Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $5.48 on premium revenue of $10.9 billion for Q2 2025 [6][28] - The consolidated Medical Care Ratio (MCR) was 90.4%, reflecting a challenging medical cost trend environment, with a year-to-date MCR of 89.8% [7][28] - The adjusted pre-tax margin was 3.3% for Q2, with a year-to-date margin of 3.6% [7][28] Business Line Data and Key Metrics Changes - In Medicaid, the MCR was 91.3%, above the long-term target range, with ongoing medical cost pressures in behavioral health, pharmacy, and inpatient care [7][29] - The Medicare segment reported an MCR of 90%, also above the long-term target range, driven by higher utilization among high-acuity populations [10][29] - The Marketplace segment had an MCR of 85.4%, significantly higher than expected, influenced by new store impacts and member reconciliations [11][30] Market Data and Key Metrics Changes - The company noted unprecedented medical cost increases across all segments, with behavioral health costs rising due to increased demand and supply-side constraints [8][94] - The overall market risk pool is trending higher, with an 8% increase in acuity year-over-year, affecting risk adjustment [56][95] Company Strategy and Development Direction - The company aims to achieve premium revenue of approximately $46 billion in 2026 and $52 billion in 2027, focusing on growth in current markets and recent Medicaid and Medicare dual RFP wins [19][20] - The company is strategically focused on managing costs and advocating for appropriate rate adjustments in Medicaid to restore funding levels [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage costs despite the challenging environment, noting that the dislocation between rates and trends in Medicaid is temporary [25][26] - The company anticipates modest impacts from the recently passed budget bill, with gradual changes expected in the Medicaid program [21][22] Other Important Information - The full-year 2025 premium revenue guidance remains unchanged at approximately $42 billion, with adjusted earnings per share guidance revised to no less than $19 [11][35] - The company continues to have a strong capital foundation, with a cash balance of approximately $100 million at the end of the quarter [32][33] Q&A Session Summary Question: Confidence in Medicaid margins improvement despite higher reimbursement rates - Management indicated that observed trends are slightly outpacing known rates, but previous guidance included rate adjustments for Q3 and Q4, which should help [44][46] Question: Required premium increases for ACA to account for trends - Management stated that rate models must catch up with underperformance and include a healthy dose of medical cost trend adjustments [48][49] Question: Adjustments to marketplace pricing in light of recent trends - Management noted that states are allowing more flexibility in pricing adjustments this year, with ongoing discussions about trend assumptions [52][54] Question: Understanding elevated trends across products - Management explained that the increase in trends is due to a combination of higher prevalence of conditions, pent-up demand post-pandemic, and supply-side factors [92][94] Question: Timing of rate updates and achieving target margins - Management emphasized the importance of using a recent baseline for rate updates to capture cost inflections and expressed hope for adequate trend inclusion in future rates [97][98]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $5.48 on premium revenue of $10.9 billion for Q2 2025 [4][5] - The consolidated Medical Care Ratio (MCR) was 90.4%, reflecting a challenging medical cost trend environment, with a year-to-date MCR of 89.8% [5][25] - The adjusted pre-tax margin for Q2 was 3.3%, with a year-to-date margin of 3.6% [5][25] Business Line Data and Key Metrics Changes - In Medicaid, the MCR was 91.3%, above the long-term target range, with ongoing medical cost pressures in behavioral health, pharmacy, and inpatient/outpatient care [5][6][25] - The Medicare segment reported an MCR of 90%, also above the long-term target range, driven by higher utilization among high acuity populations [8][26] - The Marketplace segment had an MCR of 85.4%, significantly higher than expected, influenced by new store impacts and member reconciliations [9][27] Market Data and Key Metrics Changes - The company anticipates full-year premium revenue guidance to remain unchanged at approximately $42 billion, with adjusted earnings per share guidance revised to no less than $19 [10][31] - The Medicaid MCR guidance was raised from 89.9% to 90.9%, reflecting the expectation that trends will exceed rates [31][32] - The Marketplace MCR guidance was increased from 80% to 85%, accounting for prior year reconciliations and new store impacts [34] Company Strategy and Development Direction - The company aims to achieve premium revenue targets of $46 billion in 2026 and $52 billion in 2027, focusing on growth in current markets and recent Medicaid and Medicare dual RFP wins [17][18] - The company is strategically focused on managing costs and maintaining profitability despite the challenging operating environment [24][36] - The company plans to prioritize margin stability over growth in the Marketplace segment, limiting its exposure to 10% of the portfolio [16][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage medical cost trends and maintain profitability despite the challenging environment [24][36] - The company anticipates gradual impacts from the recently passed budget bill on Medicaid membership and risk pool acuity [19][20] - Management acknowledged the unprecedented medical cost increases and emphasized the importance of effective cost control protocols [6][8] Other Important Information - The company reported a strong capital foundation, with a cash balance of approximately $100 million and reduced debt levels [29] - The adjusted G&A ratio for the quarter was 6.1%, reflecting lower incentive compensation and continued productivity enhancements [9][28] - The company is actively pursuing M&A opportunities in the current challenging environment [18] Q&A Session Summary Question: Confidence in Medicaid margins improvement - Management indicated that observed trends are slightly outpacing known rates, but they have factored in previous guidance for rate updates [40][41] Question: Required premium increases for ACA - Management stated that rate models must account for underperformance and medical cost trends, with a significant increase in trend assumptions from 7% to 11% [44][45] Question: Marketplace pricing adjustments - Management noted that states are allowing more flexibility in pricing adjustments this year, with ongoing discussions about trend assumptions and acuity shifts [49][50] Question: Market-wide enrollment decline in 2026 - Management refrained from providing specific projections but acknowledged that the dynamics vary significantly by state [56][59] Question: Elevated trends across products - Management explained that the elevated trends are driven by increased prevalence of conditions and pent-up demand post-pandemic, affecting all segments [90][92]

Core Viewpoint - Elevance Health, Inc. is facing a class action lawsuit due to alleged misleading statements and failure to disclose adverse facts regarding its business operations and financial guidance during the Class Period from April 18, 2024, to October 16, 2024 [1][4]. Financial Performance - On July 17, 2024, Elevance announced an expected increase in Medicaid utilization, which led to a stock price drop of $32.21, or 5.8%, closing at $520.93 per share [2]. - On October 17, 2024, Elevance reported third quarter 2024 financial results, missing EPS consensus estimates by 13.7% and lowering its EPS guidance for 2024 by 11.3%, resulting in a further stock price decline of $52.61, or 10.6%, to close at $444.35 per share [3]. Lawsuit Details - The class action complaint alleges that Elevance's management made materially false and misleading statements and failed to disclose significant adverse facts, including the higher costs associated with sicker patients remaining on Medicaid and inadequate reflection of these costs in financial guidance [4]. - Investors who purchased Elevance common stock during the Class Period have until July 11, 2025, to file a lead plaintiff motion in the lawsuit [5].