Elevance Health, Inc.
For the period ended Jun 30, 2026. Filed Jul 15, 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.
Jun 30, 2026 · Filed Jul 15, 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 2026-03-31; filed 2026-04-22.
0001156039-26-000043
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-15.
0001156039-26-000060
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 138 previous paragraphs and 162 current paragraphs.
84 unchanged; 48 reworded; 16 added; 4 removed; 2 previous and 14 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 (16)
Current report
In May 2026, the U.S. Department of Health and Human Services, Labor, and the Treasury (collectively, the “Tri-Agencies”) issued final regulations updating the federal Independent Dispute Resolution (“IDR”) process used to determine compensation to be paid by health plans to out-of-network providers in certain scenarios under the No Surprises Act. The regulations are primarily procedural in nature and address the operations and administration of the IDR process. Additional regulatory guidance or rulemakings are possible, and changes resulting from any such guidance or rulemakings, as well as current and potential litigation, arbitration proceedings, and government audits related to the IDR and No Surprises Act, could have an adverse effect on our business, cash flows, results of operations and financial condition.
Current report
In connection with the notice that the Company received in February 2026 from CMS regarding certain Medicare Advantage risk adjustment data submission requirements related to diagnosis codes for dates of service 2015 through April 2023, CMS provided a series of steps required to be completed by July 31, 2026 in order to avoid sanctions being imposed on the Company. On July 13, 2026, the Company received a letter from CMS stating that the Company has completed all required steps, sanctions will not be imposed and the enforcement process for this matter has been closed.
Current report
Operating expense increased primarily due to increases in targeted investments to support and strengthen our workforce and accelerate technology adoption, an increase in expenses to address regulatory matters and an increase in premium tax expenses and assessments.
Current report
Our operating expense ratio increased primarily due to targeted investments to support and strengthen our workforce and accelerate technology adoption, an increase in expenses to address regulatory matters and an increase in premium tax expenses and assessments.
Current report
Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
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, increases in targeted investments to support and strengthen our workforce and accelerate technology adoption and increases related to the 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, increases in targeted
Current report
-43- investments to support and strengthen our workforce and accelerate technology adoption and increases related to the Transformation Program.
Current report
Operating gain increased primarily due to improved specialty pharmacy profitability.
Current report
The decrease in operating gain was primarily driven by less favorable results on certain contracts and lower health plan membership within our post-acute solutions services, partially offset by improved performance in Carelon Insights.
Current report
Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Current report
Health Benefits
Current report
Operating gain decreased primarily due to higher overall medical costs and increases in targeted investments to support and strengthen our workforce and accelerate technology adoption, partially offset by higher operating revenue.
Current report
CarelonRx
Current report
Carelon Services
Current report
Corporate & Other
Removed paragraphs (4)
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Reworded paragraphs (48)
Previous 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.
Current wording
Results of operations, cost of care trends, investment yields and other measures for the three and six months ended June 30, 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
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 45.4 million medical members through our affiliated health plans as of March 31, 2026. 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 Services.
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 44.9 million medical members through our affiliated health plans as of June 30, 2026. 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 Services.
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 fraud, waste and abuse.
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, including increased utilization of specialty pharmaceuticals, new indications of existing prescription drugs, provider contracting inflation, labor costs and healthcare fraud, waste and abuse.
Previous wording
Membership shifts from Medicaid into our Individual ACA (as defined below) business following the redetermination process that began in April 2023, together with lower membership effectuation rates, particularly in geographies with high concentrations of highly subsidized members, have driven a market-wide increase in morbidity, resulting in elevated medical cost trends. Medicaid cost trends remain elevated due to higher population acuity and increased utilization of services. In response, we are working on program improvements in partnership with the states, strengthening care management, and optimizing our clinical strategy to improve effectiveness and lower costs.
Current wording
Membership shifts from Medicaid into our Individual ACA (as defined below) business following the redetermination process that began in April 2023, together with lower membership effectuation rates, particularly in geographies with high concentrations of highly subsidized members, have driven a market-wide increase in morbidity, resulting in elevated medical cost trends. Medicaid cost trends remain elevated due to higher population acuity and increased utilization of services. In response, we are working on program improvements in partnership with the states, strengthening care and provider network management, optimizing our clinical strategy to improve effectiveness and enhancing payment integrity to manage costs.
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. 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.
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 through our Simply Healthcare brand, and Maryland and Texas through our Wellpoint brand. In 2026, we expanded into Washington through our Wellpoint brand. 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 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.
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 reverifications 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 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.
Current wording
In September 2024, 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 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.
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. Although the federally mandated Medicaid eligibility redetermination period has ended, states continue to conduct regular eligibility reverifications and the effects on Medicaid enrollment, member acuity, utilization and state rate-setting, as well as changes arising from the OBBBA, may continue to affect our business.
Previous 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.
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 Advance Premium Tax Credits (“APTCs”) 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 APTCs, 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 APTCs expired on December 31, 2025. As a result, the cost of Public Exchange coverage premiums has increased for those individuals previously receiving the APTCs, which has impacted our Individual market enrollment.
Previous 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.
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. CMS has initiated these RADV audit changes, and the outcome could adversely affect our financial condition and results of operations.
Previous wording
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 wording
In the first quarter of 2026, based on a strategic review of our operations, assets and investments, management initiated 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 June 30, 2026.
Previous 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.
Current wording
The BCBSA and Blue plans approved and entered into a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”) and a separate settlement agreement and release with the provider plaintiffs (the “Provider Settlement Agreement”), which settlement agreements received final approval from the Court in September 2022 and August 2025, respectively.
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 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.
Current wording
A number of follow-on cases involving entities that opted out of the Subscriber Settlement Agreement have been filed. Additionally, follow-on cases involving the entities that opted out of the Provider Settlement Agreement have been filed and centralized in the BCBSA Litigation multi-district proceeding.
Previous 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.
Current wording
From June 30, 2025 to June 30, 2026, total medical membership declined by 1.5%. This was 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 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.
Current wording
Operating revenue for the three months ended June 30, 2026 was $49,826, an increase of $405, or 0.8%, from the three months ended June 30, 2025. Operating revenue for the six months ended June 30, 2026 was $99,320, an increase of $1,134, or 1.2%, from the six months ended June 30, 2025. The increases for the three and six months ended June 30, 2026 were primarily the 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
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 wording
Shareholders’ net income for the three months ended June 30, 2026 was $1,463, a decrease of $280, or 16.1%, from the three months ended June 30, 2025. Shareholders’ net income for the six months ended June 30, 2026 was $3,227, a decrease of $699, or 17.8%, from the six months ended June 30, 2025. The decrease in net income for the three months ended June 30, 2025 was primarily due to a decrease in operating gain in our Corporate and Other, Health Benefits and Carelon Services
Previous wording
-38- by decreased net losses on financial instruments, increased net investment income, decreased income tax expense and decreased amortization of other intangible assets.
Current wording
-39- segments. The decrease was partially offset by increased net investment income, decreased net losses on financial instruments and decreased income tax expense. The decrease in net income for the six months ended June 30, 2026 was 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 within our Corporate & Other segment and a decrease in operating gain in our Health Benefits and Carelon Services segments. The decrease was partially offset by decreased net losses on financial instruments, increased net investment income and decreased income tax expense.
Previous 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.
Current wording
Our fully-diluted shareholders’ earnings per share (“EPS”) was $6.71 for the three months ended June 30, 2026, which represented a 13.1% decrease from EPS of $7.72 for the three months ended June 30, 2025. Our EPS was $14.73 for the six months ended June 30, 2026, which represented a 15.0% decrease from EPS of $17.33 for the six months ended June 30, 2025. The decreases 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, 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.
Current wording
Operating cash flow for the six months ended June 30, 2026 and 2025 was $6,245 and $3,071, respectively. The increase in net cash provided by operating activities was primarily due to favorable working capital impacts, partially offset by lower shareholders’ net income for the six months ended June 30, 2026.
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 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.
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 primarily 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 months ended March 31, 2026 and 2025 are as follows:
Current wording
Our consolidated summarized results of operations and other financial information for the three and six months ended June 30, 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 March 31, 2026 and 2025 were $41,024 and $40,887, respectively.
Current wording
2 Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the three months ended June 30, 2026 and 2025 were $41,279 and $41,271, respectively. Premiums for the six months ended June 30, 2026 and 2025 were $82,303 and $82,158, respectively.
Previous 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.
Current wording
Our benefit expense ratio increased primarily as a result of expected elevated medical cost trend in our Medicaid and Medicare businesses, partially offset by improved performance in our Individual ACA business.
Previous wording
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 wording
Our effective tax rate increased primarily due to the net increase in reserves for uncertain tax positions.
Previous 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.
Current wording
Our results of operations discussed throughout this MD&A are determined in accordance with U.S. generally accepted accounting principles (“GAAP”). We also calculate operating gain and operating margin to further aid investors in understanding and analyzing our core operating results and comparing them among periods. We define operating revenue as premium income, product revenue and service fees. Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net losses on financial instruments, loss/gain on sale of business, interest expense, amortization of other intangible assets or income taxes, as these items are managed in our corporate shared service environment and are not the responsibility of operating segment management. Operating margin is calculated as operating gain divided by operating revenue. We use these measures as a basis for evaluating segment performance, allocating resources, forecasting future operating periods and setting incentive compensation targets. This information is not intended to be considered in isolation or as a substitute for income before income tax expense, shareholders’ net income or EPS prepared in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies. For a reconciliation of reportable segments’ operating revenue to the amounts of total revenue included in the consolidated statements of income and a reconciliation of income before income tax expense to reportable segments’ operating gain, see Note 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 months ended March 31, 2026 and 2025:
Current wording
The following table presents a summary of the reportable segment financial information for the three and six months ended June 30, 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 months ended March 31, 2026 and 2025:
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 and six months ended June 30, 2026 and 2025:
Previous 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.
Current wording
1 Operating revenue within our Commercial line of business related to our Individual ACA plans was $2,720 and $2,328 for the three months ended June 30, 2026 and 2025, respectively. Operating revenue within our Commercial line of business related to our Individual ACA plans was $5,260 and $4,689 for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
Operating gain decreased primarily as a result of higher overall medical and operating costs, partially offset by higher operating revenue.
Current wording
Operating gain decreased primarily as a result of higher overall medical costs and increases in targeted investments to support and strengthen our workforce and accelerate technology adoption, partially offset by higher operating revenue.
Previous 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.
Current wording
Operating revenue increased primarily due to the continued expansion of risk-based capabilities in our specialty care solutions and behavioral health services. These increases were partially offset by decreases related to the partial termination and modification of a care delivery services contract with an unaffiliated customer and fewer post-acute solutions services provided as a result of lower Medicare membership.
Previous wording
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 wording
The increase in operating gain was primarily driven by improved specialty pharmacy profitability and lower operating expenses, partially offset by normal timing variations in recognition of performance-related adjustments.
Previous wording
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 wording
The decrease in operating gain was primarily driven by less favorable results on certain contracts and lower health plan membership within our post acute solutions services, lower health plan membership and seasonality related to the launch of risk-based capabilities in our specialty care solutions business. The decrease was partially offset by improved performance in our behavioral health business and the expansion of CareBridge.
Previous wording
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.
Current wording
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 the Transformation Program.
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, 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.
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, 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 six months ended June 30, 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 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.
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, 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 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.
Current wording
The favorable development recognized in the six months ended June 30, 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. 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.
Previous 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.
Current wording
The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 78.9% and 80.3% for the six months ended June 30, 2026 and 2025, respectively. This ratio serves as an indicator of claims processing speed whereby speed for claims payments was slightly slower during the six months ended June 30, 2026 as compared to the six months ended June 30, 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 three months ended March 31, 2026, this metric was 7.2%, which was mainly driven by both favorable completion factor
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 six months ended June 30, 2026, this metric was 7.7%, which was mainly driven by both favorable trend factor development at the end of 2025 as well as favorable completion factor development from 2025. For the six months ended June 30, 2025, this metric was 7.3%, mainly driven by favorable trend factor development at the end of 2024, with favorable completion factor development from 2024 also contributing.
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 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.
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 six months ended June 30, 2026, this metric was 0.8%, which was calculated using the redundancy of $1,195. For the six months ended June 30, 2025, the comparable metric was 0.9%, which was calculated using the redundancy of $1,065. We believe these metrics demonstrate an appropriate and consistent level of reserve conservatism.
Previous wording
For additional information regarding our sources and uses of capital during the three months ended March 31, 2026, see Note 4, “Investments,” Note 5, “Derivative Financial Instruments,” Note 9, “Debt,” and Note 11, “Capital Stock –Use of Capital – Dividends and Stock Repurchase Program,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
For additional information regarding our sources and uses of capital during the three and six months ended June 30, 2026, see Note 4, “Investments,” Note 5, “Derivative Financial Instruments,” Note 9, “Debt,” and Note 11, “Capital Stock –Use of Capital – Dividends and Stock Repurchase Program,” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (14)
Current report — wording carried from elsewhere
Benefit expense increased primarily due to higher medical costs across most lines of business within our Health Benefits segment. 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.
Current report — wording carried from elsewhere
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 — wording carried from elsewhere
Net investment income increased primarily due to higher income from alternative investments, partially offset by lower income from fixed maturity securities.
Current report — wording carried from elsewhere
Net losses on financial instruments decreased due to lower impairment on other invested assets and lower realized losses on sales of financial instruments.
Current report — wording carried from elsewhere
Our benefit expense ratio increased primarily due to expected elevated medical cost trend in our Medicaid business, partially offset by improved performance in our Individual ACA business.
Current report — wording carried from 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 a higher cost per prescription in 2026, reflecting pricing impacts and product mix, despite lower adjusted prescription volumes.
Current report — wording carried from elsewhere
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 — wording carried from elsewhere
Our effective tax rate increased primarily due to the net increase in reserves for uncertain tax positions.
Current report — wording carried from elsewhere
Our shareholders’ net income as a percentage of total revenues decreased in the six months ended June 30, 2026 as compared to six months ended June 30, 2025 as a result of all factors discussed above.
Current report — wording carried from elsewhere
Operating loss increased primarily due to an increase in unallocated corporate expenses.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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 — wording carried from elsewhere
Operating revenue increased primarily due to the continued expansion of risk-based capabilities in our specialty care solutions and behavioral health services. These increases were partially offset by decreases related to the partial termination and modification of a care delivery services contract with an unaffiliated customer and fewer post-acute solutions services provided as a result of lower Medicare membership.
Current report — wording carried from elsewhere
Operating revenue decreased primarily due to lower affiliate revenues.
Rearranged previous paragraphs (2)
Previous report — wording carried 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
Previous report — wording carried 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.