stockrowWhat it does
Elevance Health is a U.S. health company founded in 1940 and headquartered in Indianapolis. It provides health insurance plans and healthcare-related services through three principal brands: Anthem Blue Cross and Anthem Blue Cross and Blue Shield, Wellpoint, and Carelon.
Its Health Benefits business sells managed-care plans to individuals, employers, Medicare beneficiaries, Medicaid participants and federal employees. In a risk-based plan, the member or employer pays a premium and Elevance is responsible for covered medical costs. In fee-based arrangements, employers retain much of the insurance risk while Elevance provides administration, claims processing, provider-network access, medical management and related services.
CarelonRx provides pharmacy-benefit services, including prescription claims processing, formulary management, pharmacy networks, rebate administration, home delivery, specialty pharmacy and infusion services. Carelon Services provides behavioral-health management, care management, post-acute and home-based care support, payment integrity, clinical analytics and technology services.
The company reported four segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. It had 97,100 employees in FY2025. Management said on the Q3 2026 call that the company ended the quarter with approximately 44.9 million medical members.
How it makes money
Elevance earns operating revenue from premiums, product revenue and service fees. Premiums come from risk-based health plans, where it receives a fixed payment and bears the cost of covered care. Product revenue comes principally from CarelonRx pharmacy services for unaffiliated customers and includes drug ingredient costs, rebates or discounts, co-payments and service fees. Service fees come from fee-based customers for transaction processing, network savings, Medicare processing and other health-related services.
Its FY2025 reportable-segment revenue was $199.1 billion. Management said on the Q3 2026 call that operating revenue was $50.4 billion in the quarter.
Health Benefits combines commercial, Individual, Medicare, Medicaid, Federal Employee Program and specialty coverage. CarelonRx sells pharmacy services both to Elevance-affiliated plans and outside customers. Carelon Services sells clinical, behavioral, care-management, data and payment-integrity capabilities internally and externally. The recurring elements are member premiums, employer administration fees, pharmacy claims and dispensing activity, and multi-period service arrangements.
Pricing begins with estimates of healthcare claims costs, administrative expense, risk and profit. Commercial and Medicaid premiums and Medicare bids are generally set prospectively for a contract period. The company therefore retains the risk when actual medical costs differ from its estimates in risk-based business. It also offers stop-loss coverage to some fee-based employers. In FY2025, product revenue was $24.5 billion and service fees were $8.5 billion.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Product revenue | $24.5 billion | 74.3% | 8.13% |
| Service fees | $8.5 billion | 25.7% | 0.80% |
Customers and how it sells
Elevance serves Individual, employer-group risk-based, employer-group fee-based, BlueCard, Medicare, Medicaid and Federal Employee Program members. It also serves customers that buy behavioral health, pharmacy-benefit management and care solutions. The company’s healthcare-solutions portfolio serves approximately 103,000,000 consumers.
It is an independent Blue Cross and Blue Shield Association licensee. It is the Blue Cross licensee for California and the Blue Cross and Blue Shield licensee in Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri excluding 30 Kansas City-area counties, Nevada, New Hampshire, designated New York areas, Ohio, designated Virginia areas and Wisconsin. It is licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico; an immaterial amount of revenue comes from outside the U.S. and Puerto Rico.
Individual, Medicare and some smaller-employer products are marketed directly, through independent agents and brokers, and through retail partnerships. Larger commercial accounts are generally sold through independent brokers or consultants and the company’s sales force. It sells Individual exchange coverage in nearly all Anthem Blue Cross and Anthem Blue Cross and Blue Shield service areas.
Federal and state government programs are material customers: U.S. government agencies accounted for approximately 32% of consolidated revenue in 2025.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Reportable Segments | $199.1 billion | 100.0% | 12.5% |
Suppliers and costs
Elevance’s principal cost is benefit expense: payments for outpatient care, hospital care, physician services and pharmacy benefits for risk-based members. Those costs depend on prices paid per service and how frequently members use care. The company also incurs pharmaceutical costs for CarelonRx’s unaffiliated pharmacy customers, salaries and benefits, commissions, premium taxes, technology, facilities, professional services and advertising.
Hospitals, physicians, pharmacies and other care providers are important counterparties because provider contracts determine network access and reimbursement rates. Elevance uses provider contracting, care management, utilization management, benefit design and pharmacy management to manage medical costs.
CarelonRx delegates certain core pharmacy services to CaremarkPCS Health, L.L.C., a CVS Health subsidiary, under an agreement running through December 31, 2027. The company may elect a three-year extension if either party terminates or does not renew the agreement. The pharmacy business is also exposed to drug pricing, specialty-drug use, rebates, pharmacy networks and pharmacy-benefit-manager regulation.
- Revenue$199.1B
- Cost of revenue−$169.4B
- Other operating costs−$21.6B
- Operating income$8.1B
Competitive position
The managed-care industry is highly competitive nationally and locally. Elevance competes for members and employer accounts on service, price, provider-network access, care management, product breadth, technology, quality ratings, reputation and financial stability. It also competes for provider contracts and for agents and brokers that recommend insurance products.
In pharmacy services, CarelonRx faces national, regional and local pharmacy-service providers, insurers, health plans, retail pharmacy chains, retail stores, supermarkets, mail-order pharmacies, web pharmacies and specialty pharmacies. CVS is also a significant service provider to CarelonRx under the pharmacy-services agreement.
The company’s Blue Cross and Blue Shield licenses provide access to other licensees’ provider networks and discounts through BlueCard when members work or travel outside their policy state. Elevance states that it is typically the largest participant in each of its BCBS-branded markets. Its network relationships, local-market presence, health-plan scale and care-management capabilities also support its competitive position.
Our reading: The BCBS licenses and BlueCard network are a meaningful moat in the licensed markets because they combine local branding with multi-state provider access. [item1]
Our reading: Provider contracting and Carelon’s integrated medical, pharmacy and care-management capabilities are useful operating advantages, but competitors can also pursue network, pricing and digital strategies. [item1]
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| CVS Health Corporation | pharmacy services and delegated CarelonRx operations | Medium |
Growth opportunities
Elevance’s growth plans center on expanding health-plan membership where returns meet its standards, improving Health Benefits margins, selling Carelon capabilities to external customers, integrating medical and pharmacy benefits, and using technology and analytics in care and administrative workflows. The company also intends to grow through organic expansion, strategic acquisitions and capital deployment in existing and new markets.
CarelonRx can extend pharmacy services beyond affiliated plans, while Carelon Services can sell behavioral-health, clinical-care, post-acute, home-based care, payment-integrity and analytics services to external customers. Management said on the Q3 2026 call that Carelon Services had retained more than 90% of customers across the majority of its product and clinical-risk solutions.
Management said on the Q3 2026 call that the company’s cancer-care engagement program reduced avoidable inpatient admissions by 15% in the commercial market. It also said the Elevate medical-cost-management platform identified more than $300 million in anticipated savings during 2026. These are company-reported operating measures rather than revenue figures.
Management said on the Q3 2026 call that it expects at least 12% adjusted diluted earnings-per-share growth in 2027 from its higher 2026 earnings baseline, driven by Health Benefits margin improvement, Carelon growth and operating efficiency. The company expects Medicaid margins to improve in 2027 as rates become better aligned with cost trends and its medical-cost actions gain traction.
- $138.6BFY2021
- $156.6BFY2022
- $171.3BFY2023
- $177.0BFY2024
- $199.1BFY2025
Structural risks
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Healthcare-cost estimation and pricing. Profitability can decline if the company does not accurately predict, price for and manage healthcare costs. Medical costs can rise with utilization, provider prices, specialty drugs, demographics, new technology, fraud and changing clinical practices.
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Government-program exposure. Government agencies represented approximately 32% of 2025 consolidated revenue. Medicare and Medicaid results depend on government funding, bids, rates, quality ratings, eligibility rules and risk-adjustment programs.
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Regulation and public policy. Federal and state insurance, pharmacy-benefit-manager, privacy, transparency and data-interoperability rules can change operating requirements, pricing, administrative costs and product design.
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Medicaid rate and membership pressure. Management said on the Q3 2026 call that rates were not fully caught up with underlying costs. It also said it was planning for incremental Medicaid acuity pressure from membership changes.
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Individual ACA risk-pool change. Management said on the Q3 2026 call that it expects the ACA risk pool to take more than one renewal cycle to normalize after enhanced subsidies expired.
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Competitive and execution risk. Competition is intense in managed care and pharmacy services. The company also faces risks in developing growth opportunities and integrating acquired businesses.
Bottom line
Our reading
Our reading: Elevance is a large, recurring-revenue managed-care business whose core economics depend on matching premiums and government rates to medical costs, while using provider networks and care management to control those costs. [item1, item7]
Our reading: Its BCBS licenses, broad regulated-market footprint and Carelon services create several channels to serve members, employers and external health-plan customers. [item1]
Our reading: Government-program exposure, medical-cost inflation, Medicaid rate adequacy and changing ACA membership mix remain central constraints on results. [item1, item1a, call_prepared]