By Sneha S K and Sriparna Roy April 22 (Reuters) – Elevance Health topped analysts’ estimate for quarterly earnings and raised its annual profit forecast on Wednesday, saying it has greater clarity on medical costs for the rest of the year as it leans on its efforts to keep them in check. Rising demand for […]
Health
Health insurer Elevance raises annual profit forecast on medical cost controls
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By Sneha S K and Sriparna Roy
April 22 (Reuters) – Elevance Health topped analysts’ estimate for quarterly earnings and raised its annual profit forecast on Wednesday, saying it has greater clarity on medical costs for the rest of the year as it leans on its efforts to keep them in check.
Rising demand for healthcare across government-backed plans has pushed up medical costs for the health insurance industry. To adapt, Elevance has been exiting markets where its Medicare Advantage programs for older adults have underperformed.
The company, which banks more on commercial and Medicaid plans for low-income Americans, reported a medical loss ratio of 86.8% for the first quarter. Analysts expected the ratio, which is the percentage of premiums spent on medical care, at 87.01%, according to data compiled by LSEG.
Elevance has laid out a strong and conservative framework for the year, said Cantor analyst Sarah James.
Investors had largely expected the profit beat, so the stock reaction could be muted, but the 2026 story remains attractive, James said.
Its shares were up 1.5% at $333 in premarket trading.
The company expects 2026 adjusted profit to be at least $26.75 per share, compared with at least $25.50 forecast earlier, and analysts’ estimate of $25.73.
Elevance had previously said it views 2026 as a year of “execution and repositioning” as it expects to return to at least 12% adjusted profit growth in 2027.
The company posted first-quarter adjusted profit of $12.58 per share, beating the estimate of $10.82. It includes about $1 per share of non-recurring net investment income.
“Our first-quarter results exceeded expectations, reflecting underlying business strength and improving claims experience,” said CEO Gail Boudreaux.
The upbeat results come even as policy shifts in the U.S. have intensified stress on Medicaid plans. As states re-determined Medicaid eligibility, many healthier members left the rolls, leaving a sicker population with greater medical needs. Tight state funding and changes in Medicaid work rules have added to the strain.
Elevance recorded a $935 million accrual related to a sanction notice from the Centers for Medicare & Medicaid Services, which analysts said was within investor expectations.
(Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Shilpi Majumdar)