01—Abstract
Summary
Summary of the 10-Q filed April 22, 2026. Cited figures are marked; the original filing is the authoritative source.
Elevance Health, Inc. reported its financial results for the quarter ended March 31, 2026.
Total revenues increased by 2.6% year-over-year to $50.18 billiona, driven by premium rate increases and growth in CarelonRx product revenues, partially offset by membership attrition. However, shareholders' net income saw a significant decrease of 19.2% to $1.76 billion, resulting in diluted EPS of $8.00, down from $9.61 in the prior year's quarter. This decline was primarily attributed to higher medical and operating costs across business lines, particularly a substantial loss contingency accrual related to Medicare Advantage risk adjustment data, and increased corporate expenses associated with an operating model transformation program.
The company experienced a decrease in total medical membership by 0.9%, largely due to Medicaid eligibility redeterminations and declines in Medicare Advantage and FEP programs. Despite these challenges, the company maintained strong operating cash flow, which significantly increased to $4.33 billionb, largely due to favorable working capital movements. Elevance Health continued its capital return program through dividends and share repurchases, demonstrating a commitment to shareholder value.
02—Key points
Key Highlights
- Total revenues increased by 2.6% to $50.18 billion, driven by premium increases and CarelonRx growth.
- Shareholders' net income decreased by 19.2% to $1.76 billion, with diluted EPS falling to $8.00.
- Total medical membership declined by 0.9%, primarily due to Medicaid redeterminations and lower Medicare Advantage enrollment.
- Operating cash flow significantly increased by 325.7% to $4.33 billion, driven by favorable working capital changes.
- A significant loss contingency accrual of approximately $935 million was recorded for Medicare Advantage risk adjustment data.
- The company incurred $129 million in costs for its Operating Model Transformation Program in Q1 2026.
- Elevance Health returned $1.12 billion to shareholders through common stock repurchases and paid $376 million in dividends during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Elevance Health, Inc. kept $0.04.
- Revenue$50.18B100.0%
- Cost of revenue−$5.46B10.9%
- Gross profit$44.72B89.1%
- Operating costs−$42.63B85.0%
- Operating income$2.09B4.2%
- Interest, other & tax−$326.0M0.6%
- Net income$1.76B3.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 22, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $50.18B$48.89B | +2.6% |
| Cost of Revenue | $5.46B$4.98B | +9.6% |
| Gross Profit | $44.72B$43.91B | +1.8% |
| SG&A Expenses | $6.33B$5.30B | +19.4% |
| Operating Income | $2.09B$3.17B | −34.2% |
| Net Income | $1.76B$2.18B | −19.4% |
| EPS (Basic) | $8.03$9.64 | −16.7% |
| EPS (Diluted) | $8.00$9.61 | −16.8% |
| Shares Outstanding (Basic) | 219.80M226.40M | −2.9% |
| Shares Outstanding (Diluted) | 220.40M227.20M | −3.0% |
05—Questions
Frequently Asked Questions
What is the primary driver for the decrease in shareholders' net income?
The primary driver for the decrease in shareholders' net income was higher medical and operating costs across various business lines. This included a significant loss contingency accrual of approximately $935 million related to the resubmission of certain Medicare Advantage risk adjustment data, as well as increased corporate expenses associated with the Operating Model Transformation Program. Additionally, decreased operating gain in all lines of business and increased interest expense contributed to the decline.
Why did total medical membership decline?
Total medical membership declined by 0.9%, primarily due to attrition in Medicaid membership resulting from eligibility redeterminations. Decreases were also observed in the Medicare Advantage and Federal Employee Program (FEP®) businesses. These were partially offset by an increase in the Employer Group Fee-Based business.
How did the company manage its cash flow during the quarter?
Elevance Health reported a significant increase in operating cash flow to $4.33 billion, up from $1.02 billion in the prior year's quarter. This increase was primarily driven by favorable working capital impacts. The company also continued to return capital to shareholders through $1.12 billion in common stock repurchases and $376 million in dividends.
What is the Operating Model Transformation Program, and what is its financial impact?
The Operating Model Transformation Program is a strategic initiative implemented in Q1 2026 to streamline decision-making, simplify organizational structures, and enhance technology use. The company incurred $129 million in costs during the first quarter of 2026, primarily for personnel-related charges like severance. These costs were recognized as operating expense in the Corporate & Other segment.
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