Elevance Swapped Its Liberty Dental Options For A Forward Contract And Booked A $169 Million Gain
The 10-Q shows operating gain slipped to $1,269 million while a $669 million dispute-resolution accrual was recorded.
Elevance Health's 10-Q replaced a $396 million net put-option liability tied to its Liberty Dental stake with a forward contract carried at $227 million, producing a $169 million realized gain on financial instruments in the third quarter. The gain sits under a quarter in which operating gain slipped to $1,269 million from $1,295 million.
The Liberty Dental swap
Elevance holds a 40% stake in the parent of Liberty Dental. A September 2026 amendment swapped the put and call options for a forward contract on the majority owners' shares, with 2027 purchase dates.
The purchase price is based on multiples of Liberty Dental earnings and is expected to total up to $600 million on current projections. The forward is a derivative carried at estimated fair value, recorded in other noncurrent liabilities.
At June 30, 2026, Liberty Dental's net put option was valued at $352 million, according to the prior quarter's 10-Q. The new filing gives $327 million at December 31, 2025 as the net put liability that was replaced. A related option on Mosaic Health, in which Elevance holds about 40%, is untouched: its $1,330 million carrying value stays unmarked, and the company says it will remain until the option is exercised, expires or its terms are substantially amended.
The quarter underneath
Shareholders' net income was $1,365 million, up from $1,189 million a year earlier. The filing credits higher investment income and lower amortization of intangibles, and says diluted EPS of $6.27, against $5.32, also reflects fewer diluted shares. Net investment income rose to $1,037 million from $625 million.
Operating gain moved the other way. Health Benefits operating gain fell to $436 million from $601 million, on higher medical costs and technology investments, while CarelonRx rose to $616 million from $556 million. Operating revenue was $50,440 million, up 0.7%.
For the first nine months, shareholders' net income was $4,592 million, down from $5,115 million, and the filing cites a loss accrual tied to Medicare Advantage risk-adjustment data resubmission.
The dispute-resolution accrual
Under the No Surprises Act process for out-of-network disputes, Elevance recorded $669 million of liabilities after the federal rule was finalized: $44 million for fully insured arrangements and $625 million for administrative-service arrangements. Offsetting that, it booked $575 million of self-funded receivables, net of an allowance.
Other pending disputes could add up to $324 million before customer recoveries, about 94% tied to administrative-service agreements. No liability is recorded because losses were not considered probable.
Other items in the filing
Roughly 49% of current Medicare Advantage members sit in plans rated 4.0 Stars or better for 2027, compared with about 55% for 2026.
A federal securities class action over 2024 earnings guidance survived in part: the court denied the motion to dismiss in September 2026 on certain allegations. In the Blue Cross antitrust follow-on case brought by VHS, trial is scheduled for March 2027. In the Justice Department's Medicare risk-adjustment suit, fact discovery is set to finish November 20, 2026.
CarelonRx also signed a new five-year CVS agreement running January 1, 2027 through December 31, 2031.
The next dated markers are November 20, 2026, when fact discovery closes in the Justice Department suit, and the March 2027 VHS trial.
Sources
- 10-Q Filing — Elevance Health (ELV) — SEC EDGAR
- 10-Q Filing — Elevance Health (ELV), Q2 FY2026 filed 2026-07-15 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, a3q2026elvearningsrelease.htm) — Elevance Health, filed 2026-10-21 — SEC EDGAR
- Elevance Health Shares Rise as Third-Quarter Earnings Beat Estimates and 2026 Guidance Increases — Yahoo Finance
- Elevance sees Medicaid momentum in Q3 | Healthcare Dive — healthcaredive.com
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- Elevance Health (ELV) Surpasses Q3 Earnings and Revenue Estimates — Yahoo Finance
- Elevance raises 2026 adjusted EPS guidance to at least $29 while targeting at least 12% growth in 2027 (NYSE:ELV) — seekingalpha.com
