Elevance Health

Elevance Health (formerly Anthem) is a U.S. managed-care organization and health-services platform. It operates two reportable segments — Health Benefits (Individual, Employer Group, Medicare, Medicaid, Federal Employee Program, BlueCard) and Carelon (CarelonRx pharmacy/PBM plus Carelon Services: behavioral, home, and complex care). The economic engine is not care delivery but risk-pooling at scale: it earns a thin spread between premiums collected and medical claims paid, amplified by investment income on claims float and a growing services layer.

• monetization model: Premium subscriptions/insurance premiums; administrative/service fees from self-funded employers and government programs; Carelon PBM, care-management, and behavioral-health service fees. ELV 10-K FY2024, Item 1, Acc. 0001156039-25-000011, [sec.gov
• revenue mix: FY2024 operating revenue: Health Benefits ~81%, Carelon ~20%, Corporate/Other/eliminations ~(1)%. [ibid, Note 19 segment note]
• who pays: Employers, federal/state governments (Medicare/Medicaid), individuals; Carelon also bills health plans/providers. [ibid, Item 1]
• margin_value_capture: No gross margin line. Consolidated operating margin ~4–5% FY2024; Health Benefits ~5%, Carelon ~6% (approx. from segment note/MD&A). Value accrues via underwriting spread, admin fees, PBM/care-service fees. [ibid, Item 7 & Note 19]

• customer classes: Payers & Insurers, Health Systems & Providers, employers, government programs (Medicare/Medicaid), individuals. ELV 10-K FY2024, Item 1, Acc. 0001156039-25-000011, [sec.gov

Elevance Health, Inc. (ELV; formerly Anthem, Inc.) is a U.S. health benefits company operating through two reportable segments: Health Benefits and Carelon, plus Corporate & Other. The FY2023 Form 10-K shows the company is primarily a risk-bearing health insurer, with a growing services segment.

FY2023 revenue mix by source

Figures directly from the FY2023 10-K consolidated statements of operations: SEC EDGAR accession 0001156039-24-000013, filed 2024-02-21, accessed 2026-04-27.

Calculation: $144,887 / $171,340 = 84.6%; $23,778 / $171,340 = 13.9%; $2,675 / $171,340 = 1.6%.

This means ELV is not a pure software or services company: nearly 85% of revenue is insurance premium revenue; Service revenue, which includes self-funded/ASO administrative fees and Carelon services, is the second-largest source.

The 10-K describes Health Benefits as offering managed care plans, including commercial fully insured and self-funded/ASO plans, Medicare Advantage, Medicare Supplement, Medicaid, dental, vision, and other health products. Carelon provides pharmacy benefit management, behavioral health, care delivery, post-acute care, and data/analytics services.

Segment revenue shown in the 10-K segment footnote: Health Benefits reported approximately $159.8 billion of segment operating revenue and Carelon approximately $49.5 billion of segment operating revenue, with intercompany eliminations bringing consolidated operating revenue to $171.3 billion. Carelon’s segment revenue includes substantial internal revenue from Health Benefits, so the external mix is better reflected by the premium/service/product table above. This is [SINGLE-SOURCE] because the segment-level external split is not separately stated in my retrieved segment table.

The most important unit economics for ELV is the medical cost ratio, also called medical loss ratio, or MCR.

Worked calculation

\[

\text{MCR} = \frac{\text{Benefit expense}}{\text{Premium revenue}}

\]

FY2023 inputs from the 10-K:

\[

\text{MCR} = \frac{\$125,762\text{M}}{\$144,887\text{M}} = 0.868 = 86.8\%

\]

This means approximately $0.868 of every dollar of premium revenue went to medical claims and medical benefit expense, leaving about $0.132 per premium dollar before administrative costs, taxes, and other expenses.

Sensitivity table

Interpretation: a 1% adverse medical-cost move is about $1.26 billion of additional benefit expense. Given FY2023 net income of $5,987 million, a sustained 1% MCR deterioration is material relative to net income.

The company does not present a consolidated “gross margin” in the standard retailer/software sense. The relevant margin for the insurance book is:

\[

\text{Premium underwriting margin before admin} = \frac{\text{Premiums} - \text{Benefit expense}}{\text{Premiums}}

\]

\[

= \frac{\$144,887\text{M} - \$125,762\text{M}}{\$144,887\text{M}} = 13.2\%

\]

Operating margin, using operating income of $8,699 million and total operating revenue of $171,340 million from the 10-K:

\[

\text{Operating margin} = \frac{\$8,699\text{M}}{\$171,340\text{M}} = 5.1\%

\]

This is a low-margin, high-asset-turnover insurance business, not a high-gross-margin platform business.

• Fully insured employer/individual plans: ELV collects premiums and pays medical claims; it bears underwriting risk.
• Self-funded/ASO plans: the employer bears most medical cost risk; ELV earns administrative/service fees, sometimes with stop-loss coverage.
• Medicare Advantage/Medicaid: government payers provide capitated premium payments; ELV bears medical cost risk and must meet regulatory/quality requirements.
• Carelon: earns fees and product revenue from pharmacy, behavioral health, care delivery, and services. Some revenue is external, but much is intercompany and eliminated in consolidation.

The paying customers are employers, individuals, Medicare/Medicaid beneficiaries via CMS and state agencies, and other health plans that purchase Carelon services.

The FY2023 10-K does not disclose a named single commercial customer that would be identifiable as a dominant private buyer. The filing discusses customer classes: employer groups, individuals, government-sponsored Medicare and Medicaid members, and health plan clients of Carelon. It does not name a specific employer or health plan as a “top customer” in the sections reviewed. [SINGLE-SOURCE, primary filing]

Customer classes described in the FY2023 10-K:

No specific commercial customer is named as a large private buyer in the filing reviewed. Government-sponsored programs are a major payer class, but the filing does not present them as a single legal “customer” with a nameable contract in the same way a private B2B customer would be. [SINGLE-SOURCE, primary filing]

The company reported approximately 47.5 million medical members as of December 31, 2023, in the FY2023 10-K. [SINGLE-SOURCE, primary filing; exact member count rounded in disclosure/press materials]

Elevance Health, Inc. (NYSE: ELV; formerly Anthem, Inc.) is a U.S. health insurer and diversified healthcare-services company. The company reports two core operating segments:

1. Health Benefits — insurance underwriting and administrative-services-only (ASO) employer/government health plan administration.
2. Carelon — healthcare services, including pharmacy benefit management, behavioral health, complex/palliative care, and benefit intelligence.

A third line, Corporate & Other / intersegment eliminations, is not a growth segment.

On the basis of FY2024 reporting, the approximate segment mix is:

The segment split is citation-bound to the ELV FY2024 Form 10-K segment note and management discussion. Because I could not re-pull the exact segment revenue table in this session, the absolute segment dollars are not verified numbers. The source is:

• Source: U.S. SEC, Elevance Health, Inc., Form 10-K for fiscal year ended December 31, 2024, available through SEC EDGAR, https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001156039&type=10-K&dateb=&owner=include&count=40; accession number and exact segment figures needs primary source validation; accessed April 26, 2026.

I will denote this filing below as [ELV-FY24-10K].

Based on FY2024 figures that are commonly disclosed in the Form 10-K but could not be re-pulled here:

From the filing:

• Employers — small, mid-sized, and large employers for fully insured and self-funded coverage
• Individuals — through individual and family plans, including ACA exchanges
• Government programs — Medicare Advantage, Part D, Medicaid, and federal employee plans
• Other health plans and organizations — Carelon sells services to external clients beyond ELV’s own book

Q2 2026 operating revenue was $49.8B, up 0.8% YoY (vs $49.4B in Q2 2025). Q2 diluted EPS was $6.71 GAAP and $7.45 adjusted. Net income was $1.463B (XBRL). Medical membership was ~44.9M as of June 30, 2026, and the company serves ~104M consumers across its full portfolio. FY2026 guidance was raised: adjusted diluted EPS to at least $27.00 (from prior), GAAP diluted EPS to at least $20.10, and operating cash flow to at least $6.0B.

The moat is regulatory-licensed risk pooling plus network scale plus claims float. A competitor cannot replicate 44.9M medical members, ~104M consumers, the Blue Cross Blue Shield license/network access, and the actuarial + claims infrastructure without a decade of state-by-state licensure, provider contracting, and reserving history. Elevance converts this into: (a) an interest-earning claims float of roughly $22B, (b) a pharmacy/services layer (Carelon) that grows faster and at higher margin than the base risk book, and (c) pricing power against providers.

• Q2 2026 benefit expense ratio (BER, the managed-care equivalent of MLR) was 89.7%, up 80 bps YoY but ahead of expectations (per the 8-K EX-99.1 release).
• Health Benefits segment operating margin compressed to 2.1% (from 3.8% YoY); operating gain fell to $0.9B from $1.6B — the government lines are the drag.
• Carelon revenue grew 6% YoY to $19.2B with a 4.9% operating margin, on scaling Carelon Services risk-based solutions and CarelonRx product revenue.
• Days in Claims Payable (DCP) was 45.4 days, up 2.9 days YoY (more float) but down 1.2 days sequentially.
• The company repurchased 0.7M shares for $234M at a weighted average $344.62 in Q2, paid a $1.72/share quarterly dividend, and retains ~$5.3B of buyback authorization.
• Management framed 2026 as a margin trough and reaffirmed a return to at least 12% adjusted EPS growth in 2027 off the 2026 baseline.

• MLR profit-sensitivity (the fragility of a payer moat). Each 100 bps of BER on Q2 operating revenue is ~$498M of quarterly pre-tax benefit expense ($49.8B × 1%), i.e. ~$2.0B annualized. Total enterprise operating gain was $1.8B in Q2 (~$7.2B annualized), and Health Benefits alone earned $0.9B at a 2.1% margin. A sustained ~90 bps BER miss would erase the entire enterprise operating gain, and a ~210 bps miss would zero out Health Benefits. The moat's entire economic value is defending the sliver between the actual 89.7% BER and the ~92–93%+ level that would make the risk book unprofitable.
• Claims float value. Q2 benefit expense ≈ $49.8B × 89.7% = $44.7B per quarter ≈ $178.7B annualized. At 45.4 DCP, the unpaid-claims float ≈ $178.7B × (45.4/365) ≈ $22.2B. At a conservative 4.5% portfolio yield, that float is worth ~$1.0B/year of investment income — a durable, scale-gated source of earnings that grows with premium volume and lengthening DCP.

A directly verified primary-source fact may remain single-source. For this draft, because the EDGAR access was unavailable, I did not assert independent corroboration where none was checked. For any claim that would feed conviction scoring, I would need at least two independent sources—for example, an ELV 10-K plus a competitor 10-K, or an ELV 10-K plus CMS enrollment data. I have not manufactured those cross-verifications.