Elevance Health (NYSE:ELV) reported stronger-than-expected second-quarter earnings and raised its full-year outlook, but the health insurer’s shares fell more than 9 percent in premarket trading as investors focused on declining profit margins.
Earnings and revenue surpass expectations
The company posted adjusted earnings per share of 7.45 dollars, comfortably ahead of the analyst consensus estimate of 6.21 dollars.
Revenue increased 0.8 percent year on year to 49.8 billion dollars, exceeding market expectations of 48.63 billion dollars.
Elevance said its performance benefited from favourable medical benefit expense trends and an approximately 0.80-dollar-per-share net below-the-line benefit.
Margin weakness overshadows earnings beat
Despite the stronger earnings performance, profitability came under pressure during the quarter.
Operating margin declined to 3.5 percent from 4.9 percent a year earlier, while adjusted operating margin fell to 3.6 percent from 5.0 percent.
Within the company’s Health Benefits business, operating margin dropped to 2.1 percent compared with 3.8 percent in the same quarter last year.
The benefit expense ratio also increased by 80 basis points to 89.7 percent, reflecting higher medical costs within government-sponsored healthcare programmes. Improved performance in the Individual Affordable Care Act business partially offset those increases.
Company raises full-year outlook
President and Chief Executive Officer Gail K. Boudreaux said:
“Our second quarter results exceeded our outlook, supported by disciplined execution and improved operating performance across our diversified portfolio.”
Elevance increased its adjusted earnings guidance for the 2026 financial year to at least 27.00 dollars per share, slightly above analysts’ consensus estimate of 26.91 dollars.
The company also lifted its operating cash flow forecast to at least 6.0 billion dollars.
Membership declines while business segments grow
Medical membership totalled approximately 44.9 million at the end of June, representing a sequential decline of 469,000 members.
The company attributed the reduction to the transition of a commercial fee-based customer and expected declines in Individual ACA and Medicaid membership.
The Health Benefits division generated revenue of 42.7 billion dollars, an increase of 3 percent from a year earlier, while Carelon revenue rose 6 percent to 19.2 billion dollars.
Elevance Health stock price
