Elevance Health, Inc.
For the period ended Mar 31, 2026. Filed Apr 22, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 22, 2026
ELV$425.62-1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-21.
0001156039-25-000136
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-22.
0001156039-26-000043
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 160 previous paragraphs and 138 current paragraphs.
63 unchanged; 52 reworded; 19 added; 37 removed; 8 previous and 4 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Additional federal and state guidance is being issued to implement these OBBBA provisions. Implementation dates vary, with many provisions impacting commercial plans effective January 1, 2026, and many Medicaid-related provisions effective in 2027 and 2028. States may choose to implement certain Medicaid provisions as early as 2026.
Current report
In February 2026, Congress passed the Consolidated Appropriations Act of 2026, which includes pharmacy benefit manager reforms requiring pharmacy benefit managers to remit all rebates, fees (other than bona fide service fees), and other remuneration received from entities such as manufacturers and group purchasing organizations to commercial plan sponsors, and to provide detailed commercial claims reporting, effective 30 months after enactment. The legislation also imposes extensive reporting requirements and delinks pharmacy benefit manager compensation in Medicare Part D by prohibiting pharmacy benefit managers from receiving remuneration related to Part D drugs in any form other than bona fide service fees that cannot be based on a drug’s price, effective in 2028. There continues to be the potential that similar or additional legislation may be adopted at the state or federal level.
Current report
In addition, subsequent budget reconciliation legislation enacted during 2023 through 2025 included provisions affecting Medicaid eligibility enrollment and program financing, which may influence state Medicaid policies and beneficiary coverage dynamics over time.
Current report
In the first quarter of 2026, based on a strategic review of our operations, assets and investments, management implemented the 2026 - 2027 Operating Model Transformation Program (the “Transformation Program”) to streamline decision-making, simplify organizational structures, and enhance the use of advanced technologies, including artificial intelligence, across the enterprise. The Transformation Program includes initiatives to reduce organizational layers, realign roles and responsibilities, and design workflows to support more efficient, technology-enabled operations. These actions also include the modernization of certain information technology platforms, targeted workforce reductions and role realignments. Actions to be taken under the Transformation Program were ongoing as of March 31, 2026.
Current report
CMS Notice
Current report
As previously communicated, on February 27, 2026, the Company was notified by the Centers for Medicare & Medicaid Services (“CMS”) of its intent to impose intermediate sanctions on the Company based on alleged noncompliance by the Company with certain Medicare Advantage risk adjustment data submission requirements related to diagnosis codes previously disclosed to CMS.
Current report
On March 13, 2026, CMS notified the Company that it was granting the Company’s request for an extension of the effective date of the sanctions from March 31, 2026 to May 30, 2026 and also removed certain of the Company’s MA-PD plans from the threatened sanctions and granted a waiver for various Employee Group Waiver Plans. CMS subsequently modified the compliance timeline. The Company now has until July 31, 2026 to complete a series of steps required by the agency to avoid sanctions. While the Company is working with CMS to complete these steps to reach a resolution that avoids the imposition of sanctions or other remedies, there can be no assurance that such a resolution can be achieved. The Company is also currently contesting CMS’ action through an administrative process.
Current report
Shareholders' net income for the three months ended March 31, 2026 was $1,764, a decrease of $419, or 19.2%, from the three months ended March 31, 2025. The decrease in net income for the three months ended March 31, 2026 was primarily due to decreased operating gain in all lines of business and increased interest expense. These decreases were partially offset
Current report
-38- by decreased net losses on financial instruments, increased net investment income, decreased income tax expense and decreased amortization of other intangible assets.
Current report
Total operating revenue increased primarily as a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends and growth in CarelonRx product revenues, partially offset by membership attrition.
Current report
Operating expense increased primarily due to the loss contingency accrual for our best estimate of the identified potential exposure for the resubmission of certain historical Medicare Advantage risk adjustment data and increased corporate expenses, primarily associated with the Operating Model Transformation Program.
Current report
Our operating expense ratio increased primarily due to the loss contingency accrual for our best estimate of the identified potential exposure for the resubmission of certain historical Medicare Advantage risk adjustment data and increased corporate expense, primarily associated with the Operating Model Transformation Program.
Current report
Other expense decreased primarily due to a decrease in amortization of other intangible assets due to assets being amortized under an accelerated depreciation method, which results in higher expense recognition in earlier periods and progressively lower amortization in later periods, partially offset by an increase in interest expense.
Current report
Our effective tax rate increased primarily due to an increase in our reserve for uncertain tax positions and a prior year favorable resolution of uncertain tax positions that did not recur in 2026.
Current report
Operating revenue increased primarily due to higher average revenue per prescription, partially offset by a negative change in product mix and lower prescription volumes.
Current report
The decrease in operating gain was primarily driven by lower health plan membership and normal timing variations in the recognition of performance-related adjustments, partially offset by improved specialty pharmacy profitability and lower operating expenses.
Current report
The decrease in operating gain was primarily driven by lower health plan membership and seasonality related to the launch of risk-based capabilities in our specialty care solutions business, partially offset by improved performance in our behavioral health business.
Current report
Operating revenue decreased primarily due to lower affiliate revenues.
Current report
Operating loss increased primarily due to increased unallocated corporate expenses, primarily associated with the loss contingency accrual for our best estimate of the identified potential exposure for the resubmission of certain historical Medicare Advantage risk adjustment data and Operating Model Transformation Program.
Removed paragraphs (37)
Previous report
Business Acquisitions
Previous report
Investments in Joint Ventures and Completed Acquisitions
Previous report
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 September 30, 2025 included a $(39) reduction to goodwill, and a $39 addition to tangible net assets acquired.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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”).
Previous report
Our operating expense ratio decreased primarily due to operating leverage associated with growth in operating revenue.
Previous report
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.
Previous report
Our effective tax rate decreased primarily due tothe 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.
Previous report
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Previous report
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.
Previous report
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 report
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.
Previous report
Operating expense increased primarily due to increases in premium tax expenses and assessments, partially offset by disciplined cost management.
Previous report
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.
Previous report
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.
Previous report
Our effective tax rate decreased primarily due to the impact of certain investment credits.
Previous report
Operating revenue increased primarily due to higher prescription volume associated with growth in pharmacy membership and revenue related to recent acquisitions.
Previous report
The decrease in operating gain was primarily driven by expenses associated with the expansion of dispensing services provided by CarelonRx.
Previous report
The increase in operating gain was primarily driven by the acquisition of CareBridge.
Previous report
Operating revenue increased primarily due to higher affiliate revenues.
Previous report
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.
Previous report
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Previous report
Health Benefits
Previous report
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 report
Operating gain decreased primarily as a result of rates for Affordable Care Act health plans and Medicaid being inadequate to cover medical cost trends andincreased investments to support and strengthen our workforce and accelerate technology adoption.
Previous report
CarelonRx
Previous report
Operating revenue increased primarily due to higher prescription volume associated with growth in pharmacy membership and revenue related to recent acquisitions.
Previous report
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.
Previous report
Carelon Services
Previous report
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 report
Corporate & Other
Previous report
Operating revenue increased primarily due to higher affiliate revenues.
Previous report
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.
Previous report
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.
Reworded paragraphs (52)
Previous wording
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.
Current wording
Results of operations, cost of care trends, investment yields and other measures for the three months ended March 31, 2026 are not necessarily indicative of the results and trends that may be expected for the full year ending December 31, 2026, or any other period.
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. 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.
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. Product pricing remains competitive. 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
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. Going forward, we expect the Public Exchange to be influenced by policy and regulatory changes, particularly around federal subsidies, compliance requirements, and market stability.
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. In 2025, we expanded our operations into select service areas in Florida, Maryland and Texas and in 2026, into Washington through our Simply Healthcare and Wellpoint brands. Going forward, we expect the Public Exchange to be influenced by policy and regulatory changes, particularly around federal subsidies, compliance requirements, and market stability.
Previous wording
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; 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.
Current wording
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 includes provisions that could impact our business and operations including: requiring more frequent Medicaid redeterminations for beneficiaries receiving coverage under a state’s Medicaid expansion program implemented pursuant to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended, (collectively, the “ACA”); and imposing work or community engagement requirements on certain adults in the ACA Medicaid expansion population. The OBBBA also makes changes to federal requirements regarding Medicaid state directed payments and provider taxes, including taxes on managed care organizations; delays implementation of Medicaid final regulations on certain eligibility and enrollment provisions; reduces the allowable home equity asset threshold for individuals seeking eligibility for long-term care under Medicaid; establishes a new Rural Health Transformation program; eliminates the repayment limit for excess advanced Premium Tax Credits (“PTCs”) under the ACA; modifies the rules regarding Health Savings Account (“HSA”) eligible plans under the ACA; and makes permanent an 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; among other provisions.
Previous wording
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.
Current wording
In addition, in June 2025, the Centers for Medicare and Medicaid Services (“CMS”)finalized the Marketplace Integrity and Affordability Regulation, which modifies the Public Exchange open enrollment period beginning in plan year 2027 and eligibility for PTCs, 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.
Previous 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 by third parties challenging these final regulations.
Current wording
In September 2024, the U.S. Department of Health and Human Services, 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 is necessary to assess the full impact of these regulations on our operations and financial results. Litigation has been filed challenging the 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, CMS has provided that states have until December 31, 2025 to complete these eligibility redeterminations.
Current wording
The Consolidated Appropriations Act of 2023 separated 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. CMS required states to complete Medicaid eligibility redeterminations by December 31, 2025.
Previous wording
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; providing a one percent excise tax on repurchases of stock; allowing CMS to negotiate prices on a limited set of prescription drugs in Medicare effective in 2026; instituting caps on insulin cost sharing in Medicare; redesigning 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, which could have a material adverse effect on our business and results of operations.
Current wording
The Inflation Reduction Act of 2022 (“IRA”) includes several provisions that have impacted, and continue to impact, our business. These provisions include extending the American Rescue Plan Act of 2021’s enhanced PTCs through 2025; imposing a new corporate alternative minimum tax; establishing a one percent excise tax on repurchases of stock by issuers; authorizing CMS to negotiate prices on a limited set of Medicare prescription drugs beginning in 2026; instituting caps on insulin cost sharing in Medicare; redesigning 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. From 2021 to 2025, Individual market enrollment grew significantly, driven in part by enhanced PTCs, which reduced Public Exchange coverage premiums for individuals who qualified. This, in combination 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 enhanced PTCs expired on December 31, 2025. As a result, the cost of Public Exchange coverage premiums has increased for those individuals previously receiving the enhanced PTCs, which may negatively impact our Individual market enrollment.
Previous wording
-40- 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.
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. The outcome of RADV audits could adversely affect our financial condition and results of operations.
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. 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 2026 Star Ratings reflect that approximately 55% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher.
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. 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 2026 Star Ratings reflect that approximately 59% of our Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher, or the equivalent.
Previous 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 along with other arrangements in violation of the Sherman Antitrust Act and related state laws. The cases were brought by two nationwide classes of plaintiffs, health plan subscribers and providers.
Current wording
We have been 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. These cases have been 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 along with other arrangements in violation of the Sherman Antitrust Act and related state laws. The cases were brought by two nationwide classes of plaintiffs, health plan subscribers and providers.
Previous wording
$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.
Current wording
The BCBSA and Blue plans approved a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”), which received final approval from the Court in September 2022. The ultimate amount paid by the Company under the Subscriber Settlement Agreement was $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. A number of follow-on cases involving entities that opted out of the Subscriber Settlement Agreement have been filed.
Previous wording
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 was held in July 2025, 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.
Current wording
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 in December 2024. A Final Fairness Hearing was held in July 2025, and the Court issued a Final Approval Order for the Provider Settlement Agreement in August 2025. The Provider Settlement Agreement required the defendants to make a monetary settlement payment and also required 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. The effective date of the Provider Settlement Agreement was September 19, 2025. 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 Provider Settlement Agreement have been filed and have been centralized in the BCBSA Litigation multi-district proceeding.
Previous wording
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.
Current wording
For the twelve months ended March 31, 2026, total medical membership declined by 0.9%. This was primarily driven by attrition in Medicaid membership, primarily as a result of eligibility redeterminations, and decreases in our Medicare Advantage, Employer Group Risk-Based and FEP® businesses. These decreases were partially offset by increases in our Employer Group Fee-Based business.
Previous wording
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.
Current wording
Operating revenue for the three months ended March 31, 2026 was $49,494, an increase of $729, or 1.5%, from the three months ended March 31, 2025. The increase for the three months ended March 31, 2026 was primarily a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends and growth in CarelonRx product revenues, partially offset by membership attrition.
Previous wording
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.
Current wording
Our fully-diluted shareholders’ earnings per share (“EPS”) was $8.00 for the three months ended March 31, 2026, which represented a 16.8% decrease from EPS of $9.61 for the three months ended March 31, 2025. The decrease in EPS for the three months ended March 31, 2026 resulted primarily from decreased shareholders' net income, partially offset by the impact of fewer diluted shares outstanding.
Previous wording
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.
Current wording
Operating cash flow for the three months ended March 31, 2026 and 2025 was $4,332 and $1,017, respectively. The increase in net cash provided by operating activities was primarily due to favorable working capital impacts.
Previous wording
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.
Current wording
The decrease in medical membership was primarily driven by attrition in Medicaid membership, primarily as a result of eligibility redeterminations, and decreases in our Medicare Advantage, Employer Group Risk-Based and FEP® businesses. These decreases were partially offset by increases in our Employer Group Fee-Based business.
Previous wording
Our other membership has the potential to be impacted by changes in our medical membership, as our medical members often purchase our other products that are ancillary to our health business. Dental membership increased primarily due to favorable sales in our Employer Group business. Dental administration membership increased primarily due to favorable in-
Current wording
Our other membership has the potential to be impacted by changes in our medical membership, as our medical members often purchase our other products that are ancillary to our health business. Dental membership increased primarily due to favorable sales in our Employer Group business. Dental Administration membership decreased primarily due to unfavorable in-group change within other BCBSA plans. Vision membership increased due to higher sales in our Medicaid, Employer Group and Individual health plans, partially offset by lower sales in our Medicare business.
Previous wording
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:
Current wording
Our consolidated summarized results of operations and other financial information for the three months ended March 31, 2026 and 2025 are as follows:
Previous wording
2 Benefit expense ratio represents benefit expense as a percentage of premium revenue. 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.
Current wording
2 Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the three months ended March 31, 2026 and 2025 were $41,024 and $40,887, respectively.
Previous wording
Net losses on financial instruments decreased due to higher income from fixed maturities and lower impairments on other invested assets.
Current wording
Net losses on financial instruments decreased due to lower impairment on other invested assets and lower realized losses on sales of financial instruments.
Previous wording
Benefit expense increased primarily due to higher medical cost trends across all lines of business within our Health Benefits and Carelon Services segments.
Current wording
Benefit expense increased primarily due to higher medical costs across all lines of business within our Health Benefits segment, with the exception of Medicare. These increases were partially offset by decreases in Carelon Services benefit expense related to the partial termination and modification of a care delivery services contract with an unaffiliated customer.
Previous wording
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.
Current wording
Our benefit expense ratio increased primarily as a result of expected elevated medical cost trend in our Medicaid business, partially offset by improved performance in Medicare Advantage.
Previous wording
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 volume and utilization.
Current wording
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 a higher cost per prescription in 2026, reflecting pricing impacts and product mix, despite lower adjusted prescription volumes.
Previous wording
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.
Current wording
Our shareholders’ net income as a percentage of total revenues decreased in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 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, 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.
Current wording
-41- 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 13, “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 nine months ended September 30, 2025 and 2024:
Current wording
The following table presents a summary of the reportable segment financial information for the three months ended March 31, 2026 and 2025:
Previous wording
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:
Current wording
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 months ended March 31, 2026 and 2025:
Previous wording
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.
Current wording
1 Operating revenue within our Commercial line of business related to our Individual ACA plans was $2,540 and $2,361 for the three months ended March 31, 2026 and 2025, respectively.
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, recent acquisitions and growth in our Medicare Advantage membership, partially offset by lower Medicaid membership.
Current wording
Operating revenue increased primarily as a result of higher premium yields driven by premium increases in all of our lines of business, partially offset by deliberate repositioning in our Medicare Advantage business and Medicaid membership attrition.
Previous wording
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.
Current wording
Operating gain decreased primarily as a result of higher overall medical and operating costs, partially offset by higher operating revenue.
Previous wording
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.
Current wording
Operating revenue increased primarily due to the continued expansion of risk-based capabilities in our specialty care solutions and behavioral health services, partially offset by fewer post-acute solutions services provided as a result of lower Medicare membership.
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 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.
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 March 31, 2026, our critical accounting policies and estimates related to medical claims payable have not changed from those described in our 2025 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, 2026 and 2025, see Note 8, “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 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.
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 three months ended March 31, 2026 and 2025, 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 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.
Current wording
The favorable development recognized in the three months ended March 31, 2026 resulted from trend factors in late 2025 developing more favorably than originally expected as well as from faster than expected development of completion factors from the latter part of 2025.
Previous wording
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.
Current wording
The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 64.5% and 66.2% for the three months ended March 31, 2026 and 2025, respectively. This ratio serves as an indicator of claims processing speed whereby speed for claims payments was slightly slower during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.
Previous wording
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 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.
Current wording
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 three months ended March 31, 2026, this metric was 7.2%, which was mainly driven by both favorable completion factor
Previous wording
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 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.
Current wording
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 three months ended March 31, 2026, this metric was 0.8%, which was calculated using the redundancy of $1,124. For the three months ended March 31, 2025, the comparable metric was also 0.8%, which was calculated using the redundancy of $1,025. We believe these metrics demonstrate an appropriate and consistent level of reserve conservatism.
Previous wording
Our cash receipts result primarily from premiums, product revenue, service fees, investment income, proceeds from the sale or maturity of our investment securities, proceeds from business divestitures, proceeds from borrowings and proceeds from the issuance of common stock under our employee stock plans. Cash disbursements result mainly from claims payments, operating expenses, taxes, purchases of investment securities, interest expense, payments on borrowings, acquisitions, capital expenditures, repurchases of our debt securities and common stock and the payment of cash dividends. Cash outflows fluctuate with the amount and timing of settlement of these transactions. Any future decline in our profitability would likely have an unfavorable impact on our liquidity.
Current wording
Our cash receipts result primarily from premiums, product revenue, service fees, investment income, proceeds from the sale or maturity of our investment securities, proceeds from borrowings and proceeds from the issuance of common stock under our employee stock plans. Cash disbursements result mainly from claims payments, operating expenses, taxes, purchases of investment securities, interest expense, payments on borrowings, acquisitions, capital expenditures, repurchases of our debt securities and common stock and the payment of cash dividends. Cash outflows fluctuate with the amount and timing of settlement of these transactions. Any future decline in our profitability would likely have an unfavorable impact on our liquidity.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
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
Current report — wording carried from elsewhere
-44- development from 2025 and favorable trend factor development at the end of 2025. For the three months ended March 31, 2025, this metric was 7.1%, mainly driven by favorable completion factor development from 2024, with favorable trend development at the end of 2024 also contributing.
Current report — wording carried from elsewhere
The increase in net cash provided by operating activities was primarily due favorable working capital impacts.
Current report — wording carried from elsewhere
Repurchase Program,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
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
Previous report — wording carried elsewhere
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
Previous report — wording carried elsewhere
-43- 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.
Previous report — wording carried elsewhere
Net investment income increased primarily due to higher income from alternative investments, partially offset by lower income from fixed maturity securities.
Previous report — wording carried elsewhere
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 volume and utilization.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
-51- undertakings to regulatory authorities, including the requirement to maintain certain capital levels in certain of our subsidiaries.