Oct 21, 2026 earnings call — Raises 2026 guidance; highlights Carelon growth
Elevance raised 2026 adjusted diluted EPS guidance to at least $29.
Revenue $50.4B (est $49.3B) · EPS $6.99 (est $4.71)
Key quotes
"We are revising our 2026 adjusted diluted earnings per share guidance to at least $29, reflecting operating outperformance as well as favorable non-operating items."
"What we have seen is, as we integrate medical and pharmacy, our members are benefiting by saving up to $100 per member per month."
"In Medicaid, third quarter performance was ahead of our outlook, primarily reflecting the benefit of recent rate actions."
Analyst Q&A 17
Drivers of 2027 earnings growth
Q (A.J. Rice · UBS): Analyst asked what underlies the 12% earnings growth target, whether it depends on Medicaid margin improvement, and what cost trends across businesses are assumed.
A: Management said they are confident because they enter 2027 from a higher earnings baseline and stronger operating performance. They expect growth from health benefit margin improvement, Carelon solutions growth, and better operating efficiency, and are not relying on any single assumption.
"We remain confident in delivering at least the 12% adjusted EPS growth off the 2027 higher ending baseline of 2026 of $26.75." — Gail Boudreaux (CEO)
Medicaid MLR and rate drivers
Q (Andrew Mok · Barclays): Analyst asked whether Medicaid MLR was up, down, or flat versus 3Q 2025 and whether the better rates are prospective or out-of-period items.
A: Management said third quarter MLR was 90.6% and was favorable to expectations. They said Medicaid performed better than expected primarily because of recent rate actions, and that underlying cost trend remains elevated but broadly stable.
"In Medicaid, performance was better than expected, and that was primarily because of recent rate actions." — Mark Kaye (CFO)
Work requirements and Medicaid impact
Q (Justin Lake · Wolfe): Analyst asked how 2027 work requirements might affect Medicaid membership, acuity, cost trend, and whether states are including effects in 2027 rates.
A: Management said states are still developing plans and verification methods, so outcomes will vary. They said states are beginning 2027 rate work and some have included community requirements, but acuity impact needs more visibility as the 2027 rate cycle is early.
"If we take a look at the potential acuity impact, that's going to be more visibility we have there as we move throughout the end of 2027 because we are still pretty early in the 2027 rate cycle." — Felicia Norwood
Gap between rates and margins
Q (Stephen Baxter · Wells Fargo): Analyst asked why improved rates have not translated fully into improved Medicaid margins and how much is due to cost, investments, or other factors.
A: Management said July 1 rate actions delivered sequential margin uplift but rates have not fully caught up to costs. They emphasized closing the gap through rate alignment and targeted medical cost actions, and that 2026 is the Medicaid margin trough with improvement expected in 2027.
"Rates have certainly not fully caught up with the underlying costs, and our focus here is really on closing that gap and then executing against our targeted medical cost actions." — Mark Kaye (CFO)
CarelonRx performance and integration
Q (Lisa Gill · JPMorgan): Analyst asked what drove CarelonRx strength, whether specialty infusion or product revenue, and expectations for pharmacy in 2027 selling season.
A: Management said CarelonRx had a very strong quarter driven by PBM execution and better dispensing performance, emphasizing integrated medical and pharmacy management. They reported members in integrated plans save up to $100 per member per month and have fewer ER visits.
"What we have seen is, as we integrate medical and pharmacy, our members are benefiting by saving up to $100 per member per month." — Mark Kaye (CFO)
Carelon Services growth and selling season
Q (Lance Wilkes · Bernstein): Analyst asked how much Carelon Services growth will come from internal contract shifts versus external wins, and about Jeff Park's appointment.
A: Management said the Carelon services growth model is to prove value internally then scale externally, using HealthOS, data, and AI-enabled workflows. They said the 2027 external selling season is progressing well with several new wins and strong retention, and they welcomed Jeff Park as Carelon president.
"We have already secured a number of new wins across key businesses, including behavioral health, clinical care services, as well as specialty and post-acute." — Mark Kaye (CFO)
Commercial cost trend and IDR
Q (Scott Fidel · Goldman Sachs): Analyst asked current view of commercial medical cost trend for 2026 and how they are pricing for 2027, and about IDR impact.
A: Management said commercial group cost trend is elevated but stable and that they priced 2026 and 2027 for a low double-digit cost trend. They said IDR pressure was incorporated into pricing, impacts vary by geography and funding, and they use Blues data to monitor and price ahead of trends.
"Specifically, we priced 2026 and 2027 for a low double-digit cost trend environment." — Mark Kaye (CFO)
Time to reach Medicaid target margin
Q (Kevin Fischbeck · BofA): Analyst asked how long to return to target Medicaid margins and what variables matter besides work requirements.
A: Management said they expect Medicaid margins to improve in 2027, supported by better rate alignment and medical cost actions, and they view 2%-4% as the appropriate long-term margin target. They said pace depends mainly on how quickly rates align with underlying costs and more detail will come in January.
"Over time, to your question, we continue to view 2%-4% as the appropriate margin target for Medicaid." — Mark Kaye (CFO)
Capital use and Carelon investments
Q (Erin Wright · Morgan Stanley): Analyst asked what capital deployment assumptions are embedded for 2027, including buybacks, and whether Elevance will invest more in specialty pharmacy or other areas.
A: Management said near-term posture on capital will be intentionally disciplined to maintain balance sheet strength, fund targeted investments for margin and Carelon growth, and remain opportunistic on share repurchases. They said long-term framework is unchanged: reinvest, disciplined M&A, and return capital, and noted Carelon specialty work like an Oncology Center of Excellence supports patient outcomes.
"We're looking to really maintain that balance sheet strength. We're looking to fund targeted investments that support margin enhancements and Carelon growth, and we will remain opportunistic on share repurchases." — Mark Kaye (CFO)
Commercial margins and ACA outlook
Q (George Hill · Deutsche Bank): Analyst asked if IDR will continue to weigh on 2027 results, whether pricing targets margin expansion or maintenance, and ACA margin expectations.
A: Management said they seek stability in year-over-year margins for large group fully insured in 2027. They said they feel good about 2027 ACA rates positioning to build on this year's progress, and expect the risk pool to take more than one renewal cycle to normalize after enhanced subsidies expired.
"In terms of commercial large group fully insured, we are really looking for a plan that is built around stability in year-over-year margins, so stable." — Mark Kaye (CFO)
ACA performance and plan mix
Q (Ann Hynes · Mizuho): Analyst asked how better retention and disenrollment to bronze plans affects ACA risk adjustment and overall performance.
A: Management said Individual ACA is tracking ahead of expectations with modest year-over-year margin improvement expected. They said retention and favorable claims have accompanied the shift to bronze plans, which affects risk adjustment, but ACA still performs ahead of expectations after accounting for that impact.
"With the greater membership shift towards bronze plans, to your point, it obviously affects our risk adjustment position, but ACA still continues to perform ahead of our expectations even after we incorporate that impact." — Mark Kaye (CFO)
Medicaid care management actions
Q (Ben Hendrix · RBC): Analyst asked what specific care management and clinical actions will drive Medicaid margin expansion next year and any updates on footprint rationalization.
A: Management said they are acting on utilization and payment patterns by strengthening behavioral health oversight, streamlining authorization, expanding payment integrity and claims review, and using AI analytics to detect inappropriate billing earlier. They expect these initiatives to contribute more in 2027.
"AI-enabled analytics have helped us here identify potentially inappropriate billing and utilization patterns earlier." — Mark Kaye (CFO)
CarelonRx sensitivity to trend
Q (Dave Windley · Jefferies): Analyst asked if CarelonRx will benefit when trend moderates or remain insulated and whether its margins differ from the health plans.
A: Management said Carelon's results reflect contract economics and clinical programs, so its financial exposure can differ from health plans. They used behavioral health as an example where Carelon's clinical programs reduce inpatient and ER use and can deliver gross margin ahead of plan even when broader cost trends are pressured.
"For example, in behavioral health, the clinical value that we are generating is different." — Mark Kaye (CFO)
Exchange membership and outlook
Q (Jason Cassorla · Guggenheim): Analyst asked about the expected exit membership near 1.2 million, whether that implies a sequential drop, and views on exchange enrollment next year.
A: Management said effectuation and retention in exchange markets were better than expected and they ended 3Q with approximately 1.3 million Individual ACA members versus their prior 1.2 million expectation. They said affordability and shift to bronze plans supported coverage and passive renewals were better than anticipated, so they expect to end the year with at least 1.2 million members.
"We ended the third quarter with approximately 1.3 million Individual ACA members, and that compared to our expectation of about 1.2." — Mark Kaye (CFO)
Capturing ASO conversions and selling to employers
Q (Elizabeth Anderson · Evercore): Analyst asked how Elevance will capture ASO conversions and sell integrated solutions like Carelon to employers over the long term.
A: Management said employers view health benefits as part of human capital strategy and seek affordability and simplicity, preferring payers with solid networks and clinical management rather than stitched-together models. They said Elevance offers solutions across geographies and funding types and is seeing pull-through with integrated Carelon capabilities.
"This isn't new, and we're seeing people move that way. People are still thinking, "Let's work with a payer that's got a solid network, solid clinical management to avoid having just a stitched-together model," which we've seen people avoid." — Morgan Kendrick (PRESIDENT)
Medicare Advantage margin path
Q (Ryan Langston · TD Cowen): Analyst asked whether the 12% earnings growth assumes MA returns to long-term target margin and whether enrollment will contract further given cost trends.
A: Management said they are positioned well in Medicare Advantage after disciplined footprint actions and expect to deliver margins of at least 2% in 2026 and improve in 2027. They said they will continue along the path to the long-term target margin range of 3%-5%.
"As we move into 2027, the expectation is that we improve on that margin position." — Felicia Norwood
ABA therapy guidance and control
Q (Whit Mayo · Leerink Partners): Analyst asked about CMS ABA therapy guidelines, how states are responding, and what is now within Elevance's control to manage ABA spend.
A: Management said behavioral health and ABA are focus areas with historically high utilization, and they want members to have right care while using AI to detect claim abnormalities. They said they are working with states and CMS, will deploy payment integrity reviews to prevent misuse, and aim to preserve family access to needed care.
"What we are trying to do is to make sure that as this area has expanded, we are leveraging our AI capabilities to understand abnormalities in terms of claims and what is happening with respect to this population." — Felicia Norwood