Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Elevance Health, Inc.

Consolidated Balance Sheets


	September 30, 2022		December 31, 2021
(In millions, except share data)	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	8,872	$	4,880
Fixed maturity securities (amortized cost of $28,306 and $25,641; allowance for credit losses of $10 and $6)	25,526		26,267
Equity securities	1,503		1,881


Premium receivables	6,682		5,681
Self-funded receivables	3,873		4,010
Other receivables	3,651		3,749


Other current assets	5,496		4,654
Total current assets	55,603		51,122
Long-term investments:
Fixed maturity securities (amortized cost of $671 and $616; allowance for credit losses of $0 and $0)	622		632

Other invested assets	5,516		5,225
Property and equipment, net	4,197		3,919
Goodwill	24,381		24,228
Other intangible assets	10,536		10,615
Other noncurrent assets	2,171		1,719
Total assets	$	103,026	$	97,460

Liabilities and equity
Liabilities
Current liabilities:

Medical claims payable	$	15,242	$	13,518

Other policyholder liabilities	5,482		5,521

Unearned income	3,702		1,153
Accounts payable and accrued expenses	4,963		4,970



Short-term borrowings	265		275
Current portion of long-term debt	2,249		1,599
Other current liabilities	9,384		7,849
Total current liabilities	41,287		34,885
Long-term debt, less current portion	21,258		21,157
Reserves for future policy benefits	825		802
Deferred tax liabilities, net	1,825		2,805
Other noncurrent liabilities	1,788		1,683
Total liabilities	66,983		61,332

Commitments and contingencies – Note 11

Shareholders’ equity
Preferred stock, without par value, shares authorized – 100,000,000; shares issued and outstanding – none	—		—
Common stock, par value $0.01, shares authorized – 900,000,000; shares issued and outstanding – 238,974,624 and 241,770,746	2		2
Additional paid-in capital	9,169		9,148
Retained earnings	29,604		27,088
Accumulated other comprehensive loss	(2,784)		(178)
Total shareholders’ equity	35,991		36,060
Noncontrolling interests	52		68
Total equity	36,043		36,128
Total liabilities and equity	$	103,026	$	97,460

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)


	Three Months Ended September 30				Nine Months Ended September 30
(In millions, except per share data)	2022		2021		2022		2021
Revenues
Premiums	$	33,722	$	30,395	$	99,583	$	86,604
Product revenue	3,972		3,353		10,841		9,132
Administrative fees and other revenue	1,931		1,800		5,569		5,189
Total operating revenue	39,625		35,548		115,993		100,925
Net investment income	371		335		1,112		1,026
Net (losses) gains on financial instruments	(57)		(61)		(439)		107
Total revenues	39,939		35,822		116,666		102,058
Expenses
Benefit expense	29,404		26,645		86,396		75,107
Cost of products sold	3,437		2,898		9,389		7,825
Selling, general and administrative expense	4,514		3,946		13,124		11,692
Interest expense	213		201		622		598
Amortization of other intangible assets	225		136		520		306
Loss on extinguishment of debt	—		—		—		5

Total expenses	37,793		33,826		110,051		95,533
Income before income tax expense	2,146		1,996		6,615		6,525
Income tax expense	533		494		1,557		1,555


Net income	1,613		1,502		5,058		4,970
Net loss (income) attributable to noncontrolling interests	5		7		18		(3)
Shareholders’ net income	$	1,618	$	1,509	$	5,076	$	4,967
Shareholders’ net income per share


Basic	$	6.75	$	6.20	$	21.11	$	20.33



Diluted	$	6.68	$	6.13	$	20.86	$	20.09
Dividends per share	$	1.28	$	1.13	$	3.84	$	3.39

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended September 30				Nine Months Ended September 30
(In millions)	2022		2021		2022		2021
Net income	$	1,613	$	1,502	$	5,058	$	4,970
Other comprehensive (loss) income, net of tax:
Change in net unrealized losses/gains on investments	(639)		(97)		(2,630)		(284)
Change in non-credit component of impairment losses on investments	(1)		(1)		(3)		1
Change in net unrealized gains/losses on cash flow hedges	2		4		8		10
Change in net periodic pension and postretirement costs	7		8		23		26
Foreign currency translation adjustments	(7)		(1)		(15)		(7)
Other comprehensive loss	(638)		(87)		(2,617)		(254)
Net loss (income) attributable to noncontrolling interests	5		7		18		(3)
Other comprehensive loss attributable to noncontrolling interests	3		1		11		1
Total shareholders’ comprehensive income	$	983	$	1,423	$	2,470	$	4,714

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30
(In millions)	2022		2021
Operating activities
Net income	$	5,058	$	4,970
Adjustments to reconcile net income to net cash provided by operating activities:
Net losses (gains) on financial instruments	439		(107)
Equity in net earnings of other invested assets	(304)		(437)
Depreciation and amortization	1,202		942




Deferred income taxes	(170)		114



Share-based compensation	191		196

Changes in operating assets and liabilities:
Receivables, net	(678)		(1,751)
Other invested assets	46		(56)
Other assets	(474)		(470)
Policy liabilities	1,537		2,328
Unearned income	2,548		(308)
Accounts payable and other liabilities	598		1,093


Income taxes	(41)		168
Other, net	(35)		10
Net cash provided by operating activities	9,917		6,692
Investing activities



Purchases of investments	(19,612)		(15,130)
Proceeds from sale of investments	9,402		8,339
Maturities, calls and redemptions from investments	7,606		3,388





Changes in securities lending collateral	(677)		(1,030)
Purchases of subsidiaries, net of cash acquired	(623)		(3,442)

Purchases of property and equipment	(854)		(747)

Other, net	(91)		(50)
Net cash used in investing activities	(4,849)		(8,672)
Financing activities
Net proceeds from (repayments of) commercial paper borrowings	375		(150)
Proceeds from long-term borrowings	1,286		3,462
Repayments of long-term borrowings	(982)		(954)
Proceeds from short-term borrowings	1,365		175
Repayments of short-term borrowings	(1,375)		—
Changes in securities lending payable	685		1,030
Changes in bank overdrafts	181		316



Repurchase and retirement of common stock	(1,748)		(1,378)

Cash dividends	(924)		(831)
Proceeds from issuance of common stock under employee stock plans	152		161
Taxes paid through withholding of common stock under employee stock plans	(91)		(101)

Other, net	16		8
Net cash (used in) provided by financing activities	(1,060)		1,738
Effect of foreign exchange rates on cash and cash equivalents	(16)		(9)
Change in cash and cash equivalents	3,992		(251)
Cash and cash equivalents at beginning of period	4,880		5,741
Cash and cash equivalents at end of period	$	8,872	$	5,490

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Changes in Equity

(Unaudited)


	Total Shareholders’ Equity
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
(In millions)	Number of Shares	Par Value


December 31, 2021 (audited)	241.8	$	2	$	9,148	$	27,088	$	(178)	$	68	$	36,128
Adoption of Accounting Standards Update 2020-06 (Note 2)	—	—		—		(23)		—		—		(23)
January 1, 2022	241.8	2		9,148		27,065		(178)		68		36,105
Net income (loss)	—	—		—		1,805		—		(10)		1,795
Other comprehensive loss	—	—		—		—		(1,058)		(5)		(1,063)


Noncontrolling interests adjustment	—	—		—		—		—		3		3
Repurchase and retirement of common stock	(1.2)	—		(45)		(500)		—		—		(545)
Dividends and dividend equivalents	—	—		—		(312)		—		—		(312)
Issuance of common stock under employee stock plans, net of related tax benefits	0.5	—		39		—		—		—		39
Convertible debenture repurchases, conversions and tax adjustments	—	—		9		—		—		—		9
March 31, 2022	241.1	2		9,151		28,058		(1,236)		56		36,031
Net income (loss)	—	—		—		1,653		—		(3)		1,650
Other comprehensive loss	—	—		—		—		(913)		(3)		(916)
Noncontrolling interests adjustment	—	—		—		—		—		5		5


Repurchase and retirement of common stock	(1.3)	—		(48)		(576)		—		—		(624)
Dividends and dividend equivalents	—	—		—		(310)		—		—		(310)
Issuance of common stock under employee stock plans, net of related tax benefits	0.2	—		111		—		—		—		111
Convertible debenture repurchases and conversions	—	—		(80)		—		—		—		(80)

June 30, 2022	240.0	2		9,134		28,825		(2,149)		55		35,867
Net income (loss)	—	—		—		1,618		—		(5)		1,613
Other comprehensive loss	—	—		—		—		(635)		(3)		(638)
Noncontrolling interest adjustment	—	—		—		—		—		5		5


Repurchase and retirement of common stock	(1.2)	—		(47)		(532)		—		—		(579)
Dividends and dividend equivalents	—	—		—		(307)		—		—		(307)
Issuance of common stock under employee stock plans, net of related tax benefits	0.2	—		103		—		—		—		103
Convertible debenture repurchases and conversions	—	—		(21)		—		—		—		(21)

September 30, 2022	239.0	$	2	$	9,169	$	29,604	$	(2,784)	$	52	$	36,043

See accompanying notes.

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Elevance Health, Inc. Consolidated Statements of Changes in Equity (continued) (Unaudited)

	Total Shareholders’ Equity
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity
(In millions)	Number of Shares	Par Value
January 1, 2021	245.4	$	3	$	9,244	$	23,802	$	150	$	—	$	33,199
Net income	—	—		—		1,665		—		2		1,667
Other comprehensive loss	—	—		—		—		(345)		(2)		(347)
Accumulated noncontrolling interests	—	—		—		—		—		65		65
Repurchase and retirement of common stock	(1.4)	(1)		(53)		(393)		—		—		(447)
Dividends and dividend equivalents	—	—		—		(281)		—		—		(281)
Issuance of common stock under employee stock plans, net of related tax benefits	0.9	—		62		—		—		—		62

March 31, 2021	244.9	2		9,253		24,793		(195)		65		33,918
Net income	—	—		—		1,793		—		8		1,801
Other comprehensive income	—	—		—		—		178		2		180
Noncontrolling interests adjustment	—	—		—		—		—		3		3

Repurchase and retirement of common stock	(1.3)	—		(47)		(433)		—		—		(480)
Dividends and dividend equivalents	—	—		—		(279)		—		—		(279)
Issuance of common stock under employee stock plans, net of related tax benefits	0.3	—		119		—		—		—		119
Convertible debenture repurchases and conversions	—	—		(216)		—		—		—		(216)

June 30, 2021	243.9	2		9,109		25,874		(17)		78		35,046
Net income (loss)	—	—		—		1,509		—		(7)		1,502
Other comprehensive loss	—	—		—		—		(86)		(1)		(87)
Noncontrolling interests adjustment	—	—		—		—		—		1		1
Repurchase and retirement of common stock	(1.2)	—		(44)		(407)		—		—		(451)
Dividends and dividend equivalents	—	—		—		(276)		—		—		(276)
Issuance of common stock under employee stock plans, net of related tax benefits	0.1	—		75		—		—		—		75
Convertible debenture repurchases and conversions	—	—		(2)		—		—		—		(2)
September 30, 2021	242.8	$	2	$	9,138	$	26,700	$	(103)	$	71	$	35,808

See accompanying notes.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

September 30, 2022

(In Millions, Except Per Share Data or As Otherwise Stated Herein)

1. Organization

On May 18, 2022, our shareholders approved a proposal to amend our amended and restated articles of incorporation to change our name from Anthem, Inc. to Elevance Health, Inc. This amendment and name change went into effect on June 27, 2022. We began operating as Elevance Health, Inc. and trading under our new ticker symbol “ELV” on June 28, 2022. References to the terms “we,” “our,” “us” or “Elevance Health” used throughout these Notes to Consolidated Financial Statements refer to Elevance Health, Inc., an Indiana corporation, and unless the context otherwise requires, its direct and indirect subsidiaries. References to the “states” include the District of Columbia and Puerto Rico, unless the context otherwise requires.

Elevance Health is a health company with the purpose of improving the health of humanity. We are the largest health insurer in the United States in terms of medical membership, serving over 47 million medical members through our affiliated health plans as of September 30, 2022. We offer a broad spectrum of network-based managed care risk-based plans to Individual, Group, Medicaid and Medicare markets. In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, provider network access, medical management, care management and wellness programs, actuarial services and other administrative services. We also provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program. We provide an array of specialty services both to our subsidiary health plans and also unaffiliated health plans, including pharmacy benefits management (“PBM”) services and dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

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, Anthem Blue Cross and Blue Shield, and Empire Blue Cross Blue Shield or Empire Blue Cross. In addition, we conduct business through arrangements with other BCBS licensees as well as other strategic partners. Through our subsidiaries, we also serve customers in numerous states as AIM Specialty Health, Amerigroup, Aspire Health, Beacon, CareMore, Freedom Health, HealthLink, HealthSun, Integra Managed Care, MMM, Optimum HealthCare, Simply Healthcare, and/or UniCare. We offer PBM services through our IngenioRx, Inc. (“IngenioRx”) subsidiary. We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

As part of our name change to Elevance Health, on June 15, 2022 we announced that over the next several years we will organize our brand portfolio into the following core go-to-market brands:

Anthem Blue Cross/Anthem Blue Cross and Blue Shield — represents our existing Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed plans;
Wellpoint — we intend to unite select non-BCBSA licensed Medicare, Medicaid and Commercial plans under the Wellpoint name; and
Carelon — this brand will bring together our healthcare brands and capabilities, including our Diversified Business Group and IngenioRx business under a single brand name. We now refer to our Diversified Business Group as Carelon. In January 2023, IngenioRx will become CarelonRx.

There are currently no segment changes associated with this branding strategy. Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner, and given this evolution we are in the process of reviewing and modifying how we will manage our businesses in the future.

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2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our 2021 Annual Report on Form 10-K, unless the information contained in those disclosures materially changed or is required by GAAP. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 have been recorded. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022, or any other period. The seasonal nature of portions of our health care and related benefits business, competitive and other market conditions, as well as COVID-19 related impacts, may cause full-year results to differ from estimates based upon our interim results of operations. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2021 included in our 2021 Annual Report on Form 10-K.

Certain of our subsidiaries operate outside of the United States and have functional currencies other than the U.S. dollar (“USD”). We translate the assets and liabilities of those subsidiaries to USD using the exchange rate in effect at the end of the period. We translate the revenues and expenses of those subsidiaries to USD using the average exchange rates in effect during the period. The net effect of these translation adjustments is included in “Foreign currency translation adjustments” in our consolidated statements of comprehensive income.

Cash and Cash Equivalents: We control a number of bank accounts that are used exclusively to hold customer funds for the administration of customer benefits and we have cash and cash equivalents on deposit to meet certain regulatory requirements. These amounts totaled $291 and $173 at September 30, 2022 and December 31, 2021, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.

Investments: We classify fixed maturity securities in our investment portfolio as “available-for-sale” and report those securities at fair value. Certain fixed maturity securities are available to support current operations and, accordingly, we classify such investments as current assets without regard to their contractual maturity. Investments used to satisfy contractual, regulatory or other requirements are classified as long-term, without regard to contractual maturity.

If a fixed maturity security is in an unrealized loss position and we have the intent to sell the fixed maturity security, or it is more likely than not that we will have to sell the fixed maturity security before recovery of its amortized cost basis, we write down the fixed maturity security’s cost basis to fair value and record an impairment loss in our consolidated statements of income. For impaired fixed maturity securities that we do not intend to sell or if it is more likely than not that we will not have to sell such securities, but we expect that we will not fully recover the amortized cost basis, we recognize the credit component of the impairment as an allowance for credit loss in our consolidated balance sheets and record an impairment loss in our consolidated statements of income. The non-credit component of the impairment is recognized in accumulated other comprehensive loss. Furthermore, unrealized losses entirely caused by non-credit-related factors related to fixed maturity securities for which we expect to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive loss.

The credit component of an impairment is determined primarily by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting our best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of purchase. For mortgage-backed and asset-backed securities, cash flow estimates are based on assumptions regarding the underlying collateral, including prepayment speeds, vintage, type of underlying asset, geographic concentrations, default rates, recoveries and changes in value. For all other securities, cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings and estimates regarding timing and amount of recoveries associated with a default.

For asset-backed securities included in fixed maturity securities, we recognize income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in the

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securities is adjusted to the amount that would have existed had the new effective yield been applied since the purchase date of the securities. Such adjustments are reported within net investment income.

The changes in fair value of our marketable equity securities are recognized in our results of operations within net gains and losses on financial instruments. Certain marketable equity securities are held to satisfy contractual obligations, and are reported under the caption “Other invested assets” in our consolidated balance sheets.

We have corporate-owned life insurance policies on certain participants in our deferred compensation plans and other members of management. The cash surrender value of the corporate-owned life insurance policies is reported under the caption “Other invested assets” in our consolidated balance sheets.

We use the equity method of accounting for investments in companies in which our ownership interest may enable us to influence the operating or financial decisions of the investee company. Our proportionate share of equity in net income of these unconsolidated affiliates is reported within net investment income. The equity method investments are reported under the caption “Other invested assets” in our consolidated balance sheets.

Investment income is recorded when earned. All securities sold resulting in investment gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. We recognize the collateral as an asset, which is reported under the caption “Other current assets” in our consolidated balance sheets, and we record a corresponding liability for the obligation to return the collateral to the borrower, which is reported under the caption “Other current liabilities” in our consolidated balance sheets. The securities on loan are reported in the applicable investment category on our consolidated balance sheets. Unrealized gains or losses on securities lending collateral are included in accumulated other comprehensive loss as a separate component of shareholders’ equity. The market value of loaned securities and that of the collateral pledged can fluctuate in non-synchronized fashions. To the extent the loaned securities’ value appreciates faster or depreciates slower than the value of the collateral pledged, we are exposed to the risk of the shortfall. As a primary mitigating mechanism, the loaned securities and collateral pledged are marked to market on a daily basis and the shortfall, if any, is collected accordingly. Secondarily, the collateral level is set at 102% of the value of the loaned securities, which provides a cushion before any shortfall arises. The investment of the cash collateral is subject to market risk, which is managed by limiting the investments to higher quality and shorter duration instruments.

Receivables: Receivables are reported net of amounts for expected credit losses. The allowance for doubtful accounts is based on historical collection trends, future forecasts and our judgment regarding the ability to collect specific accounts.

Premium receivables include the uncollected amounts from risk-based groups, individuals and government programs for insurance services. Premium receivables are reported net of an allowance for doubtful accounts of $140 and $142 at September 30, 2022 and December 31, 2021, respectively.

Self-funded receivables include administrative fees, claims and other amounts due from fee-based customers for administrative services. Self-funded receivables are reported net of an allowance for doubtful accounts of $82 and $50 at September 30, 2022 and December 31, 2021, respectively.

Other receivables include pharmacy rebates, provider advances, claims recoveries, reinsurance receivables, proceeds due from brokers on investment trades, accrued investment income, and other miscellaneous amounts due to us. These receivables are reported net of an allowance for doubtful accounts of $709 and $648 at September 30, 2022 and December 31, 2021, respectively.

Revenue Recognition: For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheet at September 30, 2022. For the three and nine months ended September 30, 2022 and 2021, revenue recognized from performance obligations related to prior periods, such as due to changes in transaction price, was not material. For contracts that have an original expected duration of greater than one year, revenue expected to be recognized in future periods related to unfulfilled contractual performance obligations and contracts with variable consideration related to undelivered performance obligations is not material.

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Recently Adopted Accounting Guidance: In January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of the reference rate reform. The provisions must be applied at a Topic, Subtopic, or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. We adopted ASU 2021-01 on January 7, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

In October 2020, the FASB issued Accounting Standards Update No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs (“ASU 2020-08”). The amendments in ASU 2020-08 clarify when an entity should assess whether a callable debt security is within the scope of accounting guidance, which impacts the amortization period for nonrefundable fees and other costs. ASU 2020-08 became effective for interim and annual reporting periods beginning after December 15, 2020. The amendments were to be applied on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. We adopted ASU 2020-08 on January 1, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments eliminate two of the three accounting models that require separate accounting for convertible features of debt securities, simplify the contract settlement assessment for equity classification, require the use of the if-converted method for all convertible instruments in the diluted earnings per share calculation and expand disclosure requirements. The amendments became effective for our annual and interim reporting periods beginning after December 15, 2021. We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, which resulted in an increase to our reported debt outstanding of $31, a decrease to our deferred tax liabilities of $8, and a corresponding cumulative-effect reduction to our opening retained earnings of $23; these amounts are not material to our overall consolidated financial position. The adoption of ASU 2020-06 did not have an impact on our results of operations or our consolidated cash flows. Use of the if-converted method did not have an impact on our overall earnings per share calculation.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in ASU 2019-12 remove certain exceptions to the general principles in Accounting Standards Codification Topic 740. The amendments also clarify and amend existing guidance to improve consistent application. The amendments became effective for our annual reporting periods beginning after December 15, 2020. The transition method (retrospective, modified retrospective, or prospective basis) related to the amendments depends on the applicable guidance, and all amendments for which there is no transition guidance specified are to be applied on a prospective basis. We adopted ASU 2019-12 on January 1, 2021, and the adoption did not have an impact on our consolidated financial position, results of operations or cash flows.

Recent Accounting Guidance Not Yet Adopted: In November 2020, the FASB issued Accounting Standards Update No. 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application (“ASU 2020-11”). The amendments in ASU 2020-11 make changes to the effective date and early application of Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”), which was issued in November 2018. The amendments in ASU 2020-11 have extended the original effective date by one year, and now the amendments are required for our interim and annual reporting periods beginning after December 15, 2022. The amendments in ASU 2018-12 make changes to a variety of areas to simplify or improve the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The amendments require insurers to annually review the assumptions they make about their policyholders and update the liabilities for future policy benefits if the assumptions change. The amendments also simplify the amortization of deferred contract acquisition costs and add new disclosure requirements about the assumptions insurers use to measure their liabilities and how they may affect future cash flows. The amendments related to the liability for future policy benefits for traditional and limited-payment contracts and deferred acquisition costs are to be applied to contracts in force as of the beginning of the earliest period presented, with an option to apply such amendments retrospectively with a cumulative-effect adjustment to the opening balance of retained earnings as of the earliest period presented. The amendments

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for market risk benefits are to be applied retrospectively. We do not believe the adoption of ASU 2020-11 and ASU 2018-12 will have a material impact on our consolidated financial position, results of operations, cash flows, and related disclosures.

There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2021 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations or cash flows.

3. Business Acquisitions

Completed Acquisitions

On May 5, 2022, we completed our acquisition of Integra Managed Care (“Integra”) from Personal Touch Holding Corporation. Integra is a managed long-term care plan that serves New York state Medicaid members, enabling adults with long-term care needs and disabilities to live safely and independently in their own homes. The purchase price was allocated to the tangible and intangible net assets acquired based on management’s initial estimates of their fair values, of which $89 has been allocated to finite-lived intangible assets, $250 to indefinite-lived intangible assets, and $123 to goodwill, including measurement period adjustments to goodwill of $13 during the quarter ended September 30, 2022. The majority of goodwill is deductible for income tax purposes. As of September 30, 2022, the initial accounting for the acquisition had not been finalized. Any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will be recorded as an adjustment to goodwill. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

Acquisitions completed during the year ended December 31, 2021, for which the initial accounting was finalized during the three months ended June 30, 2022 included myNEXUS, Inc. (“myNEXUS”), a comprehensive home-based nursing management company for payors, and MMM Holdings, LLC (“MMM”), including its Medicare Advantage plan, Medicaid plan and other affiliated companies. As of September 30, 2022, the purchase price of each transaction was allocated to the tangible and intangible net assets acquired based on management’s final estimates of their fair values, of which $1,577 has been allocated to finite-lived intangible assets, $20 to indefinite-lived intangible assets, and $2,531 to goodwill. The majority of goodwill is not deductible for income tax purposes.

4. Business Optimization Initiatives

Provided below is a summary of the activity, by reportable segment, related to the liability for employee termination costs previously incurred in connection with our enterprise-wide business optimization initiatives introduced in 2020.


	Commercial & Specialty Business		Government Business		IngenioRx		Other		Total
2020 Business Optimization Initiatives
Employee termination costs:
Liability for employee termination costs at January 1, 2022	$	61	$	57	$	1	$	3	$	122

Payments	(16)		(14)		—		—		(30)
Liability for employee termination costs at September 30, 2022	$	45	$	43	$	1	$	3	$	92

5. Investments

Fixed Maturity Securities

We evaluate our available-for-sale fixed maturity securities for declines based on qualitative and quantitative factors. We have established an allowance for credit loss and recorded credit loss expense as a reflection of our expected impairment losses. We continue to review our investment portfolios under our impairment review policy. Given the inherent uncertainty of changes in market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and additional material impairment losses for credit losses on investments may be recorded in future periods.

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A summary of current and long-term fixed maturity securities, available-for-sale, at September 30, 2022 and December 31, 2021 is as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance For Credit Losses		Estimated Fair Value

September 30, 2022
Fixed maturity securities:
United States Government securities	$	1,673	$	—	$	(125)	$	—	$	1,548
Government sponsored securities	65		—		(4)		—		61
Foreign government securities	322		—		(70)		(1)		251
States, municipalities and political subdivisions	4,431		5		(355)		—		4,081
Corporate securities	13,766		9		(1,560)		(7)		12,208
Residential mortgage-backed securities	4,748		7		(506)		(2)		4,247
Commercial mortgage-backed securities	77		—		(7)		—		70
Other securities	3,895		37		(250)		—		3,682
Total fixed maturity securities	$	28,977	$	58	$	(2,877)	$	(10)	$	26,148
December 31, 2021
Fixed maturity securities:
United States Government securities	$	1,443	$	7	$	(18)	$	—	$	1,432
Government sponsored securities	65		4		(1)		—		68
Foreign government securities	353		7		(13)		—		347
States, municipalities and political subdivisions	5,321		310		(10)		—		5,621
Corporate securities	12,044		401		(78)		(4)		12,363
Residential mortgage-backed securities	4,059		75		(35)		(2)		4,097
Commercial mortgage-backed securities	65		2		(3)		—		64
Other securities	2,907		24		(24)		—		2,907
Total fixed maturity securities	$	26,257	$	830	$	(182)	$	(6)	$	26,899

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For fixed maturity securities in an unrealized loss position at September 30, 2022 and December 31, 2021, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:


	Less than 12 Months					12 Months or Greater
(Securities are whole amounts)	Number of Securities	Estimated Fair Value		Gross Unrealized Loss		Number of Securities	Estimated Fair Value		Gross Unrealized Loss
September 30, 2022
Fixed maturity securities:
United States Government securities	65	$	911	$	(77)	29	$	303	$	(48)
Government sponsored securities	40	61		(4)		1	—		—
Foreign government securities	225	169		(34)		151	81		(36)
States, municipalities and political subdivisions	1,964	3,602		(314)		139	200		(41)
Corporate securities	4,322	10,228		(1,165)		1,318	1,679		(395)
Residential mortgage-backed securities	2,035	2,949		(294)		530	1,182		(212)
Commercial mortgage-backed securities	34	56		(3)		7	13		(4)
Other securities	921	2,535		(165)		269	670		(85)
Total fixed maturity securities	9,606	$	20,511	$	(2,056)	2,444	$	4,128	$	(821)


December 31, 2021
Fixed maturity securities:
United States Government securities	51	$	990	$	(11)	27	$	176	$	(7)
Government sponsored securities	—	—		—		1	1		(1)
Foreign government securities	188	143		(8)		68	41		(5)
States, municipalities and political subdivisions	281	634		(9)		8	16		(1)
Corporate securities	1,846	3,310		(57)		403	485		(21)
Residential mortgage-backed securities	692	1,967		(26)		125	173		(9)
Commercial mortgage-backed securities	2	4		(1)		4	8		(2)
Other securities	511	1,707		(19)		50	85		(5)
Total fixed maturity securities	3,571	$	8,755	$	(131)	686	$	985	$	(51)

Although not material to our consolidated results of operations, during the nine months ended September 30, 2022, we recorded a combination of credit losses, losses on sales of fixed maturity securities and impairments related to our exposure resulting from investments in Russia and Ukraine. At September 30, 2022, our remaining holdings of Russia and Ukraine fixed maturity securities were not material.

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of September 30, 2022, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their maturity or anticipated recovery. The declines in fair values are largely due to increasing interest rates driven by the high rate of inflation and other market conditions and not by unfavorable changes in the credit quality characteristics that impact our assessment on collectability of principal and interest. We have evaluated qualitative and quantitative factors for indications of credit losses on our securities, including factors such as credit rating, foreign political conflicts, uncertainties around future ability to collect payment, significant declines in fair value and industry conditions, market data, and notifications of maturity and coupon default, and have recorded an allowance for credit losses in the amount of $10 and $6 at September 30, 2022 and December 31, 2021, respectively.

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The amortized cost and fair value of fixed maturity securities at September 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.


	Amortized Cost		Estimated Fair Value
Due in one year or less	$	911	$	901
Due after one year through five years	7,364		6,871
Due after five years through ten years	9,535		8,467
Due after ten years	6,342		5,592
Mortgage-backed securities	4,825		4,317
Total fixed maturity securities	$	28,977	$	26,148

During the three and nine months ended September 30, 2022, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $5,281 and $15,953, respectively. During the three and nine months ended September 30, 2021, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $2,620 and $8,570, respectively.

In the ordinary course of business, we may sell securities at a loss for a number of reasons, including, but not limited to: (i) changes in the investment environment; (ii) expectation that the fair value could deteriorate further; (iii) desire to reduce exposure to an issuer or an industry; (iv) changes in credit quality; or (v) changes in expected cash flow.

All securities sold resulting in investment gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.

Equity Securities

A summary of marketable equity securities at September 30, 2022 and December 31, 2021 is as follows:


	September 30, 2022		December 31, 2021
Equity securities:
Exchange traded funds	$	1,403	$	1,750

Common equity securities	5		42
Private equity securities	95		89
Total	$	1,503	$	1,881

Other Invested Assets

Other invested assets include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations, mortgage loans and the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. Financial information for certain of these investments are reported on a one or three month lag due to the timing of when we receive financial information from the companies.

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Investment Gains and Losses

Net investment (losses) gains for the three and nine months ended September 30, 2022 and 2021 are as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Net (losses) gains:
Fixed maturity securities:
Gross realized gains from sales	$	8	$	30	$	44	$	133
Gross realized losses from sales	(99)		(8)		(353)		(32)
Impairment (losses) recoveries recognized in income	(5)		—		(25)		1
Net realized (losses) gains from sales of fixed maturity securities	(96)		22		(334)		102
Equity securities:
Unrealized (losses) gains recognized on equity securities still held at the end of the period	(43)		(4)		(192)		4
Net realized gains (losses) recognized on equity securities sold during the period	4		(1)		(20)		(57)
Net losses on equity securities	(39)		(5)		(212)		(53)
Other investments:
Gross gains	95		2		126		9
Gross losses	(2)		(93)		(45)		(5)
Impairment (losses) recoveries recognized in income	(12)		1		(17)		(5)
Net losses (gains) on other investments	81		(90)		64		(1)
Net (losses) gains on investments	$	(54)	$	(73)	$	(482)	$	48

Accrued Investment Income

At September 30, 2022 and December 31, 2021, accrued investment income totaled $228 and $205, respectively. We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

Securities Lending Programs

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. The fair value of the collateral received at the time of the transactions amounted to $2,841 and $2,155 at September 30, 2022 and December 31, 2021, respectively. The value of the collateral represented 102% of the market value of the securities on loan at each of September 30, 2022 and December 31, 2021. We recognize the collateral as an asset under the caption “Other current assets” in our consolidated balance sheets, and we recognize a corresponding liability for the obligation to return the collateral to the borrower under the caption “Other current liabilities.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

At September 30, 2022 and December 31, 2021, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $2,636 and $1,874, respectively, of United States Government securities for $180 and $281, respectively, and of Other securities for $25 and $0, respectively.

6. Derivative Financial Instruments

We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, swaptions, embedded derivatives and warrants. We also enter into master netting agreements, which reduce credit risk by permitting net settlement of transactions.

We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates. The floating rates payable on all of our fair value hedges are benchmarked to

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LIBOR or the Secured Overnight Financing Rate (“SOFR”). Any amounts recognized for changes in fair value of these derivatives are included in the captions “Other current assets,” “Other noncurrent assets,” “Other current liabilities” or “Other noncurrent liabilities” in our consolidated balance sheets.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive loss, net of tax, was $231 and $239 at September 30, 2022 and December 31, 2021, respectively.

During the three and nine months ended September 30, 2022, we recognized net (losses) gains on non-hedging derivatives of $(3) and $43, respectively. During the three and nine months ended September 30, 2021, we recognized net gains on non-hedging derivatives of $12 and $59, respectively.

For additional information relating to the fair value of our derivative assets and liabilities, see Note 7, “Fair Value,” of this Form 10-Q.

7. Fair Value

Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by FASB guidance for fair value measurements and disclosures, are as follows:


Level Input						Input Definition
Level I						Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II						Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III						Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in our consolidated balance sheets:

Cash equivalents: Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less and are purchased daily at par value with specified yield rates. Due to the high ratings and short-term nature of the funds, we designate all cash equivalents as Level I.

Fixed maturity securities, available-for-sale: Fair values of available-for-sale fixed maturity securities are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level II securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States government securities, foreign government securities, and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. We have controls in place to review the pricing services’ qualifications and procedures used to determine fair values. In addition, we periodically review the pricing services’ pricing methodologies, data sources and pricing inputs to ensure the fair values obtained are reasonable. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds. We also have certain fixed maturity securities, primarily corporate debt securities, which are designated Level III securities. For these securities, the valuation methodologies may incorporate broker quotes or discounted cash flow analyses using assumptions for inputs such as expected cash flows, benchmark yields, credit spreads, default rates and prepayment speeds that are not observable in the markets.

Equity securities: Fair values of equity securities are generally designated as Level I and are based on quoted market prices. For certain equity securities, quoted market prices for the identical security are not always available, and the fair value is estimated by reference to similar securities for which quoted prices are available. These securities are designated Level II. We also have certain equity securities, including private equity securities, for which the fair value is estimated based on each security’s current condition and future cash flow projections. Such securities are designated Level III. The fair values of these private equity securities are generally based on either broker quotes or discounted cash flow projections using assumptions

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for inputs such as the weighted-average cost of capital, long-term revenue growth rates and earnings before interest, taxes, depreciation and amortization, and/or revenue multiples that are not observable in the markets.

Securities lending collateral: Fair values of securities lending collateral are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level I or Level II inputs for the determination of fair value, to facilitate fair value measurements and disclosures.

Derivatives: Fair values are based on the quoted market prices by the financial institution that is the counterparty to the derivative transaction. We independently verify prices provided by the counterparties using valuation models that incorporate observable market inputs for similar derivative transactions. Derivatives are designated as Level II securities. Derivatives presented within the fair value hierarchy table below are presented on a gross basis and not on a master netting basis by counterparty.

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A summary of fair value measurements by level for assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021 is as follows:


	Level I		Level II		Level III		Total
September 30, 2022
Assets:
Cash equivalents	$	5,794	$	—	$	—	$	5,794
Fixed maturity securities, available-for-sale:
United States Government securities	—		1,548		—		1,548
Government sponsored securities	—		61		—		61
Foreign government securities	—		251		—		251
States, municipalities and political subdivisions, tax-exempt	—		4,081		—		4,081
Corporate securities	—		12,079		129		12,208
Residential mortgage-backed securities	—		4,247		—		4,247
Commercial mortgage-backed securities	—		70		—		70
Other securities	—		3,371		311		3,682
Total fixed maturity securities, available-for-sale	—		25,708		440		26,148
Equity securities:
Exchange traded funds	1,403		—		—		1,403

Common equity securities	6		(1)		—		5
Private equity securities	—		—		95		95
Total equity securities	1,409		(1)		95		1,503
Other invested assets - common equity securities	149		—		—		149
Securities lending collateral	—		2,841		—		2,841
Derivatives - other assets	—		25		—		25
Total assets	$	7,352	$	28,573	$	535	$	36,460
Liabilities:
Derivatives - other liabilities	$	—	$	(70)	$	—	$	(70)
Total liabilities	$	—	$	(70)	$	—	$	(70)

December 31, 2021
Assets:
Cash equivalents	$	2,415	$	—	$	—	$	2,415
Fixed maturity securities, available-for-sale:
United States Government securities	—		1,432		—		1,432
Government sponsored securities	—		68		—		68
Foreign government securities	—		347		—		347
States, municipalities and political subdivisions, tax-exempt	—		5,621		—		5,621
Corporate securities	—		12,027		336		12,363
Residential mortgage-backed securities	—		4,092		5		4,097
Commercial mortgage-backed securities	—		64		—		64
Other securities	—		2,888		19		2,907
Total fixed maturity securities, available-for-sale	—		26,539		360		26,899
Equity securities:
Exchange traded funds	1,750		—		—		1,750

Common equity securities	8		34		—		42
Private equity securities	—		—		89		89
Total equity securities	1,758		34		89		1,881
Other invested assets - common equity securities	138		—		—		138
Securities lending collateral	—		2,155		—		2,155
Derivatives - other assets	—		19		—		19
Total assets	$	4,311	$	28,747	$	449	$	33,507
Liabilities:
Derivatives - other liabilities	$	—	$	(1)	$	—	$	(1)
Total liabilities	$	—	$	(1)	$	—	$	(1)

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A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the three months ended September 30, 2022 and 2021 is as follows:





	Corporate Securities		Residential Mortgage- backed Securities		Other Securities		Equity Securities		Total
Three Months Ended September 30, 2022
Beginning balance at July 1, 2022	$	155	$	—	$	218	$	94	$	467
Total losses:
Recognized in net income	—		—		—		—		—
Recognized in accumulated other comprehensive loss	1		—		17		—		18
Purchases	15		—		77		3		95
Sales	(26)		—		(1)		(2)		(29)
Settlements	(10)		—		—		—		(10)

Transfers out of Level III	(6)		—		—		—		(6)
Ending balance at September 30, 2022	$	129	$	—	$	311	$	95	$	535
Change in unrealized losses included in net income related to assets still held at September 30, 2022	$	—	$	—	$	—	$	—	$	—

Three Months Ended September 30, 2021
Beginning balance at July 1, 2021	$	351	$	2	$	7	$	77	$	437
Total gains:
Recognized in net income	1		—		—		5		6
Recognized in accumulated other comprehensive loss	(1)		—		—		—		(1)
Purchases	34		—		—		3		37
Sales	—		—		—		(1)		(1)
Settlements	(47)		—		—		—		(47)

Transfers out of Level III	(4)		(1)		(5)		—		(10)
Ending balance at September 30, 2021	$	334	$	1	$	2	$	84	$	421
Change in unrealized gains included in net income related to assets still held at September 30, 2021	$	—	$	—	$	—	$	5	$	5

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A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level III inputs for the nine months ended September 30, 2022 and 2021 is as follows:



	Corporate Securities		Residential Mortgage- backed Securities		Other Securities		Equity Securities		Total
Nine Months Ended September 30, 2022
Beginning balance at January 1, 2022	$	336	$	5	$	19	$	89	$	449
Total losses:
Recognized in net income	—		—		—		1		1
Recognized in accumulated other comprehensive loss	(1)		—		17		—		16
Purchases	40		—		281		24		345
Sales	(201)		—		(1)		(19)		(221)
Settlements	(42)		—		—		—		(42)
Transfers into Level III	9		—		—		—		9
Transfers out of Level III	(12)		(5)		(5)		—		(22)
Ending balance at September 30, 2022	$	129	$	—	$	311	$	95	$	535
Change in unrealized gains included in net income related to assets still held at September 30, 2022	$	—	$	—	$	—	$	1	$	1

Nine Months Ended September 30, 2021
Beginning balance at January 1, 2021	$	325	$	2	$	5	$	60	$	392
Total gains:
Recognized in net income	2		—		—		17		19
Recognized in accumulated other comprehensive loss	4		—		—		—		4
Purchases	135		—		—		11		146
Sales	(12)		—		—		(4)		(16)
Settlements	(118)		—		(1)		—		(119)

Transfers out of Level III	(2)		(1)		(2)		—		(5)
Ending balance at September 30, 2021	$	334	$	1	$	2	$	84	$	421
Change in unrealized gains included in net income related to assets still held at September 30, 2021	$	—	$	—	$	—	$	17	$	17

There were no individually material transfers into or out of Level III during the three and nine months ended September 30, 2022 or 2021.

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. As disclosed in Note 3, “Business Acquisitions,” we completed our acquisition of Integra in the second quarter of 2022 and the acquisitions of myNEXUS and MMM during the second quarter of 2021. The net assets acquired in our acquisitions of Integra, myNEXUS and MMM and resulting goodwill and other intangible assets were recorded at fair value primarily using Level III inputs. The majority of assets acquired and liabilities assumed were recorded at their carrying values as of the respective date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in our acquisitions of Integra, myNEXUS and MMM were internally estimated based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets could be expected to generate in the future. We developed internal estimates for the expected cash flows and discount rate in the present value calculation. Other than the assets acquired and liabilities assumed in our acquisitions of Integra, myNEXUS and MMM described above, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2022 or 2021.

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Our valuation policy is determined by members of our treasury and accounting departments. Whenever possible, our policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, unobservable inputs or other valuation techniques. These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows. The use of assumptions for unobservable inputs for the determination of fair value involves a level of judgment and uncertainty. Changes in assumptions that reasonably could have been different at the reporting date may result in a higher or lower determination of fair value. Changes in fair value measurements, if significant, may affect performance of cash flows.

Potential taxes and other transaction costs are not considered in estimating fair values. Our valuation policy is generally to obtain quoted prices for each security from third-party pricing services, which are derived through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. As we are responsible for the determination of fair value, we perform analysis on the prices received from the pricing services to determine whether the prices are reasonable estimates of fair value. This analysis is performed by our internal treasury personnel who are familiar with our investment portfolios, the pricing services engaged and the valuation techniques and inputs used. Our analysis includes procedures such as a review of month-to-month price fluctuations and price comparisons to secondary pricing services. There were no adjustments to quoted market prices obtained from the pricing services during the three and nine months ended September 30, 2022 or 2021.

In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in our consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other current assets, deferred income taxes, intangible assets and certain financial instruments, such as policy liabilities, are excluded from the fair value disclosures. Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value.

The carrying amounts reported in the consolidated balance sheets for cash, premium receivables, self-funded receivables, other receivables, unearned income, accounts payable and accrued expenses, and certain other current liabilities approximate fair value because of the short-term nature of these items. These assets and liabilities are not listed in the table below.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument that is recorded at its carrying value in our consolidated balance sheets:

Other invested assets: Other invested assets include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations and mortgage loans, as well as the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. Mortgage loans are carried at amortized cost, which approximates fair value. The carrying value of corporate-owned life insurance policies represents the cash surrender value as reported by the respective insurer, which approximates fair value.

Short-term borrowings: The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices were available, on the current market interest rates estimated to be available to us for debt of similar terms and remaining maturities.

Long-term debt—commercial paper: The carrying amount for commercial paper approximates fair value, as the underlying instruments have variable interest rates at market value.

Long-term debt—senior unsecured notes and surplus notes: The fair values of our notes are based on quoted market prices in active markets for the same or similar debt, or, if no quoted market prices are available, on the current market observable rates estimated to be available to us for debt of similar terms and remaining maturities.

Long-term debt—convertible debentures: The fair value of our convertible debentures is based on the quoted market price in the active private market in which the convertible debentures trade.

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A summary of the estimated fair values by level of each class of financial instrument that is recorded at its carrying value on our consolidated balance sheets at September 30, 2022 and December 31, 2021 is as follows:


	Carrying Value			Estimated Fair Value
			Level I			Level II			Level III			Total
September 30, 2022
Assets:
Other invested assets	$	5,367		$	—		$	—		$	5,367		$	5,367
Liabilities:
Debt:
Short-term borrowings	265			—			265			—			265

Commercial paper	675			—			675			—			675
Notes	22,747			—			20,163			—			20,163
Convertible debentures	86			—			554			—			554

December 31, 2021
Assets:
Other invested assets	$	5,087		$	—		$	—		$	5,087		$	5,087
Liabilities:
Debt:
Short-term borrowings	275			—			275			—			275
Commercial paper	300			—			300			—			300
Notes	22,384			—			25,150			—			25,150
Convertible debentures	72			—			687			—			687

8. Income Taxes

During the three months ended September 30, 2022 and 2021, we recognized income tax expense of $533 and $494, respectively, which represent effective income tax rates of 24.8% and 24.7%, respectively.

During the nine months ended September 30, 2022 and 2021, we recognized income tax expense of $1,557 and $1,555, respectively, which represent effective income tax rates of 23.5% and 23.8%, respectively. The decrease in our effective tax rate from the nine months ended September 30, 2021 was primarily related to the tax impact of expected geographic changes in our mix of 2022 earnings.

Income taxes receivable totaled $214 and $173 at September 30, 2022 and December 31, 2021, respectively. We recognized the income taxes receivable as an asset under the caption “Other current assets” in our consolidated balance sheets.

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9. Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the nine months ended September 30, 2022 is as follows:


	Commercial & Specialty Business		Government Business		Other		Total
Gross medical claims payable, beginning of period	$	3,847	$	9,157	$	278	$	13,282
Ceded medical claims payable, beginning of period	(13)		(8)		—		(21)
Net medical claims payable, beginning of period	3,834		9,149		278		13,261
Business combinations and purchase adjustments	3		130		—		133
Net incurred medical claims:
Current period	22,049		60,971		1,157		84,177
Prior periods redundancies	(183)		(639)		(79)		(901)
Total net incurred medical claims	21,866		60,332		1,078		83,276
Net payments attributable to:
Current period medical claims	18,604		50,950		899		70,453
Prior periods medical claims	3,181		7,854		184		11,219
Total net payments	21,785		58,804		1,083		81,672
Net medical claims payable, end of period	3,918		10,807		273		14,998
Ceded medical claims payable, end of period	3		—		—		3
Gross medical claims payable, end of period	$	3,921	$	10,807	$	273	$	15,001

At September 30, 2022, the total of net incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $81, $388 and $3,449 for the claim years 2020 and prior, 2021 and 2022, respectively.

At September 30, 2022, the total of net incurred but not reported liabilities plus expected development on reported claims for the Government Business was $148, $508 and $10,151 for the claim years 2020 and prior, 2021 and 2022, respectively.

At September 30, 2022, the total of net incurred but not reported liabilities plus expected development on reported claims for Other was $2, $14 and $257 for the claim years 2020 and prior, 2021 and 2022, respectively.

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A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 15, “Segment Information”), for the nine months ended September 30, 2021 is as follows:


	Commercial & Specialty Business		Government Business		Other		Total
Gross medical claims payable, beginning of period	$	3,294	$	7,646	$	195	$	11,135
Ceded medical claims payable, beginning of period	(13)		(33)		—		(46)
Net medical claims payable, beginning of period	3,281		7,613		195		11,089
Business combinations and purchase adjustments	—		375		45		420
Net incurred medical claims:
Current period	20,499		52,422		1,176		74,097
Prior periods redundancies	(496)		(1,309)		(17)		(1,822)
Total net incurred medical claims	20,003		51,113		1,159		72,275
Net payments attributable to:
Current period medical claims	16,985		44,160		978		62,123
Prior periods medical claims	2,450		5,781		169		8,400
Total net payments	19,435		49,941		1,147		70,523
Net medical claims payable, end of period	3,849		9,160		252		13,261
Ceded medical claims payable, end of period	15		23		—		38
Gross medical claims payable, end of period	$	3,864	$	9,183	$	252	$	13,299

The favorable development recognized in the nine months ended September 30, 2022 and 2021 resulted primarily from trend factors in late 2021 and late 2020, respectively, developing more favorably than originally expected. Favorable development in the completion factors resulting from the latter parts of 2020 developing faster than expected also contributed to the favorable development in the nine months ended September 30, 2021. The impact from COVID-19 on healthcare utilization and medical claims submission patterns continues to provide increased estimation uncertainty on our incurred but not reported liability at September 30, 2022.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for periods in 2022 is as follows:




	Three Months Ended						Nine Months Ended September 30, 2022
	March 31, 2022		June 30, 2022		September 30, 2022

Net incurred medical claims:
Commercial & Specialty Business	$	6,834	$	7,522	$	7,510	$	21,866
Government Business	19,943		19,788		20,601		60,332
Other	354		324		400		1,078
Total net incurred medical claims	27,131		27,634		28,511		83,276
Quality improvement and other claims expense	1,084		1,143		893		3,120
Benefit expense	$	28,215	$	28,777	$	29,404	$	86,396

During the three months ended September 30, 2022, based on recent regulatory clarification, we realigned certain quality improvement costs from benefit expense to administrative expense that were previously allocated to benefit expense during the three months ended March 31, 2022 and the three months ended June 30, 2022.

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The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for periods in 2021 is as follows:




	Three Months Ended						Nine Months Ended September 30, 2021
	March 31, 2021		June 30, 2021		September 30, 2021
Net incurred medical claims:
Commercial & Specialty Business	$	6,072	$	6,718	$	7,213	$	20,003
Government Business	16,319		16,723		18,071		51,113
Other	336		403		420		1,159
Total net incurred medical claims	22,727		23,844		25,704		72,275
Quality improvement and other claims expense	972		919		941		2,832
Benefit expense	$	23,699	$	24,763	$	26,645	$	75,107

The reconciliation of the medical claims payable reflected in the tables above to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of September 30, 2022, is as follows:


	Commercial & Specialty Business		Government Business		Other		Total
Net medical claims payable, end of period	$	3,918	$	10,807	$	273	$	14,998
Ceded medical claims payable, end of period	3		—		—		3
Insurance lines other than short duration	—		241		—		241
Gross medical claims payable, end of period	$	3,921	$	11,048	$	273	$	15,242

10. Debt

We generally issue senior unsecured notes for long-term borrowing purposes. At September 30, 2022 and December 31, 2021, we had $22,722 and $22,359, respectively, outstanding under these notes.

On May 16, 2022, we repaid, at maturity, the $850 outstanding balance of our 3.125% senior unsecured notes.

On April 29, 2022, we issued $600 aggregate principal amount of 4.100% Notes due 2032 (the “2032 Notes”) and $700 aggregate principal amount of 4.550% Notes due 2052 (the “2052 Notes”) under our shelf registration statement. Interest on the 2032 Notes and 2052 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2022. We used the net proceeds for working capital and general corporate purposes, such as the funding of acquisitions, repayment of short-term and long-term debt and the repurchase of our common stock pursuant to our share repurchase program.

We have an unsecured surplus note with an outstanding principal balance of $25 at both September 30, 2022 and December 31, 2021.

We have a senior revolving credit facility (the “5-Year Facility”) with a group of lenders for general corporate purposes. On April 18, 2022, we amended and restated the credit agreement for the 5-Year Facility to, among other things, extend the maturity date of the 5-Year Facility from June 2024 to April 2027 and increase the amount of credit available under the 5-Year Facility from $2,500 to $4,000. Also on April 18, 2022, concurrently with the amendment and restatement of the 5-Year Facility, we terminated our 364-day senior revolving credit facility that provided for credit in the amount of $1,000, which was scheduled to mature in June 2022 (the “2021 364-Day Facility”). In June 2021, we terminated our 364-day senior revolving credit facility (the “prior 364-Day Facility”), which was scheduled to mature in June 2021, and entered into the 2021 364-Day Facility with a group of lenders for general corporate purposes. Our ability to borrow under the 5-Year Facility is subject to compliance with certain covenants, including covenants requiring us to maintain a defined debt-to-capital ratio of not more than 60%, subject to increase in certain circumstances set forth in the credit agreement for the 5-Year Facility. As of September 30, 2022, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 39.7%. We do not believe the restrictions contained in our 5-Year Facility covenants materially affect our financial or operating flexibility. As

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of September 30, 2022, we were in compliance with all of our debt covenants under the 5-Year Facility. There were no amounts outstanding under the 5-Year Facility, the 2021 364-Day Facility or the prior 364-Day Facility at any time during the nine months ended September 30, 2022 or the year ended December 31, 2021.

Through certain subsidiaries, we have entered into multiple 364-day lines of credit (the “Subsidiary Credit Facilities”) with separate lenders for general corporate purposes. The Subsidiary Credit Facilities provide combined credit of up to $200. At September 30, 2022 and December 31, 2021, there were no amounts outstanding under our Subsidiary Credit Facilities.

We have an authorized commercial paper program of up to $4,000, the proceeds of which may be used for general corporate purposes. In July 2022, we increased the amount available under the commercial paper program from $3,500 to $4,000. At September 30, 2022 and December 31, 2021, we had $675 and $300, respectively, outstanding under this program.

We have outstanding senior unsecured convertible debentures due 2042 (the “Debentures”), which are governed by an indenture (the “indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee. We accounted for the Debentures in accordance with the FASB cash conversion guidance for debt with conversion and other options at the time of issue. As a result, the value of the embedded conversion option (net of deferred taxes and equity issuance costs) was bifurcated from its debt host and recorded as a component of additional paid-in capital in our consolidated balance sheets. We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition method, which resulted in an increase to our reported debt outstanding of $31, a decrease of our deferred tax liabilities of $8 and a corresponding cumulative-effect reduction to our opening retained earnings of $23, eliminating the bifurcation of the embedded conversion option. During the three and nine months ended September 30, 2022, $4 and $19 of aggregate principal amount of the Debentures was surrendered for conversion by certain holders in accordance with the terms and provisions of the indenture. We elected to settle the excess of the principal amount of the conversions with cash for total payments during the three and nine months ended September 30, 2022 of $25 and $132, respectively.

The following table summarizes at September 30, 2022 the related balances, conversion rate and conversion price of the Debentures:


Outstanding principal amount	$	86

Net debt carrying amount	$	86

Conversion rate (shares of common stock per $1,000 of principal amount)	14.2967
Effective conversion price (per $1,000 of principal amount)	$	69.9462

We are a member, through certain subsidiaries, of the Federal Home Loan Bank of Indianapolis, the Federal Home Loan Bank of Cincinnati, the Federal Home Loan Bank of Atlanta and the Federal Home Loan Bank of New York (collectively, the “FHLBs”). As a member, we have the ability to obtain short-term cash advances, subject to certain minimum collateral requirements. We had $265 and $275 of outstanding short-term borrowings from the FHLBs at September 30, 2022 and December 31, 2021, respectively.

All debt is a direct obligation of Elevance Health, Inc., except for the surplus note, the FHLB borrowings, and the Subsidiary Credit Facilities.

11. Commitments and Contingencies

Litigation and Regulatory Proceedings

In the ordinary course of business, we are defendants in, or parties to, a number of pending or threatened legal actions or proceedings. To the extent a plaintiff or plaintiffs in the following cases have specified in their complaint or in other court filings the amount of damages being sought, we have noted those alleged damages in the descriptions below. With respect to the cases described below, we contest liability and/or the amount of damages in each matter and believe we have meritorious defenses.

Where available information indicates that it is probable that a loss has been incurred as of the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to

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income. In many proceedings, however, it is difficult to determine whether any loss is probable or reasonably possible. In addition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously identified loss contingency, it is not always possible to reasonably estimate the amount of the possible loss or range of loss.

With respect to many of the proceedings to which we are a party, we cannot provide an estimate of the possible losses, or the range of possible losses in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following: (i) there are novel or unsettled legal issues presented, (ii) the proceedings are in early stages, (iii) there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class, (iv) there is uncertainty as to the outcome of pending appeals or motions, (v) there are significant factual issues to be resolved, and/or (vi) in many cases, the plaintiffs have not specified damages in their complaint or in court filings. For those legal proceedings where a loss is probable, or reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses, we currently believe that the range of possible losses, in excess of established reserves is, in the aggregate, from $0 to approximately $250 at September 30, 2022. This estimated aggregate range of reasonably possible losses is based upon currently available information taking into account our best estimate of such losses for which such an estimate can be made.

Blue Cross Blue Shield Antitrust Litigation

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 twenty-eight states were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation that is pending in the U.S. District Court for the Northern District of Alabama (the “Court”). Generally, the suits allege that the BCBSA and the Blue plans have conspired to horizontally allocate geographic markets through license agreements, best efforts rules that limit the percentage of non-Blue revenue of each plan, restrictions on acquisitions, rules governing the BlueCard® and National Accounts programs and other arrangements in violation of the Sherman Antitrust Act (“Sherman Act”) and related state laws. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers.

In April 2018, the Court issued an order on the parties’ cross motions for partial summary judgment, determining that the defendants’ aggregation of geographic market allocations and output restrictions are to be analyzed under a per se standard of review, and the BlueCard® program and other alleged Section 1 Sherman Act violations are to be analyzed under the rule of reason standard of review. With respect to whether the defendants operate as a single entity with regard to the enforcement of the Blue Cross Blue Shield trademarks, the Court found that summary judgment was not appropriate due to the existence of genuine issues of material fact. In April 2019, the plaintiffs filed motions for class certification, which defendants opposed.

The BCBSA and Blue plans approved a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”), which agreement required the Court’s approval to become effective. The Subscriber Settlement Agreement requires the defendants to make a monetary settlement payment and contains certain terms imposing non-monetary obligations including (i) eliminating the “national best efforts” rule in the BCBSA license agreements (which rule limits the percentage of non-Blue revenue permitted for each Blue plan) and (ii) allowing for some large national employers with self-funded benefit plans to request a bid for insurance coverage from a second Blue plan in addition to the local Blue plan.

In November 2020, the Court issued an order preliminarily approving the Subscriber Settlement Agreement, following which members of the subscriber class were provided notice of the Subscriber Settlement Agreement and an opportunity to opt out of the class. A small number of subscribers submitted valid opt-outs by the July 2021 opt-out deadline. In excess of eight thousand claims were submitted by the November 2021 claims submission deadline. A fairness hearing was held in October 2021 and the Court took the request for final approval under advisement and requested supplemental briefing that was submitted. In February 2022, the Court ordered the issuance of a supplemental notice to self-funded account class members, which notice process was completed in March 2022. The deadline for objections to the supplemental notice along with opt-outs was in May 2022.

In August 2022, the Court issued a final approval order for the Subscriber Settlement Agreement. The Court amended its final approval order in September 2022, further clarifying the injunctive relief that may be available to subscribers who submitted valid opt-outs. In September 2022, an objector filed a motion to amend the final approval order, which the Court

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denied. In compliance with the Subscriber Settlement Agreement, the Company paid its remaining $506 portion of the settlement fund into an escrow account in September 2022, for an aggregate settlement payment by the Company of $596.

Four notices of appeal of the final approval order were filed by the September 2022 deadline. Those appeals will proceed in the United States Court of Appeals for the Eleventh Circuit. In October 2022, the subscriber plaintiffs filed a motion to consolidate and expedite the four appeals. After all appellate rights have been exhausted in a manner that affirms the Court’s final order and judgment, the defendants’ payment and non-monetary obligations under the Subscriber Settlement Agreement will become effective.

In October 2020, after the Court lifted the stay as to the provider litigation, provider plaintiffs filed a renewed motion for class certification, which defendants opposed. In March 2021, the Court issued an order terminating the pending motion for class certification until the Court determines the standard of review applicable to providers’ claims. In May 2021, the defendants and provider plaintiffs filed renewed standard of review motions. In June 2021, the parties filed summary judgment motions not critically dependent on class certification. In February 2022, the Court issued (i) an order granting certain defendants’ motion for partial summary judgment against provider plaintiffs who had previously released claims against such defendants, and (ii) an order granting provider plaintiffs’ motion for partial summary judgment, holding that Ohio v. American Express Co. does not affect the standard of review in this case. In August 2022, the Court issued (i) an order granting in part the defendants’ motion regarding the antitrust standard of review, holding that for the period of time after the elimination of the “national best efforts” rule, the rule of reason applies to the provider plaintiffs’ market allocation conspiracy claims, and (ii) an order denying the provider plaintiffs’ motion for partial summary judgment on the standard of review, reaffirming its prior holding that the providers’ group boycott claims are subject to the rule of reason. We intend to continue to vigorously defend the provider litigation, which we believe is without merit; however, its ultimate outcome cannot be presently determined.

A number of follow-on cases involving entities that opted out of the Subscriber Settlement Agreement have been filed. Those actions are: Alaska Air Group, Inc., et al. v. Anthem, Inc., et al., No. 2:21-cv-01209-AMM (N.D. Ala.); JetBlue Airways Corp., et al. v. Anthem, Inc., et al., No. 2:22-cv-00558-GMB (N.D. Ala.); Metropolitan Transportation Authority v. Blue Cross and Blue Shield of Alabama et al., No. 2:22-cv-00265-RDP (N.D. Ala.); Bed Bath & Beyond Inc. v. Anthem, Inc., No. 2:22-cv-01256-SGC (N.D. Ala.); Hoover, et al. v. Blue Cross Blue Shield Association, et al., No. 2:22-cv-00261-RDP (N.D. Ala.); and VHS Liquidating Trust v. Blue Cross of California, et al., No. RG21106600 (Cal. Super.). We intend to continue to vigorously defend these follow-on cases, which we believe are without merit; however, their ultimate outcome cannot be presently determined.

Blue Cross of California Taxation Litigation

In July 2013, our California affiliate Blue Cross of California (doing business as Anthem Blue Cross) (“BCC”) was named as a defendant in a California taxpayer action filed in Los Angeles County Superior Court (the “Superior Court”) captioned Michael D. Myers v. State Board of Equalization, et al. This action was brought under a California statute that permits an individual taxpayer to sue a governmental agency when the taxpayer believes the agency has failed to enforce governing law. Plaintiff contends that BCC, a licensed Health Care Service Plan, is an “insurer” for purposes of taxation despite acknowledging it is not an “insurer” under regulatory law. At the time, under California law, “insurers” were required to pay a gross premiums tax (“GPT”) calculated as 2.35% on gross premiums. As a licensed Health Care Service Plan, BCC has paid the California Corporate Franchise Tax (“CFT”), the tax paid by California businesses generally. Plaintiff contends that BCC must pay the GPT rather than the CFT, and seeks a writ of mandate directing the taxing agencies to collect the GPT and an order requiring BCC to pay GPT back taxes, interest, and penalties for the eight-year period prior to the filing of the complaint.

Because the GPT is constitutionally imposed in lieu of certain other taxes, BCC has filed protective tax refund claims with the City of Los Angeles, the California Department of Health Care Services and the Franchise Tax Board to protect its rights to recover certain taxes previously paid should BCC eventually be determined to be subject to the GPT for the tax periods at issue in the litigation.

In March 2018, the Superior Court denied BCC’s motion for judgment on the pleadings and similar motions brought by other entities. BCC filed a motion for summary judgment with the Superior Court, which was heard in October 2020. In December 2020, the Superior Court granted BCC’s motion for summary judgment, dismissing the plaintiff’s lawsuit. In

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November 2021, the plaintiff appealed the order granting BCC's motion for summary judgment. BCC’s responding brief was filed in March 2022. Plaintiff’s reply was filed in May 2022. We estimate that the appeal will be heard in the winter of 2022. We intend to vigorously defend the appeal of this lawsuit.

Express Scripts, Inc. Pharmacy Benefit Management Litigation

In March 2016, we filed a lawsuit against Express Scripts, Inc. (“Express Scripts”), our vendor at the time for PBM services, captioned Anthem, Inc. v. Express Scripts, Inc., in the U.S. District Court for the Southern District of New York (the “District Court”). The lawsuit seeks to recover over $14,800 in damages for pharmacy pricing that is higher than competitive benchmark pricing under the agreement between the parties (the “ESI PBM Agreement”), over $158 in damages related to operational breaches, as well as various declarations under the ESI PBM Agreement, including that Express Scripts: (i) breached its obligation to negotiate in good faith and to agree in writing to new pricing terms; (ii) was required to provide competitive benchmark pricing to us through the term of the ESI PBM Agreement; (iii) has breached the ESI PBM Agreement; and (iv) is required under the ESI PBM Agreement to provide post-termination services, at competitive benchmark pricing, for one year following any termination.

Express Scripts has disputed our contractual claims and is seeking declaratory judgments: (i) regarding the timing of the periodic pricing review under the ESI PBM Agreement, and (ii) that it has no obligation to ensure that we receive any specific level of pricing, that we have no contractual right to any change in pricing under the ESI PBM Agreement and that its sole obligation is to negotiate proposed pricing terms in good faith. In the alternative, Express Scripts claims that we have been unjustly enriched by its payment of $4,675 at the time we entered into the ESI PBM Agreement. In March 2017, the District Court granted our motion to dismiss Express Scripts’ counterclaims for (i) breach of the implied covenant of good faith and fair dealing, and (ii) unjust enrichment with prejudice. After such action, the only remaining claims were for breach of contract and declaratory relief. In August 2021, Express Scripts filed a motion for summary judgment, which we opposed. In March 2022, the District Court granted in part and denied in part Express Scripts’ motion for summary judgment. The District Court dismissed our declaratory judgment claim, our breach of contract claim for failure to prove damages and most of our operational breach claims. As a result of the summary judgment decision, the only remaining claims as of the filing of this Quarterly Report on Form 10-Q are (i) our operational breach claim based on Express Scripts’ prior authorization processes and (ii) Express Scripts’ counterclaim for breach of the market check provision of the ESI PBM Agreement. Express Scripts filed a second motion for summary judgment in June 2022, challenging our remaining operational breach claims, which we opposed in July 2022. We intend to appeal the earlier summary judgment decision at the appropriate time, vigorously pursue our claims and defend against counterclaims, which we believe are without merit; however, the ultimate outcome of this litigation cannot be presently determined.

Medicare Risk Adjustment Litigation

In March 2020, the U.S. Department of Justice (“DOJ”) filed a civil lawsuit against Elevance Health, Inc. (f/k/a Anthem, Inc.) in the U.S. District Court for the Southern District of New York (the “New York District Court”) in a case captioned United States v. Anthem, Inc. The DOJ’s suit alleges, among other things, that we falsely certified the accuracy of the diagnosis data we submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes. The DOJ further alleges that, as a result of these purported acts, we caused CMS to calculate the risk-adjustment payments based on inaccurate diagnosis information, which enabled us to obtain unspecified amounts of payments in Medicare funds in violation of the False Claims Act. The DOJ filed an amended complaint in July 2020, alleging the same causes of action but revising some of its allegations. In September 2020, we filed a motion to transfer the lawsuit to the Southern District of Ohio, a motion to dismiss part of the lawsuit, and a motion to strike certain allegations in the amended complaint. In an opinion and order issued October 3, 2022, the New York District Court denied our motions, and the case will now proceed in such court. We intend to continue to vigorously defend this suit, which we believe is without merit; however, the ultimate outcome cannot be presently determined.

Investigations of CareMore and HealthSun

With the assistance of outside counsel, we are conducting investigations of risk-adjustment practices involving data submitted to CMS (unrelated to our retrospective chart review program) at CareMore Health Plans, Inc. (“CareMore”), one of our California subsidiaries, and HealthSun Health Plans, Inc. (“HealthSun”), one of our Florida subsidiaries. Our CareMore investigation has resulted in the termination of CareMore’s relationship with one contracted provider in California. Our

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HealthSun investigation has focused on risk adjustment practices initiated prior to our acquisition of HealthSun in December 2017 that continued after the acquisition. We have voluntarily self-disclosed the existence of both of our investigations to CMS and the Criminal and Civil Divisions of the DOJ. We are cooperating with the ongoing investigations of the Criminal and Civil Divisions of the DOJ related to these risk adjustment practices, and have entered into a tolling agreement with the Civil Division of the DOJ related to its investigation. We are analyzing the scope of potential data corrections to be submitted to CMS and have begun to submit data corrections to CMS. We have also asserted indemnity claims for escrowed funds under the HealthSun purchase agreement for, among other things, breach of healthcare and financial representation provisions, based on the conduct discovered during our investigation. While certain elements of the escrow claims were resolved in the fourth quarter of 2021, litigation in the Delaware Court of Chancery related to the remaining indemnity claims for escrowed funds remains ongoing.

Other Contingencies

From time to time, we and certain of our subsidiaries are parties to various legal proceedings, many of which involve claims for coverage encountered in the ordinary course of business. We, like Health Maintenance Organizations (“HMOs”) and health insurers generally, exclude certain healthcare and other services from coverage under our HMO, Preferred Provider Organizations and other plans. We are, in the ordinary course of business, subject to the claims of our enrollees arising out of decisions to restrict or deny reimbursement for uncovered services. The loss of even one such claim, if it results in a significant punitive damage award, could have a material adverse effect on us. In addition, the risk of potential liability under punitive damage theories may increase significantly the difficulty of obtaining reasonable reimbursement of coverage claims.

In addition to the lawsuits described above, we are also involved in other pending and threatened litigation of the character incidental to our business and are from time to time involved as a party in various governmental investigations, audits, reviews and administrative proceedings. These investigations, audits, reviews and administrative proceedings include routine and special inquiries by state insurance departments, state attorneys general, the U.S. Attorney General and subcommittees of the U.S. Congress. Such investigations, audits, reviews and administrative proceedings could result in the imposition of civil or criminal fines, penalties, other sanctions and additional rules, regulations or other restrictions on our business operations. Any liability that may result from any one of these actions, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations.

Contractual Obligations and Commitments

In March 2020, we entered into an agreement with a vendor for information technology infrastructure and related management and support services through June 2025. The new agreement supersedes certain prior agreements for such services and includes provisions for additional services not provided under those agreements. Our remaining commitment under this agreement at September 30, 2022 is approximately $830. We will have the ability to terminate the agreement upon the occurrence of certain events, subject to early termination fees.

In the second quarter of 2019, we began using our pharmacy benefits manager IngenioRx to market and offer PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own. The comprehensive PBM services portfolio includes, but is not limited to, formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities. IngenioRx delegates certain PBM administrative functions, such as claims processing and prescription fulfillment, to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation, pursuant to a five-year agreement. With IngenioRx, we retain the responsibilities for clinical and formulary strategy and development, member and employer experiences, operations, sales, marketing, account management and retail network strategy.

12. Capital Stock

Use of Capital – Dividends and Stock Repurchase Program

We regularly review the appropriate use of capital, including acquisitions, common stock and debt security repurchases and dividends to shareholders. The declaration and payment of any dividends or repurchases of our common stock or debt is at the discretion of our Board of Directors and depends upon our financial condition, results of operations, future liquidity needs, regulatory and capital requirements and other factors deemed relevant by our Board of Directors.

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A summary of our cash dividend activity for the nine months ended September 30, 2022 and 2021 is as follows:


Declaration Date	Record Date	Payment Date	Cash Dividend per Share	Total
Nine Months Ended September 30, 2022
January 25, 2022	March 10, 2022	March 25, 2022	$1.28	$	309
April 19, 2022	June 10, 2022	June 24, 2022	$1.28	$	309
July 19, 2022	September 9, 2022	September 23, 2022	$1.28	$	306



Nine Months Ended September 30, 2021
January 26, 2021	March 10, 2021	March 25, 2021	$1.13	$	277
April 20, 2021	June 10, 2021	June 25, 2021	$1.13	$	278
July 20, 2021	September 10, 2021	September 24, 2021	$1.13	$	276

On October 18, 2022, our Audit Committee declared a fourth quarter 2022 dividend to shareholders of $1.28 per share, payable on December 21, 2022 to shareholders of record at the close of business on December 5, 2022.

Under our Board of Directors’ authorization, we maintain a common stock repurchase program. On January 26, 2021, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized a $5,000 increase to the common stock repurchase program. Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases are effected from time to time in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Our stock repurchase program is discretionary, as we are under no obligation to repurchase shares. We repurchase shares under the program when we believe it is a prudent use of capital. The excess cost of the repurchased shares over par value is charged on a pro rata basis to additional paid-in capital and retained earnings.

A summary of common stock repurchases for the nine months ended September 30, 2022 and 2021 is as follows:


	Nine Months Ended September 30
	2022		2021
Shares repurchased	3.7		3.9
Average price per share	$	473.36	$	356.43
Aggregate cost	$	1,748	$	1,378
Authorization remaining at the end of the period	$	2,444	$	4,714

For additional information regarding the use of capital for debt security repurchases, see Note 10, “Debt,” included in this Form 10-Q and Note 13, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2021 included in our 2021 Annual Report on Form 10-K.

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Stock Incentive Plan****s

A summary of stock option activity for the nine months ended September 30, 2022 is as follows:


	Number of Shares	Weighted- Average Option Price per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2022	2.9	$	255.50
Granted	0.5	452.34
Exercised	(0.4)	243.39
Forfeited or expired	(0.1)	339.52
Outstanding at September 30, 2022	2.9	291.95		6.56	$	477
Exercisable at September 30, 2022	1.7	239.27		5.35	$	370

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the nine months ended September 30, 2022 is as follows:


	Restricted Stock Shares and Units	Weighted- Average Grant Date Fair Value per Share
Nonvested at January 1, 2022	1.3	$	299.65
Granted	0.6	453.16
Vested	(0.6)	301.44
Forfeited	(0.1)	345.25
Nonvested at September 30, 2022	1.2	356.33

During the nine months ended September 30, 2022, we granted approximately 0.2 restricted stock units that are contingent upon us achieving earnings targets over the three year period from 2022 to 2024. These grants have been included in the activity shown above, but will be subject to adjustment at the end of 2024 based on results in the three year period.

Fair Value

We use a binomial lattice valuation model to estimate the fair value of all stock options granted. For a more detailed discussion of our stock incentive plan fair value methodology, see Note 15, “Capital Stock,” to our audited consolidated financial statements as of and for the year ended December 31, 2021 included in our 2021 Annual Report on Form 10-K.

The following weighted-average assumptions were used to estimate the fair values of options granted during the nine months ended September 30, 2022 and 2021:


	Nine Months Ended September 30
	2022		2021
Risk-free interest rate	1.97	%	1.44	%
Volatility factor	29.00	%	30.00	%
Quarterly dividend yield	0.282	%	0.360	%
Weighted-average expected life (years)	5.10		5.50

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The following weighted-average fair values per option or share were determined for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended September 30
	2022		2021
Options granted during the period	$	116.85	$	79.51
Restricted stock awards granted during the period	453.16		315.54

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13. Accumulated Other Comprehensive Loss

A reconciliation of the components of accumulated other comprehensive loss at September 30, 2022 and 2021 is as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Net unrealized investment (losses) gains:
Beginning of period balance	$	(1,489)	$	762	$	494	$	949
Other comprehensive loss before reclassifications, net of tax benefit of $220, $25, $896 and $71, respectively	(719)		(80)		(2,914)		(203)
Amounts reclassified from accumulated other comprehensive loss, net of tax (expense) benefit of $(21), $5, $(75) and $21, respectively	80		(17)		284		(81)
Other comprehensive loss	(639)		(97)		(2,630)		(284)
Other comprehensive loss attributable to noncontrolling interests, net of tax benefit of $(1), $0, $(4) and $(1), respectively	3		1		11		1
End of period balance	(2,125)		666		(2,125)		666

Non-credit components of impairments on investments:
Beginning of period balance	(2)		—		—		(2)
Other comprehensive (loss) income, net of tax benefit (expense) of $0, $0, $1 and $(1), respectively	(1)		(1)		(3)		1
End of period balance	(3)		(1)		(3)		(1)

Net cash flow hedges:
Beginning of period balance	(233)		(244)		(239)		(250)
Other comprehensive income, net of tax expense of $0, $0, $(2) and $(2), respectively	2		4		8		10
End of period balance	(231)		(240)		(231)		(240)

Pension and other postretirement benefits:
Beginning of period balance	(413)		(534)		(429)		(552)
Other comprehensive income, net of tax expense of $(3), $(4), $(9) and $(10), respectively	7		8		23		26
End of period balance	(406)		(526)		(406)		(526)

Foreign currency translation adjustments:
Beginning of period balance	(12)		(1)		(4)		5
Other comprehensive loss, net of tax benefit of $2, $1, $4 and $2, respectively	(7)		(1)		(15)		(7)
End of period balance	(19)		(2)		(19)		(2)

Total:
Total beginning of period accumulated other comprehensive (loss)	(2,149)		(17)		(178)		150
Total other comprehensive loss, net of tax benefit of $198, $27, $815 and $81, respectively	(638)		(87)		(2,617)		(254)
Total other comprehensive loss attributable to noncontrolling interests, net of tax benefit of $(1), $0, $(4) and $(1), respectively	3		1		11		1
Total end of period accumulated other comprehensive loss	$	(2,784)	$	(103)	$	(2,784)	$	(103)

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14. Earnings per Share

The denominator for basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 is as follows:


	Three Months Ended September 30		Nine Months Ended September 30
	2022	2021	2022	2021
Denominator for basic earnings per share – weighted-average shares	239.6	243.4	240.5	244.3
Effect of dilutive securities – employee stock options, nonvested restricted stock awards and convertible debentures	2.6	2.6	2.8	2.9
Denominator for diluted earnings per share	242.2	246.0	243.3	247.2

During the three months ended September 30, 2022 and 2021, weighted-average shares related to certain stock options of 0.5 and 0.0, respectively, were excluded from the denominator for diluted earnings per share because the stock options were anti-dilutive. During the nine months ended September 30, 2022 and 2021, weighted-average shares related to certain stock options of 0.4 and 0.3, respectively, were excluded from each of the denominators for diluted earnings per share because the stock options were anti-dilutive.

During the three and nine months ended September 30, 2022, we issued approximately 0.0 and 0.6 restricted stock units under our stock incentive plans, 0.0 and 0.2 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2022 through 2024. During the three and nine months ended September 30, 2021, we issued approximately 0.1 and 1.0 restricted stock units under our stock incentive plans, 0.0 and 0.3 of which vesting is contingent upon us meeting specified annual earnings targets for the three year period of 2021 through 2023. The contingent restricted stock units have been excluded from the denominators for diluted earnings per share and will be included only if and when the contingency is met.

15. Segment Information

As discussed in Note 1 “Organization”, we will be organizing our brand portfolio into three core go-to-market brands over the next several years. Our branding strategy reflects the evolution of our business from a traditional health insurance company to a lifetime, trusted health partner, and given this evolution we are in the process of reviewing and modifying how we will manage our businesses in the future. Currently, there are no changes to our segments associated with this branding strategy. The results of our operations continue to be described through four reportable segments: Commercial & Specialty Business, Government Business, IngenioRx and Other.

Our Commercial & Specialty Business segment offers plans and services to our Individual, Group risk-based, Group fee-based and BlueCard® members. The Commercial & Specialty Business segment offers health products on a full-risk basis; provides a broad array of administrative managed care services to our fee-based customers; and provides a variety of specialty and other insurance products and services such as dental, vision, life, disability and supplemental health insurance benefits.

Our Government Business segment includes our Medicare and Medicaid businesses, National Government Services, and services provided to the federal government in connection with the FEHB program.

Our IngenioRx segment includes our PBM business. IngenioRx markets and offers PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own. IngenioRx has a comprehensive PBM services portfolio, which includes services such as formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities.

Our Other segment includes our Diversified Business Group, now known as Carelon, which is our health services business focused on lowering the cost and improving the quality of healthcare by enabling and creating new care delivery and payment models, with a special emphasis on serving those with complex and chronic conditions. This segment also includes certain eliminations and corporate expenses not allocated to our other reportable segments.

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We define operating revenues to include premium income, product revenue and administrative fees and other revenues. Operating revenues are derived from premiums and fees received, primarily from the sale and administration of health benefits and pharmacy products and services. Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and selling, general and administrative expense.

Affiliated revenues represent revenues or cost for services provided to our subsidiaries by IngenioRx and Carelon, formerly known as our Diversified Business Group, as well as certain back-office services provided by our international businesses, and are recorded at cost or management’s estimate of fair market value. These affiliated revenues are eliminated in consolidation.

Financial data by reportable segment for the three and nine months ended September 30, 2022 and 2021 is as follows:


	Commercial & Specialty Business		Government Business		IngenioRx		Other		Eliminations		Total
Three Months Ended September 30, 2022
Operating revenue - unaffiliated	$	10,494	$	24,571	$	3,971	$	589	$	—	$	39,625
Operating revenue - affiliated	—		—		3,278		2,776		(6,054)		—
Operating gain	785		868		516		101		—		2,270
Three Months Ended September 30, 2021
Operating revenue - unaffiliated	$	9,863	$	21,658	$	3,369	$	658	$	—	$	35,548
Operating revenue - affiliated	—		—		3,180		2,012		(5,192)		—
Operating gain	620		967		445		27		—		2,059
Nine Months Ended September 30, 2022
Operating revenue - unaffiliated	$	31,324	$	72,164	$	10,838	$	1,667	$	—	$	115,993
Operating revenue - affiliated	—		—		10,165		8,217		(18,382)		—
Operating gain	2,673		2,653		1,393		365		—		7,084
Nine Months Ended September 30, 2021
Operating revenue - unaffiliated	$	28,904	$	61,007	$	9,131	$	1,883	$	—	$	100,925
Operating revenue - affiliated	—		—		9,499		5,674		(15,173)		—
Operating gain	2,679		2,313		1,257		52		—		6,301

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The major product revenues for each of the reportable segments for the three and nine months ended September 30, 2022 and 2021 are as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Commercial & Specialty Business
Managed care products	$	8,478	$	8,005	$	25,500	$	23,481
Managed care services	1,610		1,489		4,618		4,291
Dental/Vision products and services	360		342		1,075		1,013
Other	46		27		131		119
Total Commercial & Specialty Business	10,494		9,863		31,324		28,904
Government Business
Managed care products	24,456		21,565		71,823		60,711
Managed care services	115		93		341		296
Total Government Business	24,571		21,658		72,164		61,007
IngenioRx
Pharmacy products and services	7,249		6,549		21,003		18,630


Other
Integrated health services	3,153		2,506		9,083		7,121
Other	212		164		801		436
Total Other	3,365		2,670		9,884		7,557
Eliminations
Eliminations	(6,054)		(5,192)		(18,382)		(15,173)
Total product revenues	$	39,625	$	35,548	$	115,993	$	100,925

The classification between managed care products and managed care services in the above table primarily distinguishes between the levels of risk assumed. Managed care products represent insurance products where we bear the insurance risk, whereas managed care services represent product offerings where we provide claims adjudication and other administrative services to the customer, but the customer principally bears the insurance risk.

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three and nine months ended September 30, 2022 and 2021 is as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Reportable segments’ operating revenue	$	39,625	$	35,548	$	115,993	$	100,925
Net investment income	371		335		1,112		1,026
Net (losses) gains on financial instruments	(57)		(61)		(439)		107
Total revenues	$	39,939	$	35,822	$	116,666	$	102,058

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A reconciliation of income before income tax expense to reportable segments’ operating gain included in our consolidated statements of income for the three and nine months ended September 30, 2022 and 2021 is as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Income before income tax expense	$	2,146	$	1,996	$	6,615	$	6,525
Net investment income	(371)		(335)		(1,112)		(1,026)
Net losses (gains) on financial instruments	57		61		439		(107)
Interest expense	213		201		622		598
Amortization of other intangible assets	225		136		520		306
Loss on extinguishment of debt	—		—		—		5
Reportable segments’ operating gain	$	2,270	$	2,059	$	7,084	$	6,301

16. Leases

We lease office space and certain computer and related equipment using noncancellable operating leases. Our leases have remaining lease terms of 1 year to 12 years.

The information related to our leases is as follows:


	Balance Sheet Location	September 30, 2022		December 31, 2021
Operating Leases
Right-of-use assets	Other noncurrent assets	$	600	$	628
Lease liabilities, current	Other current liabilities	182		133
Lease liabilities, noncurrent	Other noncurrent liabilities	739		864


	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Lease Expense
Operating lease expense	$	35	$	37	$	100	$	100
Short-term lease expense	11		10		35		34
Sublease income	(1)		(1)		(3)		(3)
Total lease expense	$	45	$	46	$	132	$	131

Other information
Operating cash paid for amounts included in the measurement of lease liabilities, operating leases	$	53	$	53	$	158	$	141
Right-of-use assets obtained in exchange for new lease liabilities, operating leases	$	23	$	32	$	62	$	192

As of September 30, 2022 and December 31, 2021, the weighted average remaining lease term of our operating leases was 7 years for each period. The lease liabilities reflect a weighted average discount rate of 2.79% at September 30, 2022 and 2.69% at December 31, 2021.

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Future lease payments for noncancellable operating leases with initial or remaining terms of one year or more are as follows:


2022 (excluding the nine months ended September 30, 2022)	$	54
2023	207
2024	179
2025	142
2026	105
Thereafter	345
Total future minimum payments	1,032
Less imputed interest	(111)
Total lease liabilities	$	921

As of September 30, 2022, we have no new leases which will commence during the fourth quarter of 2022.

17. Goodwill and Other Intangible Assets

A summary of the change in the carrying amount of goodwill for our segments (see Note 15, “Segment Information”) for 2022 and 2021 is as follows:


	Commercial & Specialty Business		Government Business		IngenioRx		Other		Total
Balance as of January 1, 2021	$	11,593	$	8,331	$	48	$	1,719	$	21,691

Acquisitions and adjustments	—		2,018		11		508		2,537
Balance as of December 31, 2021	11,593		10,349		59		2,227		24,228
Acquisitions and adjustments	18		126		—		9		153
Balance as of September 30, 2022	$	11,611	$	10,475	$	59	$	2,236	$	24,381
Accumulated impairment as of September 30, 2022	$	—	$	—	$	—	$	—	$	—

The components of other intangible assets as of September 30, 2022 and December 31, 2021 are as follows:


	September 30, 2022									December 31, 2021
Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Intangible assets with finite lives:
Customer relationships	$	5,791		$	(3,580)		$	2,211		$	5,598		$	(3,236)		$	2,362
Provider and hospital relationships	326			(142)			184			324			(129)			195
Other	920			(310)			610			610			(141)			469
Total	7,037			(4,032)			3,005			6,532			(3,506)			3,026
Intangible assets with indefinite lives:
Blue Cross and Blue Shield and other trademarks	5,991			—			5,991			6,299			—			6,299
State Medicaid licenses	1,540			—			1,540			1,290			—			1,290
Total	7,531			—			7,531			7,589			—			7,589
Other intangible assets	$	14,568		$	(4,032)		$	10,536		$	14,121		$	(3,506)		$	10,615

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During the nine months ended September 30, 2022, we recorded intangible assets related to Integra and also reclassified $308 of trademarks with indefinite lives to intangible assets with finite lives - Other, which relates to our new branding strategy. In addition, the amortization period of certain intangible assets was shortened to align with the anticipated dates the new branding will take place.

Intangible assets, along with the related accumulated amortization, are removed from the table above at the end of the fiscal year in which they become fully amortized.

As of September 30, 2022, the estimated amortization expense for the year ending December 31, 2022 and each of the five succeeding years is as follows: 2022, $748; 2023, $735; 2024, $370; 2025, $311; 2026, $258; and 2027, $219.

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