Elevance Health Boosts Behavioral Health Biz with $740M State Contracts

Elevance Health Inc. (NYSE: ELV) is placing a “large focus” on its behavioral health business, inking two massive state contracts worth up to $740 million in Q1 of 2024.

Carelon, Elevance’s health care services arm, is off to a “strong start” this year, buoyed by major behavioral health contracts with the states of Maryland and California, according to its Q1 2024 earnings call.

“Momentum with external clients is building and underscores the value Carelon services is creating for health plan customers to better consumer experiences and improve affordability,” Gail Boudreaux, president and CEO of Elevance, said on the call.


Carelon raked in $12.1 billion in operating revenue in Q1 of 2024, an increase of about $600 million compared to the same period in 2023.

The Maryland Department of Health contracted Carelon to provide behavioral health services, including mental health and substance use disorder (SUD) offerings, to over 1.7 million Medicaid members starting in January 2025.

The deal represents a nearly $340 million opportunity for Carelon, according to the Baltimore Banner


The company will also partner with the California Department of Health Care Services (DHCS) to expand behavioral health services for students later this year, Boudreaux said. Carelon will serve as the administrative services organization for the public schools’ health and behavioral health services.

The deal is valued at $400 million, according to Open Minds.

“This initiative represents a major step forward in addressing the critical need for mental health support in educational settings and demonstrates our commitment to improving the health and well-being of our communities,” Boudreaux said.

Boudreaux has previously attributed much of Carelon’s success to serving government customers. 

Peter Haytaian, executive vice president of Elevance and president of Carelon, touted continued wins in the behavioral health crisis space. The company launched its suicide prevention program in 2019 and expanded it to include children aged 10 and 11 in 2021. 

Elevance reported an overall operating revenue of $42.3 billion in Q1, which Mark Kaye, Elevance’s executive vice president and chief financial officer, said was in line with the company’s expectations.

The company previously expanded its behavioral health services by tapping into the serious mental illness (SMI) segment, which represents an “open window” in the behavioral health market. Specifically, Elevance plans to take full risk with SMI care. 

In 2023, Carelon opened its first brick-and-mortar clinic, which offers physical and behavioral health. Its behavioral health offerings include family planning and marriage counseling and support for military veterans transitioning back to the community after a deployment.

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