Elevance Health (NYSE:ELV) expects adjusted earnings per share to grow at least 12% in 2027 from its recently increased 2026 baseline of at least $26.75, Chief Financial Officer Mark Kaye said at a UBS conference.
Kaye said the outlook rests on improving health insurance margins, disciplined pricing and growth in the company’s Carelon pharmacy and clinical services businesses. The 2026 earnings baseline excludes nonrecurring items, he said.
“Margin recovery strengthens our current earnings base, while client growth and broader adoption of our capabilities expand that base over time,” Kaye said.
Medicaid Rates and Membership Remain Key Variables
Elevance continues to view 2026 as the low point for Medicaid margins and expects improvement in 2027, Kaye said. State rate updates have strengthened margins, but payments have not fully caught up with current medical costs, he said.
The company is encouraged by preliminary rates for January 2027 renewals, which incorporate medical cost experience from 2025 and 2026. Some states have included prospective adjustments for changes in members’ health needs as community engagement requirements take effect, Kaye said. Several states with July renewals have also indicated a willingness to consider mid-cycle adjustments in early 2027, though those discussions are preliminary.
Kaye said it was too early to provide a range of potential membership outcomes from the requirements. States are still determining verification processes, exemptions and the timing of eligibility reviews. The effects are concentrated in the Medicaid expansion population, which represents about 20% of Elevance’s total Medicaid membership, he said.
Elevance is also pursuing clinical interventions, network actions and program design changes to manage medical costs. Kaye said automation and simpler workflows could help the company manage operating expenses as membership changes.
Medicare Margins Improve; ACA Enrollment Expected to Decline
In Medicare Advantage, Kaye said Elevance remains on track for an operating margin of at least 2% in 2026, an improvement of more than 100 basis points from 2025. Pricing, benefit design and geographic changes were the primary drivers, while utilization has been broadly consistent with the company’s assumptions, he said.
The company expects further Medicare Advantage margin improvement in 2027 and is targeting growth among people eligible for both Medicare and Medicaid. Its long-term operating margin target for the business is 3% to 5%, though Kaye did not specify when Elevance expects to reach that range.
Elevance’s 2027 Medicare Advantage bids assume medical cost trends similar to those in 2026. Inpatient care and medical specialty pharmacy, particularly oncology, have been areas of elevated cost, Kaye said.
In the individual Affordable Care Act market, Elevance is planning for continued membership attrition in 2027. Kaye said the company expects the market to take more than one renewal cycle to stabilize following the expiration of enhanced subsidies. He said 2026 enrollment retention had been better than expected, particularly in lower-cost bronze plans, but the company is not assuming the risk pool has fully normalized.
Among commercial customers, Elevance expects some decline in fully insured membership in 2027, alongside growth in fee-based business. Kaye cited a strong national account selling season and employers’ interest in alternative funding arrangements.
Carelon Expansion and Capital Allocation
Kaye said Elevance sees opportunities to expand Carelon’s risk-based clinical programs and pharmacy relationships with both its own health plans and external customers. The company expects that growth to more than offset pressure from anticipated lower membership in affiliated health plans.
CareBridge, which provides care management services, serves more than 300,000 members and has demonstrated medical cost savings in the mid-teens across multiple payer relationships, Kaye said. He also cited opportunities in musculoskeletal and post-acute care.
Elevance is focused on integrating acquisitions and scaling existing capabilities this year, but expects to evaluate selective mergers and acquisitions more actively in 2027 and beyond, Kaye said. Potential priorities include capabilities for managing complex and chronic conditions, taking on risk in high-cost care and expanding its insights business.
Kaye said Elevance’s strategy remains centered on connecting health benefits with Carelon’s pharmacy and clinical services. The company also entered a new five-year agreement with CVS in the third quarter, providing continuity as it develops specialty pharmacy and dispensing capabilities, he said.
About Elevance Health (NYSE:ELV)
Elevance Health, Inc. is a U.S. health benefits and services company. Formerly known as Anthem, Inc., it adopted the Elevance Health name in 2022 while retaining the Anthem brand for many of its health plans. The company offers medical, pharmacy, dental, vision and behavioral health coverage, including plans for individuals and employers as well as programs serving Medicare and Medicaid members. Its services also include care management, pharmacy benefit services and other health-related capabilities through its Carelon business.
