Updated version 2 - Driven by declining medical costs and rising premiums, Elevance has raised its annual earnings forecast.

Rewrite the content, add details and background information, include charts, and mention the stock price in the first paragraph. Cite the CEO's comments in the fifth paragraph.

Reuters, October 21 - Elevance Health (ELV.N) on Wednesday reported quarterly results that exceeded expectations , mainly driven by increased premiums and lower medical expenses, and subsequently raised its annual earnings forecast, sending the health insurer's stock up 2.1% in pre-market trading.

Health insurers have been facing the challenge of a decline in membership. At the same time, rising demand for behavioral health services and specialty drugs in government-sponsored insurance plans has also pushed costs higher.

Like its industry peers, Elevance has adjusted pricing to reflect rising medical costs. The company said that in the third quarter, higher premium yields and service fees offset the impact of declining membership, helping insurance business revenue rise by $1.1 billion over the same period last year.

Last week, larger rival UnitedHealth Group (UNH.N) also raised its full-year profit forecast, attributing the improvement to adjustments in insurance plan design and product pricing strategies.

Elevance CEO Gail K. Boudreaux said that the company’s strong quarterly results reflect "our stronger execution across a diversified portfolio and highlight the profitability of the business."

The company said that as of September 30, its medical membership stood at approximately 44.9 million, a decline of 487,000 from the same period last year.

The health insurer reported a third-quarter medical loss ratio—that is, the share of premiums spent on medical care—of 90.6%, beating analysts’ expectations of 91.17%.

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The company said lower costs were due to improved performance in Medicare Advantage plans for seniors and the Affordable Care Act marketplace compared to last year.

The company also said it plans to deliver at least 12% adjusted profit growth by 2027, based on a baseline earnings per share of at least $26.75.

Elevance forecasts full-year adjusted earnings per share of at least $29, up from a previous outlook of at least $27. According to data compiled by LSEG, analysts on average expect full-year earnings per share of $27.23.

On an adjusted basis, the company earned $6.99 per share, well above the average analyst estimate of $4.68 per share.

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