What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-18 compared with 2023-10-18 · 254 added, 547 removed, 668 unchanged (55% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

2024 December 31,

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

(In millions, except share and per share data)

Current assets:

51 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

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

(In millions, except per share data)

Premiums $ 35,696 $ 35,868

12 unchanged sentences

Income before income tax expense

1,654 2,127 6,714 6,555

Income tax expense 690 615

Net income 2,249 2,004

Net (income) loss attributable to noncontrolling interests ( 11 ) 5 ( 29 ) 18

Net income attributable to noncontrolling interests

Shareholders’ net income $ 2,246 $ 1,989

7 unchanged sentences

Three Months Ended

September 30 Nine Months Ended

(In millions)

(Restated) (Restated)

Net income $ 2,249 $ 2,004

2 unchanged sentences

Change in non-credit component of impairment losses on investments

2 ( 1 ) ( 1 ) ( 3 )

Change in net unrealized gains/losses on cash flow hedges 2 11

2 unchanged sentences

Foreign currency translation adjustments — 2

Other comprehensive loss ( 348 ) ( 631 ) ( 22 ) ( 2,593 )

Net (income) loss attributable to noncontrolling interests

( 11 ) 5 ( 29 ) 18

Other comprehensive loss attributable to noncontrolling interests 2 3 — 11

Other comprehensive (loss) income

Net income attributable to noncontrolling interests

Other comprehensive income attributable to noncontrolling interests

Total shareholders’ comprehensive income $ 2,194 $ 2,429

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

(In millions) (Restated)

Three Months Ended

(In millions)

Operating activities

2 unchanged sentences

Net losses on financial instruments 161 113

Equity in net earnings of other invested assets 70 ( 304 )

Equity in net losses of other invested assets

Depreciation and amortization 331 462

Impairment of property and equipment

Deferred income taxes 136 ( 255 )

20 unchanged sentences

Financing activities

Net proceeds from commercial paper borrowings — 375

Proceeds from long-term borrowings — 2,574

1 unchanged sentence

Proceeds from short-term borrowings 1,350 325

Repayments of short-term borrowings ( 265 ) ( 1,375 )

Changes in securities lending payable 212 ( 205 )

21 unchanged sentences

(In millions) Number of

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

Net income — — — 1,989 — 15 2,004

Other comprehensive income — — — — 440 2 442

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

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

Issuance of common stock under employee stock plans, net of related tax benefits 0.4 — 6 — — — 6

Convertible debenture repurchases, conversions and tax adjustments — — ( 342 ) — — — ( 342 )

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

Net income — — — 1,853 — 3 1,856

Other comprehensive loss

— — — — ( 116 ) — ( 116 )

Repurchase and retirement of common stock, including excise tax ( 1.4 ) — ( 52 ) ( 600 ) — — ( 652 )

Dividends and dividend equivalents — — — ( 352 ) — — ( 352 )

Issuance of common stock under employee stock plans, net of related tax benefits 0.2 — 116 — — — 116

June 30, 2023 235.9 2 8,761 31,608 ( 2,166 ) 107 38,312

December 31, 2023 233.1 $ 2 $ 8,868 $ 31,749 $ ( 1,313 ) $ 99 $ 39,405

Net income — — — 2,246 — 3 2,249

2 unchanged sentences

Repurchase and retirement of common stock, including excise tax ( 1.1 ) — ( 44 ) ( 525 ) — — ( 569 )

( 1.1 ) — ( 40 ) ( 445 ) — — ( 485 )

Dividends and dividend equivalents — — — ( 382 ) — — ( 382 )

Issuance of common stock under employee stock plans, net of related tax benefits 0.5 — 59 — — — 59

September 30, 2023 234.9 $ 2 $ 8,830 $ 32,103 $ ( 2,512 ) $ 116 $ 38,539

See accompanying notes.

Elevance Health, Inc.

Consolidated Statements of Changes in Equity (continued)

Total Shareholders’ Equity

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Noncontrolling

Interests Total

(In millions) Number of

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

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

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

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

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

Noncontrolling interests adjustment — — — — — 3 3

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

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

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

0.5 — 39 — — — 39

Convertible debenture repurchases and conversions

— — 9 — — — 9

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

Net income (loss) restated — — — 1,637 — ( 3 ) 1,634

Other comprehensive loss (restated) — — — — ( 905 ) ( 3 ) ( 908 )

Noncontrolling interests adjustment — — — — — 5 5

Repurchase and retirement of common stock

( 1.3 ) — ( 48 ) ( 576 ) — — ( 624 )

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

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

0.2 — 111 — — — 111

Convertible debenture repurchases and conversions

March 31, 2024 232.5 $ 2 $ 8,883 $ 33,088 $ ( 1,365 ) $ 102 $ 40,710

December 31, 2022

238.0 $ 2 $ 9,084 $ 29,647 $ ( 2,490 ) $ 87 $ 36,330

June 30, 2022 (restated) 240.0 2 9,134 28,847 ( 2,151 ) 55 35,887

Net income (loss) restated

— — — 1,989 — 15 2,004

Other comprehensive loss — — — — ( 628 ) ( 3 ) ( 631 )

Noncontrolling interests adjustment — — — — — 5 5

Repurchase and retirement of common stock

Other comprehensive income — — — — 440 2 442

Repurchase and retirement of common stock, including excise tax

( 1.3 ) — ( 51 ) ( 575 ) — — ( 626 )

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

— — — ( 307 ) — — ( 307 )

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

0.4 — 6 — — — 6

Convertible debenture repurchases and conversions

— — ( 21 ) — — — ( 21 )

September 30, 2022 (restated)

Convertible debenture repurchases, conversions and tax adjustments

— — ( 342 ) — — — ( 342 )

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

See accompanying notes.

1 unchanged sentence

Notes to Consolidated Financial Statements

September 30, 2023

March 31, 2024

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

2 unchanged sentences

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

We are one of the largest health insurers in the United States in terms of medical membership, serving over 47 million medical members through our affiliated health plans as of September 30, 2023.

We are one of the largest health insurers in the United States in terms of medical membership, serving over 46 million medical members through our affiliated health plans as of March 31, 2024.

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

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

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

We 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 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.

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

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.

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.

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

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

Through various subsidiaries, we also offer pharmacy services through our CarelonRx business, and other healthcare related services as Carelon Insights, Carelon Health, Carelon Behavioral Health and CareMore.

We have organized 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;

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

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

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

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

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

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

For additional discussion regarding our segments, including the changes made, see Note 15 “Segment Information.”

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

Health Benefits, CarelonRx, Carelon Services 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 business 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.

For additional discussion regarding our segments, including the changes made, see Note 15 “Segment Information” included in this Quarterly Report on Form 10-Q.

Basis of Presentation and Significant Accounting Policies

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We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”), unless the information contained in those disclosures materially changed or is required by GAAP.

We have filed Exhibit 99.1 to this Quarterly Report on 10-Q to recast certain prior years’ financial information and related disclosures to reflect the changes to our reportable segments beginning in the first quarter of 2023 discussed above, as well as the impact of the adoption of a new accounting standard related to the accounting for long-duration insurance contracts, which we adopted on January 1, 2023, using a modified retrospective transition method as of January 1, 2021.

The recast financial information and related disclosures set forth in Exhibit 99.1 to this Quarterly Report on Form 10-Q present such financial information and related disclosures in these items as they would have appeared had we changed our reportable segments and adopted the new accounting standard prior to January 1, 2023 and do not reflect events or developments that may have occurred subsequent to the filing of our 2022 Annual Report on Form 10-K.

In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three and nine months ended September 30, 2023 and 2022 have been recorded.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023, or any other period.

In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three months ended March 31, 2024 and 2023 have been recorded.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024, or any other period.

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

These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2022 included in Exhibit 99.1 to this Quarterly Report on Form 10-Q.

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

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

These amounts totaled $ 300 and $ 258 at September 30, 2023 and December 31, 2022, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

These amounts totaled $ 499 and $ 294 at March 31, 2024 and December 31, 2023, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

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

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The non-credit component of the impairment is recognized in accumulated other comprehensive loss.

Furthermore, unrealized losses entirely caused by non-credit-related factors related to fixed

maturity securities for which we expect to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive loss.

Furthermore, unrealized losses entirely caused by non-credit-related factors related to fixed maturity securities for which we expect to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive loss.

The credit component of an impairment is determined primarily by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security.

6 unchanged sentences

Such adjustments are reported within net investment income.

The changes in fair value of our marketable equity securities are recognized in our results of operations within net gains and losses on financial instruments.

The changes in fair value of our marketable equity securities are recognized in our results of operations within net losses on financial instruments.

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

Premium receivables are reported net of an allowance for doubtful accounts of $ 188 and $ 152 at September 30, 2023 and December 31, 2022, respectively.

Premium receivables are reported net of an allowance for doubtful accounts of $ 212 at each of March 31, 2024 and December 31, 2023.

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

Self-funded receivables are reported net of an allowance for doubtful accounts of $ 93 and $ 68 at September 30, 2023 and December 31, 2022, respectively.

Self-funded receivables are reported net of an allowance for doubtful accounts of $ 89 and $ 87 at March 31, 2024 and December 31, 2023, respectively.

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

These receivables are reported net of an allowance for doubtful accounts of $ 875 and $ 744 at September 30, 2023 and December 31, 2022, respectively.

These receivables

are reported net of an allowance for doubtful accounts of $ 956 and $ 941 at March 31, 2024 and December 31, 2023, respectively.

Revenue Recognition:

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at September 30, 2023.

For the three and nine months ended September 30, 2023 and 2022, revenue recognized from performance obligations related to prior periods, such as changes in transaction price, were not material.

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at March 31, 2024 or December 31, 2023.

For the three months ended March 31, 2024 and 2023, revenue recognized from performance obligations related to prior periods, such as changes in transaction price, were not material.

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

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

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

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, and now the amendments are required for our interim and annual reporting periods beginning after December 15, 2022.

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.

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

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

The adoption did not have an overall material impact on our financial statements.

Recent Accounting Guidance Not Yet Adopted:

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

2023-09, Income Taxes (Topic 740) ("ASU 2023-09").

The amendments in ASU 2023-09 are intended to improve income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for our fiscal year beginning after December 15, 2024.

The amendments are to be applied on a prospective basis, although retrospective adoption is permitted.

We do not believe the adoption of ASU 2023-09 will have a material impact on our consolidated financial statements or disclosures.

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

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.

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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.

ASU 2023-05 clarifies existing guidance to reduce diversity in practice and requires 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 since December 31, 2022 that had, or are expected to have, a material impact on our consolidated financial position, results of operations or cash flows.

There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2023 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations, cash flows or disclosures.

Business Acquisitions and Divestitures

Pending Divestiture

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

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

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

The divestiture is expected to close 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 three and nine months ending September 30, 2023 were not material.

Pending Acquisition

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

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

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

Completed Acquisitions

On March 11, 2024, we completed our acquisition of Paragon Healthcare, Inc.

Paragon, which operates as part of CarelonRx, provides 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.

As of March 31, 2024, the purchase price was allocated to the tangible and intangible net assets acquired based on management's initial estimates of their fair values, of which $ 553 has been allocated to finite-lived intangible assets and $ 635 to goodwill.

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

As of March 31, 2024, the initial accounting for the acquisition has not been finalized.

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

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

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

As of September 30, 2023, the purchase price was allocated to the tangible and intangible net assets acquired based on management’s initial estimates of their fair values, of which $ 820 has been allocated to finite-lived intangible assets and $ 877 to goodwill.

There were no changes to goodwill for measurement period adjustments during the three months ended September 30, 2023.

As of March 31, 2024, the purchase price was allocated to the tangible and intangible net assets acquired based on management’s estimates of their fair values, of which $ 820 has been allocated to finite-lived intangible assets and $ 893 to goodwill.

Measurement period adjustments during the three months ended March 31, 2024 were $( 5 ).

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

As of September 30, 2023, the initial accounting for the acquisition had not been finalized.

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

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

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

The initial accounting for this acquisition was finalized as of June 30, 2023.

The purchase price was allocated to tangible and intangible net assets acquired based on management’s estimates of their fair values, of which $ 89 was allocated to finite-lived intangible assets, $ 250 to indefinite-lived intangible assets, and $ 139 to goodwill.

The majority of goodwill is deductible for income tax purposes.

As of March 31, 2024, the initial accounting for the acquisition was finalized.

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

On April 1, 2024, we completed the sale of 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 entered into a product distribution partnership.

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 three months ending March 31, 2024 were not material.

Pending Acquisitions

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 our 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 is subject to closing conditions and approvals.

Business Optimization Initiatives

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

In the third quarter of 2023, we incurred $ 730 of costs towards the 2023-2024 Business Efficiency Program.

This included $ 446 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 staff, which includes severance and related costs primarily determined under the Company's 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 right-of-use assets and other property and equipment.

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

see Note 15, “Segment Information.”

In the third quarter of 2023, we also released $ 33 of severance related accruals from our business optimization initiatives introduced in 2020 (“2020 Business Optimization Initiatives”).

A summary of the activity for the nine months ended September 30, 2023 and ending balance at September 30, 2023 related to the liability for employee termination costs, is as follows:

Health Benefits

Carelon Services

2023-2024 Business Efficiency Program

Liabilities for employee termination costs at January 1, 2023

$ — $ — $ — $ — $ —

Payments and releases

Total liabilities for employee termination costs ending balance at September 30, 2023

$ — $ — $ — $ 230 $ 230

Health Benefits

Carelon Services

2020 Business Optimization Initiatives

Liabilities for employee termination costs at January 1, 2023

$ 80 $ 1 $ — $ — $ 81

( 31 ) ( 1 ) — — ( 32 )

( 33 ) — — — ( 33 )

Total liabilities for employee termination costs ending balance at September 30, 2023

$ 16 $ — $ — $ — $ 16

The ending balances related to the total liabilities for employee termination costs under the 2023-2024 Business Efficiency Program at March 31, 2024 and December 31, 2023 were $ 150 and $ 191 , respectively, and were recorded in the Corporate & Other reportable segment.

During the quarter ended March 31, 2024 there were no charges or releases related to employee termination costs under the 2023-2024 Business Efficiency Program, and payments were $ 41 .

Fixed Maturity Securities

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

A summary of current and long-term fixed maturity securities, available-for-sale, at September 30, 2023 and December 31, 2022 is as follows:

A summary of current and long-term fixed maturity securities, available-for-sale, at March 31, 2024 and December 31, 2023 is as follows:

Losses Allowance

Losses Estimated

September 30, 2023

March 31, 2024

Fixed maturity securities:

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

For fixed maturity securities in an unrealized loss position at September 30, 2023 and December 31, 2022, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:

For fixed maturity securities in an unrealized loss position at March 31, 2024 and December 31, 2023, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:

Less than 12 Months 12 Months or Greater

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Fair Value Gross

September 30, 2023

March 31, 2024

Fixed maturity securities:

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Total fixed maturity securities 1,032 $ 2,699 $ ( 55 ) 6,659 $ 14,842 $ ( 1,283 )

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of September 30, 2023, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their maturity or anticipated recovery.

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of March 31, 2024, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their maturity or anticipated recovery.

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

Allowances for credit losses have been recorded in the amounts of $ 3 and $ 9 at September 30, 2023 and December 31, 2022, respectively, for declines in fair value due to unfavorable changes in the credit quality characteristics that impact our assessment of collectability of principal and interest.

The amortized cost and fair value of fixed maturity securities at September 30, 2023, by contractual maturity, are shown below.

Allowances for credit losses have been recorded in the amount of $ 4 at both March 31, 2024 and December 31, 2023, for declines in fair value due to unfavorable changes in the credit quality characteristics that impact our assessment of collectability of principal and interest.

The amortized cost and fair value of fixed maturity securities at March 31, 2024, by contractual maturity, are shown below.

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

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Total fixed maturity securities $ 31,329 $ 30,410

During the three and nine months ended September 30, 2023, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 6,236 and $ 21,321 , respectively.

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

During the three months ended March 31, 2024 and 2023, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 5,401 and $ 5,410 , respectively.

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

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Equity Securities

A summary of marketable equity securities at September 30, 2023 and December 31, 2022 is as follows:

September 30, 2023 December 31, 2022

A summary of marketable equity securities at March 31, 2024 and December 31, 2023 is as follows:

March 31, 2024 December 31, 2023

Equity securities:

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

Investment Gains and Losses

Net investment (losses) gains for the three and nine months ended September 30, 2023 and 2022 are as follows:

On April 12, 2024, we entered into an agreement to partner with Clayton, Dubilier & Rice (“CD&R”) to accelerate innovation in care delivery across multiple regions in the United States by bringing together through a new company, (“NewCo”), certain care delivery and enablement assets of Carelon Management Services Inc., a Carelon Health business (“CMSI Assets”), and two CD&R portfolio businesses, apree health and Millennium Physician Group.

Our investment in NewCo will be through a combination of cash, an existing equity investment in apree health, and the contribution of CMSI Assets.

We will account for our initial minority ownership interest in NewCo as an equity method investment.

Further, in connection with our equity investment, each party will have certain rights and obligations, including certain put, call, and purchase price true-up options, for which the estimated value will be determinable at the time of the incremental investments.

The contribution of CMSI Assets and businesses to be contributed by CD&R to NewCo are subject to standard closing conditions and customary approvals.

Investment (Losses) and Gains

Net investment (losses) and gains for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

Net (losses) gains:

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Gross realized losses from sales ( 159 ) ( 115 )

Impairment recoveries (losses) recognized in income

2 ( 5 ) ( 8 ) ( 25 )

Impairment losses recognized in income

Net realized losses from sales of fixed maturity securities ( 139 ) ( 112 )

Equity securities:

Unrealized losses recognized on equity securities still held at the end of the period

— ( 43 ) ( 1 ) ( 192 )

Net realized gains (losses) recognized on equity securities sold during the period 2 4 5 ( 20 )

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

Net realized losses recognized on equity securities sold during the period

Net gains (losses) on equity securities 2 ( 2 )

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Impairment losses recognized in income ( 25 ) ( 3 )

Net gains (losses) on other investments

10 81 ( 8 ) 64

Net (losses) gains on other investments

Net losses on investments $ ( 166 ) $ ( 91 )

Accrued Investment Income

At September 30, 2023 and December 31, 2022, accrued investment income totaled $ 281 and $ 245 , respectively.

At March 31, 2024 and December 31, 2023, accrued investment income totaled $ 294 and $ 301 , respectively.

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

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

The fair value of the collateral received at the time of the transactions amounted to $ 2,403 and $ 2,457 at September 30, 2023 and December 31, 2022, respectively.

The value of the collateral represented 102 % of the market value of the securities on loan at each of September 30, 2023 and December 31, 2022.

The fair value of the collateral received at the time of the transactions amounted to $ 2,592 and $ 2,380 at March 31, 2024 and December 31, 2023, respectively.

The value of the collateral represented 102 % of the market value of the securities on loan at each of March 31, 2024 and December 31, 2023.

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

At September 30, 2023 and December 31, 2022, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $ 2,266 and $ 2,221 , respectively, of United States Government securities for $ 92 and $ 224 , respectively, of States, Municipalities, and Political Subdivisions securities for $ 7 and $ 0 , respectively, and of Residential Mortgage-Backed securities for $ 38 and $ 12 , respectively.

At March 31, 2024 and December 31, 2023, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $ 2,351 and $ 2,255 , respectively, of United States Government securities for $ 241 and $ 99 , respectively, and of residential mortgage-backed securities for $ 0 and $ 26 , respectively.

Derivative Financial Instruments

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

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $ 213 and $ 229 at September 30, 2023 and December 31, 2022, respectively.

During the three and nine months ended months ended September 30, 2023 , we recognized net gains of $ 13 and net losses of $ 3 , respectively, on non-hedging derivatives.

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

For additional information relating to the fair value of our derivative assets and liabilities, see Note 7, “Fair Value,” of this Form 10-Q.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $ 209 and $ 211 at March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024 , we recognized gains of $ 11 and losses of $ 6 , respectively, on non-hedging derivatives.

During the three months ended March 31, 2023 , we recognized gains of $ 12 and losses of $ 34 on non-hedging derivatives, respectively.

For additional information relating to the fair value of our derivative assets and liabilities, see Note 7, “Fair Value,” included in this Quarterly Report on Form 10-Q.

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

Level inputs, as defined by FASB guidance for fair value measurements and disclosures, are as follows:

Level Input Input Definition

Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level II Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.

Level III Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in our consolidated balance sheets:

Cash equivalents:

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.

Fixed maturity securities, available-for-sale:

Fair values of available-for-sale fixed maturity securities are based on quoted market prices, where available.

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 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.

We have controls in place to review the pricing services’ qualifications and procedures used to determine fair values.

In addition, we periodically review the pricing services’ pricing methodologies, data sources and pricing inputs to ensure the fair values obtained are reasonable.

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.

Equity securities:

Fair values of equity securities are generally designated as Level I and are based on quoted market prices.

For certain equity securities, quoted market prices for the identical security are not always available, and the fair value is estimated by reference to similar securities for which quoted prices are available.

These securities are designated Level II.

We also have certain equity securities, including private equity securities, for which the fair value is estimated based on each security’s current condition and future cash flow projections.

Such securities are designated Level III.

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

Securities lending collateral:

Fair values of securities lending collateral are based on quoted market prices, where available.

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.

We independently verify prices provided by the counterparties using valuation models that incorporate observable market 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.

A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022 is as follows:

These assets and liabilities are classified into one of three levels of hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 7 “Fair Value,” to our audited consolidated financial statements as of and for the year ended December 31, 2023 included in Part II, Item 8 of our 2023 Annual Report on Form 10-K.

A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023 is as follows:

Level I Level II Level III Total

September 30, 2023

March 31, 2024

Cash equivalents $ 1,155 $ — $ — $ 1,155

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Total assets $ 1,654 $ 32,245 $ 875 $ 34,774

Percentage of total assets at fair value

5 % 93 % 2 % 100 %

Derivatives - other liabilities $ — $ ( 61 ) $ — $ ( 61 )

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Total assets $ 2,439 $ 32,328 $ 665 $ 35,432

Percentage of total assets at fair value

7 % 91 % 2 % 100 %

Derivatives - other liabilities $ — $ ( 40 ) $ — $ ( 40 )

Total liabilities $ — $ ( 40 ) $ — $ ( 40 )

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended September 30, 2023 and 2022 is as follows:

Securities Residential

Securities Other Asset-

Securities Equity

Securities Total

Three Months Ended September 30, 2023

Beginning balance at July 1, 2023 $ 103 $ — $ 366 $ 75 $ 544

Total gains (losses):

Recognized in net income ( 2 ) — — 2 —

Recognized in accumulated other comprehensive loss 1 — — — 1

Purchases 17 — 60 3 80

Sales ( 2 ) — ( 6 ) ( 11 ) ( 19 )

Settlements ( 12 ) — — — ( 12 )

Transfers into Level III 6 2 — — 8

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

Ending balance at September 30, 2023 $ 110 $ 2 $ 419 $ 69 $ 600

Change in unrealized gains (losses) included in net income related to assets still held at September 30, 2023

$ — $ — $ — $ — $ —

Three Months Ended September 30, 2022

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

Total gains (losses):

Recognized in net income — — — — —

Recognized in accumulated other comprehensive loss 1 — 17 — 18

Purchases 15 — 77 3 95

Sales ( 26 ) — ( 1 ) ( 2 ) ( 29 )

Settlements ( 10 ) — — — ( 10 )

Transfers into Level III — — — — —

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

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

Change in unrealized gains (losses) included in net income related to assets still held at September 30, 2022

$ — $ — $ — $ — $ —

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the nine months ended September 30, 2023 and 2022 is as follows:

Securities Residential

Securities Other Asset-

Securities Equity

Securities Total

Nine Months Ended September 30, 2023

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

Total gains (losses):

Recognized in net income ( 8 ) — — ( 3 ) ( 11 )

Recognized in accumulated other comprehensive loss 5 — 2 — 7

Purchases 22 — 72 4 98

Sales ( 43 ) — ( 17 ) ( 20 ) ( 80 )

Settlements ( 18 ) — — — ( 18 )

Transfers into Level III 35 2 6 — 43

Transfers out of Level III ( 20 ) — — — ( 20 )

Ending balance at September 30, 2023 $ 110 $ 2 $ 419 $ 69 $ 600

Change in unrealized losses included in net income related to assets still held at September 30, 2023

$ — $ — $ — $ ( 4 ) $ ( 4 )

Nine Months Ended September 30, 2022

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

Total gains (losses):

Recognized in net income — — — 1 1

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

Purchases 40 — 281 24 345

Sales ( 201 ) — ( 1 ) ( 19 ) ( 221 )

Settlements ( 42 ) — — — ( 42 )

Transfers into Level III 9 — — — 9

Transfers out of Level III ( 12 ) ( 5 ) ( 5 ) — ( 22 )

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

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

$ — $ — $ — $ 1 $ 1

There were no individually material transfers into or out of Level III during the three and nine months ended September 30, 2023 or 2022.

There were no individually material transfers into or out of Level III during the three months ended March 31, 2024 or 2023.

There were no adjustments to quoted market prices obtained from the pricing services during the three months ended March 31, 2024 or 2023.

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

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

As disclosed in Note 3, “Business Acquisitions and Divestitures,” we completed our acquisition of BioPlus in the first quarter of 2023 and Integra during the second quarter of 2022.

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

As disclosed in Note 3, “Business Acquisitions and Divestitures,” we completed our acquisition of Paragon in the first quarter of 2024 and the acquisition of BioPlus in the first quarter of 2023.

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

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

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

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

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

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

Other than the assets acquired and liabilities assumed in our acquisitions of BioPlus and Integra described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2023 or 2022.

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

Whenever possible, our policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes.

Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, unobservable inputs or other valuation techniques.

These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows.

The use of assumptions for unobservable inputs for the determination of fair value involves a level of judgment and uncertainty.

Changes in assumptions that reasonably could have been different at the reporting date may result in a higher or lower determination of fair value.

Changes in fair value measurements, if significant, may affect performance of cash flows.

Potential taxes and other transaction costs are not considered in estimating fair values.

Our valuation policy is generally to obtain quoted prices for each security from third-party pricing services, which are derived through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.

As we are responsible for the determination of fair value, we perform analysis on the prices received from the pricing services to determine whether the prices are reasonable estimates of fair value.

This analysis is performed by our internal treasury personnel who are familiar with our investment portfolios, the pricing services engaged and the valuation techniques and inputs used.

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

There were no adjustments to quoted market prices obtained from the pricing services during the three and nine months ended September 30, 2023 or 2022.

Also in 2023, we entered into a shareholder’s agreement which included certain put and call options on 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.

Other than the assets acquired and liabilities assumed in our acquisitions of Paragon and BioPlus and the net put option on Liberty Dental, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2024 or 2023.

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

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These assets and liabilities are not listed in the table below.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument that is recorded at its carrying value in our consolidated balance sheets:

Other invested assets:

Other invested assets include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations and mortgage loans, as well as the cash surrender value of corporate-owned life insurance policies.

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.

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.

The carrying amount for commercial paper approximates fair value, as the underlying instruments have variable interest rates at market value.

Long-term debt—senior unsecured notes and surplus notes:

The fair values of our notes are based on quoted market prices in active markets for the same or similar debt, or, if no quoted market prices are available, on the current market observable rates estimated to be available to us for debt of similar terms and remaining maturities.

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.

A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at September 30, 2023 and December 31, 2022 is as follows:

See Note 7 “Fair Value,” to our audited consolidated financial statements as of and for the year ended December 31, 2023 included in Part II, Item 8 of our 2023 Annual Report on Form 10-K for details on the methods and assumptions used to estimate the fair value of each class of financial instrument that is recorded at its carrying value in our consolidated balance sheets.

A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at March 31, 2024 and December 31, 2023 is as follows:

Value Estimated Fair Value

Level I Level II Level III Total

September 30, 2023

March 31, 2024

Other invested assets $ 6,611 $ — $ — $ 6,580 $ 6,580

Short-term borrowings 225 — 225 — 225

Commercial paper

1,350 — 1,350 — 1,350

Notes 24,876 — 23,046 — 23,046

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Notes 24,895 — 23,569 — 23,569

Convertible debentures 63 — 463 — 463

During the three months ended September 30, 2023 and 2022, we recognized income tax expense of $ 354 an d $ 529 (restated), respectively, which represent effective income tax rates of 21.4 % and 24.9 % (restated), respectively.

The decrease in our effective incom e tax rate from the three months ended September 30, 2022 is primarily due to the tax impact of expected geographic changes in our mix of 2023 earnings.

During the nine months ended September 30, 2023 and 2022, we recognized income tax expense of $ 1,554 an d $ 1,544 (restated), respectively, which represent effective income tax rates of 23.1 % and 23.6 % (restated), respectively.

The decrease in our effective incom e tax rate from the nine months ended September 30, 2022 is primarily related to the tax impact of expected geographic changes in our mix of 2023 earnings.

Income taxes receivable totaled $ 258 and $ 440 at September 30, 2023 and December 31, 2022, respectively.

At September 30, 2023, we recognized the income tax receivable as $ 183 under the caption “Other current assets” and as $ 75 under the caption “Other noncurrent assets”.

During the three months ended March 31, 2024 and 2023, we recognized income tax expense of $ 690 an d $ 615 , respectively, which represent an effective income tax rate of 23.5 % for both periods.

Income taxes payable totaled $ 38 at March 31, 2024 and income taxes receivable totaled $ 543 at December 31, 2023.

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

Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable for the nine months ended September 30, 2023 and 2022 is as follows:

A reconciliation of the beginning and ending balances for medical claims payable for the three months ended March 31, 2024 and 2023 is as follows:

Gross medical claims payable, beginning of period $ 15,865 $ 15,348

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Net medical claims payable, beginning of period 15,858 15,342

Business combinations and purchase adjustments — 133

Net incurred medical claims:

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Gross medical claims payable, end of period $ 16,183 $ 15,491

At September 30, 2023, the total of net incurred but not reported liabilities plus expected development on reported claims was $ 481 , $ 1,421 and $ 14,011 for the claim years 2021 and prior, 2022 and 2023, respectively.

The favorable development recognized in the nine months ended September 30, 2023 resulted from trend factors in late 2022 developing more favorably than originally expected and completion factors in the latter parts of 2022 developing faster than expected.

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

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for the periods in 2023 is as follows:

Three Months Ended Nine Months Ended September 30, 2023

March 31, 2023 June 30, 2023 September 30, 2023

Total net incurred medical claims $ 29,683 $ 30,495 $ 29,538 $ 89,716

Quality improvement and other claims expense 1,103 1,109 1,068 3,280

Benefit expense $ 30,786 $ 31,604 $ 30,606 $ 92,996

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

Three Months Ended Nine Months Ended September 30, 2022

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

(Restated) (Restated) (Restated) (Restated)

At March 31, 2024, the total of net incurred but not reported liabilities plus expected development on reported claims was $ 724 , $ 4,323 and $ 11,128 for the claim years 2022 and prior, 2023 and 2024, respectively.

The favorable development recognized in the three months ended March 31, 2024 resulted from faster than expected development of completion factors from the latter part of 2023 as well as trend factors in late 2023 developing more favorably than originally expected.

The favorable development recognized in the three months ended March 31, 2023 resulted primarily from trend factors in late 2022 developing more favorably than expected and favorable development in the completion factors resulting from the latter part of 2022 developing faster than expected.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for the three months ended March 31, 2024 and 2023 is as follows:

Total net incurred medical claims $ 29,503 $ 29,683

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Benefit expense $ 30,546 $ 30,786

The reconciliation of the medical claims payable reflected in the tables above to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of September 30, 2023 and December 31, 2022, is as follows:

September 30, 2023 December 31, 2022

Net medical claims payable, end of period $ 16,175

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

At September 30, 2023 and December 31, 2022, we had $ 24,819 and $ 23,761 , respectively, outstanding under these notes.

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

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

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

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

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

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

We have an unsecured surplus note with an outstanding principal balance of $ 25 at both September 30, 2023 and December 31, 2022.

At March 31, 2024 and December 31, 2023, we had $ 24,851 and $ 24,870 , respectively, outstanding under these notes.

We have an unsecured surplus note with an outstanding principal balance of $ 25 at both March 31, 2024 and December 31, 2023.

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

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

As of September 30, 2023, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 39.2%.

As of March 31, 2024, our debt-to-capital ratio, as defined and calculated under the 5 -Year Facility, was 39.4 %.

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

As of September 30, 2023, we were in compliance with all of our debt covenants under the 5-Year Facility.

There were no amounts outstanding under the 5-Year Facility at any time during the nine months ended September 30, 2023 or the year ended December 31, 2022.

As of March 31, 2024, we were in compliance with all of our debt covenants under the 5 -Year Facility.

There were no amounts outstanding under the 5 -Year Facility at any time during the three months ended March 31, 2024 or the year ended December 31, 2023.

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

At both September 30, 2023 and December 31, 2022, we had no amounts outstanding under this program.

At March 31, 2024 and December 31, 2023, we had $ 1,350 and $ 0 , respectively, outstanding under this program.

Beginning June 30, 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.

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

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

During the three months ended March 31, 2023, $ 59 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 .

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

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

We had $ 0 and $ 265 of outstanding short-term borrowings from the FHLBs at September 30, 2023 and December 31, 2022, respectively.

We had $ 225 of outstanding short-term borrowings from the FHLBs at each of March 31, 2024 and December 31, 2023.

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

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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 September 30, 2023.

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

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

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

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

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

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

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

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

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 heard by a panel of the United States Court of Appeals for the Eleventh Circuit in September 2023 (the “Eleventh Circuit”), and the Eleventh Circuit affirmed the Court’s Final Approval Order approving the Subscriber Settlement Agreement in October 2023.

Petitions for rehearing were filed by certain appellants in November 2023 and December 2023 and were denied in January 2024.

As a result, the Eleventh Circuit issued a mandate terminating the jurisdiction of the Eleventh Circuit in February 2024.

In March 2024, Home Depot, one of the appellants, filed a petition for certiorari to the United States Supreme Court.

On the respondents' request, the United States Supreme Court granted an extension to respond until May 2024.

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.

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

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.

In January 2024, the Court issued orders (i) denying defendants’ motion for summary judgment on (a) all claims by certain hospital providers and (b) any claims based on the Blue system's rules other than exclusive serviced areas or BlueCard and (ii) denying provider plaintiffs’ motion for partial summary judgment on defendants’ common law trademark claims.

Provider 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;

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

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

Bed Bath & Beyond Inc.

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

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

Hoover, et al.

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

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 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.

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

The Second District affirmed the Superior Court's summary judgment order in April 2023.

The plaintiff filed a petition for review with the California Supreme Court in June 2023, and BCC filed its answer to the petition in the same month.

In July 2023, the California Supreme Court denied the plaintiff’s petition for review.

This matter is now resolved, and the protective tax refund claims mentioned above have been withdrawn.

Express Scripts, Inc.

Pharmacy Benefit Management Litigation

PBM Litigation

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

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

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

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 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 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;

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

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

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

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

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

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

A trial date has been set for December 2023.

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

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 Quarterly Report on Form 10-Q 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.

In February 2024, the Second Circuit ordered the parties to participate in mediation.

The mediation occurred in March 2024 and was unsuccessful.

The ultimate outcome of this appeal cannot be presently determined.

Medicare Risk Adjustment Litigation

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

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

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;

however, the ultimate outcome cannot be presently determined.

Investigations of CareMore and HealthSun

With the assistance of outside counsel, we are conducting investigations of risk-adjustment practices involving data submitted to CMS (unrelated to our retrospective chart review program) at CareMore Health Plans, Inc.

(“CareMore”), one of our California subsidiaries, and HealthSun Health Plans, Inc.

(“HealthSun”), one of our Florida subsidiaries.

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.

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 have submitted corrected data to CMS related to these investigations.

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

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

Other Contingencies

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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, 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 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 September 30, 2023 is approximately $ 554 .

Our remaining commitment under this agreement at March 31, 2024 is approximately $ 432 .

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

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

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

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

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.

(“CVS”), which is a subsidiary of CVS Health Corporation, pursuant to an agreement, that is set to terminate on December 31, 2025.

Beginning in the first quarter of 2024, CarelonRx is assuming responsibility for pharmacy mail order front-end intake and member services from CVS.

Capital Stock

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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.

A summary of our cash dividend activity for the nine months ended September 30, 2023 and 2022 is as follows:

A summary of our cash dividend activity for the three months ended March 31, 2024 and 2023 is as follows:

Declaration Date Record Date Payment Date Cash

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

January 23, 2024 March 8, 2024 March 22, 2024 $ 1.63 $ 379

April 18, 2023 June 9, 2023 June 23, 2023 $ 1.48 $ 350

July 18, 2023 September 8, 2023 September 22, 2023 $ 1.48 $ 348

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

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

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

On October 17, 2023, our Audit Committee declared a fourth quarter 2023 dividend to shareholders of $ 1.48 per share, payable on December 21, 2023 to shareholders of record at the close of business on December 6, 2023 .

On April 16, 2024, our Audit Committee declared a second quarter 2024 dividend to shareholders of $ 1.63 per share, payable on June 25, 2024 to shareholders of record at the close of business on June 10, 2024.

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

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

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

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

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

A summary of common stock repurchases for the nine months ended September 30, 2023 and 2022 is as follows:

Nine Months Ended September 30

A summary of common stock repurchases for the three months ended March 31, 2024 and 2023 is as follows:

Three Months Ended March 31

Shares repurchased 1.1 1.3

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Authorization remaining at the end of the period $ 3,633 $ 6,254

For additional information regarding the use of capital for debt security repurchases, see Note 10, “Debt,” included in this Quarterly Report on Form 10-Q and Note 13, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2022 included in Exhibit 99.1 to this Quarterly Report on Form 10-Q.

For additional information regarding the use of capital for debt security repurchases, see Note 10, “Debt,” included in this Quarterly Report on Form 10-Q and Note 13, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2023 included in Part II, Item 8 of our 2023 Annual Report on Form 10-K.

Stock Incentive Plan s

A summary of stock option activity for the nine months ended September 30, 2023 is as follows:

A summary of stock option activity for the three months ended March 31, 2024 is as follows:

Shares Weighted-

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Forfeited or expired — 431.01

Outstanding at September 30, 2023 3.1 324.74 6.25 $ 370

Exercisable at September 30, 2023 2.0 266.01 5.07 $ 346

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the nine months ended September 30, 2023 is as follows:

Outstanding at March 31, 2024 3.2 356.58 6.44 $ 521

Exercisable at March 31, 2024 2.2 297.24 5.23 $ 482

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the three months ended March 31, 2024 is as follows:

and Units Weighted-

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Forfeited — 456.61

Nonvested at September 30, 2023 1.1 423.34

During the nine months ended September 30, 2023, we granted approximately 0.2 restricted stock units that are contingent upon us achieving earnings targets over the three-year period from 2023 to 2025.

Nonvested at March 31, 2024 1.1 475.31

During the three months ended March 31, 2024, we granted approximately 0.3 restricted stock units that are contingent upon us achieving earnings targets over the three-year period from 2024 to 2026.

These grants have been included in the activity shown above but will be subject to adjustment at the end of 2026 based on results in the three-year period.

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

For a more detailed discussion of our stock incentive plan fair value methodology, see Note 15, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2022 included in Exhibit 99.1 to this Quarterly Report on Form 10-Q.

The following weighted-average assumptions were used to estimate the fair values of options granted during the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30

For a more detailed discussion of our stock incentive plan fair value methodology, see Note 15, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2023 included in Part II, Item 8 of our 2023 Annual Report on Form 10-K.

The following weighted-average assumptions were used to estimate the fair values of options granted during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31

Risk-free interest rate 4.28 % 3.95 %

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Weighted-average expected life (years) 4.40 4.40

The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30

The following weighted-average fair values per option or share were determined for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31

Options granted during the period $ 134.53 $ 127.14

Restricted stock awards granted during the period 499.00 469.31

Accumulated Other Comprehensive Loss

A reconciliation of the components of accumulated other comprehensive loss at September 30, 2023 and 2022 is as follows:

Accumulated Other Comprehensive (Loss) Income

A reconciliation of the components of accumulated other comprehensive (loss) income at March 31, 2024 and 2023 is as follows:

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

(Restated) (Restated)

Net unrealized investment (losses) gains:

Beginning of period balance $ ( 632 ) $ ( 1,755 )

Other comprehensive loss before reclassifications, net of tax benefit (expense) of $ 145 , $ 220 , $ 119 and $ 896 , respectively

( 464 ) ( 719 ) ( 317 ) ( 2,914 )

Amounts reclassified from accumulated other comprehensive loss, net of tax expense of $( 35 ), $( 21 ), $( 86 ) and $( 75 ), respectively

112 80 273 284

Other comprehensive loss

( 352 ) ( 639 ) ( 44 ) ( 2,630 )

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

Other comprehensive (loss) income before reclassifications, net of tax benefit (expense) of $ 50 and $( 85 ), respectively

Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $( 33 ) and $( 29 ), respectively

Other comprehensive (loss) income

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

End of period balance ( 688 ) ( 1,330 )

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Beginning of period balance ( 3 ) ( 3 )

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

2 ( 1 ) ( 1 ) ( 3 )

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

End of period balance ( 3 ) ( 5 )

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Beginning of period balance ( 211 ) ( 229 )

Other comprehensive income, net of tax (expense) of $( 1 ), $ 0 , $ 6 and $( 2 ), respectively

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

End of period balance ( 209 ) ( 218 )

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Beginning of period balance 10 13

Other comprehensive income, net of tax expense of $ 0 , $( 2 ), $ 0 and $( 7 ), respectively

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

End of period balance 8 15

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Beginning of period balance ( 18 ) ( 17 )

Other comprehensive loss, net of tax benefit of $ 1 , $ 2 , $ 0 and $ 4 , respectively

( 4 ) ( 7 ) ( 2 ) ( 15 )

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

End of period balance ( 18 ) ( 15 )

Total beginning of period accumulated other comprehensive loss ( 1,313 ) ( 2,490 )

Total other comprehensive loss, net of tax benefit (expense) of $ 109 , $ 196 , $ 37 , and $ 808 , respectively

( 348 ) ( 631 ) ( 22 ) ( 2,593 )

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

Total other comprehensive (loss) income, net of tax benefit (expense) of $ 15 , and $( 106 ), respectively

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

Total end of period accumulated other comprehensive loss $ ( 1,365 ) $ ( 2,050 )

Earnings per Share

The denominator for basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022 is as follows:

Shareholders' Earnings per Share

The denominator for basic and diluted shareholders' earnings per share for the three months ended March 31, 2024 and 2023 is as follows:

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

Denominator for basic earnings per share – weighted-average shares

235.3 239.6 236.4 240.5

Denominator for basic shareholders' earnings per share – weighted-average shares

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

1.2 2.6 1.6 2.8

Denominator for diluted earnings per share

236.5 242.2 238.0 243.3

During the three months ended September 30, 2023 and 2022, weighted-average shares related to certain stock options of 0.9 and 0.5 respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive.

During the nine months ended September 30, 2023 and 2022, weighted-average shares related to certain stock options of 0.8 and 0.4 , respectively, were excluded from each of the denominators for diluted earnings per share because the stock options were anti-dilutive.

During the three and nine months ended September 30, 2023, we issued approximately 0.0 and 0.6 restricted stock units under our stock incentive plans, 0.0 and 0.2 of which vesting is contingent upon us meeting specified annual earnings targets for the three-year period of 2023 through 2025.

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

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

Denominator for diluted shareholders' earnings per share

During the three months ended March 31, 2024 and 2023, weighted-average shares related to certain stock options of 0.6 and 0.4 respectively, were excluded from the denominator for diluted shareholders' earnings per share because the stock options were anti-dilutive.

During the three months ended March 31, 2024, we issued approximately 0.6 restricted stock units under our stock incentive plans, 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three-year period of 2024 through 2026.

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

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

Segment Information

As discussed in Note 1 “Organization”, we have changed our reportable segment presentation and its composition to reflect how we began managing our operations and monitoring performance, aligning strategies and allocating resources beginning on January 1, 2023.

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

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

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

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

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

Health Benefits, CarelonRx, Carelon Services and Corporate & Other.

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.

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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 stop loss, dental, vision, life, disability and supplemental health insurance benefits.

Our CarelonRx segment includes our pharmacy business.

and provides a variety of specialty and other insurance products and services such as stop loss, dental, vision 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 services such as formulary management, pharmacy networks, specialty and home delivery pharmacy services and member services.

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

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

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, 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 & 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.

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

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

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.

Financial data by reportable segment for the three months ended September 30, 2023 and 2022 is as follows:

Financial data by reportable segment for the three months ended March 31, 2024 and 2023 is as follows:

Benefits CarelonRx Carelon

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& Other Eliminations Total

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Premiums $ 35,382 $ — $ 408 $ 408 $ — $ ( 94 ) $ 35,696

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Operating gain (loss) $ 2,287 $ 523 $ 290 $ 813 $ ( 84 ) $ — $ 3,016

Three Months Ended September 30, 2022

Premiums $ 33,376 $ — $ 412 $ 412 $ — $ ( 66 ) $ 33,722

Product revenue — 3,972 — 3,972 — — 3,972

Service fees 1,689 — 224 224 18 — 1,931

Operating revenue - unaffiliated 35,065 3,972 636 4,608 18 ( 66 ) 39,625

Operating revenue - affiliated — 3,277 2,518 5,795 193 ( 5,988 ) —

Operating revenue - total $ 35,065 $ 7,249 $ 3,154 $ 10,403 $ 211 $ ( 6,054 ) $ 39,625

Operating gain (loss) (restated) $ 1,634 $ 516 $ 125 $ 641 $ ( 24 ) $ — $ 2,251

Financial data by reportable segment for the nine months ended September 30, 2023 and 2022 is as follows:

Benefits CarelonRx Carelon

Services Total Corporate

& Other Eliminations Total

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2023

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

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Operating gain (loss)

Nine Months Ended September 30, 2022

Premiums $ 98,626 $ — $ 1,105 $ 1,105 $ — $ ( 148 ) $ 99,583

Product revenue — 10,841 — 10,841 — — 10,841

Service fees 4,862 — 670 670 37 — 5,569

Operating revenue - unaffiliated 103,488 10,841 1,775 12,616 37 ( 148 ) 115,993

Operating revenue - affiliated — 10,162 7,310 17,472 762 ( 18,234 ) —

Operating revenue - total $ 103,488 $ 21,003 $ 9,085 $ 30,088 $ 799 $ ( 18,382 ) $ 115,993

Operating gain (loss) (restated) $ 5,266 $ 1,393 $ 438 $ 1,831 $ ( 73 ) $ — $ 7,024

$ 2,149 $ 512 $ 229 $ 741 $ ( 59 ) $ — $ 2,831

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

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

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 is as follows:

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three months ended March 31, 2024 and 2023 is as follows:

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

Reportable segments’ operating revenue $ 42,273 $ 41,898

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Total revenues $ 42,577 $ 42,172

A reconciliation of income before income tax expense to reportable segments’ operating gain included in our consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 is as follows:

A reconciliation of income before income tax expense to reportable segments’ operating gain included in our consolidated statements of income for the three months ended March 31, 2024 and 2023 is as follows:

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

(Restated) (Restated)

Income before income tax expense $ 2,939 $ 2,619

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Reportable segments’ operating gain $ 3,016 $ 2,831

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

Our leases have remaining lease terms of 1 year to 12 years.

The information related to our leases is as follows:

Balance Sheet Location September 30, 2023 December 31, 2022

Operating Leases

Right-of-use assets Other noncurrent assets $ 573 $ 604

Lease liabilities, current Other current liabilities 172 181

Lease liabilities, noncurrent Other noncurrent liabilities 695 751

Three Months Ended

September 30 Nine Months Ended

2023 2022 2023 2022

Lease Expense

Operating lease expense $ 69 $ 35 $ 126 $ 100

Short-term and variable lease expense — 11 28 35

Sublease income ( 1 ) ( 1 ) ( 4 ) ( 3 )

Total lease expense $ 68 $ 45 $ 150 $ 132

Other information

Operating cash paid for amounts included in the measurement of lease liabilities, operating leases $ 53 $ 53 $ 156 $ 158

Right-of-use assets obtained in exchange for new lease liabilities, operating leases $ — $ 23 $ 47 $ 62

As of September 30, 2023 and December 31, 2022, the weighted average remaining lease term of our operating leases was 7 years for each period.

The lease liabilities reflect a weighted average discount rate of 3.53 % at September 30, 2023 and 2.98 % at December 31, 2022.

Our activities as disclosed in Note 4, “Business Optimization Initiatives”, include reducing our office space footprint.

As a result, during the quarter ended September 30, 2023 we recorded impairment charges of $ 23 for abandonment of right-of-use assets which are included in the operating lease expense shown above.

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

2023 (excluding the nine months ended September 30, 2023)

Thereafter 335

Total future minimum payments 974

Less imputed interest 107

Total lease liabilities $ 867

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements