AI Takeaway
Elevance Health's Q2 FY2026 revenue grew modestly to $50.5B while profitability declined sharply, with operating income down 27.3% and EPS down 13.1%, driven by elevated Medicaid/Medicare medical cost trends, a Medicare Advantage risk-adjustment loss contingency accrual, and increased operating expenses tied to workforce and transformation initiatives.
Revenue
$50.47B
++1.40% YoY
EPS (Basic)
$6.74
-12.92% YoY
Operating Income
$1.76B
-27.30% YoY
Filed · Source: SEC EDGAR 10-Q filing
Total operating gain fell 27.3% to $1,763M in Q2 FY2026 from $2,425M a year ago, primarily due to Health Benefits segment operating gain dropping 42.6% to $896M (from $1,560M), while CarelonRx operating gain grew 8.6% to $582M. Health Benefits operating margin contracted 170bp to 2.1%, and total operating margin fell 140bp to 3.5%.
Source: 10-Q Item 2 MD&A
Total medical membership fell to 44.9M members as of June 30, 2026, down 672K (1.5%) from 45.6M a year earlier, driven by Medicaid attrition from eligibility redeterminations (-375K, -4.3%), Medicare Advantage declines (-358K, -15.9%), and Employer Group Risk-Based declines (-198K, -5.5%), partially offset by Employer Group Fee-Based growth (+347K, +1.7%).
Source: 10-Q Item 2 MD&A
Benefit expense ratio increased 80bp to 89.7% in Q2 FY2026, primarily due to expected elevated medical cost trend in Medicaid and Medicare businesses, partially offset by improved performance in the Individual ACA business. Membership shifts and lower effectuation rates following ACA subsidy expiration (APTCs expired Dec 31, 2025) have driven market-wide morbidity increases.
Source: 10-Q Item 2 MD&A
2 more insights available
Upgrade to unlockThe benefit expense ratio rose 80bp YoY to 89.7% in Q2 FY2026 due to elevated medical cost trends in Medicaid and Medicare, driven by membership shifts, lower effectuation rates, and increased population acuity following ACA redeterminations and APTC expiration. Continued cost trend volatility could further pressure margins if pricing does not adequately reflect underlying costs.
Source: 10-Q Item 2 MD&A
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $7.45 versus the $6.27 analyst consensus — a +18.9% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $50.47B | $49.78B | +1.40% |
Cost of Revenue | $5.49B | $5.29B | +3.76% |
Operating Income | $1.76B | $2.42B | -27.30% |
Net Income | $1.46B | $1.74B | -16.06% |
EPS (Basic) | $6.74 | $7.74 | -12.92% |
EPS (Diluted) | $6.71 | $7.72 | -13.08% |
SG&A Expense | $5.55B | $5B | +11.01% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $126.44B | $121.94B | +3.69% |
Current Assets | $67.18B | $63.32B | +6.10% |
Total Liabilities | $81.42B | $78.09B | +4.26% |
Current Liabilities | $44.25B | $43.83B | +0.96% |
Stockholders' Equity | $44.88B | $43.72B | +2.66% |
Cash & Equivalents | $10.23B | $8.56B | +19.53% |
Long-Term Debt | $31.04B | — | — |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $6.25B | $3.07B | +103.35% |
Investing Cash FlowYTD | $-1.48B | $-584M | -153.94% |
Financing Cash FlowYTD | $-4.01B | $-2.22B | -80.83% |
Dividends Paid | $373M | $385M | -3.12% |
Share BuybacksYTD | $1.36B | $1.26B | +7.95% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 3.5% | 4.9% | -1.38% |
Net Margin | 2.9% | — | — |
ROE | 3.3% | — | — |
ROA | 1.2% | — | — |
Current Ratio | $1.518 | — | — |
Debt to Equity | $1.814 | — | — |
Elevance Health reported Q1 2026 revenue of $50.2B (+2.6% YoY) but saw operating income fall 34.2% to $2.1B and net income decline 19.2% to $1.76B, reflecting significant cost pressures from rising medical costs and elevated SG&A spending, partially offset by a strong surge in operating cash flow to $4.3B.
ELV posted FY2025 revenue of $199.1B (+12.5% YoY) driven by membership growth, but operating income fell 8.4% to $7.2B as medical cost pressures compressed the operating margin to 3.6%, resulting in net income declining 5.3% to $5.7B.
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The filing does not disclose analyst consensus estimates, so a beat/miss cannot be confirmed from this data. However, the filing shows revenue grew 1.4% YoY to $50,474M while diluted EPS declined 13.1% YoY to $6.71, reflecting profitability pressure despite top-line growth.
Shareholders' net income fell 16.1% YoY to $1,463M primarily due to decreased operating gain in the Corporate & Other, Health Benefits, and Carelon Services segments, partially offset by higher net investment income and lower net losses on financial instruments. Health Benefits segment operating gain alone dropped 42.6% to $896M from $1,560M a year earlier.
The benefit expense ratio rose 80bp YoY to 89.7%, driven by elevated medical cost trends in the Medicaid and Medicare businesses, tied to membership shifts, eligibility redeterminations, and lower effectuation rates following the expiration of enhanced ACA premium tax credits (APTCs) on December 31, 2025. This was partially offset by improved performance in the Individual ACA business.
Total medical membership declined 1.5% YoY to 44.9 million members as of June 30, 2026, driven by Medicaid attrition (-4.3%), Medicare Advantage declines (-15.9%), and Employer Group Risk-Based declines (-5.5%), partially offset by growth in Employer Group Fee-Based membership (+1.7%).
Key risks include elevated Medicaid and Medicare medical cost trends, CMS Risk Adjustment Data Validation (RADV) audit exposure with a related loss contingency accrual, ongoing BCBSA antitrust litigation, and regulatory uncertainty from the OBBBA and pharmacy benefit manager reform legislation. The filing states there were no material changes to risk factors from its 2025 Annual Report on Form 10-K.