Elevance Health Wednesday reported fourth quarter net income of $547 million as healthcare cost issues continued to drag earnings of the health insurance giant.
Elevance, which is the nation’s second-largest health insurer behind UnitedHealth Group’s UnitedHealthcare, is best known for its operation of Anthem brand Blue Cross and Blue Shield plans in 14 states. In addition, Elevance manages Medicaid via contracts with multiple states and also sells individual coverage under the Affordable Care Act also known as Obamacare. The company also has a growing Carelon healthcare services business.
Like many of its rival health insurers, the company has been battling rising medical expenses from customers in its health plans. Wednesday’s results reflected costs that are continuing to rise with the company’s benefit expense ratio, which is the percentage of premium revenue that goes toward medical costs, rising to 93.5 percent in the fourth quarter.
Health insurers historically have wanted that benefit expense ratio percentage in the mid to low 80s but that’s been largely unachievable for most health insurers for the last year or so in part because insurers say Americans, particularly older adults, have a pent up demand for healthcare following the Covid-19 pandemic when many patients delayed treatment. “For the year, our benefit expense ratio was 90.0 percent, an increase of 150 basis points year over year, driven by elevated medical cost trends,” Elevance said in its fourth quarter and 2025 full year earnings report.
Net income rose 31% to $547 million, or $2.47 a share, in the fourth quarter ended December 31, 2025 compared to $418 million, or $1.81, in the year-ago period. Total revenues were up 9.5% to $49.7 billion.
Elevance’s benefit expense ratio gradually rose over the last year. It was 91.3 percent in the third quarter, 88.9% and in the second quarter and 86.4% in the first quarter, according to earnings reports issued throughout last year.
Elevance said its operating revenue was up 10% to $49.3 billion in the fourth quarter “driven by higher premium yields in our health benefits segment, contributions from acquisitions, and growth in Medicare Advantage membership, partially offset by membership attrition in our Medicaid business.”
Elevance ended 2025 with 45.2 million health plan members, which was down 1 percent compared to the prior year, “driven by attrition” in the company’s Medicaid health insurance business for low income Americans.
Meanwhile, the company’s Carelon health services business, which includes the pharmacy benefit management company CarelonRx, continues to grow. Operating revenue jumped 27% to $18.7 billion driven by growth of “CarelonRx product revenue, the expansion of Carelon Servivecs risk-based solutions and the acquisition of CareBridge.”
“As we enter 2026, our focus is on advancing affordability and making healthcare easier to access and navigate for the members we serve,” Elevance chief executive officer Gail Boudreaux said. “Through pricing discipline and targeted investments, we are strengthening the earnings power of our diversified platform and remain confident in our ability to return to at least 12% adusted (earnings per share) growth in 2027.”