UPDATED: Oct. 21 at 1:20 p.m. ET
Elevance Health's top brass maintains that 2026 is a "trough year" for the company's Medicaid business and told investors Wednesday that there are positive signs for the segment heading into 2027.
CEO Gail Boudreaux said during Elevance's earnings call that Q3 performance in Medicaid "was ahead of our outlook" given recent state rate bumps. The company's Medicaid unit is "now tracking slightly ahead of our prior full-year margin guidance," Boudreaux said.
With those tailwinds in place, Boudreaux said that the team is staying focused on its efforts to improve, including enhanced clinical-based oversight programs in behavioral health, improved care management programs and network updates.
"We remain focused on the levers we can control," Boudreaux said. "Looking to 2027, we expect Medicaid margins to improve as rates become better aligned with cost trends and the actions we are taking continue to gain traction."
In addition, Chief Financial Officer Mark Kaye said that while cost trends in Medicaid were still elevated in the third quarter, expenses were stable compared to results from Q2.
He added that there is still plenty of work that the insurer can do to respond to the challenging Medicaid environment, even with the positive improvements felt in Q3.
"The progress that we're making on those priorities really reinforces our view here that 2026 is the trough for Medicaid margins, and that we will expect improvement again in 2027," Kaye said.
The Medicaid program has been dinged by the same rise in medical costs that has impacted the broader industry and is set for a turbulent year in 2027 as states implement work requirements nationwide as mandated in the H.R. 1 legislation.
PUBLISHED: Oct. 21 at 7:55 a.m. ET
Elevance Health is boosting its outlook for the year as it beat Wall Street analysts' expectations for both profit and revenue in the third quarter.
The company reported Wednesday morning that it earned $1.4 billion in profit for the quarter, up slightly from the $1.2 billion haul it posted a year ago. Profits through the first nine months of the year were $4.6 billion, down year-over-year from $5.1 billion.
Revenues were $50.4 billion in the quarter, on par with the $50.1 billion it brought in for the prior year quarter. Revenues through three quarters were $149.8 billion, up from $148.3 billion through the first three quarters of 2025.
Elevance now expects to earn at least $29 in earnings per share for the full year, up from its previous 2026 guidance of $27. The company also boosted its outlook in Q2.
CEO Gail Boudreaux said in the company's earnings press release that the team is "confident" in delivering on its promise to deliver at least 12% in EPS growth for 2027 based on the higher baseline it expects following Q3.
"Elevance Health's third quarter results reflect stronger execution across our diversified portfolio and underscore the earnings power of the business," she said. "By bringing together the capabilities of our Health Benefits business and Carelon, we are improving the healthcare experience, strengthening our competitive advantage, and creating long-term value for our shareholders."
The company noted an improved medical loss ratio for the quarter at 90.6%, compared to the 91.7% it reported in the third quarter of 2025. Across the year, insurers have made progress on managing medical costs, as throughout late 2024 and 2025, MLR performance was a drag on the industry.
Elevance said in the release that the improvements reflect better performance in both Medicare Advantage and the individual market, both hot spots for cost pressure.
At the company's insurance unit, operating revenues were $43.4 billion in the quarter, up slightly from $42.2 billion in the prior-year quarter. Elevance said this reflects higher premium yields and service fee revenue, though it was offset in part by declines in membership across MA, Medicaid and employer group plans.
The company reported about 44.9 million members as of Q3, down by 487,000 compared to the third quarter of 2025 amid declines in those three markets.
Operating revenue at Carelon, meanwhile, was $19.3 billion in the third quarter, up from $18.3 billion a year ago. Elevance Health attributed the increase to growth at both CarelonRx and its risk-based solutions at Carelon Services.
Alongside the earnings release, Elevance announced Jeff Park would join the company as president of Carelon, effective Dec. 1. Park joins the company from Waltz Health, where he also served as president, and helped steer its merger with EVERSANA and ongoing growth initiatives.
Park also previously held leadership roles at OptumRx, Catamaran, WellDyneRx and Diplomat Pharmacy.
In the role, Park will be tasked with supporting Carelon through its "next phase of growth," the company said.
"Carelon is central to our strategy and an important driver of growth for Elevance Health," said Boudreaux in the release. "Jeff brings deep healthcare experience, and a proven track record of growing businesses, driving execution, and creating value for customers."
"As we build on Carelon's momentum, his leadership will help accelerate growth, expand our impact, and further our work to make health care more affordable, simpler, and more personalized," she said.