What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-21 compared with 2025-07-17 · 170 added, 162 removed, 333 unchanged (50% of the section changed)

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References to the “states” include the District of Columbia and Puerto Rico, unless the context otherwise requires.

Results of operations, cost of care trends, investment yields and other measures for the three and six months ended June 30, 2025 are not necessarily indicative of the results and trends that may be expected for the full year ending December 31, 2025, or any other period.

Results of operations, cost of care trends, investment yields and other measures for the three and nine months ended September 30, 2025 are not necessarily indicative of the results and trends that may be expected for the full year ending December 31, 2025, or any other period.

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 approximately 45.6 million medical members through our affiliated health plans as of June 30, 2025.

We are one of the largest health insurers in the United States in terms of medical membership, serving approximately 45.4 million medical members through our affiliated health plans as of September 30, 2025.

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

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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 through our CarelonRx business, and other healthcare related services as Carelon Insights and Carelon Health.

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

Our portfolio consists of the following core go-to-market brands:

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There are many drivers of medical cost trends that can cause variance from our estimates, such as changes in the level and mix of services utilized, regulatory changes, aging of the population, health status and other demographic characteristics of our members, epidemics, pandemics, advances in medical technology, new high-cost prescription drugs, new indications of existing prescription drugs, provider contracting inflation, labor costs and healthcare fraud, waste and abuse.

Membership shifts from Medicaid into our Individual ACA business following the redetermination process that began in April 2023, together with lower membership effectuation rates, particularly in geographies with high concentrations of highly subsidized members, have driven a market-wide increase in morbidity, resulting in elevated medical cost trends.

The increase in Medicaid cost trend has decelerated, but at a more modest pace than anticipated, due to higher member acuity and an increase in utilization.

Membership shifts from Medicaid into our Individual ACA (as defined below) business following the redetermination process that began in April 2023, together with lower membership effectuation rates, particularly in geographies with high concentrations of highly subsidized members, have driven a market-wide increase in morbidity, resulting in elevated medical cost trends.

Medicaid cost trends remain elevated due to higher population acuity and increased utilization of services.

In response, we are working on program improvements in partnership with the states, strengthening care management, and optimizing our clinical strategy to improve effectiveness and lower costs.

Pricing Trends:

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We have expanded into select service areas in Florida, Maryland, and Texas in 2025, using our Simply Healthcare and Wellpoint brands.

Changes to our business environment are likely to continue as elected officials at the national and state levels continue to enact significant modifications to existing laws and regulations, including changes to available Public Exchange premium subsidies and insurer taxes and fees.

Going forward, we expect the Public Exchange to be influenced by policy and regulatory changes, particularly around federal subsidies, compliance requirements, and market stability.

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

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Regulatory Trends and Uncertainties

The budget reconciliation legislation of 2025, One Big Beautiful Bill Act (the “OBBBA”), was signed into law on July 4, 2025.

The OBBBA contains a variety of provisions that could impact our business and results of operations including:

changes to Medicaid renewal and eligibility rules, including more frequent redeterminations for beneficiaries receiving coverage through the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and a requirement for adults made eligible under the ACA, to meet work or community engagement standards;

The federal budget reconciliation legislation, known as the One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025.

The OBBBA contains a variety of provisions that could impact our business and operations including:

changes to Medicaid renewal and eligibility rules, such as more frequent redeterminations for beneficiaries receiving coverage through the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended, (collectively, the “ACA”), and a requirement for certain adults made eligible under the ACA, to meet work or community engagement standards;

changes to federal requirements regarding Medicaid state directed payments and provider taxes, including taxes on managed care organizations;

delays in the implementation of Medicaid final regulations on certain eligibility and enrollment provisions;

applies cost sharing to certain services for adults made eligible under the ACA’s Medicaid expansion;

reduces the allowable home equity asset threshold for members seeking eligibility for Medicaid long term care services;

grants to the U.S.

Department of Health and Human Services (“HHS”) the authority to approve certain state home and community-based services waivers;

eliminates the repayment limit for excess advanced premium tax credits under the ACA;

modifies rules regarding HSA-eligible plans under the ACA and makes permanent the safe harbor first established under the Coronavirus Aid, Relief, and Economic Security Act, allowing pre-deductible coverage of telehealth services for HSA high-deductible health plans;

and establishes a new rural health transformation program, among other provisions.

Additional federal and state guidance is expected to be issued in order to implement these OBBBA provisions, most of which have effective dates in 2027 and 2028.

In addition, in June 2025, CMS finalized the Marketplace Integrity and Affordability Regulation which modifies the ACA exchange open enrollment periods and eligibility for premium tax credits among other requirements.

In September 2024, the HH S, the U.S Department of Labor, and the U.S Department of the Treasury (collectively, the “Tri-Agencies”) issued final regulations related to mental health parity that will require health plans to make administrative and operational changes to comply with these final regulations.

application of cost sharing to certain services for adults made eligible under the ACA’s Medicaid expansion;

reduction of the allowable home equity asset threshold for members seeking eligibility for Medicaid long term care services;

authorization of the U.S.

Department of Health and Human Services (“HHS”) to approve certain state home and community-based services waivers;

elimination of the repayment limit for excess advanced premium tax credits under the ACA;

modification of the rules regarding Health Savings Account eligible plans under the ACA and a permanent extension of the safe harbor first established under the Coronavirus Aid, Relief, and Economic Security Act, allowing pre-deductible coverage of telehealth services for HSA eligible high-deductible health plans;

and establishment of a new Rural Health Transformation program, among other provisions.

Additional federal and state guidance is being issued to implement these OBBBA provisions, most of which have effective dates in 2027 and 2028, although some states may look to implement certain of these provisions in 2026.

In addition, in June 2025, the Centers for Medicare and Medicaid Services (“CMS”) finalized the Marketplace Integrity and Affordability Regulation which modifies the ACA exchange open enrollment period beginning in plan year 2027 and eligibility for premium tax credits among other requirements.

In September 2025, a federal court delayed the effective dates for several provisions of the Marketplace Integrity and Affordability Regulation pending the resolution of ongoing litigation challenging the legality of those provisions.

Also, in September 2025, CMS issued guidance modifying eligibility requirements for ACA catastrophic plans.

In September 2024, the HH S, the U.S.

Department of Labor, and the U.S Department of the Treasury (collectively, the “Tri-Agencies”) issued final regulations related to mental health parity that will require health plans to make administrative and operational changes to comply with these final regulations.

While some provisions became effective on January 1, 2025, additional guidance from the Tri-Agencies will be necessary to assess the full impact of these regulations on our operations and financial results.

Litigation has been filed challenging these final regulations.

Litigation has been filed by third parties challenging these final regulations.

The Consolidated Appropriations Act of 2023 decoupled Medicaid eligibility redeterminations from the COVID-19 Public Health Emergency initially declared in January 2020.

As a result, states were permitted to begin removing ineligible beneficiaries from their Medicaid programs starting April 1, 2023, and the majority of our Medicaid markets began doing so as of June 30, 2023.

Although most states have completed this process, the Centers for Medicare and Medicaid Services (“CMS”) has provided that states have until December 31, 2025 to complete these eligibility redeterminations.

The Inflation Reduction Act of 2022 contains a variety of provisions that have impacted, and continue to impact, our business including by extending the American Rescue Plan Act of 2021’s enhanced Premium Tax Credits (“PTC”) through 2025;

Although most states have completed this process, CMS has provided that states have until December 31, 2025 to complete these eligibility redeterminations.

The Inflation Reduction Act of 2022 (“IRA”) contains a variety of provisions that have impacted, and continue to impact, our business, including by extending the American Rescue Plan Act of 2021’s enhanced Premium Tax Credits (“PTC”) through 2025;

imposing a new corporate alternative minimum tax;

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We also expect further and ongoing regulatory guidance on a number of issues related to Medicare, including evolving methodology for ratings and quality bonus payments.

CMS also frequently proposes changes to its program that audits data submitted under the risk adjustment programs in ways that could increase financial recoveries from pla ns.

CMS also frequently proposes changes to its program that audits data

submitted under the risk adjustment programs in ways that could increase financial recoveries from pla ns.

For example, in May 2025, CMS announced plans to substantially increase the scale and pace of Risk Adjustment Data Validation (“RADV”) audits of Medicare Advantage plans, which could adversely affect our financial condition and results of operations.

1A, “Risk Factors” and the “Regulatory Trends and Uncertainties” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K.

For additional discussion regarding regulatory trends and uncertainties, and risk factors that could cause actual results to differ materially from those contained in forward-looking statements, see Part I, Item 1, “Business – Regulation,” Part I, Item 1A, “Risk Factors” and the “Regulatory Trends and Uncertainties” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K.

Other Significant Items

Business and Operational Matters

In the third quarter of 2023, based on a strategic review of our operations, assets and investments, management implemented the “2023-2024 Business Efficiency Program” to enhance operating efficiency, refine the focus of our investments and optimize our physical footprint.

The 2023-2024 Business Efficiency Program included 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 was finalized as of December 31, 2024, except as to cash outlays related to personnel-related costs associated with this program, which are expected to be paid through 2025.

For additional information, see Note 4, “Business Optimization Initiative,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Pursuant to CMS’ Medicare Advantage Star Ratings system, CMS annually awards between 1.0 and 5.0 Stars to Medicare Advantage plans based on performance in several categories.

Plans must have a Star Rating of 4.0 or higher to qualify for bonus payments.

Our 2024 Star Ratings, which are used for payment year 2025, reflect that 53% of our Medicare Advantage members were enrolled in plans rated at least 4.0 Stars or higher.

Our 2025 Star Ratings, which are used for payment year 2026, reflect that approximately 40% of our Medicare Advantage members were enrolled in plans rated at least 4.0 Stars or higher.

CMS released our 2026 Star Ratings in October 2025, which will be used to determine our Medicare Advantage bonus payments in 2027.

Our 2025 Star Ratings reflect that 38% of our Medicare Advantage members were enrolled in plans rated at least 4.0 Stars or higher.

We expect this change will result in a reduction to our 2026 operating revenue of approximately $183 million, net of offsets from contracting provisions.

Further, we expect to mitigate the financial impact to our 2026 operating gain and net income per share resulting from this change through various strategies such as contract diversification, operating expense efficiencies, capital deployment alternatives and network enhancements.

Business Acquisitions and Divestitures

Our 2026 Star Ratings reflect that approximately 55% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher.

Business Acquisitions

Investments in Joint Ventures and Completed Acquisitions

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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 Medicaid/Medicare populations.

Measurement period adjustments during the three months ended June 30, 2025 included $264 increase in indefinite-lived intangible assets, ($166) reduction in goodwill, ($157) reduction to tangible net assets acquired, and a $59 increase to finite-lived intangible assets.

On December 10, 2024, we completed our acquisition of 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 Medicaid/Medicare members receiving long-term services and support.

This acquisition aligns with Carelon Services’ 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.

Measurement period adjustments during the three months ended June 30, 2025 included a ($690) reduction to finite-lived intangible assets, a ($438) reduction to contingent consideration liability, $183 increase in goodwill and $73 decrease to tangible net assets acquired.

Measurement period adjustments during the three months ended September 30, 2025 included a $(39) reduction to goodwill, and a $39 addition to tangible net assets acquired.

On August 6, 2024, we made an equity investment of $2,580 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.

Our additional contribution of

the CMSI Assets to Mosaic Health was completed on January 1, 2025, for which we received an additional $300 of equity (approximately 5% ownership) in Mosaic Health.

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 in the three months ended June 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 divested and results of operations as of and for the three months ended March 31, 2024 were not material.

For additional information, see Note 3, “Business Acquisitions and Divestitures”, Note 5, “Investments” , and Note 6, “Derivative Financial Instruments” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Our additional contribution of the CMSI Assets to Mosaic Health was completed on January 1, 2025, for which we received an additional $300 of equity (approximately 5% ownership) in Mosaic Health.

For additional information, see Note 3, “Business Acquisitions”, Note 5, “Investments”, and Note 6, “Derivative Financial Instruments” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Litigation Matters

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Generally, the lawsuits in the BCBSA Litigation challenge elements of the licensing agreements between the BCBSA and the independently owned and operated Blue plans along with other arrangements in violation of the Sherman Antitrust Act and related state laws.

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

The BCBSA and Blue plans approved a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”), and the ultimate amount paid by the Company under the Subscriber Settlement Agreement was $604, which was primarily accrued in 2020.

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

$604, which was primarily accrued in 2020.

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 the second Blue plan bid provision effective in September 2024.

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

The BCBSA and the Blue plans have 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.

The BCBSA and the 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.

The Court granted preliminary approval of the Provider Settlement Agreement on December 4, 2024 .

A Final Fairness Hearing is scheduled for July 29, 2025.

If app roved 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.

A Final Fairness Hearing was held in July 202 5, and the Court issued a Final Approval Order for the Provider Settlement Agreement in August 2025.

The Provider Settlement Agreement requires the defendants to make a monetary settlement payment no later than September 18, 2025.

Our portion of the monetary settlement payment of $666 has been paid.

The Provider Settlement Agreement also requires that 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, be implemented on a timeline set forth in the Provider Settlement Agreement.

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

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

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Selected Operating Performance

For the twelve months ended June 30, 2025, total medical membership declined by 0.3%.

This was primarily driven by attrition in Medicaid membership, primarily as a result of eligibility redeterminations, and decreases in our Commercial Fee-Based business.

These decreases were partially offset by increases in our Medicare Advantage and Individual ACA businesses.

Operating revenue for the three months ended June 30, 2025 was $49,421, an increase of $6,198, or 14.3%, from the three months ended June 30, 2024.

Operating revenue for the six months ended June 30, 2025 was $98,186, an increase of $12,690, or 14.8%, from the six months ended June 30, 2024.

The increases for both the three and six months ended June 30, 2025 were primarily a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends,

recent acquisitions, and growth in Medicare Advantage and Individual ACA membership, partially offset by membership attrition in our Medicaid business.

Net income for the three months ended June 30, 2025 was $1,744, a decrease of $557, or 24.2%, from the three months ended June 30, 2024.

Net income for the six months ended June 30, 2025 was $3,928, a decrease of $622, or 13.7%, from the six months ended June 30, 2024.

The decreases for both the three and six months ended June 30, 2025 were primarily due to decreased operating gain within our Health Benefits segment and increased net losses on financial instruments.

These decreases were partially offset by increases in operating gain in our CarelonRx and Carelon Services businesses and decreased income tax expense.

Our fully-diluted shareholders’ earnings per share (“EPS”) was $7.72 for the three months ended June 30, 2025, which represented a 21.6% decrease from EPS of $9.85 for the three months ended June 30, 2024.

Our EPS was $17.33 for the six months ended June 30, 2025, which represented a 10.9% decrease from EPS of $19.44 for the six months ended June 30, 2024.

The decrease in EPS for both periods resulted primarily from decreased shareholders' net income, partially offset by the impact of fewer diluted shares outstanding.

Operating cash flow for the six months ended June 30, 2025 and 2024 was $3,071 and $2,425, respectively.

The increase in net cash provided by operating activities was primarily due to favorable working capital impacts, partially offset by a lower net income for the six months ended June 30, 2025.

For the twelve months ended September 30, 2025, total medical membership declined by 0.9%.

This was primarily driven by decreases in our BlueCard ® business and attrition in Medicaid membership, primarily as a result of eligibility redeterminations.

These decreases were partially offset by increases in our Medicare Advantage business.

Operating revenue for the three months ended September 30, 2025 was $50,087, an increase of $5,368, or 12.0%, from the three months ended September 30, 2024.

Operating revenue for the nine months ended September 30, 2025 was $148,273, an increase of $18,058, or 13.9%, from the nine months ended September 30, 2024.

The increases for both the three and nine months ended September 30, 2025 were primarily a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends, recent acquisitions, and growth in our Medicare Advantage business, partially offset by Medicaid membership attrition.

Net income for the three months ended September 30, 2025 was $1,187, an increase of $179, or 17.8%, from the three months ended September 30, 2024.

Net income for the nine months ended September 30, 2025 was $5,115, a decrease of $443, or 8.0%, from the nine months ended September 30, 2024.

The increase in net income for the three months ended September 30, 2025 was primarily due to decreased losses on financial instruments and decreased income tax expense.

The increase was partially offset by higher amortization of other intangible assets and higher interest expense.

The decrease in net income for the nine months ended September 30, 2025 was primarily due to decreased operating gain within our Health Benefits segment and increased net losses on financial instruments.

The decrease was partially offset by increases in operating gain in our CarelonRx and Carelon Services businesses and decreased income tax expense.

Our fully-diluted shareholders’ earnings per share (“EPS”) was $5.32 for the three months ended September 30, 2025, which represented a 22.0% increase from EPS of $4.36 for the three months ended September 30, 2024.

Our EPS was $22.67 for the nine months ended September 30, 2025, which represented a 4.8% decrease from EPS of $23.81 for the nine months ended September 30, 2024.

The increase in EPS for the three months ended September 30, 2025 resulted primarily from increased shareholders' net income and the impact of fewer diluted shares outstanding.

The decrease in EPS for the nine months ended September 30, 2025 resulted primarily from decreased shareholders' net income, partially offset by the impact of fewer diluted shares outstanding.

Operating cash flow for the nine months ended September 30, 2025 and 2024 was $4,206 and $5,102, respectively.

The decrease in net cash provided by operating activities was primarily due to the Provider Settlement Agreement payment made in September 2025 and lower net income for the nine months ended September 30, 2025.

Membership and Other Metrics

The following table presents our medical membership by customer type as of June 30, 2025 and 2024.

The following table presents our medical membership by customer type as of September 30, 2025 and 2024.

Also included below is other membership by product and other metrics.

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Medical Membership

The decrease in medical membership was primarily driven by attrition in Medicaid membership, including as a result of eligibility redeterminations, and decreases in our Commercial Fee-Based business.

These decreases were partially offset by increases in our Medicare Advantage and Individual ACA businesses.

The decrease in medical membership was primarily driven by decreases in our BlueCard ® business and attrition in Medicaid membership, including as a result of eligibility redeterminations.

These decreases were partially offset by increases in our Medicare Advantage business.

Other Membership

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Dental membership increased primarily due to favorable sales in our Employer Group business.

Dental administration membership increased primarily due to favorable in-group change with other BCBSA plans associated with FEP ® .

Dental administration membership increased primarily due to favorable in-

group change with other BCBSA plans associated with FEP ® .

Vision membership increased due to higher sales in our Employer Group, Medicare Advantage, and Individual health plans.

Consolidated Results of Operations

Our consolidated summarized results of operations and other financial information for the three and six months ended June 30, 2025 and 2024 are as follows:

Our consolidated summarized results of operations and other financial information for the three and nine months ended September 30, 2025 and 2024 are as follows:

Three Months Ended

June 30 Six Months Ended

June 30 Change

September 30 Nine Months Ended

September 30 Change

Three Months Ended

Six Months Ended June 30

Nine Months Ended September 30

2024 2025 vs.

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Net losses on financial instruments (1) (125) (596) (371) 124 99.2 % (225) (60.6) %

Gain (loss) on sale of business

— (39) — 201 39 100.0 % 201 (100.0) %

Total revenues 50,711 45,106 149,378 131,569 5,605 12.4 % 17,809 13.5 %

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Net income 1,187 1,008 5,115 5,558 179 17.8 % (443) (8.0) %

Net income attributable to noncontrolling interests (1) (1) (2) (4) — NM 2 NM

Net loss attributable to noncontrolling interests

2 8 — 4 (6) NM (4) NM

Shareholders’ net income $ 1,189 $ 1,016 $ 5,115 $ 5,562 $ 173 17.0 % $ (447) (8.0) %

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2 Benefit expense ratio represents benefit expense as a percentage of premium revenue.

Premiums for the three months ended June 30, 2025 and 2024 were $41,271 and $35,416, respectively.

Premiums for the six months ended June 30, 2025 and 2024 were $82,158 and $71,112, respectively.

Premiums for the three months ended September 30, 2025 and 2024 were $41,791 and $36,809, respectively.

Premiums for the nine months ended September 30, 2025 and 2024 were $123,949 and $107,921, respectively.

3 bp = basis point;

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4 Operating expense ratio represents operating expense as a percentage of total operating revenue.

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Total operating revenue increased primarily as a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends, recent acquisitions, and growth in our Medicare Advantage membership, partially offset by membership attrition in our Medicaid business.

Net investment income decreased primarily due to lower income from fixed maturity securities.

Net losses on financial instruments increased due to higher losses on other invested assets partially offset by lower losses from fixed maturity securities sales.

Benefit expense increased primarily due to higher medical cost trends across all lines of business within our Health Benefits segment, partially offset by a favorable out-of-period settlement from a value-based care provider.

Our benefit expense ratio increased primarily as a result of higher medical cost trend in our Medicaid business and Individual and Small Group ACA plans (“Affordable Care Act health plans”).

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

Total operating revenue increased primarily as a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends, recent acquisitions, and growth in our Medicare Advantage business, partially offset by Medicaid membership attrition.

Net investment income increased primarily due to higher income from alternative investments, partially offset by lower income from fixed maturity securities.

Net losses on financial instruments decreased due to higher income from fixed maturities and lower impairments on other invested assets.

Benefit expense increased primarily due to higher medical cost trends across all lines of business within our Health Benefits and Carelon Services segments.

Our benefit expense ratio increased primarily as a result of higher cost trend in Medicare, given pronounced Part D seasonality related to the IRA, and Commercial inclusive of Individual and Small Group ACA plans (“Affordable Care Act health plans”).

Cost of products sold reflects the cost of pharmaceuticals dispensed by CarelonRx for our unaffiliated pharmacy customers.

Cost of products sold increased as a result of higher script utilization.

Operating expense improved primarily due to disciplined cost management, partially offset by an increase in premium taxes and assessments.

Our operating expense ratio decreased primarily due to operating expense leverage associated with growth in operating revenue.

Other expense increased primarily due to higher interest expense related to our issuances of senior secured notes during the latter half of 2024.

The increase also reflects higher amortization of intangible assets acquired in our fourth quarter of 2024 acquisitions.

Our effective tax rate increased primarily due to the non-recurrence of a favorable resolution of an uncertain tax position recognized during the three months period ended June 30, 2024.

Our shareholders’ net income as a percentage of total revenues decreased in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 as a result of all factors discussed above.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Total operating revenue increased primarily as a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends, recent acquisitions, and growth in our Medicare Advantage and Individual ACA membership, partially offset by membership attrition in our Medicaid business.

Cost of products sold increased as a result of higher script volume and utilization.

Our operating expense ratio decreased primarily due to operating leverage associated with growth in operating revenue.

Other expense increased primarily due to higher interest expense related to our issuance of senior notes during the fourth quarter of 2024.

The increase also reflects higher amortization expense due to intangible assets acquired in the fourth quarter of 2024.

Our effective tax rate decreased primarily due to the impact of the certain investment credits and the non-recurrence of a prior year uncertain tax position recognized during the three months ended September 30, 2024.

Our shareholders’ net income as a percentage of total revenues increased in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 as a result of all factors discussed above.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Net investment income increased primarily due to higher income from alternative investments, partially offset by lower income from fixed maturity securities.

Net losses on financial instruments increased due to higher losses on other invested assets, partially offset by lower losses from fixed maturity securities sales.

Our benefit expense ratio increased primarily as a result of higher medical cost trend in our Medicaid and Affordable Care Act health plans.

Benefit expense increased primarily due to higher medical cost trend across all lines of business within our Health Benefits and Carelon Services segments, partially offset by a favorable out-of-period settlement from a value-based care provider.

Our benefit expense ratio increased primarily as a result of higher medical cost trend in our Medicare Advantage and Medicaid businesses and Affordable Care Act health plans.

Cost of products sold reflects the cost of pharmaceuticals dispensed by CarelonRx for our unaffiliated pharmacy customers.

Cost of products sold increased as a result of higher script utilization.

Operating expense increased primarily due to premium tax expenses, some of which were out of period.

The increase was partially offset by disciplined cost management.

Our operating expense ratio decreased primarily due to operating expense leverage associated with growth in operating revenue and ongoing cost management, partially offset by an increase in premium taxes and assessments.

Other expense increased primarily due to higher interest expense related to our issuances of senior secured notes during the latter half of 2024.

The increase also reflects higher amortization expense on the intangible assets recognized from the acquisitions we completed in the fourth quarter of 2024.

Our effective tax rate decreased primarily due to the impact of certain investment-related activities, partially offset by the non-recurrence of a favorable resolution of an uncertain tax position recognized during the six months ended June 30, 2024.

Our shareholders’ net income as a percentage of total revenues decreased in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 as a result of all factors discussed above.

Cost of products sold increased as a result of higher script volume and utilization.

Operating expense increased primarily due to increases in premium tax expenses and assessments, partially offset by disciplined cost management.

Our operating expense ratio decreased primarily due to operating leverage associated with growth in operating revenue, partially offset by increases in premium tax expenses and assessments.

Other expense increased primarily due to higher interest expense related to our issuance of senior notes during the fourth quarter of 2024.

The increase also reflects higher amortization expense due to intangible assets acquired in the fourth quarter of 2024.

Our effective tax rate decreased primarily due to the impact of certain investment credits.

Our shareholders’ net income as a percentage of total revenues decreased in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 as a result of all factors discussed above.

Reportable Segments Results of Operations

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For additional information, see Note 15, “Segment Information,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The following table presents a summary of the reportable segment financial information for the three and six months ended June 30, 2025 and 2024:

Six Months Ended

The following table presents a summary of the reportable segment financial information for the three and nine months ended September 30, 2025 and 2024:

Nine Months Ended

Three Months Ended

June 30 Three Months Ended

Six Months Ended

September 30 Three Months Ended

Nine Months Ended

2024 Change 2025 vs.

2025 2024 2025 2024 $ % $ %

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Health Benefits $ 42,246 $ 38,278 $ 125,259 $ 112,695 $ 3,968 10.4 % $ 12,564 11.1 %

10,643 8,774 20,759 16,841 1,869 21.3 % 3,918 23.3 %

CarelonRx 10,997 9,143 31,756 25,984 1,854 20.3 % 5,772 22.2 %

Carelon Services 7,324 4,638 21,301 13,192 2,686 57.9 % 8,109 61.5 %

7,441 4,545 13,977 8,554 2,896 63.7 % 5,423 63.4 %

Corporate & Other 149 74 546 323 75 101.4 % 223 69.0 %

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Carelon Services 3.0 % 4.0 % 5.2 % 5.2 % (100) bp 0 bp

Total operating margin

4.9 % 6.4 % 5.7 % 6.8 % (150) bp (110) bp

Total operating margin 2.6 % 3.1 % 4.6 % 5.5 % (50) bp (90) bp

bp = basis point;

one hundred basis points = 1%.

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

The following table summarizes the operating revenues for our Commercial, Medicare, Medicaid and FEP ® lines of business within our Health Benefits segment for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended

September 30 Nine Months Ended

Three Months Ended

Nine Months Ended

2024 Change 2025 vs.

2025 2024 2025 2024 $ % $ %

Health Benefits Operating Revenue

$ 12,849 $ 11,639 $ 37,654 $ 34,965 $ 1,210 10.4 % $ 2,689 7.7 %

11,138 9,385 33,990 27,741 1,753 18.7 % 6,249 22.5 %

14,166 13,063 42,120 39,182 1,103 8.4 % 2,938 7.5 %

4,093 4,191 11,495 10,807 (98) (2.3) % 688 6.4 %

Total operating revenue $ 42,246 $ 38,278 $ 125,259 $ 112,695 $ 3,968 10.4 % $ 12,564 11.1 %

1 Operating revenue within our Commercial line of business related to our Individual ACA plans was $2,358 and $2,082 for the three months ended September 30, 2025 and 2024, respectively, and $7,047 and $6,178 for the nine months ended September 30, 2025 and 2024, respectively.

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

Health Benefits

Operating revenue increased primarily as a result of higher premium yields driven by premium rate increases in all of our lines of business in recognition of medical cost trends, recently closed acquisitions and growth in our Medicare Advantage membership, partially offset by lower Medicaid membership.

Operating gain decreased primarily as a result of Medicaid and Affordable Care Act health plan rates being inadequate to cover medical cost trends, partially offset by a favorable out-of-period settlement from a value-based care provider.

Operating revenue increased primarily as a result of higher premium yields driven by premium rate increases in all of our lines of business in recognition of medical cost trends, recent acquisitions and growth in our Medicare Advantage membership, partially offset by lower Medicaid membership.

Operating gain decreased primarily as a result of higher medical cost trends and increased investments to support and strengthen our workforce and accelerate technology adoption, partially offset by higher revenue.

Operating revenue increased primarily due to higher prescription volume associated with growth in pharmacy membership and revenue related to recent acquisitions.

The increase in operating gain was primarily driven by the growth of product revenue, partially offset by expenses associated with the launch of additional services by CarelonRx.

The decrease in operating gain was primarily driven by expenses associated with the expansion of dispensing services provided by CarelonRx.

Carelon Services

Operating revenue increased primarily due to the acquisition of CareBridge in December 2024 and the continued expansion of risk-based capabilities in our specialty care solutions and behavioral health services.

The increase in operating gain was primarily driven by improved performance in our post-acute care, specialty care solutions and behavioral health services, as well as the acquisition of CareBridge.

The increase in operating gain was primarily driven by the acquisition of CareBridge.

Corporate & Other

Operating revenue increased primarily due to higher affiliated revenues.

Operating loss decreased primarily due to operating expense leverage.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Operating revenue increased primarily due to higher affiliate revenues.

Operating loss decreased primarily due to a non-recurring accrual recorded during the three months ended September 30, 2024 for the Provider Settlement Agreement associated with the BCBSA Litigation and lower business optimization charges in the three months ended September 30, 2025.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Health Benefits

Operating revenue increased primarily as a result of higher premium yields driven by premium rate increases in all of our lines of business in recognition of medical cost trends, growth in our Medicare Advantage membership and recently closed acquisitions, partially offset by lower Medicaid membership.

Operating gain decreased primarily as a result of Affordable Care Act health plans and Medicaid rates being inadequate to cover medical cost trends, partially offset by a favorable out-of-period settlement from a value-based care provider.

Operating gain decreased primarily as a result of rates for Affordable Care Act health plans and Medicaid being inadequate to cover medical cost trends and increased investments to support and strengthen our workforce and accelerate technology adoption .

Operating revenue increased primarily due to higher prescription volume associated with growth in pharmacy membership and revenue related to recent acquisitions.

The increase in operating gain was primarily driven by the growth of product revenue, partially offset by expenses associated with the launch of additional services by CarelonRx.

The increase in operating gain was primarily driven by the growth in product revenue, partially offset by expenses associated with the expansion of dispensing and specialty services provided by CarelonRx.

Carelon Services

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Corporate & Other

Operating revenue increased primarily due to higher affiliated revenues.

Operating loss increased primarily due to an increase in unallocated corporate expenses.

Operating revenue increased primarily due to higher affiliate revenues.

Operating loss decreased primarily due to a non-recurring accrual recorded during the nine months ended September 30, 2024 for the Provider Settlement Agreement associated with the BCBSA Litigation and lower business optimization charges in the nine months ended September 30, 2024.

Critical Accounting Policies and Estimates

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We consider our most important accounting policies that require significant estimates and management judgment to be those policies with respect to liabilities for medical claims payable, goodwill and other intangible assets and investments.

Our accounting policies related to these items are discussed in our 2024 Annual Report on Form 10-K in Note 2, “Basis of Presentation and Significant Accounting Policies,” to our audited consolidated financial statements as of and for the year ended December 31, 2024, as well as in the “Critical Accounting Policies and Estimates” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of June 30, 2025, our critical accounting policies and estimates have not changed from those described in our 2024 Annual Report on Form 10-K.

Our accounting policies related to these items are discussed in our 2024 Annual Report on Form 10-K in Note 2, “Basis of Presentation and Significant Accounting Policies,” to our audited consolidated financial statements as of and for the year ended December 31, 2024, as well as in the “Critical Accounting Policies and Estimates” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of September 30, 2025, our critical accounting policies and estimates have not changed from those described in our 2024 Annual Report on Form 10-K.

We continually evaluate the accounting policies and estimates used to prepare the consolidated financial statements.

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Our accounting policies related to medical claims payable are discussed in the references cited above.

As of June 30, 2025, our critical accounting policies and estimates related to medical claims payable have not changed from those described in our 2024 Annual Report on Form 10-K.

For a reconciliation of the beginning and ending balance for medical claims payable for the six months ended June 30, 2025 and 2024, see Note 9, “Medical Claims Payable,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The following table provides a summary of the two key assumptions having the most significant impact on our incurred but not paid liability estimates for the six months ended June 30, 2025 and 2024, which are the trend and completion factors.

As of September 30, 2025, our critical accounting policies and estimates related to medical claims payable have not changed from those described in our 2024 Annual Report on Form 10-K.

For a reconciliation of the beginning and ending balance for medical claims payable for the nine months ended September 30, 2025 and 2024, see Note 9, “Medical Claims Payable,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The following table provides a summary of the two key assumptions having the most significant impact on our incurred but not paid liability estimates for the nine months ended September 30, 2025 and 2024, which are the trend and completion factors.

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

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Changes in Key Assumptions

Six Months Ended

Nine Months Ended

Assumed trend factors $ 1,035 $ 664

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Total $ 1,266 $ 1,610

The favorable development recognized in the six months ended June 30, 2025 resulted from trend factors in late 2024 developing more favorably than originally expected as well as a smaller contribution from faster than expected development of completion factors from the latter part of 2024.

The favorable development recognized in the six months ended June 30, 2024 resulted from favorable development in the completion factors resulting from the latter part of 2023 developing faster than expected as well as trend factors in late 2023 developing more favorably than originally expected.

The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 80.3% and 79.8% for the six months ended June 30, 2025 and 2024, respectively.

This ratio serves as an indicator of claims processing speed whereby speed for claims payments was slightly faster during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The favorable development recognized in the nine months ended September 30, 2025 resulted from trend factors in late 2024 developing more favorably than originally expected as well as a smaller contribution from faster than expected development of completion factors from the latter part of 2024.

The favorable development recognized in the nine months ended September 30, 2024 resulted from favorable development in the completion factors resulting from the latter part of 2023 developing faster than expected as well as trend factors in late 2023 developing more favorably than originally expected.

The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 86.3% and 85.4% for the nine months ended September 30, 2025 and 2024, respectively.

This ratio serves as an indicator of claims processing speed whereby speed for claims payments was slightly faster during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

We calculate the percentage of prior year redundancies in the current period as a percent of prior year net medical claims payable less prior year redundancies in the current period in order to demonstrate the development of prior year reserves.

For the six months ended June 30, 2025, this metric was 7.3%, which was mainly driven by favorable trend factor development at the end of 2024, with favorable completion factor development from 2024 also contributing.

For the six months ended June 30, 2024, this metric was 10.2%, driven by both favorable completion factor development from 2023 and favorable trend factor development at the end of 2023.

For the nine months ended September 30, 2025, this metric was 8.9%, which was mainly driven by favorable trend factor development at the end of 2024, with favorable completion factor development from 2024 also contributing.

For the nine months ended September 30, 2024, this metric was 11.3%, driven by both favorable completion factor development from 2023 and favorable trend factor development at the end of 2023.

We calculate the percentage of prior year redundancies in the current period as a percent of prior year net incurred medical claims to indicate the percentage of redundancy included in the preceding year calculation of current year net incurred medical claims.

We believe this calculation supports the reasonableness of our prior year estimate of incurred medical claims and the consistency in our methodology.

For the six months ended June 30, 2025, this metric was 0.9%, which was calculated using the redundancy of $1,065.

For the six months ended June 30, 2024, the comparable metric was 1.2%, which was calculated using the redundancy of $1,473.

For the nine months ended September 30, 2025, this metric was 1.0%, which was calculated using the redundancy of $1,266.

For the nine months ended September 30, 2024, the comparable metric was 1.3%, which was calculated using the redundancy of $1,610.

We believe these metrics demonstrate an appropriate and consistent level of reserve conservatism.

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For a more detailed overview of our liquidity and capital resources management, see the “ Introduction ” section included in the “Liquidity and Capital Resources” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K.

For additional information regarding our sources and uses of capital during the three and six months ended June 30, 2025, see Note 5, “Investments,” Note 6, “Derivative Financial Instruments,” Note 10, “Debt,” and Note 12, “Capital Stock – Use of Capital – Dividends and Stock Repurchase Program, ” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

A summary of our major sources and uses of cash and cash equivalents for the six months ended June 30, 2025 and 2024 is as follows:

Six Months Ended

For additional information regarding our sources and uses of capital during the three and nine months ended September 30, 2025, see Note 5, “Investments,” Note 6, “Derivative Financial Instruments,” Note 10, “Debt,” and Note 12, “Capital Stock – Use of Capital – Dividends and Stock Repurchase Program, ” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

A summary of our major sources and uses of cash and cash equivalents for the nine months ended September 30, 2025 and 2024 is as follows:

Nine Months Ended

2025 2024 Change

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Proceeds from the sale of subsidiaries, net of cash sold — 399 (399)

Purchases of subsidiaries, net of cash acquired

Issuances of short- and long-term debt, net of repayments 659 1,915 (1,256)

Proceeds from sales, maturities, calls and redemptions of investments, net of purchases 329 — 329

Changes in securities lending payable 576 158 418

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Purchases of property and equipment (823) (934) 111

Repayments of short- and long-term debt, net of issuances (1,255) — (1,255)

Cash dividends (1,152) (1,135) (17)

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Effect of foreign exchange rates on cash and cash equivalents 1 2 (1)

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

$ 425 $ 1,360 $ (935)

The increase in net cash provided by operating activities was primarily due to favorable working capital impacts, partially offset by a lower net income for the six months ended June 30, 2025.

Other significant sources of cash year-over-year included increased proceeds from sales, maturities, calls, and redemptions of investments, net of purchases, changes in bank overdrafts, lower amounts for purchase of subsidiaries, net of cash acquired and decreased purchases of property and equipment.

Other significant uses of cash year-over-year included an increase in repayments of short- and long-term debt, net of issuances and increased amounts for repurchase and retirement of common stock.

We maintained a strong financial condition and liquidity position, with consolidated cash, cash equivalents and investments in fixed maturity and equity securities of $35,879 at June 30, 2025.

Since December 31, 2024, total cash, cash equivalents and investments in fixed maturity and equity securities increased by $163, primarily due to cash generated from operations, decline in purchase of subsidiaries, net of cash acquired, an increase in proceeds from sales, maturities, calls and redemptions of investments, net of purchases, change in bank overdrafts, and lower purchases of property and equipment.

This increase was partially offset by increased cash used in repayment of short- and long-term debt, net of issuances, and increased repurchase and retirement of common stock.

Other significant sources of cash year-over-year included decreased purchases of investments, net of proceeds from sales, maturities, calls, and redemptions, lower amounts for purchases of subsidiaries, net of cash acquired, changes in bank overdrafts and decreased purchases of property and equipment.

Other significant uses of cash year-over-year included a decrease in issuance of short- and long-term debt, net of repayments and increased amounts for the repurchase and retirement of common stock.

We maintained a strong financial condition and liquidity position, with consolidated cash, cash equivalents and investments in fixed maturity and equity securities of $37,327 at September 30, 2025.

Since December 31, 2024, total cash, cash equivalents and investments in fixed maturity and equity securities increased by $1,611, primarily due to lower amounts for purchases of subsidiaries, net of cash acquired, changes in bank overdrafts and decreased purchases of property and equipment.

This increase was partially offset by decreased cash generated by issuances of short- and long-term debt, net of repayments, increased amounts for the repurchase and retirement of common stock and decreased cash generated from operations.

Many of our subsidiaries are subject to various government regulations that restrict the timing and amount of dividends and other distributions that may be paid to their respective parent companies.

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Changes that occur in statutory accounting practices, if any, could impact our subsidiaries’ future dividend capacity.

In addition, we have agreed to certain undertakings to regulatory authorities, including the requirement to maintain certain capital levels in certain of our subsidiaries.

At June 30, 2025, we held $2,224 of cash, cash equivalents and investments at the parent company, which are available for general corporate use, including investment in our businesses, acquisitions, potential future common stock repurchases and dividends to shareholders, repurchases of debt securities and debt and interest payments.

In addition, we have agreed to certain

undertakings to regulatory authorities, including the requirement to maintain certain capital levels in certain of our subsidiaries.

At September 30, 2025, we held $2,647 of cash, cash equivalents and investments at the parent company, which are available for general corporate use, including investment in our businesses, acquisitions, potential future common stock repurchases and dividends to shareholders, repurchases of debt securities and debt and interest payments.

Periodically, we access capital markets and issue debt (“Notes”) for long-term borrowing purposes, for example, to refinance debt, to finance acquisitions or for share repurchases.

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Our debt-to-capital ratio may not be comparable to similarly titled measures reported by other companies.

Our consolidated debt-to-capital ratio was 40.8% and 43.0% as of June 30, 2025 and December 31, 2024, respectively.

Our consolidated debt-to-capital r atio was 42.1% and 43.0% as of September 30, 2025 and December 31, 2024, respectively.

Our senior debt is rated “A” by S&P Global Ratings, “BBB+” by Fitch Ratings, Inc., “Baa2” by Moody’s Investor Service, Inc.

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

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

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

On September 5, 2025, we amended and restated the credit agreement for the 5-Year Facility to, among other things, extend the maturity date of the 5-Year Facility from April 2027 to September 2030 and increase the amount of credit available under the 5-Year Facility from $4,000 to $5,000.

As of September 30, 2025, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 42.1%.

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

We had no amounts outstanding under the 5-Year Facility as of June 30, 2025 or December 31, 2024.

As of June 30, 2025, we were in compliance with all of the debt covenants under the 5-Year Facility.

As of September 30, 2025, we were in compliance with all of our debt covenants under the 5-Year Facility.

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

Should commercial paper issuance become unavailable, we have the ability to use a combination of cash on hand and/or our 5-Year Facility to redeem any outstanding commercial paper upon maturity.

We had no commercial paper outstanding at either June 30, 2025 or December 31, 2024.

We had no commercial paper outstanding at either September 30, 2025 or December 31, 2024.

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 $360 and $365 of outstanding short-term borrowings from the FHLBs as of June 30, 2025 and December 31, 2024, respectively.

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

We had $180 and $365 of outstanding short-term borrowings from the FHLBs as of September 30, 2025 and December 31, 2024, respectively.

We regularly review the appropriate use of capital, including acquisitions, common stock and debt security repurchases and dividends to shareholders.

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.

For additional information regarding our sources and uses of capital at June 30, 2025, see Note 5, “Investments,” Note 6, “Derivative Financial Instruments,” Note 10, “Debt,” and Note 12, “Capital Stock – Use of Capital – Dividends and Stock Repurchase Program, ” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For additional information regarding our sources and uses of capital at September 30, 2025, see Note 5, “Investments,” Note 6, “Derivative Financial Instruments,” Note 10, “Debt,” and Note 12, “Capital Stock – Use of Capital – Dividends and Stock Repurchase Program, ” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In addition to regulations regarding the timing and amount of dividends, our regulated subsidiaries’ states of domicile have statutory risk-based capital (“RBC”) requirements for health and other insurance companies and health maintenance organizations largely based on the National Association of Insurance Commissioners (“NAIC”) Risk-Based Capital for Health Organizations Model Act (the “RBC Model Act”).

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis