Financial Analysis

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 sign …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Debt Short-term Borrowings We are a member, through certain subsidiaries, of the Federal Home Loan Bank of Indianapolis, the Federal Home Loan Bank of Cincinnati, the Federal Home Loan Bank of Atlanta and the Federal Home Loan Bank of New York (collectively, the FHLBs). As a member we have the ability to obtain short-term cash advances, subject to certain minimum collateral requirements. At December 31, 2025 and 2024, $150 and $365, respectively, were outstanding under our short-term FHLB borrowings. Outstanding short-term FHLB borrowings at December 31, 2025 had fixed interest rates of 3.78%. We have a senior revolving credit facility (the 5-Year Facility) with a group of lenders for general corporate purposes. On September 5, 2025, we amended and restated the credit agreement for the 5-Year Facility to, among other things, extend the maturity date of the 5-Year Facility from April 2027 to September 2030 and increase the amount of credit available under the 5-Year Facility from $4,000 to $5,000. Our ability to borrow under the 5-Year Facility is subject to compliance with certain covenants, including covenants requiring us to maintain a defined debt-to-capital ratio of not more than 60%, subject to increase in certain circumstances set forth in the credit agreement for the 5-Year Facility. As of December 31, 2025, our debt-to-capital ratio, as defined and calculated under the 5-Year Facility, was 42.1%. We do not believe the restrictions contained in our 5-Year Facility cove …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Fair Value Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by FASB guidance for fair value measurements and disclosures, are as follows: Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect managements best estimate of what market participants would use in pricing the asset or liability at the measurement date. The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in the consolidated balance sheets: Cash equivalents: Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less and are purchased daily at par value with specified yield rates. Due to the short-term nature of the funds, we designate all cash equivalents as Level I. Fixed maturity securities, available-for-sale: Fair values of available-for-sale fixed maturity securities are based on quoted market prices, where available. These fair values are obtained primarily from third-party pricin …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Goodwill and Other Intangible Assets A summary of the change in the carrying amount of goodwill for our segments (see Note 20, Segment Information) for 2025 and 2024 is as follows: Health Benefits CarelonRx Carelon Services Total Balance as of January 1, 2024 $ 22,104 $ 957 $ 2,256 $ 25,317 Acquisitions and adjustments 460 958 1,542 2,960 Balance as of December 31, 2024 22,564 1,915 3,798 28,277 Acquisitions and adjustments (112) (17) 196 67 Balance as of December 31, 2025 $ 22,452 $ 1,898 $ 3,994 $ 28,344 Accumulated impairment as of December 31, 2025 $ $ $ $ As required by FASB guidance, we completed annual impairment tests of existing goodwill and other intangible assets with indefinite lives during 2025, 2024 and 2023. We perform these annual impairment tests during the fourth quarter. FASB guidance also requires interim impairment testing to be performed when potential impairment indicators exist. These tests involve the use of estimates related to the estimated fair value of goodwill and intangible assets with indefinite lives and require a significant degree of management judgment and the use of subjective assumptions. Qualitative testing procedures include assessing our financial performance, macroeconomic conditions, industry and market considerations, various asset specific factors and entity specific events. For quantitative testing, the fair values are estimated using the projected income and market valuation approaches, incorporating Level III internal estimates …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes The components of deferred income taxes at December 31, 2025 and 2024 are as follows: 2025 2024 Deferred income tax assets: Accrued expenses $ 652 $ 826 Bad debt reserves 465 434 Insurance reserves 122 192 Lease liabilities 137 170 Retirement liabilities 107 126 Deferred compensation 42 45 Federal and state carryforwards 617 428 Foreign (including Puerto Rico) carryforwards 236 139 Other 53 51 Subtotal 2,431 2,411 Less: valuation allowance (311) (294) Total deferred income tax assets 2,120 2,117 Deferred income tax liabilities: U.S. federal and state intangible assets 2,447 2,584 Foreign (including Puerto Rico) intangible assets 125 194 Capitalized software 439 513 Depreciation and amortization 20 38 Investment basis 276 11 Retirement assets 295 330 Lease right-of-use assets 89 114 Prepaid expenses 240 275 Total deferred income tax liabilities 3,931 4,059 Net deferred income tax liabilities $ 1,811 $ 1,942 Deferred tax balances are classified by deferred tax assets and deferred tax liabilities by taxing jurisdiction in the financial statements. We recognized $298 and $206 of deferred tax asset under the caption Other noncurrent assets at December 31, 2025 and 2024, respectively. We recognized $2,110 and $2,148 of deferred tax liability under the caption Deferred tax liabilities, net at December 31, 2025 and 2024, respectively. As of December 31, 2025, we have established U.S. deferred taxes for undistributed earnings from certain non-U.S. subsidiaries, which are …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases We lease office space and certain computer and related equipment using noncancelable operating leases. Our leases have remaining lease terms of 1 year to 11 years. The information related to our leases is as follows: Balance Sheet Location December 31, 2025 December 31, 2024 Operating Leases ROU assets Other noncurrent assets $ 452 $ 567 Lease liabilities, current Other current liabilities 131 153 Lease liabilities, noncurrent Other noncurrent liabilities $ 529 $ 658 Years Ended December 31 2025 2024 2023 Lease Expense Operating lease expense $ 116 $ 147 $ 155 Short-term and variable lease expense 42 47 43 Sublease income (5) (6) (5) Total lease expense $ 153 $ 188 $ 193 During the years ended December 31, 2025, 2024 and 2023, we reduced our office space footprint and concurrently performed an interim impairment test for related ROU assets. We recorded impairment charges of $7, $17 and $23, respectively, for impairment and abandonment of ROU assets which are included in the operating lease expense shown above. Years Ended December 31 2025 2024 Other information Operating cash paid for amounts included in the measurement of lease liabilities, operating leases $ 176 $ 202 ROU assets obtained in exchange for new lease liabilities, operating leases 33 63 ROU assets derecognized (terminations/modifications) $ (75) $ (19) Weighted average remaining lease term in years, operating leases 6 6 Weighted average discount rate, operating leases 4.05 % 3.96 % At December 31, 2025, f …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Guidance: In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). The amendments in ASU 2023-07 are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 became effective for our fiscal year beginning after December 15, 2023, and for interim periods within our fiscal year beginning after December 15, 2024. We adopted these amendments on January 1, 2024, using the retrospective approach. Accordingly, the amendments were applied to all prior periods presented in the financial statements, and significant segment expense categories and amounts for prior periods are based on the categories identified and disclosed in the period of adoption. The adoption of ASU 2023-07 did not have an impact on our results of operations or our consolidated cash flows. In November 2020, the FASB issued Accounting Standards Update No. 2020-11, Financial ServicesInsurance (Topic 944): Effective Date and Early Application (ASU 2020-11). The amendments in ASU 2020-11 changed the effective date and early application of Accounting Standards Update No. 2018-12, Financial ServicesInsurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts , which was issued in November 2018. The amendments in ASU 2020-11 extended the original effective date by …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Retirement Benefits We sponsor various qualified defined benefit plans through certain subsidiaries. Future benefit accruals for these plans are frozen, but participants continue to earn interest on existing account balances. We fund our qualified pension plans in amounts that are at least sufficient to meet minimum amounts required by law. Qualified pension plan expenses and valuations are dependent on assumptions used by third-party actuaries in calculating those amounts. These assumptions include discount rates, expected rates of return on plan assets, retirement rates, mortality rates and other factors. We also sponsor the Elevance Health 401(k) Plan, which is a qualified defined contribution plan covering substantially all employees. Voluntary employee contributions are matched by us subject to certain limitations. Contributions made by us totaled $317, $314 and $316 during 2025, 2024 and 2023, respectively. The benefit obligations and fair value of plan assets for the qualified pension plans as of December 31, 2025 and 2024 were as follows: 2025 2024 Benefit obligation $ (1,195) $ (1,225) Fair value of plan assets 1,816 1,764 Over (under) funded status $ 621 $ 539 Prepaid pension benefits for the qualified pension plans are reported with Other noncurrent assets on the consolidated balance sheets. As of December 31, 2025, our estimated future payments for the qualified pension plans are as follows: 2026, $129; 2027, $106; 2028, $103; 2029, $99; 2030, $95; and 2031-2035, …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Business Optimization Initiatives 2023-2024 Business Efficiency Program During the third quarter of 2023, based on a strategic review of our operations, assets and investments, management implemented the 2023-2024 Business Efficiency Program to enhance operating efficiency, refine the focus of our investments and optimize our physical footprint. The 2023-2024 Business Efficiency Program included the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices. The 2023-2024 Business Efficiency Program was finalized as of December 31, 2024. All material cash outlays associated with this program were paid as of December 31, 2025. In 2025, we released $55 from our severance accrual. Payments related to employee termination costs for the 2023-2024 Business Efficiency Program during the year ended December 31, 2025 were $130 In 2024, we incurred $268 of costs towards the 2023-2024 Business Efficiency Program. This included primarily $72 of pre-tax charges for information technology asset write-offs, $165 of pre-tax personnel-related charges for the reduction and/or relocation of staff, which includes severance and related costs primarily determined under our existing severance plans, and $31 of pre-tax charges from asset impairments related to the closure or partial closure of offices, includi …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

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, pharmacy, and social services with the aim of delivering who …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Capital Stock Stock Incentive Plan s Our Board of Directors has adopted the 2017 Elevance Health Incentive Compensation Plan (the 2017 Incentive Plan) which has been approved by our shareholders. The term of the 2017 Incentive Plan is such that no awards may be granted on or after May 18, 2027. The 2017 Incentive Plan gives authority to the Compensation and Talent Committee of the Board of Directors to make incentive awards to our non-employee directors, employees and consultants, consisting of stock options, stock, restricted stock, restricted stock units, cash-based awards, stock appreciation rights, performance shares and performance units. The 2017 Incentive Plan limits the number of available shares for issuance to 37.5 shares, subject to adjustment as set forth in the 2017 Incentive Plan. Stock options are granted for a fixed number of shares with an exercise price at least equal to the fair value of the shares at the grant date. Stock options vest over three years in equal annual installments and generally have a term of ten years from the grant date. Certain option grants contain provisions whereby the employee continues to vest in the award subsequent to termination due to retirement. Our attribution method for newly granted awards considers all vesting and other provisions, including retirement eligibility, in determining the requisite service period over which the fair value of the awards will be recognized. Awards of restricted stock or restricted stock units are …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

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 sign …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

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 3 …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

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. 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 securiti …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes During the three months ended June 30, 2026 and 2025, we recognized income tax expense of $483 an d $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 an d $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. …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Guidance: In July 2025, the FASB issued Accounting Standards Update No. 2025-05, Financial InstrumentsCredit 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, d …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

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 mo …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

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 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

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, …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing