Elevance Health (NYSE:ELV) said it expects earnings to decline in 2026 compared with the prior year, citing a tougher outlook for the U.S. health insurance sector after the government proposed only a modest increase in payments to private Medicare Advantage plans.
The insurer said projected adjusted diluted earnings for the current year are expected to be at least $25.50 per share, down from $30.29 in 2025. Operating revenue is also forecast to fall by a low single-digit percentage.
Elevance shares dropped more than 4% in U.S. premarket trading. A similarly cautious outlook from rival UnitedHealth (NYSE:UNH) on Tuesday triggered a broad sell-off across the sector, erasing roughly $80 billion in combined market value among U.S. health insurers.
Late on Monday, the Trump administration proposed an average increase of just 0.09% in payments to private insurers managing Medicare Advantage plans, a move that fell short of Wall Street’s expectations. Analysts cited by Reuters said the market had been looking for a more meaningful hike to offset rising costs and higher utilization in senior healthcare.
At Elevance, elevated medical expenses tied to Affordable Care Act plans contributed to an increase in its fourth-quarter benefit expense ratio — a key efficiency metric comparing costs to net premium revenue — which rose to 93.5%. That marked a 110-basis-point increase from a year earlier and signals that a greater share of premium income is being absorbed by operating costs. Bloomberg consensus had been forecasting a ratio of 93.6%.
For the quarter ended December 31, Elevance reported adjusted earnings of $3.33 per share, beating expectations of $3.10. Operating revenue totaled $49.31 billion, slightly below analysts’ projections of $49.81 billion.