Elevance Health Inc. (NYSE:ELV) shares fell after the health insurer reported mixed fourth-quarter 2025 earnings and bleak fiscal 2026 guidance. The stock has recovered most of its loss from the premarket session
Earnings Snapshot
The company reported fourth-quarter 2025 revenues of $49.3 billion, up 10% year over year, below the consensus of $49.82 billion. Operating revenue was $197.6 billion in 2025, up 13%.
The increase in revenue for the quarter and year was driven by higher
premium yields in the Health Benefits segment, contributions from acquisitions, and growth in Medicare Advantage membership, partially offset by membership attrition in the Medicaid business.
Elevance Health reported adjusted earnings of $3.33 per share, beating the consensus of $3.10.
The benefit expense ratio was 93.5% in the fourth quarter, an increase of 110 basis points, reflecting higher medical cost trend primarily in Affordable Care Act health plans and heightened Medicare Part D seasonality driven by Inflation Reduction Act changes.
For the year, the benefit expense ratio was 90%, an increase of 150 basis points year over year, driven by elevated medical cost trends.
The operating expense ratio was 11% in the fourth quarter and 10.6% for the full year. On an adjusted basis, the corresponding operating expense ratios were 10.8% and 10.5%.
Segment Details
Health Benefits segment operating revenue was $41.8 billion in the fourth quarter of 2025, up 11% driven primarily by higher premium yields, contributions from acquisitions, and growth in Medicare Advantage membership, partially offset by membership attrition in the Medicaid business.
Medical membership totaled approximately 45.2 million as of December 31, 2025, a decrease of 1% year over year, driven by attrition in Medicaid business.
Operating revenue for Carelon was $18.7 billion, up 27%, driven by growth in CarelonRx product revenue, the expansion of Carelon Services risk-based solutions, and the acquisition of CareBridge.
Conference Call Highlights
In the company conference call, Elevance Health executive reports a membership increase of approximately 10% following the open enrollment period.
Elevance Health’s CEO stated that 2026 will be a year focused on execution and repositioning for the company.
The CEO noted that they expect a decline in Medicaid membership, along with a potential shift in the acuity of the population over time.
Additionally, the company anticipates a significant decline in Medicare Advantage membership, projected to be in the high teens percentage range for 2026.
Executives also mentioned that costs for Medicaid and Obamacare plans are likely to remain under pressure in 2026.
Finally, they expressed concerns that the Medicare Agency’s proposed payment rates for 2027 do not align with current trends in medical costs and utilization.
2026 Guidance
Elevance Health expects fiscal 2026 adjusted earnings to be at least $25.50 per share compared to the Wall Street estimate of $26.90.
The insurance company forecasts 2026 sales to decline in mid-single digits, due to lower premiums.
Benefit Expense Ratio is expected to be 90.2% +/- 50 bps, with Adjusted Operating Expense Ratio of 10.6% +/- 50 bps
The company expects year-end medical enrollment to be between 43,175 and 43,875, compared to 45,232 in 2025.
The Centers for Medicare & Medicaid Services (CMS) pointed to a modest payment growth of 0.09% in 2027, translating to more than $700 million in additional payments to Medicare Advantage plans, way below the expected rate increase of roughly between 4% and 6%.
ELV Price Action: Elevance Health shares were up 3.37% at $333.80 at the time of publication on Wednesday, according to Benzinga Pro data.
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