Elevance Health Inc. (ELV): 2Q26 Recap: Medicaid Cost Pressure Remains in Focus as UW Cycle Recovery Lagging vs. MA

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Elevance Health Inc. (ELV): 2Q26 Recap: Medicaid Cost Pressure Remains in Focus as UW Cycle Recovery Lagging vs. MA

Goldman Sachs Elevance Health Inc. (ELV)

Medicare Advantage underwriting fundamentals alongside an unchanged but still

cautious outlook on Medicaid margins.

Notably, ELV maintained its view that 2026 represents the trough year for Medicaid

margins, continues to see improving rate alignment across states, and announced the

planned exit of the District of Columbia Medicaid market while indicating that additional

targeted Medicaid market exits are likely over the next 12-18 months. We view ELV’s

planned Medicaid exits as broadly consistent with late-cycle stress across

government-sponsored programs and the growing list of carrier exits we have

highlighted across Medicare, Medicaid, and ACA Exchange markets during the current

underwriting cycle. We detailed these exits in our 2Q26 Preview (link), recent reports

(link) and our 10/14 initiation report (link).

We remain Neutral rated on ELV based on its above-average business mix indexing to

Medicaid, the managed care end market we remain most cautious on forward

fundamentals, especially relative to our positive outlook for advancing MA profitability

beginning in 2026.

ELV: 2Q26 Results in Summary

n 2Q Results: Adjusted EPS of $7.45 exceeded GS/Visible Alpha consensus of

$6.06/$6.15, driven by favorable benefit expense performance, improved Individual

ACA profitability, stronger-than-expected CarelonRx profitability, and an

approximately $0.80 per share non-recurring below-the-line benefit. The 2Q26 MLR

of 89.7% compared to GS/consensus of 89.5%/89.9%, with elevated medical cost

trend in Medicaid partially offset by improved Individual ACA and Medicare

Advantage performance.