Elevance Health Inc

Previous wording

Results of operations, cost of care trends, investment yields and other measures for the three and six months ended June 30, 2024 are not necessarily indicative of the results and trends that may be expected for the full year ending December 31, 2024, or any other period.

Current wording

Results of operations, cost of care trends, investment yields and other measures for the three and nine months ended September 30, 2024 are not necessarily indicative of the results and trends that may be expected for the full year ending December 31, 2024, or any other period.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

We made the decision to expand our participation in the Individual state- or federally-facilitated marketplaces (the “Public Exchange”) for 2024. For 2024, we are offering Individual Public Exchange products in 141 of the 143 rating regions in which we operate, in comparison to 138 of 143 rating regions in 2023. As described in “Regulatory Trends and Uncertainties” below, we expect growth in our Public Exchange membership as Medicaid members who are no longer

Current wording

We made the decision to expand our participation in the Individual state- or federally-facilitated marketplaces (the “Public Exchange”) for 2024. For 2024, we are offering Individual Public Exchange products in 141 of the 143 rating regions in which we operate, in comparison to 138 of 143 rating regions in 2023. As described in “Regulatory Trends and Uncertainties” below, we expect growth over time in our Public Exchange membership as Medicaid members who are no longer eligible for Medicaid coverage continue to exit the Medicaid program and seek coverage elsewhere. Changes to our business environment are likely to continue as elected officials at the national and state levels continue to enact, and both elected officials and candidates for election continue to propose, significant modifications to existing laws and regulations, including changes to taxes and fees. In addition, growth in our government-sponsored business exposes us to increased regulatory oversight.

Previous wording

The Consolidated Appropriations Act of 2023 decoupled Medicaid eligibility redeterminations from the Public Health Emergency initially declared in January 2020 relating to COVID-19. 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 by June 30, 2023. Most states are expected to complete a majority of their redeterminations by July 31, 2024. Since redeterminations resumed, we have experienced a decline in our Medicaid membership. Over time, we expect growth in our commercial plans, including through the Public Exchanges, as members who have lost Medicaid coverage in our 14 commercial states seek coverage elsewhere.

Current wording

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 by June 30, 2023. While 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. Since redeterminations resumed, we have experienced a decline in our Medicaid membership. We expect growth over time in our commercial plans, including through the Public Exchanges, as members who have lost Medicaid coverage in states where we offer commercial plans seek coverage elsewhere.

Previous wording

The Inflation Reduction Act of 2022 contains a variety of provisions that have impacted our business including extending the American Rescue Plan Act of 2021’s enhanced Premium Tax Credits (“PTC”) through 2025; imposing a new corporate alternative minimum tax; providing a one percent excise tax on repurchases of stock; allowing the Centers for Medicare and Medicaid Services (“CMS”) to negotiate prices on a limited set of prescription drugs beginning in 2026; instituting caps on insulin cost sharing in Medicare; redesigning of the Medicare Part D benefit; requiring drug manufacturers pay rebates if prices increase beyond inflation; and delaying the implementation of the Trump Administration Medicare drug rebate rule until at least 2032. The extension of the enhanced PTC has allowed for growth in Individual Public Exchange enrollment and has supported continuity of coverage since Medicaid eligibility redeterminations resumed in 2023.

Current wording

The Inflation Reduction Act of 2022 contains a variety of provisions that have impacted our business including extending the American Rescue Plan Act of 2021’s enhanced Premium Tax Credits (“PTC”) through 2025; imposing a new corporate alternative minimum tax; providing a one percent excise tax on repurchases of stock; allowing CMS to negotiate prices on a limited set of prescription drugs beginning in 2026; instituting caps on insulin cost sharing in Medicare; redesigning of the Medicare Part D benefit; requiring drug manufacturers to pay rebates if prices increase beyond inflation; and delaying the implementation of the Trump Administration Medicare drug rebate rule until at least 2032. The extension of the enhanced PTC has allowed for growth in Individual Public Exchange enrollment and has supported continuity of coverage since Medicaid eligibility redeterminations resumed in 2023. If Congress does not act to extend the enhanced PTC, they will expire at the end of 2025.

Previous wording

The Consolidated Appropriations Act of 2021 (the “2021 Appropriations Act”) has impacted our business, including additional disclosure and reporting requirements related to broker compensation, mental health parity, pharmacy benefits and drug costs, as well as procedures and coverage requirements related to surprise medical bills and continuity of care for certain patients. The requirements of the 2021 Appropriations Act applicable to us had varying effective dates beginning in December 2021 and extending into 2024.

Current wording

The Consolidated Appropriations Act of 2021 has impacted our business, including additional disclosure and reporting requirements related to broker compensation, mental health parity, pharmacy benefits and drug costs, as well as procedures and coverage requirements related to surprise medical bills and continuity of care for certain patients. The requirements applicable to us had varying effective dates beginning in December 2021. In September 2024, the U.S. Departments of Health and Human Services, Labor, and Treasury (the “Tri-Agencies”) issued final regulations related to mental health parity that will require health plans to make administrative and operational changes. Additional guidance from the Tri-Agencies will be necessary to assess the full impact of these regulations on our operations and financial results.

Previous wording

The health plan price transparency regulations issued by the U.S. Departments of Health and Human Services, Labor and Treasury required us in 2022 to begin disclosing certain pricing information regarding negotiated rates and historical payment information with providers. Additionally, beginning in 2023, we were required to make available to members personalized out-of-pocket cost information and underlying negotiated rates for 500 covered healthcare items and services, which expanded to include all items and services in January 2024.

Current wording

The health plan price transparency regulations issued by the Tri-Agencies required us in 2022 to begin disclosing certain pricing information regarding negotiated rates and historical payment information with providers. Additionally, as directed by law, we make available to members personalized out-of-pocket cost information and underlying negotiated rates.

Previous wording

During 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 refine the focus of our investments and optimize our physical footprint. 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. For additional information, see Note 4, “Business Optimization Initiatives” of the Notes to Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

During 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 refine the focus of our investments and optimize our physical footprint. 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. Actions to be taken under the 2023-2024 Business Efficiency Program were substantially finalized as of September 30, 2024. For additional information, see Note 4, “Business Optimization Initiatives” of the Notes to Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

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. In June 2024, CMS announced that it recalculated the 2024 Star Ratings (payment year 2025) across the industry in light of recent court decisions regarding the application of new calculation methodologies first introduced to the 2024 Star Ratings. As a result of these recalculations, our overall enterprise enrollment-weighted average Star Rating will increase from 3.5 Stars to 4.0 Stars. We now estimate approximately 56% of our Medicare Advantage members to be enrolled in plans rated at least 4.0 Stars or higher, or are too new to be rated, for 2024 Star Ratings, which will be rewarded at the 4.0 Stars level consistent with our enterprise enrollment-weighted average Star Rating (payment year 2025). This reflects an increase over our original estimate of 34% in October 2023.

Current wording

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. The Company’s 2024 Star Ratings, which are used for payment year 2025, reflect 53% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher. This is an increase over the original 2024 Star Rating of 34% in October 2023 based on subsequent recalculations by CMS.

Previous wording

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, LLP (“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.

Current wording

On August 6, 2024, we made an equity investment that resulted in our minority interest ownership of 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 initial investment was $2,580 and is accounted for as an equity method investment. 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. Further, in connection with our equity investment, each party has certain rights and obligations, including certain put, call, and purchase price true-up options, for which we recorded a net written option liability of $1,330 at September 30, 2024.

Previous wording

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.

Current wording

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

Previous wording

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. 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.

Current wording

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 $201, including contingent purchase price adjustments. 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 as of December 31, 2023 and the results of operations for such businesses for the nine months ending September 30, 2024 were not material.

Previous wording

On December 31, 2023, we entered into an agreement to acquire Centers Plan for Healthy Living LLC and Centers for Specialty Care Group IPA, LLC (“Centers”). Centers is a managed long-term care plan that serves New York state Medicaid and dual-eligible Medicaid/Medicare members, enabling adults with long-term care needs and disabilities to live safely and independently in their own home. This acquisition aligns with our strategic plan to grow the Health Benefits segment and leverage industry-leading expertise while serving Medicaid and 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.

Current wording

On December 31, 2023, we entered into an agreement to acquire Centers Plan for Healthy Living LLC and Centers for Specialty Care Group IPA, LLC (“Centers”). Centers is a managed long-term care plan that serves New York state Medicaid and dual-eligible Medicaid/Medicare members, enabling adults with long-term care needs and disabilities to live safely and independently in their own home. This acquisition aligns with our strategic plan to grow the Health Benefits segment and leverage industry-leading expertise while serving Medicaid and dual-eligible populations. The acquisition is expected to close in the fourth quarter of 2024 and is subject to standard closing conditions and customary approvals.

Previous wording

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

Current wording

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

Previous wording

In the consolidated multi-district proceeding in the United States District Court for the Northern District of Alabama (the “Court”) captioned In re Blue Cross Blue Shield Antitrust Litigation(“BCBSA Litigation”), the BCBSA and Blue Cross and/or Blue Shield licensees, including us (the “Blue plans”), previously approved a settlement agreement and release with the

Current wording

We are a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA and Blue Cross and/or Blue Shield licensees (the “Blue plans”) across the country. Cases filed in 28 states were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation(“BCBSA Litigation”) that is pending before the U.S. District Court for the Northern District of Alabama (the “Court”). Generally, the lawsuits in the BCBSA Litigation challenge elements of the licensing agreements between the BCBSA and the independently owned and operated Blue plans. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers.

Previous wording

In August 2022, the Court issued a final order approving the Subscriber Settlement Agreement (the “Final Approval Order”). In compliance with the Subscriber Settlement Agreement, the Company paid $506 into an escrow account in September 2022, for an aggregate and full settlement payment by the Company of $596, which amount was accrued in 2020. The Final Approval Order was appealed to the United States Court of Appeals for the Eleventh Circuit (the “Eleventh Circuit”), which affirmed the Final Approval Order in October 2023. Petitions for rehearing were denied in January 2024, and the Eleventh Circuit issued a mandate terminating its jurisdiction in February 2024. In March 2024 and April 2024, two of the appellants each filed petitions for certiorari to the United States Supreme Court (the “Supreme Court”), and the defendants and subscriber plaintiffs filed briefs in opposition in May 2024. 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 became effective and the funds held in escrow will be distributed in accordance with the Subscriber Settlement Agreement. For additional information regarding the BCBSA Litigation, see Note 14, “Commitments and Contingencies –Litigation and Regulatory Proceedings – Blue Cross Blue Shield Antitrust Litigation,” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of our 2023 Annual Report on Form 10-K.

Current wording

The BCBSA and Blue plans approved a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”), and in compliance with the Subscriber Settlement Agreement, we paid $506 into an escrow account in September 2022, for an aggregate settlement payment by us of $596, which amount was 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 second Blue plan bid provision effective in September 2024. The funds held in escrow will be distributed in accordance with the Subscriber Settlement Agreement.

Previous wording

For the twelve months ended June 30, 2024, total medical membership declined by 4.6%. This was primarily driven by Medicaid membership attrition, including as a result of eligibility redeterminations and certain market exits, and lapses exceeding sales in our Employer Group risk-based and Medicare businesses. These decreases were partially offset by increases in our Employer Group fee-based, Individual and Federal Employee Health Benefits (“FEHB”) businesses, resulting from sales exceeding lapses.

Current wording

For the twelve months ended September 30, 2024, total medical membership declined by 3.3%. This was primarily driven by Medicaid membership attrition, including as a result of eligibility redeterminations and certain market exits, and lapses exceeding sales in our Employer Group risk-based and Medicare businesses. These decreases were partially offset by increases in our Employer Group fee-based, Individual and Federal Employee Health Benefits (“FEHB”) businesses, resulting from sales exceeding lapses.

Previous wording

Operating revenue for the three months ended June 30, 2024 was $43,223, a decrease of $154, or 0.4%, from the three months ended June 30, 2023. This decrease was primarily a result of declines in premiums driven by Medicaid membership attrition. These declines were partially offset by premium rate increases in all lines of business to reflect medical cost trends and increased product revenue from our CarelonRx business, due to growth in external members served and the acquisition of Paragon, which closed in the first quarter of 2024. Operating revenue for the six months ended June 30, 2024 was $85,496, an increase of $221, or 0.3%, from the six months ended June 30, 2023. This increase was primarily a result of premium rate increases in all lines of business to reflect medical cost trends. Increased product revenue from our CarelonRx business also contributed to the overall increase. These increases were partially offset by overall declines in premiums driven by Medicaid membership attrition.

Current wording

Operating revenue for the three months ended September 30, 2024 was $44,719, an increase of $2,239, or 5.3%, from the three months ended September 30, 2023. Operating revenue for the nine months ended September 30, 2024 was $130,215, an increase of $2,460, or 1.9%, from the nine months ended September 30, 2023. These increases for both the three and nine months ended September 30, 2024 were primarily a result of premium rate increases in all lines of business in recognition of medical cost trends. Increased product revenue from our CarelonRx business also contributed to the overall increase. These increases were partially offset by overall declines in premiums driven by Medicaid membership attrition.

Previous wording

Net income for the three months ended June 30, 2024 was $2,301, an increase of $445, or 24.0%, from the three months ended June 30, 2023. Net income for the six months ended June 30, 2024 was $4,550, an increase of $690, or 17.9%, from the six months ended June 30, 2023. These increases for both the three and six months ended June 30, 2024 were primarily due to improved operating gain performance in all of our reportable segments, gain on the sale of our life and disability business, increased net investment income and lower amortization of other intangible assets. These increases were partially offset by higher income tax expense due to higher income before taxes.

Current wording

Net income for the three months ended September 30, 2024 was $1,008, a decrease of $292, or 22.5%, from the three months ended September 30, 2023. The decrease for the three months ended September 30, 2024 was primarily due to a net decrease in operating gain in our reportable segments and a $39 decrease of the gain on sale of our life and disability businesses due to contingent purchase price adjustments, partially offset by increased net investment income and lower amortization of other intangible assets. Net income for the nine months ended September 30, 2024 was $5,558, an increase of $398, or 7.7%, from the nine months ended September 30, 2023. The increase for the nine months ended September 30, 2024 was primarily due to increased net investment income, gain on the sale of our life and disability businesses and lower amortization of other intangible assets, partially offset by higher income tax expense due to higher income before taxes.

Previous wording

Our fully-diluted shareholders’ earnings per share (“EPS”) was $9.85 for the three months ended June 30, 2024, which represented a 26.4% increase from EPS of $7.79 for the three months ended June 30, 2023. Our EPS was $19.44 for the six months ended June 30, 2024, which represented a 20.7% increase from EPS of $16.10 for the six months ended June 30, 2023. The increase in EPS for both periods resulted primarily from increased shareholders' net income, as well as fewer diluted shares outstanding.

Current wording

Our fully-diluted shareholders’ earnings per share (“EPS”) was $4.36 for the three months ended September 30, 2024, which represented a 20.0% decrease from EPS of $5.45 for the three months ended September 30, 2023. The decrease in EPS resulted primarily from decreased shareholders' net income, partially offset by the impact of fewer diluted shares outstanding. Our EPS was $23.81 for the nine months ended September 30, 2024, which represented a 10.4% increase from EPS of $21.56 for the nine months ended September 30, 2023. The increase in EPS resulted primarily from increased shareholders' net income, as well as fewer diluted shares outstanding.

Previous wording

Operating cash flow for the six months ended June 30, 2024 and 2023 was $2,425 and $8,419, respectively. The decrease in net cash provided by operating activities was primarily due to the timing of CMS payments received in the prior year, the

Current wording

Operating cash flow for the nine months ended September 30, 2024 and 2023 was $5,102 and $11,032, respectively. The decrease in net cash provided by operating activities was primarily due to the timing of CMS payments received in the prior year, the impact of the membership decline in our Medicaid business, and the timing of working capital changes, partially offset by higher net income for the nine months ended September 30, 2024.

Previous wording

1 BlueCard® membership at June 30, 2023 has been restated lower by 17 to align to our current reporting, which is the Blue Cross Blue Shield Association reporting methodology.

Current wording

1 BlueCard® membership at September 30, 2023 has been restated lower by 19 to align to our current reporting, which is the Blue Cross Blue Shield Association reporting methodology.

Previous wording

The decrease in medical membership was primarily driven by Medicaid membership attrition, including as a result of eligibility redeterminations and certain market exits, and lapses exceeding sales in our Employer Group risk-based and

Current wording

The decrease in medical membership was primarily driven by Medicaid membership attrition, including as a result of eligibility redeterminations and certain market exits, and lapses exceeding sales in our Employer Group risk-based and Medicare businesses. These decreases were partially offset by increases in our Employer Group fee-based, Individual and FEHB businesses, resulting from sales exceeding lapses.

Previous wording

Our consolidated summarized results of operations and other financial information for the three and six months ended June 30, 2024 and 2023 are as follows:

Current wording

Our consolidated summarized results of operations and other financial information for the three and nine months ended September 30, 2024 and 2023 are as follows:

Previous wording

2 Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the three months ended June 30, 2024 and 2023 were $35,416 and $36,589, respectively. Premiums for the six months ended June 30, 2024 and 2023 were $71,112 and $72,457, respectively.

Current wording

2 Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the three months ended September 30, 2024 and 2023 were $36,809 and $35,259, respectively. Premiums for the nine months ended September 30, 2024 and 2023 were $107,921 and $107,716, respectively.

Previous wording

Net investment income increased primarily due to higher income from alternative investments and fixed maturity securities.

Current wording

Net investment income increased primarily due to higher income from fixed maturity securities.

Previous wording

Our operating expense ratio increased primarily due to the increase in operating expenses described above, partially offset by the favorable impact of operating revenue growth.

Current wording

Our operating expense ratio decreased primarily due to disciplined cost management, lower business optimization charges during the three months ended September 30, 2024 and the favorable impact of operating revenue growth, partially offset by the accrual for the Provider Settlement Agreement associated with the BCBSA Litigation.

Previous wording

Other expense declined primarily due to decreased amortization of other intangible assets. During the six months ended June 30, 2023, we had increased amortization of other intangible assets as the amortization period of certain assets was shortened to align with the dates our new branding took place.

Current wording

Other expense declined primarily due to decreased amortization of other intangible assets during the three months ended September 30, 2024. During the three months ended September 30, 2023, we had increased amortization of other intangible assets as the amortization period of certain assets was shortened to align with the dates our new branding took place. This decrease was partially offset by an increase in interest expense during the three months ended September 30, 2024.

Previous wording

Our shareholders’ net income as a percentage of total revenues increased in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 as a result of all factors discussed above.

Current wording

Our shareholders’ net income as a percentage of total revenues decreased in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 as a result of all factors discussed above.

Previous wording

Net losses on financial instruments increased slightly primarily due to increased losses on equity securities and fixed maturity securities, partially offset by reduced losses on other investments.

Current wording

Net losses on financial instruments increased primarily due to increased losses on alternative investments and equity securities, partially offset by increased gains on fixed maturity securities.

Previous wording

During the three months ended June 30, 2024, we experienced a gain on sale of business due to the sale of our life and disability business.

Current wording

During the nine months ended September 30, 2024, we experienced a gain on sale of business due to the sale of our life and disability businesses.

Previous wording

Other expense declined primarily due to decreased amortization of other intangible assets. During the three months ended June 30, 2023, we had increased amortization of other intangible assets as the amortization period of certain assets was shortened to align with the dates our new branding took place.

Current wording

Other expense declined primarily due to decreased amortization of other intangible assets during the nine months ended September 30,2024. During the nine months ended September 30, 2023, we had increased amortization of other intangible assets as the amortization period of certain assets was shortened to align with the dates our new branding took place.

Previous wording

Our shareholders’ net income as a percentage of total revenues increased in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 as a result of all factors discussed above.

Current wording

Our shareholders’ net income as a percentage of total revenues increased in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 as a result of all factors discussed above.

Previous wording

Our results of operations discussed throughout this MD&A are determined in accordance with U.S. generally accepted accounting principles (“GAAP”). We also calculate operating gain and operating margin to further aid investors in understanding and analyzing our core operating results and comparing them among periods. We define operating revenue as premium income, product revenue and service fees. Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net losses on financial instruments, gain on sale of business, interest expense, amortization of other intangible assets or income taxes, as these items are managed in our corporate shared service environment and are not the responsibility of operating segment management. Operating margin is calculated as operating gain divided by operating revenue. We use these measures as a basis for evaluating segment performance, allocating resources, forecasting future operating periods and setting incentive compensation targets. This information is not intended to be considered in isolation or as a substitute for income before income tax expense, shareholders’ net income or EPS prepared in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies. For a reconciliation of reportable segments’ operating revenue to the amounts of total revenue included in the consolidated statements of income and a reconciliation of income before income tax expense to reportable segments’ operating gain, 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.

Current wording

Our results of operations discussed throughout this MD&A are determined in accordance with U.S. generally accepted accounting principles (“GAAP”). We also calculate operating gain and operating margin to further aid investors in understanding and analyzing our core operating results and comparing them among periods. We define operating revenue as premium income, product revenue and service fees. Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net losses on financial instruments, loss/gain on sale of business, interest expense, amortization of other intangible assets or income taxes, as these items are managed in our corporate shared service environment and are not the responsibility of operating segment management. Operating margin is calculated as operating gain divided by operating revenue. We use these measures as a basis for evaluating segment performance, allocating resources, forecasting future operating periods and setting incentive compensation targets. This information is not intended to be considered in isolation or as a substitute for income before income tax expense, shareholders’ net income or EPS prepared in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies. For a reconciliation of reportable segments’ operating revenue to the amounts of total revenue included in the consolidated statements of income and a reconciliation of income before income tax expense to reportable segments’ operating gain, 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.

Previous wording

The following table presents a summary of the reportable segment financial information for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents a summary of the reportable segment financial information for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Operating revenue increased primarily due to higher prescription volume associated with growth in external pharmacy members and the acquisition of Paragon in 2024, partially offset by the impact of Medicaid membership attrition.

Current wording

Operating revenue increased primarily due to the acquisition of Paragon in 2024 and higher prescription volume associated with growth in external pharmacy members.

Previous wording

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

Current wording

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

Previous wording

The increase in operating gain was primarily driven by improved performance in our behavioral health and medical management businesses, partially offset by increased medical cost trends in our post-acute business and the impact of the Medicaid membership attrition.

Current wording

The decrease in operating gain was primarily driven by increased medical cost trends in our post-acute business and the impact of Medicaid membership attrition.

Previous wording

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

Current wording

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