Elevance Health Reports Fourth Quarter and Full Year 2025 Results; Sets Full Year 2026 Outlook
4Q 2025 operating revenue of $49.3 billion; FY 2025 of $197.6 billion4Q 2025 diluted EPS1 of $2.47; adjusted diluted EPS2 of $3.33FY 2025 diluted EPS1 of $25.21; adjusted diluted EPS2 of $30.29Projected FY 2026 GAAP diluted EPS1 to be at least $22.30Projected FY 2026 adjusted diluted EPS2 to be at least $25.50Returned $4.1 billion of capital to shareholders in 2025Reaffirming long-term earnings algorithm; recalibrating segment margin targetsElevance Health, Inc. (NYSE:ELV) reported fourth quarter and full year 2025 results."Elevance Health delivered fourth quarter results in line with our outlook, reflecting disciplined execution in a dynamic environment. As we enter 2026, our focus is on advancing affordability and making healthcare easier to access and navigate for the members we serve. Through pricing discipline and targeted investments, we are strengthening the earnings power of our diversified platform and remain confident in our ability to return to at least 12% adjusted EPS growth in 2027."Gail K. BoudreauxPresident and Chief Executive Officer1.Earnings per diluted share ("EPS").2.Refer to GAAP reconciliation tables herein for reconciliation of GAAP to adjusted measures. Elevance Health Consolidated Enterprise Highlights (Unaudited) (In billions)Three Months Ended Twelve Months Ended December 31,2025 December 31,2024 December 31,2025 December 31,2024 Operating Revenue1$49.3 $45.0 $197.6 $175.2 Operating Gain1,2$0.3 $0.7 $7.2 $7.9 Adjusted Operating Gain1,3$0.4 $0.8 $7.5 $9.3 Operating Margin10.6% 1.5% 3.6% 4.5% Adjusted Operating Margin1,30.8% 1.9% 3.8% 5.3% 1.See "Basis of Presentation."2.Operating Gain for the three and twelve months ended December 31, 2025, and December 31, 2024, includes items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation."3.Adjusted Operating Gain for the three and twelve months ended December 31, 2025, and December 31, 2024, excludes items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation."Operating revenue was $49.3 billion in the fourth quarter of 2025, an increase of $4.3 billion, or 10 percent compared to the prior year quarter. Operating revenue was $197.6 billion in 2025, an increase of $22.4 billion, or 13 percent. The increase in revenue for the quarter and year was driven by higher premium yields in our Health Benefits segment, contributions from acquisitions, and growth in Medicare Advantage membership, partially offset by membership attrition in our Medicaid business.The benefit expense ratio was 93.5 percent in the fourth quarter, an increase of 110 basis points compared to the prior year period, reflecting higher medical cost trend primarily in our Affordable Care Act health plans and heightened Medicare Part D seasonality driven by Inflation Reduction Act changes. For the year, our benefit expense ratio was 90.0 percent, an increase of 150 basis points year over year, driven by elevated medical cost trends.Days in Claims Payable was 41.3 days as of December 31, 2025, a decrease of 0.1 days from September 30, 2025, and a decrease of 1.9 days compared to December 31, 2024.The operating expense ratio was 11.0 percent in the fourth quarter and 10.6 percent for the full year. On an adjusted basis, the corresponding operating expense ratios were 10.8 percent and 10.5 percent. We maintained expense discipline while investing to support and strengthen our workforce, scale Carelon's capabilities, and accelerate technology adoption across the enterprise.Cash Flow & Balance SheetOperating cash flow was $4.3 billion in 2025, approximately 0.8 times GAAP net income. As of December 31, 2025, cash and investments at the parent company totaled approximately $2.6 billion.During the fourth quarter of 2025, the Company repurchased 1.4 million shares of its common stock for $471 million, at a weighted average price of $335.64, and paid a quarterly dividend of $1.71 per share, representing a distribution of cash totaling $377 million. As of December 31, 2025, the Company had approximately $6.7 billion of Board approved share repurchase authorization remaining.Health Benefits is comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard®, Medicare, Medicaid, and Federal Employee Program businesses. Health Benefits Reportable Segment Highlights (Unaudited) (In billions)Three Months Ended Twelve Months Ended December 31,2025 December 31,2024 December 31,2025 December 31,2024 Operating Revenue1$41.8 $37.6 $167.1 $150.3 Operating Gain1,2($0.2) $0.2 $4.2 $6.2 Adjusted Operating Gain1,3($0.2) $0.2 $4.2 $6.3 Operating Margin1(0.5%) 0.6% 2.5% 4.2% Adjusted Operating Margin1(0.5%) 0.6% 2.5% 4.2% 1.See "Basis of Presentation."2.Operating Gain for the three and twelve months ended December 31, 2024 includes items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation."3.Adjusted Operating Gain for three and twelve months ended December 31, 2024 excludes $16 and $66 million, respectively, of 2024 business dispositions and related items adjusted out of adjusted shareholders' net income for the Health Benefits segment.Health Benefits segment operating revenue was $41.8 billion in the fourth quarter of 2025, an increase of $4.3 billion, or 11 percent compared to the fourth quarter of 2024. Operating revenue was $167.1 billion in 2025, an increase of $16.8 billion, or 11 percent. The increases for the quarter and year were driven primarily by higher premium yields, contributions from acquisitions, and growth in our Medicare Advantage membership, partially offset by membership attrition in our Medicaid business.The Company reported an adjusted operating loss of $0.2 billion in the fourth quarter of 2025 and an adjusted operating gain of $4.2 billion for the full year. Adjusted operating results in both periods were impacted primarily by higher medical cost trend.Medical membership totaled approximately 45.2 million as of December 31, 2025, a decrease of 0.5 million, or 1 percent, year over year, driven by attrition in our Medicaid business.Carelon is comprised of CarelonRx and Carelon Services. Carelon Reportable Segment Highlights (Unaudited) (In billions)Three Months Ended Twelve Months Ended December 31,2025 December 31,2024 December 31,2025 December 31,2024 Operating Revenue1,2$18.7 $14.7 $71.7 $53.9 Operating Gain1,3$0.6 $0.6 $3.4 $2.9 Adjusted Operating Gain1,4,5$0.6 $0.6 $3.4 $3.1 Operating Margin13.1% 3.9% 4.7% 5.4% Adjusted Operating Margin13.3% 4.4% 4.8% 5.8% 1.See "Basis of Presentation."2.Operating revenue for the three and twelve months ended December 31, 2024 includes $0.2 and $0.8 billion, respectively, of revenue related to 2024 business dispositions and related items that have been excluded from adjusted operating gain.3.Operating Gain for the three and twelve months ended December 31, 2025, and December 31, 2024, includes items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation."4.Adjusted Operating Gain for three and twelve months ended December 31, 2025 excludes $38 million of 2025 business dispositions and related items adjusted out of adjusted shareholders' net income for the Carelon segment.5.Adjusted Operating Gain for the three and twelve months ended December 31, 2024 excludes $74 and $215 million, respectively, of 2024 business dispositions and related items adjusted out of adjusted shareholders' net income for the Carelon segment.Operating revenue for Carelon was $18.7 billion in the fourth quarter of 2025, an increase of $3.9 billion, or 27 percent compared to the prior year period, driven by growth in CarelonRx product revenue, the expansion of Carelon Services risk-based solutions, and the acquisition of CareBridge. Operating revenue was $71.7 billion in 2025, an increase of $17.8 billion, or 33 percent.Adjusted operating gain for Carelon totaled $0.6 billion in the fourth quarter, approximately flat year over year. On a full year basis, adjusted operating gain was $3.4 billion in 2025, an increase of $0.3 billion, or 10 percent, driven by improved CarelonRx performance and growth in Carelon Services risk-based solutions.Quarterly DividendOn January 27, 2026, the Audit Committee of the Company's Board of Directors declared a first quarter 2026 dividend to shareholders of $1.72 per share. The first quarter dividend is payable on March 25, 2026 to shareholders of record at the close of business on March 10, 2026.About Elevance HealthElevance Health is a lifetime, trusted health partner whose purpose is to improve the health of humanity. The company supports consumers, families, and communities across the entire healthcare journey – connecting them to the care, support, and resources they need to lead better lives. Elevance Health's companies serve approximately 104 million consumers through a diverse portfolio of industry-leading medical, pharmacy, behavioral, clinical, home health, and complex care solutions. For more information, please visit www.elevancehealth.com or follow us @ElevanceHealth on X and Elevance Health on LinkedIn.Conference Call and WebcastManagement will host a conference call and webcast today at 8:30 a.m. Eastern Standard Time ("EST") to discuss the company's fourth quarter and full year 2025 results and 2026 outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:888-947-9963 (Domestic)888-566-0046 (Domestic Replay)312-470-0178 (International)203-369-3677 (International Replay)The access code for today's conference call is 3972058. There is no access code for the replay. The replay will be available from 11:30 a.m. EST today, until the end of the day on February 27, 2026. The call will also be available through a live webcast at www.elevancehealth.com under the "Investors" link. A webcast replay will be available following the call.Basis of PresentationOperating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets, gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Refer to the GAAP reconciliation tables.Operating margin is defined as operating gain divided by operating revenue.Elevance HealthEarnings Release Financial Schedules and Supplementary InformationQuarter & Year Ended December 31, 2025Membership and Other MetricsQuarterly & Full Year Consolidated Statements of IncomeCondensed Consolidated Balance SheetCondensed Consolidated Statement of Cash FlowsSupplemental Financial Information - Reportable SegmentsSupplemental Financial Information - Reconciliation of Medical Claims PayableReconciliation of Non-GAAP Financial MeasuresFinancial Guidance SummaryMembership Guidance SummaryElevance HealthMembership and Other Metrics(Unaudited) Change fromMedical Membership (in thousands)December 31,2025 December 31,2024 September 30,2025 December 31,2024 September 30,2025Individual1,307 1,287 1,354 1.6% (3.5%)Employer Group Risk-Based3,617 3,713 3,616 (2.6%) —%Commercial Risk-Based4,924 5,000 4,970 (1.5%) (0.9%)BlueCard®6,509 6,630 6,394 (1.8%) 1.8%Employer Group Fee-Based20,583 20,569 20,608 0.1% (0.1%)Commercial Fee-Based27,092 27,199 27,002 (0.4%) 0.3%Medicare Advantage2,230 2,066 2,245 7.9% (0.7%)Medicare Supplement882 891 877 (1.0%) 0.6%Total Medicare3,112 2,957 3,122 5.2% (0.3%)Medicaid8,500 8,917 8,645 (4.7%) (1.7%)Federal Employee Program1,604 1,661 1,630 (3.4%) (1.6%)Total Medical Membership45,232 45,734 45,369 (1.1%) (0.3%) Other Metrics (in millions) CarelonRx Quarterly Adjusted Scripts88.5 82.9 85.0 6.8% 4.1%Carelon Services Consumers Served91.8 101.1 97.6 (9.2%) (5.9%) Elevance HealthConsolidated Statements of Income(Unaudited)(In millions, except per share data)Three Months EndedDecember 31 Twelve Months EndedDecember 31 2025 2024 Change 2025 2024 Change Revenues Premiums$40,690 $36,245 12.3% $164,639 $144,166 14.2%Product revenue 6,460 6,714 (3.8%) 24,470 22,630 8.1%Service fees 2,161 2,030 6.5% 8,475 8,408 0.8%Total operating revenue 49,311 44,989 9.6% 197,584 175,204 12.8%Net investment income 493 527 (6.5%) 2,194 2,051 7.0%Net losses on financial instruments (57) (74) NM (653) (445) NMGain on sale of business — — NM — 201 NMTotal revenues 49,747 45,442 9.5% 199,125 177,011 12.5%Expenses Benefit expense 38,065 33,500 13.6% 148,223 127,567 16.2%Cost of products sold 5,522 6,012 (8.2%) 21,178 19,750 7.2%Operating expense 5,415 4,804 12.7% 20,984 20,025 4.8%Interest expense 366 340 7.6% 1,402 1,185 18.3%Amortization of other intangible assets 164 180 (8.9%) 628 580 8.3%Total expenses 49,532 44,836 10.5% 192,415 169,107 13.8% Income before income tax expense 215 606 (64.5%) 6,710 7,904 (15.1%) Income tax expense (benefit) (331) 193 NM 1,049 1,933 (45.7%)Net income 546 413 32.2% 5,661 5,971 (5.2%) Net loss attributable to noncontrolling interests 1 5 NM 1 9 NMShareholders' net income$547 $418 30.9% $5,662 $5,980 (5.3%)Shareholders' earnings per diluted share$2.47 $1.81 36.5% $25.21 $25.68 (1.8%)Diluted shares 221.8 231.1 (4.0%) 224.6 232.9 (3.6%) Benefit expense as a percentage of premiums 93.5% 92.4% 110 bp 90.0% 88.5% 150 bpOperating expense as a percentage of total operating revenue 11.0% 10.7% 30 bp 10.6% 11.4% (80) bpIncome before income tax expense as a percentage of total revenue 0.4% 1.3% (90) bp 3.4% 4.5% (110) bpFull story available on Benzinga.com
