Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Elevance Health, Inc.

Consolidated Balance Sheets


	June 30, 2026		December 31, 2025
	(Unaudited)
(In millions, except share and per share data)
Assets
Current assets:
Cash and cash equivalents	$	10,232	$	9,491
Fixed maturity securities (amortized cost of $25,962 and $25,773; allowance for credit losses of $55 and $21)	25,719		25,884
Equity securities	1,563		740


Premium receivables, net	10,991		10,073
Self-funded receivables, net	5,583		5,162
Other receivables	6,818		6,307


Other current assets	6,278		5,344

Total current assets	67,184		63,001
Long-term investments:
Fixed maturity securities (amortized cost of $1,263 and $1,116; allowance for credit losses of $0 and $0)	1,259		1,121

Other invested assets	11,130		10,839
Property and equipment, net	4,645		4,679
Goodwill	28,339		28,344
Other intangible assets	10,983		11,200
Other noncurrent assets	2,898		2,310
Total assets	$	126,438	$	121,494

Liabilities and equity
Liabilities
Current liabilities:

Medical claims payable	$	18,463	$	17,084

Other policyholder liabilities	3,463		3,632

Unearned income	1,640		1,493
Accounts payable and accrued expenses	6,632		7,322



Short-term borrowings	—		150
Current portion of long-term debt	375		1,099
Other current liabilities	13,681		10,255

Total current liabilities	44,254		41,035
Long-term debt, less current portion	30,669		30,797

Deferred tax liabilities, net	2,206		2,110
Other noncurrent liabilities	4,287		3,526
Total liabilities	81,416		77,468

Commitments and contingencies – Note 10

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 – 216,841,146 and 220,723,898	2		2
Additional paid-in capital	8,917		8,938
Retained earnings	36,675		35,393
Accumulated other comprehensive loss	(711)		(451)
Total shareholders’ equity	44,883		43,882
Noncontrolling interests	139		144
Total equity	45,022		44,026
Total liabilities and equity	$	126,438	$	121,494

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)


	Three Months Ended June 30				Six Months Ended June 30
	2026		2025		2026		2025
(In millions, except per share data)
Revenues
Premiums	$	41,279	$	41,271	$	82,303	$	82,158
Product revenue	6,264		6,042		12,489		11,851
Service fees	2,283		2,108		4,528		4,177
Total operating revenue	49,826		49,421		99,320		98,186
Net investment income	704		486		1,469		1,076
Net losses on financial instruments	(56)		(131)		(134)		(595)

Total revenues	50,474		49,776		100,655		98,667
Expenses
Benefit expense	37,024		36,706		72,639		72,018
Cost of products sold	5,492		5,293		10,955		10,276
Operating expense	5,547		4,997		11,877		10,297
Interest expense	364		341		721		685
Amortization of other intangible assets	110		147		222		302


Total expenses	48,537		47,484		96,414		93,578
Income before income tax expense	1,937		2,292		4,241		5,089
Income tax expense	483		548		1,027		1,161


Net income	1,454		1,744		3,214		3,928
Net loss (gain) attributable to noncontrolling interests	9		(1)		13		(2)
Shareholders’ net income	$	1,463	$	1,743	$	3,227	$	3,926
Shareholders’ net income per share


Basic	$	6.74	$	7.74	$	14.78	$	17.39



Diluted	$	6.71	$	7.72	$	14.73	$	17.33
Dividends per share	$	1.72	$	1.71	$	3.44	$	3.42

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended June 30				Six Months Ended June 30
	2026		2025		2026		2025
(In millions)
Net income	$	1,454	$	1,744	$	3,214	$	3,928
Other comprehensive income (loss), net of tax:
Net unrealized investment gains (losses)
Change in gross unrealized investment gains (losses)	31		144		(370)		396
Income tax effect	(7)		(34)		86		(93)
Total change in unrealized investment gains (losses), net of tax	24		110		(284)		303
Gross reclassification adjustment for net realized investment losses included in earnings	1		49		44		105
Income tax effect	—		(11)		(10)		(25)
Change in net unrealized investment gains (losses)	25		148		(250)		383
Pension and other benefits
Change during the period	3		3		7		6
Income tax effect	(1)		(1)		(2)		(9)
Change in pension and other benefits	2		2		5		(3)
Other
Change during the period	3		2		(17)		12
Income tax effect	—		—		2		(3)
Change in other	3		2		(15)		9
Other comprehensive income (loss)	30		152		(260)		389
Net loss (gain) attributable to noncontrolling interests	9		(1)		13		(2)
Other comprehensive income attributable to noncontrolling interests	—		(1)		—		(2)
Total shareholders’ comprehensive income	$	1,493	$	1,894	$	2,967	$	4,313

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30
	2026		2025
(In millions)
Operating activities
Net income	$	3,214	$	3,928
Adjustments to reconcile net income to net cash provided by operating activities:
Net losses on financial instruments	134		595

Equity in net earnings of other invested assets	(567)		(138)
Depreciation and amortization	720		753



Deferred income taxes	(123)		(226)


Impairment of property and equipment	37		—
Share-based compensation	130		162

Changes in operating assets and liabilities:
Receivables, net	(1,831)		(4,097)
Other invested assets	—		(35)
Other assets	(1,441)		(604)
Policy liabilities	1,216		387
Unearned income	147		53
Accounts payable and other liabilities	4,124		1,690


Income taxes	488		603
Other, net	(3)		—
Net cash provided by operating activities	6,245		3,071
Investing activities
Purchases of investments	(7,867)		(8,102)
Proceeds from sale of investments	6,070		7,683
Maturities, calls and redemptions from investments	984		748





Changes in securities lending collateral	(142)		(466)
Purchases of subsidiaries, net of cash acquired	5		54

Purchases of property and equipment	(522)		(463)

Other, net	(11)		(38)
Net cash used in investing activities	(1,483)		(584)
Financing activities

Repayments of long-term borrowings	(750)		(1,250)
Proceeds from short-term borrowings	825		—
Repayments of short-term borrowings	(975)		(5)
Changes in securities lending payable	142		466
Changes in bank overdrafts	(1,181)		631



Repurchase and retirement of common stock	(1,358)		(1,258)

Cash dividends	(749)		(771)
Proceeds from issuance of common stock under employee stock plans	63		21
Taxes paid through withholding of common stock under employee stock plans	(35)		(40)

Other, net	9		(11)
Net cash used in financing activities	(4,009)		(2,217)
Effect of foreign exchange rates on cash and cash equivalents	(12)		2
Change in cash and cash equivalents	741		272
Cash and cash equivalents at beginning of period	9,491		8,288

Cash and cash equivalents at end of period	$	10,232	$	8,560

See accompanying notes.

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Elevance Health, Inc.

Consolidated Statements of Changes in Total 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		Net Unrealized Investment Gains (Losses)		Pension and Other Benefits		Other
December 31, 2025	220.7	$	2	$	8,938	$	35,393	$	108	$	(332)	$	(227)	$	144	$	44,026
Net income	—	—		—		1,764		—		—		—		(4)		1,760
Other comprehensive income (loss)	—	—		—		—		(275)		3		(18)		—		(290)

Repurchase and retirement of common stock, including excise tax	(3.6)	—		(151)		(983)		—		—		—		—		(1,134)
Dividends and dividend equivalents	—	—		—		(378)		—		—		—		—		(378)
Issuance of common stock under employee stock plans, net of related tax benefits	0.3	—		58		—		—		—		—		—		58
March 31, 2026	217.4	$	2	$	8,845	$	35,796	$	(167)	$	(329)	$	(245)	$	140	$	44,042
Net income	—	—		—		1,463		$	—	—		—		(9)		$	1,454
Other comprehensive income	—	—		—		—		25		2		3		—		30
Noncontrolling interests adjustment	—	—		—		—		—		—		—		8		8
Repurchase and retirement of common stock, including excise tax	(0.8)	—		(28)		(208)		—		—		—		—		(236)
Dividends and dividend equivalents	—	—		—		(376)		—		—		—		—		(376)
Issuance of common stock under employee stock plans, net of related tax benefits	0.2	—		100		—		—		—		—		—		100
June 30, 2026	216.8	$	2	$	8,917	$	36,675	$	(142)	$	(327)	$	(242)	$	139	$	45,022

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

	Total Shareholders’ Equity
	Common Stock								Accumulated Other Comprehensive Loss						Noncontrolling Interests		Total Equity
				Additional Paid-in Capital		Retained Earnings	Net Unrealized Investment Gains (Losses)		Pension and Other Benefits		Other
(In millions)	Number of Shares	Par Value
December 31, 2024	227.5	$	2	$	8,911		$	33,549	$	(523)	$	(399)	$	(225)	$	111	$	41,426
Net income	—	—		—			2,183		—		—		—		1		2,184
Other comprehensive income (loss)	—	—		—			—		234		(5)		7		1		237
Noncontrolling interests adjustment	—	—		—			—		—		—		—		4		4
Repurchase and retirement of common stock, including excise tax	(2.2)	—		(97)			(799)		—		—		—		—		(896)
Dividends and dividend equivalents	—	—		—			(387)		—		—		—		—		(387)
Issuance of common stock under employee stock plans, net of related tax benefits	0.4	—		52			—		—		—		—		—		52

March 31, 2025	225.7	$	2	$	8,866		$	34,546	$	(289)	$	(404)	$	(218)	$	117	$	42,620
Net income	—	—		—			1,743		—		—		—		1		1,744
Other comprehensive income	—	—		—			—		147		2		2		1		152
Noncontrolling interests adjustment	—	—		—			—		—		—		—		10		10
Repurchase and retirement of common stock, including excise tax	(1.0)	—		(27)			(354)		—		—		—		—		(381)
Dividends and dividend equivalents	—	—		—			(386)		—		—		—		—		(386)
Issuance of common stock under employee stock plans, net of related tax benefits	0.1	—		92			—		—		—		—		—		92
June 30, 2025	224.8	$	2	$	8,931		$	35,549	$	(142)	$	(402)	$	(216)	$	129	$	43,851

See accompanying notes.

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Elevance Health, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

June 30, 2026

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

1. Organization

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 one of the largest health insurers in the United States in terms of medical membership, serving approximately 44.9 million medical members through our affiliated health plans as of June 30, 2026. We offer a broad spectrum of network-based managed care risk-based plans to Individual, Employer 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, care provider network access, medical management, care management, wellness programs, actuarial services and other administrative services. Across these markets, we generate revenue through risk-based premiums, administrative fees from self-funded employers and pharmacy and health service fees through our Carelon businesses. We provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employee Program® (“FEP®”). We provide an array of specialty services both to customers of our subsidiary health plans and to unaffiliated health plans, including pharmacy services, stop loss insurance, dental, vision 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 and Anthem Blue Cross and Blue Shield. We also conduct business through arrangements with other BCBS licensees as well as other strategic partners. In addition, we serve members in numerous states as Wellpoint, Carelon, MMM and/or Simply Healthcare. We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

Our portfolio consists of the following core go-to-market brands:

Anthem Blue Cross/Anthem Blue Cross and Blue Shield — represents our Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed Medicare, Medicaid, and commercial Health Benefit plans;
Wellpoint — represents our Wellpoint branded Medicare, Medicaid and commercial Health Benefit plans and other non-BCBSA brands; and
Carelon — represents our healthcare related services and capabilities, including our CarelonRx and Carelon Services businesses.

We report our results of operations in the following four reportable segments: Health Benefits, CarelonRx, Carelon Services and Corporate & Other (our businesses that do not individually meet the quantitative thresholds for an operating segment, as well as corporate expenses not allocated to our other reportable segments). For additional information on reportable segments see Note 13, “Segment Information.”

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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 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 Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 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 six months ended June 30, 2026 and 2025 have been recorded. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026, or any other period. The seasonal nature of portions of our healthcare and related benefits business, as well as competitive and other market conditions, 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, 2025 included in our 2025 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 “Other” in our consolidated statements of comprehensive income.

Reclassifications: Certain prior year amounts have been reclassified to conform to the current year presentation.

Cash and Cash Equivalents: Cash and cash equivalents includes available cash and all highly liquid investments with maturities of three months or less when purchased. 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 and contractual requirements. These amounts totaled $668 and $348 at June 30, 2026 and December 31, 2025, 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.

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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 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” in our consolidated statements of income.

The changes in fair value of our marketable equity securities are recognized in our results of operations within “Net 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 investments in limited partnerships (“LPs”) and companies in which our ownership interest may enable us to influence the operating or financial decisions of the investee company, including unconsolidated variable interest entities. These investments are accounted for using the equity method of accounting and are reported within “Other invested assets” in our consolidated balance sheets. Our proportionate share of equity in net income (loss) for these LPs and unconsolidated investee companies is reported within “Net investment income” in our consolidated statements of income. The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than temporary. In applying the equity method (including assessment for other-than temporary impairment), we use financial information provided by the LPs and investee companies, generally on a one-to three-month lag. We consolidate investee companies in certain other instances where it is deemed to exercise control or is considered the primary beneficiary of a variable interest entity.

Mortgage loans on real estate are classified as held for investment and are reported at their amortized cost basis net of loss allowance under the caption “Other invested assets” in our consolidated balance sheets. Amortized cost is the amount at which the loan is originated, adjusted for accrued interest, amortization of premium, discount and net deferred fees or costs, collection of cash and write-offs.

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.

Investment income is recorded when earned. All securities sold resulting in investment realized 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. Under Financial Accounting Standards Board (“FASB”) guidance related to accounting for transfers and servicing of financial assets and extinguishments of liabilities, we recognize the collateral as an asset, which is reported in “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.” The securities on loan are reported in the applicable investment category in 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.

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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 insured groups, individuals and government programs. Premium receivables are reported net of an allowance for doubtful accounts of $187 and $167 at June 30, 2026 and December 31, 2025, respectively.

Self-funded receivables include administrative fees, claims and other amounts due from fee-based customers. Self-funded receivables are reported net of an allowance for doubtful accounts of $153 and $145 at June 30, 2026 and December 31, 2025, respectively.

Other receivables include pharmacy rebates, provider advances, claims recoveries, reinsurance receivables, proceeds due from brokers on investment trades that have not yet settled, accrued investment income and other miscellaneous amounts due to us. These receivables are reported net of an allowance for doubtful accounts of $1,737 and $1,509 at June 30, 2026 and December 31, 2025, respectively. During the quarter ended June 30, 2025, we realized a $209 settlement with a value-based care provider, which allowed us to release $129 from the allowance for doubtful accounts. Of the settlement amount, $154 pertained to services rendered in 2024.

Revenue Recognition: Premiums for risk-based contracts are recognized as revenue over the period insurance coverage is provided, and, if applicable, net of amounts recognized for medical loss ratio rebates, risk adjustment, reinsurance and risk corridor under contractual premium stabilization arrangements, the Affordable Care Act (“ACA”) or other regulatory requirements. Premiums may also include performance incentives and penalties, which are recognized based on contractual terms. We estimate amounts receivable and payable under these contractual terms, and to the extent that such estimated amounts vary from the final amounts paid, the adjustments are included in earnings in the period of final settlement. Premium payments from contracted government agencies are based on eligibility lists produced by the government agencies. Premium payments related to the unexpired contractual coverage periods are reflected in the accompanying consolidated balance sheets as “Unearned income”. Premiums include revenue adjustments for retrospectively rated contracts where revenue is based on the estimated loss experience of the contract. Premium rates for certain lines of business are subject to approval by the Department of Insurance of each respective state. Additionally, delays in annual premium rate changes from contracted government agencies require that we defer the recognition of any increases to the period in which the premium rates become final. The value of the impact can be significant in the period in which it is recognized depending on the magnitude of the premium rate increase, the membership to which it applies and the length of the delay between the effective date of the rate increase and the final contract date. Premium rate decreases are recognized in the period the change in premium rate becomes effective and the change in the rate is known, which may be prior to the period when the contract amendment affecting the rate is finalized.

We also record premiums for certain value-based arrangements of our Carelon Services care delivery businesses. Under these value-based arrangements, we carry financial responsibility across medical claims costs through risk contracts with health plans in which we deliver, integrate, direct and control certain healthcare services for patients. In exchange, we receive a premium that is typically paid on a per-patient per-month basis and performance-based payments that are recognized when performance metrics are achieved. We consider these value-based arrangements to represent a single performance obligation where revenues are recognized in the period in which healthcare services are made available.

Service fees include revenue from certain group contracts that provide for the group to be at risk for all or, with supplemental insurance arrangements, a portion, of their claims experience. We charge these fee-based groups an administrative fee, which is based on the number of members in a group and the group’s claim experience. In addition, service fees include amounts received for the administration of Medicare, certain other government programs, and administrative services arrangements of our Carelon subsidiaries. Generally, each fee-based arrangement includes services which constitute a single suite of services provided and for which consideration is based upon an agreed-upon rate, regardless of the amount of services provided in a given period. As with premiums, each fee-based arrangement may include terms with retroactive rate or membership adjustments, performance incentives and penalties, each of which is a form of variable consideration within the transaction price. As such, each fee-based arrangement contains a single performance obligation that constitutes a series, and revenue is recognized over time as the services are performed. All benefit payments under these programs are excluded from benefit expense.

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The determination of whether services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment. The estimation of variable consideration to be recognized requires significant judgment in the determination of the level of achievement of performance incentives, service level achievements subject to performance penalties, and the completion level of tasks subject to implementation fees.

Product revenue represents services performed by CarelonRx for unaffiliated pharmacy customers and includes ingredient costs (net of any rebates or discounts), including co-payments made by or on behalf of the customer, and service fees. Unaffiliated pharmacy customers include our fee-based groups that have contracted with CarelonRx for pharmacy services and third-party health plans. Product revenues and costs of goods sold for our affiliated health plans are eliminated in consolidation, excluding co-payments and subsidies made by or on behalf of affiliated customers. Product revenue for pharmacy services is recognized using the gross method at the negotiated contract price when CarelonRx has concluded that it is the principal, and it controls the services before prescription drugs are transferred to the customer. CarelonRx determines whether it is the principal based on its contractual rights to design and develop a listing of prescription drugs offered to the customer (formulary management); its control over establishing the pharmacy network available to the customer to have its prescription fulfilled (network management); and its discretion over establishing the pricing for prescription drugs. Overall, control over these activities indicates CarelonRx is primarily responsible for fulfilling the promise to provide pharmacy services. CarelonRx recognizes revenue when control of the prescription drugs is transferred to customers, in an amount it expects to be entitled to in exchange for the products or services provided.

For our non-risk-based contracts, we had no material contract assets, contract liabilities or deferred contract costs recorded on our consolidated balance sheets at June 30, 2026 or December 31, 2025. For the three and six months ended June 30, 2026 and 2025, 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.

Recently Adopted Accounting Guidance: In July 2025, the FASB issued Accounting Standards Update No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). This standard introduces a practical expedient for all entities when estimating expected credit losses on current accounts receivable and contract assets arising from transactions under Accounting Standards Codification (“ASC”) Topic 606. Under the practical expedient, entities may assume that conditions at the balance sheet date remain unchanged over the life of the asset, reducing the need to prepare complex macroeconomic forecasts for short-term balances. ASU 2025-05 became effective for our fiscal years beginning after December 15, 2025, and interim periods within such fiscal years, with prospective application required. We adopted these amendments on January 1, 2026 and applied the amendments on a prospective basis. The adoption of ASU 2025-05 did not have an impact on our consolidated financial statements and disclosures.

Recent Accounting Guidance Not Yet Adopted: In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This standard requires additional expense breakdowns in the footnotes for items such as inventory purchases, employee compensation, depreciation, and intangible asset amortization. Public companies must also provide a qualitative description of remaining expense amounts not separately disclosed, as well as the definition and total amount of selling expenses. ASU 2024-03 is effective for our fiscal year beginning after December 15, 2026, and for interim periods within our fiscal year beginning after December 15, 2027. The amendments are to be applied either prospectively to financial statements issued for reporting periods after the effective date of the update, or retrospectively to all prior periods presented in the financial statements. We are currently evaluating the effects the adoption of ASU 2024-03 will have on our consolidated financial statements and related disclosures.

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In September 2025, the FASB issued Accounting Standards Update No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This standard modernizes the accounting for internal-use software by removing references to prescriptive development stages and instead requiring capitalization of costs once (1) management has authorized and committed to funding the software project, and (2) it is probable the project will be completed and placed in service. Entities must evaluate whether there is “significant development uncertainty,” such as unresolved novel functionality or substantially revised performance requirements, before meeting this capitalization threshold. ASU 2025-06 is effective for our fiscal years beginning after December 15, 2027, and interim periods within such fiscal years, with early adoption permitted. Entities may adopt the amendments prospectively, retrospectively, or under a modified transition approach. We are currently evaluating the impact of ASU 2025-06 on our consolidated financial statements and related disclosures.

There were no other new accounting pronouncements that were issued or became effective since the issuance of our 2025 Annual Report on Form 10-K that had, or are expected to have, a material impact on our consolidated financial position, results of operations, cash flows or disclosures.

3. Operating Model Transformation

In the first quarter of 2026, based on a strategic review of our operations, assets and investments, management implemented the 2026 - 2027 Operating Model Transformation Program (the “Transformation Program”) to streamline decision-making, simplify organizational structures, and enhance the use of advanced technologies, including artificial intelligence, across the enterprise. The Transformation Program includes initiatives to reduce organizational layers, realign roles and responsibilities, and design workflows to support more efficient, technology-enabled operations. These actions also include the modernization of certain information technology platforms, targeted workforce reductions and role realignments. Actions to be taken under the Transformation Program were ongoing as of June 30, 2026. Cash outlays associated with this program, which primarily relate to the personnel-related costs, are expected to be paid through 2028.

During the six months ended June 30, 2026, we incurred $129 of costs towards the Transformation Program, primarily for personnel-related charges for the reduction and/or relocation of staff, which included severance and related costs. These charges were recognized as operating expense in the Corporate & Other segment.

The ending liability balance related to the employee termination costs under the Transformation Program at June 30, 2026 was $114, which included charges of $129 and payments of $15 made during the six months ended June 30, 2026.

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4. Investments

Fixed Maturity Securities

A summary of current and long-term fixed maturity securities, available-for-sale, at June 30, 2026 and December 31, 2025 is as follows:


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

June 30, 2026
Fixed maturity securities:
United States Government securities	$	1,384	$	2	$	(29)	$	—	$	1,357
Government sponsored securities	52		—		—		—		52
Foreign government securities	13		—		—		—		13
States, municipalities and political subdivisions, tax-exempt	3,483		76		(60)		(3)		3,496
Corporate securities	13,950		222		(176)		(4)		13,992
Residential mortgage-backed securities	3,537		21		(155)		(2)		3,401
Commercial mortgage-backed securities	1,861		13		(34)		(2)		1,838
Other asset-backed securities	2,945		54		(126)		(44)		2,829
Total fixed maturity securities	$	27,225	$	388	$	(580)	$	(55)	$	26,978
December 31, 2025
Fixed maturity securities:
United States Government securities	$	1,512	$	10	$	(19)	$	—	$	1,503
Government sponsored securities	80		2		(1)		—		81
Foreign government securities	13		—		—		—		13
States, municipalities and political subdivisions, tax-exempt	3,701		76		(74)		(2)		3,701
Corporate securities	13,498		419		(130)		(4)		13,783
Residential mortgage-backed securities	3,203		43		(136)		(3)		3,107
Commercial mortgage-backed securities	2,078		28		(31)		(2)		2,073
Other asset-backed securities	2,804		53		(103)		(10)		2,744
Total fixed maturity securities	$	26,889	$	631	$	(494)	$	(21)	$	27,005

Other asset-backed securities primarily consist of collateralized loan obligations and other debt securities.

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For fixed maturity securities in an unrealized loss position at June 30, 2026 and December 31, 2025, 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
June 30, 2026
Fixed maturity securities:
United States Government securities	47	$	883	$	(13)	13	$	122	$	(16)
Government sponsored securities	12	16		—		11	9		—
Foreign government securities	2	7		—		1	—		—
States, municipalities and political subdivisions, tax-exempt	246	606		(8)		360	586		(52)
Corporate securities	1,565	4,705		(80)		644	1,014		(96)
Residential mortgage-backed securities	362	1,159		(16)		1,151	905		(139)
Commercial mortgage-backed securities	186	810		(10)		154	308		(24)
Other asset-backed securities	306	1,152		(25)		178	382		(101)
Total fixed maturity securities	2,726	$	9,338	$	(152)	2,512	$	3,326	$	(428)


December 31, 2025
Fixed maturity securities:
United States Government securities	18	$	460	$	(3)	17	$	167	$	(16)
Government sponsored securities	4	—		—		16	29		(1)
Foreign government securities	1	3		—		2	1		—
States, municipalities and political subdivisions, tax-exempt	213	486		(8)		522	848		(66)
Corporate securities	568	1,398		(22)		839	1,397		(108)
Residential mortgage-backed securities	169	282		(4)		1,164	1,012		(132)
Commercial mortgage-backed securities	80	308		(6)		212	479		(25)
Other asset-backed securities	154	657		(28)		174	275		(75)
Total fixed maturity securities	1,207	$	3,594	$	(71)	2,946	$	4,208	$	(423)

-15-

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of June 30, 2026, 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 anticipated recovery. The declines in fair values are largely due to elevated interest rates driven by the higher rate of inflation and other market conditions.

Allowances for credit losses have been recorded in the amount of $55 and $21 at June 30, 2026 and December 31, 2025, respectively, for declines in fair value due to unfavorable changes in the credit quality characteristics that impact our assessment of collectability of principal and interest.

The amortized cost and fair value of fixed maturity securities at June 30, 2026, 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	$	277	$	272
Due after one year through five years	3,590		3,581
Due after five years through ten years	9,209		9,273
Due after ten years	5,806		5,785

Mortgage and other asset-backed securities	8,343		8,067
Total fixed maturity securities	$	27,225	$	26,978

Equity Securities

A summary of current equity securities at June 30, 2026 and December 31, 2025 is as follows:


	June 30, 2026		December 31, 2025
Equity securities:
Exchange traded funds	$	1,481	$	650

Common equity securities	35		35
Private equity securities	47		55
Total	$	1,563	$	740

Other Invested Assets

A summary of other invested assets at June 30, 2026 and December 31, 2025 is as follows:


	June 30, 2026		December 31, 2025
Other invested assets:
Company-owned life insurance	$	3,043	$	2,927
Equity method investments and joint ventures	3,112		3,136
Limited partnership investments	3,217		3,033
Other	1,758		1,743
Total	$	11,130	$	10,839

At June 30, 2026, “Other invested assets” included non-controlled equity method investments and joint ventures, including our minority interest ownership of approximately 40% of Augusta Topco Holdings, L.P. (“Mosaic Health”) and our 40% minority interest ownership of Project Freedom Holdings, LLC, which is the ultimate parent of LIBERTY Dental Plan Corporation (“Liberty Dental”). See Note 5, “Investments” to our audited consolidated financial statements as of and for the year ended December 31, 2025 included in Part II, Item 8 of our 2025 Annual Report on Form 10-K.

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In connection with our equity method investment in Mosaic Health, we entered into a financing agreement to provide a term loan of $200 and a line of credit up to $500 to Mosaic Health. Mosaic Health borrowed $100 on the line of credit in December 2025, which remained outstanding at June 30, 2026. Net amounts receivable under these arrangements were $282 at both June 30, 2026 and December 31, 2025, which are included under the caption “Other invested assets” in our consolidated balance sheets as of June 30, 2026 and December 31, 2025. Interest income recognized from the financing arrangement during the three and six months ended June 30, 2026 and 2025 was not material. In addition to the term loan and line of credit, we committed to providing $70 of additional funding with no additional equity interest in Mosaic Health to meet any shortfall in operating cash flow and regulatory capital requirements of certain businesses that were contributed by us to Mosaic Health through December 31, 2026. Additional funding of $34 was provided during the six months ended June 30, 2026. No additional funding was provided as of December 31, 2025. We also committed to fund any shortfalls above $70 in those businesses if necessary for which we would receive additional equity interests in Mosaic Health, in which none has been contributed. Related party transactions with Mosaic Health included care delivery and enablement services provided in the normal course of business which amounts were included in “Benefit expense” in our consolidated statements of income amounting to $193 and $386 for the three and six months ended June 30, 2026, respectively, and $171 and $346, respectively, for the three and six months ended June 30, 2025.

In connection with our equity method investment in Liberty Dental, in December 2024 we entered into a commitment to provide funding in the form of mandatorily redeemable preferred equity shares in Liberty Dental of up to $250, of which $165 was disbursed as of both June 30, 2026 and December 31, 2025. Mandatorily redeemable preferred equity in Liberty Dental of $162 and $137 is included in the caption “Other invested assets” in our consolidated balance sheets at June 30, 2026 and December 31, 2025, respectively. Dividend income recognized from the financing arrangement during the three and six months ended June 30, 2026 and 2025 was not material. During the three and six months ended June 30, 2026, in the normal course of business, related party transactions with Liberty Dental included administrative services to our Medicare Advantage members under a capitated arrangement amounting to $123 and $256, respectively, and $146 and $292, respectively, for the three and six months ended June 30, 2025 which amounts were included in “Benefit expense” in our consolidated statements of income.

Investment Gains (Losses)

Net investment gains (losses) for the three and six months ended June 30, 2026 and 2025 are as follows:


	Three Months Ended June 30,				Six Months Ended June 30
	2026		2025		2026		2025
Net gains (losses):
Fixed maturity securities:
Gross realized gains from sales	$	30	$	22	$	63	$	49
Gross realized losses from sales	(31)		(62)		(70)		(144)
Impairment losses recognized in income	—		(9)		(37)		(10)
Net realized losses from sales of fixed maturity securities	(1)		(49)		(44)		(105)
Equity securities:
Unrealized gains recognized on equity securities still held at the end of the period	—		—		(2)		(6)
Net realized losses recognized on equity securities sold during the period	—		(1)		(1)		(2)
Net losses on equity securities	—		(1)		(3)		(8)
Other investments:
Gross gains	26		8		34		13
Gross losses	(1)		(6)		(6)		(99)
Other realized losses recognized in income	(60)		(83)		(96)		(394)
Net losses on other investments	(35)		(81)		(68)		(480)
Net losses on investments	$	(36)	$	(131)	$	(115)	$	(593)

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A primary objective in the management of our fixed maturity and equity portfolios is to maximize total return relative to underlying liabilities and respective liquidity needs. In achieving this goal, assets may be sold to take advantage of market conditions or other investment opportunities as well as tax considerations. Sales will generally produce realized gains and losses. 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) expectations 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.

During the three and six months ended June 30, 2026, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $2,854 and $5,796, respectively. During the three and six months ended June 30, 2025, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $2,682 and $6,021, respectively.

Accrued Investment Income

At June 30, 2026 and December 31, 2025, accrued investment income totaled $322 and $295, respectively. We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

Securities Lending Programs

The fair value of the cash and securities received as collateral for securities loaned at June 30, 2026 and December 31, 2025 was $2,833 and $2,691, respectively. The collateral received was 102% of the market value of the loaned securities at each of June 30, 2026 and December 31, 2025.

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 June 30, 2026 and December 31, 2025, the remaining contractual maturities of our securities lending transactions included overnight and continuous transactions of cash for $2,171 and $2,136, respectively, United States Government securities for $658 and $552, respectively, and residential mortgage-backed securities for $4 and $3, respectively.

5. Derivative Financial Instruments

We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, collars, swaptions, embedded derivatives and warrants. We also enter into master netting agreements, which reduce credit risk by permitting net settlement of transactions. We posted collateral of $80 and received collateral of $34 related to our derivative financial instruments at June 30, 2026 and December 31, 2025, respectively.

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 the Secured Overnight Financing Rate (“SOFR”). These derivatives are recorded at fair value and are included in the captions “Other current assets,” “Other noncurrent assets,” “Other current liabilities” or “Other noncurrent liabilities” in our consolidated balance sheets, as applicable.

The unrecognized loss, net of tax, for all expired and terminated interest rate cash flow hedges included in “Accumulated other comprehensive loss” in our consolidated balance sheets was $187 and $192 as of June 30, 2026 and December 31, 2025, respectively.

During both the three and six months ended June 30, 2026, we recognized net losses of $20 on non-hedging derivatives included in “Net losses on financial instruments” in our consolidated income statements. During the three and six months ended June 30, 2025, we recognized net gains of $0 and net losses of $2, respectively, on non-hedging derivatives included in “Net losses on financial instruments” in our consolidated income statement.

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In connection with our equity investment in Mosaic Health (see Note 4, “Investments”), we entered into a limited partnership and related agreements with the majority owners that provide for certain rights and obligations of each party, including certain put, call, and purchase price true-up options. These options, if exercised, will result in our purchase of the units held by the majority owners as early as 2028 but no later than 2030 at a price based on certain multiples of revenue and earnings of Mosaic Health businesses, subject to various adjustments and qualifications. At inception, we calculated the fair value of the net put option, which is a Level III measurement (see Note 6, “Fair Value”), using a Monte Carlo simulation, which relies on assumptions including cash flow projections, risk-free rates, volatility and details specific to the options. Significant changes in assumptions could result in significantly lower or higher fair value measurements. The carrying value of the net put option of $1,330, which is a non-cash item originally measured at fair value, is included under the caption “Other noncurrent liabilities” in our consolidated balance sheets as of June 30, 2026. We have elected to not mark the net put option to market, as it is an option on large blocks of equity securities, and the carrying value of the net put option will remain on the consolidated balance sheets until it is exercised, expires, or the terms are substantially amended.

In connection with our equity investment in Liberty Dental (see Note 4, “Investments”), we entered into an agreement with the majority owners that provides for certain rights and obligations of each party, including certain put and call options. These options, if exercised, will result in our purchase of the units held by the majority owners as early as the third quarter of 2026, but no later than fourth quarter of 2027 at a price based on certain multiples of earnings of Liberty Dental, subject to various adjustments and qualifications. We have calculated the fair value of the net put option, which is a Level III measurement (see Note 6, “Fair Value”), based on assumptions including cash flow projections, risk-free rates, volatility and details specific to the options. Significant changes in assumptions could result in significantly lower or higher fair value measurements. The carrying value of the net put option of $396, which is a non-cash item originally measured at fair value, is included under the caption “Other noncurrent liabilities” in our consolidated balance sheets as of June 30, 2026. We have elected to not mark the net put option to market, as it is an option on large blocks of equity securities, and the carrying value of the net put option will remain on the consolidated balance sheets until it is exercised, expires, or the terms are substantially amended.

For additional information relating to the fair value of our derivative assets and liabilities, see Note 6, “Fair Value,” included in this Quarterly Report on Form 10-Q.

6. 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. These assets and liabilities are classified into one of three levels of hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate and determine the fair value hierarchy classification for each class of financial instruments, see Note 7, “Fair Value,” to our audited consolidated financial statements as of and for the year ended December 31, 2025 included in Part II, Item 8 of our 2025 Annual Report on Form 10-K.

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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 June 30, 2026 and December 31, 2025 is as follows:


	Level I		Level II		Level III		Total
June 30, 2026
Assets:
Cash equivalents	$	5,305	$	—	$	—	$	5,305
Fixed maturity securities, available-for-sale:
United States Government securities	—		1,357		—		1,357
Government sponsored securities	—		52		—		52
Foreign government securities	—		13		—		13
States, municipalities and political subdivisions, tax-exempt	—		3,496		—		3,496
Corporate securities	—		13,575		417		13,992
Residential mortgage-backed securities	—		3,398		3		3,401
Commercial mortgage-backed securities	—		1,838		—		1,838
Other asset-backed securities	—		1,961		868		2,829
Total fixed maturity securities, available-for-sale	—		25,690		1,288		26,978
Equity securities:
Exchange traded funds	1,481		—		—		1,481
Common equity securities	—		35		—		35
Private equity securities	—		—		47		47
Total equity securities	1,481		35		47		1,563
Other invested assets - common equity securities	4		—		—		4
Securities lending collateral	—		2,833		—		2,833
Derivatives - other assets	—		5		—		5
Total assets	$	6,790	$	28,563	$	1,335	$	36,688
Percentage of total assets at fair value	18%		78%		4%		100%
Liabilities:
Derivatives - other liabilities	$	—	$	(102)	$	—	$	(102)
Total liabilities	$	—	$	(102)	$	—	$	(102)

December 31, 2025
Assets:
Cash equivalents	$	5,184	$	—	$	—	$	5,184
Fixed maturity securities, available-for-sale:
United States Government securities	—		1,503		—		1,503
Government sponsored securities	—		81		—		81
Foreign government securities	—		13		—		13
States, municipalities and political subdivisions, tax-exempt	—		3,701		—		3,701
Corporate securities	—		13,373		410		13,783
Residential mortgage-backed securities	—		3,090		17		3,107
Commercial mortgage-backed securities	—		2,073		—		2,073
Other asset-backed securities	—		1,878		866		2,744
Total fixed maturity securities, available-for-sale	—		25,712		1,293		27,005
Equity securities:
Exchange traded funds	650		—		—		650
Common equity securities	—		35		—		35
Private equity securities	—		—		55		55
Total equity securities	650		35		55		740
Other invested assets - common equity securities	6		—		—		6
Securities lending collateral	—		2,692		—		2,692
Derivatives - other assets	—		62		—		62
Total assets	$	5,840	$	28,501	$	1,348	$	35,689
Percentage of total assets at fair value	16%		80%		4%		100%
Liabilities:
Derivatives - other liabilities	$	—	$	(28)	$	—	$	(28)
Total liabilities	$	—	$	(28)	$	—	$	(28)

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There were no individually material transfers into or out of Level III during the three and six months ended June 30, 2026 or 2025. There were no adjustments to quoted market prices obtained from the pricing services during the three and six months ended June 30, 2026 or 2025.

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. The fair values of goodwill and other intangible assets acquired in certain business acquisitions during the years ended December 31, 2025 and 2024 were finalized based on a valuation performed using 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.

As discussed in more detail within Note 4, “Investments”, we entered into agreements that included certain put and call options associated with our minority interest ownership of Mosaic Health in 2024 and Liberty Dental in 2023 (as amended in 2025). The resulting net put option liabilities were recorded at their fair values measured at the dates of acquisition using Level III inputs with an election not to mark the derivative to market, which is further discussed and disclosed in Note 5, “Derivative Financial Instruments”. The net put option fair value for Mosaic Health was $2,736 and $2,717 at June 30, 2026 and December 31, 2025, respectively. The net put option fair value for Liberty Dental was $352 and $327 at June 30, 2026 and December 31, 2025, respectively.

Other than the goodwill and intangible assets acquired and liabilities assumed in our business acquisitions and the net put options on Mosaic Health and Liberty Dental, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three and six months ended June 30, 2026 or 2025.

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 property and equipment, other current assets, deferred income taxes, intangible assets and certain financial instruments, such as limited partnerships, joint ventures, other non-controlled corporations, corporate-owned life insurance policies, and 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.

See Note 7, “Fair Value,” to our audited consolidated financial statements as of and for the year ended December 31, 2025 included in Part II, Item 8 of our 2025 Annual Report on Form 10-K for details on the methods and assumptions used to estimate the fair value for each class of financial instruments that are recorded at their carrying value in our consolidated balance sheets.

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A summary of the estimated fair values by level for each class of financial instruments that is recorded at its carrying value on our consolidated balance sheets at June 30, 2026 and December 31, 2025 is as follows:


	Carrying Value			Estimated Fair Value
			Level I			Level II			Level III			Total
June 30, 2026
Assets:
Other invested assets	$	809		$	—		$	—		$	787		$	787
Liabilities:
Debt:

Notes	31,044			—			29,068			—			29,068
Options	1,726			—			—			3,088			3,088

December 31, 2025
Assets:
Other invested assets	$	781		$	—		$	—		$	762		$	762
Liabilities:
Debt:
Short-term borrowings	150			—			150			—			150

Notes	31,896			—			30,207			—			30,207
Options	1,726			—			—			3,044			3,044

7. Income Taxes

During the three months ended June 30, 2026 and 2025, we recognized income tax expense of $483 and $548, respectively, which represent effective income tax rates of 24.9% and 23.9%, respectively. During the six months ended June 30, 2026 and 2025, we recognized income tax expense of $1,027 and $1,161, respectively, which represent effective income tax rates of 24.2% and 22.8%, respectively. The increases in our effective income tax rate compared to the three and six months ended June 30, 2025 were primarily due to a current year net increase in reserves for uncertain tax positions.

Income taxes netted to a payable of $52 at June 30, 2026 and a receivable of $436 at December 31, 2025. We recognized income taxes receivable of $224 and $587 as an asset under the caption “Other current assets” and income taxes payable of $276 and $151 as a liability under the caption “Other current liabilities” in our consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively.

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8. Medical Claims Payable

A reconciliation of the beginning and ending balances for medical claims payable for the six months ended June 30, 2026 and 2025 is as follows:


	2026		2025
Gross medical claims payable, beginning of period	$	16,829	$	15,580
Ceded medical claims payable, beginning of period	(48)		(13)
Net medical claims payable, beginning of period	16,781		15,567
Business combinations and purchase adjustments	—		182
Net incurred medical claims:
Current period	71,743		71,090
Prior periods redundancies	(1,195)		(1,065)
Total net incurred medical claims	70,548		70,025
Net payments attributable to:
Current period medical claims	56,610		57,117
Prior periods medical claims	12,619		11,802
Total net payments	69,229		68,919
Net medical claims payable, end of period	18,100		16,855
Ceded medical claims payable, end of period	44		16
Gross medical claims payable, end of period	$	18,144	$	16,871

At June 30, 2026, the total of net incurred but not reported liabilities plus expected development on reported claims was $15,133, $2,419 and $548 for the claim years 2026, 2025, and 2024 and prior, respectively.

The favorable development recognized in the six months ended June 30, 2026 resulted from both favorable trend and completion factor development from 2025.

The favorable development recognized in the six months ended June 30, 2025 resulted from trend factors in late 2024 developing more favorably than originally expected as well as a smaller contribution from faster than expected development of completion factors from the latter part of 2024.

The reconciliation of net incurred medical claims to benefit expense included in our consolidated statements of income for the six months ended June 30, 2026 and 2025 is as follows:



	2026		2025
Net incurred medical claims with medical claims payable	$	70,242	$	67,917
Performance-based risk arrangements without medical claims payable	306		2,108
Total net incurred medical claims	70,548		70,025
Quality improvement and other claims expense	2,091		1,993
Benefit expense	$	72,639	$	72,018

Net incurred medical claims under certain performance-based risk arrangements that include gain or loss sharing components do not require a medical claim payable liability.

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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 sheets, as of June 30, 2026 is as follows:



	Total
Net medical claims payable, end of period	$	18,100
Ceded medical claims payable, end of period	44
Insurance lines other than short duration	319
Gross medical claims payable, end of period	$	18,463

9. Debt

Long-term debt

The carrying value of our long-term debt at June 30, 2026 and December 31, 2025 consists of the following:



	June 30, 2026		December 31, 2025
Senior unsecured notes	$	31,019	$	31,871
Unsecured surplus note	25		25
Total long-term debt	31,044		31,896
Current portion of long-term debt	(375)		(1,099)
Long-term debt, less current portion	$	30,669	$	30,797

On March 15, 2026, we repaid, at maturity, the $750 outstanding balance of our 1.500% senior unsecured notes. During the twelve months ended December 31, 2025, the Company repaid at maturity $1,250 of its 2.375% senior unsecured notes and redeemed $400 of its 5.350% senior unsecured notes and $500 of its 4.900% senior unsecured notes.

Short-term borrowings

We have a senior revolving credit facility (the “5-Year Facility”) with a group of lenders for general corporate purposes.

The 5-Year Facility provides credit of $5,000 and matures in September 2030. In addition, we have an authorized commercial

paper program of up to $5,000, the proceeds of which may be used for general corporate purposes. We also maintain borrowing arrangements with 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”), under which we may obtain advances.

The following table summarizes our outstanding short-term borrowings and advances as of June 30, 2026 and December 31, 2025.


Facility	June 30, 2026		December 31, 2025

Senior revolving credit facility	$	—	$	—
Commercial paper program	$	—	$	—
FHLB advances	$	—	$	150

All debt is a direct obligation of Elevance Health, Inc., except for the unsecured surplus note and the FHLB advances, which are obligations of certain subsidiaries. We were in compliance with our debt covenants as of June 30, 2026. For more information on our short-term borrowings, debt covenants and long-term debt, see Note 13, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2025 included in Part II, Item 8 of our 2025 Annual Report on Form 10-K.

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10. Commitments and Contingencies

Litigation and Regulatory Proceedings

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.

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 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 probable 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 or probable loss or range of 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.

With respect to the cases described below, we contest the liability and/or the amount of damages in each matter, and we believe we have meritorious defenses. We do not believe the outcome of any known pending or threatened legal actions or proceedings will, in the aggregate, have a material impact on our financial position. However, unanticipated outcomes do sometimes occur, which could result in liabilities in excess of our accruals and could have a material adverse effect on our consolidated financial position or results of operations.

In addition to the lawsuits described below, 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 (“government actions”). These government actions include routine and special inquiries by and disclosures to state insurance departments, state attorneys general, U.S. Regulatory Agencies, the U.S. Attorney General and subcommittees of the U.S. Congress. Such government actions 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 government actions individually, or in the aggregate, could have a material adverse effect on our consolidated financial position or results of operations.

Blue Cross Blue Shield Antitrust Litigation

We have been a defendant in multiple lawsuits that were initially filed in 2012 against the BCBSA and Blue Cross and/or Blue Shield licensees (the “Blue plans”) across the country. These cases were consolidated into a single, multi-district proceeding captioned In re Blue Cross Blue Shield Antitrust Litigation (the “BCBSA 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 and related state laws. The cases were brought by two putative nationwide classes of plaintiffs, health plan subscribers and providers.

The BCBSA and Blue plans approved and entered into a settlement agreement and release with the subscriber plaintiffs (the “Subscriber Settlement Agreement”) and a separate settlement agreement and release with the provider plaintiffs (the “Provider Settlement Agreement”) which settlement received final approval from the Court in September 2022 and August 2025, respectively.

A number of follow-on cases involving entities that opted out of the Subscriber Settlement Agreement have been filed and remain pending. Those actions are: Alaska Air Group, Inc., et al. v. Anthem, Inc., et al., No. 2:21-cv-01209-AMM (N.D. Ala.) (“Alaska Air”); JetBlue Airways Corp., et al. v. Anthem, Inc., et al., No. 2:22-cv-00558-GMB (N.D. Ala.) (“Jet Blue”); Metropolitan Transportation Authority v. Blue Cross and Blue Shield of Alabama et al., No. 2:22-cv-00265-RDP (N.D. Ala.) (dismissed without prejudice in June 2023); Bed Bath & Beyond Inc. v. Anthem, Inc., No. 2:22-cv-01256-SGC (N.D. Ala.) and Hoover, et al. v. Blue Cross Blue Shield Association, et al., No. 1:21-cv-23448 (S.D. Fla.). Beginning in 2021, Prime

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Healthcare Services, Inc., Prime Healthcare Foundation, Inc., Prime Healthcare Management, Inc.and VHS Liquidating Trust (“VHS”) filed an antitrust action, VHS Liquidating Trust v. Blue Cross of California, et al., No. RG21106600 (Cal Super.) against BCBSA and all Blue plans in California Superior Court bringing similar claims as the BCBSA Litigation. In February 2023, the Court denied the defendants’ motion to dismiss based on a statute of limitations defense in Alaska Air and Jet Blue. In September 2023, the California court presiding over the VHS case upheld its prior order granting in part defendants’ motion to strike based on the statute of limitations. In February 2025, the VHS plaintiffs amended their complaint to add an additional plaintiff, Children’s Hospital of Los Angeles. Trial for this case is scheduled for March 2027. 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.

A number of follow-on cases involving entities that opted out of the Provider Settlement Agreement have been filed and have been centralized in the BCBSA Litigation multi-district proceeding. We intend to continue to vigorously defend these provider follow-on cases, which we believe are without merit; however, their ultimate outcome 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. in the U.S. District Court for the Southern District of New York (the “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 & 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 factual 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, all of which the District Court denied in October 2022. In November 2022, we filed an answer. In March 2023, discovery commenced. Fact and expert discovery are ongoing with current completion deadlines of August 31, 2026 and May 10, 2027, respectively. We intend to continue to vigorously defend this suit, which we believe is without merit; however, the ultimate outcome cannot be presently determined.

CMS Notice

In connection with the notice that the Company received in February 2026 from the Centers for Medicare & Medicaid Services (“CMS”) regarding certain Medicare Advantage risk adjustment data submission requirements related to diagnosis codes for dates of service 2015 through April 2023, CMS provided a series of steps required to be completed by July 31, 2026 in order to avoid sanctions being imposed on the Company. On July 13, 2026, the Company received a letter from CMS stating that the Company has completed all required steps, sanctions will not be imposed and the enforcement process for this matter has been closed.

As previously disclosed, the Company recorded an accrual in connection with the CMS Notice of approximately $935 at March 31, 2026 representing its current best estimate of the identified potential exposure for the resubmission of certain Medicare Advantage risk adjustment data pursuant to applicable loss contingency accounting guidance. On May 27, 2026 we paid CMS $342, leaving an accrual balance of $593 as of June 30, 2026. The $593 accrual was recorded in “Other current liabilities” on the consolidated balance sheet as of June 30, 2026 and the $935 in “Operating expense” on the consolidated statement of income for the six months ended June 30, 2026.

The Company believes that it is reasonably possible that the loss contingency liability for the risk adjustment data previously disclosed to CMS could differ from the amount originally accrued. Management currently estimates that the aggregate amount of such liability could range from approximately $320 less than the amount originally accrued up to $320 in excess of the amount originally accrued.

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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.

Contractual Obligations and Commitments

In September 2024, we extended our agreement with a vendor for information technology infrastructure and related management and support services through June 2029. Our remaining commitment under this agreement is approximately $1,412. We have the ability to terminate the agreement upon the occurrence of certain events, subject to early termination fees.

CarelonRx markets and offers pharmacy services to our affiliated health plan customers throughout the country, as well as to customers outside of the health plans we own. The comprehensive pharmacy services portfolio includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services. CarelonRx delegates certain core pharmacy services to CaremarkPCS Health, L.L.C. (“CVS”), which is a subsidiary of CVS Health Corporation, pursuant to an agreement (“CVS Agreement”), with the current contractual term extending through December 31, 2027. We can elect to have CVS continue to provide services to us for a three-year extension period on the same terms and conditions as in the current CVS Agreement in the event of a termination or non-renewal by either party.

We have financial guarantees related to standby letters of credit and surety bonds related to certain contractual commitments, which totaled $783 as of June 30, 2026. We do not believe such obligations will materially affect our financial position, results of operations, or cash flows.

We have unfunded loan commitments to certain equity investees of $401 at June 30, 2026. We do not believe such obligations will materially affect our financial position, results of operations, or cash flows.

Vulnerability Concentrations

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, investment securities, premium receivables and instruments held through hedging activities. All investment securities are managed by professional investment managers within policies authorized by our Board of Directors. Such policies limit the amounts that may be invested in any one issuer and prescribe certain investee company criteria. Concentrations of credit risk with respect to premium receivables are limited due to the large number of employer groups that constitute our customer base in the states in which we conduct business. As of June 30, 2026, there were no significant concentrations of financial instruments in a single investee, industry or geographic location.

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11. Capital Stock

Stock Incentive Plan****s

A summary of stock option activity for the six months ended June 30, 2026 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, 2026	3.1	$	373.90
Granted	0.9	295.96
Exercised	(0.2)	207.29
Forfeited or expired	(0.1)	380.26
Outstanding at June 30, 2026	3.7	$	361.36	6.25	$	204
Exercisable at June 30, 2026	2.3	$	372.60	4.62	$	123

A summary of the status of nonvested restricted stock activity, including restricted stock units and performance units, for the six months ended June 30, 2026 is as follows:


	Restricted Stock Shares and Units	Weighted- Average Grant Date Fair Value per Share
Nonvested at January 1, 2026	1.1	$	437.32
Granted	0.9	297.62
Vested	(0.3)	453.08
Forfeited	(0.1)	399.66
Nonvested at June 30, 2026	1.6	$	355.60

During the six months ended June 30, 2026, we granted approximately 0.3 restricted stock units that are contingent upon us achieving an earnings target for 2026 and certain qualitative plan metrics over the three-year period from 2026 to 2028. These grants have been included in the activity shown above but will be subject to adjustment at the end of 2028 based on results during 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, 2025 included in Part II, Item 8 of our 2025 Annual Report on Form 10-K.

The following weighted-average assumptions were used to estimate the fair values of options granted during the six months ended June 30, 2026 and 2025:


	Six Months Ended June 30
	2026		2025
Risk-free interest rate	3.97	%	4.29	%
Volatility factor	31.00	%	30.00	%
Quarterly dividend yield	0.585	%	0.432	%
Weighted-average expected life (years)	4.55		4.45

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The following weighted-average fair values per option or share were determined for the six months ended June 30, 2026 and 2025:


	Six Months Ended June 30
	2026		2025
Options granted during the period	$	76.04	$	107.38
Restricted stock awards granted during the period	297.62		395.28

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.

A summary of our cash dividend activity for the six months ended June 30, 2026 and 2025 is as follows:


Declaration Date	Record Date	Payment Date	Cash Dividend per Share	Total
Six Months Ended June 30, 2026
January 27, 2026	March 10, 2026	March 25, 2026	$1.72	$	376
April 21, 2026	June 10, 2026	June 25, 2026	$1.72	$	373




Six Months Ended June 30, 2025
January 22, 2025	March 10, 2025	March 25, 2025	$1.71	$	386
April 16, 2025	June 10, 2025	June 25, 2025	$1.71	$	385

On July 14, 2026, our Audit Committee declared a third quarter 2026 dividend to shareholders of $1.72 per share, payable on September 25, 2026 to shareholders of record at the close of business on September 10, 2026.

Under our Board of Directors’ authorization, we maintain a common stock repurchase program. On October 15, 2024, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized an $8,000 increase to the common stock repurchase program. No duration has been placed on the common stock repurchase program, and we reserve the right to discontinue the program at any time. 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 six months ended June 30, 2026 and 2025 is as follows:


	Six Months Ended June 30
	2026		2025
Shares repurchased	4.4		3.2
Average price per share	$	310.89	$	399.97
Aggregate cost	$	1,358	$	1,259
Authorization remaining at the end of the period	$	5,337	$	8,041

We expect to utilize the remaining authorized amount over a multi-year period, subject to market and industry conditions. For additional information regarding the use of capital for debt security repurchases, see Note 9, “Debt,” included in this Quarterly Report on Form 10-Q and Note 13, “Debt,” to our audited consolidated financial statements as of and for the year ended December 31, 2025 included in Part II, Item 8 of our 2025 Annual Report on Form 10-K.

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12. Shareholders' Earnings per Share

The denominator for basic and diluted shareholders' earnings per share for the three and six months ended June 30, 2026 and 2025 is as follows:


	Three Months Ended June 30		Six Months Ended June 30
	2026	2025	2026	2025
Denominator for basic shareholders' earnings per share – weighted-average shares	217.0	225.2	218.4	225.8
Effect of dilutive securities – employee stock options and non-vested restricted stock awards	0.9	0.6	0.7	0.7
Denominator for diluted shareholders' earnings per share	217.9	225.8	219.1	226.5

During the three months ended June 30, 2026 and 2025, weighted-average shares related to certain stock options of 1.8 and 1.9, respectively, were excluded from the denominator for diluted shareholders' earnings per share because the stock options were anti-dilutive. During the six months ended June 30, 2026 and 2025, weighted-average shares related to certain stock options of 1.8 and 1.7, respectively, were excluded from the denominator for diluted shareholders' earnings per share because the stock options were anti-dilutive.

We have issued approximately 0.8 cumulative restricted stock units under our stock incentive plans, of which vesting is contingent upon us meeting specified earnings and qualitative plan performance targets. Contingent restricted stock units are excluded from the denominator for diluted shareholders’ earnings per share and are included only if and when the contingency is met. These contingent restricted stock units are being measured over a three-year period and generally vest in March of the year following each measurement period.

13. Segment Information

We report our results of operations in the following four reportable segments: Health Benefits, CarelonRx, Carelon Services and Corporate & Other. An immaterial amount of our total consolidated revenues is derived from activities outside of the U.S. and Puerto Rico.

Our Health Benefits segment offers a comprehensive suite of health plans and services to our Individual, Employer Group risk-based, Employer Group fee-based, BlueCard®, Medicare, Medicaid and FEP® members. The Health Benefits 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 stop loss, dental, vision and supplemental health insurance benefits.

Our CarelonRx segment includes our pharmacy services business. CarelonRx markets and offers pharmacy services to our affiliated health plan customers, as well as to external customers outside of the health plans we own. CarelonRx offers a comprehensive pharmacy services portfolio, which includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services, as well as infusion services and injectable therapies.

Our Carelon Services segment integrates physical, behavioral, and social services with the aim of delivering whole health affordably by offering a broad array of healthcare related services and capabilities to internal and external customers through our Carelon Health and Carelon Insights businesses. Carelon promotes affordability by managing complex areas of the healthcare system, leveraging data and insights to ensure members receive safe, appropriate, high-quality care and providers are reimbursed accurately and timely. Our approach to cost management relies on capabilities including provider enablement, value-based networks, member engagement, and utilization management. Our care delivery services primarily target serving chronic and complex populations by providing personalized care in the home and virtually.

Our Corporate & Other segment includes our businesses that do not individually meet the quantitative threshold for an operating segment, as well as corporate expenses not allocated to our other reportable segments.

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We define operating revenues to include premiums, product revenue and service fees. 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 operating expense.

Affiliated operating revenues represent revenues or costs for services provided to our subsidiaries by CarelonRx and Carelon Services, in addition to certain administrative and other services provided by our international businesses, which are recorded at cost or management’s estimate of fair market value. These affiliated operating revenues are eliminated in our consolidated financial statements.

The accounting policies of the segments are consistent with those described in the summary of significant accounting policies in Note 2, “Basis of Presentation and Significant Accounting Policies,” except that all capitation risk arrangements are reported on a gross basis with an adjustment included in eliminations for capitated risk arrangements that are presented on a net basis under GAAP.

Our chief operating decision maker (the “CODM”) is our Chief Executive Officer. The CODM assesses the performance of our reportable segments based on operating gain or loss as defined above. The CODM evaluates net investment income, net gains (losses) on financial instruments, interest expense, depreciation and amortization expense, income taxes and assets, liabilities and equity on a consolidated basis, as these items are managed in a corporate shared service environment and are not the responsibility of segment operating management.

The CODM uses operating gain or loss, developed during the annual budget process, and updated during the periodic forecasting process, as a basis to assess performance and allocate operating and capital resources to each segment.

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Financial data by reportable segment for the three and six months ended June 30, 2026 and 2025 is as follows:


			Carelon
	Health Benefits		CarelonRx		Carelon Services		Total		Corporate & Other		Eliminations		Total
Three Months Ended June 30, 2026
Premiums	$	40,647	$	—	$	833	$	833	$	—	$	(201)	$	41,279
Product revenue	—		6,264		—		6,264		—		—		6,264
Service fees	2,073		3		207		210		—		—		2,283
Operating revenue - unaffiliated	42,720		6,267		1,040		7,307		—		(201)		49,826
Operating revenue - affiliated	—		4,983		6,935		11,918		6		(11,924)		—
Operating revenue - total	$	42,720	$	11,250	$	7,975	$	19,225	$	6	$	(12,125)	$	49,826

Benefit expense	$	36,739	$	—	$	6,743	$	6,743	$	6	$	(6,464)	$	37,024
Cost of products sold	—		10,473		—		10,473		—		(4,981)		5,492
Operating expense	5,085		195		866		1,061		81		(680)		5,547
Operating gain (loss)	$	896	$	582	$	366	$	948	$	(81)	$	—	$	1,763


Three Months Ended June 30, 2025
Premiums	$	39,710	$	—	$	1,863	$	1,863	$	—	$	(302)	$	41,271
Product revenue	—		6,042		—		6,042		—		—		6,042
Service fees	1,872		4		232		236		—		—		2,108
Operating revenue - unaffiliated	41,582		6,046		2,095		8,141		—		(302)		49,421
Operating revenue - affiliated	—		4,597		5,346		9,943		232		(10,175)		—
Operating revenue - total	$	41,582	$	10,643	$	7,441	$	18,084	$	232	$	(10,477)	$	49,421

Benefit expense	$	35,487	$	—	$	6,290	$	6,290	$	8	$	(5,079)	$	36,706
Cost of products sold	—		9,884		—		9,884		—		(4,591)		5,293
Operating expense	4,535		223		751		974		295		(807)		4,997
Operating gain (loss)	$	1,560	$	536	$	400	$	936	$	(71)	$	—	$	2,425

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			Carelon
	Health Benefits		CarelonRx		Carelon Services		Total		Corporate & Other		Eliminations		Total
Six Months Ended June 30, 2026
Premiums	$	81,099	$	—	$	1,612	$	1,612	$	—	$	(408)	$	82,303
Product revenue	—		12,489		—		12,489		—		—		12,489
Service fees	4,111		7		410		417		—		—		4,528
Operating revenue - unaffiliated	85,210		12,496		2,022		14,518		—		(408)		99,320
Operating revenue - affiliated	—		9,354		13,318		22,672		10		(22,682)		—
Operating revenue - total	$	85,210	$	21,850	$	15,340	$	37,190	$	10	$	(23,090)	$	99,320

Benefit expense	$	72,192	$	—	$	12,829	$	12,829	$	15	$	(12,397)	$	72,639
Cost of products sold	—		20,303		—		20,303		—		(9,348)		10,955
Operating expense	9,965		383		1,675		2,058		1,199		(1,345)		11,877
Operating gain (loss)	$	3,053	$	1,164	$	836	$	2,000	$	(1,204)	$	—	$	3,849


Six Months Ended June 30, 2025
Premiums	$	79,298	$	—	$	3,363	$	3,363	$	—	$	(503)	$	82,158
Product revenue	—		11,851		—		11,851		—		—		11,851
Service fees	3,715		7		455		462		—		—		4,177
Operating revenue - unaffiliated	83,013		11,858		3,818		15,676		—		(503)		98,186
Operating revenue - affiliated	—		8,901		10,159		19,060		397		(19,457)		—
Operating revenue - total	$	83,013	$	20,759	$	13,977	$	34,736	$	397	$	(19,960)	$	98,186

Benefit expense	$	69,880	$	—	$	11,609	$	11,609	$	18	$	(9,489)	$	72,018
Cost of products sold	—		19,168		—		19,168		—		(8,892)		10,276
Operating expense	9,356		453		1,477		1,930		590		(1,579)		10,297
Operating gain (loss)	$	3,777	$	1,138	$	891	$	2,029	$	(211)	$	—	$	5,595

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three and six months ended June 30, 2026 and 2025 is as follows:


	Three Months Ended June 30				Six Months Ended June 30
	2026		2025		2026		2025
Reportable segments’ operating revenue	$	49,826	$	49,421	$	99,320	$	98,186
Net investment income	704		486		1,469		1,076
Net losses on financial instruments	(56)		(131)		(134)		(595)

Total revenues	$	50,474	$	49,776	$	100,655	$	98,667

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A reconciliation of reportable segments' operating gain to income before income tax expense included in our consolidated statements of income for the three and six months ended June 30, 2026 and 2025 is as follows:


	Three Months Ended June 30				Six Months Ended June 30
	2026		2025		2026		2025

Income before income tax expense	$	1,937	$	2,292	$	4,241	$	5,089
Net investment income	(704)		(486)		(1,469)		(1,076)
Net losses on financial instruments	56		131		134		595

Interest expense	364		341		721		685
Amortization of other intangible assets	110		147		222		302

Reportable segments’ operating gain	$	1,763	$	2,425	$	3,849	$	5,595

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