Elevance Health Inc. Q1 FY2026 earnings call

First, realigned leadership structure to strengthen coordination between health benefits and Carillon. Second, embedded and scaled AI across clinical, operational, and administrative workflows. Third, transformed how care is delivered through Carillon by advancing integrated whole health approach, combining care bridge and care at home capabilities into a single risk-based solution.

In Medicaid, early evidence shows actions are lowering costs, especially in behavioral health and specialty pharmacy. In Medicare Advantage, steps taken are driving improved performance and on track to achieve an operating margin of at least 2% in 2026. In Commercial, maintained disciplined pricing approach in 2026. In Individual ACA, modestly stronger retention, especially in bronze tier plans. In Carillon, risk-based solutions are delivering measurable value with AI and advanced analytics driving higher medication adherence, fewer ER visits, and lower hospital readmissions.

Raised full year adjusted diluted earnings per share guidance to at least $26.75. Expect to return to at least 12% adjusted EPS growth in 2027 off of revised 2026 earnings baseline of $25.75.

Received notice from CMS in February related to historical risk adjustment data. Engaging constructively with the agency and making steady progress toward resolution, but matter does not affect outlook or how we serve members.

Q: Hi, everybody, and thanks for the question. Maybe just we're well into the PBM selling season for 2027, and I guess we're gearing up for the commercial employer market selling season. Are you hearing anything different in terms of the amount of activity that you're seeing out there, the types of priorities that employers are putting on? engaging, anything they're emphasizing given AI, given a little uncertainty in the economy that you would call out that's different this year as we begin to move into the selling season?

A: Thanks for the question, AJ, and I think it's a great one to start the call. Let me start with the commercial selling season, and then I'll ask Mark to comment on the PBM. But in terms of the national account season in particular, where we see early, I think, early interest by employers, as I think I shared in my remarks, we're off to a really strong start. We've got some early wins. What we're hearing from our national account employers is they're very focused on affordability. AI is important in terms of the consumer experience. As you know, we've got two core goals, reduce the cost of healthcare for them and improve the experience. And we've been investing heavily in ensuring that those capabilities show through. So from an employer perspective, we just hosted our national account group, and we had most of our clients in, and they shared with us, I think, a lot of satisfaction. We had a very strong 26 selling year, but also 27, we have a very strong pipeline, almost a record level for 27. We're pretty enthusiastic about how our assets are resonating. The other thing that we're starting to see is, again, continued consolidation from clients. We've had a record of taking clients who have multiple carriers and consolidating some single carrier under us and that that theme is continuing so we're very optimistic but overall the season i would say very focused on affordability given what's going on in the economy but also very focused on experience and wanting to ensure simplicity um that there's real value pulling through for the commercial group but let me ask mark to comment on the pbm um side as well yeah thanks aj Kailon Oryx delivered a strong ASO selling season for 2026. We had several national account wins. We also had improved win rates across both the middle market and large group. And that performance here really reflects growing demand for a more integrated medical pharmacy model and for some of the differentiated value that Kailon Oryx is able to bring to employers and our health plan partners. I'd say sales momentum remains strong. We have seen total sales to date running ahead of plan, including two marquee national wins. And that really does highlight our ability to compete upmarket successfully for large, sophisticated clients. We've also seen good renewal activity, especially as we enter this active phase of some of the client strategy discussions. On the commercial side, good penetration across that book, good cross-selling of pharmacy into our existing fee-based relationships. that obviously remains an important lever for us. And the reason this opportunity is real is that it is producing measurable results. Maybe just to give you two examples here, we have seen for clients that do have that aligned medical pharmacy benefit savings upwards of $100 per member per month, as well as significantly fewer ER visits, as well as a reduction in some of the high cost specialty drug administration. So in short, as we look forward to 2027, our confidence is really grounded in that pipeline momentum and the demonstrated value that we bring.