By Sneha S K and Sriparna Roy
April 22 (Reuters) – Elevance Health topped quarterly earnings estimate and raised 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.
Elevance, which relies more on commercial and Medicaid plans for low-income Americans, has been exiting underperforming markets for Medicare Advantage programs for older adults.
The company reported a medical loss ratio, the percentage of premiums spent on medical care, of 86.8% for the first quarter, while analysts expected 87.01%, according to data compiled by LSEG.
Elevance has laid out a strong and conservative framework for the year, Cantor analyst Sarah James said, adding that while the profit beat was largely expected, the 2026 story remains attractive.
The insurer expects 2026 adjusted per-share profit to be at least $26.75, compared with at least $25.50 forecast earlier, and analysts’ estimate of $25.73.
“While it is still early in the year, the trends we are seeing give us increased confidence in the trajectory of the business,” CEO Gail Boudreaux said on a call with analysts.
Boudreaux said Elevance is using AI to lower costs, allowing it to see cost trends faster and take network action more quickly.
The company 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.
First-quarter adjusted profit per share of $12.58 beat the estimate of $10.82. It includes about $1 per share of non-recurring net investment income.
That came even as policy shifts in the U.S. and tight state funding have intensified stress on Medicaid plans. Elevance shares gained 3%.
The company recorded a $935 million accrual related to a sanction notice from the Centers for Medicare & Medicaid Services, which analysts said was within investor expectations.
It has also initiated measures to submit data to the agency, and expects the sanctions will not take effect once those steps are completed.
(Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Shilpi Majumdar)
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