Anthem — Financial Results

Revenue Grew Strongly but Rising Medical Costs Squeezed Profits

Elevance grew revenue by $22.4 billion, driven by premium rate increases and Medicare Advantage growth, but profits actually fell because medical costs rose faster than premiums. The benefit expense ratio (the share of premium revenue paid out in claims) climbed to 90.0%, meaning the company kept only 10 cents of every premium dollar after paying claims — a thinner margin than the prior year. This is the core tension in the business right now.

The Health Benefits Segment — the Core Engine — Is Under Real Pressure

The Health Benefits segment, which generates roughly 85% of total revenue, saw its profit drop by a third in one year. Higher medical cost trends across all lines — but especially the ACA (Affordable Care Act) individual marketplace business — were the main culprit. A profit margin of just 2.5% on a health insurance business leaves very little buffer if costs keep rising.

Medicaid Membership Is Shrinking as Eligibility Checks Resume

After pandemic-era rules were lifted, states began removing people from Medicaid who no longer qualify — a process called eligibility redetermination. Elevance lost 417,000 Medicaid members in 2025, and this trend is ongoing. New federal legislation (the "One Big Beautiful Bill Act") will require more frequent Medicaid eligibility checks starting as early as 2026, which could accelerate membership losses further.

Medicare Advantage Is a Bright Spot, With Improving Star Ratings

Medicare Advantage — private insurance for Americans 65 and older — grew solidly and is becoming a larger part of the business. Critically, Elevance's CMS Star Ratings (a government quality score that determines bonus payments) improved significantly: 59% of Medicare Advantage members are now in top-rated plans, up from 40%. Higher star ratings mean more bonus revenue starting in 2027.

Carelon and CarelonRx Are Growing and Diversifying Revenue

The company's non-insurance businesses are expanding rapidly. CarelonRx (pharmacy benefits) grew on higher prescription volume. Carelon Services (health services including home and community care) nearly doubled revenue, largely due to the acquisition of CareBridge in December 2024. These segments are becoming meaningful profit contributors, partially cushioning the Health Benefits weakness.

Operating Cash Flow Dropped Sharply, Partly Due to a One-Time Legal Settlement

Cash generated from operations fell by $1.5 billion. A significant portion of this was a $666 million payment to settle the long-running Blue Cross Blue Shield antitrust litigation (a lawsuit challenging how Blue plans carve up territories), which was finalized in 2025. Lower net income and unfavorable working capital timing also contributed. The company still holds $2.6 billion in cash at the parent level and maintains investment-grade credit ratings.