Event: Wednesday, July 15, 2026
Focus: Whether improving claims trends can sustain the raised 2026 outlook—and whether the market has already priced in much of the good news.
Elevance enters 2Q with clear operating momentum but a meaningfully higher bar. The company exceeded expectations in 1Q, raised its full-year adjusted EPS outlook to at least $26.75 from at least $25.50, and reaffirmed a goal of at least 12% adjusted EPS growth in 2027 off a stated $25.75 normalized 2026 base. Management’s own 1Q framework implied that 2Q EPS should represent roughly 23% of the revised annual guide—about $6.15 per share—so the primary question is less about a quarterly beat in isolation and more about the durability of medical-cost performance through the second half.
The shares closed at $426.83 on July 14, up approximately 20.5% year to date and 30.1% from the April 22 1Q-results date. That recovery reflects investor confidence in the reset Medicare Advantage portfolio, improving claims experience, disciplined commercial pricing, and capital return. It also means the stock likely needs confirmation that first-quarter favorable trends were not merely timing- or seasonality-driven.
| Key item | 1Q26 result / outlook | Why it matters for 2Q |
|---|---|---|
| Adjusted EPS | $12.58, +5.1% Y/Y | Included approximately $1/share of non-recurring investment income and ACA timing benefits. Investors will want to see quality of earnings normalize as expected. |
| FY26 adjusted EPS guidance | At least $26.75 | Raised by $1.25 in 1Q; $1 of the increase was non-recurring investment income, while $0.25 reflected underlying operating improvement. |
| Implied 2Q EPS | Roughly $6.15 | Management said 2Q should be approximately 23% of FY guidance; this is the most useful disclosed earnings reference point going into the print. |
| Benefit expense ratio | 86.8%, +40 bps Y/Y | Better claims experience helped 1Q, but the 2Q result must support confidence in the full-year medical-cost assumptions. |
| Adjusted operating expense ratio | 10.5%, -20 bps Y/Y | Expense discipline is a favorable offset to still-elevated medical trend. |
| Medicaid outlook | Approx. (1.75%) operating margin for FY26 | This remains the weakest major business and the largest execution risk. |
| Medicare Advantage outlook | At least 2% operating margin for FY26 | Repositioning actions are working so far; sustaining that recovery is essential to the equity story. |
| Operating cash flow | FY26 target of at least $5.5B | 1Q operating cash flow was a strong $4.3B, though aided by working-capital dynamics. |
| Capital return | At least $2.3B of 2026 buybacks targeted | ELV repurchased $1.1B of stock in 1Q and had $5.6B of authorization remaining at quarter-end. |
In 1Q, Elevance described about $0.45/share of core operating outperformance: roughly two-thirds stemmed from better underlying claims experience and one-third from ACA timing. A milder-than-assumed flu season contributed roughly $0.10/share, while the bronze-plan mix in ACA deferred some expected costs into the back half of the year.
That sets up an important quality-of-earnings test for 2Q:
The key nuance: ELV does not need a lower medical-cost environment to support the guide. Management has said its outlook assumes a prudent trend backdrop, with operational actions expected to do much of the work. Investors should test whether that assertion still holds after another quarter of claims maturation.
Medicaid is expected to be ELV’s trough business in 2026. In 1Q, results were slightly better than management expected, but the company retained its forecast for an approximately negative 1.75% full-year operating margin. Rates were described as near mid-single-digit increases, but still somewhat below the underlying medical-cost trend.
For 2Q, watch for:
Management has framed 2026 as the Medicaid margin trough, with improved state rate alignment expected in 2027. That makes 2Q commentary on rate negotiations and the timing of membership attrition potentially more important than the absolute quarterly result.
ELV deliberately shrank and repositioned its Medicare Advantage portfolio; MA membership was down 15.8% year over year at the end of 1Q. The trade-off is lower membership in exchange for improved margin quality, and management is targeting at least a 2% MA operating margin in 2026.
The 2Q call should address whether:
A maintained or improved MA margin outlook would reinforce the thesis that ELV has made the necessary portfolio decisions after the sector’s recent margin pressure. Any backtracking would be particularly problematic given the stock’s recovery.
Individual ACA enrollment ended 1Q at 1.424 million, and management said it expected approximately 1.2 million members at the end of 2Q, ahead of its initial view. Higher bronze-plan enrollment helped first-quarter earnings because those plan designs defer more member costs into later periods.
The issue for investors is not simply enrollment growth; it is risk-pool quality and margin emergence:
A healthy ACA update supports premium stability and commercial growth. But it should not be mistaken for a permanent first-half margin tailwind.
Carelon revenue grew 7.9% year over year in 1Q, led by Carelon Services risk-based solutions and CarelonRx product revenue. Yet combined Carelon operating gain declined modestly, reflecting lower affiliated plan membership and investment in risk-based capabilities.
The long-term narrative remains attractive: integrated medical, pharmacy, behavioral health, home care, and clinical services could differentiate ELV in commercial selling and reduce total medical costs. However, 2Q should show whether the company can move from revenue growth and investment toward incremental margin conversion.
Key items to watch:
The largest discrete uncertainty is the CMS notice related to historical Medicare Advantage risk-adjustment data. ELV recorded a $935 million accrual in 1Q, or $4.24 per share, for its current estimate of potential exposure related to data from 2015 through April 2, 2023.
The company has until July 31, 2026 to complete CMS-required compliance steps intended to avoid intermediate sanctions, according to its 1Q filing. ELV stated that the ultimate liability could range from approximately $585 million below the recorded accrual to $565 million above it.
For the 2Q call, investors should look for:
A positive procedural update could remove an important valuation overhang. Conversely, ambiguity, a higher accrual, or a suggestion that sanctions remain possible would likely overshadow an otherwise solid operational quarter.
At the July 14 close of $426.83, ELV trades at roughly 16.6x the company’s stated $25.75 normalized 2026 earnings baseline used for its 2027 growth framework. That is not an excessive multiple for a company capable of returning to double-digit EPS growth, but it does leave less room for execution mistakes than was the case earlier in the year.
The market’s likely focus is therefore:
ELV’s 2Q report is principally a validation quarter. The company has already reset its Medicare portfolio, raised 2026 guidance, outlined a credible 2027 earnings-growth path, and benefited from a sharply improved stock price. To sustain that momentum, it needs to demonstrate that medical-cost improvement is repeatable, Medicaid losses are contained and nearing a trough, Carelon’s investments have a path to profit conversion, and the CMS matter remains finite and manageable.
Most important datapoint: not the headline EPS result, but whether management can credibly preserve its full-year earnings floor and 2027 growth algorithm after incorporating more mature 2026 claims data.