Elevance Health Inc.’s (NYSE: ELV) health care services arm, Carelon, experienced a boost in operating gain in 2023 thanks to the company’s behavioral health business, among other factors.
Carelon’s operating gain increased by $9 million from the second to third quarter of 2023, according to Elevance’s third-quarter earnings call. The insurer also announced plans to expand its behavioral health services by tapping into the serious mental illness (SMI) field.
“We are pleased with our momentum in [Carelon] as it continues to advance its strategy of integrated physical, behavioral, social and pharmacy services to deliver whole health affordably,” Gail K. Boudreaux, president and CEO of Elevance, said during the earnings call.
The insurer plans to enhance Carelon’s operating efficiency while capitalizing on its growth. Last quarter its growth was driven by its behavioral health business as well as its post-acute care management solution.
“We expect continued momentum in Carelon, including growth in Carelon’s services driven by new product launches and opportunities for meaningful external growth across businesses and the ramp-up of BioPlus and the launch of Carelon Advanced home delivery,” John Gallina, chief financial officer of Elevance, said during the earnings call.
Carelon opened its first brick-and-mortar clinic in April. Located in Fayetteville, North Carolina, the 4,760-square-foot facility offers physical and behavioral health services as well as non-medical services which include family planning and marriage counseling.
The insurer plans to expand its behavioral health offerings in the future, including focusing more on the SMI population.
“We are also looking at taking full risks on the seriously mentally ill in behavioral health,” Peter Haytaian, executive vice president of Elevance Health and president of Carelon and CarelonRX, said. “When you think about these highly specialized areas of care, we’re not naive to think that we have the capabilities internally to handle all of it… we will be looking not only for partnerships but acquisitions that can help us in that regard.”
Elevance’s tailwinds, including Carelon’s performance, will be partially offset by headwinds primarily consisting of Medicaid membership attrition. Elevance lost around 140,000 Medicaid members in Q2 due to eligibility redeterminations and a new entrant into one of its state programs.
Elevance’s third quarter 2023 revenues grew 7.2% to $42.5 billion year over year. The payer reported $1.6 billion in profit last quarter.