Elevance hikes 2026 outlook off strong Q2, to exit more Medicaid markets

Elevance Health continues to carefully manage its healthcare segments as it navigates a path to steady profitability.

The nation’s second-largest health insurer, Elevance got a jump on the competition Wednesday, raising its 2026 earnings guidance after reporting stronger-than-expected second-quarter results.

Elevance cited improved performance in its Medicare Advantage and Affordable Care Act businesses while reaffirming that Medicaid remains a challenging area that will prompt additional market exits.

“We expect to exit additional Medicaid markets over the next 12 to 18 months, where we do not see a path to sustainable performance,” President and CEO Gail K. Boudreaux said. “These are targeted portfolio actions, and they do not change our commitment to serving Medicaid members in markets where we can deliver value for states, members, and shareholders.”

Elevance Health operates through three primary business segments: Anthem Blue Cross and Blue Shield for commercial plans, Wellpoint for government-sponsored Medicaid and Medicare programs, and Carelon for non-insurance healthcare and pharmacy services.

Elevance reported 44.9 million members as of June 30, a decrease of 469,000 sequentially, driven by a “commercial fee-based customer transition” and anticipated attrition in individual ACA and Medicaid membership.

Executives said Medicaid continues to face elevated medical costs, particularly in behavioral health, specialty pharmacy, outpatient surgery and emergency department utilization.

Chief Financial Officer Mark Kaye said second-quarter results supported the company’s full-year expectation for a Medicaid operating margin of negative 1.75%, describing 2026 as the expected low point before profitability improves.

“The second quarter really reinforced our confidence in the full-year Medicaid framework,” he said, noting that higher-than-expected state rate increases and membership trends broadly matched company assumptions.

Executives expect Medicaid margins to improve in the second half of the year because of July 1 rate increases and ongoing efforts to manage healthcare costs.

They also emphasized that recent cost pressures are increasingly being driven by utilization among members who remain enrolled rather than by changes in member acuity following the post-pandemic Medicaid eligibility redeterminations.

“We are not seeing a new stepwise acuity reset,” Kaye said.

Investments touted

Elevance plans to reinvest approximately 80 cents per share of one-time investment gains recognized during the second quarter into technology and operational improvements during the second half of the year, Kaye explained.

Those investments include artificial intelligence, analytics, provider connectivity, member engagement and medical cost management tools.

Boudreaux said the investments are intended to improve the company’s ability to identify rising medical costs more quickly, simplify the member experience and reduce administrative burdens for providers.

Technology has already reduced the time needed to identify emerging cost trends, Boudreaux said. “In many cases, we’ve compressed months of work into days.”

The investments also will expand Carelon’s value-based care capabilities, including its CareBridge home-based care platform, behavioral health services and oncology programs.

Quarterly highlights

• The benefit expense ratio of 89.7% increased 80 basis points year over year, driven by an “expected elevated medical cost trend” in government businesses, partially offset by improved performance in Individual ACA compared to the prior year.
• Days in claims payable stood at 45.4 days at the end of Q2, a decrease of 1.2 days from Q1 and an increase of 2.9 days year over year.
• Health Benefits segment operating revenue of $42.7 billion increased $1.1 billion, or 3% over the prior year quarter, driven primarily by higher premium yields, partially offset by declines in Medicare Advantage, Medicaid, and Employer Group risk membership.
• Carelon posted $19.2 billion in operating revenue, an increase of $1.1 billion, or 6% compared to the prior year quarter. Growth was driven by the scaling of Carelon Services risk-based solutions and CarelonRx product revenue.

By The Numbers

• Total Revenue: $50.5 billion ($49.8 billion in Q2 2025)
• Net Income: $1.45 billion ($!.74 billion in Q2 2025)
• Earnings Per Share: Adjusted EPS of $7.45 ($8.84 in Q2 2025)
• Share Repurchases: $234 million in Q2 2026
• Dividend Declared: $1.72 per share
• Stock Price Movement: Shares dropped nearly 9% to $389.91

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