Elevance Health Inc. (NYSE:ELV) on Wednesday reported second-quarter results that topped Wall Street estimates and raised its full-year adjusted earnings and operating cash flow guidance, supported by higher premium yields and continued growth in its Carelon business.
Adjusted earnings came in at $7.45 per share, beating the analyst consensus estimate of $6.21. Revenue rose to $49.83 billion, above the consensus estimate of $48.69 billion.
Premium Yields, Carelon Support Growth
Revenue increased by $400 million from a year earlier, driven by higher premium yields in the Health Benefits segment and stronger CarelonRx product revenue. Those gains were partly offset by expected declines in Medicare Advantage, Medicaid and Employer Group risk membership.
The benefit expense ratio increased 80 basis points year over year to 89.7%, reflecting elevated medical costs in government businesses. Improved performance in the Individual Affordable Care Act business partially offset the increase.
The operating expense ratio was 11.1%, while the adjusted operating expense ratio rose 100 basis points to 11%, primarily due to targeted investments in workforce and long-term operating capabilities.
Health Benefits operating revenue increased 3% to $42.7 billion, led by higher premium yields despite lower membership in certain government and employer plans.
Medical membership totaled about 44.9 million as of June 30, down 469,000 from the prior quarter. The decline reflected a planned commercial fee-based customer transition and expected attrition in individual ACA and Medicaid membership.
Carelon operating revenue rose 6% to $19.2 billion, driven by the expansion of Carelon Services’ risk-based solutions and higher CarelonRx product revenue.
Raises Full-Year Guidance
Chief Executive Officer Gail Boudreaux said the company is increasing investments in key capabilities while raising its earnings outlook, adding that the moves support its goal of returning to at least 12% adjusted earnings growth in 2027.
Elevance now expects fiscal 2026 adjusted earnings of at least $27 per share, up from prior guidance of at least $26.75 and above the Wall Street consensus estimate of $26.91.
The company also raised its fiscal 2026 operating cash flow forecast to at least $6 billion.
Despite the earnings beat and higher guidance, investors appeared underwhelmed by the size of the outlook increase. According to Reuters, Wall Street analysts said the guidance raise was smaller than the magnitude of the quarterly earnings beat, triggering a broader selloff across managed-care insurers.
Shares of Molina Healthcare Inc. (NYSE:MOH), Centene Corp. (NYSE:CNC), Oscar Health Inc. (NYSE:OSCR) and UnitedHealth Group Inc. (NYSE:UNH) also traded lower. Jefferies analyst David Windley said that after the sector’s rally since the first quarter, “a small beat and raise is unlikely to be satisfactory for the market.”
ELV Price Action: Elevance Health shares were down 8.29% at $391.41 at the time of publication on Wednesday, according to Benzinga Pro data.
Photo by Jonathan Weiss via Shutterstock
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