Jan 28 (Reuters) - Elevance Health forecast 2026 profit below Wall Street expectations on Wednesday, as the health insurer expects higher medical costs to persist into the year.

Elevance Health shares dropped 6.5% in premarket trading.

Health insurers have been battling persistently high costs after a churn in enrollment in Medicaid, the U.S. government plans for low-income people, hit the industry. As states redetermined eligibility, many healthier members fell off the rolls, leaving behind those who require medical services.

Demand for healthcare has remained high over the last two years in areas such as behavioral health services, specialty drugs, leading to higher medical costs for insurers.

"Through pricing discipline and targeted investments, we are strengthening the earnings power of our diversified platform and remain confident in our ability to return to at least 12% adjusted EPS growth in 2027," said CEO Gail Boudreaux.

The company forecast 2026 adjusted profit to be at least $25.50 per share, below analysts' estimates of $26.90 per share, according to data compiled by LSEG.

The company also expects a low-single-digit decline in total operating revenue in 2026.

On an adjusted basis, the company reported fourth-quarter profit of $3.33 per share, beating estimates of $3.10 per share.