Elevance Health, Inc. (ELV) is a leading health benefits company in the United States, serving approximately 45.7 million medical members through its affiliated health plans as of December 31, 2024. With a rich history spanning over two decades, Elevance Health has solidified its position as a trusted partner in the evolving healthcare landscape.
Business Overview and History
Elevance Health was formed in 2001 through the merger of two major health insurance providers. The company started as an independent licensee of the Blue Cross and Blue Shield Association, serving members across several states as Anthem Blue Cross and Anthem Blue Cross and Blue Shield. Over the years, Elevance Health has expanded its footprint, now operating in all 50 states, the District of Columbia, and Puerto Rico through its subsidiaries.
The company's growth strategy has been a combination of organic expansion and strategic acquisitions. In 2012, Elevance Health acquired Amerigroup Corporation, significantly expanding its Medicaid business. This was followed by the acquisition of HealthWise of America in 2015, which bolstered the company's Medicare Advantage offerings. In 2018, Elevance Health acquired Aspire Health, expanding its capabilities in providing integrated care management services.
One of the key challenges Elevance Health faced early on was adapting to the changes brought about by the Affordable Care Act in 2010. The company had to navigate new regulations and requirements for the individual insurance market, including the establishment of public health insurance exchanges. Elevance Health ultimately emerged as a leader in the ACA marketplace, establishing a strong presence across many state-based and federally-facilitated exchanges.
The company's core business segments include Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. The Health Benefits segment offers a comprehensive suite of health plans and services, while CarelonRx focuses on the company's pharmacy services business. Carelon Services integrates physical, behavioral, pharmacy, and social services to deliver whole-health solutions.
Throughout its history, Elevance Health has demonstrated a commitment to innovation and a willingness to adapt to industry changes. The company has built a diverse portfolio of health products and services, positioning itself as a leader in the evolving healthcare landscape. Despite the challenges it has faced, Elevance Health has continued to grow and evolve, becoming one of the largest health insurers in the United States.
Financial Performance and Ratios
Financials Elevance Health's financial performance has been consistently strong, with the company reporting net income of $5.97 billion and total revenue of $175.20 billion for the fiscal year ended December 31, 2024. The company's operating cash flow stood at $5.81 billion, and its free cash flow reached $4.55 billion during the same period.
For the fourth quarter of 2024, Elevance Health reported revenue of $45.44 billion, an increase of 2.9% year-over-year, and net income of $418 million. The company's total operating revenue for the full year 2024 was $175.20 billion, representing a 2.9% increase from 2023.
Elevance Health operates primarily in the United States and Puerto Rico, with a small amount of revenue derived from international operations.
Liquidity
The company's financial ratios reflect its financial stability and growth potential. As of December 31, 2024, Elevance Health's debt-to-equity ratio was 0.43, indicating a balanced capital structure. The company's current ratio and quick ratio were both 1.45, suggesting a healthy liquidity position. Elevance Health's cash and cash equivalents stood at $8.29 billion as of December 31, 2024.
Elevance Health has a $4.0 billion senior revolving credit facility that matures in April 2027, with no amounts outstanding as of December 31, 2024, providing additional financial flexibility.
Navigating Industry Challenges
The healthcare industry has faced significant challenges in recent years, including rising costs, evolving regulatory environments, and the impact of the COVID-19 pandemic. Elevance Health has demonstrated its resilience and adaptability in navigating these obstacles.
During the COVID-19 pandemic, the company quickly mobilized to support its members, facilitating access to essential health resources and providing aid to communities impacted by the crisis. Elevance Health's integrated care model and digital capabilities enabled it to swiftly adapt to the changing landscape and ensure continuity of care for its members.
Moreover, the company has proactively addressed industry-wide challenges, such as rising healthcare costs, by deepening its partnerships with care providers and implementing value-based care models. Elevance Health's focus on affordability and whole-health solutions has resonated with its customers, contributing to its strong performance in the commercial and government-sponsored markets.
Elevance Health has also demonstrated its ability to navigate regulatory changes, such as the implementation of the Affordable Care Act (ACA) and subsequent modifications. The company's diversified business model and geographic footprint have allowed it to adapt to these changes and capitalize on new opportunities, such as the growth in individual and group exchange plans.
Growth Opportunities and Outlook
Looking ahead, Elevance Health is well-positioned to capitalize on the growing demand for integrated, affordable, and accessible healthcare solutions. The company's strategic focus on expanding its Carelon Services segment, which offers a range of healthcare-related services and capabilities, is expected to drive future growth.
For 2025, Elevance Health is guiding for adjusted diluted earnings per share (EPS) in the range of $34.15 to $34.85, reflecting the company's confidence in its ability to deliver sustainable growth. The company also anticipates total medical membership to reach 45.8 million to 46.6 million by the end of 2025, driven by expected growth in its commercial fee-based, ACA exchange, and Medicare Advantage businesses.
Elevance Health expects operating revenue to grow in the high-single to low double-digit percent range in 2025, bolstered by acquisitions like CareBridge. The consolidated medical loss ratio is expected to be around 89.1%, plus or minus 50 basis points, a roughly 60 basis point increase at the midpoint. The adjusted operating expense ratio is expected to be 10.4%, plus or minus 50 basis points, implying a slight year-over-year improvement.
The company anticipates a more normalized operating cash flow of roughly $8 billion or 1.1 times GAAP net income in 2025. Elevance Health plans to allocate approximately $2.3 billion towards share repurchases in 2025, with a bias towards the first half of the year. Additionally, the board has approved a 5% increase in the quarterly dividend to $1.71 per share.
Elevance Health's strong brand recognition, extensive provider network, and diversified product portfolio position it well to navigate the evolving healthcare landscape. The company's commitment to innovation, digital transformation, and whole-health solutions are expected to contribute to its long-term success.
Segment Performance
Health Benefits Segment The Health Benefits segment offers a comprehensive suite of health plans and services to Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicare, Medicaid, and Federal Employee Program (FEP) members. In 2024, this segment's premiums were $142.67 billion, an increase of 0.8% compared to 2023, driven by premium rate increases across all lines of business. However, the segment's operating gain decreased by 9.4% to $6.24 billion, primarily due to higher medical costs in the Medicaid business.
CarelonRx Segment
The CarelonRx segment includes Elevance Health's pharmacy services business. In 2024, CarelonRx's operating revenue was $35.96 billion, an increase of 6.3% compared to 2023. The segment's operating gain increased by 10.0% to $2.17 billion, driven by higher prescription volumes and the acquisition of Paragon Healthcare, Inc.
Carelon Services Segment
The Carelon Services segment integrates physical, behavioral, pharmacy, and social services to deliver whole-health solutions. In 2024, Carelon Services' operating revenue was $17.96 billion, an increase of 27.0% compared to 2023. The segment's operating gain increased by 5.4% to $717 million, driven by the expansion of various services and recent acquisitions.
Corporate/Other Segment
The Corporate/Other segment includes businesses that do not individually meet the quantitative thresholds for an operating segment and corporate expenses not allocated to other reportable segments. In 2024, this segment reported an operating loss of $1.27 billion, compared to a $1.04 billion loss in 2023.
Industry Trends
The US health insurance market was valued at $453 billion in 2024 and is expected to grow at a CAGR of 3.7% during 2025-2033 to reach $639 billion by 2033. This growth is driven by increasing healthcare costs, evolving enrollment trends, and technological advancements. Elevance Health's focus on expanding its pharmacy, healthcare services, and government-sponsored businesses, while maintaining discipline on costs, has enabled the company to deliver relatively stable financial performance amid industry headwinds.
Conclusion
Elevance Health, Inc. (ELV) has demonstrated its resilience and adaptability in the face of industry challenges, leveraging its diversified business model and strategic initiatives to drive consistent financial performance. As the healthcare landscape continues to evolve, Elevance Health's focus on affordability, integration, and whole-health solutions positions the company as a leader poised to capitalize on the growing demand for innovative healthcare services. With a solid financial foundation, a clear strategic vision, and a talented leadership team, Elevance Health is well-equipped to navigate the industry's complexities and deliver long-term value for its shareholders.