Elevance Health, Inc. 2026 Q1 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Elevance Health, Inc. is a leading U.S. health insurer serving approximately 45.4 million medical members as of the period end. The company operates through four reportable segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. It is a large accelerated filer and an independent licensee of the Blue Cross and Blue Shield Association.
Key Financial Metrics
| Metric (in millions, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Operating Revenue | $49,494 | $48,765 |
| Total Revenues | $50,181 | $48,891 |
| Net Income | $1,760 | $2,184 |
| Shareholders' Net Income | $1,764 | $2,183 |
| Diluted EPS | $8.00 | $9.61 |
| Operating Cash Flow | $4,332 | $1,017 |
| Cash and Cash Equivalents | $9,657 | $9,491 |
| Total Debt (Short-term + Long-term) | $31,842 | $32,046 |
| Debt-to-Capital Ratio | 42.0% | 42.1% |
| Benefit Expense Ratio | 86.8% | 86.4% |
| Operating Expense Ratio | 12.8% | 10.9% |
Material Changes vs. Prior Period
- Revenue Growth: Total operating revenue increased 1.5% to $49.49 billion, driven by premium rate increases in the Health Benefits segment and growth in CarelonRx product revenues, partially offset by membership attrition.
- Profitability Decline: Shareholders' net income decreased 19.2% to $1.76 billion. This was primarily due to decreased operating gain across all lines of business and increased interest expense.
- Expense Increases: Operating expenses rose 19.4% to $6.33 billion. This increase was driven by a $935 million loss contingency accrual related to Medicare Advantage risk adjustment data resubmission and costs associated with the new Operating Model Transformation Program.
- Membership Trends: Total medical membership declined 0.9% to 45.4 million. Significant decreases occurred in Medicare Advantage (-15.8%) and Medicaid (-4.6%) due to eligibility redeterminations, partially offset by growth in Employer Group Fee-Based business (+3.2%).
- Cash Flow: Operating cash flow surged to $4.33 billion (up from $1.02 billion) primarily due to favorable working capital impacts.
Guidance, Outlook, Risks, and Unusual Items
- Operating Model Transformation: Management launched a 2026-2027 program to streamline operations and integrate AI. Q1 incurred $129 million in costs, primarily for personnel reductions.
- CMS Regulatory Action: The company received notice of intent from CMS to impose intermediate sanctions regarding Medicare Advantage risk adjustment data. An accrual of approximately $935 million was recorded. The company is contesting the action and has until July 31, 2026, to complete compliance steps to avoid sanctions.
- Legal Proceedings: The company is involved in the BCBSA Antitrust Litigation. A provider settlement of $666 million was recognized in Q3 2024. Follow-on cases remain pending.
- Regulatory Environment: The "One Big Beautiful Bill Act" (OBBBA) signed in July 2025 introduces changes to Medicaid redeterminations and work requirements. The Consolidated Appropriations Act of 2026 includes pharmacy benefit manager reforms effective 30 months post-enactment.
- Capital Allocation: The company repurchased $1.12 billion of common stock in Q1 and paid dividends of $1.72 per share. Approximately $5.57 billion remains authorized for future repurchases.
Key Facts for Investor Verification
- Verify the potential financial impact of the CMS intermediate sanctions and the range of the loss contingency liability (estimated between $350 million less to $565 million more than the current $935 million accrual).
- Monitor the execution and cost trajectory of the 2026-2027 Operating Model Transformation Program, which includes workforce reductions and IT modernization.
- Assess the sustainability of medical cost trends, particularly in the Medicaid and Individual markets, which are driving elevated expense ratios.
- Review the status of follow-on antitrust litigation cases that opted out of the BCBSA subscriber and provider settlements.
- Track membership attrition in Medicare Advantage and Medicaid segments resulting from federal and state eligibility redeterminations.