Elevance Health Looking Forward To More Upside, Downside Risk Sharing

Like many other insurers, Elevance Health Inc. (NYSE: ELV) is beginning to capitalize on its health care service capabilities.

Starting this year, the company will separate its business reports for its provider services wing, Carelon, as a way to adapt to the company’s evolving infrastructure.

“Carelon offers a diverse suite of services across behavioral health, advanced analytics, complex care, pharmacy services and digital assets,” Elevance CFO John Gallina said during Wednesday’s quarterly earnings call. “We remain committed to expanding the scale and scope of services Carelon provides to our own and third-party health plans.”


Elevance has touted its own at-home care offerings in the past, too. Today, it is reaping some of the benefits that have come from its investments in home-based care and other health care services.

Carelon RX and Carelon health services grew revenue by 12% and 27% in 2022 compared to 2021, respectively.

Gallina said that separating its business divisions and keeping Carelon’s earnings and operations as its own entity is an indication of “how we will grow our enterprise for years to come.”


Elevenace also touted its recent purchase of Blue Cross and Blue Shield of Louisiana, which will expand its portfolio of Anthem brand health plans.

The deal will bring 1.9 million health plan customers to Elevance’s insurance plans and makes Louisiana the 15th state where the Anthem Blue Cross brand of health insurance will be sold once the deal is finalized.

While Elevance is not ruling out more acquisitions in the near-term future, it is bullish on Carelon’s ability to continue to grow without inorganic growth.

“We expect Carelon services to grow revenue in the low double-digit range organically, excluding all pending or unannounced M&A,” Gallina said. “That growth will be driven by revenue per consumer served.”

Partnering with health plans has also proven to be financially beneficial.

Of Carelon’s nearly $41 billion of revenue in 2022, about 60% came from partnering with Elevance’s health plans.

Growing internally is something Elevance will continue to focus on in 2023 and beyond.

“A core part of our strategy is focused on internal growth and serving Elevance’s affiliated health plans,” Peter Haytaian, executive vice president of Elevance Health and president of Carelon, said. “We built infrastructure to engage to a much better degree with our associates and partners internally and we’re seeing really good progress there. We remain keenly focused on whole health and improving the patient experience.”

Elevance is also still exploring and refining its strategy when it comes to value-based care.

“We continue, quite frankly, to refine and improve our strategy,” Elevance CEO Gail Boudreaux said. “We feel like we’re making really good progress on it. What we’re seeing is a lot more interest in sharing up and downside risk. Historically, value-based care was more upside risk. I think one of the biggest differences is the sharing of data bilaterally and much more timely so that action can be taken in a much more integrated way.”

That could potentially open the door for more home-based care providers to partner with the company in the future. CareAdvantage Inc., for instance, works with the company on a risk-sharing model in Virginia.

Elevance Health’s profits dipped 16.5% to $949 million in the fourth quarter of 2022, compared to $1.1 billion last year during the same time period. Revenue jumped 9% to $39.9 billion compared to $36.6 billion a year ago.

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