How Elevance Health Makes its Money: Revenue Breakdown

How Does Elevance Health Make its Money?

Elevance Health (formerly Anthem) is the second-largest health insurance company in the United States, serving over 46 million medical members. The company operates the largest portfolio of Blue Cross Blue Shield plans in the nation, covering members in 14 states. Beyond traditional insurance, Elevance has been building its Carelon health services division, which provides pharmacy benefits management, behavioral health, palliative care, and clinical solutions. This vertical integration strategy mirrors UnitedHealth’s Optum playbook, aiming to diversify revenue beyond insurance premiums.

Elevance’s competitive advantage starts with the Blue Cross Blue Shield brand — the most recognized name in US health insurance. In its 14 states, Elevance is the exclusive BCBS licensee, giving it brand recognition, provider network depth, and employer preference that competitors can’t easily replicate. The BCBS brand is particularly powerful in employer-sponsored insurance, where HR departments default to the “safe choice” of a known brand when selecting health plans for employees. Beyond brand, Elevance’s scale (46 million members) gives it negotiating leverage with hospitals, doctors, and pharmaceutical companies — the more members Elevance has, the lower the per-unit cost it can negotiate for medical services.

Elevance Health (ELV) Business Model

Elevance Health Competitors

Elevance Health’s key competitors and comparable public companies in the healthcare sector include UnitedHealth Group, CVS Health, and HCA Healthcare. Each of these companies competes for market share, investor attention, and revenue in overlapping segments. See how Elevance Health stacks up by comparing their revenue breakdown, margins, and growth metrics.

Revenue Breakdown

Health Benefits (Commercial, Medicare, Medicaid) — 82% of Revenue

The core insurance business where Elevance collects premiums from employers, individuals, and government programs (Medicare, Medicaid) and pays medical claims. Revenue is split across three main lines: Commercial (employer-sponsored and individual plans — the largest and highest-margin line), Medicare (plans for seniors, including Medicare Advantage and Medicare Supplement), and Medicaid (government-funded plans for low-income populations, managed under state contracts). Revenue grew 6.6% in 2024, driven by premium rate increases, Medicare Advantage enrollment growth, and Medicaid rate adjustments.

The health insurance business is fundamentally about managing the medical loss ratio (MLR) — the percentage of premiums paid out as medical claims. In 2024, Elevance’s MLR was approximately 87-88%, meaning for every dollar of premium collected, roughly 87-88 cents went to paying doctors, hospitals, and pharmacies. The remaining 12-13 cents covers administrative costs and profit. Small changes in the MLR have massive earnings impact: a 1 percentage point increase in MLR on $145 billion of health benefits revenue equals $1.45 billion in additional medical costs. Rising utilization (more people going to the doctor post-COVID), pharmacy cost inflation (GLP-1 drugs like Ozempic), and Medicaid redetermination (states removing ineligible members from rolls) have all created MLR pressure.

Carelon (Pharmacy, Behavioral, Clinical Services) — 17% of Revenue

Elevance’s growing health services division, designed to provide value beyond insurance premiums. Carelon includes: Carelon Rx (pharmacy benefits management — negotiating drug prices and managing pharmacy networks), Carelon Behavioral Health (the largest behavioral health management company in the US), and clinical services including palliative care, post-acute care management, and population health analytics. Revenue surged 17.3% in 2024, the fastest-growing segment, as Elevance internalized more pharmacy volume through Carelon Rx and expanded clinical services.

The strategic rationale for Carelon mirrors UnitedHealth’s Optum — by owning the services that deliver healthcare (pharmacy, behavioral health, clinical management), Elevance captures more of the healthcare dollar instead of just paying claims to external providers. Carelon serves both Elevance’s own insured members and external clients, creating a revenue stream that is partially decoupled from insurance enrollment cycles.

Other Revenue — 1% of Revenue

Includes investment income, fee-based administrative services (where Elevance manages health benefits for self-insured employers but doesn’t bear the claims risk), and miscellaneous revenue. Revenue grew 7.1% in 2024.

Elevance Health (ELV) Income Statement

All values in millions USD unless otherwise stated.

Financial data sourced from Elevance Health SEC Filings.

Elevance Health (ELV) Key Financial Metrics

• Gross Margin: 15.8%
• Operating Margin: 5.8%
• Revenue Growth: 8.6%

Is Elevance Health Profitable?

Yes, Elevance is consistently profitable, though margins are thin by design — health insurance is a high-volume, low-margin business where tiny changes in the medical loss ratio have outsized earnings impact. The 15.8% gross margin reflects the narrow spread between premiums collected and medical claims paid. The 5.8% operating margin and $6.0 billion net income were flat year-over-year despite 8.6% revenue growth, indicating that medical cost trends outpaced premium rate increases in 2024. This margin pressure — driven by higher utilization, GLP-1 drug costs (Ozempic/Wegovy prescriptions have surged), and Medicaid redetermination disruption — has been the key investor concern. Elevance’s EPS guidance fell short of expectations in 2024, causing significant stock price pressure. The offset is Carelon, which is growing 17% and contributes higher-margin revenue as it scales. Over time, a larger Carelon contribution should reduce Elevance’s dependence on insurance underwriting margins.

Elevance Health (ELV): What to Watch

1. Medical cost trend and MLR — The benefit expense ratio (medical loss ratio) is the single most important metric. Rising utilization, GLP-1 drug costs, and procedure catch-up from COVID deferrals are all putting upward pressure on medical costs. Elevance must price premiums high enough to maintain target margins.
2. Carelon growth and margin contribution — Carelon’s 17% growth and expanding capabilities represent Elevance’s diversification strategy. The rate at which Carelon’s operating income contribution grows will determine whether Elevance can reduce its reliance on insurance underwriting.
3. Medicaid redetermination impact — Post-COVID, states are redetermining Medicaid eligibility and removing millions of people from the rolls. This creates membership attrition but also improves the risk profile of the remaining Medicaid population (healthier members may be removed first).
4. Medicare Advantage star ratings — CMS star ratings determine bonus payments and are critical for Medicare Advantage profitability. Elevance’s ability to maintain high star ratings across its plans protects billions in bonus revenue.
5. GLP-1 drug cost management — The explosion in Ozempic/Wegovy prescriptions is the most significant pharmacy cost headwind for insurers. Elevance’s ability to manage GLP-1 utilization through Carelon Rx (prior authorization, step therapy, preferred formulary positioning) directly impacts the medical loss ratio.

Elevance Health (ELV) Financial Summary

Elevance Health is the second-largest US health insurer with 46 million members and the nation’s largest Blue Cross Blue Shield portfolio across 14 states. Revenue grew 8.6% to $177 billion in 2024, driven by premium rate increases, Medicare enrollment growth, and Carelon health services (17% of revenue) surging 17.3%. Net income was flat at $6.0 billion as medical cost trends — including GLP-1 drug spending, rising utilization, and Medicaid redetermination disruption — offset revenue growth, compressing the operating margin to 5.8%. The strategy is vertical integration through Carelon (pharmacy, behavioral health, clinical services), which mirrors UnitedHealth’s Optum playbook and aims to capture more of the healthcare dollar while reducing dependence on insurance underwriting margins.