What changed in this filing

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Item 1. Financial Statements

2024-10-17 compared with 2024-07-17 · 220 added, 180 removed, 837 unchanged (32% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

2024 December 31,

55 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

6 unchanged sentences

Net losses on financial instruments ( 125 ) ( 124 ) ( 371 ) ( 358 )

Gain on sale of business 240 — 240 —

(Loss) gain on sale of business

( 39 ) — 201 —

Total revenues 45,106 42,849 131,569 128,693

9 unchanged sentences

Net income 1,008 1,300 5,558 5,160

Net income attributable to noncontrolling interests

Net loss (income) attributable to noncontrolling interests

8 ( 11 ) 4 ( 29 )

8 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

1 unchanged sentence

Net income $ 1,008 $ 1,300 $ 5,558 $ 5,160

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Change in net unrealized losses/gains on investments 887 ( 352 ) 805 ( 44 )

Change in non-credit component of impairment losses on investments

— ( 1 ) — ( 3 )

Change in net unrealized gains/losses on cash flow hedges 2 1 8 16

2 unchanged sentences

Foreign currency translation adjustments 7 ( 4 ) 2 ( 2 )

Other comprehensive (loss) income

Other comprehensive income (loss)

898 ( 348 ) 824 ( 22 )

Net income attributable to noncontrolling interests

Net loss (income) attributable to noncontrolling interests

8 ( 11 ) 4 ( 29 )

4 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

(In millions)

6 unchanged sentences

Depreciation and amortization 995 1,321

Impairment of property and equipment 103 446

Deferred income taxes ( 258 ) ( 361 )

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Repayments of long-term borrowings ( 800 ) ( 1,908 )

Proceeds from short-term borrowings 210 —

Repayments of short-term borrowings ( 75 ) ( 265 )

Changes in securities lending payable 158 ( 54 )

5 unchanged sentences

Other, net 9 5

Net cash provided by (used in) financing activities

Net cash used in financing activities

( 215 ) ( 2,955 )

2 unchanged sentences

Cash and cash equivalents at beginning of period 6,526 7,387

Less cash and equivalents included in assets held for sale at end of period

Less cash and cash equivalents included in assets held for sale at end of period

Cash and cash equivalents at end of period $ 7,866 $ 10,919

See accompanying notes.

S ee accompanying notes.

Elevance Health, Inc.

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June 30, 2024 231.9 2 9,001 34,575 ( 1,387 ) 106 42,297

Net income (loss)

— — — 1,016 — ( 8 ) 1,008

Other comprehensive income

— — — — 898 — 898

Noncontrolling interest adjustment — — — — — 6 6

Repurchase and retirement of common stock, including excise tax

( 0.1 ) — ( 5 ) ( 55 ) — — ( 60 )

Dividends and dividend equivalents — — — ( 379 ) — — ( 379 )

Issuance of common stock under employee stock plans, net of related tax benefits 0.1 — 109 — — — 109

September 30, 2024 231.9 $ 2 $ 9,105 $ 35,157 $ ( 489 ) $ 104 $ 43,879

Elevance Health, Inc.

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

— — — 1,289 — 11 1,300

Other comprehensive loss — — — — ( 346 ) ( 2 ) ( 348 )

Repurchase and retirement of common stock

( 1.1 ) — ( 40 ) ( 445 ) — — ( 485 )

Dividends and dividend equivalents

— — — ( 349 ) — — ( 349 )

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

0.1 — 109 — — — 109

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

See accompanying notes.

1 unchanged sentence

Notes to Consolidated Financial Statements

June 30, 2024

September 30, 2024

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

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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 nearly 46 million medical members through our affiliated health plans as of June 30, 2024.

We are one of the largest health insurers in the United States in terms of medical membership, serving nearly 46 million medical members through our affiliated health plans as of September 30, 2024.

As a lifetime, trusted health partner, 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 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.

In addition, we serve members in numerous states as 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.

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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;

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

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

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

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

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generally accepted accounting principles (“GAAP”) for interim financial reporting.

Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements.

Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements.

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.

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 six months ended June 30, 2024 and 2023 have been recorded.

The results of operations for the three and six months ended June 30, 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.

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, 2024 and 2023 have been recorded.

The results of operations for the three and nine months ended September 30, 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 healthcare 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, 2023 included in our 2023 Annual Report on Form 10-K.

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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 $ 400 and $ 294 at June 30, 2024 and December 31, 2023, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

These amounts totaled $ 339 and $ 294 at September 30, 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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For impaired fixed maturity securities that we do not intend to sell or if it is more likely than not that we will not have to sell such securities, but we expect that we will not fully recover the amortized cost basis, we recognize the credit component of the impairment as an allowance for credit loss in our consolidated balance sheets and record an impairment loss in our consolidated statements of income.

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.

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.”

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.

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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.

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

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

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

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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 $ 177 and $ 212 at June 30, 2024 and December 31, 2023, respectively.

Premium receivables are reported net of an allowance for doubtful accounts of $ 185 and $ 212 at September 30, 2024 and December 31, 2023, respectively.

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

Self-funded receivables are reported net of an allowance for doubtful accounts of $ 87 at both June 30, 2024 and December 31, 2023, respectively.

Self-funded receivables are reported net of an allowance for doubtful accounts of $ 89 and $ 87 at September 30, 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 $ 1,046 and $ 941 at June 30, 2024 and December 31, 2023, respectively.

These receivables are reported net of an allowance for doubtful accounts of $ 1,140 and $ 941 at September 30, 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 June 30, 2024 or December 31, 2023.

For the three and six months ended June 30, 2024 and 2023, 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 September 30, 2024 or December 31, 2023.

For the three and nine months ended September 30, 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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Business Acquisitions and Divestitures

Completed Acquisitions

Investments in Joint Ventures and Completed Acquisitions

On August 6, 2024, we made an investment of $ 2,580 , consisting of cash and the net put option discussed in Note 6 "Derivative Financial Instruments", that resulted in our minority interest ownership of approximately 35 % of Augusta Topco Holdings, L.P.

(“Mosaic Health”), a joint venture with Clayton, Dubilier & Rice (“CD&R”) that is designed to accelerate innovation in care delivery across multiple regions in the United States by bringing together certain care delivery and enablement assets of Carelon Management Services Inc.

(“CMSI Assets”), a Carelon Health business, and two CD&R portfolio businesses, apree health and Millennium Physician Group (see Note 5, “Investments”).

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

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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 June 30, 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 $ 411 has been allocated to finite-lived intangible assets and $ 753 to goodwill.

As of September 30, 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 $ 411 has been allocated to finite-lived intangible assets and $ 751 to goodwill.

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

During the three months ended June 30, 2024, measurement period adjustments were $( 25 ).

As of June 30, 2024, the initial accounting for the acquisition has not been finalized.

Since closing and during the measurement period we have adjusted goodwill by $( 2 ).

As of September 30, 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.

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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 June 30, 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.

As of September 30, 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.

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

2 unchanged sentences

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, which resulted in a gain on sale of business of $ 240 .

(“The Standard”), a provider of financial protection products and services for employers and individuals, which resulted in a gain on sale of business of $ 201 , net of a contingent purchase price adjustment of $( 39 ) in the three months ended September 30, 2024.

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

The related net assets held for sale for the life and disability businesses to be divested as of December 31, 2023 and results of operations for the three and six months ending June 30, 2024 were not material.

Pending Acquisitions and Divestitures

The related net assets held for sale for the life and disability businesses divested as of December 31, 2023 and results of operations for the nine months ending September 30, 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”).

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This acquisition aligns with our strategic plan to grow the Health Benefits segment and leverage industry-leading expertise while serving Medicaid and dual-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 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, Augusta Topco Holdings, L.P.

(“Augusta”), 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 Augusta 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 Augusta 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.

Our and CD&R's investments and contributions to Augusta are subject to standard closing conditions and customary approvals.

The CMSI Assets, along with certain other assets planned to be divested, are included in assets held for sale and liabilities held for sale as of June 30, 2024.

In conjunction with the classification as assets held for sale, a $ 44 impairment of goodwill was recorded during the quarter ended June 30, 2024.

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

On October 15, 2024, we entered into an agreement to acquire RSV QOZB LTSS, Inc.

and certain affiliated entities (d/b/a CareBridge), a value-based healthcare company that manages home and community-based services for Medicaid and dual-eligible populations receiving long-term services and support.

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

The acquisition is expected to close in the fourth quarter of 2024 or first quarter of 2025 and is subject to standard closing conditions and customary approvals.

Business Optimization Initiatives

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The 2023-2024 Business Efficiency Program includes the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.

The 2023-2024 Business Efficiency Program is expected to be substantially complete by the end of the third quarter of 2024.

Actions to be taken under the 2023-2024 Business Efficiency Program were substantially finalized as of September 30, 2024.

Cash outlays associated with this program, which primarily relate to the personnel-related costs, are expected to be paid through 2025.

The ending balances related to the total liabilities for employee termination costs under the 2023-2024 Business Efficiency Program at June 30, 2024 and December 31, 2023 were $ 125 and $ 191 , respectively, and were recorded in the Corporate & Other reportable segment.

During the quarter ended June 30, 2024, there were no charges or releases related to employee termination costs under the 2023-2024 Business Efficiency Program, and payments were $ 25 .

In the third quarter of 2024, we incurred $ 268 of costs towards the 2023-2024 Business Efficiency Program.

This included primarily $ 72 of pre-tax charges for information technology asset write-offs, $ 165 of pre-tax personnel-related charges for the reduction and/or relocation of staff, which includes severance and related costs primarily determined under our existing severance plans, and $ 31 of pre-tax charges from asset impairments related to the closure or partial closure of offices, including operating lease-related right-of-use assets and other property and equipment.

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

The ending balances related to the total liabilities for employee termination costs under the 2023-2024 Business Efficiency Program at September 30, 2024 and December 31, 2023 were $ 267 and $ 191 , respectively.

During the nine months ended September 30, 2024, there were $ 165 in charges recorded related to employee termination costs under the 2023-2024 Business Efficiency Program, and payments were $ 89 .

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 June 30, 2024 and December 31, 2023 is as follows:

A summary of current and long-term fixed maturity securities, available-for-sale, at September 30, 2024 and December 31, 2023 is as follows:

Losses Allowance

Losses Estimated

June 30, 2024

September 30, 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 June 30, 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:

Allowances for credit losses have been recorded in the amount of $ 2 and $ 4 at September 30, 2024 and December 31, 2023, 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.

For fixed maturity securities in an unrealized loss position at September 30, 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

June 30, 2024

September 30, 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 June 30, 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.

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of September 30, 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 amount of $ 4 at both June 30, 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 June 30, 2024, by contractual maturity, are shown below.

The amortized cost and fair value of fixed maturity securities at September 30, 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 $ 29,622 $ 29,847

During the three and six months ended June 30, 2024, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 3,014 and $ 8,414 , respectively.

During the three and six months ended June 30, 2023, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 9,675 and $ 15,085 , respectively.

During the three and nine months ended September 30, 2024, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $ 3,870 and $ 12,284 , respectively.

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.

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 June 30, 2024 and December 31, 2023 is as follows:

June 30, 2024 December 31, 2023

A summary of marketable equity securities at September 30, 2024 and December 31, 2023 is as follows:

September 30, 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.

As discussed in Note 3, during the three months ended September 30, 2024, we made an initial investment in Mosaic Health which is accounted for as an equity method investment.

Including all direct transaction costs, our investment was $ 2,580 , representing approximately 35 % of Mosaic Health ownership.

Our additional contribution of the CMSI Assets to Mosaic Health is subject to certain closing conditions and customary approvals and is expected to be made in the fourth quarter of 2024 or first quarter of 2025.

The CMSI Assets, along with certain other unrelated assets planned to be divested, are included under the captions “Assets held for sale” and “Liabilities held for sale” in our consolidated balance sheet as of September 30, 2024.

In connection with our equity method investment in Mosaic Health, we entered into a financing agreement to provide a term loan of $ 200 and a revolving credit facility of up to $ 500 to Mosaic Health.

Net amounts receivable under these arrangements were $ 188 at September 30, 2024, which is included under the caption “Other noncurrent assets” in our consolidated balance sheets as of September 30, 2024.

Investment (Losses) and Gains

Net investment gains and (losses) for the three and six months ended June 30, 2024 and 2023 are as follows:

Net investment (losses) and gains for the three and nine months ended September 30, 2024 and 2023 are as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

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Gross realized losses from sales ( 107 ) ( 164 ) ( 354 ) ( 377 )

Impairment losses recognized in income

Impairment (losses) gains recognized in income

( 9 ) 2 ( 13 ) ( 8 )

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Equity securities:

Unrealized (losses) gains recognized on equity securities still held at the end of the period ( 2 ) 2 1 ( 2 )

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

Net (losses) gains on equity securities

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

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

( 3 ) 2 ( 4 ) 5

Net gains on equity securities

Other investments:

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Impairment losses recognized in income ( 98 ) ( 8 ) ( 124 ) ( 37 )

Net losses on other investments ( 11 ) ( 40 ) ( 41 ) ( 18 )

Net (losses) gains on other investments

( 63 ) 10 ( 104 ) ( 8 )

Net losses on investments $ ( 126 ) $ ( 137 ) $ ( 379 ) $ ( 355 )

Accrued Investment Income

At June 30, 2024 and December 31, 2023, accrued investment income totaled $ 316 and $ 301 , respectively.

At September 30, 2024 and December 31, 2023, accrued investment income totaled $ 300 and $ 301 , respectively.

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

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The fair value of the collateral received at the time of the transactions amounted to $ 2,700 and $ 2,380 at June 30, 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 June 30, 2024 and December 31, 2023.

The fair value of the collateral received at the time of the transactions amounted to $ 2,538 and $ 2,380 at September 30, 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 September 30, 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 June 30, 2024 and December 31, 2023, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $ 2,269 and $ 2,255 , respectively, of United States Government securities for $ 261 and $ 99 , respectively, and of residential mortgage-backed securities for $ 170 and $ 26 , respectively.

At September 30, 2024 and December 31, 2023, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $ 2,320 and $ 2,255 , respectively, United States Government securities for $ 218 and $ 99 , respectively, and residential mortgage-backed securities for $ 0 and $ 26 , respectively.

Derivative Financial Instruments

We use derivative financial instruments to manage interest rate and foreign exchange risk and credit exposure.

We primarily invest in the following types of derivative financial instruments:

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

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

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $ 205 and $ 211 at June 30, 2024 and December 31, 2023, respectively.

During the three and six months ended months ended June 30, 2024 , we recognized net gains of $ 2 and net gains of $ 7 , respectively, on non-hedging derivatives.

During the three and six months ended June 30, 2023 , we recognized net gains of $ 7 and net losses of $ 15 on non-hedging derivatives, respectively.

The unrecognized loss for all expired and terminated cash flow hedges included in “Accumulated other comprehensive loss”, was $ 203 and $ 211 at September 30, 2024 and December 31, 2023, respectively.

During the three and nine months ended months ended September 30, 2024 , we recognized net gains of $ 1 and $ 8 , respectively, on non-hedging derivatives.

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

In connection with our equity investment in Mosaic Health (see Note 5, “Investments”), we entered into a limited partnership and related agreements with the majority owners that provides for certain rights and obligations of each party, including certain put, call, and purchase price true-up options.

These options, if exercised, will result in our purchase of the units held by the majority owners as early as 2028 but no later than 2030 at a price based on certain multiples of revenue and earnings of Mosaic Health businesses, subject to various adjustments and qualifications.

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

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

The net put option’s preliminary estimated fair value liability of $ 1,330 , which is a non-cash item measured at the date of our initial investment, is included under the caption “Other noncurrent liabilities” in our consolidated balance sheet as of September 30, 2024.

We have elected to not mark the net put option to market, and the value of the net put option will remain on our balance sheet until it is exercised or expires.

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.

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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 June 30, 2024 and December 31, 2023 is as follows:

For a description of the methods and assumptions that are used to estimate and determine the fair value hierarchy classification for each class of financial instruments, 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 September 30, 2024 and December 31, 2023 is as follows:

Level I Level II Level III Total

June 30, 2024

September 30, 2024

Cash equivalents $ 2,680 $ — $ — $ 2,680

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Percentage of total assets at fair value 10 % 87 % 3 % 100 %

6 % 92 % 2 % 100 %

Derivatives - other liabilities $ — $ ( 26 ) $ — $ ( 26 )

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Percentage of total assets at fair value 7 % 91 % 2 % 100 %

7 % 91 % 2 % 100 %

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

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

There were no individually material transfers into or out of Level III during the three and six months ended June 30, 2024 or 2023.

There were no adjustments to quoted market prices obtained from the pricing services during the three and six months ended June 30, 2024 or 2023.

There were no individually material transfers into or out of Level III during the three and nine months ended September 30, 2024 or 2023.

There were no adjustments to quoted market prices obtained from the pricing services during the three and nine months ended September 30, 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 Paragon in the first quarter of 2024 and the acquisition of BioPlus in the first quarter of 2023.

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

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

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 and six months ended June 30, 2024 or 2023.

In 2024, we entered into a limited partnership and related agreements which included certain put and call options on our minority interest ownership of Mosaic Health.

Also, in 2023, we entered into a limited liability company agreement which included certain put and call options on our minority interest ownership of Project Freedom Holdings, LLC, which is the ultimate parent of Liberty Dental Plan Corporation (“Liberty Dental”).

The resulting net put option liabilities were recorded at their fair value measured at the date of acquisition using Level III inputs based on a Monte Carlo simulation, which relies on assumptions including cash flow projections, risk-free rates, volatility and details specific to the options.

We have elected to not mark the net put option to market, and the value of the net put option will remain on our balance sheet until it is exercised or expires.

Other than the assets acquired and liabilities assumed in our acquisitions of Paragon and BioPlus and the net put options on Mosaic Health and Liberty Dental, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 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.

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 June 30, 2024 and December 31, 2023 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 for each class of financial instruments that are recorded at their carrying value in our consolidated balance sheets.

A summary of the estimated fair values by level for each class of financial instruments that are recorded at their carrying value on our consolidated balance sheets at September 30, 2024 and December 31, 2023 is as follows:

Value Estimated Fair Value

Level I Level II Level III Total

June 30, 2024

September 30, 2024

Other invested assets $ 8,041 $ — $ — $ 8,024 $ 8,024

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Notes 24,895 — 23,569 — 23,569

During the three months ended June 30, 2024 and 2023, we recognized income tax expense of $ 685 an d $ 585 , respectively, which represent effective income tax rates of 22.9 % and 24.0 %, respectively.

During the six months ended June 30, 2024 and 2023 , we recognized income tax expense of $ 1,375 an d $ 1,200 , respectively, which represent effective income tax rates of 23.2 % and 23.7 %, respectively.

The decrease in our effective income tax rate from the three and six months ended June 30, 2023 is primarily due to the favorable resolution of an uncertain tax benefit and the impact of certain investment credits.

Income taxes receivable totaled $ 369 and $ 543 at June 30, 2024 and December 31, 2023, respectively.

During the three months ended September 30, 2024 and 2023, we recognized income tax expense of $ 365 an d $ 354 , respectively, which represent effective income tax rates of 26.6 % and 21.4 %, respectively.

During the nine months ended September 30, 2024 and 2023 , we recognized income tax expense of $ 1,740 an d $ 1,554 , respectively, which represent effective income tax rates of 23.8 % and 23.1 %, respectively.

The increase in our effective income tax rate from the three and nine months ended September 30, 2023 was primarily due to an increase in reserves for uncertain tax positions.

Income taxes receivable totaled $ 312 and $ 543 at September 30, 2024 and December 31, 2023, respectively.

We recognize income taxes 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 six months ended June 30, 2024 and 2023 is as follows:

A reconciliation of the beginning and ending balances for medical claims payable for the nine months ended September 30, 2024 and 2023 is as follows:

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

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Gross medical claims payable, end of period $ 15,185 $ 15,917

At June 30, 2024, the total of net incurred but not reported liabilities plus expected development on reported claims was $ 452 , $ 2,349 and $ 12,254 for the claim years 2022 and prior, 2023 and 2024, respectively.

The favorable development recognized in the six months ended June 30, 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 six months ended June 30, 2023 resulted primarily from trend factors in late 2022 developing more favorably than expected.

At September 30, 2024, the total of net incurred but not reported liabilities plus expected development on reported claims was $ 285 , $ 1,396 and $ 13,495 for the claim years 2022 and prior, 2023 and 2024, respectively.

The favorable development recognized in the nine months ended September 30, 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 nine months ended September 30, 2023 resulted primarily from trend factors in late 2022 developing more favorably than expected.

Favorable development in the completion factors resulting from the latter part of 2022 developing faster than expected also contributed.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for the six months ended June 30, 2024 and 2023 is as follows:

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for the nine months ended September 30, 2024 and 2023 is as follows:

Total net incurred medical claims $ 91,105 $ 89,716

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Benefit expense $ 94,067 $ 92,996

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 June 30, 2024 is as follows:

Net medical claims payable, end of period $ 15,176

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

At June 30, 2024 and December 31, 2023, we had $ 27,436 and $ 24,870 , respectively, outstanding under these notes.

At September 30, 2024 and December 31, 2023, we had $ 26,763 and $ 24,870 , respectively, outstanding under these notes.

On May 30, 2024, we issued $ 600 aggregate principal amount of 5.150 % Notes due 2029 (the “2029 Notes”), $ 1,000 aggregate principal amount of 5.375 % Notes due 2034 (the “2034 Notes”) and $ 1,000 aggregate principal amount of 5.650 % Notes due 2054 (the “2054 Notes”, and, together with the 2029 Notes and the 2034 Notes, the “Notes”) under our shelf registration statement.

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

We have an unsecured surplus note with an outstanding principal balance of $ 25 at both June 30, 2024 and December 31, 2023.

On August 15, 2024, we repaid, at maturity, the $ 800 outstanding balance of our 3.500 % senior unsecured notes.

We have an unsecured surplus note with an outstanding principal balance of $ 25 at both September 30, 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 June 30, 2024, our debt-to-capital ratio, as defined and calculated under the 5 -Year Facility, was 39.6 %.

As of September 30, 2024, our debt-to-capital ratio, as defined and calculated under the 5 -Year Facility, was 38.2 %.

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

As of June 30, 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 six months ended June 30, 2024 or the year ended December 31, 2023.

As of September 30, 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 nine months ended September 30, 2024 or during the twelve months 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.

We had $ 0 outstanding under this program at both June 30, 2024 and December 31, 2023.

We have classified 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.

We had no amounts outstanding under this program at both September 30, 2024 and December 31, 2023.

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 $ 225 of outstanding short-term borrowings from the FHLBs at each of June 30, 2024 and December 31, 2023.

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

We had $ 360 and $ 225 of outstanding short-term borrowings from the FHLBs at September 30, 2024 and December 31, 2023, respectively.

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

Commitments and Contingencies

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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:

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.

(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.

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.

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

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

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

In April 2018, the Court issued an order on the parties’ cross motions for partial summary judgment, determining that the defendants’ aggregation of geographic market allocations and output restrictions are to be analyzed under a per se standard of review, and the BlueCard ® program and other alleged Section 1 Sherman Act violations are to be analyzed under the rule of reason standard of review.

With respect to whether the defendants operate as a single entity with regard to the enforcement of the Blue Cross Blue Shield trademarks, the Court found that summary judgment was not appropriate due to the existence of genuine issues of material fact.

In April 2019, the plaintiffs filed motions for class certification, which defendants opposed.

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

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In June 2024, the Supreme Court declined to grant certiorari, exhausting all appellate rights.

The Subscriber Settlement Agreement became effective on June 24, 2024, and the defendants’ payment and non-monetary obligations under the Subscriber Settlement Agreement and the funds held in escrow will be distributed in accordance with the Subscriber Settlement Agreement.

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

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

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

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

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

American Express Co .

does not affect the standard of review in this case.

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

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

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;

however, its ultimate outcome cannot be presently determined.

The Subscriber Settlement Agreement and the defendants' payment and non-monetary obligations under the Subscriber Settlement Agreement became effective in June 2024, with the request for second Blue plan bid provisions effective in September 2024.

The funds held in escrow will be distributed in accordance with the Subscriber Settlement Agreement.

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

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however, their ultimate outcome cannot be presently determined.

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

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

In response to that order, the parties filed renewed standard of review motions, and in June 2021, the parties filed summary judgment motions not critically dependent on class certification.

American Express Co .

does not affect the standard of review in this case.

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

In the third quarter of 2024, the BCBSA, along with the individually named Blue plans approved a settlement agreement and release (the “Provider Settlement Agreement”) with the provider plaintiffs, and in October 2024 the provider plaintiffs filed a motion for preliminary approval with the Court.

If approved by the Court, the Provider Settlement Agreement will require the defendants to make a monetary settlement payment, our portion of which is estimated to be $ 666 , and will contain certain non-monetary terms including (i) expansion of certain opportunities to contract with providers in contiguous service areas, (ii) certain prompt pay commitments, and (iii) various technological enhancements to the BlueCard program.

We recognized our estimated payment obligation under the Provider Settlement Agreement of $ 666 in September 2024.

We recognized this estimated payment obligation as operating expense in the Corporate & Other segment (see Note 15, “Segment Information”).

Express Scripts, Inc.

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

breached the ESI Agreement;

(iii) has breached the ESI Agreement;

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

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

Mediation ordered by the Second Circuit occurred in March 2024 and was unsuccessful.

We submitted our appellant brief in April 2024.

Briefing must be complete by August 2024.

Briefing was completed in August 2024, and oral arguments before the Second Circuit are scheduled for October 2024.

The ultimate outcome of this appeal cannot be presently determined.

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

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

in the District Court in a case captioned United States v.

The DOJ’s suit alleges, among other things, that we falsely certified the accuracy of the diagnosis data we submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes.

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

In September 2020, we filed a motion to transfer the lawsuit to the Southern District of Ohio, a motion to dismiss part of the lawsuit, and a motion to strike certain allegations in the amended complaint, all of which the New York District Court denied in October 2022.

In November 2022, we filed an answer.

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

Fact discovery is ongoing, and the New York District Court will address deadlines to complete discovery at the next case management conference in July 2024.

Fact discovery is ongoing.

In July 2024, the District Court issued a scheduling order setting the deadlines for the completion of fact discovery in February 2025 and October 2025 for the completion of expert discovery.

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

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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.

Our remaining commitment under this agreement at June 30, 2024 is approximately $ 356 .

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

In September 2024, we extended our agreement with a vendor for information technology infrastructure and related management and support services through June 2029.

Our remaining commitment under this agreement at September 30, 2024 is approximately $ 2,107 .

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

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

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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 six months ended June 30, 2024 and 2023 is as follows:

A summary of our cash dividend activity for the nine months ended September 30, 2024 and 2023 is as follows:

Declaration Date Record Date Payment Date Cash

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

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

April 16, 2024 June 10, 2024 June 25, 2024 $ 1.63 $ 378

Six Months Ended June 30, 2023

July 16, 2024 September 10, 2024 September 25, 2024 $ 1.63 $ 378

Nine Months Ended September 30, 2023

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

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

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

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

On October 15, 2024, our Audit Committee declared a fourth quarter 2024 dividend to shareholders of $ 1.63 per share, payable on December 20, 2024 to shareholders of record at the close of business on December 5, 2024.

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

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

On October 15, 2024, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized an $ 8,000 increase to the common stock repurchase program.

As of October 15, 2024, $ 11,111 was available for repurchase under the program.

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

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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 six months ended June 30, 2024 and 2023 is as follows:

Six Months Ended June 30

A summary of common stock repurchases for the nine months ended September 30, 2024 and 2023 is as follows:

Nine Months Ended September 30

Shares repurchased 2.1 3.8

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Stock Incentive Plan s

A summary of stock option activity for the six months ended June 30, 2024 is as follows:

A summary of stock option activity for the nine months ended September 30, 2024 is as follows:

Shares Weighted-

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Forfeited or expired ( 0.1 ) 452.26

Outstanding at June 30, 2024 3.0 359.56 6.18 $ 554

Exercisable at June 30, 2024 2.0 298.49 4.95 $ 492

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the six months ended June 30, 2024 is as follows:

Outstanding at September 30, 2024 2.9 361.50 5.91 $ 462

Exercisable at September 30, 2024 1.9 299.01 4.70 $ 424

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the nine months ended September 30, 2024 is as follows:

and Units Weighted-

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Forfeited ( 0.1 ) 475.21

Nonvested at June 30, 2024 1.1 476.95

During the six months ended June 30, 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.

Nonvested at September 30, 2024 1.0 478.61

During the nine months ended September 30, 2024, we granted approximately 0.2 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.

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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 six months ended June 30, 2024 and 2023:

Six Months Ended June 30

The following weighted-average assumptions were used to estimate the fair values of options granted during the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30

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 six months ended June 30, 2024 and 2023:

Six Months Ended June 30

The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30

Options granted during the period $ 134.65 $ 127.08

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Accumulated Other Comprehensive (Loss) Income

A reconciliation of the components of accumulated other comprehensive (loss) income at June 30, 2024 and 2023 is as follows:

A reconciliation of the components of accumulated other comprehensive (loss) income at September 30, 2024 and 2023 is as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

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Beginning of period balance ( 3 ) ( 6 ) ( 3 ) ( 3 )

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

— ( 1 ) — ( 3 )

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

End of period balance ( 3 ) ( 4 ) ( 3 ) ( 4 )

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Beginning of period balance ( 23 ) ( 15 ) ( 18 ) ( 17 )

Other comprehensive income (loss), net of tax expense of $ 0 , $( 5 ), $ 0 and $( 3 ), respectively

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

7 ( 4 ) 2 ( 2 )

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Total beginning of period accumulated other comprehensive loss ( 1,387 ) ( 2,166 ) ( 1,313 ) ( 2,490 )

Total other comprehensive (loss) income, net of tax benefit (expense) of $ 7 , $ 32 , $ 22 , and $( 72 ), respectively

Total other comprehensive (loss) income, net of tax expense of $( 281 ), $ 109 , $( 259 ), and $ 37 , respectively

898 ( 348 ) 824 ( 22 )

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Shareholders' Earnings per Share

The denominator for basic and diluted shareholders' earnings per share for the three and six months ended June 30, 2024 and 2023 is as follows:

The denominator for basic and diluted shareholders' earnings per share for the three and nine months ended September 30, 2024 and 2023 is as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

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233.1 236.5 233.6 238.0

During the three months ended June 30, 2024 and 2023, weighted-average shares related to certain stock options of 0.5 and 1.0 respectively, were excluded from the denominator for diluted shareholders' earnings per share because the stock options were anti-dilutive.

During the six months ended June 30, 2024 and 2023, weighted-average shares related to certain stock options of 0.6 and 0.7 , respectively, were excluded from each of the denominators for diluted earnings per share because the stock options were anti-dilutive.

During the three and six months ended June 30, 2024, we issued approximately 0.0 and 0.6 restricted stock units under our stock incentive plans, 0.0 and 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three-year period of 2024 through 2026.

During the three and six months ended months ended June 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 months ended September 30, 2024 and 2023, weighted-average shares related to certain stock options of 0.5 and 0.9 respectively, were excluded from the denominator for diluted shareholders' earnings per share because the stock options were anti-dilutive.

During the nine months ended September 30, 2024 and 2023, weighted-average shares related to certain stock options of 0.5 and 0.8 , 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, 2024, 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 2024 through 2026.

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.

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.

21 unchanged sentences

These affiliated revenues are eliminated in consolidation.

Financial data by reportable segment for the three and six months ended June 30, 2024 and 2023 is as follows:

Financial data by reportable segment for the three and nine months ended September 30, 2024 and 2023 is as follows:

Benefits CarelonRx Carelon

1 unchanged sentence

& Other Eliminations Total

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Premiums $ 36,448 $ — $ 680 $ 680 $ — $ ( 319 ) $ 36,809

6 unchanged sentences

Depreciation and amortization of property and equipment — — — — 231 — 231

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Premiums $ 34,934 $ — $ 422 $ 422 $ — $ ( 97 ) $ 35,259

9 unchanged sentences

& Other Eliminations Total

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Premiums $ 106,926 $ — $ 1,882 $ 1,882 $ — $ ( 887 ) $ 107,921

6 unchanged sentences

Depreciation and amortization of property and equipment — — — — 687 — 687

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Premiums $ 106,701 $ — $ 1,261 $ 1,261 $ — $ ( 246 ) $ 107,716

8 unchanged sentences

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 six months ended June 30, 2024 and 2023 is as follows:

therefore, eliminations also include adjustments for affiliated and unaffiliated capitated risk arrangements that are recognized on a net basis under GAAP, as well as other 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, 2024 and 2023 is as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

2 unchanged sentences

Net losses on financial instruments ( 125 ) ( 124 ) ( 371 ) ( 358 )

Gain on sale of business

(Loss) gain on sale of business

( 39 ) — 201 —

Total revenues $ 45,106 $ 42,849 $ 131,569 $ 128,693

A reconciliation of income before income tax expense to reportable segments’ operating gain included in our consolidated statements of income for the three and six months ended June 30, 2024 and 2023 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 and nine months ended September 30, 2024 and 2023 is as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

2 unchanged sentences

Net losses on financial instruments 125 124 371 358

Gain on sale of business

Loss (gain) on sale of business

39 — ( 201 ) —

3 unchanged sentences

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