Elevance forecasts 2026 profit below estimates, flags revenue decline

Core Viewpoint - Elevance Health anticipates a slight decline in revenue for 2026 and projects full-year profit below Wall Street expectations, indicating ongoing challenges from elevated medical costs impacting insurers [1] Group 1: Financial Forecast - The company expects total operating revenue to decrease by a low-single-digit percentage in 2026, raising investor concerns following UnitedHealth's similar revenue decline announcement [3] - The forecast includes a low-double-digit decline in membership for certain plans, partially offset by increased premiums and growth in Carelon, its health services division [3] Group 2: Market Conditions - The outlook reflects continued pressure in the Medicaid sector, contributing to a negative market sentiment and stock selloff [4] - Health insurers are facing persistently high medical costs due to increased demand for behavioral health services and specialty drugs, which have elevated costs over the past two years [5] Group 3: Membership and Policy Changes - The company anticipates a sicker member pool in its Obamacare business due to the expiration of enhanced tax credits that previously supported plan purchases [6] - The expiration of these tax credits, which capped out-of-pocket premiums at 8.5% of income, is expected to lead to higher premiums for millions, potentially discouraging healthier individuals from enrolling [7] Group 4: Regulatory Impact - Shares of health insurers fell after the U.S. health insurance agency announced a rate increase of only 0.09% for Medicare Advantage plans, which was below expectations [8]