Net income rose 13.1% while operating gain fell 2.0%, helped by a net non-operating benefit of $1.85 per share 8-K. Full-year guidance was raised to adjusted EPS of at least $29.00 and operating cash flow of at least $6.5 billion 8-K.
Elevance Health, Inc. · Q3 2026 · Reported 21 Oct 2026 · US
Key figures
Billion USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Total revenues | 51.43 | 50.71 | +1.4 % |
Net income | 1.34 | 1.19 | +13.1 % |
Benefit expense as a percentage of premiums | 90.6 % | 91.3 % | -0.7 pp |
Operating expense as a percentage of total operating revenue | 11.4 % | 10.5 % | +0.9 pp |
Total Operating Margin | 2.5 % | 2.6 % | -0.1 pp |
Health Benefits Operating Gain,USD/share | 436.00 | 601.00 | -27.5 % |
Net margin | 2.6 % | 2.3 % | +0.3 pp |
Figures in USD, as reported. Margins are computed from the reported lines. Changes in ratios are in percentage points.
Profit growth came from below the operating line, not from operations
Net income was $1.34 billion against $1.19 billion a year earlier, up 13.1%, and diluted EPS rose 17.9% to $6.27 8-K. Operating gain moved the other way, to $1,269 million from $1,295 million, down 2.0% 8-K. Net investment income rose to $1,037 million from $625 million, and management cites a net non-operating benefit of $1.85 per share 8-K.
The share count fell to 217.6 million from 223.7 million, which adds to the EPS gain over net income 8-K. Company-defined adjusted EPS was $6.99 against $6.03 8-K. The operating margin was 2.5% against 2.6% 8-K.
Health Benefits margin fell as spending outran a better claims ratio
The benefit expense ratio improved 70 basis points to 90.6%, which management attributes to Medicare Advantage and Individual ACA 8-K. The operating expense ratio rose to 11.4% from 10.5% 8-K. The adjusted ratio of 11.3% was up 90 basis points, mainly on targeted, one-time investments in capabilities plus spending on growth and quality initiatives 8-K.
Health Benefits operating gain fell 27.5% to $436 million, and its margin was 1.0% against 1.4% 8-K. Revenue grew 2.6% on higher premium yields despite 487 thousand fewer members, with Medicare Advantage membership down 15.5% 8-K. The release does not say when the investment spending ends.
Carelon is where operating gain grew
Carelon operating gain rose 17% to $0.9 billion on revenue up 5%, which management ties to Carelon Services risk-based solutions and better specialty pharmacy profitability 8-K. CarelonRx gain was $616 million against $556 million, and Carelon Services gain was $292 million against $219 million 8-K.
Operating cash flow was $1.3 billion, up $0.1 billion, mainly on favorable working capital 8-K. The release does not give a quarterly cash-to-income comparison, and risk-factor detail will come with the 10-Q.
What to watch next
Guidance: FY 2026 diluted EPS of at least $22.00, adjusted EPS of at least $29.00, operating cash flow of at least $6.5 billion, and at least 12% adjusted EPS growth in 2027 from a baseline of at least $26.75 8-K. Nine-month operating cash flow was already $7,512 million, and the release does not reconcile that with the $6.5 billion floor 8-K.
Whether the Health Benefits operating gain recovers once the targeted investments, which management calls one-time, fade, given falling Medicare Advantage and Medicaid membership 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.