Core Viewpoint - Bank of America Global Research has lowered the target price for Elevance Health from $350 to $330 [1] Company Summary - The target price adjustment indicates a shift in market expectations regarding Elevance Health's future performance [1]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Elevance Health's unaudited Consolidated Financial Statements for the period ended June 30, 2025, covering Balance Sheets, Income, Cash Flows, and Equity with detailed notes Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $8,560 | $8,288 | | Total current assets | $63,324 | $58,942 | | Goodwill | $28,368 | $28,277 | | **Total assets** | **$121,938** | **$116,889** | | **Liabilities & Equity** | | | | Medical claims payable | $17,155 | $15,746 | | Long-term debt, less current portion | $28,178 | $29,218 | | **Total liabilities** | **$78,087** | **$75,463** | | **Total shareholders' equity** | **$43,722** | **$41,315** | Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenue | $49,421 | $43,223 | $98,186 | $85,496 | | Benefit expense | $36,706 | $30,572 | $72,018 | $61,118 | | Net income | $1,744 | $2,301 | $3,928 | $4,550 | | Diluted EPS | $7.72 | $9.85 | $17.33 | $19.44 | Consolidated Cash Flow Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,071 | $2,425 | | Net cash used in investing activities | ($584) | ($3,128) | | Net cash provided by (used in) financing activities | ($2,217) | $700 | | Change in cash and cash equivalents | $272 | ($8) | [Note 1. Organization](index=9&type=section&id=Note%201.%20Organization) Elevance Health, a major U.S. health insurer, serves approximately 45.6 million members across diverse markets and reports results through four distinct segments - As of June 30, 2025, the company serves approximately **45.6 million** medical members through its affiliated health plans[22](index=22&type=chunk) - The company's results are reported in four segments: **Health Benefits, CarelonRx, Carelon Services, and Corporate & Other**[23](index=23&type=chunk) [Note 3. Business Acquisitions and Divestitures](index=14&type=section&id=Note%203.%20Business%20Acquisitions%20and%20Divestitures) The company expanded its Health Benefits and Carelon Services segments through acquisitions and divested its life and disability businesses, recognizing a significant gain - Completed the acquisition of Centers Plan for Healthy Living LLC on December 31, 2024, to grow the Health Benefits segment, adding **$211 million** in finite-lived intangibles and **$285 million** in goodwill[53](index=53&type=chunk) - Completed the acquisition of CareBridge on December 10, 2024, to enhance Carelon Services' at-home care strategy, adding **$305 million** in finite-lived intangibles and **$1,814 million** in goodwill[54](index=54&type=chunk) - On April 1, 2024, the company sold its life and disability businesses, recognizing a gain of **$240 million**[55](index=55&type=chunk) [Note 9. Medical Claims Payable](index=26&type=section&id=Note%209.%20Medical%20Claims%20Payable) Medical claims payable increased to $17.2 billion by June 30, 2025, with $1.065 billion in favorable prior period development for the first six months of 2025 Medical Claims Payable Reconciliation (in millions) | Description | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net medical claims payable, beginning of period | $15,567 | $15,858 | | Total net incurred medical claims | $70,025 | $59,078 | | *Prior periods redundancies* | *($1,065)* | *($1,473)* | | Total net payments | $68,919 | $59,881 | | Gross medical claims payable, end of period | $16,871 | $15,067 | - Favorable development in the first six months of 2025 was **$1.065 billion**, resulting from late 2024 trend factors being more favorable than originally expected[100](index=100&type=chunk) [Note 10. Debt](index=27&type=section&id=Note%2010.%20Debt) Elevance Health's outstanding senior unsecured notes decreased to $29.8 billion, with a $1.25 billion repayment and a $4.0 billion undrawn revolving credit facility, maintaining a healthy debt-to-capital ratio - On January 15, 2025, the company repaid **$1,250 million** of its 2.375% unsecured notes at maturity[105](index=105&type=chunk) - The company has a **$4.0 billion** senior revolving credit facility maturing in April 2027, with no amounts outstanding as of June 30, 2025[106](index=106&type=chunk) - The debt-to-capital ratio under the 5-Year Facility was **40.8%** as of June 30, 2025, well below the 60% covenant limit[106](index=106&type=chunk) [Note 11. Commitments and Contingencies](index=28&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) The company is involved in significant litigation, including the Blue Cross Blue Shield Antitrust Litigation, with a $666 million estimated settlement for provider plaintiffs, and a False Claims Act lawsuit - The Subscriber Settlement Agreement in the Blue Cross Blue Shield Antitrust Litigation became effective in June 2024[114](index=114&type=chunk) - A proposed Provider Settlement Agreement received preliminary court approval, with a final hearing set for July 29, 2025; the company's estimated payment obligation is **$666 million**, which was recognized in September 2024[118](index=118&type=chunk) - The company is defending a lawsuit from the U.S. Department of Justice alleging violations of the False Claims Act related to Medicare Part C risk-adjustment data[120](index=120&type=chunk) [Note 12. Capital Stock](index=31&type=section&id=Note%2012.%20Capital%20Stock) During the first half of 2025, Elevance Health repurchased 3.2 million shares for $1.26 billion and paid $3.42 per share in cash dividends, with $8.04 billion remaining for future repurchases Share Repurchase Summary | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Shares repurchased (millions) | 3.2 | 2.0 | | Average price per share | $399.97 | $506.55 | | Aggregate cost (millions) | $1,259 | $1,029 | | Authorization remaining (millions) | $8,041 | $3,171 | Dividend Summary | Period | Cash Dividend per Share | Total Paid (millions) | | :--- | :--- | :--- | | Q1 2025 | $1.71 | $386 | | Q2 2025 | $1.71 | $385 | | **YTD 2025 Total** | **$3.42** | **$771** | [Note 15. Segment Information](index=35&type=section&id=Note%2015.%20Segment%20Information) In Q2 2025, Health Benefits operating gain decreased, while CarelonRx and Carelon Services saw increased operating gains, contributing to a total operating gain of $2.425 billion Segment Operating Gain (Loss) (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Health Benefits | $1,560 | $2,145 | $3,777 | $4,432 | | CarelonRx | $536 | $497 | $1,138 | $1,020 | | Carelon Services | $400 | $208 | $891 | $498 | | Corporate & Other | ($71) | ($85) | ($211) | ($169) | | **Total Operating Gain** | **$2,425** | **$2,765** | **$5,595** | **$5,781** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's Q2 and H1 2025 financial performance, covering business trends, acquisitions, consolidated and segment results, liquidity, and critical accounting policies [Business and Regulatory Trends](index=41&type=section&id=Business%20and%20Regulatory%20Trends) Elevated medical cost trends in Individual ACA and Medicaid, coupled with regulatory changes like the OBBBA of 2025 and ongoing Medicaid redeterminations, are impacting the business - Medical cost trends are elevated due to increased morbidity in the Individual ACA business and higher member acuity and utilization in Medicaid[158](index=158&type=chunk) - The budget reconciliation legislation of 2025, the One Big Beautiful Bill Act (OBBBA), is expected to impact Medicaid renewal/eligibility rules and other areas, with most provisions effective in 2027 and 2028[165](index=165&type=chunk) - Medicaid eligibility redeterminations, which began in April 2023, are ongoing, with states having until December 31, 2025 to complete the process[167](index=167&type=chunk) [Other Significant Items](index=43&type=section&id=Other%20Significant%20Items) The company's 2025 Medicare Advantage Star Ratings show a decline, expected to reduce 2026 operating revenue by $183 million, alongside recent acquisitions and joint venture investments - The 2025 Medicare Advantage Star Ratings show **38%** of members in plans rated 4.0 Stars or higher, down from **53%** in the 2024 ratings[174](index=174&type=chunk)[175](index=175&type=chunk) - The lower Star Ratings are expected to cause a reduction in 2026 operating revenue of approximately **$183 million**, which the company plans to mitigate through various strategies[175](index=175&type=chunk) [Membership and Other Metrics](index=45&type=section&id=Membership%20and%20Other%20Metrics) Total medical membership slightly decreased by 0.3% year-over-year to 45.6 million, driven by a decline in Medicaid membership largely offset by an increase in Medicare Advantage Medical Membership by Category (in thousands) | Category | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Commercial Fee-Based | 27,154 | 27,234 | (0.3)% | | Medicare Advantage | 2,255 | 2,031 | 11.0% | | Medicaid | 8,733 | 9,028 | (3.3)% | | **Total Medical Membership** | **45,621** | **45,776** | **(0.3)%** | [Consolidated Results of Operations](index=47&type=section&id=Consolidated%20Results%20of%20Operations) Q2 2025 operating revenue grew 14.3% to $49.4 billion, but net income fell 24.2% due to a higher benefit expense ratio driven by increased medical cost trends - Q2 2025 operating revenue increased **14.3%** YoY, while net income decreased **24.2%** YoY[196](index=196&type=chunk)[198](index=198&type=chunk) - The benefit expense ratio for Q2 2025 increased to **88.9%** from 86.3% in Q2 2024, driven by higher medical cost trends in Medicaid and ACA plans[197](index=197&type=chunk)[200](index=200&type=chunk) - The operating expense ratio improved by **160 basis points** to **10.1%** in Q2 2025, reflecting operating leverage from revenue growth[197](index=197&type=chunk)[202](index=202&type=chunk) [Reportable Segments Results of Operations](index=49&type=section&id=Reportable%20Segments%20Results%20of%20Operations) In Q2 2025, Health Benefits operating gain declined significantly, while CarelonRx and Carelon Services experienced substantial growth in operating gain due to acquisitions and improved performance - Health Benefits operating gain decreased **27.3%** in Q2 2025, as Medicaid and ACA plan rates were inadequate to cover medical cost trends[214](index=214&type=chunk)[216](index=216&type=chunk) - CarelonRx operating gain increased **7.8%** in Q2 2025, driven by higher prescription volume and revenue from recent acquisitions[214](index=214&type=chunk)[217](index=217&type=chunk) - Carelon Services operating gain grew **92.3%** in Q2 2025, primarily due to the acquisition of CareBridge and improved performance in specialty and behavioral health services[214](index=214&type=chunk)[218](index=218&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operating activities increased to $3.1 billion for the first half of 2025, with the parent company holding $2.2 billion in cash and investments, and the debt-to-capital ratio improving to 40.8% - Net cash provided by operating activities for the first six months of 2025 was **$3,071 million**, an increase from **$2,425 million** in the same period of 2024[237](index=237&type=chunk) - As of June 30, 2025, the parent company held **$2,224 million** of cash, cash equivalents, and investments available for general corporate use[241](index=241&type=chunk) - The consolidated debt-to-capital ratio was **40.8%** as of June 30, 2025, compared to **43.0%** as of December 31, 2024[243](index=243&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) There have been no material changes to the company's market risks since the disclosures in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the company's market risks since December 31, 2024[257](index=257&type=chunk) [Controls and Procedures](index=58&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[258](index=258&type=chunk) - No material changes to internal control over financial reporting were identified during the second quarter of 2025[259](index=259&type=chunk) [PART II. OTHER INFORMATION](index=58&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=58&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 11 of the Consolidated Financial Statements for detailed information regarding the company's legal proceedings as of June 30, 2025 - Information regarding legal proceedings is incorporated by reference from Note 11, "Commitments and Contingencies," in Part I, Item 1 of this report[260](index=260&type=chunk) [Risk Factors](index=58&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company reports that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K[261](index=261&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q2 2025, the company repurchased 928,007 shares of common stock, with approximately $8.04 billion remaining available under the repurchase authorization Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 567,084 | $427.05 | | May 2025 | 112,510 | $390.43 | | June 2025 | 248,413 | $380.11 | | **Total** | **928,007** | **N/A** | - As of the end of June 2025, the remaining authorization under the share repurchase program was approximately **$8.04 billion**[262](index=262&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon its senior securities during the period - None[263](index=263&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable to the company - None[264](index=264&type=chunk) [Other Information](index=59&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company disclosed that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the second quarter of 2025 - During the three months ended June 30, 2025, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement[265](index=265&type=chunk) [Exhibits](index=60&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, CEO/CFO certifications, and XBRL data files - Exhibits filed include the Amended and Restated Articles of Incorporation, Bylaws, CEO/CFO certifications (Sections 302 and 906), and XBRL interactive data files[267](index=267&type=chunk)

Core Insights - Elevance Health, Inc. (ELV) reported Q2 2025 adjusted EPS of $8.84, missing estimates by 3.5% and declining 12.6% year over year [1][8] - Operating revenues reached $49.4 billion, up 14.3% year over year, exceeding consensus estimates by 2.6% [1][8] - The increase in revenues was driven by higher premiums and product revenues, although rising medical costs in ACA and Medicaid impacted margins [1][8] Financial Performance - Medical membership stood at approximately 45.6 million, a decrease of 0.3% year over year, attributed to Medicaid attrition [2] - Premiums increased by 16.5% year over year to $41.3 billion, surpassing the consensus estimate of $39.6 billion [3] - Product revenues were $6 billion, a 9.3% increase year over year, but fell short of estimates [3] - Total expenses rose 16.1% year over year to $47.5 billion, driven by higher benefit expenses and interest costs [4] - The adjusted operating margin decreased by 170 basis points to 5% [3] Segment Performance - Health Benefits segment revenues totaled $41.6 billion, an 11.9% increase year over year, exceeding estimates [4] - Operating gains in the Health Benefits segment declined 27.3% year over year to $1.6 billion [5] - Carelon segment revenues reached $18.1 billion, a 36.1% increase year over year, driven by acquisitions and product revenue growth [6] - Carelon's operating gain increased by 28.6% year over year to $936 million [7] Cash Flow and Capital Management - Cash and cash equivalents rose to $8.6 billion from $8.3 billion at the end of 2024 [10] - Total assets increased to $121.9 billion from $116.9 billion at the end of 2024 [10] - Long-term debt decreased to $28.2 billion from $29.2 billion [11] - The company generated net cash flow from operations of $3.1 billion in the first half of 2025, a 26.6% increase year over year [11] - Share buybacks amounted to $379 million in Q2, with $8 billion remaining under the buyback authorization [12] Outlook - Adjusted EPS guidance for 2025 was lowered to $30 from a previous range of $34.15 to $34.85 [13] - The company anticipates operating revenues to grow in the high-single- to low-double-digit range in 2025 [15] - Medical enrollment is expected to be between 45.8 and 46.7 million in 2025 [15]

Core Insights - Elevance Health reported revenue of $49.42 billion for the quarter ended June 2025, reflecting a 14.3% increase year-over-year, and an EPS of $8.84, down from $10.12 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $48.15 billion by 2.64%, while the EPS fell short of the consensus estimate of $9.16 by 3.49% [1] Financial Performance Metrics - Benefit Expense Ratio was reported at 88.9%, slightly above the average estimate of 88.4% from 16 analysts [4] - Medical Membership - Commercial Risk-Based stood at 4.96 million, below the estimated 5 million [4] - Medical Membership - Commercial Fee-Based was reported at 27.15 million, slightly below the estimate of 27.22 million [4] - Service fees revenue was $2.11 billion, lower than the $2.23 billion estimate, representing a year-over-year decline of 7.4% [4] - Product revenue reached $6.04 billion, slightly below the $6.14 billion estimate, but showed a 9.3% increase year-over-year [4] - Net investment income was $486 million, exceeding the estimate of $464.67 million, but down 4.3% from the previous year [4] - Premiums revenue was reported at $41.27 billion, surpassing the estimate of $39.64 billion, with a year-over-year increase of 16.5% [4] - Total operating revenue from Health Benefits was $41.58 billion, above the estimate of $40.84 billion, reflecting an 11.9% year-over-year increase [4] - Total operating revenue from Carelon was $18.08 billion, exceeding the estimate of $16.86 billion, with a significant year-over-year increase of 35.8% [4] - Total operating revenue from Carelon Services was $7.44 billion, above the estimate of $6.8 billion, representing a remarkable 63.7% increase year-over-year [4] - Total operating revenue from CarelonRx was $10.64 billion, surpassing the estimate of $10.05 billion, with a year-over-year increase of 21.3% [4] Stock Performance - Elevance Health's shares have returned -8.3% over the past month, contrasting with the Zacks S&P 500 composite's increase of 4.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Elevance Health reported second quarter GAAP diluted earnings per share of $7.72 and adjusted diluted earnings per share of $8.84, with a revised full year 2025 adjusted EPS guidance of approximately $30 [16][9] - Operating revenue was $49.4 billion, an increase of 14% year over year, driven by higher premium yields and recent acquisitions [16][17] - The consolidated benefit expense ratio increased to 88.9%, up 260 basis points year over year, primarily due to pressures in the ACA and Medicaid businesses [17][20] Business Line Data and Key Metrics Changes - The Medicare Advantage portfolio showed continued strength, with cost trends remaining in line with expectations [18][46] - CarillonRx experienced over 20% growth in operating revenue, while Carillon services delivered more than 50% growth in revenue [19][20] - The company ended the quarter with 45.6 million medical members, a decrease of approximately 200,000 sequentially, attributed to reduced Medicaid membership and lower effectuation rates in the ACA business [16][17] Market Data and Key Metrics Changes - The ACA market is experiencing increased morbidity due to a higher proportion of higher acuity members transitioning from Medicaid, resulting in elevated medical cost trends [25][54] - Medicaid cost trends decelerated in the second quarter but at a slower pace than expected, with higher acuity and increased member utilization impacting margins [18][20] - The company anticipates a broader market reset in 2026 due to the expiration of enhanced subsidies, which could further affect risk pool changes [13][21] Company Strategy and Development Direction - The company is focused on delivering whole health solutions that are simple, affordable, and personalized, while managing costs and reinforcing operational foundations for long-term value creation [7][10] - Strategic investments are being prioritized in innovative care models, artificial intelligence, and pharmacy services to support long-term success [19][20] - The company aims to stabilize trends in high-cost areas and improve care delivery through streamlined processes and advanced analytics [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the disappointment of revising guidance for the second consecutive year but emphasized the importance of transparency and strong execution in navigating unprecedented cost trends [15][21] - The company is taking proactive steps to stabilize trends, particularly in high-cost areas, and is focused on disciplined pricing and margin recovery [13][21] - Management remains confident in the strength of the enterprise and the impact of investments on long-term value creation [15][21] Other Important Information - The company is actively engaged with state partners to ensure upcoming Medicaid rate cycles reflect the developing acuity environment [13][21] - The debt to capital ratio was reported at 40.8%, preserving flexibility for strategic investments [20] - The company returned approximately $2 billion to investors year to date, with operating cash flow totaling $2.1 billion in the quarter [20] Q&A Session Summary Question: Can you help delineate the pressure you're seeing in the ACA business? - Management identified three principal factors: increased risk pool acuity, higher utilization in several cost categories, and inappropriate coding tactics contributing to inflated costs [24][25] Question: Can you size the relative impact of ACA and Medicaid in the guidance revision? - The reduction in full year guidance is slightly more weighted towards ACA, with ongoing enrollment losses in Medicaid contributing to elevated morbidity [29][35] Question: How do you think about the dynamic of Medicaid margins and rate setting? - Management expects Medicaid margins to show year-over-year improvement in the back half of the year, despite ongoing challenges with rate alignment [43][44] Question: What are you seeing on Medicare Advantage trends? - Medicare Advantage trends remain elevated and consistent with expectations, with a disciplined approach to bids for 2026 focused on margin recovery [46][48] Question: Can you comment on the utilization you're seeing? - Elevated utilization is noted in emergency room visits and behavioral health services, with a significant increase in acuity due to disenrollment of lower acuity members [54][108] Question: How is the current environment affecting capital allocation strategy? - The company plans to maintain a 50-50 split between investment and returning capital, with a focus on opportunistic share repurchases and integration of past acquisitions [74][75] Question: How do you change the pricing process for the ACA? - Management believes that ongoing discussions with CMS and state partners will help stabilize the ACA market, with upcoming rate filings capturing current acuity and expected risk pool deterioration [80][81]

Financial Data and Key Metrics Changes - Elevance Health reported second quarter GAAP diluted earnings per share of $7.72 and adjusted diluted earnings per share of $8.84, with a revised full year 2025 adjusted EPS guidance of approximately $30 [14][19] - Operating revenue was $49.4 billion, an increase of 14% year over year, driven by higher premium yields and recent acquisitions [14][15] - The consolidated benefit expense ratio increased to 88.9%, up 260 basis points year over year, primarily due to pressures in the ACA and Medicaid businesses [15][17] Business Line Data and Key Metrics Changes - The Medicare Advantage portfolio showed continued strength, with cost trends in line with expectations [6][17] - CarillonRx experienced over 20% growth in operating revenue, while Carillon services delivered more than 50% growth in revenue [18][19] - Membership decreased to 45.6 million, down approximately 200,000 sequentially, attributed to a reduction in Medicaid membership and lower effectuation rates in the ACA business [14][15] Market Data and Key Metrics Changes - The ACA market is experiencing elevated morbidity due to shifts from Medicaid, with approximately 70% of the total impact attributed to risk pool acuity [26][36] - Medicaid cost trends decelerated in the second quarter but at a slower pace than expected, with higher acuity and increased member utilization [16][17] - The company anticipates a broader market reset in 2026 due to the expiration of enhanced subsidies, which may lead to further risk pool changes [12][20] Company Strategy and Development Direction - The company is focused on executing a clear strategy to strengthen structural performance across the enterprise, with an emphasis on managing costs and deploying targeted investments [5][8] - Efforts are being made to stabilize trends in high-cost areas, including specialty services and post-acute care, while enhancing care delivery through streamlined prior authorization processes [9][10] - The company aims to improve visibility and consistency in operations while preparing for potential policy changes affecting Medicaid and ACA markets [20][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the disappointment in revising guidance for the second consecutive year but emphasized the commitment to transparency and strong execution [13][19] - The company is taking proactive steps to address elevated medical cost trends and is not relying on near-term recovery assumptions [7][12] - Management remains confident in the strength of the enterprise and the ability to create long-term value through operational discipline and innovation [13][19] Other Important Information - The company is utilizing AI-enabled tools to streamline clinical workflows and identify fraud, waste, and abuse [10][69] - Approximately one-third of benefit expenses are now in downside risk arrangements, supporting improved care coordination [10][12] - The company has returned approximately $2 billion to investors year-to-date, with a focus on maintaining flexibility for strategic investments [19][72] Q&A Session Summary Question: Can you help delineate the pressure you're seeing in the ACA business? - Management identified three principal factors: increased risk pool acuity, higher utilization in several cost categories, and inappropriate coding tactics contributing to inflated costs [22][25] Question: Can you size the relative impact of ACA and Medicaid in the guidance revision? - The reduction in guidance is slightly more weighted towards ACA, with ongoing enrollment losses in Medicaid contributing to elevated morbidity [29][35] Question: How do you think about the dynamic of Medicaid margins? - Management expects Medicaid margins to show year-over-year improvement in the back half of the year, despite ongoing challenges [42][100] Question: Can you talk about Medicare Advantage trends and bid strategy? - Medicare Advantage trends remain elevated and consistent with expectations, with a disciplined approach to bids for 2026 focused on margin recovery [46][48] Question: What are you doing differently in terms of cost structure initiatives? - The company is transforming processes using technology and AI to manage costs and identify trends earlier, with a focus on responsible innovation [66][69] Question: How is the current environment affecting capital allocation strategy? - The company is maintaining a flexible capital allocation strategy, focusing on opportunistic share repurchases while integrating recent acquisitions [72][73]

Financial Performance - Elevance Health's operating revenue for 2Q 2025 grew by 143% to $494 billion [7, 9] - The medical loss ratio was 889% [9] - Adjusted operating expense ratio improved by 140 bps to 100% [9] - Operating cash flow was $21 billion [9] - Adjusted diluted earnings per share (EPS) decreased by 142% to $884 [7] Segment Results - Health Benefits operating revenue increased by 119% to $416 billion [11] - Health Benefits adjusted operating margin decreased by 200 bps to 38% [12] - Carelon revenue increased by 358% to $181 billion [14] - CarelonRx revenue increased by 213% to $1064 billion [33] - Carelon Services revenue increased by 637% to $7441 billion [33] Strategic Focus - Elevance Health is focused on simplifying healthcare, affordability, and accessibility for consumers [3, 5] - The company aims to deepen clinical and business partnerships with care providers [4, 5] - Elevance Health is targeting at least 12% average annual growth in Adjusted Diluted Earnings Per Share [19, 20]

Financial Performance - Elevance Health cut its profit outlook for the year [1] Healthcare Industry Dynamics - Higher medical costs in Affordable Care Act plans impacted Elevance Health [1] - Lower reimbursement from Medicaid impacted Elevance Health [1]

E A R N I N G S R E L E A S E ELEVANCE HEALTH REPORTS SECOND QUARTER 2025 RESULTS Indianapolis, IN - July 17, 2025 - Elevance Health, Inc. (NYSE: ELV) reported second quarter 2025 results. "In the second quarter, Elevance Health made meaningful progress in delivering an experience that is simple and personal to those we serve, while advancing our efforts to enhance efficiency across the healthcare system. We are updating our outlook to reflect elevated medical cost trends in ACA and slower rate alignment in ...

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Elevance Health, Inc. due to a class action lawsuit alleging that the company misled investors regarding the impact of Medicaid redetermination on its financial guidance and cost trends [1][2]. Group 1: Legal Investigation - The law firm is representing long-term stockholders of Elevance who held shares between April 18, 2024, and October 16, 2024, following a class action complaint filed on May 12, 2025 [1]. - The investigation focuses on whether Elevance's board of directors breached their fiduciary duties to the company [1]. Group 2: Allegations in the Lawsuit - The lawsuit claims that Elevance made false or misleading statements about its monitoring of cost trends related to the Medicaid redetermination process [2]. - It is alleged that while Elevance acknowledged rising Medicaid expenses, it misrepresented that these were adequately reflected in its financial guidance for 2024 [2]. - The lawsuit highlights that the redetermination process led to a significant increase in the acuity and utilization of Medicaid members, contrary to the company's assurances [2]. Group 3: Contact Information - Investors seeking more information or wishing to discuss their rights can contact Brandon Walker or Marion Passmore at Bragar Eagel & Squire, P.C. via phone or email [3][6].