Slides
Page 1
Elevance Health 3Q 2026 Supplemental Earnings Presentation October 21, 2026
Page 2
2 Key Highlights 1 3Q 2026 Results Results exceeded our outlook, driven by favorable benefit expense performance and strong operating execution • Adjusted diluted EPS 1 of $6.99 reflects operating outperformance of ~$0.50 and a net non - operating benefit of ~$1.85 • Operating revenue of $50.4B increased 0.7% due to higher premium yields, CarelonRx product revenue, and service fees, partially offset by lower health plan membership • Benefit expense ratio of 90.6% improved 70 basis points from the prior year, as Medicaid, Medicare Advantage, and Individual ACA delivered results favorable to our outlook • Adjusted operating expense ratio of 11.3% increased 90 basis points from the prior year, principally due to targeted investments in capabilities that drive our long - term performance 2 2026 Outlook & 2027 Growth Raising our 2026 earnings baseline 2 to at least $26.75 from at least $26.00 based on stronger operating performance • Raising 2026 adjusted diluted EPS guidance to at least $29.00, reflecting our 3Q outperformance, an improved outlook for our Individual ACA business, and non - operating items • Raising 2026 operating cash flow guidance to at least $6.5 billion Confident in delivering at least 12% adjusted diluted EPS growth in 2027, off our revised earnings baseline of at least $26.7 5 2 • Outlook supported by Health Benefits margin improvement, broader adoption Carelon’s value - based solutions, greater operating efficiency, and disciplined capital deployment 3 Strategic Focus Areas Executing on targeted investments to strengthen medical cost management, member experience, Carelon’s value - based capabilities, and our long - term earnings growth Deepening adoption of Carelon’s integrated, value - based solutions across our health plans and external clients Scaling data and analytics capabilities to identify emerging cost drivers earlier, enable targeted interventions, achieve better health outcomes, and improve operating efficiency 1. See “GAAP Reconciliation” on slides 12 and 13 herein. 2. FY 2026 earnings baseline excludes non - recurring net investment income and other non - operating items, as well as targeted one - ti me investments.
Page 3
3 3 Scaling Capabilities to Drive Measurable Results Medical Cost Management Member Engagement Carelon Provider Connectivity Our connected model builds a durable advantage: better health outcomes, lower costs, and stronger operating performance Identify and Address Emerging Cost Drivers Deliver a More Personal Member Experience Expand Integrated Care Solutions through Carelon Improving Provider Efficiency 1. Represents anticipated savings identified in 2026 through our Elevate insights platform for medical cost management. 2. Reflects reduction in avoidable inpatient admissions through the Cancer Care Engagement program in the Commercial market. SAVINGS OPPORTUNITIES IDENTIFIED STRONGER MEMBER OUTCOMES EXPANDING REACH AND VALUE REDUCING ADMINISTRATIVE FRICTION >$300M in anticipated savings identified year to date 1 15% reduction in avoidable admissions for oncology program members 2 >400 bps increase year to date in percentage of health plan benefit expense managed by Carelon 3 >60% reduction in documentation requests for health systems on HealthOS $ Driving better outcomes, lower costs, and more consistent performance Lower healthcare costs Improve member experience Reduce provider friction Scale value - based solutions BUILDING A STRONGER AND MORE DURABLE ENTERPRISE 3. Reflects change in Carelon affiliated revenue as a percentage of Health Benefits benefit expense.
Page 4
4 4 Key Highlights • Third quarter adjusted diluted EPS exceeded our outlook, reflecting favorable benefit expense performance and disciplined execution • Adjusted EPS of $6.99 reflected stronger operating performance across Medicaid, Medicare Advantage, and Individual ACA of ~$0.50 versus our outlook, as well as a non - operating benefit of ~$1.85 • Operating revenue growth was driven by higher premium yields, CarelonRx product revenue, and service fees, partially offset by lower Government and Employer Group risk - based membership • Benefit expense ratio of 90.6% improved 70 basis points compared to the prior year, driven by better performance in Medicare Advantage and Individual ACA • Operating cash flow of $1.3 billion increased year over year, primarily due to favorable working capital dynamics 3Q 2026 Results Elevance Health 3Q 2026 3Q 2025 Change Operating Revenue 1 $50.4B $50.1B 0.7% Benefit Expense Ratio 90.6% 91.3% (70) bps Adjusted Operating Expense Ratio 2 11.3% 10.4% 90 bps Adjusted Operating Gain 1 ,2 $1.3B $1.3B (0.5%) Adjusted Operating Margin 1,2 2.7% 2.7% 0 bps Net Investment Income $1.0B $0.6B 65.9% Adjusted Diluted EPS 2 $6.99 $6.03 15.9% Operating Cash Flow $1.3B $1.1B $0.1B 1. See “Non - GAAP Measures and Basis of Presentation” on slide 11 herein. 2. See “GAAP Reconciliation” on slides 12 and 13 herein.
Page 5
5 5 Key Highlights • Our Health Benefits segment performed better than expected, driven by a favorable benefit expense ratio, while investing to drive future growth • Operating revenue grew 2.6% year over year, driven by higher premium yields and service fees, partially offset by lower Medicare Advantage, Medicaid, and Employer Group risk - based membership • Operating margin of 1.0% declined compared to the prior year, reflecting our targeted investments, partially offset by an improved benefit expense ratio • Membership of 44.9M declined from the prior year, reflecting lower enrollment in our Medicaid, Medicare Advantage, and Employer Group risk - based businesses, partially offset by growth in Commercial fee - based membership Health Benefits 3Q 2026 3Q 2025 Change Operating Revenue 1 $43.4B $42.2B 2.6% Operating Gain 1,2 $0.4B $0.6B (27.5%) Operating Margin 1,2 1.0% 1.4% (40) bps Membership 44.9M 45.4M (1.1%) 1. See “Non - GAAP Measures and Basis of Presentation” on slide 11 herein. 2. See “Reportable Segment Highlight & Health Benefits Revenue Details” on slide 14 herein. Health Benefits 3Q 2026 Results
Page 6
6 6 Key Highlights • Carelon delivered strong third quarter results, underscoring its expanding role in improving affordability and driving sustainable earnings growth • CarelonRx operating revenue reflected higher pharmacy spending, partially offset by lower health plan membership; operating margin reflected specialty pharmacy strength and reduced operating expense • Carelon Services operating revenue growth was driven by our continued expansion of risk - based solutions; operating margin reflects improved performance across these programs 3Q 2026 Results Carelon 3Q 2026 3Q 2025 Change Operating Revenue 1 $19.3B $18.3B 5.4% Operating Gain 1,2 $0.9B $0.8B 17.2% Operating Margin 1,2 4.7% 4.2% 50 bps Adjusted Scripts 82.6M 85.0M (2.8%) Consumers Served 91.0M 97.6M (6.8%) 1. See “Non - GAAP Measures and Basis of Presentation” on slide 11 herein. 2. See “Reportable Segment Highlight & Health Benefits Revenue Details” on slide 14 herein. Health Services
Page 7
7 7 Flywheel Supports Our Long - Term Growth Algorithm Health Benefits Optimize the Core Invest in Growth Accelerate Performance Targeting at least 12% average annual growth in Adjusted Diluted Earnings Per Share Approximately 45M medical members balanced across Commercial, Medicaid, Medicare, and the Federal Employee Program, leveraging the assets and capabilities of Carelon to accelerate growth As an integrated portfolio of whole health solutions serving approximately 91M consumers, Carelon connects care across physical, behavioral, social, home health, and pharmacy needs to bend the cost curve, enhance consumer experiences, and deliver whole health, affordably Health Services
Page 8
8 8 Adjusted Operating Gain – High Single Digit to Low Double Digit CAGR 1 Long - Term Growth Algorithm Revenue Growth High Single Digit CAGR 1 Adjusted Operating Margin Expanding to 5.0% – 6.0% Capital Deployment Approximately 4% Contribution to Adjusted Diluted EPS CAGR 1 Health Benefits Mid to High Single Digit CAGR Driven by targeted membership growth, strategic geographic and product expansion, and growth in specialized populations Carelon Services High Teens to Low Twenties CAGR Driven by risk - based revenue growth and M&A CarelonRx Low Double Digit CAGR Driven by new client relationships and scaling of specialty pharmacy capabilities Strengthen operational discipline to accelerate margin normalization Advance value - based care models to improve outcomes and reduce costs Integrate technology to simplify the experience for members and care providers Share Repurchases Organic Reinvestment Programmatic M&A targeting integrated solutions that strengthen health plan competitiveness + + 1. CAGR = Compound Annual Growth Rate Target. Targeting at least 12% average annual growth in Adjusted Diluted EPS
Page 9
9 9 Committed to Strong Growth Over the Long - Term M&A/ Organic Reinvestment 50% Share Repurchase 30% Dividends 20% 3.8% 5.0% – 6.0% 2025 Target $198B High Single Digit CAGR 1 2025 Target Elevance Health 4.8% Mid Single Digit 2025 Target $72B Mid Teens CAGR 1 2025 Target Carelon 2 2.5% Mid Single Digit 2025 Target $167B Mid to High Single Digit CAGR 1 2025 Target Health Benefits Capital Allocation Targeting at least 12% average annual growth in Adjusted Diluted EPS Adjusted 3 Operating Margin Revenue (in billions) 1. CAGR = Compound Annual Growth Rate Target. 2. The CAGR target for revenue and the operating margin target for Carelon includes: ( i ) a low double digit revenue CAGR and mid single digit percentage operating margin for CarelonRx, and (ii) a high teens to low twenties revenue CAGR and mid to high single digit percentage operating margin for Ca rel on Services. 3. See “GAAP Reconciliation” on slides 12 and 13 herein.
Page 10
10 Forward - Looking Statements This document contains certain forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward - looking statements reflect our views about future events and financial performance and are generally not historical facts. Words such as “expect,” “feel,” “believ e,” “will,” “may,” “should,” “anticipate,” “intend,” “estimate,” “project,” “forecast,” “plan,” “potential,” “predict” and similar expressions are intended to identify forward - looking statement s. These statements include, but are not limited to: financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations wi th respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many o f w hich are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the fo rwa rd - looking statements. You are cautioned not to place undue reliance on these forward - looking statements that speak only as of the date hereof. You are also urged to carefully review and consider the various risks and other disclosures discussed in our reports filed with the U.S. Securities and Exchange Commission from time to time, which attempt to advise interested parties of the factors that affect our business. Except to the extent required by law, we do not update or revise any forward - looking statements to reflect events or circumstances occurring after the date hereof. These risks and uncertainties include, but are not limited to: trends in healthcare costs and utilization rates; reduced enro llm ent; our ability to secure and implement sufficient premium rates; the impact of large scale medical emergencies, such as public health epidemics and pandemics, and other catas tro phes; the impact of new or changes in existing federal, state and international laws or regulations, including laws and regulations impacting healthcare, insurance, pharmac y s ervices and other diversified products and services, or their enforcement or application; the impact of cyber - attacks or other privacy or data security incidents or our failure to c omply with any privacy, data or security laws or regulations, including any investigations, claims or litigation related thereto; failure to effectively maintain and moderniz e o ur information systems, or failure of our information systems or technology, including artificial intelligence, to operate as intended; failure to effectively maintain the availab ili ty and integrity of our data; changes in economic and market conditions, as well as regulations that may negatively affect our liquidity and investment portfolios; competitive pre ssu res and our ability to adapt to changes in the industry and develop and implement strategic growth opportunities; risks and uncertainties regarding Medicare and Medicaid programs, i ncl uding those related to non - compliance with the complex regulations imposed thereon; our ability to maintain and achieve improvement in Centers for Medicare and Medicaid Se rvices Star Ratings and other quality scores and funding risks with respect to revenue received from participation therein; a negative change in our healthcare product mi x; costs and other liabilities associated with litigation, government investigations, audits or reviews; our ability to contract with providers on cost - effective and competitive terms; ri sks associated with providing healthcare, pharmacy and other diversified products and services, including medical malpractice or professional liability claims and non - compliance b y any party with the pharmacy services agreement between us and CaremarkPCS Health, L.L.C.; the effects of any negative publicity or sentiment related to the health benefits industry in general or us i n particular; risks associated with mergers, acquisitions, joint ventures and strategic alliances; possible impairment of the value of our intangible assets if future results do not adequately support goodwill and other intangible assets; possible restrictions in the payment of dividends from our subsidiaries and increases in required mi nim um levels of capital; our ability to repurchase shares of our common stock and pay dividends on our common stock due to the adequacy of our cash flow and earnings and other conside rat ions; the potential negative effect from our substantial amount of outstanding indebtedness and the risk that increased interest rates or market volatility could impact o ur access to or further increase the cost of financing; a downgrade in our financial strength ratings; events that may negatively affect our licenses with the Blue Cross and Blue Shie ld Association; intense competition to attract and retain employees; risks associated with our international operations; and various laws and provisions in our governing documents tha t m ay prevent or discourage takeovers and business combinations.
Page 11
11 Non - GAAP Measures and Basis of Presentation This document references non - GAAP measures, including “Adjusted Diluted EPS,” “Adjusted Operating Expense Ratio,” “Adjusted Oper ating Gain,” “Adjusted Operating Margin,” “Adjusted Shareholders’ Net Income,” and “Adjusted Operating Expense”. These non - GAAP measures are intended to aid investors wh en comparing Elevance Health’s financial results among periods and are not intended to be alternatives to any measure calculated in accordance with GAAP. Reconciliati ons of these non - GAAP measures to the most directly comparable measures calculated in accordance with GAAP are available on slides 12 - 13 of this document. In addition to these non - GAAP measures, references are made to the measures “Operating Revenue,” “Operating Gain/Loss,” and “Ope rating Margin”. Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reportable segments, alloc ate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benef it expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets and gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the res ponsibility of operating segment management. Each of these measures is provided to further aid investors in understanding and analyzing Elevance Health’s oper ati ng and financial results. A reconciliation of reportable segments operating gain to income before income tax expense is available on slide 12 of this document. Prior amoun ts may be grouped differently to conform to the current presentation.
Page 12
12 12 GAAP Reconciliation — Shareholders’ Net Income and Shareholders’ Earnings Per Diluted Share Three Months Ended Sep 30 Nine Months Ended Sep 30 (In millions, except per share data) 2026 2025 Change 2026 2025 Change Shareholders' net income $1,365 $1,189 14.8% $4,592 $5,115 (10.2%) Add / (Subtract): Amortization of other intangible assets 106 162 328 464 Net losses on financial instruments 48 1 182 596 Transaction and integration related costs 1 42 49 133 182 Business optimization program charges 1 18 (4) 147 (4) Litigation and settlement expenses 1 8 4 26 19 Accrual related to CMS notice 1,2 — — 935 — Tax impact of non - GAAP adjustments (67) (52) (427) (307) Net adjustment items 155 160 1,324 950 Adjusted shareholders' net income $1,520 $1,349 12.7% $5,916 $6,065 (2.5%) Shareholders’ earnings per diluted share $6.27 $5.32 17.9% $21.01 $22.67 (7.3%) Add / (Subtract): Amortization of other intangible assets 0.49 0.72 1.50 2.06 Net losses on financial instruments 0.22 — 0.83 2.64 Transaction and integration related costs 1 0.19 0.22 0.61 0.81 Business optimization program charges 1 0.08 (0.02) 0.67 (0.02) Litigation and settlement expenses 1 0.04 0.02 0.12 0.08 Accrual related to CMS notice 1,2 — — 4.28 — Tax impact of non - GAAP adjustments (0.31) (0.23) (1.95) (1.36) Net adjustment items 0.72 0.71 6.05 4.21 Adjusted shareholders’ earnings per diluted share 3 $6.99 $6.03 15.9% $27.06 $26.88 0.7% Three Months Ended Sep 30 Nine Months Ended Sep 30 (In millions) 2026 2025 Change 2026 2025 Change Income before income tax expense $1,794 $1,406 27.6% $6,035 $6,495 (7.1%) Net investment income (1,037) (625) (2,506) (1,701) Net losses on financial instruments 48 1 182 596 Interest expense 358 351 1,079 1,036 Amortization of other intangible assets 106 162 328 464 Reportable segments operating gain $1,269 $1,295 (2.0%) $5,118 $6,890 (25.7%) 1. Adjustment item resides in the Corporate & Other reportable segment 2. Adjustment item represents the Company's current best estimate of the identified potential exposure for certain historical Me dic are Advantage risk adjustment data related to the CMS notice to the Company dated February 27, 2026. 3. Totals may not foot due to rounding.
Page 13
13 13 GAAP Reconciliation — Operating Gain, Operating Expense Ratio, and 2026 Outlook (In millions) Operating expense $5,752 $5,272 9.1% $17,629 $15,569 13.2% Add / (Subtract): Transaction and integration related costs 1 (42) (49) (133) (182) Business optimization program charges 1 (18) 4 (147) 4 Litigation and settlement expenses 1 (8) (4) (26) (19) Accrual related to CMS notice 1,2 — — (935) — Net adjustment Items (68) (49) (1,241) (197) Adjusted operating expense $5,684 $5,223 8.8% $16,388 $15,372 6.6% Operating revenue $50,440 $50,087 0.7% $149,760 $148,273 1.0% Operating expense ratio 11.4% 10.5% 90 bp 11.8% 10.5% 130 bp Adjusted operating expense ratio 11.3% 10.4% 90 bp 10.9% 10.4% 50 bp Three Months Ended Sep 30 Nine Months Ended Sep 30 (In millions) 2026 2025 Change 2026 2025 Change Reportable segments operating gain $1,269 $1,295 (2.0%) $5,118 $6,890 (25.7%) Add / (Subtract): Transaction and integration related costs 1 42 49 133 182 Business optimization program charges 1 18 (4) 147 (4) Litigation and settlement expenses 1 8 4 26 19 Accrual related to CMS notice 1,2 — — 935 — Net adjustment Items 68 49 1,241 197 Reportable segments adjusted operating gain $1,337 $1,344 (0.5%) $6,359 $7,087 (10.3%) Full Year 2026 Outlook Shareholders’ earnings per diluted share At least $22.00 Add / (Subtract): Accrual related to CMS notice 1,2 $4.28 Amortization of other intangible assets 3 $2.02 Net losses on financial instruments 3 $1.16 Transaction and integration related costs 1,3 $0.91 Business optimization program charges 1 $0.67 Litigation and settlement expenses 1,3 $0.16 Tax impact of non - GAAP adjustments 3 Approximately ($2.20) Net adjustment items $7.00 Adjusted shareholders’ earnings per diluted share At least $29.00 1. Adjustment item resides in the Corporate & Other reportable segment. 2. Adjustment item represents the Company's current best estimate of the identified potential exposure for certain historical Me dic are Advantage risk adjustment data related to the CMS notice to the Company dated February 27, 2026. 3. Adjustment item represents the midpoint of a projected range and serves as the estimated full year adjustment amount. Operating revenue $50,440 $50,087 0.7% $149,760 $148,273 1.0% Operating margin 2.5% 2.6% (10) bp 3.4% 4.6% (120) bp Adjusted operating margin 2.7% 2.7% 0 bp 4.2% 4.8% (60) bp
Page 14
14 14 Reportable Segment & Health Benefits Revenue Details Three Months Ended Sep 30 Nine Months Ended Sep 30 (In millions, Unaudited) 2026 2025 Change 2026 2025 Change Operating Revenue Health Benefits $43,357 $42,246 2.6% $128,567 $125,259 2.6% CarelonRx 11,599 10,997 5.5% 33,449 31,756 5.3% Carelon Services 7,708 7,324 5.2% 23,048 21,301 8.2% Corporate & Other 6 149 (96.0%) 16 546 (97.1%) Eliminations (12,230) (10,629) NM 6 (35,320) (30,589) NM 6 Total Operating Revenue 1 $50,440 $50,087 0.7% $149,760 $148,273 1.0% Operating Gain (Loss) Health Benefits $436 $601 (27.5%) $3,489 $4,378 (20.3%) CarelonRx 616 556 10.8% 1,780 1,694 5.1% Carelon Services 292 219 33.3% 1,128 1,110 1.6% Corporate & Other 2,3 (75) (81) NM 6 (1,279) (292) NM 6 Total Operating Gain 1,4 $1,269 $1,295 (2.0%) $5,118 $6,890 (25.7%) Operating Margin Health Benefits 1.0% 1.4% (40) bp 2.7% 3.5% (80) bp CarelonRx 5.3% 5.1% 20 bp 5.3% 5.3% 0 bp Carelon Services 3.8% 3.0% 80 bp 4.9% 5.2% (30) bp Total Operating Margin 1 2.5% 2.6% (10) bp 3.4% 4.6% (120) bp 1. See “Basis of Presentation” on slide 11 herein. 2. Operating Gain for the three and nine months ended September 30, 2026 included $42 and $133 million, respectively, of transac tio n and integration related costs, $18 and $147 million, respectively, of business optimization charges, and $8 and $26 million , r espectively, of litigation and settlement expenses. Operating Gain for the nine months ended September 30, 2026 also included $935 million for the Company's current best estimate of the i den tified potential exposure for certain historical Medicare Advantage risk adjustment data related to the CMS notice to the Com pan y dated February 27, 2026. All adjustments for the three and nine month periods reside in the Corporate & Other reportable segment. 3. Operating Gain for the three and nine months ended September 30, 2025, included $49 and $182 million, respectively, of transa cti on and integration related costs, ($4) and ($4) million, respectively, of business optimization charges, and $4 and $19 milli on, respectively, of litigation and settlement expenses. All adjustments for the three and nine month periods reside in the Corporate & Other reportable segment. 4. Operating Gain for the three and nine months ended September 30, 2026, and September 30, 2025, include items excluded from ad jus ted shareholders' net income. See "GAAP Reconciliation" on pages 12 and 13 herein. 5. The Individual business, including ACA products, is reported as part of Commercial Operating Revenue. 6. "NM" = calculation not meaningful. Elevance Health has four reportable segments: Health Benefits (comprised of Individual, Employer Group risk - based, Employer Grou p fee - based, BlueCard®, Medicare, Medicaid, and Federal Employee Program businesses); CarelonRx; Carelon Services; and Corporate & Other (comprised of businesses that do not individually meet the qu ant itative thresholds for an operating division as well as corporate expenses not allocated to our other reportable segments). Three Months Ended Sep 30 Nine Months Ended Sep 30 (In millions, Unaudited) 2026 2025 Change 2026 2025 Change Health Benefits Operating Revenue Commercial $13,343 $12,849 3.8% $40,142 $37,654 6.6% Individual 5 2,514 2,358 6.6% 7,774 7,047 10.3% Medicare 11,229 11,138 0.8% 33,182 33,990 (2.4%) Medicaid 14,979 14,166 5.7% 43,703 42,120 3.8% Federal Employee Program 3,806 4,093 (7.0%) 11,540 11,495 0.4% Total Health Benefits Operating Revenue 1 $43,357 $42,246 2.6% $128,567 $125,259 2.6%