Elevance Health, Inc.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 21 October 2025: press release. Guidance figures: 3 lowered, 1 new, 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Operating revenue rose 12 percent: Operating revenue was $50.1 billion, up $5.4 billion, driven by higher premium yields, recent acquisitions and Medicare Advantage growth, partly offset by Medicaid membership losses. Source
• Adjusted EPS down, diluted EPS up: Diluted EPS was $5.32 against $4.36. Adjusted diluted EPS was $6.03 against $8.60, a decline of 29.9 percent. Source
• Health Benefits gain fell sharply: Health Benefits operating gain was $0.6 billion against $1.6 billion, with operating margin of 1.4 percent against 4.2 percent. Source
• Benefit expense ratio rose 180 basis points: Benefit expense ratio was 91.3 percent, up 180 basis points. Management described the cost trend as elevated but expected, mainly in Medicare. Source
• Consolidated operating margin declined: Operating margin was 2.6 percent against 3.1 percent in the quarter. Nine-month operating margin was 4.6 percent against 5.5 percent. Source
• Operating cash flow lower year to date: Year-to-date operating cash flow was $4.2 billion, or 0.8 times GAAP net income, down $0.9 billion, partly reflecting a Provider Settlement Agreement payment. Source
• Quarterly buybacks and dividend: The company bought back 2.9 million shares for $875 million at an average of $303.48, and paid a $1.71 dividend totaling $381 million. Source

“Our third quarter results were in line with expectations and reflect disciplined execution across Elevance Health.”

Gail K. Boudreaux President and Chief Executive Officer

Guidance

What changed from last quarter

• Guidance kept: Adjusted diluted EPS guidance of approximately $30.00 and benefit expense ratio guidance of approximately 90.0% were reaffirmed. Source
• Guidance lowered: Projected full-year net adjustment items fell to $5.30 per diluted share from $5.90 in the prior release. Source

Results and growth drivers

• Operating revenue rose 12 percent: Operating revenue was $50.1 billion, up $5.4 billion, driven by higher premium yields, recent acquisitions and Medicare Advantage growth, partly offset by Medicaid membership losses. Source
• Adjusted EPS down, diluted EPS up: Diluted EPS was $5.32 against $4.36. Adjusted diluted EPS was $6.03 against $8.60, a decline of 29.9 percent. Source
• Adjusted operating margin declined: Adjusted operating gain was $1.3 billion against $2.5 billion, and adjusted operating margin was 2.7 percent against 5.5 percent. Source
• Nine-month net income down: Nine-month shareholders’ net income was $5.1 billion, down 8.0 percent from $5.6 billion a year earlier. Source

Segment performance

• Health Benefits gain fell sharply: Health Benefits operating gain was $0.6 billion against $1.6 billion, with operating margin of 1.4 percent against 4.2 percent. Source
• Health Benefits revenue up 10 percent: Health Benefits operating revenue was $42.2 billion, an increase of $4.0 billion or 10 percent year over year. Source
• Carelon revenue up 33 percent: Carelon operating revenue was $18.3 billion, up $4.5 billion, from home health and pharmacy acquisitions, CarelonRx product growth and risk-based services. Source
• Carelon operating gain held flat: Carelon operating gain was $0.8 billion in both periods. Operating margin was 4.2 percent against 5.8 percent, with platform investments offsetting Carelon Services gains. Source
• CarelonRx gain declined: CarelonRx operating gain was $556 million against $619 million, a 10.2 percent decline, with operating margin of 5.1 percent against 6.8 percent. Source

“In a dynamic healthcare environment, we’re focused on advancing affordability and elevating the member experience through our growing value-based care partnerships and AI-enabled digital solutions that simplify access and improve outcomes.”

Gail K. Boudreaux President and Chief Executive Officer

Membership and customers

• Medical membership slightly lower: Medical membership was 45.4 million, down 0.9 percent year over year and 0.6 percent from June 30, 2025. Source
• Medicare Advantage membership grew: Medicare Advantage membership was 2.2 million, up 9.7 percent year over year, while Medicare Supplement membership was 0.9 million, down 1.9 percent. Source
• Medicaid membership down 3.1 percent: Medicaid membership was 8.6 million, down 3.1 percent year over year, while Individual membership rose 4.2 percent to 1.4 million. Source
• Carelon Services consumers served fell: Carelon Services consumers served were 97.6 million, down 3.7 percent, while CarelonRx quarterly adjusted scripts rose 6.0 percent to 85.0 million. Source

Medical costs and benefit expense

• Benefit expense ratio rose 180 basis points: Benefit expense ratio was 91.3 percent, up 180 basis points. Management described the cost trend as elevated but expected, mainly in Medicare. Source
• Part D seasonality shaped Medicare costs: Management linked the Medicare cost trend to pronounced Part D seasonality arising from Inflation Reduction Act benefit changes. Source
• Benefit expense grew 15.8 percent: Benefit expense was $38.1 billion, up 15.8 percent, while premiums rose 13.5 percent to $41.8 billion. Source
• Prior-year claims redundancies declined: Prior-year claims redundancies were $1.27 billion over nine months, against $1.61 billion a year earlier, reducing net incurred claims. Source
• Days in claims payable improved: Days in claims payable were 42.6 at September 30, adjusted for CareBridge, down 0.2 days year over year on a comparable basis. Source

“As we plan for 2026, we remain disciplined in managing what we can control - positioning our businesses for long-term, sustainable growth and value creation for all stakeholders.”

Gail K. Boudreaux President and Chief Executive Officer

Operating expense and margins

• Operating expense ratio improved: Operating expense ratio was 10.5 percent, down 130 basis points. The adjusted ratio was 10.4 percent, up 100 basis points, on targeted investments. Source
• Adjusted operating expense rose 23.8 percent: Adjusted operating expense was $5.2 billion against $4.2 billion, reflecting investments to scale Carelon capabilities, workforce support and technology. Source
• Consolidated operating margin declined: Operating margin was 2.6 percent against 3.1 percent in the quarter. Nine-month operating margin was 4.6 percent against 5.5 percent. Source

Cash flow and balance sheet

• Operating cash flow lower year to date: Year-to-date operating cash flow was $4.2 billion, or 0.8 times GAAP net income, down $0.9 billion, partly reflecting a Provider Settlement Agreement payment. Source
• Parent company cash and investments: Parent company cash and investments totaled about $2.6 billion at September 30, 2025. Source
• Net investment income rose 13.4 percent: Net investment income was $625 million, up 13.4 percent from $551 million, while net losses on financial instruments were $125 million. Source

Capital returned to shareholders

• Quarterly buybacks and dividend: The company bought back 2.9 million shares for $875 million at an average of $303.48, and paid a $1.71 dividend totaling $381 million. Source
• Year-to-date capital returned to shareholders: Year-to-date capital returned to shareholders was $3.3 billion, against $2.0 billion through June 30, 2025. Source
• Repurchase authorization remaining declined: About $7.2 billion of Board approved repurchase authorization remained at September 30, down from about $8.0 billion at June 30. Source

Strategy and investment

• Value-based care and AI focus: Management pointed to growing value-based care partnerships and AI-enabled digital solutions as its focus for affordability and member experience. Source
• Transaction costs excluded from adjusted results: Transaction and integration costs were $49 million in the quarter and $182 million for nine months, and are excluded from adjusted results. Source
• Workforce and technology investment: Management cited increased investments to support its workforce and accelerate technology adoption as contributors to cost levels in Health Benefits. Source

Coming up, as management said on 21 October 2025

• Fourth quarter dividend payment: The fourth quarter 2025 dividend of $1.71 per share is payable December 19, 2025, to holders of record December 5, 2025. Source

Figures management reported

Risks management discussed

• Operational: Higher medical cost trend weighed principally on the Health Benefits operating gain in the quarter. Source
• Regulatory: Part D benefit seasonality tied to Inflation Reduction Act changes contributed to elevated Medicare costs. Source
• Demand: Ongoing Medicaid membership losses from eligibility reverifications partly offset revenue growth. Source
• Financial: A Provider Settlement Agreement payment reduced operating cash flow in the year to date. Source

Earlier plans management reported on

• On track: Management said third quarter results were in line with expectations. Source
• Not stated: Management reaffirmed the full-year 2025 benefit expense ratio and adjusted diluted EPS guidance. No progress status was stated. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.