Elevance Health Q1: Stable Profits Amid Rising Medical Costs and Legal Challenges
Elevance Health reported stable first-quarter financial results with $2.2 billion in profits despite rising medical costs, reflecting a slight decrease from $2.25 billion in Q1 2024. Revenue increased by 15% year-over-year to $48.9 billion, driven by higher premium yields in the Health Benefits segment, strategic acquisitions, and growth in Medicare Advantage and Affordable Care Act individual membership, as well as CarelonRx product expansion. Medicare Advantage performance aligned with expectations, supported by strong retention linked to enhanced care coordination and reduced inpatient admissions.
The company’s strategic emphasis on administrative services-only (ASO) plans, where employers self-fund claims but outsource administration, has provided some insulation from escalating medical expenses. This contrasts with UnitedHealth Group’s recent earnings, which showed profit growth but lowered guidance due to increased Medicare Advantage care costs. Elevance maintained its full-year profit forecast of $34.15 to $34.18 per share and reported adjusted net income of $11.97 per share for Q1.
Operating revenue for Elevance’s Health Benefits segment rose 11% year-over-year to $41.4 billion, fueled by Medicare Advantage and commercial risk-based membership growth reaching approximately 45.8 million total members. Operating gain, totaling $2.2 billion, absorbed higher medical cost trends in Medicaid but was partly offset by premium increases. The Carelon segment showed robust growth, with operating revenue up 38% to $16.7 billion driven by acquisitions in home health and pharmacy services and scaling of risk-based capabilities. Carelon’s operating gain increased 34% to $1.1 billion.
These financial outcomes occurred amid regulatory and legal developments impacting the company. Elevance challenged the Department of Health and Human Services over a significant drop in Medicare Advantage Star Ratings, which saw seven plans awarded 5 stars in 2025 compared to 38 in 2024. One of the 5-star plans was Elevance’s HealthSun Health Plans. Additionally, Elevance is named in a class-action lawsuit alleging a price-fixing scheme to suppress out-of-network provider payments, filed by orthopedic providers in Illinois federal court.
Overall, Elevance Health’s financial performance highlights its strategic positioning in Medicare Advantage and health services integration through acquisitions and product expansion. The company’s approach to managing risk with ASO plans and premium adjustments has mitigated the impact of elevated medical cost trends, supporting consistent operational results. Regulatory challenges and ongoing litigation may influence future market and compliance dynamics, warranting monitoring by insurers and healthcare stakeholders.