What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-15 · 539 added, 604 removed, 1742 unchanged (40% of the section changed)

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Years ended December 31, 2023, 2022 and 2021

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Audited Consolidated Financial Statements:

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We have audited the accompanying consolidated balance sheets of Elevance Health, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(c) (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(c) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

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Product revenue 19,452 14,978 12,657

Administrative fees and other revenue 7,453 6,913 6,315

Service fees 7,903 7,453 6,913

Total operating revenue 170,209 155,660 136,943

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Cost of products sold 17,293 13,035 10,895

Selling, general and administrative expense 17,686 15,914 17,450

Operating expense 20,087 17,700 15,918

Interest expense 1,030 851 798

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Net income 5,991 5,888 6,149

Net loss attributable to noncontrolling interests 6 9 —

Net (gain) loss attributable to noncontrolling interests

Shareholders’ net income $ 5,987 $ 5,894 $ 6,158

Shareholders’ net income per share

Shareholders’ earnings per share

Basic $ 25.38 $ 24.56 $ 25.26

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Net income $ 5,991 $ 5,888 $ 6,149

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Change in net unrealized gains/losses on investments 1,117 ( 2,260 ) ( 457 )

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Change in net periodic pension and postretirement costs 40 ( 70 ) 123

Change in future policy benefits ( 3 ) 32 ( 7 )

Foreign currency translation adjustments ( 1 ) ( 13 ) ( 9 )

Other comprehensive (loss) income ( 2,336 ) ( 330 ) 446

Net loss attributable to noncontrolling interests 6 9 —

Other comprehensive income (loss)

1,171 ( 2,304 ) ( 337 )

Net (gain) loss attributable to noncontrolling interests

Other comprehensive loss attributable to noncontrolling interests 6 11 2

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Net losses (gains) on financial instruments 694 550 ( 318 )

Equity in net earnings of other invested assets ( 293 ) ( 562 ) ( 51 )

Equity in net earnings (losses) of other invested assets

33 ( 293 ) ( 562 )

Depreciation and amortization 1,745 1,675 1,302

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Financing activities

Net (repayments of) proceeds from commercial paper borrowings ( 300 ) 50 ( 150 )

Proceeds from long-term borrowings 2,574 3,071 3,462

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Net income — — — 6,158 — ( 9 ) 6,149

Other comprehensive income — — — — 446 — 446

Other comprehensive loss — — — ( 335 ) ( 2 ) ( 337 )

Accumulated noncontrolling interest

— — — — — 79 79

Repurchase and retirement of common stock ( 5.1 ) ( 1 ) ( 192 ) ( 1,707 ) — — ( 1,900 )

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

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

January 1, 2022

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

Net income — — — 5,894 — ( 6 ) 5,888

Other comprehensive loss — — — — ( 2,293 ) ( 11 ) ( 2,304 )

Accumulated noncontrolling interest — — — — — 79 79

Noncontrolling interests adjustment

— — — — — 36 36

Repurchase and retirement of common stock ( 4.8 ) — ( 184 ) ( 2,132 ) — — ( 2,316 )

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

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

— — — 6,025 — ( 6 ) 6,019

Other comprehensive loss — — — — ( 2,325 ) ( 11 ) ( 2,336 )

Net income — — — 5,987 — 4 5,991

Other comprehensive income (loss) — — — — 1,177 ( 6 ) 1,171

Noncontrolling interests adjustment

— — — — — 14 14

Repurchase and retirement of common stock ( 5.8 ) — ( 217 ) ( 2,481 ) — — ( 2,698 )

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(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.

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We are one of the largest health insurers in the United States in terms of medical membership, serving approximately 47 million medical members through our affiliated health plans as of December 31, 2023.

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 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 benefit management (“PBM”) services and dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

We provide an array of specialty services both to customers of our subsidiary health plans and also to unaffiliated health plans, including pharmacy services, 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.

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

We also 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, MMM, Optimum Healthcare, Simply Healthcare, UniCare and/or Wellpoint.

We offer PBM services through our CarelonRx, Inc.

(“CarelonRx”) subsidiary, which was named IngenioRx, Inc.

prior to January 1, 2023.

In addition, we serve members in numerous states as Amerigroup, Freedom Health, HealthSun, MMM, Optimum Healthcare, Simply Healthcare and/or Wellpoint.

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, in June 2022, we announced that over the next several years we will organize our brand portfolio into the following core go-to-market brands:

As we announced in 2022, 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 brings together our healthcare-related services and capabilities, including our formerly named Diversified Business Group and IngenioRx businesses, under a single brand name.

There were no changes made to our segments in 2022 associated with this branding strategy.

Through December 31, 2022, we managed our operations by customer types through four reportable segments:

Commercial & Specialty Business, Government Business, CarelonRx (formerly known as IngenioRx) and Other.

Our branding strategy reflects the evolution of

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

For additional discussion, including the changes to our reportable segments for 2023, see Note 20, “Segment Information.”

• Wellpoint — we are uniting select non-BCBSA licensed Medicare, Medicaid and commercial plans under the Wellpoint name;

• Carelon — this brand brings together our healthcare related services 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 resources, and made changes to our reportable segments beginning in the first quarter of 2023.

We now report our results of operations 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 segments).

During the fourth quarter of 2023, we moved our Carelon Global Solutions international businesses from the Corporate & Other reportable segment to the Carelon Services reportable segment.

All prior period reportable segment information has been

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

reclassified for comparability to conform to the current presentation.

For additional discussion, see Note 20, “Segment Information.”

Basis of Presentation and Significant Accounting Policies

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All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements and the notes to the consolidated financial statements have been recast and are presented as they would have appeared had we changed our reportable segments, discussed in Note 20, “Segment Information,” and adopted the long-duration contracts accounting standard, discussed in this Note 2 below, prior to January 1, 2023.

Certain of our subsidiaries operate outside of the United States and have functional currencies other than the U.S.

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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 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

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

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

effective yield is recalculated to reflect actual payments to date and anticipated future payments.

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.

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Certain marketable equity securities are held to satisfy contractual obligations, and are reported under the caption “Other invested assets” in our consolidated balance sheets.

Mortgage loans on real estate are classified as held for investment and are reported at their amortized cost basis net of loss allowance under the caption “Other invested assets” in our consolidated balance sheets.

Amortized cost is the amount at which the loan is originated, adjusted for accrued interest, amortization of premium, discount and net deferred fees or costs, collection of cash and write-offs.

We have corporate-owned life insurance policies on certain participants in our deferred compensation plans and other members of management.

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Self-funded receivables are reported net of an allowance for doubtful accounts of $ 87 and $ 68 at December 31, 2023 and 2022, respectively.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

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.

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The deferred tax benefits of the deferred tax assets are recognized to the extent realization of such benefits is more likely than not.

Deferred income tax expense or benefit generally represents the net change in deferred income tax assets and liabilities during the year, excluding the impact

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

from amounts initially recorded for business combinations, if any, and amounts recorded to accumulated other comprehensive income.

Deferred income tax expense or benefit generally represents the net change in deferred income tax assets and liabilities during the year, excluding the impact from amounts initially recorded for business combinations, if any, and amounts recorded to accumulated other comprehensive income.

Current income tax expense represents the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for the year reported.

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We have elected to account for the effects of the Corporate AMT on deferred tax assets and carryforwards and tax credits in the period they arise.

Additionally, the Inflation Reduction Act of 2022 imposes an excise tax on the fair market value of net stock repurchases made after December 31, 2022.

We have also elected to disregard Corporate AMT when evaluating the need for a valuation allowance for non-Corporate AMT deferred tax assets.

We do not believe the Corporate AMT will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures.

Additionally, the Inflation Reduction Act of 2022 imposes an excise tax on the fair market value of net stock repurchases made after December 31, 2022.

These are included as a charge to retained earnings as a component of the repurchase and retirement of common stock.

We account for income tax contingencies in accordance with FASB guidance that contains a model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing a minimum recognition threshold, which all income tax positions must achieve before being recognized in the financial statements.

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Property and equipment is recorded at cost, net of accumulated depreciation.

Depreciation is computed principally by the straight-line method over estimated useful lives ranging from fifteen to thirty years for buildings and improvements, three to five years for computer equipment and software, and the lesser of the remaining life of the building lease, if any, or seven years for furniture and other equipment.

Leasehold improvements are depreciated over the term of the related lease.

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FASB guidance allows for qualitative assessments of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount for purposes of a goodwill impairment analysis and whether it is more likely than not that an indefinite-lived intangible asset is impaired for purposes of an indefinite-lived intangible asset impairment analysis.

Estimated fair values developed based on our assumptions and judgments might be different if other reasonable assumptions and estimates were to be used.

Estimated fair values developed based on our assumptions and judgments might be different if other reasonable assumptions

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

and estimates were to be used.

Qualitative analysis involves assessing situations and developments that could affect key drivers used to evaluate whether the fair value of our goodwill and indefinite-lived intangible assets are impaired.

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Our assumed discount rate is based on our industry’s weighted-average cost of capital and reflects volatility associated with the cost of equity capital.

Market valuations include market comparisons to publicly traded

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Notes to Consolidated Financial Statements (continued)

companies in our industry and are based on observed multiples of certain measures including revenue;

Market valuations include market comparisons to publicly traded companies in our industry and are based on observed multiples of certain measures including revenue;

earnings before interest, taxes, depreciation and amortization (“EBITDA”);

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Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to instruments recognized in the consolidated balance sheets.

We attempt to mitigate the risk of non-performance by selecting counterparties with high credit ratings and monitoring their creditworthiness and by diversifying derivatives among multiple counterparties.

We attempt to

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

mitigate the risk of non-performance by selecting counterparties with high credit ratings and monitoring their creditworthiness and by diversifying derivatives among multiple counterparties.

At December 31, 2023, we believe there were no material concentrations of credit risk with any individual counterparty.

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We recognize the funded status of pension and other postretirement benefit plans on the consolidated balance sheets based on fiscal-year-end measurements of plan assets and benefit obligations.

Prepaid pension

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Notes to Consolidated Financial Statements (continued)

benefits represent prepaid costs related to defined benefit pension plans and are reported with other noncurrent assets.

Prepaid pension benefits represent prepaid costs related to defined benefit pension plans and are reported with other noncurrent assets.

Postretirement benefits represent outstanding obligations for retiree medical, life, vision and dental benefits.

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rather, they are projected by estimating the claims expense for those months based on recent claims expense levels and healthcare trend levels (“trend factors”).

We regularly review and set assumptions regarding cost trends and utilization when initially establishing claim liabilities.

We continually monitor and adjust the claims liability and benefit expense based on subsequent paid claims activity.

If it is determined that our assumptions regarding cost trends and utilization are materially different than actual results, our income statement and financial position could be impacted in future periods.

Premium deficiencies are recognized when it is probable that expected claims and administrative expenses will exceed future premiums on existing medical insurance contracts without consideration of investment income.

Determination of premium deficiencies for longer duration life and disability contracts includes consideration of investment income.

For purposes of premium deficiencies, contracts are deemed to be either short or long duration and are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts.

Once established, premium deficiencies are released commensurate with actual claims experience over the remaining life of the contract.

No premium deficiencies were established at December 31, 2022 or 2021.

On a regular basis, we review cost trends and utilization assumptions set upon initial establishment of claim liabilities.

We utilize subsequent paid claims activity to monitor and continuously adjust the claims liability and benefit expense.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

actual results are determined to be materially different than assumptions regarding cost trends and utilization, future periods of our income statement and overall financial position could be impacted.

Determination of premium deficiencies for longer duration life and disability contracts includes consideration of investment income.

For purposes of evaluating premium deficiencies, contracts are deemed to be either short or long duration and are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts.

Once established, reserves for premium deficiencies are released commensurate with actual claims experience over the remaining life of the contract.

No reserves for premium deficiencies were established at December 31, 2023 or 2022.

Benefit expense includes incurred medical claims as well as quality improvement expenses for our risk-based members.

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Premiums related to the unexpired contractual coverage periods are reflected in the accompanying consolidated balance sheets as unearned income.

Premiums include revenue adjustments for retrospectively rated contracts where revenue is based on the estimated loss experience of the contract.

Premiums include revenue adjustments for retrospectively rated contracts where revenue is based on the estimated loss experience of the

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Premium rates for certain lines of business are subject to approval by the Department of Insurance of each respective state.

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Premium rate decreases are recognized in the period the change in premium rate becomes effective and the change in the rate is known, which may be prior to the period when the contract amendment affecting the rate is finalized.

Administrative fees and other revenue include revenue from certain group contracts that provide for the group to be at risk for all, or with supplemental insurance arrangements, a portion, of their claims experience.

We charge these fee-based

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

groups an administrative fee, which is based on the number of members in a group and the group’s claim experience.

In addition, administrative fees and other revenue include amounts received for the administration of Medicare, certain other government programs, and administrative services arrangements of our Carelon (Diversified Business Group) subsidiaries, now known as Carelon.

Generally, these fee-based arrangements include services which constitute a single suite of services provided and for which consideration is based upon an agreed-upon rate, regardless of the amount of services provided in a given period.

As with premiums, these fee-based arrangements may include terms with retroactive rate or membership adjustments, performance incentives and penalties, each of which is a form of variable consideration within the transaction price.

As such, these fee-based arrangements contain a single performance obligation that constitutes a series, and revenue is recognized over time as the services are performed.

Service fees include revenue from certain group contracts that provide for the group to be at risk for all, or with supplemental insurance arrangements, a portion, of their claims experience.

We charge these fee-based groups an administrative fee, which is based on the number of members in a group and the group’s claim experience.

In addition, service fees include amounts received for the administration of Medicare, certain other government programs, and administrative services arrangements of our Carelon subsidiaries.

Generally, each fee-based arrangement includes services which constitute a single suite of services provided and for which consideration is based upon an agreed-upon rate, regardless of the amount of services provided in a given period.

As with premiums, each fee-based arrangement may include terms with retroactive rate or membership adjustments, performance incentives and penalties, each of which is a form of variable consideration within the transaction price.

As such, each fee-based arrangement contains a single performance obligation that constitutes a series, and revenue is recognized over time as the services are performed.

All benefit payments under these programs are excluded from benefit expense.

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The estimation of variable consideration to be recognized requires significant judgment in the determination of the level of achievement of performance incentives, service level achievements subject to performance penalties, and the completion level of tasks subject to implementation fees.

Product revenue includes revenue for services performed by our CarelonRx PBM for unaffiliated PBM customers.

Unaffiliated PBM customers include our fee-based groups that have contracted with CarelonRx for PBM services and third-party health plans.

Product revenues and costs of goods sold for our affiliated health plans are eliminated in consolidation.

Product revenue for PBM services is recognized using the gross method at the negotiated contract price when CarelonRx has concluded that it is the principal and it controls the services before prescription drugs are transferred to the customer.

Product revenue includes revenue for services performed by CarelonRx for unaffiliated pharmacy customers as well as any co-payments and subsidies made by or on behalf of affiliated customers.

Unaffiliated pharmacy customers include our fee-based groups that have contracted with CarelonRx for pharmacy services and third-party health plans.

Product revenues and costs of goods sold for our affiliated health plans are eliminated in consolidation, excluding co-payments and subsidies made by or on behalf of affiliated customers.

Product revenue for pharmacy services is recognized using the gross method at the negotiated contract price when CarelonRx has concluded that it is the principal and it controls the services before prescription drugs are transferred to the customer.

CarelonRx determined it is the principal due to its contractual rights to design and develop a listing of prescription drugs offered to the customer (formulary management);

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and its discretion over establishing the pricing for prescription drugs.

Overall, control over these activities indicate CarelonRx is primarily responsible for fulfilling the promise to provide PBM services.

Product revenue includes ingredient costs (net of any rebates or discounts), including any co-payments made by or on behalf of the customer, and administrative fees.

Overall, control over these activities indicate CarelonRx is primarily responsible for fulfilling the promise to provide pharmacy services.

Product revenue includes ingredient costs (net of any rebates or discounts), including any co-payments and subsidies made by or on behalf of the customer, and administrative fees.

CarelonRx recognizes revenue when control of the prescription drugs is transferred to customers, in an amount it expects to be entitled to in exchange for the products or services provided.

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 December 31, 2022.

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheets at December 31, 2023 and 2022.

Revenue recognized in 2023 and 2022 from performance obligations related to prior years, such as due to changes in transaction price, was not material.

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Cost of Products Sold:

CarelonRx’s cost of products sold includes the cost of prescription drugs dispensed to unaffiliated PBM customers (net of rebates or discounts).

CarelonRx’s cost of products sold includes the cost of prescription drugs dispensed to unaffiliated pharmacy customers (net of rebates or discounts).

Cost of products sold includes per-claim administrative fees for prescription fulfillment by its vendor and certain CarelonRx direct costs related to sales and administration of customer contracts.

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Stock options are granted for a fixed number of shares with an exercise price at least equal to the fair value of the shares at the date of the grant.

Restricted stock awards are issued at the fair value of the stock on the grant date.

Restricted stock awards are

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

issued at the fair value of the stock on the grant date.

The employee stock purchase plan allows for a purchase price per share which is 90 % of the fair value of a share of common stock on the lower of the first or last trading day of the plan quarter.

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We use print, broadcast and other advertising to promote our products and to develop our corporate image.

We market our products through direct marketing activities and an extensive network of independent

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

agents, brokers and retail partnerships for Individual and Medicare customers, and for certain Group risk-based customers with a smaller employee base.

Products for Group risk-based customers with a larger employee base are generally sold through independent brokers or consultants retained by the customer who work with industry specialists from our in-house sales force.

We market our products through direct marketing activities and an extensive network of independent agents, brokers and retail partnerships for Individual and Medicare customers, and for certain Employer Group risk-based customers with a smaller employee base.

Products for Employer Group risk-based customers with a larger employee base are generally sold through independent brokers or consultants retained by the customer who work with industry specialists from our in-house sales force.

In the Individual and Group markets, we offer products through state or federally facilitated marketplaces, or Public Exchanges, and off-exchange products.

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Total advertising and marketing expense was $ 599 , $ 511 and $ 588 for the years ended December 31, 2023, 2022 and 2021, respectively.

Health Insurance Provider Fee :

The ACA imposed an annual Health Insurance Provider Fee (“HIP Fee”) on health insurers that wrote certain types of health insurance on U.S.

risks, which was permanently repealed effective January 1, 2021.

The HIP Fee was non-deductible for federal income tax purposes.

Our affected products were priced to cover the increased selling, general and administrative and income tax expenses associated with the HIP Fee when it was in effect.

The HIP Fee was $ 15,523 for 2020 and was permanently eliminated beginning in 2021.

For the year ended December 31, 2020, we recognized $ 1,570 as selling, general and administrative expense related to the HIP Fee.

We lease office space and certain computer and related equipment under noncancelable operating leases.

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The operating lease liabilities are reported in other current liabilities and other noncurrent liabilities and the related ROU assets are reported in other noncurrent assets on our consolidated balance sheets.

Lease expense for our operating leases is calculated on a straight-line basis over the lease term and is reported in selling, general and administrative expense on our consolidated statements of income.

Lease expense for our operating leases is calculated on a straight-line basis over the lease term and is reported in operating expense on our consolidated statements of income.

For our office space leases, we account for the lease and non-lease components (such as common area maintenance) as a single lease component.

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See Note 18, “Leases,” for additional information about the ROU asset impairment and abandonment charges.

Earnings per Share:

Shareholders ’ Earnings per Share:

Earnings per share amounts, on a basic and diluted basis, have been calculated based upon the weighted-average common shares outstanding for the period.

Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.

Diluted earnings per share may include the dilutive effect of stock options, restricted stock and convertible debentures, using the treasury stock method.

Basic shareholders’ earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.

Diluted shareholders’ earnings per share may include the dilutive effect of stock options, restricted stock and convertible debentures, using the treasury stock method.

The treasury stock method assumes exercise of stock options and vesting of restricted stock, with the assumed proceeds used to purchase common stock at the average market price for the period.

The difference between the number of shares assumed issued and the number of shares assumed purchased represents the dilutive shares.

Recently Adopted Accounting Guidance:

In January 2021, the 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

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

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 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.

Recently Adopted Accounting Guidance:

In November 2020, the 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 changed 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 , which was issued in November 2018.

The amendments in ASU 2020-11 extended the original effective date by one year to 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 Annual Report on Form 10-K have been restated to reflect the impacts of our adoption as required by the new standard.

Adjustments of $( 131 ) and $ 54 , respectively, were made to shareholders’ net income for the years ended December 31, 2022 and 2021, which include adjustments to benefit expense of $ 155 and $( 74 ), respectively.

In addition, the following balance sheet adjustments were made at years ended December 31, 2022 and 2021:

$( 17 ) and $( 4 ), respectively, to total assets;

$ 47 and $( 39 ), respectively, to total liabilities;

$ 13 and $( 19 ), respectively, to accumulated other comprehensive loss;

and $( 64 ) and $ 35 , respectively to shareholders’ equity and total equity.

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

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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 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 shareholders’ 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 , eliminating the bifurcation of the embedded conversion option;

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 , by eliminating the bifurcation of the embedded conversion option.

These amounts were 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.

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

Recent Accounting Guidance Not Yet Adopted:

In November 2023, the 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.

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 extended the original effective date by one year, with the amendments required for our interim and annual reporting periods beginning after December 15, 2022.

This standard requires the Company to review cash flow assumptions for its 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 the Company to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income.

The rate used to discount the Company’s 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 the Company’s liabilities.

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

The Company adopted the new standard 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 earliest period presented, January 1, 2021.

The adoption did not have a material impact on our consolidated financial position, results of operations, cash flows, or related disclosures.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

The amendments in ASU 2023-07 are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for our fiscal year beginning after December 15, 2023, and interim periods within our fiscal year beginning after December 15, 2024.

The amendments are to be applied retrospectively to all prior periods presented in the financial statements, and upon transition, the significant segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

We are currently evaluating the effects the adoption of ASU 2023-07 will have on our consolidated financial statements and related disclosures.

In August 2023, the FASB issued Accounting Standards Update No.

2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement (“ASU 2023-05”).

ASU 2023-05 clarifies existing guidance to reduce diversity in practice and is requiring a joint venture to recognize and initially measure its assets and liabilities using a new basis of accounting, at fair value, upon formation.

These amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025.

We do not believe the adoption of ASU 2023-05 will have a material impact on our consolidated financial statements and disclosures.

There were no other new accounting pronouncements that were issued or became effective during the year ended December 31, 2023 that had, or are expected to have, a material impact on our financial position, results of operations, cash flows or financial statement disclosures.

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Notes to Consolidated Financial Statements (continued)

Business Acquisitions

Business Acquisitions and Divestitures

Completed Acquisitions

During the year ended December 31, 2023, we completed business combinations for total cash consideration of approximately $ 1,655 .

These acquisitions included Integra MLTC, Inc.

(“Integra”), acquired May 2022, which 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 prices for all business combinations were allocated to the tangible and intangible net assets acquired based on management’s initial estimates of their fair values, of which $ 89 was allocated to finite-lived intangible assets, $ 250 to indefinite-lived intangible assets, and $ 145 to goodwill.

The intangible assets and goodwill acquired were assigned to our Government Business reportable segment.

The majority of goodwill is deductible for income tax purposes.

As of December 31, 2022, the initial accounting for the acquisitions completed in 2022 had not been finalized.

These acquisitions included BioPlus Parent, LLC and subsidiaries (“BioPlus”) which were acquired in February 2023.

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

BioPlus seeks to connect payors and providers of specialty pharmaceuticals to meet the medication therapy needs of patients with complex medical conditions.

The purchase prices for all business combinations were preliminarily allocated to the tangible and intangible net assets acquired based on management's initial estimates of their fair values, of which $ 820 was allocated to finite-lived intangible assets and $ 918 to goodwill.

Of these amounts, $ 1,718 was allocated to our CarelonRx reportable segment and $ 20 to our Carelon Services reportable segment.

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

As of December 31, 2023, 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.

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

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

During the year ended December 31, 2022, we completed business combinations for total cash consideration of approximately $ 751 .

These acquisitions included myNEXUS, Inc.

(“myNEXUS”), acquired April 2021, a comprehensive home-based nursing management company for payors, and MMM Holdings, LLC (“MMM”), acquired June 2021, including its Medicare Advantage plan, Medicaid plan, and other affiliated companies.

These acquisitions included Integra MLTC, Inc.

(“Integra”), acquired in May 2022, a managed long-term care plan serving 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 prices for all business combinations were allocated to the tangible and intangible net assets acquired based on management’s final estimates of their fair values, of which $ 89 was allocated to finite-lived intangible assets, $ 250 to indefinite-lived intangible assets, and $ 161 to goodwill including measurement period adjustments of $ 16 during the year ended December 31, 2023.

Of these amounts, $ 795 was allocated to our Other reportable segment and $ 3,333 to our Government Business reportable segment.The majority of goodwill is not deductible for income tax purposes.

The intangible assets and goodwill acquired were assigned to our Health Benefits reportable segment.

The majority of goodwill is deductible for income tax purposes.

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

Acquired tangible assets (liabilities) at the acquisition date were:

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Deferred tax liabilities ( 187 ) ( 48 )

Total net tangible assets $ 267 $ ( 107 )

Total net tangible assets (liabilities)

$ ( 83 ) $ 251

The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent and tax liabilities, are finalized.

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Fair Value Weighted Average Useful Life Fair Value Weighted Average Useful Life

Customer-related $ 85 10 years $ 1,313 13 years

Provider and hospital relationships 2 15 years 240 14 years

Other 2 0.5 years 24 13 years

State Medicaid licenses 250 Indefinite 20 Indefinite

Customer-related $ 796 25 years

$ 85 10 years

Provider and hospital relationships — — 2 15 years

Other 24 5 years

State Medicaid licenses — — 250 Indefinite

Total intangible assets $ 820 $ 339

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Unaudited pro forma revenues for the years ended December 31, 2023 and 2022 as if the acquisitions had occurred on January 1, 2022 were immaterial for both periods.

The pro forma effects of the acquisitions on net earnings were immaterial for both years.

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 in the first half 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 life and disability businesses to be divested as of and for the year ended December 31, 2023 were not material.

Pending Acquisitions

Louisiana Health Service & Indemnity Company (d/b/a Blue Cross and Blue Shield of Louisiana)

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, an independent licensee of the BCBSA that provides healthcare plans to the Individual, Group, Medicaid and Medicare markets, primarily in the State of Louisiana.

On January 4, 2024, we announced our entrance into an agreement to acquire Paragon Healthcare, Inc., a company providing infusion services and injectable therapies through its omnichannel model of ambulatory infusion centers, home infusion pharmacies, and other specialty pharmacy services.

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.

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.

BioPlus Parent, LLC

On November 9, 2022, we announced our entrance into an agreement with CarepathRx Aggregator, LLC to acquire its specialty pharmacy division, which includes BioPlus Parent, LLC (“BioPlus”) and subsidiaries.

BioPlus is one of the largest independent specialty pharmacy organizations in the United States and seeks to connect payors and providers of specialty pharmaceuticals to meet the medication therapy needs of patients with complex medical conditions.

The acquisition is expected to close in the first half of 2024 and is subject to standard closing conditions and customary approvals.

On December 31, 2023, we entered into an agreement to acquire Centers Plan for Healthy Living LLC and Centers for Specialty Care Group IPA, LLC (“Centers”).

Centers is a managed long-term care plan that serves New York state Medicaid and dually-eligible Medicaid/Medicare members, enabling adults with long-term care needs and disabilities to live safely and independently in their own home.

This acquisition aligns with Elevance Health’s strategic plan to grow the Health Benefits segment and leverage industry-leading expertise while serving Medicaid and dually eligible populations.

The acquisition is expected to close in the third quarter of 2024 and is subject to standard closing conditions and customary approvals.

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

The acquisition was completed on February 15, 2023, and initial purchase accounting for the acquisition has not been finalized.

The acquisition is subject to closing conditions and approvals.

Business Optimization Initiatives

We believe that our properties are adequate and suitable for our business as presently conducted;

however, we are continuing to evaluate our real estate strategy as it relates to the changing needs of a more hybrid remote workforce.

As a result, during 2022, we identified additional reductions of office space and recorded a net charge of $ 39 in selling, general and administrative expenses.

This charge includes $ 34 for impairment and abandonment of operating-lease related ROU assets and $ 7 for impairment and abandonment of property and equipment.

In addition, we released $ 2 of employee termination costs, as reflected in the table below.

The net charges recognized in the Commercial & Specialty Business, Government Business, CarelonRx and Other segments in 2022, were $ 20 , $ 16 , $ 0 and $ 3 , respectively.

See Note 20, “Segment Information” for a discussion of our segments.

During 2021, we identified reductions of office space and recorded a charge of $ 202 in selling, general and administrative expenses.

2023-2024 Business Efficiency Program

In the third quarter of 2023, we implemented the “2023-2024 Business Efficiency Program” as a result of a strategic review of our operations, assets and investments.

The purpose of this program is to enhance operating efficiency, refine the

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

focus of our investments and optimize our physical footprint.

This efficiency program includes the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.

We anticipate substantial completion of the 2023-2024 Business Efficiency Program by the end of the third quarter of 2024.

Cash outlays associated with this program, primarily for personnel-related costs, are expected to be paid through 2024.

In 2023, we incurred $ 752 of expense, which included $ 468 of pre-tax charges for information technology assets and contract write-offs related to projects that have been de-prioritized and stopped, $ 230 of pre-tax personnel-related charges for the reduction and/or relocation of workforce, which includes severance and related costs primarily determined under our existing severance plans, and $ 54 of pre-tax charges from asset impairments related to the closure or partial closure of data centers and offices, including operating lease-related ROU assets and other property and equipment.

These charges were recognized in operating expense in the Corporate & Other segment;

see Note 20, “Segment Information.”

2020 Business Optimization Program

During 2020, our management introduced initiatives across the enterprise to optimize our business operations, including recognition of liabilities for future payments for employee termination costs in connection with the repositioning and reskilling of our workforce.

During 2021, we identified reductions of office space and recorded a charge of $ 202 in operating expense related to this optimization program.

This charge included $ 136 for impairment and abandonment of operating-lease related ROU assets and $ 66 for impairment and abandonment of property and equipment.

The charges recognized in the Commercial & Specialty Business, Government Business, CarelonRx and Other segments in 2021, were $ 108 , $ 60 , $ 1 and $ 33 , respectively.

The charges recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2021, were $ 168 , $ 1 , $ 33 and $ 0 , respectively.

During 2022, while evaluating our real estate strategy as it relates to the changing needs of a more hybrid remote workforce, we identified additional reductions of office space and recorded a net charge of $ 39 in operating expense related to this optimization program.

This charge included $ 34 for impairment and abandonment of operating-lease related ROU assets and $ 7 for impairment and abandonment of property and equipment.

In addition, we released $ 2 of employee termination costs.

The net charges (benefits) recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2022, were $ 36 , $ 0 , $ 5 and $( 2 ), respectively.

During 2023, we released $ 33 of employee termination costs related to this optimization program, as reflected in the table below, which was recognized in the Health Benefits segment.

Liabilities for Employee Termination Costs

A summary of the activity for the year ended December 31, 2023 and the ending balance at that date, related to the liability for employee termination costs, is as follows:

Health Benefits CarelonRx Carelon Services Corporate & Other Total

2023-2024 Business Efficiency Program

Liabilities for employee termination costs at January 1, 2023

$ — $ — $ — $ — $ —

— — — 230 230

— — — ( 39 ) ( 39 )

Total liabilities for employee termination costs ending balance at December 31, 2023

$ — $ — $ — $ 191 $ 191

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

During 2020, our management introduced enterprise-wide initiatives to optimize our business and, as a result, we recorded a charge of $ 653 in selling, general and administrative expenses.

This charge included $ 258 for impairment and abandonment of operating-lease related ROU assets, $ 198 for impairment and abandonment of property and equipment and $ 197 for future payments for employee termination costs in connection with the repositioning and reskilling of our workforce.

The charges recognized in the Commercial & Specialty Business, Government Business, CarelonRx and Other segments in 2020, were $ 311 , $ 205 , $ 4 and $ 133 , respectively.

A summary of the activity for the year ended December 31, 2022 and ending balance at December 31, 2022, related to the liability for employee termination costs previously incurred in 2020, is as follows:

Commercial & Specialty Business Government Business CarelonRx Other Total

Health Benefits CarelonRx Carelon Services Corporate & Other Total

2020 Business Optimization Initiatives

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$ 8 $ — $ — $ — $ 8

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Certain prior year residential and commercial mortgage-backed securities have been reclassified throughout this Note 5 and Note 7, “Fair Value” to conform to the current year presentation.

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

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At December 31, 2023 and 2022, there were no individual investments that exceeded 10% of shareholders’ equity.

At December 31, 2022 and 2021, there were eight and two , respectively, fixed maturity investments that did not produce income during the years then ended.

At December 31, 2023 and 2022, there were eleven and eight respectively, fixed maturity investments that did not produce income during the years then ended.

As of December 31, 2023 and 2022, we had committed approximately $ 1,321 and $ 1,504 , respectively, to future capital calls from various third-party investments in exchange for an ownership interest in the related entities.

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Securities Lending Programs

The fair value of the collateral received at the time of the securities lending transactions amounted to $ 2,457 and $ 2,155 at December 31, 2022 and 2021, respectively.

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

The fair value of the cash and securities received as collateral for securities loaned at December 31, 2023 and 2022 was $ 2,380 and $ 2,457 , respectively.

The collateral received was 102 % of the market value of the loaned securities at each of December 31, 2023 and 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.

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Non-hedging instruments

Derivatives embedded in convertible fixed maturity securities 18 Fixed Maturity Securities 4 —

Derivatives embedded in convertible securities

15 Fixed maturity securities

Interest rate swaps 5 Equity securities/other assets/other liabilities — —

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Collars 19 Equity securities 14 ( 3 )

Futures 358 Equity securities 2 ( 2 )

Futures/Forwards

151 Equity securities/other assets/other liabilities

Subtotal non-hedging 351 Subtotal non-hedging 22 ( 88 )

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Non-hedging instruments

Derivatives embedded in convertible securities

18 Fixed maturity securities

Interest rate swaps 5 Equity securities/other assets/other liabilities — —

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Collars 19 Equity securities 23 ( 9 )

Futures 344 Equity securities 3 ( 2 )

Futures/Forwards

358 Equity securities/other assets/other liabilities

Subtotal non-hedging 400 Subtotal non-hedging 30 ( 11 )

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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 the LIBOR or the Secured Overnight Financing Rate.

The floating rates payable on all of our fair value hedges are benchmarked to the Secured Overnight Financing Rate.

A summary of our outstanding fair value hedges at December 31, 2023 and 2022 is as follows:

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Received Expiration Date

Interest rate swap 2023 $ 300 $ — 5.500 % April 15, 2032

Interest rate swap 2023 150 — 2.550 September 15, 2030

Interest rate swap 2023 500 — 4.900 February 8, 2026

Interest rate swap 2023 125 — 4.101 September 1, 2027

Interest rate swap 2023 100 — 2.250 November 15, 2029

Interest rate swap

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Derivatives embedded in convertible securities Net (losses) gains on financial instruments $ ( 2 )

Interest rate swaps Net (losses) gains on financial instruments ( 4 )

Options (including swaptions) Net (losses) gains on financial instruments 3

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Year ended December 31, 2022

Derivatives embedded in convertible securities Net (losses) gains on financial instruments $ ( 3 )

Interest rate swaps Net (losses) gains on financial instruments ( 4 )

Options (including swaptions) Net (losses) gains on financial instruments 13

Collars Net (losses) gains on financial instruments 10

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Futures Net (losses) gains on financial instruments 7

Total $ ( 2 )

In January 2023, we made an equity investment that resulted in our minority interest ownership of Project Freedom Holdings, LLC, which is the ultimate parent of LIBERTY Dental Plan Corporation (“Liberty Dental”).

Liberty Dental engages in dental insurance and dental health care administration.

As part of the Liberty Dental transaction, we entered into a shareholders’ agreement with the majority owners that provides for certain rights and obligations of each party, including certain put and call options.

These options could result in our purchase of the units held by the majority owners in 2026 and 2027.

We have calculated the fair value of the net put option, which is a Level III measurement (see Note 7, “Fair Value”), using a Monte Carlo simulation, which relies on assumptions, including cash flow projections, risk-free rates, volatility and details specific to the put and call options.

Significant changes in assumptions could result in significantly lower or higher fair value measurements.

The net put option’s fair value liability of $ 85 , measured at the date of acquisition, is included in “Other noncurrent liabilities.” We have elected to not mark the net put option to market, and the fair value of the net put option will remain on the balance sheet until it's exercised or expires.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

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Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less and are purchased daily at par value with specified yield rates.

Due to the high ratings and short-term nature of the funds, we designate all cash equivalents as Level I.

Due to the short-term nature of the funds, we designate all cash equivalents as Level I.

Fixed maturity securities, available-for-sale:

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These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures.

Level II securities primarily include corporate securities, securities from states, municipalities and political

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities.

Level II securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities.

For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities.

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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 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.

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

For these securities, the valuation methodologies may incorporate broker quotes, net asset value of underlying loans 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.

Equity securities:

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These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value, to facilitate fair value measurements and disclosures.

Fair values are based on the quoted market prices by the financial institution that is the counterparty to the derivative transaction.

Fair values are generally based on the quoted market prices by the financial institution that is the counterparty to the derivative transaction.

We independently verify prices provided by the counterparties using valuation models that incorporate market observable inputs for similar derivative transactions.

Derivatives are designated as Level II securities.

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

These derivatives are designated as Level II securities.

Fair values of certain derivatives where market observable inputs are not available are estimated using

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

assumptions such as cash flow projections, risk-free rates, volatility and details specific to the derivative contract.

These derivatives are designated as Level III securities.

In addition, the following methods and assumptions were used to determine the fair value of each class of pension benefit plan assets and other benefit plan assets not defined above (see Note 11, “Retirement Benefits,” for fair values of benefit plan assets):

Mutual funds:

Fair values are based on quoted market prices, which represent the net asset value (“NAV”) of the shares held.

Fair values are based on quoted market prices, which represent the net asset value (“NAV”) of shares held.

Partnership investments:

Fair values are estimated based on the plan’s proportionate share of the undistributed partners’ capital as reported in audited financial statements of the partnership.

In accordance with FASB guidance, certain investments that are measured at fair value using the NAV per share as a practical expedient or the fair value measurement alternative have been classified in the fair value hierarchy.

The fair value amounts presented are intended to permit reconciliation of the fair value hierarchy to the total investments of the master trust.

Fair values are estimated based on the plan’s ownership share of the partnerships’ net assets, as reported in their periodic capital statements, and are valued using NAV as a practical expedient.

The partnerships primarily consist of a real estate investment fund which acquires investments in real estate entities, and an energy fund which invests in public and private oil and gas companies principally through privately issued securities.

Collective investment trusts (“CITs”):

Fair values are based on the NAV of the units held by the plan at year end and are valued using NAV as a practical expedient.

The CITs are passive index funds that seek investment results that generally correspond to the performance of the Bloomberg U.S.

Intermediate Treasury Index.

Commingled fund:

Fair value is based on NAV per fund share, primarily derived from the quoted prices in active markets on the underlying equity securities.

Contract with insurance company :

Fair value of the contract in the insurance company general investment account is determined by the insurance company based on the fair value of the underlying investments of the account.

Fair value is based on NAV per fund share and is valued using NAV as a practical expedient.

The fund primarily invests in publicly traded equity securities of issuers within the fund’s benchmark.

The objective of the fund is to produce returns in excess of the relevant benchmark over rolling five-year periods.

Insurance company contracts:

Fair value is based on the fair value of the underlying investments of the account as determined by the insurance company.

Investment in DOL 103-12 trust:

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Life insurance contracts:

Fair value is based on the cash surrender value of the policies as reported by the insurer.

Fair value is based on the cash surrender value of the policies as reported by the insurance carriers.

Elevance Health, Inc.

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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 2022 and the acquisitions of myNEXUS and MMM

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

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

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 net assets acquired in these acquisitions 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.

The fair values of goodwill and other intangible assets acquired in our acquisitions of BioPlus and Integra were 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 years ended December 31, 2022 or 2021.

Also in 2023, we entered into a shareholders’ agreement which included certain put and call options associated with our minority interest ownership of Liberty Dental.

The resulting net put option liability was recorded at its fair value measured at the date of acquisition using Level III inputs with an election not to mark the derivative to market, which is further discussed and disclosed in Note 6, “Derivatives”.

Other than the assets acquired and liabilities assumed in our acquisitions of BioPlus and Integra and the net put option on Liberty Dental described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the years ended December 31, 2023 or 2022.

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

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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 the consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other current assets, deferred income taxes, intangible assets and certain financial instruments, such as policy liabilities, are excluded from the fair value disclosures.

Non-financial instruments such as property and equipment, other current assets, deferred income taxes, intangible assets and certain financial instruments, such as policy liabilities, are excluded from the fair value disclosures.

Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value.

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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.

Mortgage loans are carried at amortized cost, which approximates fair value.

Mortgage loans are carried at amortized cost net of loss allowance.

The fair value of mortgage loans is measured using discounted cash flows benchmarked against the 10-year U.S.

Treasury yield plus a market rate spread.

The carrying value of corporate-owned life insurance policies represents the cash surrender value as reported by the respective insurer, which approximates fair value.

Short-term borrowings :

The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or if no quoted market prices were available, on the current market interest rates estimated to be available to us for debt of similar terms and remaining maturities.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Short-term borrowings :

Long-term debt—commercial paper :

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Long-term debt—convertible debentures :

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.

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

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 December 31, 2023 and 2022 is as follows:

5 unchanged sentences

Notes 24,895 — 23,569 — 23,569

Convertible debentures 63 — 463 — 463

December 31, 2022

1 unchanged sentence

Short-term borrowings 265 — 265 — 265

Commercial paper 300 — 300 — 300

Notes 23,786 — 21,861 — 21,861

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Deferred compensation 44 34

Federal and state operating loss carryforwards 208 201

Federal and state carryforwards

Investment basis 31 340

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Depreciation and amortization 54 62

Investment basis — 295

Retirement assets 319 317

Lease right-of-use asset 123 126

Lease right-of-use assets

Prepaid expenses 249 201

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( 15 ) ( 0.2 ) ( 19 ) ( 0.3 ) ( 22 ) ( 0.3 )

HIP fee — — — — 330 5.3

Basis adjustments from recent acquisitions — — — — ( 110 ) ( 1.8 )

Change in valuation allowance

84 1.1 51 0.7 81 1.0

Other, net ( 89 ) ( 1.2 ) ( 106 ) ( 1.4 ) ( 93 ) ( 1.1 )

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During the year ended December 31, 2023, we recognized income tax expense of $ 1,724 , or $ 7.26 per diluted share.

The decrease in effective income tax rate is primarily due to the impact of geographic changes in the mix of 2022 earnings.

The decrease in effective income tax rate for 2023 compared to 2022 was primarily due to the impact of geographic changes in the mix of 2023 earnings.

During the year ended December 31, 2022, we recognized income tax expense of $ 1,712 , or $ 7.05 per diluted share.

The HIP Fee payment was eliminated beginning in 2021.

During the year ended December 31, 2020, we recognized income tax expense of $ 1,666 , or $ 6.55 per diluted share, which included income tax expense of $ 330 , or $ 1.30 per diluted share, as a result of the non-tax deductibility of the HIP Fee payment.

The decrease in effective income tax rate for 2022 compared to 2021 was primarily due to the impact of geographic changes in the mix of 2022 earnings.

During the year ended December 31, 2021, we recognized income tax expense of $ 1,846 , or $ 7.48 per diluted share.

The change in the carrying amount of gross unrecognized tax benefits from uncertain tax positions for the years ended December 31, 2023 and 2022 is as follows:

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Also included in the table above, at December 31, 2023, is $ 2 that would be recognized as an adjustment to additional paid-in capital, which would not affect our effective tax rate.

In addition to the contingent liabilities included in the table above, we filed protective state income tax refund claims of approximately $ 92 and $ 310 for 2022 and 2017, respectively.

There were no equivalent protective state income tax refund claims filed in 2021, 2020, 2019 or 2018.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

For the years ended December 31, 2023, 2022 and 2021 we recognized net interest expense of $ 24 , $ 13 and $ 9 , respectively.

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As of December 31, 2023, as further described below, certain tax years remain open to examination by the Internal Revenue Service (“IRS”) and various state, local and foreign authorities.

As a result of these examinations and discussions with taxing agencies, we have recorded amounts for uncertain tax positions.

As a result of these examinations and discussions

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

with taxing agencies, we have recorded amounts for uncertain tax positions.

It is anticipated that the amount of unrecognized tax benefits will change in the next twelve months due to possible settlements of audits and changes in temporary items.

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In certain states, we pay premium taxes in lieu of state income taxes.

Premium taxes are reported in selling, general and administrative expense.

At December 31, 2022, we had federal net operating loss carryforwards of $ 160 that will expire beginning 2032 through 2042 and $ 109 that have an indefinite carryforward period.

State net operating loss carryforwards expire beginning 2023 through 2042, with some having an indefinite carryforward period.

Premium taxes are reported in operating expense.

At December 31, 2023, we had federal net operating loss carryforwards of $ 192 , of which $ 69 will expire beginning 2032 through 2043 and $ 123 have an indefinite carryforward period.

State and foreign net operating loss carryforwards expire beginning 2024 through 2042, with some having an indefinite carryforward period.

Income taxes receivable totaled $ 543 and $ 440 at December 31, 2023 and 2022, respectively.

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Capitalized costs related to the internal development of software of $ 5,870 and $ 5,354 at December 31, 2023 and 2022, respectively, are reported with computer software.

Impairment of property and equipment for the years ended December 31, 2022, 2021 and 2020 was $ 7 , $ 73 , and $ 198 , respectively, which is included in selling, general and administrative expenses and primarily related to our activities disclosed in Note 4, “Business Optimization Initiatives.”

Impairment of property and equipment for the years ended December 31, 2023, 2022 and 2021 was $ 446 , $ 7 , and $ 73 , respectively, which is included in operating expense and primarily related to our activities disclosed in Note 4, “Business Optimization Initiatives.”

Elevance Health, Inc.

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A summary of the change in the carrying amount of goodwill for our segments (see Note 20, “Segment Information”) for 2023 and 2022 is as follows:

Business Government

Business CarelonRx Other Total

Health Benefits CarelonRx Carelon Services Total

Balance as of January 1, 2022 $ 21,942 $ 59 $ 2,227 $ 24,228

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Accumulated impairment as of December 31, 2023

$ — $ — $ — $ —

As required by FASB guidance, we completed annual impairment tests of existing goodwill and other intangible assets with indefinite lives during 2023, 2022 and 2021.

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Other intangible assets $ 14,298 $ ( 4,025 ) $ 10,273 $ 14,594 $ ( 4,279 ) $ 10,315

In 2022, due to our acquisition of Integra, we recorded intangible assets and due to our new branding strategy, reclassified $ 308 of trademarks with indefinite lives to Intangible assets with finite lives - Other.

In addition, the amortization period of certain intangible assets was shortened to align with the anticipated dates the new branding will take place.

In 2023, additions to the gross carrying amount of customer relationships relate to the acquisition of BioPlus.

The decrease in the gross and net carrying amount of intangible assets with finite lives—other primarily related to the accelerated amortization of certain trade names in connection with the new branding strategy, which was substantially completed in 2023.

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.

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We sponsor various non-contributory employee defined benefit plans through certain subsidiaries.

The Elevance Health Cash Balance Plan A (formerly the Anthem Cash Balance Plan A) and the Elevance Health Cash Balance Plan B (formerly the Anthem Cash Balance Plan B) are cash balance pension plans covering certain eligible employees of the affiliated companies that participate in these plans.

The Elevance Health Cash Balance Plan A and the Elevance Health Cash Balance Plan B are cash balance pension plans covering certain eligible employees of the affiliated companies that participate in these plans.

Effective January 1, 2006, benefits were curtailed, with the result that most participants stopped accruing benefits but continue to earn interest on benefits accrued prior to the curtailment.

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Benefit obligation at beginning of year $ 1,415 $ 1,859 $ 277 $ 343

Service cost — — — 1

Interest cost 68 52 14 7

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Equity securities primarily include a mix of domestic securities, foreign securities and mutual funds invested in equities.

Fixed maturity securities primarily include treasury securities, corporate bonds and asset-backed investments issued by corporations and the U.S.

Other types of investments include insurance contracts

Fixed maturity securities primarily include corporate bonds, treasury securities and asset-backed investments issued by corporations and the U.S.

Other types of investments include insurance contracts designed specifically for employee benefit plans, an investment in a DOL 103-12 trust and certain alternative investments.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

designed specifically for employee benefit plans, a commingled fund comprised primarily of equity securities and certain partnership interests.

The partnerships hold various types of underlying assets such as real estate and investments in oil and gas companies.

Generally, the partnership interests are not redeemable and are transferable only with the consent of the general partner.

Unfunded commitments related to all partnership interests totaled approximately $ 2 and $ 3 at December 31, 2022 and 2021, respectively.

As of December 31, 2023, there were no significant concentrations of investments in the pension benefit assets or other benefit assets.

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Pension benefit assets and other benefit assets recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

In accordance with FASB guidance, certain alternative investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

The fair value amounts presented are intended to permit reconciliation of the fair value hierarchy to the total plan assets.

The fair values of our pension benefit assets and other benefit assets by asset category and level inputs at December 31, 2023, excluding cash, investment income receivable and amounts due to/from brokers, resulting in a net asset of $ 43 , and excluding estimated claims settlements to be paid from other benefit assets of $( 23 ), are as follows (see Note 7, “Fair Value,” for additional information regarding the definition of level inputs):

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Pension Benefit Assets:

Cash equivalents

$ 2 $ — $ — $ 2

Equity securities:

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Other types of investments:

Commingled fund — 93 — 93

Insurance company contracts — — 143 143

Total pension benefit assets at fair value $ 528 $ 594 $ 143 1,265

Partnership investments 71

Alternative investments

Total pension benefit assets $ 1,765

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Mutual funds 17 — — 17

Fixed maturity securities:

Government securities — 3 — 3

Corporate securities — 3 — 3

Asset-backed securities — 3 — 3

Other types of investments:

Commingled fund — 2 — 2

Life insurance contracts — — 289 289

Investment in DOL 103-12 trust — 9 — 9

Total other benefit assets at fair value

$ 26 $ 9 $ 289 324

Alternative investments

Total other benefit assets

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Other types of investments:

Commingled fund — 106 — 106

Insurance company contracts — — 154 154

Total pension benefit assets at fair value $ 673 $ 707 $ 154 1,534

Partnership investments 78

Alternative investments

Total pension benefit assets $ 1,698

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Other types of investments:

Commingled fund — 2 — 2

Life insurance contracts — — 270 270

Investment in DOL 103-12 trust — 10 — 10

Total other benefit assets at fair value

$ 25 $ 19 $ 270 314

Alternative investments

Total other benefit assets

In order to conform with current year presentation, the table above includes a reclassification of the commingled fund from Level II into alternative investments measured using NAV as a practical expedient.

This reclassification did not have any impact on total plan assets.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The following table provides additional information on the alternative investments that are measured using NAV as a practical expedient:

Fair Value as of December 31 Unfunded Commitments as of December 31, 2023 Redemption Frequency (if applicable) Redemption Notice Period

Collective investment trusts:

Pension benefit assets

Other benefit assets

355 — $ — Daily

Commingled fund:

Pension benefit assets

Other benefit assets

Total commingled fund

86 95 — 1st & 15th of the month

7 business days

Partnership investments 70 71 1 Not Applicable

Not Applicable

Total alternative investments $ 511 $ 166 $ 1

A reconciliation of the beginning and ending balances of plan assets measured at fair value using Level III inputs for the years ended December 31, 2023, 2022 and 2021 is as follows:

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Actual return on plan assets relating to assets still held at the reporting date

( 22 ) ( 53 ) ( 75 )

Purchases 6 — 6

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Actual return on plan assets relating to assets still held at the reporting date

( 22 ) ( 53 ) ( 75 )

Purchases 9 — 9

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Our current funding strategy is to fund an amount at least equal to the minimum required funding as determined under ERISA with consideration of maximum tax deductible amounts.

We may elect to make discretionary contributions up to the maximum amount deductible for income tax purposes.

We may elect to make discretionary contributions up to the

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

maximum amount deductible for income tax purposes.

For the years ended December 31, 2023, 2022 and 2021, no material contributions were necessary to meet ERISA required funding levels.

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2029 - 2033 492 99

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

In addition to the defined benefit plans, we maintain the Elevance Health 401(k) Plan (formerly the Anthem 401(k) Plan), which is a qualified defined contribution plan covering substantially all employees.

In addition to the defined benefit plans, we maintain the Elevance Health 401(k) Plan, which is a qualified defined contribution plan covering substantially all employees.

Voluntary employee contributions are matched by us subject to certain limitations.

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Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 20, “Segment Information”), for the year ended December 31, 2022 is as follows:

Business Government

Business Other Total

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

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

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

Business combinations and purchase adjustments 3 130 — 133

Net incurred medical claims:

Current year 30,067 81,795 1,552 113,414

Prior years redundancies ( 154 ) ( 630 ) ( 85 ) ( 869 )

Total net incurred medical claims 29,913 81,165 1,467 112,545

Net payments attributable to:

Current year medical claims 26,274 71,463 1,260 98,997

Prior years medical claims 3,362 8,052 186 11,600

Total net payments 29,636 79,515 1,446 110,597

Net medical claims payable, end of year 4,114 10,929 299 15,342

Ceded medical claims payable, end of year 5 1 — 6

Gross medical claims payable, end of year $ 4,119 $ 10,930 $ 299 $ 15,348

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

A reconciliation of the beginning and ending balances for medical claims payable, by segment, for the year ended December 31, 2021 is as follows:

Business Government

Business Other Total

Gross medical claims payable, beginning of year $ 3,294 $ 7,646 $ 195 $ 11,135

Ceded medical claims payable, beginning of year ( 13 ) ( 33 ) — ( 46 )

Net medical claims payable, beginning of year 3,281 7,613 195 11,089

Business combinations and purchase adjustments — 375 45 420

Net incurred medical claims:

Current year 28,132 70,670 1,638 100,440

Prior years redundancies ( 465 ) ( 1,222 ) ( 16 ) ( 1,703 )

Total net incurred medical claims 27,667 69,448 1,622 98,737

Net payments attributable to:

Current year medical claims 24,502 62,233 1,421 88,156

Prior years medical claims 2,612 6,054 163 8,829

Total net payments 27,114 68,287 1,584 96,985

Net medical claims payable, end of year 3,834 9,149 278 13,261

Ceded medical claims payable, end of year 13 8 — 21

Gross medical claims payable, end of year $ 3,847 $ 9,157 $ 278 $ 13,282

A reconciliation of the beginning and ending balances for medical claims payable, by segment, for the year ended December 31, 2020 is as follows:

Business Government

Business Other Total

A reconciliation of the beginning and ending balances for medical claims payable for the years ended December 31, 2023, 2022 and 2021 is as follows:

2023 2022 2021

Gross medical claims payable, beginning of year $ 15,348 $ 13,282 $ 11,135

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This information is compared to the originally established year end liability.

Negative amounts reported for incurred medical claims related to prior years result from claims being settled for amounts less than originally

Negative amounts reported for incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated.

The prior year redundancy of $ 1,571 shown above for the year ended December 31, 2023 represents an estimate based on paid claim activity from January 1, 2023 to December 31, 2023.

Medical claim liabilities are usually described as

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The prior year redundancy of $ 869 shown above for the year ended December 31, 2022 represents an estimate based on paid claim activity from January 1, 2022 to December 31, 2022.

Medical claim liabilities are usually described as having a “short tail,” which means that they are generally paid within twelve months of the member receiving service from the provider.

having a “short tail,” which means that they are generally paid within twelve months of the member receiving service from the provider.

Accordingly, the majority of the $ 1,571 redundancy relates to claims incurred in calendar year 2022.

The following table provides a summary of the two key assumptions having the most significant impact on our incurred but not paid liability estimates for the years ended December 31, 2023, 2022 and 2021, which are the completion and trend factors.

These two key assumptions can be influenced by utilization levels, unit costs, mix of business, benefit plan designs, provider reimbursement levels, processing system conversions and changes, claim inventory levels, claim processing patterns, claim submission patterns and operational changes resulting from business combinations.

We had increased estimation uncertainty on our incurred but not reported liability at December 31, 2022 and December 31, 2021.

Slowdowns in claims submission patterns and increases in utilization levels for COVID-19 testing and treatment are the primary factors that lead to the increased estimation uncertainty.

These vital assumptions can be affected by variables such as utilization levels, unit costs, mix of business, benefit plan designs, provider reimbursement levels, processing system conversions and changes, claim inventory levels, claim processing and submission patterns, and operational changes resulting from business combinations.

We had increased estimation uncertainty on our incurred but not reported liability at December 31, 2022, 2021 and 2020.

Slowdowns in claims submission patterns and increases in utilization levels for COVID-19 testing and treatment are the primary factors that led to the increased estimation uncertainty.

Favorable Developments

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Total $ ( 1,571 ) $ ( 869 ) $ ( 1,703 )

The favorable development recognized in 2023 resulted primarily from trend factors in late 2022 developing more favorably than originally expected.

Favorable development in the completion factors in late 2022 also contributed to the favorable development in 2023.

The favorable development recognized in 2022 resulted primarily from trend factors in late 2021 developing more favorably than originally expected as well as a smaller contribution from completion factor development.

The favorable development recognized in 2021 resulted primarily from trend factors in late 2020 developing more favorably than originally expected as well as a smaller but significant contribution from completion factor development.

The favorable development recognized in 2020 resulted primarily from trend factors in late 2019 developing more favorably than originally expected as well as a smaller contribution from completion factor development.

The reconciliation of net incurred medical claims to benefit expense included in the consolidated statements of income is as follows:

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2023 2022 2021

Net incurred medical claims:

Commercial & Specialty Business $ 29,913 $ 27,667 $ 24,519

Government Business 81,165 69,448 58,650

Other 1,467 1,622 1,288

Total net incurred medical claims $ 120,227 $ 112,545 $ 98,737

1 unchanged sentence

Benefit expense $ 124,330 $ 116,642 $ 102,571

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Incurred claims development, net of reinsurance, for the Commercial & Specialty Business for the years ended December 31, 2022, 2021 and 2020 is as follows:

Commercial & Specialty Business Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claim Years (Unaudited) (Unaudited) 2022

2020 & Prior $ 27,545 $ 27,080 $ 27,101

2021 28,132 27,957

Total $ 85,128

Paid claims development, net of reinsurance, for the Commercial & Specialty Business for the years ended December 31, 2022, 2021 and 2020 is as follows:

Commercial & Specialty Business Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claim Years (Unaudited) (Unaudited) 2022

2020 & Prior $ 24,263 $ 26,876 $ 27,049

Incurred claims development, net of reinsurance, for the years ended December 31, 2023, 2022 and 2021 is as follows:

Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

2021 2022 2023

Total $ 81,014

At December 31, 2022, the total of incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $ 52 , $ 266 and $ 3,796 for the claim years 2020 and prior, 2021 and 2022, respectively.

At December 31, 2022, the cumulative number of reported claims for the Commercial & Specialty Business was 80 , 87 and 81 for the claim years 2020 and prior, 2021 and 2022, respectively.

Incurred claims development, net of reinsurance, for the Government Business as of and for the years ended December 31, 2022, 2021 and 2020 is as follows:

Government Business Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claim Years (Unaudited) (Unaudited)

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Notes to Consolidated Financial Statements (continued)

Paid claims development, net of reinsurance, for the Government Business as of and for the years ended December 31, 2022, 2021 and 2020 is as follows:

Government Business Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claim Years (Unaudited) (Unaudited) 2022

2020 & Prior $ 56,767 $ 62,821 $ 62,981

2021 62,233 70,125

Total $ 204,569

At December 31, 2022, the total of incurred but not reported liabilities plus expected development on reported claims for the Government Business was $ 142 , $ 325 and $ 10,462 for the claim years 2020 and prior, 2021 and 2022, respectively.

At December 31, 2022, the cumulative number of reported claims for the Government Business was 251 , 325 and 298 for the claim years 2020 and prior, 2021 and 2022, respectively.

Incurred claims development, net of reinsurance, for Other as of and for the years ended December 31, 2022, 2021 and 2020 is as follows:

Other Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claim Years (Unaudited) (Unaudited) 2022

2020 & Prior $ 1,486 $ 1,470 $ 1,459

Paid claims development, net of reinsurance, for the years ended December 31, 2023, 2022 and 2021 is as follows:

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

2021 2022 2023

Total $ 4,620

Paid claims development, net of reinsurance, for Other as of and for the years ended December 31, 2022, 2021 and 2020 is as follows:

Other Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claim Years (Unaudited) (Unaudited)

2 unchanged sentences

Total $ 327,294

At December 31, 2022, the total of incurred but not reported liabilities plus expected development on reported claims for Other was $ 1 , $ 6 and $ 292 for the claim years 2020 and prior, 2021 and 2022, respectively.

At December 31, 2022, the cumulative number of reported claims for Other was 29 , 28 , and 25 for the claim years 2020 and prior, 2021 and 2022, respectively.

The information about incurred claims development, paid claims development and cumulative number of reported claims for the years ended December 31, 2020 and 2021 for our Commercial & Specialty Business, Government Business and Other is unaudited and presented as supplementary information.

The cumulative number of reported claims for each claim year for our Commercial & Specialty Business, Government Business and Other have been developed using historical data captured by our claim payment systems.

The provided claim

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

amounts are not a precise tool for understanding utilization of medical services.

At December 31, 2023, the total of incurred but not reported liabilities plus expected development on reported claims was $ 363 , $ 843 and $ 14,652 for the claim years 2021 and prior, 2022 and 2023, respectively.

At December 31, 2023, the cumulative number of reported claims was 480 , 462 and 430 for the claim years 2021 and prior, 2022 and 2023, respectively.

The information about incurred claims development, paid claims development and cumulative number of reported claims for the years ended December 31, 2021 and 2022 is unaudited and presented as supplementary information.

The cumulative number of reported claims for each claim year has been developed using historical data captured by our claim payment systems.

The provided claim amounts are not a precise tool for understanding utilization of medical services.

They could be impacted by a variety of factors, including changes in provider billing practices, provider reimbursement arrangements, mix of services, benefit design or processing systems.

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Our cumulative number of reported claims may not be comparable to similar measures reported by other health benefits companies.

The reconciliation of the Commercial & Specialty Business, Government Business and Other incurred and paid claims development information for the three years ended December 31, 2022, reflected in the tables above, to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of December 31, 2022, is as follows:

Business Government

Business Other Total

The reconciliation of incurred and paid claims development information for the three years ended December 31, 2023, reflected in the tables above, to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of December 31, 2023, is as follows:

Cumulative incurred claims and allocated claim adjustment expenses, net of reinsurance $ 343,152

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Outstanding short-term FHLB borrowings at December 31, 2023 had fixed interest rates of 5.460 %.

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 .

The interest rate on each line of credit is based on the LIBOR rate plus a predetermined rate.

Our ability to borrow under the lines of credit is subject to compliance with certain covenants.

At each of December 31, 2022 and 2021, $ 0 was outstanding under our Subsidiary Credit Facilities.

Elevance Health, Inc.

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5.125 %, due 2053

4.850 %, due 2054

Surplus note:

2 unchanged sentences

2.750 %, due 2042

Variable rate debt:

Commercial paper program — 300

Total long-term debt 24,895 23,849

3 unchanged sentences

Notes to Consolidated Financial Statements (continued)

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

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

We generally issue senior unsecured notes (“Notes”) for long-term borrowing purposes.

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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.

We used the net 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.

On December 1, 2022, we repaid, at maturity, the $ 750 outstanding balance of our 2.950 % senior unsecured notes.

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We recognized a loss on extinguishment of debt of $ 15 for the repurchase of these notes.

On November 23, 2020, we repaid, at maturity, the $ 900 outstanding balance of our 2.500 % senior unsecured notes.

On August 17, 2020, we repaid, at maturity, the $ 700 outstanding balance of our 4.350 % senior unsecured notes.

Additionally, during the year ended December 31, 2020, we repurchased $ 79 of outstanding principal amount of certain other senior unsecured notes, plus applicable premium for early redemption plus accrued and unpaid interest, for cash totaling $ 109 .

We recognized a loss on extinguishment of debt of $ 30 for the repurchase of these notes.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

On May 5, 2020, we issued $ 400 aggregate principal amount of additional senior notes pursuant to a reopening of our existing 2.375 % Notes due 2025 (the “2025 Notes”), $ 1,100 aggregate principal amount of 2.250 % Notes due 2030 (the “2030 Notes”), and $ 1,000 aggregate principal amount of 3.125 % Notes due 2050 (the “2050 Notes”) under our shelf registration statement.

The 2025 Notes constitute an additional issuance of our 2.375 % notes due 2025, of which $ 850 aggregate principal amount was issued on September 9, 2019 .

Interest on the 2025 Notes is deemed to have accrued from January 15, 2020 and is payable semi-annually in arrears on January 15 and July 15 of each year, commencing July 15, 2020.

Interest on the 2030 Notes and 2050 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2020.

The proceeds were used 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.

The surplus note is an unsecured obligation of Anthem Insurance Companies, Inc.

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Any payment of interest or principal on the surplus note may be made only with the prior approval of the Indiana Department of Insurance (“IDOI”) and only out of capital and surplus funds of Anthem Insurance that the IDOI determines to be available for the payment under Indiana insurance laws.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

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.

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As of December 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, the 2021 364-Day Facility or the prior 364-Day Facility at any time during the years ended December 31, 2022 or 2021.

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

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 December 31, 2022, we had $ 0 outstanding under our commercial paper program.

At December 31, 2021, we had $ 300 outstanding under our commercial paper program with a weighted-average interest rate of 0.150 %.

Commercial paper borrowings have been classified as long-term debt at December 31, 2022 and 2021, as our general practice and intent is to replace short-term commercial paper outstanding at expiration with additional short-term commercial paper for an uninterrupted period extending for more than one year, and we have the ability to redeem our commercial paper with borrowings under the credit facilities described above.

At December 31, 2023 and 2022, we had $ 0 outstanding under our commercial paper program.

Beginning in 2023, we have reclassified our commercial paper balances from long-term debt to short-term debt as our intent is to not replace short-term commercial paper outstanding at expiration with additional short-term commercial paper for an uninterrupted period extending for more than one year.

Convertible Debentures

On October 9, 2012, we issued $ 1,500 of senior convertible debentures (the “Debentures”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The Debentures are governed by an indenture dated as of October 9, 2012 between us and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”).

The Debentures bear interest at a rate of 2.750 % per year, payable semi-annually in arrears in cash on April 15 and October 15 of each year, and mature on October 15, 2042, unless earlier redeemed, repurchased or converted into shares of common stock at the applicable conversion rate.

The Debentures also have a contingent interest feature that requires us to pay additional interest based on certain thresholds and for certain events, as defined in the Indenture, beginning on October 15, 2022.

As of October 15, 2022, one of these events had occurred and contingent interest began accruing on the Debentures at a rate of 0.50% of the average trading price of a Debenture for the ten consecutive trading days ended October 14, 2022.

Contingent interest will be payable on April 15, 2023, to holders of the Debentures as of the April 1, 2023 record date.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Holders may convert their Debentures at their option prior to the close of business on the business day immediately preceding April 15, 2042, only under the following circumstances:

(1) during any fiscal quarter if the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130 % of the applicable conversion price on each applicable trading day;

(2) during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $ 1,000 (whole dollars) principal amount of Debentures for each trading day of that measurement period was less than 98 % of the product of the last reported sale price of our common stock and the applicable conversion rate on each such day;

(3) if we call any or all of the Debentures for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date;

or (4) upon the occurrence of specified corporate events, as defined in the Indenture.

On and after April 15, 2042 and until the close of business on the third scheduled trading day immediately preceding the Debentures’ maturity date of October 15, 2042 , holders may convert their Debentures into common stock at any time irrespective of the preceding circumstances.

The Debentures are redeemable at our option at any time on or after October 20, 2022 , upon the occurrence of certain events, as defined in the Indenture.

On February 13, 2023, we delivered notice to redeem all of the outstanding Debentures.

The Debentures will be redeemed on March 15, 2023 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.

Upon conversion of the Debentures, we will deliver cash up to the aggregate principal amount of the Debentures converted.

With respect to any conversion obligation in excess of the aggregate principal amount of the Debentures converted, we have the option to settle the excess with cash, shares of our common stock or a combination thereof based on a daily conversion value, determined in accordance with the Indenture.

The initial conversion rate for the Debentures was 13.2319 shares of our common stock per Debenture, which represented a 25 % conversion premium based on the closing price of $ 60.46 per share of our common stock on October 2, 2012 (the date the Debentures’ terms were finalized) and is equivalent to an initial conversion price of $ 75.575 per share of our common stock.

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 (the “Indenture”) 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 of 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 .

During the year ended December 31, 2022, $ 41 aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and provisions of the Indenture.

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We recognized a loss on the extinguishment of debt related to the Debentures of $ 6 , based on the fair values of the debt on the conversion settlement dates.

During the year ended December 31, 2020, $ 56 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 of $ 222 .

We recognized a loss on the extinguishment of debt related to the Debentures of $ 6 , based on the fair values of the debt on the conversion settlement dates.

As of December 31, 2022, our common stock was last traded at a price of $ 512.97 per share.

If the remaining Debentures had been converted or matured at December 31, 2022, we would have been obligated to pay the principal of the Debentures plus an amount in cash or shares equal to $ 402 .

The Debentures and underlying shares of our common stock have not been and will not be registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

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.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The following table summarizes, at December 31, 2022, the related balances, conversion rate and conversion price of the Debentures:

Outstanding principal amount $ 63

Net debt carrying amount $ 63

Conversion rate (shares of common stock per $1,000 of principal amount) 14.3238

Effective conversion price (per $1,000 of principal amount) $ 69.8139

Prior to 2022, we accounted for these Debentures in accordance with the FASB cash conversion guidance for debt with conversion and other options at the time of issue.

We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, eliminating the bifurcation of the embedded conversion option.

For additional information, see Note 2, “Basis of Presentation and Significant Accounting Policies.”

During the years ended December 31, 2023, 2022 and 2021, we recognized $ 0 , $ 2 and $ 4 , respectively, of interest expense related to the Debentures, of which $ 0 , $ 2 and $ 3 , respectively, represented interest expense recognized at the stated interest rate of 2.750 % and $ 0 , $ 0 and $ 1 , respectively, represented interest expense resulting from amortization of the debt discount.

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2028, $ 1,236 and thereafter, $ 17,522 .

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Commitments and Contingencies

Litigation and Regulatory Proceedings

In the ordinary course of business, we are defendants in, or parties to, a number of pending or threatened legal actions or proceedings.

We are defendants in, or parties to, a number of pending or threatened legal actions or proceedings.

To the extent a plaintiff or plaintiffs in the following cases have specified in their complaint or in other court filings the amount of damages being sought, we have noted those alleged damages in the descriptions below.

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 income.

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

In addition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously identified loss contingency, it is not always possible to reasonably estimate the amount of the possible loss or range of loss.

With respect to many of the proceedings to which we are a party, we cannot provide an estimate of the possible losses, or the range of possible losses in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following:

In addition, even where loss is possible or probable or an exposure to loss exists in excess of the liability already accrued with respect to a previously identified loss contingency, it is not always possible to reasonably estimate the amount of the possible or probable loss or range of losses in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following:

(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 December 31, 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.

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

We do not believe the outcome of any known pending or threatened legal actions or proceedings will, in the aggregate, have a material impact on our financial position.

However, unanticipated outcomes do sometimes occur, which could result in liabilities in excess of our accruals and could have a material adverse effect on our consolidated financial position or results of operations.

In addition to the lawsuits described below, we are also involved in other pending and threatened litigation of the character incidental to our business and are from time to time involved as a party in various governmental investigations, audits, reviews and administrative proceedings (“government actions”).

These government actions include routine and special inquiries by and disclosures to state insurance departments, state attorneys general, U.S.

Regulatory Agencies, the U.S.

Attorney General and subcommittees of the U.S.

Such government actions could result in the imposition of civil or criminal fines, penalties, other sanctions and additional rules, regulations or other restrictions on our business operations.

Any liability that may result from any one of these government actions, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations.

Blue Cross Blue Shield Antitrust Litigation

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

Generally, the suits allege that the BCBSA and the Blue plans have

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

conspired to horizontally allocate geographic markets through license agreements, best efforts rules that limit the percentage of non-Blue revenue of each plan, restrictions on acquisitions, rules governing the BlueCard ® and National Accounts programs and other arrangements in violation of the Sherman Antitrust Act (“Sherman Act”) and related state laws.

Generally, the suits allege that the BCBSA and the Blue plans have conspired to horizontally allocate geographic markets through license agreements, best efforts rules that limit the percentage of non-Blue revenue of each plan, restrictions on acquisitions, rules governing the BlueCard ® and National Accounts programs and other arrangements in violation of the Sherman Antitrust Act (“Sherman Act”) and related state laws.

The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers.

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The BCBSA and Blue plans approved a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”), which agreement required the Court’s approval to become effective.

The Subscriber Settlement Agreement requires the defendants to make a monetary settlement payment and contains certain terms imposing non-monetary obligations including (i) eliminating the “national best efforts” rule in the BCBSA license agreements (which rule limits the percentage of non-Blue revenue permitted for each Blue plan) and (ii) allowing for some large national employers with self-funded benefit plans to request a bid for insurance coverage from a second Blue plan in addition to the local Blue plan.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

limits the percentage of non-Blue revenue permitted for each Blue plan) and (ii) allowing for some large national employers with self-funded benefit plans to request a bid for insurance coverage from a second Blue plan in addition to the local Blue plan.

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.

A fairness hearing was held in October 2021 and the Court took the request for final approval under advisement.

In February 2022, the Court ordered the issuance of a supplemental notice to self-funded account class members.

The notice process was completed in March 2022.

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 denied.

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 was previously accrued in 2020.

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

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

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

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

Those appeals were heard by a panel of the United States Court of Appeals for the Eleventh Circuit in September 2023.

In October 2023, the Eleventh Circuit affirmed the Court’s Final Approval Order approving the subscriber settlement.

Petitions for rehearing filed by certain appellants in November 2023 and December 2023 remain pending.

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 the 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 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, holding that Ohio v.

American Express Co .

does not affect the standard of review in this case.

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.

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 provider groups’ boycott claims are subject to the rule of reason.

In December 2023, the Court denied defendants’ motion for summary judgment on providers’ damage claims as time-barred and speculative and provider plaintiffs’ motion for partial summary judgment on the defendants’ single entity defense due to the existence of genuine issues of material fact.

Providers plaintiffs’ motion for class certification, filed in October 2020, remains pending.

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

however, its ultimate outcome cannot be presently determined.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

A number of follow-on cases involving entities that opted out of the Subscriber Settlement Agreement have been filed.

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

Ala.) (“Alaska Air”) ;

JetBlue Airways Corp., et al.

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

Ala.) (“Jet Blue”) ;

Metropolitan Transportation Authority v.

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2:22-cv-00265-RDP (N.D.

Ala.) (dismissed without prejudice in June 2023);

Bed Bath & Beyond Inc.

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RG21106600 (Cal.

Super.) (“VHS”) .

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

In September 2023, the California court presiding over the VHS case, upheld its prior order granting in part defendants’ motion to strike based on the statute of limitations.

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

however, their ultimate outcome cannot be presently determined.

Blue Cross of California Taxation Litigation

In July 2013, our California affiliate Blue Cross of California (doing business as Anthem Blue Cross) (“BCC”) was named as a defendant in a California taxpayer action filed in Los Angeles County Superior Court (the “Superior Court”) captioned Michael D.

State Board of Equalization, et al.

This action was brought under a California statute that permits an individual taxpayer to sue a governmental agency when the taxpayer believes the agency has failed to enforce governing law.

Plaintiff contends that BCC, a licensed Health Care Service Plan, is an “insurer” for purposes of taxation despite acknowledging it is not an “insurer” under regulatory law.

At the time, under California law, “insurers” were required to pay a gross premiums tax (“GPT”) calculated as 2.35 % on gross premiums.

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.

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.

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

We estimate that the appeal will be heard in March 2023.

We intend to vigorously defend the appeal of this lawsuit.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Express Scripts, Inc.

Pharmacy Benefit Management Litigation

PBM Litigation

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

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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:

(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.

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.

The lawsuit sought 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 (the “Pricing Claim”);

(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 disputed our contractual claims and it sought declaratory judgments:

(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 claimed 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.

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

In March 2022, the District Court granted in part and denied in part Express Scripts’ motion for summary

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

In March 2022, the District Court granted in part and denied in part Express Scripts’ motion for summary judgment.

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 Annual Report on Form 10-K 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.

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;

however, the ultimate outcome of this litigation cannot be presently determined.

As a result of the summary judgment decision, the only remaining claims as of the filing of this Annual Report on Form 10-K were (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 Agreement.

Express Scripts filed a second motion for summary judgment in June 2022, challenging our remaining operational breach claims, which the District Court denied in March 2023.

In November 2023, the District Court issued a final judgment ending the lawsuit in the District Court after the parties settled and stipulated to dismiss the only remaining claim that had not been disposed of by the court order or stipulation.

In December 2023, we filed a notice of appeal with the United States Court of Appeal for the Second Circuit (the “Second Circuit”), regarding the Pricing Claim.

The Second Circuit has ordered the parties to mediate the Pricing Claim in February 2024.

The ultimate outcome of this appeal cannot be presently determined.

Medicare Risk Adjustment Litigation

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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.

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

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 completed by February 2025.

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

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

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

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

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 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 quarters of 2021 and 2022, litigation in the Delaware Court of Chancery related to the remaining indemnity claims for escrowed funds remains ongoing.

We cooperated with the investigations of the Criminal and Civil Divisions of the DOJ related to these risk adjustment practices, and have submitted corrected data to CMS related to these investigations.

In an action filed in the Delaware Court of Chancery, we 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.

The litigation related to our indemnity claims has been resolved.

In October 2023, the DOJ declined to prosecute HealthSun.

HealthSun agreed to repay, and has now repaid, CMS approximately $ 53 .

Other Contingencies

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In addition, the risk of potential liability under punitive damage theories may increase significantly the difficulty of obtaining reasonable reimbursement of coverage claims.

In addition to the lawsuits described above, we are also involved in other pending and threatened litigation of the character incidental to our business and are from time to time involved as a party in various governmental investigations,

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

audits, reviews and administrative proceedings.

These investigations, audits, reviews and administrative proceedings include routine and special inquiries by state insurance departments, state attorneys general, the U.S.

Attorney General and subcommittees of the U.S.

Such investigations, audits, reviews and administrative proceedings could result in the imposition of civil or criminal fines, penalties, other sanctions and additional rules, regulations or other restrictions on our business operations.

Any liability that may result from any one of these actions, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations.

Contractual Obligations and Commitments

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.

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 December 31, 2023 is approximately $ 481 .

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 CarelonRx, formerly known as 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.

CarelonRx 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, 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.

We formed CarelonRx, 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 all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services.

CarelonRx delegates certain core pharmacy services to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation, pursuant to an agreement, that is set to terminate on December 31, 2025.

Vulnerability from Concentrations

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Stock Incentive Plan s

Our Board of Directors has adopted the 2017 Elevance Health Incentive Compensation Plan, formerly known as the 2017 Anthem Incentive Compensation Plan (“2017 Incentive Plan”), which has been approved by our shareholders.

Our Board of Directors has adopted the 2017 Elevance Health Incentive Compensation Plan (the “2017 Incentive Plan”) which has been approved by our shareholders.

The term of the 2017 Incentive Plan is such that no awards may be granted on or after May 18, 2027.

The 2017 Incentive Plan gives authority to the Compensation Committee of the Board of Directors to make incentive awards to our non-employee directors, employees and consultants, consisting of stock options, stock, restricted stock, restricted stock units, cash-based awards, stock appreciation rights, performance shares and performance units.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The 2017 Incentive Plan limits the number of available shares for issuance to 37.5 shares, subject to adjustment as set forth in the 2017 Incentive Plan.

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Awards of restricted stock or restricted stock units are issued at the fair value of the stock on the grant date and may also include one or more performance measures that must be met for the award to vest.

For restricted stock or restricted stock

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

units without performance measures, the restrictions lapse in three equal annual installments.

For restricted stock or restricted stock units without performance measures, the restrictions lapse in three equal annual installments.

Restricted stock or restricted stock units with performance measures vest in three year installments.

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Nonvested at December 31, 2023 1.1 423.94

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

During the year ended December 31, 2023, we granted approximately 0.2 restricted stock units that are contingent upon us achieving certain revenue and earnings targets over the three year period of 2023 to 2025.

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As of December 31, 2023, there were approximately 11.8 shares of common stock available for future grants under the 2017 Incentive Plan.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

We use a binomial lattice valuation model to estimate the fair value of all stock options granted.

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Weighted-average expected life (years) 4.40 5.10 5.50

The following weighted-average fair values were determined for the years ending December 31, 2022, 2021 and 2020:

The following weighted-average fair values per share were determined for the years ending December 31, 2023, 2022 and 2021:

2023 2022 2021

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The Stock Purchase Plan discount was recognized as compensation expense for the year ended December 31, 2023, based on GAAP guidance.

During the years ended December 31, 2022, 2021 and 2020, we issued 0.1 , 0.1 and 0.2 shares, respectively, under the Stock Purchase Plan, and we received cash of $ 62 , $ 55 and $ 47 , respectively, for such shares.

During the years ended

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

December 31, 2023, 2022 and 2021, we issued 0.1 , 0.1 and 0.1 shares, respectively, under the Stock Purchase Plan, and we received cash of $ 65 , $ 62 and $ 55 , respectively, for such shares.

As of December 31, 2023, 4.2 shares were available for issuance under the Stock Purchase Plan.

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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.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

A summary of the cash dividend activity for the years ended December 31, 2023 and 2022 is as follows:

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

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

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Authorization remaining at end of year $ 4,200 $ 1,876

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

We expect to utilize the remaining authorized amount over a multi-year period, subject to market and industry conditions.

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Beginning of year balance $ ( 1,755 ) $ 494 $ 949

Other comprehensive (loss) income before reclassifications, net of tax benefit (expense) of $ 926 , $ 121 , and $( 160 ), respectively

Other comprehensive income (loss) before reclassifications, net of tax (expense) benefit of $( 218 ), $ 926 , and $ 121 , respectively

760 ( 2,614 ) ( 357 )

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Other comprehensive (loss) income 1,117 ( 2,260 ) ( 457 )

Other comprehensive loss attributable to noncontrolling interests, net of tax benefit (expense) of $ 1 , $( 3 ), and $ 1 , respectively

End of year balance ( 632 ) ( 1,755 ) 494

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Beginning of year balance ( 3 ) — ( 2 )

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

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

End of year balance ( 3 ) ( 3 ) —

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Beginning of year balance ( 229 ) ( 239 ) ( 250 )

Other comprehensive income, net of tax expense of $( 6 ), $( 3 ), and $( 3 ), respectively

Other comprehensive income, net of tax benefit (expense) of $ 6 , $( 6 ), and $( 3 ), respectively

End of year balance ( 211 ) ( 229 ) ( 239 )

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End of year balance ( 459 ) ( 499 ) ( 429 )

Future policy benefits:

Beginning of year balance 13 ( 19 ) —

Adoption of ASU 2018-12 — — ( 12 )

Other comprehensive (loss) income, net of tax benefit (expense) of $ 1 , $( 10 ), and $ 2 , respectively

( 3 ) 32 ( 7 )

End of year balance 10 13 ( 19 )

Foreign currency translation adjustments:

Beginning of year balance ( 17 ) ( 4 ) 5

Other comprehensive (loss) income, net of tax benefit (expense) of $ 6 , $ 2 , and $( 2 )

Other comprehensive loss, net of tax benefit of $ 1 , $ 6 , and $ 2

( 1 ) ( 13 ) ( 9 )

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Total beginning of year accumulated other comprehensive (loss) income ( 2,490 ) ( 197 ) 150

Total other comprehensive (loss) income, net of tax benefit (expense) of $ 809 , $ 110 , and $( 154 ), respectively

Adoption of ASU 2018-12 — — ( 12 )

Total other comprehensive income (loss), net of tax (expense) benefit of $( 362 ), $ 799 , and $ 112 , respectively

1,171 ( 2,304 ) ( 337 )

Total other comprehensive loss attributable to noncontrolling interests, net of tax (expense) benefit of $( 3 ), $ 1 , and $ 0 , respectively

Total end of year accumulated other comprehensive (loss) income $ ( 2,503 ) $ ( 178 ) $ 150

Total other comprehensive loss attributable to noncontrolling interests, net of tax benefit (expense) of $ 1 , $( 3 ), and $ 1 , respectively

Total end of year accumulated other comprehensive loss

$ ( 1,313 ) $ ( 2,490 ) $ ( 197 )

Elevance Health, Inc.

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4.2 % 4.1 % 4.4 %

The table above includes certain reclassifications between direct and assumed premiums for 2022 and 2021.

These reclassifications did not impact any amounts presented in the consolidated financial statements.

The difference between written premiums and earned premiums is immaterial in each of the years presented above.

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Reportable segments:

Commercial & Specialty Business $ 35,633 $ 33,209 $ 31,471

Government Business 96,323 82,520 71,188

Other 1,273 1,644 1,450

Health Benefits $ 141,515 $ 131,964 $ 115,725

Carelon Services 1,679 1,499 1,786

( 340 ) ( 234 ) ( 138 )

Net premiums $ 142,854 $ 133,229 $ 117,373

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Net benefit expense $ 124,330 $ 116,642 $ 102,571

The table above includes certain reclassifications between direct and assumed benefit expense for 2022 and 2021.

These reclassifications did not impact any amounts presented in the consolidated financial statements.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

We lease office space and certain computer and related equipment using noncancelable operating leases.

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Lease liabilities, noncurrent Other noncurrent liabilities 685 751

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Years Ended December 31

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Total lease liabilities $ 849

Earnings per Share

The denominator for basic and diluted earnings per share at December 31, 2022, 2021 and 2020 is as follows:

2022 2021 2020

Denominator for basic earnings per share—weighted-average shares 240.0 243.8 250.8

Effect of dilutive securities—employee stock options, non-vested restricted stock awards, convertible debentures and equity units

Denominator for diluted earnings per share 242.8 246.8 254.3

During the years ended December 31, 2022, 2021 and 2020, weighted-average shares related to certain stock options of 0.4 , 0.2 and 1.2 , respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Shareholders ’ Earnings per Share

The denominator for basic and diluted shareholders’ earnings per share at December 31, 2023, 2022 and 2021 is as follows:

2023 2022 2021

Denominator for basic shareholders’ earnings per share—weighted-average shares

235.9 240.0 243.8

Effect of dilutive securities—employee stock options, non-vested restricted stock awards and convertible debentures

Denominator for diluted shareholders’ earnings per share

237.4 242.8 246.8

During the years ended December 31, 2023, 2022 and 2021, weighted-average shares related to certain stock options of 0.8 , 0.4 and 0.2 , respectively, were excluded from the denominator for diluted shareholders’ earnings per share because the stock options were anti-dilutive.

During the years ended December 31, 2023, 2022 and 2021, we issued approximately 0.2 , 0.2 and 0.3 restricted stock units, respectively, of which vesting was contingent upon us meeting certain earnings targets.

Contingent restricted stock units are excluded from the denominator for diluted earnings per share and are included only if and when the contingency is met.

Contingent restricted stock units are excluded from the denominator for diluted shareholders’ earnings per share and are included only if and when the contingency is met.

The 2023 contingent restricted stock units are being measured over the three year period of 2023 through 2025, the 2022 contingent restricted stock units are being measured over the three year period of 2022 through 2024 and the 2021 contingent restricted stock units are being measured over the three year period of 2021 through 2023.

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Segment Information

Through December 31, 2022, we managed and presented our operations through four reportable segments:

Commercial & Specialty Business, Government Business, CarelonRx (formerly known as 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.

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

We now report our results of operations in the following four reportable segments:

During the fourth quarter of 2023, we moved our Carelon Global Solutions international businesses from the Corporate & Other reportable segment to the Carelon Services reportable segment.

All prior period reportable segment information has been reclassified for comparability to conform to the current 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 business.

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 (“NGS”) and services provided to the federal government in connection with the FEHB business.

Our CarelonRx segment includes our PBM business.

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

CarelonRx 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 Services, 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.

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.

As we continue our journey to evolve our business from a traditional health insurance company into a lifetime, trusted health partner, we are evaluating and making changes to how we manage our business.

This included a review of the products in each of our operating segments, which resulted in restructurings between some of our operating segments.

Therefore, our reportable segment presentation in 2023 and its composition will reflect how we began managing our operations and monitoring performance, aligning strategies and allocating resources on January 1, 2023.

As a result of these changes, beginning with our Quarterly Report on Form 10-Q for the first quarter of 2023, we will report our results in the following four reportable segments:

(i) Health Benefits, which will combine our existing Commercial & Specialty Business and Government Business segments;

(ii) our existing CarelonRx segment;

(iii) Carelon Services (our former Diversified Business Group), which will be carved out from our existing Other segment;

and (iv) Corporate and Other, which will include businesses that do not individually meet the quantitative thresholds for an operating segment, as well as corporate expenses not allocated to our other reportable segments.

We expect to reclassify previously reported information to conform to the new presentation.

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

Operating revenues are derived from premiums and fees received, primarily from the sale and administration of health benefit 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 costs for services provided to our subsidiaries by CarelonRx and Carelon Services, 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.

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 services 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 all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services.

Our Carelon Services segment integrates physical, behavioral, social and pharmacy services to deliver whole health affordably through creating value by offering market-competitive services, powered by analytics.

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

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

as well as health and wellness programs.

At the end of 2023, Carelon Services integrated Carelon Global Solutions into the Carelon family of offerings.

The companies under Carelon Global Solutions have been providing services related to data management, information technology, and business operations since 2019 and were previously included within our Corporate & Other segment.

Our Corporate and 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 premiums, 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 operating expense.

Affiliated revenues represent revenues or costs for services provided to our subsidiaries by CarelonRx and Carelon Services, in addition to certain administrative and other 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.

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

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Through our participation in various federal government programs, we generated approximately 29 % of our total consolidated revenues from agencies of the U.S.

government for each of the years ended December 31, 2022, 2021, and 2020.

The majority of these revenues are contained in our Government Business segment.

government for the year ended December 31, 2023, and 28 % for each of the years ended December 31, 2022 and 2021.

The majority of these revenues are contained in our Health Benefits segment.

An immaterial amount of our total consolidated revenues is derived from activities outside of the U.S.

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We evaluate net investment income, net gains (losses) on financial instruments, interest expense, amortization expense, gain or loss on extinguishment of debt, income taxes and assets and liabilities on a consolidated basis, as these items are managed in a corporate shared service environment and are not the responsibility of segment operating management.

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

Financial data by reportable segment for the years ended December 31, 2023, 2022 and 2021 is as follows:

Commercial & Specialty Business Government Business CarelonRx Other Eliminations Total

Benefits CarelonRx Carelon

Services Total Corporate

& Other Eliminations Total

Year Ended December 31, 2023

Premiums $ 141,515 $ — $ 1,679 $ 1,679 $ — $ ( 340 ) $ 142,854

Product revenue — 19,452 — 19,452 — — 19,452

Service fees 7,056 6 813 819 28 — 7,903

Operating revenue - unaffiliated 148,571 19,458 2,492 21,950 28 ( 340 ) 170,209

$ 41,674 $ 96,810 14,974 $ 2,202 $ — $ 155,660

Operating revenue - affiliated — 14,377 11,655 26,032 451 ( 26,483 ) —

— — 13,552 11,092 ( 24,644 ) —

Operating gain 2,933 3,297 1,868 354 — 8,452

Operating revenue - total $ 148,571 $ 33,835 $ 14,147 $ 47,982 $ 479 $ ( 26,823 ) $ 170,209

Operating gain (loss) $ 6,888 $ 1,975 $ 680 $ 2,655 $ ( 1,044 ) $ — $ 8,499

Depreciation and amortization of property and equipment $ — $ — $ — $ — $ 872 $ — $ 872

— — — 784 — 784

Year ended December 31, 2021

Year Ended December 31, 2022 (Restated)

Premiums $ 131,964 $ — $ 1,499 $ 1,499 $ — $ ( 234 ) $ 133,229

Product revenue — 14,978 — 14,978 — — 14,978

Service fees 6,520 — 889 889 44 — 7,453

Operating revenue - unaffiliated 138,484 14,978 2,388 17,366 44 ( 234 ) 155,660

$ 38,809 $ 82,919 12,655 $ 2,560 $ — $ 136,943

Operating revenue - affiliated — 13,548 10,472 24,020 355 ( 24,375 ) —

— — 12,776 7,690 ( 20,466 ) —

Operating revenue - total $ 138,484 $ 28,526 $ 12,860 $ 41,386 $ 399 $ ( 24,609 ) $ 155,660

Operating gain (loss) $ 6,022 $ 1,868 $ 535 $ 2,403 $ ( 142 ) $ — $ 8,283

2,753 3,061 1,684 ( 9 ) — 7,489

Depreciation and amortization of property and equipment $ — $ — $ — $ — $ 784 $ — $ 784

— — — 668 — 668

Year ended December 31, 2020

Year Ended December 31, 2021 (Restated)

Premiums $ 115,725 $ — $ 1,786 $ 1,786 $ — $ ( 138 ) $ 117,373

Product revenue — 12,657 — 12,657 — — 12,657

Service fees 6,003 — 844 844 66 — 6,913

Operating revenue - unaffiliated 121,728 12,657 2,630 15,287 66 ( 138 ) 136,943

$ 36,699 $ 71,572 10,384 $ 2,153 $ — $ 120,808

Operating revenue - affiliated — 12,774 7,500 20,274 29 ( 20,303 ) —

— — 11,527 3,904 ( 15,431 ) —

Operating revenue - total $ 121,728 $ 25,431 $ 10,130 $ 35,561 $ 95 $ ( 20,441 ) $ 136,943

Operating gain (loss) $ 5,850 $ 1,684 $ 187 $ 1,871 $ ( 162 ) $ — $ 7,559

2,681 2,444 1,361 ( 126 ) — 6,360

Depreciation and amortization of property and equipment $ — $ — $ — $ — $ 668 $ — $ 668

— — — 638 — 638

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

The major product revenues for each of the reportable segments for the years ended December 31, 2022, 2021 and 2020 are as follows:

2022 2021 2020

Commercial & Specialty Business

Managed care products $ 33,927 $ 31,564 $ 29,815

Managed care services 6,152 5,711 5,296

Dental/Vision products and services 1,434 1,363 1,231

Other 161 171 357

Total Commercial & Specialty Business 41,674 38,809 36,699

Government Business

Managed care products 96,322 82,519 71,188

Managed care services 488 400 384

Total Government Business 96,810 82,919 71,572

Pharmacy products and services 28,526 25,431 21,911

Integrated health services 12,274 9,645 5,787

Other 1,020 605 270

Total Other Business 13,294 10,250 6,057

Eliminations ( 24,644 ) ( 20,466 ) ( 15,431 )

Total product revenues $ 155,660 $ 136,943 $ 120,808

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 fee-based product offerings where we provide claims adjudication and other administrative services to the customer, but the customer principally bears the insurance risk.

Asset, liability and equity details by reportable segment have not been disclosed, as we do not internally report such information.

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Total revenues $ 171,340 $ 156,595 $ 138,639

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

A reconciliation of reportable segments’ operating gain to income before income tax expense included in our consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 is as follows:

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During the years ended December 31, 2023, 2022 and 2021, in the normal course of business, we assumed premiums of $ 481 , $ 501 and $ 462 , respectively, from APC Passe, LLC, which is included in our total assumed premiums (see Note 17, “Reinsurance”).

In January 2023, we made an equity investment that resulted in our minority interest ownership of Liberty Dental.

During the year ended December 31, 2023, in the normal course of business, Liberty Dental recognized $ 426 in revenue for administrative services provided to our members, primarily for those members in our Medicare Advantage plans.

Statutory Information

The majority of our insurance and HMO subsidiaries report their accounts in conformity with accounting practices prescribed or permitted by state insurance regulatory authorities, commonly referred to as statutory accounting, which vary in certain respects from GAAP.

However, certain of our insurance and HMO subsidiaries, including BCC, Blue Cross of California Partnership Plan, Inc., Golden West Health Plan, Inc., Beacon Health Options of California, Inc.

However, certain of our insurance and HMO subsidiaries, including Blue Cross of California, Blue Cross of California Partnership Plan, Inc., Golden West Health Plan, Inc., Beacon Health Options of California, Inc.

and CareMore Health Plan are regulated by the California Department of Managed Health Care (“DMHC”) and report their accounts in conformity with GAAP (these entities are collectively referred to as the “DMHC regulated entities”).

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RBC is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company or HMO to support its overall business operations in consideration of its size and risk profile.

The formula for determining the amount of RBC specifies various factors, weighted based on the perceived degree of risk, which are applied to certain financial balances and financial activity.

The formula for determining the amount of RBC specifies various factors, weighted based on the perceived degree of risk, which are applied to certain

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

financial balances and financial activity.

Below minimum RBC requirements are classified within certain levels, each of which requires specified corrective action.

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Dividends in excess of these amounts are subject to prior approval by the respective state insurance departments or the DMHC.

During 2022, our insurance and HMO

Elevance Health, Inc.

Notes to Consolidated Financial Statements (continued)

subsidiaries paid aggregate cash dividends of $ 3,097 to the parent company, including cash dividends which required prior approval from regulatory authorities.

During 2023, our insurance and HMO subsidiaries paid aggregate cash dividends of $ 4,909 to the parent company, including cash dividends which required prior approval from regulatory authorities.

We currently estimate that approximately $ 4,400 of dividends will be paid to the parent company in 2024.

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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-K

Item 8. Financial Statements and Supplementary Data