Elevance Health, Inc.

Previous wording

Results of operations, cost of care trends, investment yields and other measures for the three months ended March 31, 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.

Current wording

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.

Previous wording

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 45.8 million medical members through our affiliated health plans as of March 31, 2025. We are an independent licensee of the Blue Cross and Blue Shield Association (“BCBSA”), an association of independent health benefit plans. We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin. In a majority of these service areas, we do business as Anthem Blue Cross and Anthem Blue Cross and Blue Shield. We also conduct business through arrangements with other BCBS licensees, as well as other strategic partners. In addition, we serve members in numerous states as Wellpoint, Carelon, MMM and/or Simply Healthcare. 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.

Current wording

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 an independent licensee of the Blue Cross and Blue Shield Association (“BCBSA”), an association of independent health benefit plans. We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin. In a majority of these service areas, we do business as Anthem Blue Cross and Anthem Blue Cross and Blue Shield. We also conduct business through arrangements with other BCBS licensees, as well as other strategic partners. In addition, we serve members in numerous states as Wellpoint, Carelon, MMM and/or Simply Healthcare. 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.

Previous wording

Medical Cost Trends: Our medical cost trends are primarily driven by changes in the utilization of services across all provider types and the unit cost of these services. We work to mitigate these trends through various medical management programs such as care and condition management, program integrity and specialty pharmacy management and utilization management, as well as benefit design changes. 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 provider or member fraud.

Current wording

Medical Cost Trends: Our medical cost trends are primarily driven by changes in the utilization of services across all provider types and the unit cost of these services. We work to mitigate these trends through various medical management programs such as care and condition management, program integrity and specialty pharmacy management and utilization management, as well as benefit design changes. 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.

Previous wording

Pricing Trends: We strive to price our health benefit products consistent with anticipated underlying medical cost trends. We frequently make adjustments to respond to legislative and regulatory changes as well as pricing and other actions taken by existing competitors and new market entrants. Revenues from the Medicare and Medicaid programs are dependent, in whole or in part, upon annual funding from the federal government and/or applicable state governments. Product pricing remains competitive.

Current wording

Pricing Trends: We strive to price our health benefit products consistent with anticipated underlying medical cost trends. We frequently make adjustments to respond to legislative and regulatory changes as well as pricing and other actions taken by existing competitors and new market entrants. Revenues from the Medicare and Medicaid programs are dependent, in whole or in part, upon annual funding from the federal government and/or applicable state governments. Pricing of the Medicare and Medicaid programs may not adequately reflect current underlying healthcare cost trends given the timing lag between when pricing is established and the start of the applicable contract, which could adversely affect our financial results.

Previous wording

We continue to participate in the Individual state- or federally-facilitated marketplaces (the “Public Exchange”) in nearly all of our Anthem Blue Cross and Anthem Blue Cross and Blue Shield service areas. We anticipate continued growth in our existing Public Exchange membership and have expanded into select service areas in Florida, Maryland, and Texas in 2025, using our Simply Healthcare and Wellpoint brands, and we are actively evaluating expansion opportunities in additional marketplaces beyond 2025. 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 Individual premium subsidies and insurer taxes and fees.

Current wording

Affordable Care Act: We continue to participate in the Individual state- or federally-facilitated marketplaces (the “Public Exchange”) in nearly all of our Anthem Blue Cross and Anthem Blue Cross and Blue Shield service areas. 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.

Previous wording

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. Our comprehensive pharmacy services portfolio includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services, as well as infusion services and injectable therapies.

Current wording

Carelon Rx: 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. Our comprehensive pharmacy services portfolio includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services, as well as infusion services and injectable therapies.

Previous wording

In September 2024, the U.S. Departments of Health and Human Services (“HHS”), Labor, and 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.

Current wording

In September 2024, the HHS, 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.

Previous 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 as of June 30, 2023. Although most states have completed this process, Centers for Medicare and Medicaid Services (“CMS”) has provided that states have until December 31, 2025 to complete these eligibility redeterminations.

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 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.

Previous wording

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”), continues to impact our business and results of operations, including pricing, minimum medical loss ratios, and the geographies in which our products are available. 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 plans.

Current wording

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 plans. 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.

Previous wording

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.

Current wording

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.

Previous wording

On December 31, 2024, we completed our acquisition of 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.

Current wording

On December 31, 2024, we completed our acquisition of 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 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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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

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 $201 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.

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 $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.

Previous 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.

Current wording

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.

Previous wording

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 Court granted preliminary approval of the Provider Settlement Agreement on December 4, 2024. If approved by the Court, the Provider Settlement Agreement will require the defendants to make a monetary settlement payment, our portion of which is estimated to be $666, and will contain certain non-monetary terms including (i) expansion of certain opportunities to contract with providers in contiguous service areas, (ii) certain prompt pay commitments, and (iii) various technological enhancements to the BlueCard program. We recognized our estimated payment obligation under the Provider Settlement Agreement of $666 in September 2024. A number of follow-on cases involving entities that opted out of the putative Provider Settlement Agreement have been filed.

Current wording

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 Court granted preliminary approval of the Provider Settlement Agreement on December 4, 2024. A Final Fairness Hearing is scheduled for July 29, 2025. If approved by the Court, the Provider Settlement Agreement will require the defendants to make a monetary settlement payment, our portion of which is estimated to be $666, and will contain certain non-monetary terms including (i) expansion of certain opportunities to contract with providers in contiguous service areas, (ii) certain prompt pay commitments, and (iii) various technological enhancements to the BlueCard program. We recognized our estimated payment obligation under the Provider Settlement Agreement of $666 in September 2024. A number of follow-on cases involving entities that opted out of the putative Provider Settlement Agreement have been filed.

Previous wording

For the twelve months ended March 31, 2025, total medical membership declined by 0.5%. This was primarily driven by attrition in Medicaid membership, including as a result of eligibility redeterminations and certain market exits, and decreases in our Commercial Fee-Based business. These decreases were partially offset by increases in our Medicare Advantage and Individual ACA businesses.

Current wording

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.

Previous wording

Net income for the three months ended March 31, 2025 was $2,184, a decrease of $65, or 2.9%, from the three months ended March 31, 2024. The decrease was primarily due to a decreased operating gain within our Health Benefits segment, increased operating loss in our Corporate and Other 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, increased net investment income and decreased income tax expense.

Current wording

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.

Previous wording

Our fully-diluted shareholders’ earnings per share (“EPS”) was $9.61 for the three months ended March 31, 2025, which represented a 0.2% increase from EPS of $9.59 for the three months ended March 31, 2024. The increase in EPS resulted primarily as a result of fewer diluted shares outstanding.

Current wording

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.

Previous wording

Operating cash flow for the three months ended March 31, 2025 and 2024 was $1,017 and $1,978, respectively. The decrease in net cash provided by operating activities was primarily due to timing related changes in working capital.

Current wording

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.

Previous wording

The decrease in medical membership was primarily driven by attrition in Medicaid membership, including as a result of eligibility redeterminations and certain market exits, and decreases in our Commercial Fee-Based business. These decreases were partially offset by increases in our Medicare Advantage and Individual ACA businesses.

Current wording

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.

Previous wording

Our consolidated summarized results of operations and other financial information for the three months ended March 31, 2025 and 2024 are as follows:

Current wording

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:

Previous wording

2 Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the three months ended March 31, 2025 and 2024 were $40,887 and $35,696, respectively.

Current wording

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.

Previous wording

Operating revenue for the three months ended March 31, 2025 was $48,765, an increase of $6,492, or 15.4%, from the three months ended March 31, 2024. The increase was primarily a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends, recent acquisitions, growth in Medicare Advantage and Individual ACA membership, and growth in CarelonRx product revenue, partially offset by membership attrition in our Medicaid business.

Current wording

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.

Previous wording

Net losses on financial instruments increased due to losses on other invested assets and equity securities.

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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, growth in Medicare Advantage and Individual ACA membership, and growth in CarelonRx product revenue, partially offset by membership attrition in our Medicaid business.

Current wording

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.

Previous wording

Net investment income increased primarily due to higher income from alternative investments.

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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 out of period premium tax expense related to Medicaid.

Current wording

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.

Previous wording

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 was also due to higher amortization of other intangible assets related to the intangible assets acquired during the acquisitions we completed in the fourth quarter of 2024.

Current wording

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.

Previous wording

Our effective tax rate decreased primarily due to the favorable resolution of uncertain tax positions and the impact of certain investment credits.

Current wording

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.

Previous wording

The following table presents a summary of the reportable segment financial information for the three months ended March 31, 2025 and 2024:

Current wording

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

Previous wording

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 and growth in our Medicare Advantage and Individual ACA membership.

Current wording

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.

Previous wording

Operating gain decreased primarily as a result of Medicaid rates being inadequate to cover medical cost trends, partially offset by premium rate increases in most lines of business and enhanced operating efficiencies.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

The most subjective accounting estimate in our consolidated financial statements is our liability for medical claims payable. Our accounting policies related to medical claims payable are discussed in the references cited above. As of March 31, 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 three months ended March 31, 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.

Current wording

The most subjective accounting estimate in our consolidated financial statements is our liability for medical claims payable. 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.

Previous wording

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 three months ended March 31, 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.

Current wording

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. 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.

Previous wording

The favorable development recognized in the three months ended March 31, 2025 resulted from favorable development in the completion factors resulting from the latter part of 2024 developing faster than expected as well as trend factors in late 2024 developing more favorably than originally expected.

Current wording

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.

Previous wording

The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 66.2% and 63.8% for the three months ended March 31, 2025 and 2024, respectively. This ratio serves as an indicator of claims processing speed whereby speed for claims payments was slightly faster during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

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.