Key financial results

  • Third quarter adjusted diluted earnings per share was $6.99, which exceeded the company's outlook.Third quarter adjusted diluted earnings per share of $6.99 exceeded our outlook.
  • Operating revenue increased just under 1% to $50.4 billion, driven by higher premium yields and CarelonRx product revenue.Operating revenue increased just under 1% to $50.4 billion, driven by higher premium yields, CarelonRx product revenue and service fees
  • The consolidated benefit expense ratio was 90.6%, representing an improvement of 70 basis points.Our consolidated benefit expense ratio was 90.6%, an improvement of 70 basis points.
  • The adjusted operating expense ratio increased 90 basis points to 11.3% due to targeted investments in member experience and medical cost management.Our adjusted operating expense ratio increased 90 basis points to 11.3%.
  • Operating cash flow for the quarter was $1.3 billion.Operating cash flow totaled $1.3 billion in the quarter
  • The company recorded a net nonoperating benefit of $1.85 per share, primarily from investment income valuation adjustments.We also recorded a net nonoperating benefit of $1.85 per share primarily related to valuation adjustments within investment income

Business segment results

  • Medicaid: Medicaid performance was ahead of outlook due to recent rate actions, though cost trends remain elevated.Medicaid, third quarter performance was ahead of our outlook, primarily reflecting the benefit of recent rate actions.
  • Medicare Advantage: Medicare Advantage operating margin is expected to be at least 2% for the full year.The product and geographic actions we took for 2026, along with the quality of our retained membership mix, support a full year operating margin of at least 2%.
  • Medicare Advantage: Approximately half of Medicare Advantage members are enrolled in plans rated 4 Stars or higher.We recently received our 2027 Star Ratings and are pleased that approximately half of our Medicare Advantage members will be enrolled in plans rated 4 Stars or higher.
  • Individual ACA: Individual ACA enrollment is ahead of expectations, with the company expecting to end the year with at least 1.2 million members.Enrollment also remains ahead of expectations, reflecting the value our plans deliver and we now expect to end the year with at least 1.2 million members.
  • Individual ACA: Individual ACA operating margins are expected to be modestly higher for the full year as claims developed favorably.In Individual ACA, we now expect a modestly higher full year operating margin as claims continue to develop favorably.
  • Commercial Group: Commercial Group cost trends remain consistent with pricing assumptions, and the company maintained pricing discipline.In Commercial Group, cost trend remains consistent with our pricing assumptions.
  • Carelon: Carelon reported an operating gain increase of 10.8% with an operating margin of 5.3% for the quarter.Carelon, from an earnings perspective, especially in the Rx side, had a very strong quarter. We were up 10.8% on an operating gain basis.
  • Carelon: CarelonRx is focused on integrating medical and pharmacy management to control total cost of care.CarelonRx model, where it's differentiated as we combine that pharmacy scale with that medical integration

Capital allocation

  • The company raised its full year operating cash flow guidance to at least $6.5 billion.we are raising our full year operating cash flow guidance to at least $6.5 billion.
  • Management intends to maintain balance sheet strength and fund targeted investments while remaining opportunistic on share repurchases.we're looking to really maintain that balance sheet strength. We're looking to fund targeted investments that support margin enhancement in Carelon growth
  • The long-term capital framework remains focused on reinvesting in the business, disciplined M&A, and returning capital to shareholders.our capital framework is really unchanged. We're looking to, again, reinvest back into the business, pursue a disciplined M&A
  • Medicaid cost trends remain elevated but stable, with states increasingly incorporating recent cost experience into rates.Medicaid cost trend remained elevated, but relatively stable compared with the second quarter.
  • The Independent Dispute Resolution process is viewed as an industry-wide affordability issue with excessive awards.IDR is obviously an industry-wide affordability issue and its impact varies meaningfully by geography, by funding arrangement as well as provider and network mix.
  • The ACA risk pool is expected to take more than one renewal cycle to normalize following the expiration of enhanced subsidies.we do expect the risk pool to take more than one renewal cycle to normalize following the expiration of those enhanced subsidies.

Competitive landscape

  • The company is seeing large jumbo employers return to Anthem after moving away for 12 months.notably, several large jumbo employers have moved back to Anthem after moving away for 12 months.
  • Carelon has maintained retention rates exceeding 90% across the majority of its product and clinical risk solutions.We've also seen very good retention. We've exceeded 90% across the majority of our product and clinical risk solutions

Macroeconomic environment

  • The call did not discuss specific macroeconomic trends such as inflation or interest rates beyond their impact on investment income and healthcare affordability.

Growth opportunities and strategies

  • Carelon is expanding external client relationships and deepening adoption across affiliated health plans.Our focus remains on deepening adoption across our health plans, expanding external client relationships and delivering measurable value.
  • The company is integrating pharmacy and medical management to improve outcomes, citing a $100 per member per month savings advantage.What we have seen is, as we integrate medical and pharmacy, our members are benefiting by saving up to $100 per member per month.
  • Medicaid growth strategies include expanding evidence-based clinical oversight in behavioral health and strengthening care management.We are expanding evidence-based clinical oversight in behavioral health, strengthening care management and advancing targeted network actions

Financial guidance and outlook

  • The company raised its 2026 adjusted diluted earnings per share guidance to at least $29.Based on these results, we are raising our 2026 adjusted diluted earnings per share guidance to at least $29.
  • The 2026 earnings baseline was increased to at least $26.75.Our earnings baseline increases by $0.75 to at least $26.75
  • The company expects at least 12% adjusted earnings per share growth in 2027 from the higher 2026 baseline.From this higher baseline, we remain confident in our ability to deliver at least 12% adjusted diluted earnings per share growth in 2027.

Leadership and Operational Focus

  • Jeff Park was appointed as President of Carelon to help scale health services and pharmacy businesses.we are pleased to welcome Jeff Park as President of Carelon. As you saw from his background, he brings a significant amount of experience
  • The company is utilizing AI-enabled workflows to improve care management and identify emerging cost drivers.

Q3 2026 results

MetricResultChange
Adjusted diluted EPS$6.99Exceeded outlook
Operating revenue$50.4 billionIncreased just under 1%
Consolidated benefit expense ratio90.6%Improved 70 basis points
Adjusted operating expense ratio11.3%Increased 90 basis points
Operating cash flow$1.3 billionNot stated
Days in Claims Payable44.9 daysIncrease of 3.5 days year-over-year

How management sounded

Positive (+45 on our -100 to +100 scale). Management raised 2026 guidance and the earnings baseline, citing strong execution across all business lines and confidence in 2027 growth. Management sounded more upbeat than on 62% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • The implementation of Medicaid work requirements and their impact on membership and acuity.
  • The evolution of the Independent Dispute Resolution (IDR) process and its impact on consumer costs.
  • The pace of Medicaid margin recovery and rate alignment with underlying cost trends.

Earlier calls

  • Q2 2026 (Jul 15, 2026), tone Balanced: Elevance Health raised its 2026 adjusted earnings guidance to at least $27 per share following strong second quarter results. The company plans to exit underperforming Medicaid markets while accelerating investments in medical cost management and Carelon capabilities.