# Elevance Q3 2026 Earnings: Most of the Guidance Raise Won't Recur — InvestMoat Research

_Elevance beat by more than $2 a share and raised its 2026 guide by $2, and analysts raised their targets. The recurring earnings baseline it promises 2027 growth from rose only $0.75, and at least 12% growth from there would take EPS back to about where it was in 2025._

_Published: October 24, 2026 · Last reviewed: October 24, 2026 · Canonical page: https://www.investmoat.com/research/elevance-q3-and-the-raise-that-wont-recur_
_Tags: Healthcare, Business Models_
_Covers: ELV, UNH, CVS, HUM_

## Summary

Elevance reported Q3 2026 on October 21: adjusted EPS of $6.99 against a consensus near $4.70, and full-year adjusted guidance raised to at least $29 from at least $27. The quarter included a $1.85 per share net non-operating benefit, and the earnings baseline Elevance uses for its 2027 target, which strips out non-recurring investment income, other non-operating items and one-time investments, rose only $0.75 to at least $26.75. Inside operations, Carelon's operating gain rose 17% and the insurance book's medical cost ratio improved 70 basis points, but the insurer's reported profit fell 27.5% on higher spending the baseline adds back. At least 12% growth from the baseline gets 2027 adjusted EPS to about $30, roughly the $30.29 Elevance earned in 2025, so I read the print as a modest recurring improvement dressed as a big raise.

## What would prove this wrong

If Elevance's Health Benefits segment reports an operating margin at least 50 basis points above the year-earlier quarter in both its Q4 2026 and Q1 2027 reports, the insurance book is recovering faster than its baseline implies, and my read that the 2026 raise was mostly one-off and the recurring gain modest is wrong.

_Status as of October 24, 2026: **holding**._

---

FY2026 adjusted EPS guide: ≥$29.00 · Recurring earnings baseline: ≥$26.75 · FY2025 adjusted EPS, actual: $30.29 · Elevance price: (live)

Elevance raised its 2026 guide by $2 a share on October 21, and by the end of the week at least nine brokers had raised their price targets. The figure I'd look at instead is the one Elevance grows from. Its earnings baseline, the 2026 number it promises to grow at least 12% from in 2027, rose $0.75, to at least $26.75. And 12% on $26.75 is about $30, which is roughly what Elevance earned in 2025.

The baseline, in the release's words, "excludes non-recurring net investment income and other non-operating items, as well as targeted one-time investments." So the gap between the $2 raise and the $0.75 is a net figure: one-off gains taken out, one-off spending added back, and a Q4 tax charge Elevance hasn't sized. It's still the company's own read of how much of the year recurs, and it's well under half of the headline.

## What the raise is made of

**Elevance's Q3 2026 headline figures and what each one carries into 2027.**

| Measure | Figure | What it carries into 2027 |
| --- | --- | --- |
| Q3 adjusted EPS | $6.99 (consensus about $4.70) | Includes a $1.85 net non-operating benefit; about $5.14 without it |
| FY2026 adjusted EPS guide | ≥$29.00 (from ≥$27.00 in July) | Includes Q2's ~$0.80 below-the-line benefit and Q3's $1.85, less an undisclosed Q4 discrete tax charge |
| FY2026 earnings baseline | ≥$26.75 (up $0.75) | Excludes one-off gains and adds back one-time investments; the 12% target compounds from here |
| FY2027 at 12% growth on the baseline | ≥$29.96 | About 3% above the 2026 guide |
| FY2025 adjusted EPS, actual | $30.29 | What 2027 has to get back to |

_Figures as of Q3 2026, Elevance earnings release and call, October 21, 2026. Source: [Elevance Health Reports Third Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000068/a3q2026elvearningsrelease.htm); [Elevance Health Reports Second Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000058/a2q2026elvearningsrelease.htm); [Elevance Health Reports Fourth Quarter and Full Year 2025 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/1156039/000115603926000006/a4q2025elvearningsrelease.htm); [Elevance (ELV) Q3 2026 Earnings Call Transcript](https://www.fool.com/earnings/call-transcripts/2026/10/21/elevance-elv-q3-2026-earnings-call-transcript/); [Elevance Health (ELV) Q3 2026: adj. EPS 6.99 (exp. 4.70), revenue 50.4bln (exp. 49.29bln); raises FY guidance](https://www.newsquawk.com/headlines/elevance-health-elv-q3-2026-usd-adj-eps-699-exp-470-revenue-504bln-exp-4929bln)._

Even without the $1.85, Elevance beat consensus by about 45 cents, so the operations did better than expected. They didn't do $2 better. And once you put the 2027 promise next to 2025, it's a recovery: at 12%, 2027 only gets Elevance back to where it was last year.

**How the Street responded in the two days after the print.**

| Measure | Figure |
| --- | --- |
| Price target raises, October 22–23 | UBS to $523, TD Cowen to $495, Guggenheim to $485, Barclays to $472, RBC to $455, Morgan Stanley to $449, Baird to $406, among others |
| Consensus target after the raises | $455.57 across 23 analysts |

_Figures as of October 23, 2026. Source: [Elevance Health (ELV) price target and analyst forecast](https://www.marketbeat.com/stocks/NASDAQ/ELV/forecast/)._

## Where the recurring improvement came from

**Elevance's Health Benefits operating margin has been below the year before in every quarter of 2026. The insurance book is seasonal, so each quarter compares with the same quarter of 2025, and Q4 2025 was a loss. This reported margin includes the one-time spending the baseline adds back.**

| Period | 2025 | 2026 |
| --- | --- | --- |
| Q1 | 5.4% | 5.1% |
| Q2 | 3.8% | 2.1% |
| Q3 | 1.4% | 1% |
| Q4 | -0.5% | — |

_Figures as of Q3 2026, Elevance earnings releases, January 28 to October 21, 2026. Source: [Elevance Health Reports Fourth Quarter and Full Year 2025 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/1156039/000115603926000006/a4q2025elvearningsrelease.htm); [Elevance Health Reports First Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000039/a1q2026elvearningsrelease.htm); [Elevance Health Reports Second Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000058/a2q2026elvearningsrelease.htm); [Elevance Health Reports Third Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000068/a3q2026elvearningsrelease.htm)._

Split by segment, Q3 has two moving parts. Carelon, the pharmacy and care services arm, grew its operating gain 17% to about $908 million and widened its margin to 4.7% from 4.2%. Health Benefits, the insurance book, earned $436 million, down 27.5%, on a 1.0% margin. Q3 is the insurer's seasonal low, so Carelon out-earning it two to one is a Q3 fact. Over nine months the insurer still earned more, about $3.5 billion against Carelon's roughly $2.9 billion, but Carelon is the half that's growing.

Inside the insurer, the core line did get better. The benefit expense ratio fell 70 basis points to 90.6%, on better results in Medicare Advantage and the individual ACA business. What pulled reported profit down was a 90 basis point rise in the operating expense ratio, which Elevance put down partly to "targeted, one-time investments." The release doesn't split that spending by segment, so I can't say how much of the insurer's drop it explains.

> **INSIGHT** — When a managed-care company raises guidance, check how much of the raise shows up in the baseline it grows from, and which segment earned the part that did. The baseline is the company's own estimate of what recurs, and it's usually in a footnote.

## The insurer is better than its reported margin, and 2026 was the trough

The strongest objection is that I'm reading the wrong margin. Elevance's medical costs improved, and the spending that dragged down the segment's profit is the same one-time spending the baseline adds back. On that view the insurance book is already recovering on a recurring basis, and the reported 1.0% understates it. CFO Mark Kaye also said the baseline raise reflected third-quarter operating outperformance, and he expects "a modestly higher full-year operating margin" in the ACA business as claims develop favorably.

The second part is timing. Management called 2026 "the trough for our Medicaid margin," said the July rate updates "did provide greater support to the second half margins," and expects Medicare Advantage margins to improve in 2027 toward a 3% to 5% long-term range. Elevance has also guided low all year, raising the 2026 number three times from at least $25.50 in January. If Medicaid rates keep catching up and a smaller Medicare book is better priced, the insurer could carry a lot of 2027, and 12% would be a floor.

I think that's partly right, and it's why I've narrowed what I'm claiming. The insurer's medical costs are improving, and some of the reported margin drop will reverse. What I'm still saying is that the recurring improvement is $0.75 on Elevance's own measure, which already gives it credit for the one-time spending, and that the 2027 target gets earnings back to 2025. The recovery case also leans on state Medicaid rates and Medicare pricing that Elevance doesn't set. Kaye said "rates have certainly not fully caught up with the underlying costs," and that Elevance is "planning for incremental acuity pressure" from some of the changes.

## UnitedHealth is the name where the recovery case already shows

**Insurance and services segments at the two covered managed-care names that have reported Q3 2026. CVS and Humana report in early November.**

| Company | Insurance segment, Q3 2026 | Services segment, Q3 2026 | What helped |
| --- | --- | --- | --- |
| UnitedHealth | UnitedHealthcare $2.8B operating earnings, 3.3% margin (2.1% a year earlier) | Optum $3.7B, 5.6% margin (3.6%) | $610M of net medical reserve development related to 2026 dates of service |
| Elevance | Health Benefits $436M, 1.0% margin (1.4%) | Carelon ~$908M, 4.7% margin (4.2%) | $1.85 per share net non-operating benefit |

_Figures as of Q3 2026, company earnings releases, October 13 and October 21, 2026. Source: [UnitedHealth Group Reports Third Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0000731766/000073176626000255/earningsrelease3q26unh.htm); [Elevance Health Reports Third Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000068/a3q2026elvearningsrelease.htm)._

UnitedHealth is where the bull case on Elevance is already true. Its reserve development flatters Q3 against the first half, but take it out and UnitedHealthcare's margin is still about half a point above last year's by my rough math, so its insurance book is repricing its way back on the reported numbers. Elevance's might be doing the same underneath, but it isn't showing in the segment yet. This is a two-company read until CVS and Humana report.

**Live scores for the four covered managed-care names.**

| Ticker | Name | Moat | Growth | Valuation | Composite | Note |
| --- | --- | --- | --- | --- | --- | --- |
| **Reported Q3 2026** |  |  |  |  |  |  |
| [ELV](https://www.investmoat.com/stocks/elv) | Elevance Health, Inc. | 73 | 48 | 63 | 58 | Baseline up $0.75 against a $2 guide raise |
| [UNH](https://www.investmoat.com/stocks/unh) | UnitedHealth Group Inc. | 79 | 54 | 74 | 67 | Insurance margin up to 3.3%, with reserve help |
| **Report in early November** |  |  |  |  |  |  |
| [CVS](https://www.investmoat.com/stocks/cvs) | CVS Health Corporation | 65 | 60 | 77 | 66 | Aetna plus Caremark; Q3 call November 4 |
| [HUM](https://www.investmoat.com/stocks/hum) | Humana Inc. | 65 | 58 | 64 | 60 | 2027 star bonus arrives in 2028; Q3 on November 6 |

_Valuation and composite above use each asset's static valuation score; the live site recomputes them against the current market price._

**The pillars that protect a managed-care franchise through a bad pricing year. Statuses are read live from each stock's analysis.**

| Ticker | Regulatory Lock-In | Network Effects | Bundling | Scale Economics |
| --- | --- | --- | --- | --- |
| [ELV](https://www.investmoat.com/stocks/elv) | strong | strong | weakened | intact |
| [UNH](https://www.investmoat.com/stocks/unh) | weakened | strong | strong | intact |
| [CVS](https://www.investmoat.com/stocks/cvs) | intact | intact | intact | intact |
| [HUM](https://www.investmoat.com/stocks/hum) | intact | intact | intact | intact |

In my October note on [Humana and the star rating that pays once](/research/humana-and-the-star-rating-that-pays-once) I argued that what lasts in managed care is what keeps earning through a bad star year, and I counted Elevance's Blue Cross licences among those things. Q3 fits that. Elevance's regulatory lock-in and network effects are rated strong, and the members they protect stayed put: BlueCard, the network that serves other Blue plans' members in Elevance's states, grew 3.2%, and employer fee-based membership grew 1.9%, while Medicare Advantage shrank 15.5%. What the licence doesn't do is set the margin on the risk business. The bundling pillar, where Carelon would show up as a real Optum rival, is still rated weakened.

## Three dated checks

**Dated checks on this argument.**

| When | What | What would count against me |
| --- | --- | --- |
| November 4, 2026 | CVS discusses Q3 2026 results | Aetna's insurance margin improving mostly on its own pricing, which would make Elevance's lag company-specific rather than a rate story |
| November 6, 2026 | Humana reports Q3 2026 | A clear insurance-margin recovery at the purest Medicare Advantage name, ahead of its star bonus |
| Late January 2027 | Elevance reports Q4 2026 and gives 2027 guidance | Health Benefits margin at least 50 basis points above Q4 2025's loss, with a 2027 guide of $31 or more |

_Figures as of October 24, 2026. Source: [CVS Health to hold third quarter 2026 earnings conference call](https://www.cvshealth.com/news/company-news/cvs-health-to-hold-third-quarter-2026-earnings-conference-call.html); [Humana Inc. to release third quarter 2026 results on November 6, 2026](https://finviz.com/news/401439/humana-inc-to-release-third-quarter-2026-results-on-november-6-2026); [Elevance (ELV) Q3 2026 Earnings Call Transcript](https://www.fool.com/earnings/call-transcripts/2026/10/21/elevance-elv-q3-2026-earnings-call-transcript/)._

> **RISK** — What would break this: (1) Health Benefits margin beating the prior year by 50 basis points or more in both Q4 2026 and Q1 2027, which trips the claim above; (2) a 2027 adjusted EPS guide of $31 or more, which would mean the recurring base is bigger than the $0.75 raise implied; (3) Carelon's profit growth slowing to single digits while Elevance still hits its numbers, which would mean the insurer is carrying more than I think.

The refresh of Elevance's analysis that ships with this piece keeps the moat and the scenario targets where they were, rewrites the base case around the 12% target, keeps Carelon's revenue driver at decelerating (its revenue growth slowed from 7.9% to 6% to 5% this year even as its profit rose), and re-scores valuation at the current price. At a price near the base case, the stock needs the 12% to be met, and meeting it only gets earnings back to 2025. As CVS and Humana report, I'd read each one the same way: the baseline before the guide, and the segments before the total.

## Sources

1. [Elevance Health Reports Third Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000068/a3q2026elvearningsrelease.htm) — Elevance Health via SEC EDGAR, October 21, 2026 (filing)
2. [Elevance Health Reports Second Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000058/a2q2026elvearningsrelease.htm) — Elevance Health via SEC EDGAR, July 15, 2026 (filing)
3. [Elevance Health Reports First Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0001156039/000115603926000039/a1q2026elvearningsrelease.htm) — Elevance Health via SEC EDGAR, April 22, 2026 (filing)
4. [Elevance Health Reports Fourth Quarter and Full Year 2025 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/1156039/000115603926000006/a4q2025elvearningsrelease.htm) — Elevance Health via SEC EDGAR, January 28, 2026 (filing)
5. [Elevance (ELV) Q3 2026 Earnings Call Transcript](https://www.fool.com/earnings/call-transcripts/2026/10/21/elevance-elv-q3-2026-earnings-call-transcript/) — The Motley Fool, October 21, 2026 (transcript)
6. [Elevance Health (ELV) Q3 2026: adj. EPS 6.99 (exp. 4.70), revenue 50.4bln (exp. 49.29bln); raises FY guidance](https://www.newsquawk.com/headlines/elevance-health-elv-q3-2026-usd-adj-eps-699-exp-470-revenue-504bln-exp-4929bln) — Newsquawk, October 21, 2026 (third-party)
7. [Elevance Health (ELV) price target and analyst forecast](https://www.marketbeat.com/stocks/NASDAQ/ELV/forecast/) — MarketBeat, October 23, 2026 (third-party)
8. [UnitedHealth Group Reports Third Quarter 2026 Results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/0000731766/000073176626000255/earningsrelease3q26unh.htm) — UnitedHealth Group via SEC EDGAR, October 13, 2026 (filing)
9. [CVS Health to hold third quarter 2026 earnings conference call](https://www.cvshealth.com/news/company-news/cvs-health-to-hold-third-quarter-2026-earnings-conference-call.html) — CVS Health, October 5, 2026 (press-release)
10. [Humana Inc. to release third quarter 2026 results on November 6, 2026](https://finviz.com/news/401439/humana-inc-to-release-third-quarter-2026-results-on-november-6-2026) — Humana via Business Wire (Finviz mirror), October 12, 2026 (press-release)

---

Scores are computed deterministically from each asset's data file: composite = Moat^0.40 × Growth^0.30 × Valuation^0.30, scaled to 0–100.

Full analyses for every name above: https://www.investmoat.com/stocks. Site index for agents: https://www.investmoat.com/llms.txt

InvestMoat is an open-source research and education framework. Nothing here is financial advice.