What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-04-19 compared with 2022-10-19 · 321 added, 570 removed, 705 unchanged (56% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

2023 December 31,

(In millions, except share data) (Unaudited)

(In millions, except share and per share data) (Unaudited) (Restated)

Current assets:

51 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

(In millions, except per share data) 2022 2021 2022 2021

(In millions, except per share data) (Restated)

Premiums $ 35,868 $ 32,785

Product revenue 4,022 3,301

Administrative fees and other revenue 1,931 1,800 5,569 5,189

Service fees 2,008 1,800

Total operating revenue 41,898 37,886

Net investment income 387 360

Net (losses) gains on financial instruments ( 57 ) ( 61 ) ( 439 ) 107

Net losses on financial instruments ( 113 ) ( 151 )

Total revenues 42,172 38,095

1 unchanged sentence

Cost of products sold 3,481 2,883

Selling, general and administrative expense 4,514 3,946 13,124 11,692

Operating expense 4,800 4,345

Interest expense 251 201

Amortization of other intangible assets 235 129

Loss on extinguishment of debt — — — 5

Total expenses 39,553 35,789

Income before income tax expense

2,146 1,996 6,615 6,525

Income tax expense 615 527

Net income 2,004 1,779

Net loss (income) attributable to noncontrolling interests 5 7 18 ( 3 )

Net (income) loss attributable to noncontrolling interests ( 15 ) 10

Shareholders’ net income $ 1,989 $ 1,789

7 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

(In millions) 2023 2022

3 unchanged sentences

Change in non-credit component of impairment losses on investments

( 1 ) ( 1 ) ( 3 ) 1

Change in net unrealized gains/losses on cash flow hedges 11 3

Change in net periodic pension and postretirement costs 2 7

Change in future policy benefits 2 9

Foreign currency translation adjustments 2 ( 3 )

Other comprehensive loss ( 638 ) ( 87 ) ( 2,617 ) ( 254 )

Net loss (income) attributable to noncontrolling interests 5 7 18 ( 3 )

Other comprehensive loss attributable to noncontrolling interests 3 1 11 1

Other comprehensive income (loss) 442 ( 1,054 )

Net (income) loss attributable to noncontrolling interests ( 15 ) 10

Other comprehensive (income) loss attributable to noncontrolling interests ( 2 ) 5

Total shareholders’ comprehensive income $ 2,429 $ 740

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

(In millions) 2022 2021

Three Months Ended

(In millions) (Restated)

Operating activities

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Net losses (gains) on financial instruments 439 ( 107 )

Net losses on financial instruments 113 151

Equity in net earnings of other invested assets 30 ( 153 )

22 unchanged sentences

Financing activities

Net proceeds from (repayments of) commercial paper borrowings 375 ( 150 )

Net proceeds from commercial paper borrowings 325 225

Proceeds from long-term borrowings 2,574 —

Repayments of long-term borrowings ( 1,908 ) ( 14 )

Proceeds from short-term borrowings 1,365 175

Repayments of short-term borrowings ( 1,375 ) —

Changes in securities lending payable ( 205 ) 441

21 unchanged sentences

(In millions) Number of

December 31, 2021 (audited) 241.8 $ 2 $ 9,148 $ 27,088 $ ( 178 ) $ 68 $ 36,128

Adoption of Accounting Standards Update 2020-06 (Note 2) — — — ( 23 ) — — ( 23 )

January 1, 2022 241.8 2 9,148 27,065 ( 178 ) 68 36,105

Net income (loss) — — — 1,805 — ( 10 ) 1,795

Other comprehensive loss — — — — ( 1,058 ) ( 5 ) ( 1,063 )

Noncontrolling interests adjustment — — — — — 3 3

Repurchase and retirement of common stock ( 1.2 ) — ( 45 ) ( 500 ) — — ( 545 )

December 31, 2022 (restated) 238.0 $ 2 $ 9,084 $ 29,647 $ ( 2,490 ) $ 87 $ 36,330

Net income — — — 1,989 — 15 2,004

Other comprehensive income — — — — 440 2 442

Repurchase and retirement of common stock, including excise tax ( 1.3 ) — ( 51 ) ( 575 ) — — ( 626 )

Dividends and dividend equivalents — — — ( 354 ) — — ( 354 )

2 unchanged sentences

March 31, 2023 237.1 $ 2 $ 8,697 $ 30,707 $ ( 2,050 ) $ 104 $ 37,460

Net income (loss) — — — 1,653 — ( 3 ) 1,650

Other comprehensive loss — — — — ( 913 ) ( 3 ) ( 916 )

Noncontrolling interests adjustment — — — — — 5 5

Repurchase and retirement of common stock ( 1.3 ) — ( 48 ) ( 576 ) — — ( 624 )

Dividends and dividend equivalents — — — ( 310 ) — — ( 310 )

Issuance of common stock under employee stock plans, net of related tax benefits 0.2 — 111 — — — 111

Convertible debenture repurchases and conversions — — ( 80 ) — — — ( 80 )

June 30, 2022 240.0 2 9,134 28,825 ( 2,149 ) 55 35,867

Net income (loss) — — — 1,618 — ( 5 ) 1,613

Other comprehensive loss — — — — ( 635 ) ( 3 ) ( 638 )

Noncontrolling interest adjustment — — — — — 5 5

Repurchase and retirement of common stock ( 1.2 ) — ( 47 ) ( 532 ) — — ( 579 )

Dividends and dividend equivalents — — — ( 307 ) — — ( 307 )

Issuance of common stock under employee stock plans, net of related tax benefits 0.2 — 103 — — — 103

Convertible debenture repurchases and conversions — — ( 21 ) — — — ( 21 )

September 30, 2022 239.0 $ 2 $ 9,169 $ 29,604 $ ( 2,784 ) $ 52 $ 36,043

See accompanying notes.

Elevance Health, Inc.

Consolidated Statements of Changes in Equity (continued)

Total Shareholders’ Equity

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Noncontrolling

Interests Total

(In millions) Number of

December 31, 2021 (restated) 241.8 $ 2 $ 9,148 $ 27,142 $ ( 197 ) $ 68 $ 36,163

Adoption of Accounting Standards Update 2020-06 — — — ( 23 ) — — ( 23 )

January 1, 2022 241.8 2 9,148 27,119 ( 197 ) 68 36,140

Net income — — — 1,665 — 2 1,667

Other comprehensive loss — — — — ( 345 ) ( 2 ) ( 347 )

Accumulated noncontrolling interests — — — — — 65 65

Repurchase and retirement of common stock ( 1.4 ) ( 1 ) ( 53 ) ( 393 ) — — ( 447 )

Dividends and dividend equivalents — — — ( 281 ) — — ( 281 )

Issuance of common stock under employee stock plans, net of related tax benefits

0.9 — 62 — — — 62

March 31, 2021 244.9 2 9,253 24,793 ( 195 ) 65 33,918

Net income — — — 1,793 — 8 1,801

Other comprehensive income — — — — 178 2 180

Noncontrolling interests adjustment — — — — — 3 3

Repurchase and retirement of common stock

( 1.3 ) — ( 47 ) ( 433 ) — — ( 480 )

Dividends and dividend equivalents — — — ( 279 ) — — ( 279 )

Issuance of common stock under employee stock plans, net of related tax benefits

0.3 — 119 — — — 119

Convertible debenture repurchases and conversions

— — ( 216 ) — — — ( 216 )

June 30, 2021 243.9 2 9,109 25,874 ( 17 ) 78 35,046

Net income (loss) — — — 1,509 — ( 7 ) 1,502

Other comprehensive loss — — — — ( 86 ) ( 1 ) ( 87 )

Net income (loss) (restated) — — — 1,789 — ( 10 ) 1,779

Other comprehensive loss (restated) — — — — ( 1,049 ) ( 5 ) ( 1,054 )

Noncontrolling interests adjustment — — — — — 3 3

Repurchase and retirement of common stock ( 1.2 ) — ( 45 ) ( 500 ) — — ( 545 )

( 1.2 ) — ( 44 ) ( 407 ) — — ( 451 )

Dividends and dividend equivalents — — — ( 312 ) — — ( 312 )

— — — ( 276 ) — — ( 276 )

Issuance of common stock under employee stock plans, net of related tax benefits

2 unchanged sentences

— — 9 — — — 9

September 30, 2021 242.8 $ 2 $ 9,138 $ 26,700 $ ( 103 ) $ 71 $ 35,808

March 31, 2022 (restated) 241.1 $ 2 $ 9,151 $ 28,096 $ ( 1,246 ) $ 56 $ 36,059

See accompanying notes.

1 unchanged sentence

Notes to Consolidated Financial Statements

September 30, 2022

March 31, 2023

(In Millions, Except Per Share Data or As Otherwise Stated Herein)

On May 18, 2022, our shareholders approved a proposal to amend our amended and restated articles of incorporation to change our name from Anthem, Inc.

to Elevance Health, Inc.

This amendment and name change went into effect on June 27, 2022.

We began operating as Elevance Health, Inc.

and trading under our new ticker symbol “ELV” on June 28, 2022.

References to the terms “we,” “our,” “us” or “Elevance Health” used throughout these Notes to Consolidated Financial Statements refer to Elevance Health, Inc., an Indiana corporation, and unless the context otherwise requires, its direct and indirect subsidiaries.

1 unchanged sentence

Elevance Health is a health company with the purpose of improving the health of humanity.

We are the largest health insurer in the United States in terms of medical membership, serving over 47 million medical members through our affiliated health plans as of September 30, 2022.

We offer a broad spectrum of network-based managed care risk-based plans to Individual, Group, Medicaid and Medicare markets.

In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, provider network access, medical management, care management and wellness programs, actuarial services and other administrative services.

We also provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program.

We provide an array of specialty services both to our subsidiary health plans and also unaffiliated health plans, including pharmacy benefits management (“PBM”) services and dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

We are one of the largest health insurers in the United States in terms of medical membership, serving greater than 48 million medical members through our affiliated health plans as of March 31, 2023.

We offer a broad spectrum of network-based managed care risk-based plans to Individual, Employer Group, Medicaid and Medicare markets.

In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, provider network access, medical management, care management, wellness programs, actuarial services and other administrative services.

We provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program.

We provide an array of specialty services both to customers of our subsidiary health plans and also unaffiliated health plans, including pharmacy services and dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

We are an independent licensee of the Blue Cross and Blue Shield Association (“BCBSA”), an association of independent health benefit plans.

We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin.

We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (with the exception of 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin.

In a majority of these service areas, we do business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield, and Empire Blue Cross Blue Shield or Empire Blue Cross.

In addition, we conduct business through arrangements with other BCBS licensees as well as other strategic partners.

Through our subsidiaries, we also serve customers in numerous states as AIM Specialty Health, Amerigroup, Aspire Health, Beacon, CareMore, Freedom Health, HealthLink, HealthSun, Integra Managed Care, MMM, Optimum HealthCare, Simply Healthcare, and/or UniCare.

We offer PBM services through our IngenioRx, Inc.

(“IngenioRx”) subsidiary.

We also serve members in numerous states as Amerigroup, Freedom Health, HealthLink, HealthSun, MMM, Optimum HealthCare, Simply Healthcare, UniCare and/or Wellpoint.

We also conduct business through arrangements with other BCBS licensees as well as other strategic partners.

We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

As part of our name change to Elevance Health, on June 15, 2022 we announced that over the next several years we will organize our brand portfolio into the following core go-to-market brands:

Through various subsidiaries, we also offer pharmacy services as CarelonRx and other healthcare-related services as Carelon Services, Aspire Health, Carelon Behavioral Health and CareMore.

As we announced in 2022, over the next several years we are organizing our brand portfolio into the following core go-to-market brands:

• Anthem Blue Cross/Anthem Blue Cross and Blue Shield — represents our existing Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed plans;

• Wellpoint — we intend to unite select non-BCBSA licensed Medicare, Medicaid and commercial plans under the Wellpoint name;

• Carelon — this brand will bring together our healthcare brands and capabilities, including our Diversified Business Group and IngenioRx business under a single brand name.

We now refer to our Diversified Business Group as Carelon.

In January 2023, IngenioRx will become CarelonRx.

There are currently no segment changes associated with this branding strategy.

Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner, and given this evolution we are in the process of reviewing and modifying how we will manage our businesses in the future.

• Carelon — this brand brings together our healthcare-related brands and capabilities, including our CarelonRx and Carelon Services businesses, under a single brand name.

Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner.

Given this evolution, we reviewed and modified how we manage our business, monitor our performance and allocate our resources, and made changes to our reportable segments beginning in the first quarter of 2023.

The results of our operations are now reported in the following four reportable segments:

Health Benefits (aggregates our previously reported Commercial & Specialty Business and Government Business segments), CarelonRx, Carelon Services (previously included in our Other segment) and Corporate & Other (our businesses that do not individually meet the quantitative thresholds for an operating segment, as well as corporate expenses not allocated to our other reportable

In 2022, we managed and presented our operations through the following four reportable segments:

Commercial & Specialty Business, Government Business, CarelonRx and Other.

Previously reported information in this Form 10-Q has been reclassified to conform to the new presentation.

For additional discussion regarding our segments, including the changes made, see Note 14 “Segment Information.”

Basis of Presentation and Significant Accounting Policies

4 unchanged sentences

We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our 2022 Annual Report on Form 10-K, unless the information contained in those disclosures materially changed or is required by GAAP.

In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 have been recorded.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022, or any other period.

The seasonal nature of portions of our health care and related benefits business, competitive and other market conditions, as well as COVID-19 related impacts, may cause full-year results to differ from estimates based upon our interim results of operations.

In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three months ended March 31, 2023 and 2022 have been recorded.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023, or any other period.

The seasonal nature of portions of our health care and related benefits business, as well as competitive and other market conditions, may cause full-year results to differ from estimates based upon our interim results of operations.

These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2022 included in our 2022 Annual Report on Form 10-K.

6 unchanged sentences

We control a number of bank accounts that are used exclusively to hold customer funds for the administration of customer benefits, and we have cash and cash equivalents on deposit to meet certain regulatory requirements.

These amounts totaled $ 291 and $ 173 at September 30, 2022 and December 31, 2021, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

These amounts totaled $ 520 and $ 258 at March 31, 2023 and December 31, 2022, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

We classify fixed maturity securities in our investment portfolio as “available-for-sale” and report those securities at fair value.

8 unchanged sentences

For mortgage-backed and asset-backed securities, cash flow estimates are based on assumptions regarding the underlying collateral, including prepayment speeds, vintage, type of underlying asset, geographic concentrations, default rates, recoveries and changes in value.

For all other securities, cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings and estimates regarding timing and amount of recoveries associated with a default.

For all other securities, cash flow estimates are driven by assumptions regarding

probability of default, including changes in credit ratings and estimates regarding timing and amount of recoveries associated with a default.

For asset-backed securities included in fixed maturity securities, we recognize income using an effective yield based on anticipated prepayments and the estimated economic life of the securities.

When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments.

The net investment in the

securities is adjusted to the amount that would have existed had the new effective yield been applied since the purchase date of the securities.

The net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the purchase date of the securities.

Such adjustments are reported within net investment income.

10 unchanged sentences

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral.

We recognize the collateral as an asset, which is reported under the caption “Other current assets” in our consolidated balance sheets, and we record a corresponding liability for the obligation to return the collateral to the borrower, which is reported under the caption “Other current liabilities” in our consolidated balance sheets.

The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

We recognize the collateral as an asset, which is reported under the caption “Other current assets” on our consolidated balance sheets, and we record a corresponding liability for the obligation to return the collateral to the borrower, which is reported under the caption “Other current liabilities.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

Unrealized gains or losses on securities lending collateral are included in accumulated other comprehensive loss as a separate component of shareholders’ equity.

6 unchanged sentences

The allowance for doubtful accounts is based on historical collection trends, future forecasts and our judgment regarding the ability to collect specific accounts.

Premium receivables include the uncollected amounts from risk-based groups, individuals and government programs for insurance services.

Premium receivables are reported net of an allowance for doubtful accounts of $ 140 and $ 142 at September 30, 2022 and December 31, 2021, respectively.

Premium receivables include the uncollected amounts from employer risk-based groups, individuals and government programs for insurance services.

Premium receivables are reported net of an allowance for doubtful accounts of $ 149 and $ 152 at March 31, 2023 and December 31, 2022, respectively.

Self-funded receivables include administrative fees, claims and other amounts due from fee-based customers for administrative services.

Self-funded receivables are reported net of an allowance for doubtful accounts of $ 82 and $ 50 at September 30, 2022 and December 31, 2021, respectively.

Self-funded receivables are reported net of an allowance for doubtful accounts of $ 76 and $ 68 at March 31, 2023 and December 31, 2022, respectively.

Other receivables include pharmacy rebates, provider advances, claims recoveries, reinsurance receivables, proceeds due from brokers on investment trades, accrued investment income and other miscellaneous amounts due to us.

These receivables are reported net of an allowance for doubtful accounts of $ 709 and $ 648 at September 30, 2022 and December 31, 2021, respectively.

These receivables are reported net of an allowance for doubtful accounts of $ 763 and $ 744 at March 31, 2023 and December 31, 2022, respectively.

Revenue Recognition:

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at September 30, 2022.

For the three and nine months ended September 30, 2022 and 2021, revenue recognized from performance obligations related to prior periods, such as due to changes in transaction price, was not material.

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at March 31, 2023.

For the three months ended March 31, 2023 and 2022, revenue recognized from performance obligations related to prior periods, such as changes in transaction price, were not material.

For contracts that have an original, expected duration of greater than one year, revenue expected to be recognized in future periods related to unfulfilled contractual performance obligations and contracts with variable consideration related to undelivered performance obligations is not material.

Recently Adopted Accounting Guidance:

In January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”).

The amendments in ASU 2021-01 provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of the reference rate reform.

The provisions must be applied at a Topic, Subtopic, or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level.

We adopted ASU 2021-01 on January 7, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

In October 2020, the FASB issued Accounting Standards Update No.

2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs (“ASU 2020-08”).

The amendments in ASU 2020-08 clarify when an entity should assess whether a callable debt security is within the scope of accounting guidance, which impacts the amortization period for nonrefundable fees and other costs.

ASU 2020-08 became effective for interim and annual reporting periods beginning after December 15, 2020.

The amendments were to be applied on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities.

We adopted ASU 2020-08 on January 1, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

In August 2020, the FASB issued Accounting Standards Update No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) .

The amendments eliminate two of the three accounting models that require separate accounting for convertible features of debt securities, simplify the contract settlement assessment for equity classification, require the use of the if-converted method for all convertible instruments in the diluted earnings per share calculation and expand disclosure requirements.

The amendments became effective for our annual and interim reporting periods beginning after December 15, 2021.

We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, which resulted in an increase to our reported debt outstanding of $ 31 , a decrease to our deferred tax liabilities of $ 8 , and a corresponding cumulative-effect reduction to our opening retained earnings of $ 23 ;

these amounts are not material to our overall consolidated financial position.

The adoption of ASU 2020-06 did not have an impact on our results of operations or our consolidated cash flows.

Use of the if-converted method did not have an impact on our overall earnings per share calculation.

In December 2019, the FASB issued Accounting Standards Update No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

The amendments in ASU 2019-12 remove certain exceptions to the general principles in Accounting Standards Codification Topic 740.

The amendments also clarify and amend existing guidance to improve consistent application.

The amendments became effective for our annual reporting periods beginning after December 15, 2020.

The transition method (retrospective, modified retrospective, or prospective basis) related to the amendments depends on the applicable guidance, and all amendments for which there is no transition guidance specified are to be applied on a prospective basis.

We adopted ASU 2019-12 on January 1, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

Recent Accounting Guidance Not Yet Adopted:

In November 2020, the FASB issued Accounting Standards Update No.

In November 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.2020-11.

Financial Services—Insurance (Topic 944):

Effective Date and Early Application (“ASU 2020-11”).

The amendments in ASU 2020-11 make changes to the effective date and early application of Accounting Standards Update No.

The amendments in ASU 2020-11 change the effective date and early application of Accounting Standards Update No.

2018-12, Financial Services—Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”), which was issued in November 2018.

The amendments in ASU 2020-11 have extended the original effective date by one year, and now the amendments are required for our interim and annual reporting periods beginning after December 15, 2022.

The amendments in ASU 2018-12 make changes to a variety of areas to simplify or improve the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity.

The amendments require insurers to annually review the assumptions they make about their policyholders and update the liabilities for future policy benefits if the assumptions change.

The amendments also simplify the amortization of deferred contract acquisition costs and add new disclosure requirements about the assumptions insurers use to measure their liabilities and how they may affect future cash flows.

The amendments related to the liability for future policy benefits for traditional and limited-payment contracts and deferred acquisition costs are to be applied to contracts in force as of the beginning of the earliest period presented, with an option to apply such amendments retrospectively with a cumulative-effect adjustment to the opening balance of retained earnings as of the earliest period presented.

The amendments

for market risk benefits are to be applied retrospectively.

We do not believe the adoption of ASU 2020-11 and ASU 2018-12 will have a material impact on our consolidated financial position, results of operations, cash flows, and related disclosures.

The amendments in ASU 2020-11 extended the original effective date by one year, and now the amendments are required for our interim and annual reporting periods beginning after December 15, 2022.

This standard requires us to review cash flow assumptions for our long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income.

This standard also requires us to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income.

The rate used to discount our reserves for future policy benefits will be based on an estimate of the yield for an upper-medium grade fixed-income instrument with a duration profile matching that of our liabilities.

In addition, this standard changes the amortization method for deferred acquisition costs.

We adopted these amendments on January 1, 2023, using the modified retrospective transition method for changes to the liability for future policy benefits and deferred acquisition costs as of the transition date, January 1, 2021.

While the adoption did not have an overall material impact, our prior period financial statements presented in this Form 10-Q have been restated to reflect the impacts of our adoption as required by the new standard.

There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2022 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations or cash flows.

Business Acquisitions

Business Acquisitions and Divestitures

Pending Divestiture

On March 28, 2023, we announced our entrance into an agreement to sell our life and disability businesses to StanCorp Financial Group, Inc.

(“The Standard”), a provider of financial protection products and services for employers and individuals.

Upon closing, we and The Standard will enter into a product distribution partnership.

The divestiture is expected to close by the end of the first quarter of 2024 and is subject to standard closing conditions and customary approvals.

The related net assets held for sale and results of operations for the employee benefits businesses to be divested as of and for the period ending March 31, 2023 were not material.

Pending Acquisition

On January 23, 2023, we announced our entrance into an agreement to acquire Louisiana Health Service & Indemnity Company, d/b/a Blue Cross and Blue Shield of Louisiana (“BCBSLA”), an independent licensee of the BCBSA that provides healthcare plans to the Individual, Employer Group, Medicaid and Medicare markets, primarily in the State of Louisiana.

This acquisition aligns with our mission to become a lifetime, trusted health partner as we bring our innovative whole-health solutions to BCBSLA’s members.

The acquisition is expected to close by the end of the fourth quarter of 2023 and is subject to standard closing conditions and customary approvals.

Completed Acquisitions

On May 5, 2022, we completed our acquisition of Integra Managed Care (“Integra”) from Personal Touch Holding Corporation.

On February 15, 2023, we completed our acquisition of BioPlus Parent, LLC and subsidiaries (“BioPlus”) from CarepathRx Aggregator, LLC.

Prior to the acquisition, BioPlus was one of the largest independent specialty pharmacy organizations in the United States.

BioPlus, which operates as part of CarelonRx, seeks to connect payors and providers of specialty pharmaceuticals to meet the medication therapy needs of patients with complex medical conditions.

This acquisition aligns with our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve.

As of March 31, 2023, the purchase price was allocated to the tangible and

intangible net assets acquired based on management’s initial estimates of their fair values, of which $ 809 has been allocated to finite-lived intangible assets and $ 728 to goodwill.

The majority of goodwill is not deductible for income tax purposes.

As of March 31, 2023, the initial accounting for the acquisition had not been finalized.

The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

On May 5, 2022, we completed our acquisition of Integra Managed Care (“Integra”).

Integra is a managed long-term care plan that serves New York state Medicaid members, enabling adults with long-term care needs and disabilities to live safely and independently in their own homes.

The purchase price was allocated to the tangible and intangible net assets acquired based on management’s initial estimates of their fair values, of which $ 89 has been allocated to finite-lived intangible assets, $ 250 to indefinite-lived intangible assets, and $ 123 to goodwill, including measurement period adjustments to goodwill of $ 13 during the quarter ended September 30, 2022.

The purchase price was allocated to tangible and intangible net assets acquired based on management's estimates of their fair values, of which $ 89 has been allocated to finite-lived intangible assets, $ 250 to indefinite-lived intangible assets, and $ 125 to goodwill.

The majority of goodwill is deductible for income tax purposes.

As of September 30, 2022, the initial accounting for the acquisition had not been finalized.

Any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will be recorded as an adjustment to goodwill.

There were no measurement period adjustments during the quarter ended March 31, 2023, and as of March 31, 2023, the initial accounting for the acquisition had not been finalized.

The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

Acquisitions completed during the year ended December 31, 2021, for which the initial accounting was finalized during the three months ended June 30, 2022 included myNEXUS, Inc.

(“myNEXUS”), a comprehensive home-based nursing management company for payors, and MMM Holdings, LLC (“MMM”), including its Medicare Advantage plan, Medicaid plan and other affiliated companies.

As of September 30, 2022, the purchase price of each transaction was allocated to the tangible and intangible net assets acquired based on management’s final estimates of their fair values, of which $ 1,577 has been allocated to finite-lived intangible assets, $ 20 to indefinite-lived intangible assets, and $ 2,531 to goodwill.

The majority of goodwill is not deductible for income tax purposes.

Business Optimization Initiatives

Provided below is a summary of the activity, by reportable segment, related to the liability for employee termination costs previously incurred in connection with our enterprise-wide business optimization initiatives introduced in 2020.

Commercial & Specialty Business Government Business IngenioRx Other Total

2020 Business Optimization Initiatives

Employee termination costs:

Liability for employee termination costs at January 1, 2022 $ 61 $ 57 $ 1 $ 3 $ 122

Payments ( 16 ) ( 14 ) — — ( 30 )

Liability for employee termination costs at September 30, 2022

$ 45 $ 43 $ 1 $ 3 $ 92

Fixed Maturity Securities

3 unchanged sentences

Given the inherent uncertainty of changes in market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and additional material impairment losses for credit losses on investments may be recorded in future periods.

A summary of current and long-term fixed maturity securities, available-for-sale, at September 30, 2022 and December 31, 2021 is as follows:

Cost or Amortized Cost Gross

A summary of current and long-term fixed maturity securities, available-for-sale, at March 31, 2023 and December 31, 2022 is as follows:

Losses Allowance

Losses Estimated

September 30, 2022

March 31, 2023

Fixed maturity securities:

2 unchanged sentences

Foreign government securities 332 2 ( 43 ) ( 1 ) 290

States, municipalities and political subdivisions 4,431 5 ( 355 ) — 4,081

States, municipalities and political subdivisions, tax-exempt 4,339 38 ( 192 ) — 4,185

Corporate securities 13,834 78 ( 956 ) ( 5 ) 12,951

1 unchanged sentence

Commercial mortgage-backed securities 2,243 2 ( 173 ) ( 2 ) 2,070

Other securities 3,895 37 ( 250 ) — 3,682

Other asset-backed securities 4,142 17 ( 208 ) — 3,951

Total fixed maturity securities $ 30,188 $ 161 $ ( 1,922 ) $ ( 8 ) $ 28,419

4 unchanged sentences

Foreign government securities 321 1 ( 46 ) ( 2 ) 274

States, municipalities and political subdivisions 5,321 310 ( 10 ) — 5,621

States, municipalities and political subdivisions, tax-exempt 4,389 19 ( 265 ) — 4,143

Corporate securities 13,721 31 ( 1,218 ) ( 5 ) 12,529

1 unchanged sentence

Commercial mortgage-backed securities 2,055 1 ( 176 ) ( 2 ) 1,878

Other securities 2,907 24 ( 24 ) — 2,907

Other asset-backed securities 3,967 12 ( 241 ) — 3,738

Total fixed maturity securities $ 29,015 $ 76 $ ( 2,378 ) $ ( 9 ) $ 26,704

For fixed maturity securities in an unrealized loss position at September 30, 2022 and December 31, 2021, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:

Other asset-backed securities primarily consists of collateralized loan obligations and other debt securities.

For fixed maturity securities in an unrealized loss position at March 31, 2023 and December 31, 2022, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:

Less than 12 Months 12 Months or Greater

5 unchanged sentences

Fair Value Gross

September 30, 2022

March 31, 2023

Fixed maturity securities:

3 unchanged sentences

80 40 ( 3 ) 231 186 ( 40 )

States, municipalities and political subdivisions

1,964 3,602 ( 314 ) 139 200 ( 41 )

States, municipalities and political subdivisions, tax-exempt 468 945 ( 12 ) 967 1,689 ( 180 )

Corporate securities 1,878 3,636 ( 114 ) 3,207 6,687 ( 842 )

1 unchanged sentence

Commercial mortgage-backed securities 260 679 ( 24 ) 558 1,298 ( 149 )

Other securities 921 2,535 ( 165 ) 269 670 ( 85 )

Other asset-backed securities 364 1,067 ( 59 ) 775 2,149 ( 149 )

Total fixed maturity securities 3,636 $ 7,474 $ ( 251 ) 7,039 $ 14,151 $ ( 1,671 )

2 unchanged sentences

United States Government securities 61 $ 701 $ ( 40 ) 38 $ 442 $ ( 63 )

51 $ 990 $ ( 11 ) 27 $ 176 $ ( 7 )

Government sponsored securities 39 73 ( 4 ) 6 5 ( 1 )

— — — 1 1 ( 1 )

Foreign government securities

150 100 ( 10 ) 198 142 ( 36 )

States, municipalities and political subdivisions

281 634 ( 9 ) 8 16 ( 1 )

States, municipalities and political subdivisions, tax-exempt 1,398 2,615 ( 147 ) 396 652 ( 118 )

Corporate securities 3,551 7,826 ( 549 ) 2,204 3,521 ( 669 )

1,846 3,310 ( 57 ) 403 485 ( 21 )

Residential mortgage-backed securities

2 unchanged sentences

457 1,082 ( 76 ) 324 719 ( 100 )

Other securities

511 1,707 ( 19 ) 50 85 ( 5 )

Other asset-backed securities 784 2,203 ( 124 ) 398 1,074 ( 117 )

Total fixed maturity securities 7,781 $ 16,035 $ ( 1,071 ) 4,060 $ 7,537 $ ( 1,307 )

Although not material to our consolidated results of operations, during the nine months ended September 30, 2022, we recorded a combination of credit losses, losses on sales of fixed maturity securities and impairments related to our exposure resulting from investments in Russia and Ukraine.

At September 30, 2022, our remaining holdings of Russia and Ukraine fixed maturity securities were not material.

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of September 30, 2022, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their maturity or anticipated recovery.

The declines in fair values are largely due to increasing interest rates driven by the high rate of inflation and other market conditions and not by unfavorable changes in the credit quality characteristics that impact our assessment on collectability of principal and interest.

We have evaluated qualitative and quantitative factors for indications of credit losses on our securities, including factors such as credit rating, foreign political conflicts, uncertainties around future ability to collect payment, significant declines in fair value and industry conditions, market data, and notifications of maturity and coupon default, and have recorded an allowance for credit losses in the amount of $ 10 and $ 6 at September 30, 2022 and December 31, 2021, respectively.

The amortized cost and fair value of fixed maturity securities at September 30, 2022, by contractual maturity, are shown below.

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of March 31, 2023, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their maturity or anticipated recovery.

The declines in fair values are largely due to increasing interest rates driven by the higher rate of inflation and other market conditions.

Allowances for credit losses have been recorded in the amounts of $ 8 and $ 9 at March 31, 2023 and December 31, 2022, respectively, for declines in fair value due to unfavorable changes in the credit quality characteristics that impact our assessment of collectability of principal and interest.

The amortized cost and fair value of fixed maturity securities at March 31, 2023, by contractual maturity, are shown below.

Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.

6 unchanged sentences

Total fixed maturity securities $ 30,188 $ 28,419

During the three and nine months ended September 30, 2022, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 5,281 and $ 15,953 , respectively.

During the three and nine months ended September 30, 2021, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 2,620 and $ 8,570 , respectively.

During the three months ended March 31, 2023 and 2022, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 5,410 and $ 3,646 , respectively.

In the ordinary course of business, we may sell securities at a loss for a number of reasons, including, but not limited to:

7 unchanged sentences

Equity Securities

A summary of marketable equity securities at September 30, 2022 and December 31, 2021 is as follows:

September 30, 2022 December 31, 2021

A summary of marketable equity securities at March 31, 2023 and December 31, 2022 is as follows:

March 31, 2023 December 31, 2022

Equity securities:

6 unchanged sentences

Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value.

Financial information for certain of these investments are reported on a one or three month lag due to the timing of when we receive financial information from the companies.

Financial information for certain of these investments is reported on a one or three month lag due to the timing of when we receive financial information from the companies.

Investment Gains and Losses

Net investment (losses) gains for the three and nine months ended September 30, 2022 and 2021 are as follows:

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

Net investment (losses) gains for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31

Net (losses) gains:

2 unchanged sentences

Gross realized losses from sales ( 115 ) ( 78 )

Impairment (losses) recoveries recognized in income ( 5 ) — ( 25 ) 1

Net realized (losses) gains from sales of fixed maturity securities ( 96 ) 22 ( 334 ) 102

Impairment losses recognized in income ( 7 ) ( 20 )

Net realized losses from sales of fixed maturity securities ( 112 ) ( 78 )

Equity securities:

Unrealized (losses) gains recognized on equity securities still held at the end of the period ( 43 ) ( 4 ) ( 192 ) 4

Net realized gains (losses) recognized on equity securities sold during the period 4 ( 1 ) ( 20 ) ( 57 )

Unrealized losses recognized on equity securities still held at the end of the period ( 1 ) ( 71 )

Net realized losses recognized on equity securities sold during the period ( 1 ) ( 14 )

Net losses on equity securities ( 2 ) ( 85 )

2 unchanged sentences

Gross losses ( 1 ) ( 30 )

Impairment (losses) recoveries recognized in income ( 12 ) 1 ( 17 ) ( 5 )

Net losses (gains) on other investments 81 ( 90 ) 64 ( 1 )

Net (losses) gains on investments $ ( 54 ) $ ( 73 ) $ ( 482 ) $ 48

Impairment losses recognized in income ( 3 ) ( 4 )

Net gains (losses) on other investments 23 ( 11 )

Net losses on investments $ ( 91 ) $ ( 174 )

Accrued Investment Income

At September 30, 2022 and December 31, 2021, accrued investment income totaled $ 228 and $ 205 , respectively.

At March 31, 2023 and December 31, 2022, accrued investment income totaled $ 256 and $ 245 , respectively.

We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

1 unchanged sentence

The fair value of the collateral received at the time of the transactions amounted to $ 2,841 and $ 2,155 at September 30, 2022 and December 31, 2021, respectively.

The value of the collateral represented 102 % of the market value of the securities on loan at each of September 30, 2022 and December 31, 2021.

The fair value of the collateral received at the time of the transactions amounted to $ 2,252 and $ 2,457 at March 31, 2023 and December 31, 2022, respectively.

The value of the collateral represented 102 % of the market value of the securities on loan at each of March 31, 2023 and December 31, 2022.

We recognize the collateral as an asset under the caption “Other current assets” in our consolidated balance sheets, and we recognize a corresponding liability for the obligation to return the collateral to the borrower under the caption “Other current liabilities.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

At September 30, 2022 and December 31, 2021, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $ 2,636 and $ 1,874 , respectively, of United States Government securities for $ 180 and $ 281 , respectively, and of Other securities for $ 25 and $ 0 , respectively.

At March 31, 2023 and December 31, 2022, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $ 2,127 and $ 2,221 , respectively, of United States Government securities for $ 104 and $ 224 , respectively, and of Residential Mortgage-Backed securities for $ 21 and $ 12 , respectively.

Derivative Financial Instruments

3 unchanged sentences

We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates.

The floating rates payable on all of our fair value hedges are benchmarked to

LIBOR or the Secured Overnight Financing Rate (“SOFR”).

The floating rates payable on all of our fair value hedges are benchmarked to LIBOR or the Secured Overnight Financing Rate (“SOFR”).

Any amounts recognized for changes in fair value of these derivatives are included in the captions “Other current assets,” “Other noncurrent assets,” “Other current liabilities” or “Other noncurrent liabilities” in our consolidated balance sheets.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $ 231 and $ 239 at September 30, 2022 and December 31, 2021, respectively.

During the three and nine months ended September 30, 2022 , we recognized net (losses) gains on non-hedging derivatives of $( 3 ) and $ 43 , respectively.

During the three and nine months ended September 30, 2021 , we recognized net gains on non-hedging derivatives of $ 12 and $ 59 , respectively.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $ 217 and $ 229 at March 31, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2023 , we recognized net losses on non-hedging derivatives of $ 22 .

During the three months ended March 31, 2022 , we recognized net gains on non-hedging derivatives of $ 23 .

For additional information relating to the fair value of our derivative assets and liabilities, see Note 6, “Fair Value,” of this Form 10-Q.

17 unchanged sentences

Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds.

We also have certain fixed maturity securities, primarily corporate debt securities, which are designated Level III securities.

We also have certain fixed maturity securities, primarily collateralized loan obligation securities and corporate debt securities, that are designated Level III securities.

For these securities, the valuation methodologies may incorporate broker quotes or discounted cash flow analyses using assumptions for inputs such as expected cash flows, benchmark yields, credit spreads, default rates and prepayment speeds that are not observable in the markets.

5 unchanged sentences

Such securities are designated Level III.

The fair values of these private equity securities are generally based on either broker quotes or discounted cash flow projections using assumptions

for inputs such as the weighted-average cost of capital, long-term revenue growth rates and earnings before interest, taxes, depreciation and amortization, and/or revenue multiples that are not observable in the markets.

The fair values of these private equity securities are generally based on either broker quotes or discounted cash flow projections using assumptions for inputs such as the weighted-average cost of capital, long-term revenue growth rates and earnings before interest, taxes, depreciation and amortization, and/or revenue multiples that are not observable in the markets.

Securities lending collateral:

5 unchanged sentences

Derivatives presented within the fair value hierarchy table below are presented on a gross basis and not on a master netting basis by counterparty.

A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021 is as follows:

A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at March 31, 2023 and December 31, 2022 is as follows:

Level I Level II Level III Total

September 30, 2022

March 31, 2023

Cash equivalents $ 6,277 $ — $ — $ 6,277

7 unchanged sentences

Commercial mortgage-backed securities — 2,070 — 2,070

Other securities — 3,371 311 3,682

Other asset-backed securities — 3,561 390 3,951

Total fixed maturity securities, available-for-sale — 27,887 532 28,419

20 unchanged sentences

Commercial mortgage-backed securities — 1,878 — 1,878

Other securities — 2,888 19 2,907

Other asset-backed securities — 3,382 356 3,738

Total fixed maturity securities, available-for-sale — 26,211 493 26,704

10 unchanged sentences

Total liabilities $ — $ ( 60 ) $ — $ ( 60 )

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended September 30, 2022 and 2021 is as follows:

Securities Residential

Securities Other

Securities Equity

Securities Total

Three Months Ended September 30, 2022

Beginning balance at July 1, 2022 $ 155 $ — $ 218 $ 94 $ 467

Total losses:

Recognized in net income — — — — —

Recognized in accumulated other comprehensive loss 1 — 17 — 18

Purchases 15 — 77 3 95

Sales ( 26 ) — ( 1 ) ( 2 ) ( 29 )

Settlements ( 10 ) — — — ( 10 )

Transfers out of Level III ( 6 ) — — — ( 6 )

Ending balance at September 30, 2022 $ 129 $ — $ 311 $ 95 $ 535

Change in unrealized losses included in net income related to assets still held at September 30, 2022 $ — $ — $ — $ — $ —

Three Months Ended September 30, 2021

Beginning balance at July 1, 2021 $ 351 $ 2 $ 7 $ 77 $ 437

Recognized in net income 1 — — 5 6

Recognized in accumulated other comprehensive loss ( 1 ) — — — ( 1 )

Purchases 34 — — 3 37

Sales — — — ( 1 ) ( 1 )

Settlements ( 47 ) — — — ( 47 )

Transfers out of Level III ( 4 ) ( 1 ) ( 5 ) — ( 10 )

Ending balance at September 30, 2021 $ 334 $ 1 $ 2 $ 84 $ 421

Change in unrealized gains included in net income related to assets still held at September 30, 2021 $ — $ — $ — $ 5 $ 5

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the nine months ended September 30, 2022 and 2021 is as follows:

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended March 31, 2023 and 2022 is as follows:

Securities Residential

Securities Other

Securities Other Asset-

Securities Equity

Securities Total

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Beginning balance at January 1, 2023 $ 137 $ — $ 356 $ 88 $ 581

1 unchanged sentence

Recognized in net income — — ( 1 ) ( 6 ) ( 7 )

Recognized in accumulated other comprehensive loss ( 1 ) — 17 — 16

Purchases 17 — 41 — 58

1 unchanged sentence

Settlements ( 2 ) — — — ( 2 )

Transfers into Level III 9 — — — 9

Transfers out of Level III ( 1 ) — — — ( 1 )

Ending balance at September 30, 2022 $ 129 $ — $ 311 $ 95 $ 535

Change in unrealized gains included in net income related to assets still held at September 30, 2022 $ — $ — $ — $ 1 $ 1

Nine Months Ended September 30, 2021

Ending balance at March 31, 2023 $ 142 $ — $ 390 $ 78 $ 610

Change in unrealized losses included in net income related to assets still held at March 31, 2023 $ — $ — $ — $ ( 7 ) $ ( 7 )

Three Months Ended March 31, 2022

Beginning balance at January 1, 2022 $ 336 $ 5 $ 19 $ 89 $ 449

Total gains (losses):

Recognized in net income 1 — — 3 4

3 unchanged sentences

Settlements ( 33 ) — — — ( 33 )

Transfers out of Level III ( 2 ) ( 1 ) ( 2 ) — ( 5 )

Ending balance at September 30, 2021 $ 334 $ 1 $ 2 $ 84 $ 421

Change in unrealized gains included in net income related to assets still held at September 30, 2021 $ — $ — $ — $ 17 $ 17

There were no individually material transfers into or out of Level III during the three and nine months ended September 30, 2022 or 2021.

Ending balance at March 31, 2022 $ 341 $ 4 $ 37 $ 99 $ 481

Change in unrealized gains included in net income related to assets still held at March 31, 2022 $ — $ — $ — $ 3 $ 3

There were no individually material transfers into or out of Level III during the three months ended March 31, 2023 or 2022.

Certain assets and liabilities are measured at fair value on a nonrecurring basis;

that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances.

As disclosed in Note 3, “Business Acquisitions,” we completed our acquisition of Integra in the second quarter of 2022 and the acquisitions of myNEXUS and MMM during the second quarter of 2021.

The net assets acquired in our acquisitions of Integra, myNEXUS and MMM and resulting goodwill and other intangible assets were recorded at fair value primarily using Level III inputs.

The majority of assets acquired and liabilities assumed were recorded at their carrying values as of the respective date of acquisition, as their carrying values approximated their fair values due to their short-term nature.

The fair values of goodwill and other intangible assets acquired in our acquisitions of Integra, myNEXUS and MMM were internally estimated based on the income approach.

As disclosed in Note 3, “Business Acquisitions and Divestitures,” we completed our acquisition of BioPlus in February 2023 and Integra in May 2022.

The net assets acquired in our acquisitions of BioPlus and Integra and resulting goodwill and other intangible assets were recorded at fair value primarily using Level III inputs.

The majority of tangible assets acquired and liabilities assumed were recorded at their carrying values as of the acquisition date, as their carrying values approximated their fair values due to their short-term nature.

The fair values of goodwill and other intangible assets acquired in our acquisitions of BioPlus and Integra were internally estimated based on the income approach.

The income approach estimates fair value based on the present value of the cash flows that the assets could be expected to generate in the future.

We developed internal estimates for the expected cash flows and discount rate in the present value calculation.

Other than the assets acquired and liabilities assumed in our acquisitions of Integra, myNEXUS and MMM described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2022 or 2021.

Other than the assets acquired and liabilities assumed in our acquisitions of BioPlus and Integra described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2023 or 2022.

Our valuation policy is determined by members of our treasury and accounting departments.

10 unchanged sentences

Our analysis includes procedures such as a review of month-to-month price fluctuations and price comparisons to secondary pricing services.

There were no adjustments to quoted market prices obtained from the pricing services during the three and nine months ended September 30, 2022 or 2021.

There were no adjustments to quoted market prices obtained from the pricing services during the three months ended March 31, 2023 or 2022.

In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in our consolidated balance sheets.

17 unchanged sentences

The fair value of our convertible debentures is based on the quoted market price in the active private market in which the convertible debentures trade.

A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at September 30, 2022 and December 31, 2021 is as follows:

A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at March 31, 2023 and December 31, 2022 is as follows:

Value Estimated Fair Value

Level I Level II Level III Total

September 30, 2022

March 31, 2023

Other invested assets $ 5,844 $ — $ — $ 5,844 $ 5,844

2 unchanged sentences

Notes 24,876 — 23,371 — 23,371

Convertible debentures 86 — 554 — 554

December 31, 2022

1 unchanged sentence

Short-term borrowings 265 — 265 — 265

Commercial paper 300 — 300 — 300

Notes 23,786 — 21,861 — 21,861

Convertible debentures 63 — 463 — 463

During the three months ended September 30, 2022 and 2021, we recognized income tax expense of $ 533 and $ 494 , respectively, which represent effective income tax rates of 24.8 % and 24.7 %, respectively.

During the nine months ended September 30, 2022 and 2021, we recognized income tax expense of $ 1,557 and $ 1,555 , respectively, which represent effective income tax rates of 23.5 % and 23.8 %, respectively.

The decrease in our effective tax rate from the nine months ended September 30, 2021 was primarily related to the tax impact of expected geographic changes in our mix of 2022 earnings.

Income taxes receivable totaled $ 214 and $ 173 at September 30, 2022 and December 31, 2021, respectively.

We recognized the income taxes receivable as an asset under the caption “Other current assets” in our consolidated balance sheets.

During the three months ended March 31, 2023 and 2022, we recognized income tax expense of $ 615 an d $ 527 (restated), respectively, which represent effective income tax rates of 23.5 % and 22.9 % (restated), respectively.

The increase in the incom e tax rate in 2023 primarily relates to the tax impact of expected geographic changes in our mix of 2023 earnings and reduced investment tax credits.

Income taxes payable totaled $ 399 at March 31, 2023 and income tax receivable was $ 440 at December 31, 2022.

We recognize the income tax payable as a liability under the caption “Other current liabilities” and the income receivable as an asset under the caption “Other current assets” in our consolidated balance sheets.

Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the nine months ended September 30, 2022 is as follows:

Business Government

Business Other Total

Gross medical claims payable, beginning of period $ 3,847 $ 9,157 $ 278 $ 13,282

Ceded medical claims payable, beginning of period ( 13 ) ( 8 ) — ( 21 )

Net medical claims payable, beginning of period 3,834 9,149 278 13,261

Business combinations and purchase adjustments 3 130 — 133

Net incurred medical claims:

Current period 22,049 60,971 1,157 84,177

Prior periods redundancies ( 183 ) ( 639 ) ( 79 ) ( 901 )

Total net incurred medical claims 21,866 60,332 1,078 83,276

Net payments attributable to:

Current period medical claims 18,604 50,950 899 70,453

Prior periods medical claims 3,181 7,854 184 11,219

Total net payments 21,785 58,804 1,083 81,672

Net medical claims payable, end of period 3,918 10,807 273 14,998

Ceded medical claims payable, end of period 3 — — 3

Gross medical claims payable, end of period $ 3,921 $ 10,807 $ 273 $ 15,001

At September 30, 2022, the total of net incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $ 81 , $ 388 and $ 3,449 for the claim years 2020 and prior, 2021 and 2022, respectively.

At September 30, 2022, the total of net incurred but not reported liabilities plus expected development on reported claims for the Government Business was $ 148 , $ 508 and $ 10,151 for the claim years 2020 and prior, 2021 and 2022, respectively.

At September 30, 2022, the total of net incurred but not reported liabilities plus expected development on reported claims for Other was $ 2 , $ 14 and $ 257 for the claim years 2020 and prior, 2021 and 2022, respectively.

A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the nine months ended September 30, 2021 is as follows:

Business Government

Business Other Total

A reconciliation of the beginning and ending balances for medical claims payable, for the three months ended March 31, 2023 and 2022 is as follows:

Gross medical claims payable, beginning of period $ 15,348 $ 13,282

13 unchanged sentences

Gross medical claims payable, end of period $ 15,491 $ 14,470

The favorable development recognized in the nine months ended September 30, 2022 and 2021 resulted primarily from trend factors in late 2021 and late 2020, respectively, developing more favorably than originally expected.

Favorable development in the completion factors resulting from the latter parts of 2020 developing faster than expected also contributed to the favorable development in the nine months ended September 30, 2021.

The impact from COVID-19 on healthcare utilization and medical claims submission patterns continues to provide increased estimation uncertainty on our incurred but not reported liability at September 30, 2022.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for periods in 2022 is as follows:

Three Months Ended Nine Months Ended September 30, 2022

March 31, 2022 June 30, 2022 September 30, 2022

Net incurred medical claims:

Commercial & Specialty Business $ 6,834 $ 7,522 $ 7,510 $ 21,866

Government Business 19,943 19,788 20,601 60,332

Other 354 324 400 1,078

Total net incurred medical claims 27,131 27,634 28,511 83,276

Quality improvement and other claims expense 1,084 1,143 893 3,120

Benefit expense $ 28,215 $ 28,777 $ 29,404 $ 86,396

During the three months ended September 30, 2022, based on recent regulatory clarification, we realigned certain quality improvement costs from benefit expense to administrative expense that were previously allocated to benefit expense during the three months ended March 31, 2022 and the three months ended June 30, 2022.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for periods in 2021 is as follows:

Three Months Ended Nine Months Ended September 30, 2021

March 31, 2021 June 30, 2021 September 30, 2021

Net incurred medical claims:

Commercial & Specialty Business $ 6,072 $ 6,718 $ 7,213 $ 20,003

Government Business 16,319 16,723 18,071 51,113

Other 336 403 420 1,159

At March 31, 2023, the total of net incurred but not reported liabilities plus expected development on reported claims was $ 644 , $ 4,036 and $ 10,804 for the claim years 2021 and prior, 2022 and 2023, respectively.

The favorable development recognized in the three months ended March 31, 2023 and 2022 resulted primarily from trend factors in late 2022 and late 2021, respectively, developing more favorably than originally expected.

Favorable development in the completion factors resulting from the latter parts of 2022 developing faster than expected also contributed to the favorable development in the three months ended March 31, 2023.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for the three months ended March 31, 2023 and 2022 is as follows:

Total net incurred medical claims $ 29,683 $ 27,131

1 unchanged sentence

Benefit expense $ 30,786 $ 28,231

The reconciliation of the medical claims payable reflected in the tables above to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of September 30, 2022, is as follows:

Business Government

Business Other Total

Net medical claims payable, end of period $ 15,484

3 unchanged sentences

We generally issue senior unsecured notes for long-term borrowing purposes.

At September 30, 2022 and December 31, 2021, we had $ 22,722 and $ 22,359 , respectively, outstanding under these notes.

On May 16, 2022, we repaid, at maturity, the $ 850 outstanding balance of our 3.125 % senior unsecured notes.

On April 29, 2022, we issued $ 600 aggregate principal amount of 4.100 % Notes due 2032 (the “2032 Notes”) and $ 700 aggregate principal amount of 4.550 % Notes due 2052 (the “2052 Notes”) under our shelf registration statement.

Interest on the 2032 Notes and 2052 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2022.

We used the net proceeds for working capital and general corporate purposes, such as the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

We have an unsecured surplus note with an outstanding principal balance of $ 25 at both September 30, 2022 and December 31, 2021.

At March 31, 2023 and December 31, 2022, we had $ 24,851 and $ 23,761 , respectively, outstanding under these notes.

On February 8, 2023, we issued $ 500 aggregate principal amount of 4.900 % Notes due 2026 (the “2026 Notes”), $ 1,000 aggregate principal amount of 4.750 % Notes due 2033 (the “2033 Notes”), and $ 1,100 aggregate principal amount of 5.125 % Notes due 2053 (the “2053 Notes”) under our shelf registration statement.

Interest on the 2026 Notes is payable semi-annually in arrears on February 8 and August 8 of each year, commencing August 8, 2023.

Interest on the 2033 Notes and 2053 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing August 15, 2023.

We intend to use the proceeds for working capital and general corporate purposes, including, but not limited to, the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

On January 17, 2023, we repaid, at maturity, the $ 1,000 outstanding balance of our 3.300 % senior unsecured notes.

On March 15, 2023, we repaid, at maturity, the $ 500 outstanding balance of our 0.450 % senior unsecured notes.

We have an unsecured surplus note with an outstanding principal balance of $ 25 at both March 31, 2023 and December 31, 2022.

We have a senior revolving credit facility (the “5-Year Facility”) with a group of lenders for general corporate purposes.

On April 18, 2022, we amended and restated the credit agreement for the 5-Year Facility to, among other things, extend the maturity date of the 5-Year Facility from June 2024 to April 2027 and increase the amount of credit available under the 5-Year Facility from $ 2,500 to $ 4,000 .

Also on April 18, 2022, concurrently with the amendment and restatement of the 5-Year Facility, we terminated our 364-day senior revolving credit facility that provided for credit in the amount of $ 1,000 , which was scheduled to mature in June 2022 (the “2021 364-Day Facility”).

In June 2021, we terminated our 364-day senior revolving credit facility (the “prior 364-Day Facility”), which was scheduled to mature in June 2021, and entered into the 2021 364-Day Facility with a group of lenders for general corporate purposes.

The 5-Year Facility provides credit of up to $ 4,000 and matures in April 2027.

Our ability to borrow under the 5-Year Facility is subject to compliance with certain covenants, including covenants requiring us to maintain a defined debt-to-capital ratio of not more than 60%, subject to increase in certain circumstances set forth in the credit agreement for the 5-Year Facility.

As of September 30, 2022, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 39.7%.

As of March 31, 2023, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 40.5%.

We do not believe the restrictions contained in our 5-Year Facility covenants materially affect our financial or operating flexibility.

of September 30, 2022, we were in compliance with all of our debt covenants under the 5-Year Facility.

There were no amounts outstanding under the 5-Year Facility, the 2021 364-Day Facility or the prior 364-Day Facility at any time during the nine months ended September 30, 2022 or the year ended December 31, 2021.

As of March 31, 2023, we were in compliance with all of our debt covenants under the 5-Year Facility.

There were no amounts outstanding under the 5-Year Facility at any time during the three months ended March 31, 2023 or the year ended December 31, 2022.

Through certain subsidiaries, we have entered into multiple 364-day lines of credit (the “Subsidiary Credit Facilities”) with separate lenders for general corporate purposes.

The Subsidiary Credit Facilities provide combined credit of up to $ 200 .

At September 30, 2022 and December 31, 2021, there were no amounts outstanding under our Subsidiary Credit Facilities.

Our ability to borrow under the Subsidiary Credit Facilities is subject to compliance with certain covenants.

At March 31, 2023 and December 31, 2022, we had no outstanding borrowings under the Subsidiary Credit Facilities.

We have an authorized commercial paper program of up to $ 4,000 , the proceeds of which may be used for general corporate purposes.

In July 2022, we increased the amount available under the commercial paper program from $ 3,500 to $4,000.

At September 30, 2022 and December 31, 2021, we had $ 675 and $ 300 , respectively, outstanding under this program.

We have outstanding senior unsecured convertible debentures due 2042 (the “Debentures”), which are governed by an indenture (the “indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee.

We accounted for the Debentures in accordance with the FASB cash conversion guidance for debt with conversion and other options at the time of issue.

As a result, the value of the embedded conversion option (net of deferred taxes and equity issuance costs) was bifurcated from its debt host and recorded as a component of additional paid-in capital in our consolidated balance sheets.

We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, which resulted in an increase to our reported debt outstanding of $ 31 , a decrease of our deferred tax liabilities of $ 8 and a corresponding cumulative-effect reduction to our opening retained earnings of $ 23 , eliminating the bifurcation of the embedded conversion option.

During the three and nine months ended September 30, 2022, $ 4 and $ 19 of aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and provisions of the indenture.

We elected to settle the excess of the principal amount of the conversions with cash for total payments during the three and nine months ended September 30, 2022 of $ 25 and $ 132 , respectively.

The following table summarizes at September 30, 2022 the related balances, conversion rate and conversion price of the Debentures:

Outstanding principal amount $ 86

Net debt carrying amount $ 86

Conversion rate (shares of common stock per $1,000 of principal amount) 14.2967

Effective conversion price (per $1,000 of principal amount) $ 69.9462

At March 31, 2023 and December 31, 2022, we had $ 325 and $ 0 , respectively, outstanding under this program.

On March 15, 2023, we redeemed all of our outstanding senior unsecured convertible debentures due 2042 (the “Debentures”), pursuant to the indenture dated as of October 9, 2012 between us and The Bank of New York Mellon Trust Company, N.A., as trustee.

The Debentures were redeemed at a redemption price equal to 100 % of the principal amount of the Debentures plus accrued and unpaid interest to, but excluding, the date of redemption, for cash totaling $ 5 .

During the three months ended March 31, 2023, $ 59 aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and conditions of the indenture.

We elected to settle the excess of the principal amount of the conversions with cash for total payments during the three months ended March 31, 2023 of $ 404 .

We are a member, through certain subsidiaries, of the Federal Home Loan Bank of Indianapolis, the Federal Home Loan Bank of Cincinnati, the Federal Home Loan Bank of Atlanta and the Federal Home Loan Bank of New York (collectively, the “FHLBs”).

As a member, we have the ability to obtain short-term cash advances, subject to certain minimum collateral requirements.

We had $ 265 and $ 275 of outstanding short-term borrowings from the FHLBs at September 30, 2022 and December 31, 2021, respectively.

All debt is a direct obligation of Elevance Health, Inc., except for the surplus note, the FHLB borrowings, and the Subsidiary Credit Facilities.

We had $ 265 of outstanding short-term borrowings from the FHLBs at each of March 31, 2023 and December 31, 2022.

All debt is a direct obligation of Elevance Health, Inc., except for the surplus note, the FHLBs borrowings and the Subsidiary Credit Facilities.

Commitments and Contingencies

3 unchanged sentences

With respect to the cases described below, we contest liability and/or the amount of damages in each matter and believe we have meritorious defenses.

Where available information indicates that it is probable that a loss has been incurred as of the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to

In many proceedings, however, it is difficult to determine whether any loss is probable or reasonably possible.

2 unchanged sentences

(i) there are novel or unsettled legal issues presented, (ii) the proceedings are in early stages, (iii) there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class, (iv) there is uncertainty as to the outcome of pending appeals or motions, (v) there are significant factual issues to be resolved, and/or (vi) in many cases, the plaintiffs have not specified damages in their complaint or in court filings.

For those legal proceedings where a loss is probable, or reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses, we currently believe that the range of possible losses, in excess of established reserves is, in the aggregate, from $ 0 to approximately $ 250 at September 30, 2022.

This estimated aggregate range of reasonably possible losses is based upon currently available information taking into account our best estimate of such losses for which such an estimate can be made.

1 unchanged sentence

We are a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA and Blue Cross and/or Blue Shield licensees (the “Blue plans”) across the country.

Cases filed in twenty-eight states were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation that is pending in the U.S.

Cases filed in 28 states were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation that is pending in the U.S.

District Court for the Northern District of Alabama (the “Court”).

7 unchanged sentences

In November 2020, the Court issued an order preliminarily approving the Subscriber Settlement Agreement, following which members of the subscriber class were provided notice of the Subscriber Settlement Agreement and an opportunity to opt out of the class.

A small number of subscribers submitted valid opt-outs by the July 2021 opt-out deadline.

In excess of eight thousand claims were submitted by the November 2021 claims submission deadline.

A fairness hearing was held in October 2021 and the Court took the request for final approval under advisement and requested supplemental briefing that was submitted.

In February 2022, the Court ordered the issuance of a supplemental notice to self-funded account class members, which notice process was completed in March 2022.

The deadline for objections to the supplemental notice along with opt-outs was in May 2022 .

In August 2022, the Court issued a final approval order for the Subscriber Settlement Agreement.

A small number of subscribers submitted valid opt-outs by the opt-out deadline.

In August 2022, the Court issued a final order approving the Subscriber Settlement Agreement (the “Final Approval Order”).

The Court amended its Final Approval Order in September 2022, further clarifying the injunctive relief that may be available to subscribers who submitted valid opt-outs.

In September 2022, an objector filed a motion to amend the final approval order, which the Court

In compliance with the Subscriber Settlement Agreement, the Company paid its remaining $ 506 portion of the settlement fund into an escrow account in September 2022, for an aggregate settlement payment by the Company of $ 596 .

Four notices of appeal of the final approval order were filed by the September 2022 deadline.

Those appeals will proceed in the United States Court of Appeals for the Eleventh Circuit.

In October 2022, the subscriber plaintiffs filed a motion to consolidate and expedite the four appeals.

After all appellate rights have been exhausted in a manner that affirms the Court’s final order and judgment, the defendants’ payment and non-monetary obligations under the Subscriber Settlement Agreement will become effective.

In compliance with the Subscriber Settlement Agreement, the Company paid $ 506 into an escrow account in September 2022, for an aggregate and full settlement payment by the Company of $ 596 , which amount was accrued in 2020.

Four notices of appeal of the Final Approval Order were filed prior to the September 2022 appeal deadline.

Those appeals are proceeding in the United States Court of Appeals for the Eleventh Circuit.

In the event that all appellate rights are exhausted in a manner that affirms the Court’s Final Approval Order, the defendants’ payment and non-monetary obligations under the Subscriber Settlement Agreement will become effective and the funds held in escrow will be distributed in accordance with the Subscriber Settlement Agreement.

In October 2020, after the Court lifted the stay as to the provider litigation, provider plaintiffs filed a renewed motion for class certification, which defendants opposed.

In March 2021, the Court issued an order terminating the pending motion for class certification until the Court determines the standard of review applicable to providers’ claims.

In May 2021, the defendants and provider plaintiffs filed renewed standard of review motions.

In March 2021, the Court issued an order terminating the pending motion for class certification until the Court determined the standard of review applicable to the providers’ claims.

In response to that order, the parties filed renewed standard of review motions in May 2021.

In June 2021, the parties filed summary judgment motions not critically dependent on class certification.

In February 2022, the Court issued (i) an order granting certain defendants’ motion for partial summary judgment against provider plaintiffs who had previously released claims against such defendants, and (ii) an order granting provider plaintiffs’ motion for partial summary judgment, holding that Ohio v.

In February 2022, the Court issued orders (i) granting certain defendants’ motion for partial summary judgment against the provider plaintiffs who had previously released claims against such defendants, and (ii) granting the provider plaintiffs’ motion for partial summary judgment, determining that Ohio v.

American Express Co .

does not affect the standard of review in this case.

In August 2022, the Court issued (i) an order granting in part the defendants’ motion regarding the antitrust standard of review, holding that for the period of time after the elimination of the “national best efforts” rule, the rule of reason applies to the provider plaintiffs’ market allocation conspiracy claims, and (ii) an order denying the provider plaintiffs’ motion for partial summary judgment on the standard of review, reaffirming its prior holding that the providers’ group boycott claims are subject to the rule of reason.

In August 2022, the Court issued orders (i) granting in part the defendants’ motion regarding the antitrust standard of review, holding that for the period of time after the elimination of the “national best efforts” rule, the rule of reason applies to the provider plaintiffs’ market allocation conspiracy claims, and (ii) denying the provider plaintiffs’ motion for partial summary judgment on the standard of review, reaffirming its prior holding that the providers’ group boycott claims are subject to the rule of reason.

In November 2022, the Court issued an order requiring the parties to submit supplemental briefs on certain questions related to providers’ renewed motion for class certification.

We intend to continue to vigorously defend the provider litigation, which we believe is without merit;

5 unchanged sentences

2:21-cv-01209-AMM (N.D.

Ala.) ( "Alaska Air" );

JetBlue Airways Corp., et al.

1 unchanged sentence

2:22-cv-00558-GMB (N.D.

Ala.) ( "Jet Blue" );

Metropolitan Transportation Authority v.

3 unchanged sentences

2:22-cv-01256-SGC (N.D.

Ala.) ( "Bed Bath & Beyond" );

Hoover, et al.

4 unchanged sentences

RG21106600 (Cal.

In February 2023, the Court denied the defendants’ motion to dismiss on statute of limitations in Alaska Air and Jet Blue .

In March 2023, pursuant to a stipulation by the parties, the Court denied the defendants’ motion to dismiss on the statute of limitations in Bed Bath & Beyond .

We intend to continue to vigorously defend these follow-on cases, which we believe are without merit;

7 unchanged sentences

As a licensed Health Care Service Plan, BCC has paid the California Corporate Franchise Tax (“CFT”), the tax paid by California businesses generally.

Plaintiff contends that BCC must pay the GPT rather than the CFT, and seeks a writ of mandate directing the taxing agencies to collect the GPT and an order requiring BCC to pay GPT back taxes, interest, and penalties for the eight-year period prior to the filing of the complaint.

Plaintiff contends that BCC must pay the GPT rather than the CFT and seeks a writ of mandate directing the taxing agencies to collect the GPT

and an order requiring BCC to pay GPT back taxes, interest, and penalties for the eight-year period prior to the filing of the complaint.

Because the GPT is constitutionally imposed in lieu of certain other taxes, BCC has filed protective tax refund claims with the City of Los Angeles, the California Department of Health Care Services and the Franchise Tax Board to protect its rights to recover certain taxes previously paid should BCC eventually be determined to be subject to the GPT for the tax periods at issue in the litigation.

In March 2018, the Superior Court denied BCC’s motion for judgment on the pleadings and similar motions brought by other entities.

BCC filed a motion for summary judgment with the Superior Court, which was heard in October 2020.

In December 2020, the Superior Court granted BCC’s motion for summary judgment, dismissing the plaintiff’s lawsuit.

November 2021, the plaintiff appealed the order granting BCC's motion for summary judgment.

BCC’s responding brief was filed in March 2022.

Plaintiff’s reply was filed in May 2022.

We estimate that the appeal will be heard in the winter of 2022.

We intend to vigorously defend the appeal of this lawsuit.

In November 2021, the plaintiff appealed the summary judgment order.

BCC’s responding brief was filed in March 2022 and Plaintiff’s reply was filed in May 2022.

In March 2023, the appeal was argued before the California Second District Court of Appeal.

We expect a ruling in April 2023.

We intend to continue to vigorously defend this suit, which we believe is without merit;

however, the ultimate outcome cannot be presently determined.

Express Scripts, Inc.

1 unchanged sentence

In March 2016, we filed a lawsuit against Express Scripts, Inc.

(“Express Scripts”), our vendor at the time for PBM services, captioned Anthem, Inc.

(“Express Scripts”), our vendor at the time for pharmacy benefit management services, captioned Anthem, Inc.

Express Scripts, Inc.

1 unchanged sentence

District Court for the Southern District of New York (the “District Court”).

The lawsuit seeks to recover over $ 14,800 in damages for pharmacy pricing that is higher than competitive benchmark pricing under the agreement between the parties (the “ESI PBM Agreement”), over $ 158 in damages related to operational breaches, as well as various declarations under the ESI PBM Agreement, including that Express Scripts:

The lawsuit seeks to recover over $ 14,800 in damages for pharmacy pricing that is higher than competitive benchmark pricing under the agreement between the parties (the “ESI Agreement”), over $ 158 in damages related to operational breaches, as well as various declarations under the ESI Agreement, including that Express Scripts:

(i) breached its obligation to negotiate in good faith and to agree in writing to new pricing terms;

(ii) was required to provide competitive benchmark pricing to us through the term of the ESI PBM Agreement;

(iii) has breached the ESI PBM Agreement;

and (iv) is required under the ESI PBM Agreement to provide post-termination services, at competitive benchmark pricing, for one year following any termination.

(ii) was required to provide competitive benchmark pricing to us through the term of the ESI Agreement;

(iii) has breached the ESI Agreement;

and (iv) is required under the ESI Agreement to provide post-termination services, at competitive benchmark pricing, for one year following any termination.

Express Scripts has disputed our contractual claims and is seeking declaratory judgments:

(i) regarding the timing of the periodic pricing review under the ESI PBM Agreement, and (ii) that it has no obligation to ensure that we receive any specific level of pricing, that we have no contractual right to any change in pricing under the ESI PBM Agreement and that its sole obligation is to negotiate proposed pricing terms in good faith.

In the alternative, Express Scripts claims that we have been unjustly enriched by its payment of $ 4,675 at the time we entered into the ESI PBM Agreement.

(i) regarding the timing of the periodic pricing review under the ESI Agreement, and (ii) that it has no obligation to ensure that we receive any specific level of pricing, that we have no contractual right to any change in pricing under the ESI Agreement and that its sole obligation is to negotiate proposed pricing terms in good faith.

In the alternative, Express Scripts claims that we have been unjustly enriched by its payment of $ 4,675 at the time we entered into the ESI Agreement.

In March 2017, the District Court granted our motion to dismiss Express Scripts’ counterclaims for (i) breach of the implied covenant of good faith and fair dealing, and (ii) unjust enrichment with prejudice.

After such action, the only remaining claims were for breach of contract and declaratory relief.

After such ruling, Express Scripts’ only remaining claims were for breach of contract and declaratory relief.

In August 2021, Express Scripts filed a motion for summary judgment, which we opposed.

1 unchanged sentence

The District Court dismissed our declaratory judgment claim, our breach of contract claim for failure to prove damages and most of our operational breach claims.

As a result of the summary judgment decision, the only remaining claims as of the filing of this Quarterly Report on Form 10-Q are (i) our operational breach claim based on Express Scripts’ prior authorization processes and (ii) Express Scripts’ counterclaim for breach of the market check provision of the ESI PBM Agreement.

Express Scripts filed a second motion for summary judgment in June 2022, challenging our remaining operational breach claims, which we opposed in July 2022.

Express Scripts filed a second motion for summary judgment in June 2022, challenging our remaining operational breach claims, which we opposed, and the District Court denied in March 2023, allowing our operational breach claim to proceed.

A trial date has been set for December 2023.

We intend to appeal the earlier summary judgment decision at the appropriate time, vigorously pursue our claims and defend against counterclaims, which we believe are without merit;

3 unchanged sentences

Department of Justice (“DOJ”) filed a civil lawsuit against Elevance Health, Inc.

(f/k/a Anthem, Inc.) in the U.S.

District Court for the Southern District of New York (the “New York District Court”) in a case captioned United States v.

2 unchanged sentences

The DOJ further alleges that, as a result of these purported acts, we caused CMS to calculate the risk-adjustment payments based on inaccurate diagnosis information, which enabled us to obtain unspecified amounts of payments in Medicare funds in violation of the False Claims Act.

The DOJ filed an amended complaint in July 2020, alleging the same causes of action but revising some of its allegations.

In September 2020, we filed a motion to transfer the lawsuit to the Southern District of Ohio, a motion to dismiss part of the lawsuit, and a motion to strike certain allegations in the amended complaint.

In an opinion and order issued October 3, 2022, the New York District Court denied our motions, and the case will now proceed in such court.

The DOJ filed an amended

complaint in July 2020, alleging the same causes of action but revising some of its factual allegations.

In November 2022, we filed an answer.

In March 2023, discovery commenced, and an initial case management conference was held in April 2023.

The Court entered a scheduling order requiring fact discovery to be completed by June 2024 and expert discovery to be complete by February 2025.

We intend to continue to vigorously defend this suit, which we believe is without merit;

5 unchanged sentences

Our CareMore investigation has resulted in the termination of CareMore’s relationship with one contracted provider in California.

HealthSun investigation has focused on risk adjustment practices initiated prior to our acquisition of HealthSun in December 2017 that continued after the acquisition.

Our HealthSun investigation has focused on risk adjustment practices initiated prior to our acquisition of HealthSun in December 2017 that continued after the acquisition.

We have voluntarily self-disclosed the existence of both of our investigations to CMS and the Criminal and Civil Divisions of the DOJ.

We are cooperating with the ongoing investigations of the Criminal and Civil Divisions of the DOJ related to these risk adjustment practices, and have entered into a tolling agreement with the Civil Division of the DOJ related to its investigation.

We are analyzing the scope of potential data corrections to be submitted to CMS and have begun to submit data corrections to CMS.

We have submitted corrected data to CMS related to these investigations.

We have also asserted indemnity claims for escrowed funds under the HealthSun purchase agreement for, among other things, breach of healthcare and financial representation provisions, based on the conduct discovered during our investigation.

While certain elements of the escrow claims were resolved in the fourth quarter of 2021, litigation in the Delaware Court of Chancery related to the remaining indemnity claims for escrowed funds remains ongoing.

While certain elements of the indemnity claims were resolved in the fourth quarters of 2021 and 2022, litigation in the Delaware Court of Chancery related to the remaining indemnity claims for escrowed funds remains ongoing.

Other Contingencies

11 unchanged sentences

In March 2020, we entered into an agreement with a vendor for information technology infrastructure and related management and support services through June 2025.

The new agreement supersedes certain prior agreements for such services and includes provisions for additional services not provided under those agreements.

Our remaining commitment under this agreement at September 30, 2022 is approximately $ 830 .

The agreement superseded certain prior agreements for such services and includes provisions for additional services not provided under those agreements.

Our remaining commitment under this agreement at March 31, 2023 is approximately $ 697 .

We will have the ability to terminate the agreement upon the occurrence of certain events, subject to early termination fees.

In the second quarter of 2019, we began using our pharmacy benefits manager IngenioRx to market and offer PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own.

The comprehensive PBM services portfolio includes, but is not limited to, formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities.

IngenioRx delegates certain PBM administrative functions, such as claims processing and prescription fulfillment, to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation, pursuant to a five-year agreement.

With IngenioRx, we retain the responsibilities for clinical and formulary strategy and development, member and employer experiences, operations, sales, marketing, account management and retail network strategy.

We formed CarelonRx, formerly known as IngenioRx, to market and offer pharmacy services to our affiliated health plan customers, as well as to external customers outside of the health plans we own, starting in the second quarter of 2019.

The comprehensive pharmacy services portfolio includes, but is not limited to, formulary management, pharmacy networks, specialty and home delivery pharmacy services and member services.

CarelonRx delegates certain pharmacy services, such

as claims processing and prescription fulfillment, to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation, pursuant to a five-year agreement, which is set to terminate on December 31, 2024.

With CarelonRx, we retain the responsibilities for clinical and formulary strategy and development, member and employer experiences, operations, sales, marketing, account management and retail network strategy.

Capital Stock

2 unchanged sentences

The declaration and payment of any dividends or repurchases of our common stock or debt is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors.

A summary of our cash dividend activity for the nine months ended September 30, 2022 and 2021 is as follows:

A summary of our cash dividend activity for the three months ended March 31, 2023 and 2022 is as follows:

Declaration Date Record Date Payment Date Cash

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

January 24, 2023 March 10, 2023 March 24, 2023 $ 1.48 $ 351

April 19, 2022 June 10, 2022 June 24, 2022 $ 1.28 $ 309

July 19, 2022 September 9, 2022 September 23, 2022 $ 1.28 $ 306

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

January 25, 2022 March 10, 2022 March 25, 2022 $ 1.28 $ 309

April 20, 2021 June 10, 2021 June 25, 2021 $ 1.13 $ 278

July 20, 2021 September 10, 2021 September 24, 2021 $ 1.13 $ 276

On October 18, 2022, our Audit Committee declared a fourth quarter 2022 dividend to shareholders of $ 1.28 per share, payable on December 21, 2022 to shareholders of record at the close of business on December 5, 2022 .

On April 18, 2023, our Audit Committee declared a second quarter 2023 dividend to shareholders of $ 1.48 per share, payable on June 23, 2023 to shareholders of record at the close of business on June 9, 2023 .

Under our Board of Directors’ authorization, we maintain a common stock repurchase program.

On January 24, 2023, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized a $ 5,000 increase to the common stock repurchase program.

No duration has been placed on the common stock repurchase program, and we reserve the right to discontinue the program at any time.

Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing.

The repurchases are effected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

The repurchases are affected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Our stock repurchase program is discretionary, as we are under no obligation to repurchase shares.

1 unchanged sentence

The excess cost of the repurchased shares over par value is charged on a pro rata basis to additional paid-in capital and retained earnings.

A summary of common stock repurchases for the nine months ended September 30, 2022 and 2021 is as follows:

Nine Months Ended September 30

A summary of common stock repurchases for the three months ended March 31, 2023 and 2022 is as follows:

Three Months Ended March 31

Shares repurchased 1.3 1.2

4 unchanged sentences

Stock Incentive Plan s

A summary of stock option activity for the nine months ended September 30, 2022 is as follows:

A summary of stock option activity for the three months ended March 31, 2023 is as follows:

Shares Weighted-

5 unchanged sentences

Forfeited or expired — 366.61

Outstanding at September 30, 2022 2.9 291.95 6.56 $ 477

Exercisable at September 30, 2022 1.7 239.27 5.35 $ 370

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the nine months ended September 30, 2022 is as follows:

Outstanding at March 31, 2023 3.3 322.65 6.72 $ 458

Exercisable at March 31, 2023 2.2 265.17 5.52 $ 424

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the three months ended March 31, 2023 is as follows:

and Units Weighted-

3 unchanged sentences

Forfeited — 387.32

Nonvested at September 30, 2022 1.2 356.33

During the nine months ended September 30, 2022, we granted approximately 0.2 restricted stock units that are contingent upon us achieving earnings targets over the three year period from 2022 to 2024.

Nonvested at March 31, 2023 1.2 420.84

During the three months ended March 31, 2023, we granted approximately 0.2 restricted stock units that are contingent upon us achieving earnings targets over the three-year period from 2023 to 2025.

These grants have been included in the activity shown above but will be subject to adjustment at the end of 2025 based on results in the three-year period.

1 unchanged sentence

For a more detailed discussion of our stock incentive plan fair value methodology, see Note 15, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2022 included in our 2022 Annual Report on Form 10-K.

The following weighted-average assumptions were used to estimate the fair values of options granted during the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30

The following weighted-average assumptions were used to estimate the fair values of options granted during the three months ended March 31, 2023 and 2022:

Three Months Ended March 31

Risk-free interest rate 3.95 % 1.97 %

2 unchanged sentences

Weighted-average expected life (years) 4.40 5.10

The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30

The following weighted-average fair values per option or share were determined for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31

Options granted during the period $ 127.14 $ 116.64

1 unchanged sentence

Accumulated Other Comprehensive Loss

A reconciliation of the components of accumulated other comprehensive loss at September 30, 2022 and 2021 is as follows:

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

A reconciliation of the components of accumulated other comprehensive loss at March 31, 2023 and 2022 is as follows:

Net unrealized investment (losses) gains:

Beginning of period balance $ ( 1,755 ) $ 494

Other comprehensive loss before reclassifications, net of tax benefit of $ 220 , $ 25 , $ 896 and $ 71 , respectively

( 719 ) ( 80 ) ( 2,914 ) ( 203 )

Amounts reclassified from accumulated other comprehensive loss, net of tax (expense) benefit of $( 21 ), $ 5 , $( 75 ) and $ 21 , respectively

Other comprehensive gain (loss) before reclassifications, net of tax (expense) benefit of $( 85 ) and $ 355 , respectively

337 ( 1,146 )

Other comprehensive loss ( 639 ) ( 97 ) ( 2,630 ) ( 284 )

Other comprehensive loss attributable to noncontrolling interests, net of tax benefit of $( 1 ), $ 0 , $( 4 ) and $( 1 ), respectively

Amounts reclassified from accumulated other comprehensive loss, net of tax benefit (expense) of $( 29 ) and $( 21 ), respectively

Other comprehensive income (loss) 427 ( 1,069 )

Other comprehensive (income) loss attributable to noncontrolling interests, net of tax benefit of $ 0 and $( 2 ), respectively

End of period balance ( 1,330 ) ( 570 )

1 unchanged sentence

Beginning of period balance ( 3 ) —

Other comprehensive (loss) income, net of tax benefit (expense) of $ 0 , $ 0 , $ 1 and $( 1 ), respectively

( 1 ) ( 1 ) ( 3 ) 1

Other comprehensive loss, net of tax benefit of $ 1 and $ 1 , respectively

End of period balance ( 5 ) ( 1 )

1 unchanged sentence

Beginning of period balance ( 229 ) ( 239 )

Other comprehensive income, net of tax expense of $ 0 , $ 0 , $( 2 ) and $( 2 ), respectively

Other comprehensive income, net of tax benefit (expense) of $ 8 and $( 1 ), respectively

End of period balance ( 218 ) ( 236 )

3 unchanged sentences

End of period balance ( 497 ) ( 422 )

Future policy benefits:

Beginning of period balance 13 ( 19 )

Other comprehensive income, net of tax expense of $ 0 and $ 3 , respectively

End of period balance 15 ( 10 )

Foreign currency translation adjustments:

Beginning of period balance ( 17 ) ( 4 )

Other comprehensive loss, net of tax benefit of $ 2 , $ 1 , $ 4 and $ 2 , respectively

( 7 ) ( 1 ) ( 15 ) ( 7 )

Other comprehensive income (loss), net of tax benefit of $ 0 and $ 1 , respectively

End of period balance ( 15 ) ( 7 )

Total beginning of period accumulated other comprehensive loss ( 2,490 ) ( 197 )

Total other comprehensive loss, net of tax benefit of $ 198 , $ 27 , $ 815 and $ 81 , respectively

Total other comprehensive income (loss), net of tax (expense) benefit of $( 106 ) and $ 336 , respectively

442 ( 1,054 )

Total other comprehensive loss attributable to noncontrolling interests, net of tax benefit of $( 1 ), $ 0 , $( 4 ) and $( 1 ), respectively

Total other comprehensive (income) loss attributable to noncontrolling interests, net of tax benefit of $ 0 and $( 2 ), respectively

Total end of period accumulated other comprehensive loss $ ( 2,050 ) $ ( 1,246 )

Earnings per Share

The denominator for basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 is as follows:

The denominator for basic and diluted earnings per share for the three months ended March 31, 2023 and 2022 is as follows:

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

Denominator for basic earnings per share – weighted-average shares

239.6 243.4 240.5 244.3

Effect of dilutive securities – employee stock options, nonvested restricted stock awards and convertible debentures

2.6 2.6 2.8 2.9

Denominator for diluted earnings per share

242.2 246.0 243.3 247.2

During the three months ended September 30, 2022 and 2021, weighted-average shares related to certain stock options of 0.5 and 0.0 , respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive.

During the nine months ended September 30, 2022 and 2021, weighted-average shares related to certain stock options of 0.4 and 0.3 , respectively, were excluded from each of the denominators for diluted earnings per share because the stock options were anti-dilutive.

During the three and nine months ended September 30, 2022, we issued approximately 0.0 and 0.6 restricted stock units under our stock incentive plans, 0.0 and 0.2 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2022 through 2024.

During the three and nine months ended September 30, 2021, we issued approximately 0.1 and 1.0 restricted stock units under our stock incentive plans, 0.0 and 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2021 through 2023.

During the three months ended March 31, 2023 and 2022, weighted-average shares related to certain stock options of 0.4 and 0.2 , respectively, were excluded from each of the denominators for diluted earnings per share because the stock options were anti-dilutive.

During the three months ended March 31, 2023, we issued approximately 0.6 restricted stock units under our stock incentive plans, 0.2 of which vesting is contingent upon us meeting specified annual earnings targets for the three-year period of 2023 through 2025.

During the three months ended March 31, 2022, we issued approximately 0.5 restricted stock units under our stock incentive plans, 0.2 of which vesting is contingent upon us meeting specified annual earnings targets for the three-year period of 2022 through 2024.

The contingent restricted stock units have been excluded from the denominators for diluted earnings per share and will be included only if and when the contingency is met.

Segment Information

As discussed in Note 1 “Organization”, we will be organizing our brand portfolio into three core go-to-market brands over the next several years.

Currently, there are no changes to our segments associated with this branding strategy.

The results of our operations continue to be described through four reportable segments:

Commercial & Specialty Business, Government Business, IngenioRx and Other.

Our Commercial & Specialty Business segment offers plans and services to our Individual, Group risk-based, Group fee-based and BlueCard ® members.

The Commercial & Specialty Business segment offers health products on a full-risk basis;

As discussed in Note 1 “Organization”, we are reorganizing our brand portfolio into three core go-to-market brands over the next several years.

Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner.

Given this evolution, we reviewed and modified how we manage our business and the products in each of our operating segments, which has resulted in restructurings between some of our operating segments.

As a result of these changes, we have changed our reportable segment presentation and its composition to reflect how we began managing our operations and monitoring performance, aligning strategies and allocating resources beginning on January 1, 2023.

The results of our operations are now reported in the following four reportable segments:

In 2022, we managed and presented our operations through the following four reportable segments:

Commercial & Specialty Business, Government Business, CarelonRx and Other.

Previously reported information throughout this Form 10-Q has been reclassified to conform to the new presentation.

Our Health Benefits segment offers a comprehensive suite of health plans and services to our Individual, Employer Group risk-based, Employer Group fee-based, BlueCard ® , Medicare, Medicaid and FEHB program members.

Our Health Benefits segment also includes our National Government Services.

The Health Benefits segment offers health products on a full-risk basis;

provides a broad array of administrative managed care services to our fee-based customers;

and provides a variety of specialty and other insurance products and services such as dental, vision, life, disability and supplemental health insurance benefits.

Our Government Business segment includes our Medicare and Medicaid businesses, National Government Services, and services provided to the federal government in connection with the FEHB program.

Our IngenioRx segment includes our PBM business.

IngenioRx markets and offers PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own.

IngenioRx has a comprehensive PBM services portfolio, which includes services such as formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities.

Our Other segment includes our Diversified Business Group, now known as Carelon, which is our health services business focused on lowering the cost and improving the quality of healthcare by enabling and creating new care delivery and payment models, with a special emphasis on serving those with complex and chronic conditions.

This segment also includes certain eliminations and corporate expenses not allocated to our other reportable segments.

We define operating revenues to include premium income, product revenue and administrative fees and other revenues.

and provides a variety of specialty and other insurance products and services such as stop loss, dental, vision, life, disability and supplemental health insurance benefits.

Our CarelonRx segment includes our pharmacy business.

CarelonRx markets and offers pharmacy services to our affiliated health plan customers, as well as to external customers outside of the health plans we own.

CarelonRx offers a comprehensive pharmacy services portfolio, which includes services such as formulary management, pharmacy networks, specialty and home delivery pharmacy services and member services.

Our Carelon Services segment is focused on lowering the cost and improving the quality of healthcare by enabling and creating new care delivery and payment models, with a special emphasis on serving those with complex and chronic conditions.

Carelon Services offers a broad array of healthcare-related services and capabilities to internal and external customers including integrated care delivery, behavioral health, palliative care, utilization management, payment integrity services and subrogation services, as well as health and wellness programs.

Our Corporate & Other segment includes our businesses that do not individually meet the quantitative threshold for an operating segment, as well as corporate expenses not allocated to our other reportable segments.

We define operating revenues to include premium income, product revenue and service fees.

Operating revenues are derived from premiums and fees received, primarily from the sale and administration of health benefits and pharmacy products and services.

Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and selling, general and administrative expense.

Affiliated revenues represent revenues or cost for services provided to our subsidiaries by IngenioRx and Carelon, formerly known as our Diversified Business Group, as well as certain back-office services provided by our international businesses, and are recorded at cost or management’s estimate of fair market value.

Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and operating expense.

Affiliated revenues represent revenues or costs for services provided to our subsidiaries by CarelonRx and Carelon Services, in addition to certain back-office services provided by our international businesses, which are recorded at cost or management’s estimate of fair market value.

These affiliated revenues are eliminated in consolidation.

Financial data by reportable segment for the three and nine months ended September 30, 2022 and 2021 is as follows:

Business Government

Business IngenioRx Other Eliminations Total

Three Months Ended September 30, 2022

Operating revenue - unaffiliated $ 10,494 $ 24,571 $ 3,971 $ 589 $ — $ 39,625

Operating revenue - affiliated — — 3,278 2,776 ( 6,054 ) —

Operating gain 785 868 516 101 — 2,270

Three Months Ended September 30, 2021

Operating revenue - unaffiliated $ 9,863 $ 21,658 $ 3,369 $ 658 $ — $ 35,548

Operating revenue - affiliated — — 3,180 2,012 ( 5,192 ) —

Operating gain 620 967 445 27 — 2,059

Nine Months Ended September 30, 2022

Financial data by reportable segment for the three months ended March 31, 2023 and 2022 is as follows:

Benefits CarelonRx Carelon

Services Total Corporate

& Other Eliminations Total

Three Months Ended March 31, 2023

Premiums $ 35,534 $ — $ 410 $ 410 $ — $ ( 76 ) $ 35,868

Product revenue — 4,022 — 4,022 — — 4,022

Service fees 1,746 — 207 207 55 — 2,008

Operating revenue - unaffiliated 37,280 4,022 617 4,639 55 ( 76 ) 41,898

Operating revenue - affiliated — 4,002 2,695 6,697 196 ( 6,893 ) —

Operating gain 2,673 2,653 1,393 365 — 7,084

Nine Months Ended September 30, 2021

Operating revenue - total $ 37,280 $ 8,024 $ 3,312 $ 11,336 $ 251 $ ( 6,969 ) $ 41,898

Operating gain (loss) $ 2,159 $ 512 $ 209 $ 721 $ ( 49 ) $ — $ 2,831

Three Months Ended March 31, 2022

Premiums $ 32,463 $ — $ 366 $ 366 $ — $ ( 44 ) $ 32,785

Product revenue — 3,301 — 3,301 — — 3,301

Service fees 1,564 — 226 226 10 — 1,800

Operating revenue - unaffiliated 34,027 3,301 592 3,893 10 ( 44 ) 37,886

Operating revenue - affiliated — 3,382 2,356 5,738 263 ( 6,001 ) —

Operating gain 2,679 2,313 1,257 52 — 6,301

The major product revenues for each of the reportable segments for the three and nine months ended September 30, 2022 and 2021 are as follows:

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

Commercial & Specialty Business

Managed care products

$ 8,478 $ 8,005 $ 25,500 $ 23,481

Managed care services

1,610 1,489 4,618 4,291

Dental/Vision products and services

360 342 1,075 1,013

46 27 131 119

Total Commercial & Specialty Business

10,494 9,863 31,324 28,904

Government Business

Managed care products

24,456 21,565 71,823 60,711

Managed care services

115 93 341 296

Total Government Business

24,571 21,658 72,164 61,007

Pharmacy products and services 7,249 6,549 21,003 18,630

Integrated health services 3,153 2,506 9,083 7,121

212 164 801 436

Total Other 3,365 2,670 9,884 7,557

( 6,054 ) ( 5,192 ) ( 18,382 ) ( 15,173 )

Total product revenues

$ 39,625 $ 35,548 $ 115,993 $ 100,925

The classification between managed care products and managed care services in the above table primarily distinguishes between the levels of risk assumed.

Managed care products represent insurance products where we bear the insurance risk, whereas managed care services represent product offerings where we provide claims adjudication and other administrative services to the customer, but the customer principally bears the insurance risk.

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three and nine months ended September 30, 2022 and 2021 is as follows:

Operating revenue - total $ 34,027 $ 6,683 $ 2,948 $ 9,631 $ 273 $ ( 6,045 ) $ 37,886

Operating gain (loss) (restated) $ 1,851 $ 398 $ 200 $ 598 $ ( 22 ) $ — $ 2,427

For segment reporting, we present all capitated risk arrangements on a gross basis;

therefore, eliminations also include adjustments for unaffiliated capitated risk arrangements that are recognized on a net basis under GAAP, as well as affiliated eliminations.

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three months ended March 31, 2023 and 2022 is as follows:

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

Reportable segments’ operating revenue $ 41,898 $ 37,886

Net investment income 387 360

Net (losses) gains on financial instruments ( 57 ) ( 61 ) ( 439 ) 107

Net losses on financial instruments ( 113 ) ( 151 )

Total revenues $ 42,172 $ 38,095

A reconciliation of income before income tax expense to reportable segments’ operating gain included in our consolidated statements of income for the three and nine months ended September 30, 2022 and 2021 is as follows:

A reconciliation of income before income tax expense to reportable segments’ operating gain included in our consolidated statements of income for the three months ended March 31, 2023 and 2022 is as follows:

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

Income before income tax expense $ 2,619 $ 2,306

Net investment income ( 387 ) ( 360 )

Net losses (gains) on financial instruments 57 61 439 ( 107 )

Net losses on financial instruments 113 151

Interest expense 251 201

Amortization of other intangible assets 235 129

Loss on extinguishment of debt — — — 5

Reportable segments’ operating gain $ 2,831 $ 2,427

2 unchanged sentences

The information related to our leases is as follows:

Balance Sheet Location September 30, 2022 December 31, 2021

Balance Sheet Location March 31, 2023 December 31, 2022

Operating Leases

3 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

Lease Expense

Operating lease expense $ 25 $ 28

Short-term lease expense 11 10 35 34

Short-term and variable lease expense 13 12

Sublease income ( 1 ) ( 1 )

3 unchanged sentences

Right-of-use assets obtained in exchange for new lease liabilities, operating leases $ 4 $ —

As of September 30, 2022 and December 31, 2021, the weighted average remaining lease term of our operating leases was 7 years for each period.

The lease liabilities reflect a weighted average discount rate of 2.79 % at September 30, 2022 and 2.69 % at December 31, 2021.

As of March 31, 2023 and December 31, 2022, the weighted average remaining lease term of our operating leases was 7 years for each period.

The lease liabilities reflect a weighted average discount rate of 3.19 % at March 31, 2023 and 2.98 % at December 31, 2022.

Future lease payments for noncancellable operating leases with initial or remaining terms of one year or more are as follows:

2022 (excluding the nine months ended September 30, 2022) $ 54

2023 (excluding the three months ended March 31, 2023) $ 162

Thereafter 324

2 unchanged sentences

Total lease liabilities $ 905

As of September 30, 2022, we have no new leases which will commence during the fourth quarter of 2022.

Goodwill and Other Intangible Assets

A summary of the change in the carrying amount of goodwill for our segments (see Note 15, “Segment Information”) for 2022 and 2021 is as follows:

Business Government

Business IngenioRx Other Total

Balance as of January 1, 2021 $ 11,593 $ 8,331 $ 48 $ 1,719 $ 21,691

Acquisitions and adjustments — 2,018 11 508 2,537

Balance as of December 31, 2021 11,593 10,349 59 2,227 24,228

Acquisitions and adjustments 18 126 — 9 153

Balance as of September 30, 2022 $ 11,611 $ 10,475 $ 59 $ 2,236 $ 24,381

Accumulated impairment as of September 30, 2022 $ — $ — $ — $ — $ —

The components of other intangible assets as of September 30, 2022 and December 31, 2021 are as follows:

September 30, 2022 December 31, 2021

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

Intangible assets with finite lives:

Customer relationships $ 5,791 $ ( 3,580 ) $ 2,211 $ 5,598 $ ( 3,236 ) $ 2,362

Provider and hospital relationships 326 ( 142 ) 184 324 ( 129 ) 195

Other 920 ( 310 ) 610 610 ( 141 ) 469

Total 7,037 ( 4,032 ) 3,005 6,532 ( 3,506 ) 3,026

Intangible assets with indefinite lives:

Blue Cross and Blue Shield and other trademarks 5,991 — 5,991 6,299 — 6,299

State Medicaid licenses 1,540 — 1,540 1,290 — 1,290

Total 7,531 — 7,531 7,589 — 7,589

Other intangible assets $ 14,568 $ ( 4,032 ) $ 10,536 $ 14,121 $ ( 3,506 ) $ 10,615

During the nine months ended September 30, 2022, we recorded intangible assets related to Integra and also reclassified $ 308 of trademarks with indefinite lives to intangible assets with finite lives - Other, which relates to our new branding strategy.

In addition, the amortization period of certain intangible assets was shortened to align with the anticipated dates the new branding will take place.

Intangible assets, along with the related accumulated amortization, are removed from the table above at the end of the fiscal year in which they become fully amortized.

As of September 30, 2022, the estimated amortization expense for the year ending December 31, 2022 and each of the five succeeding years is as follows:

2022, $ 748 ;

2023, $ 735 ;

2024, $ 370 ;

2025, $ 311 ;

2026, $ 258 ;

and 2027, $ 219 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements