Just caught that Elevance Health shares dropped hard in pre-market trading this morning - down about 7% to $299.99 after the company reported its Q4 earnings and 2026 guidance. The stock had already fallen 14% yesterday, so clearly the market isn't happy with what management laid out.

Looking at the numbers, the company actually posted solid Q4 results on the surface. Revenue hit $49.3 billion, up 10% year-over-year, and adjusted EPS came in at $3.33. For the full year 2025, they pulled in $197.6 billion in revenue with adjusted EPS of $30.29. But here's where it gets messy - the benefit expense ratio jumped significantly, hitting 93.5% in Q4 and 90% for the year. That's a red flag for investors watching margins.

The real problem seems to be the 2026 outlook. Management is guiding for adjusted EPS of at least $25.50, which is a pretty substantial drop from the $30.29 they just reported. They're also expecting revenue to decline by a low single-digit percentage next year. Medical membership is down 1% year-over-year to 45.2 million, mainly from Medicaid attrition, which isn't helping the narrative.

Management did mention they expect pricing discipline and targeted investments to drive at least 12% adjusted EPS growth in 2027, but investors seem skeptical about bridging that gap. The share drop reflects concerns about near-term headwinds and whether the company can actually execute on that recovery plan.