BioPlus Co., Ltd.

Dive Brief:Elevance Healths pharmacy benefit manager has agreed to buy Krogers specialty pharmacy business,as PBMs continue to double down on sources of reliable revenue in a competitive pharmacy market.If the deal is finalized, Krogers specialty pharmacy will merge with CarelonRx, Elevances PBM.Kroger will retain its in-store retail pharmacies and walk-in clinics.Terms of the transaction were not disclosed. In a Monday release,Kroger said it expects the deal to close in the second half of 2024. Elevance did not respond to a request for comment by time of publication.Dive Insight:Specialty pharmacies dispense expensive prescription medicines for complex, chronic conditions. Theyre a key source of revenue for PBMs:Less than 2% of the U.S. population takes specialty drugs, according to industry estimates, but the prescriptions account for 50% of total U.S. pharmacy spend. Specialty drugs can result in profits of hundreds or even thousands of dollars per prescription.Specialty pharmacies also provide wraparound services like side-effect management and personalized care. As a result, its a difficult segment of the pharmacy supply chain for other players to disrupt, at a time when legacy PBMs are losing clients to newer businesses with more transparent business models.For example, CVS Caremark one of the largest PBMs in the U.S. lost a massive client in Blue Shield of California late last year, when the payer decided to contract with multiple vendors for pharmacy services instead.However, BSCA retained Caremarkfor its specialty business, in part due to the difficulty of switching specialty vendors.As such,Krogers specialty business could be a valuable addition for CarelonRx.Elevances PBM has hustled to build out its specialty offerings since launching in 2019 as IngenioRx: Early last year,Elevance completed its acquisition of BioPlus, one of the largest specialty pharmacy organizations in the U.S. And in March, Elevance closed its buy of Paragon Healthcare, a company that provides infusion services, including through specialty pharmacies.CarelonRx has steadily grown to account for more of Elevances topline. CarelonRx brought in $33.8 billion in revenue last year, up 19% year over year, and notched the highest operating margin of Elevances reportable segments, at 5.8%, according to a 10-K filed with the Securities and Exchange Commission earlier this yearMeanwhile,Kroger is divesting assets as it looks to get a $25 billion merger with competitor Albertsons across the finish line. The Federal Trade Commission sued to block the deal last month, citing anticompetitive concerns. '

Given the focus on building out its Carelon segment, Elevance now reports its performance and that of its health insurance business individually. UPDATED: 12:50 p.m. on Jan. 24 While multiple competitors have taken a hit in the fourth quarter amid a rise in care utilization, executives at Elevance Health said what they saw in the quarter generally aligned with expectations. Chief Financial Officer Mark Kaye said during the company's earnings call on Wednesday morning that the company's benefits expense ratio of 89.2%, landing at the midpoint of its expected range. There were some specific areas where Elevance saw heightened utilization, though, and that also tracks with reports from other payers. Kaye said that the insurer saw an uptick in orthopedic services and other care delayed during the pandemic, as well as an increase in services related to respiratory conditions late in the quarter. Given that this trend was identified earlier in the year, Elevance Health did broadly plan for the impacts as part of its estimates on cost trend. A noted rise in vaccinations for respiratory syncytial virus also aligns with UnitedHealth Group's Q4 report. Elevance Health beat the Street on both earnings and revenue for the fourth quarter of 2023, reporting $856 million in profit. The company also posted $42.6 billion in revenue for Q4, according to its earnings report released Wednesday morning. That's up nearly 7% from the $39.9 billion in revenue reported for the prior year quarter. Profit declined slightly year-over-year. In the fourth quarter of 2022, Elevance Health reported $865 million in profit, making for a 1% decrease. The insurer's revenue and profit for the quarter both surpassed Wall Street analysts' expectations, according to Zacks Investment Research. “We are pleased to have delivered another year of strong performance in 2023, enabled by our relentless focus on customer experience and affordability, and continued investments in growth and innovation," CEO Gail Boudreaux said in a press release. "The balance and resilience of our business coupled with the focused execution of our enterprise strategy supports our confidence in our outlook for 2024, as we continue to optimize the foundation, and scale our flywheel for sustained growth of the enterprise over the long term.” For the full-year 2023, Elevance Health brought in $171.3 billion in revenue and $5.99 billion in profit. By comparison, the company reported $156.6 billion in revenue and $5.89 billion in profit for 2022. Given the focus on building out its Carelon segment, Elevance now reports its performance and that of its health insurance business individually. The benefits division, which includes its Anthem Blue Cross plans as well as Wellpoint, brought in $36.5 billion in operating revenue for the fourth quarter. Operating revenue for the full year was $148.6 billion, according to the report. Elevance Health's membership was 47 million at the end of the year, declining by 1% or about 570,000 members. The company said this was due in part to the ongoing Medicaid redeterminations as well as declines in its employer group risk-based plans. In Q4, the company lost 364,000 members because of the Medicaid eligibility rulings, which was partially offset by commercial segment growth. Operating revenue at Carelon was $12.4 billion in Q4 and $48 billion for the full-year 2023. The company saw growth in membership at Carelon Rx, its pharmacy benefit management arm, and touted the acquisition of BioPlus as key drivers, according to the report. Alongside reporting the fourth-quarter results, Elevance Health set its full-year 2024 guidance at $37.10 in earnings per share.

INDIANAPOLIS--( BUSINESS WIRE )--Elevance Health, Inc. (NYSE: ELV) reported fourth quarter and full year 2023 results. “We are pleased to have delivered another year of strong performance in 2023, enabled by our relentless focus on customer experience and affordability, and continued investments in growth and innovation. The balance and resilience of our business coupled with the focused execution of our enterprise strategy supports our confidence in our outlook for 2024, as we continue to optimize the foundation, and scale our flywheel for sustained growth of the enterprise over the long term.” Gail K. Boudreaux President and Chief Executive Officer 1. Earnings per diluted share ("EPS") 2. Refer to GAAP reconciliation tables herein for reconciliation of GAAP to adjusted measures. Elevance Health Consolidated Enterprise Highlights (Unaudited) (In billions) Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 Operating Revenue 1 $42.5 $39.7 $42.5 $170.2 $155.7 Operating Gain 1,2,3 $1.3 $1.3 $1.8 $8.5 $8.3 Operating Margin 1 3.0 % 3.2 % 4.1 % 5.0 % 5.3 % 1. See “Basis of Presentation.” 2. Operating Gain for the three and twelve months ended December 31, 2023 and December 31, 2022 include items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation." 3. Operating Gain for the three and twelve months ended December 31, 2022 have been restated. See "GAAP Reconciliation." Operating revenue was $42.5 billion in the fourth quarter of 2023, an increase of $2.8 billion, or 7 percent compared to fourth quarter 2022. Operating revenue was $170.2 billion in 2023, an increase of $14.5 billion, or 9 percent. The increase in the quarter and year was driven by higher premium revenue in our Health Benefits segment and growth in pharmacy product revenue in CarelonRx. The benefit expense ratio was 89.2 percent in the fourth quarter, an improvement of 50 basis points compared to fourth quarter 2022, and 87.0 percent for the full year, an improvement of 60 basis points year-over-year. The improvement in the quarter and year was driven by premium rate adjustments to cover medical cost trend. Days in Claims Payable was 47.3 days as of December 31, 2023, a decrease of 1.3 days from September 30, 2023, and a decrease of 0.2 days compared to December 31, 2022. The operating expense ratio was 11.8 percent both in the fourth quarter and for the full year of 2023, an increase of 30 basis points as compared to the fourth quarter of 2022 and an increase of 40 basis points year-over-year. The increase in the quarter was driven by an acceleration of investments for growth and the increase for the full year was driven by business optimization charges recorded in 2023. Cash Flow & Balance Sheet Operating cash flow for 2023 was $8.1 billion, or 1.3 times GAAP net income. As of December 31, 2023, cash and investments at the parent company totaled approximately $1.6 billion. During the fourth quarter of 2023, the Company repurchased 2.0 million shares of its common stock for $929 million, at a weighted average price of $465.63. For the full year of 2023, the Company repurchased 5.8 million shares of its common stock for $2.7 billion, at a weighted average price of $463.53. As of December 31, 2023, the Company had approximately $4.2 billion of Board approved share repurchase authorization remaining. During the fourth quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $346 million. Health Benefits is comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicare, Medicaid, and Federal Health Products & Services businesses. Health Benefits Reportable Segment Highlights (Unaudited) (In billions) Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 Operating Revenue 1 $36.5 $35.0 $36.7 $148.6 $138.5 Operating Gain 1,2 $0.8 $0.8 $1.8 $6.9 $6.0 Operating Margin 1 2.1 % 2.2 % 5.0 % 4.6 % 4.3 % 1. See “Basis of Presentation.” 2. Operating Gain for the three and twelve months ended December 31, 2022 and three months ended September 30, 2023 have been restated for the realignment of Carelon Global Solutions. See footnote 4 to the Reportable Segment Highlight Details for more detail. Operating revenue was $36.5 billion in the fourth quarter of 2023, an increase of $1.5 billion, or 4 percent compared to fourth quarter 2022. Operating revenue was $148.6 billion in 2023, an increase of $10.1 billion, or 7 percent. The increase was primarily driven by higher premium revenue in our Commercial Health Benefits business. Operating gain totaled $767 million in the fourth quarter of 2023, a decline of 2 percent compared to the fourth quarter of 2022. This was primarily driven by investments made in the quarter to support long-term growth. Operating gain totaled $6.9 billion in 2023, an increase of $866 million, or 14 percent year-over-year. This was primarily driven by premium rate adjustments to reflect medical cost trends. Medical membership totaled approximately 47.0 million as of December 31, 2023, a decrease of 570 thousand, or 1 percent year-over-year. This was driven by attrition in our Medicaid business associated with the resumption of eligibility redeterminations in the second quarter of 2023 and declines in our Employer Group risk-based business. These membership losses were partially offset by growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage. During the fourth quarter of 2023, medical membership declined by 364 thousand driven by Medicaid membership attrition associated with redeterminations, partially offset by growth in commercial fee-based members. Carelon is comprised of CarelonRx and Carelon Services. Carelon Reportable Segment Highlights (Unaudited) (In billions) Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 Operating Revenue 1,2,3 $12.4 $10.9 $12.0 $48.0 $41.4 Operating Gain 1,2,3 $0.6 $0.5 $0.7 $2.7 $2.4 Operating Margin 1 4.8 % 4.7 % 5.6 % 5.5 % 5.8 % 1. See “Basis of Presentation.” 2. Operating Revenue and Operating Gain for Carelon in millions for the three months ended December 31, 2023 included $8,827 and $490 for CarelonRx; and $3,574 and $102 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended December 31, 2022 included $7,523 and $475 for CarelonRx; and $3,342 and $39 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the twelve months ended December 31, 2023 included $33,835 and $1,975 for CarelonRx; and $14,147 and $680 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the twelve months ended December 31, 2022 included $28,526 and $1,868 for CarelonRx; and $12,860 and $535 for Carelon Services, respectively. 3. Operating Revenue and Operating Gain for the three and twelve months ended December 31, 2022 and three months ended September 30, 2023 have been restated for the realignment of Carelon Global Solutions. See footnote 4 to the Reportable Segment Highlight Details table for more detail. Operating revenue in the Carelon segments was $12.4 billion in the fourth quarter of 2023, an increase of $1.5 billion, or 14 percent from fourth quarter 2022. Operating revenue was $48.0 billion in 2023, an increase of $6.6 billion, or 16 percent. The increases for the quarter and the year were driven by growth in pharmacy product revenue in CarelonRx associated with growth in both external pharmacy members served and the acquisition of the BioPlus specialty pharmacy. Operating gain in the Carelon segments was $592 million in the fourth quarter of 2023, an increase of $78 million, or 15 percent from fourth quarter 2022. The increase in the quarter was primarily driven by improved performance in our Carelon Services businesses. Operating gain was $2.7 billion in 2023, an increase of $252 million, or 10 percent year-over-year. The increase for the full year was primarily driven by higher prescription volumes in CarelonRx associated with growth in external pharmacy members served, the acquisition of the BioPlus specialty pharmacy, and improved performance across our Carelon Services businesses, along with the continued expansion of our post-acute care management business. About Elevance Health Elevance Health is a lifetime, trusted health partner fueled by its purpose to improve the health of humanity. The company supports consumers, families, and communities across the entire care journey – connecting them to the care, support, and resources they need to lead healthier lives. Elevance Health’s companies serve more than 115 million people through a diverse portfolio of industry-leading medical, digital, pharmacy, behavioral, clinical, and complex care solutions. For more information, please visit www.elevancehealth.com or follow us @ElevanceHealth on X and Elevance Health on LinkedIn. Conference Call and Webcast Management will host a conference call and webcast today at 8:30 a.m. Eastern Standard Time (“EST”) to discuss the company’s fourth quarter and full year results and outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers: 888-947-9963 (Domestic) 800-568-3942 (Domestic Replay) 312-470-0178 (International) 203-369-3812 (International Replay) The access code for today's conference call is 3972058. There is no access code for the replay. The replay will be available from 11:30 a.m. EDT today, until the end of the day on February 23, 2024. The call will also be available through a live webcast at www.elevancehealth.com under the “Investors” link. A webcast replay will be available following the call. Basis of Presentation Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets, gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Refer to the GAAP reconciliation tables. Operating margin is defined as operating gain divided by operating revenue. Elevance Health Earnings Release Financial Schedules and Supplementary Information Quarter and Year Ended December 31, 2023 Membership and Other Metrics Quarterly & Full-Year Consolidated Statements of Income Condensed Consolidated Balance Sheet Condensed Consolidated Statement of Cash Flows Supplemental Financial Information - Reportable Segments Supplemental Financial Information - Reconciliation of Medical Claims Payable Reconciliation of Non-GAAP Financial Measures Financial Guidance Summary Elevance Health Membership and Other Metrics (Unaudited) Change from Medical Membership (in thousands) December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 Individual 1,025 789 999 29.9 % 2.6 % Employer Group Risk-Based 3,756 3,988 3,754 (5.8 ) % 0.1 % Commercial Risk-Based 4,781 4,777 4,753 0.1 % 0.6 % BlueCard ® 6,838 6,462 6,756 5.8 % 1.2 % Employer Group Fee-Based 20,227 20,174 20,166 0.3 % 0.3 % Commercial Fee-Based 27,065 26,636 26,922 1.6 % 0.5 % Medicare Advantage 2,047 1,977 2,064 3.5 % (0.8 ) % Medicare Supplement 923 947 928 (2.5 ) % (0.5 ) % Total Medicare 2,970 2,924 2,992 1.6 % (0.7 ) % Medicaid 10,503 11,571 11,018 (9.2 ) % (4.7 ) % Federal Employees Health Benefits 1,642 1,623 1,640 1.2 % 0.1 % Total Medical Membership 46,961 47,531 47,325 (1.2 ) % (0.8 ) % Other Membership (in thousands) Life and Disability Members 4,629 4,834 4,611 (4.2 ) % 0.4 % Dental Members 6,820 6,692 6,775 1.9 % 0.7 % Dental Administration Members 1,729 1,586 1,708 9.0 % 1.2 % Vision Members 9,944 9,813 9,861 1.3 % 0.8 % Medicare Part D Standalone Members 260 271 261 (4.1 ) % (0.4 ) % Other Metrics (in millions) CarelonRx Quarterly Adjusted Scripts 78.0 82.0 77.3 (4.9 ) % 0.9 % Carelon Services Consumers Served 103.3 105.0 104.8 (1.6 ) % (1.4 ) % Elevance Health Consolidated Statements of Income (Unaudited) (In millions, except per share data) Three Months Ended December 31 Twelve Months Ended December 31 2023 2022 Change 2023 2022 Change Revenues Premiums $ 35,138 $ 33,646 4.4 % $ 142,854 $ 133,229 7.2 % Product revenue 5,394 4,137 30.4 % 19,452 14,978 29.9 % Service fees 1,922 1,884 2.0 % 7,903 7,453 6.0 % Total operating revenue 42,454 39,667 7.0 % 170,209 155,660 9.3 % Net investment income 529 373 41.8 % 1,825 1,485 22.9 % Net losses on financial instruments (336 ) (111 ) NM (694 ) (550 ) NM Total revenues 42,647 39,929 6.8 % 171,340 156,595 9.4 % Expenses Benefit expense 31,334 30,195 3.8 % 124,330 116,642 6.6 % Cost of products sold 4,837 3,646 32.7 % 17,293 13,035 32.7 % Operating expense 4,999 4,567 9.5 % 20,087 17,700 13.5 % Interest expense 259 229 13.1 % 1,030 851 21.0 % Amortization of other intangible assets 217 247 (12.1 )% 885 767 15.4 % Total expenses 41,646 38,884 7.1 % 163,625 148,995 9.8 % Income before income tax expense 1,001 1,045 (4.2 )% 7,715 7,600 1.5 % Income tax expense 170 168 1.2 % 1,724 1,712 0.7 % Net income 831 877 (5.2 )% 5,991 5,888 1.7 % Net loss (income) attributable to noncontrolling interests 25 (12 ) NM (4 ) 6 NM Shareholders' net income $ 856 $ 865 (1.0 )% $ 5,987 $ 5,894 1.6 % Shareholders' earnings per diluted share $ 3.63 $ 3.59 1.1 % $ 25.22 $ 24.28 3.9 % Diluted shares 235.8 241.2 (2.2 )% 237.4 242.8 (2.2 )% Benefit expense as a percentage of premiums 89.2 % 89.7 % (50) bp 87.0 % 87.6 % (60) bp Operating expense as a percentage of total operating revenue 11.8 % 11.5 % 30 bp 11.8 % 11.4 % 40 bp Income before income tax expense as a percentage of total revenue 2.3 % 2.6 % (30) bp 4.5 % 4.9 % (40) bp "NM" = calculation not meaningful Elevance Health Condensed Consolidated Balance Sheet (In millions) December 31, 2023 December 31, 2022 Assets (Unaudited) Current assets: Cash and cash equivalents $ 6,526 $ 7,387 Fixed maturity and equity securities 29,843 26,905 Premium and other receivables 17,865 16,044 Other current assets 5,795 5,281 Total current assets 60,029 55,617 Long-term investments 6,983 6,437 Property and equipment, net 4,359 4,316 Goodwill and other intangible assets 35,590 34,698 Other noncurrent assets 1,967 1,687 Total assets $ 108,928 $ 102,755 Liabilities and equity Liabilities Current liabilities: Medical claims payable $ 16,111 $ 15,596 Short-term borrowings 225 265 Current portion of long-term debt 1,649 1,500 Other current liabilities 23,806 22,335 Total current liabilities 41,791 39,696 Long-term debt, less current portion 23,246 22,349 Other noncurrent liabilities 4,486 4,380 Total liabilities 69,523 66,425 Total shareholders’ equity 39,306 36,243 Noncontrolling interests 99 87 Total equity 39,405 36,330 Total liabilities and equity $ 108,928 $ 102,755 Elevance Health Condensed Consolidated Statement of Cash Flows (Unaudited) (In millions) Twelve Months Ended December 31 2023 2022 Operating activities Net income $5,991 $5,888 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,745 1,675 Share-based compensation 289 264 Changes in operating assets and liabilities (534 ) 423 Other non-cash items 570 149 Net cash provided by operating activities 8,061 8,399 Investing activities Purchases of investments, net of sales and maturities (2,700 ) (2,338 ) Purchases of subsidiaries, net of cash acquired (1,552 ) (649 ) Purchases of property and equipment (1,296 ) (1,152 ) Other, net (24 ) (421 ) Net cash used in investing activities (5,572 ) (4,560 ) Financing activities Net change in short-term and long-term borrowings 626 862 Repurchase and retirement of common stock (2,676 ) (2,316 ) Cash dividends (1,395 ) (1,229 ) Other, net 96 1,365 Net cash used in financing activities (3,349 ) (1,318 ) Effect of foreign exchange rates on cash and cash equivalents (1 ) (14 ) Change in cash and cash equivalents (861 ) 2,507 Cash and cash equivalents at beginning of period 7,387 4,880 Cash and cash equivalents at end of period $6,526 $7,387 REPORTABLE SEGMENTS Elevance Health has four reportable segments: Health Benefits (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicare, Medicaid, and Federal Health Products & Services businesses); CarelonRx; Carelon Services; and Corporate & Other (comprised of businesses that do not individually meet the quantitative thresholds for an operating division as well as corporate expenses not allocated to our other reportable segments). Elevance Health Reportable Segment Highlight Details (Unaudited) (In millions) Three Months Ended December 31 Twelve Months Ended December 31 2023 2022 Change 2023 2022 Change Operating Revenue Health Benefits $ 36,547 $ 34,996 4.4 % $ 148,571 $ 138,484 7.3 % Carelon 2,4 12,401 10,865 14.1 % 47,982 41,386 15.9 % Corporate & Other 4 181 58 212.1 % 479 399 20.1 % Eliminations 4 (6,675 ) (6,252 ) 6.8 % (26,823 ) (24,609 ) 9.0 % Total Operating Revenue 1 $ 42,454 $ 39,667 7.0 % $ 170,209 $ 155,660 9.3 % Operating Gain (Loss) Health Benefits 3,4 $ 767 $ 785 (2.3 )% $ 6,888 $ 6,022 14.4 % Carelon 2,3,4 592 514 15.2 % 2,655 2,403 10.5 % Corporate & Other 1,3,4 (75 ) (40 ) NM 5 (1,044 ) (142 ) NM 5 Total Operating Gain 1 $ 1,284 $ 1,259 2.0 % $ 8,499 $ 8,283 2.6 % Operating Margin Health Benefits 2.1 % 2.2 % (10) bp 4.6 % 4.3 % 30 bp Carelon 4.8 % 4.7 % 10 bp 5.5 % 5.8 % (30) bp Total Operating Margin 1 3.0 % 3.2 % (20) bp 5.0 % 5.3 % (30) bp 1. See “Basis of Presentation.” 2. Operating Revenue and Operating Gain for Carelon for the three months ended December 31, 2023 included $8,827 and $490 for CarelonRx; and $3,574 and $102 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended December 31, 2022 included $7,523 and $475 for CarelonRx; and $3,342 and $39 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the twelve months ended December 31, 2023 included $33,835 and $1,975 for CarelonRx; and $14,147 and $680 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the twelve months ended December 31, 2022 included $28,526 and $1,868 for CarelonRx; and $12,860 and $535 for Carelon Services, respectively. 3. Operating Gain for the three and twelve months ended December 31, 2023 and December 31, 2022 included items adjusted out of adjusted shareholders' net income. See "GAAP Reconciliation." 4. Operating Revenue and Operating Gain for the three and twelve months ended December 31, 2022 are restated for the realignment of Carelon Global Solutions. For the three and twelve months ended December 31, 2022, $150 and $583 of Operating Revenue was realigned to Carelon Services, $160 and $618 of Operating Revenue was realigned away from the Corporate & Other segment, and $10 and $35 of Operating Revenue were realigned to Eliminations. For the three and twelve months ended December 31, 2022, $22 and $80 of Operating Gain was realigned to Carelon Services, $10 and $39 of Operating Gain was realigned away from the Health Benefits segment, and $12 and $41 of Operating Gain was realigned away from Corporate & Other. For the three months ended September 30, 2023, $135 of Operating Revenue was realigned to Carelon Services, $147 of Operating Revenue was realigned away from the Corporate & Other segment, and $12 of Operating Revenue were realigned to Eliminations. For the three months ended September 30, 2023, $19 of Operating Gain was realigned to Carelon Services, $13 of Operating Gain was realigned away from the Health Benefits segment, and $6 was realigned away from Corporate & Other. 5. "NM" = calculation not meaningful. Elevance Health Reconciliation of Medical Claims Payable Years Ended December 31 2023 2022 2021 (In millions) (Unaudited) Gross medical claims payable, beginning of year $ 15,348 $ 13,282 $ 11,135 Ceded medical claims payable, beginning of year (6 ) (21 ) (46 ) Net medical claims payable, beginning of year 15,342 13,261 11,089 Business combinations and purchase adjustments — 133 420 Net incurred medical claims: Current year 121,798 113,414 100,440 Prior years redundancies 1 (1,571 ) (869 ) (1,703 ) Total net incurred medical claims 120,227 112,545 98,737 Net payments attributable to: Current year medical claims 107,146 98,997 88,156 Prior years medical claims 12,565 11,600 8,829 Total net payments 119,711 110,597 96,985 Net medical claims payable, end of year 15,858 15,342 13,261 Ceded medical claims payable, end of year 7 6 21 Gross medical claims payable, end of year 2 $ 15,865 $ 15,348 $ 13,282 Current year medical claims paid as a percentage of current year net incurred medical claims 88.0 % 87.3 % 87.8 % Prior year redundancies in the current year as a percentage of prior year net medical claims payable less prior year redundancies in the current year 11.4 % 7.0 % 18.1 % Prior year redundancies in the current year as a percentage of prior year net incurred medical claims 1.4 % 0.9 % 2.2 % Negative amounts reported for net incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated. Excludes insurance lines other than short duration. Elevance Health GAAP Reconciliation (Unaudited) This document references non-GAAP measures, including “Adjusted Shareholders’ Net Income,” “Adjusted Shareholders’ Net Income Per Share,” “Adjusted EPS”, “Adjusted Operating Gain”, “Adjusted Operating Expense” and “Adjusted Operating Expense Ratio”, which are non-GAAP measures. These non-GAAP measures are intended to aid investors when comparing Elevance Health’s financial results among periods and are not intended to be alternatives to any measure calculated in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP are available below. In addition to these non-GAAP measures, references are made to the measures “Operating Revenue” and “Operating Gain/Loss,” “Operating Margin” and “Adjusted EPS”. Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets and gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Each of these measures is provided to further aid investors in understanding and analyzing Elevance Health’s operating and financial results. A reconciliation of Operating Revenue to Total Revenue is set forth in the Consolidated Statements of Income herein. A reconciliation of the non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP, together with a reconciliation of reportable segments operating gain to income before income tax expense, is reported below. Prior amounts may be grouped differently to conform to current presentation.Net adjustment items per share may not sum due to rounding. A reconciliation of Operating Revenue to Total Revenue is set forth in the Consolidated Statements of Income herein. Three Months Ended December 31 Twelve Months Ended December 31 (In millions, except per share data) 2023 2022 Change 2023 2022 Change Shareholders' net income - As reported $ 856 $ 949 (9.8 )% $ 5,987 $ 6,025 (0.6 )% Impact of Accounting Standards Update 2018-12 Adoption — (84 ) — (131 ) Shareholders' net income - Restated $ 856 $ 865 (1.0 )% $ 5,987 $ 5,894 1.6 % Add / (Subtract): Net losses on financial instruments 336 111 694 550 Amortization of other intangible assets 217 247 885 767 Transaction and integration related costs 59 36 213 72 Business optimization charges 22 39 719 39 Litigation expenses 1 1 6 12 BCBSA litigation settlement (8 ) (20 ) (8 ) (44 ) Tax impact of non-GAAP adjustments (158 ) (102 ) (628 ) (363 ) Net adjustment items 469 312 1,881 1,033 Adjusted shareholders' net income $ 1,325 $ 1,177 12.6 % $ 7,868 $ 6,927 13.6 % Shareholders' earnings per diluted share - As reported $ 3.63 $ 3.93 (7.6 )% $ 25.22 $ 24.81 1.7 % Impact of Accounting Standards Update 2018-12 Adoption — (0.34 ) — (0.53 ) Shareholders' earnings per diluted share - Restated 3.63 3.59 1.1 % 25.22 24.28 3.9 % Add / (Subtract): Net losses on financial instruments 1.42 0.46 2.92 2.27 Amortization of other intangible assets 0.92 1.02 3.73 3.16 Transaction and integration related costs 0.25 0.15 0.90 0.30 Business optimization charges 0.09 0.16 3.03 0.16 Litigation expenses — — 0.03 0.05 BCBSA litigation settlement (0.03 ) (0.08 ) (0.03 ) (0.18 ) Tax impact of non-GAAP adjustments (0.67 ) (0.42 ) (2.65 ) (1.50 ) Net adjustment items 1.99 1.29 7.92 4.25 Adjusted shareholders' earnings per diluted share $ 5.62 $ 4.88 15.2 % $ 33.14 $ 28.53 16.2 % Elevance Health GAAP Reconciliation (Unaudited) Three Months Ended December 31 Twelve Months Ended December 31 (In millions) 2023 2022 Change 2023 2022 Change Operating expense - As reported $ 4,999 $ 4,562 9.6 % $ 20,087 $ 17,686 13.6 % Impact of Accounting Standards Update 2018-12 Adoption — 5 — 14 Operating expense - Restated $ 4,999 $ 4,567 9.5 % $ 20,087 $ 17,700 13.5 % Add / (Subtract): Transaction and integration related costs (59 ) (36 ) (213 ) (72 ) Business optimization charges (22 ) (39 ) (719 ) (39 ) Litigation expenses (1 ) (1 ) (6 ) (12 ) BCBSA litigation settlement 8 20 8 44 Net adjustment items (74 ) (56 ) (930 ) (79 ) Adjusted operating expense $ 4,925 $ 4,511 9.2 % $ 19,157 $ 17,621 8.7 % Operating revenue $ 42,454 $ 39,667 7.0 % $ 170,209 $ 155,660 9.3 % Operating expense ratio 11.8 % 11.5 % 30 bp 11.8 % 11.4 % 40 bp Adjusted operating expense ratio 11.6 % 11.4 % 20 bp 11.3 % 11.3 % — bp Three Months Ended December 31 Twelve Months Ended December 31 (In millions) 2023 2022 Change 2023 2022 Change Income before income tax expense $ 1,001 $ 1,045 (4.2 )% $ 7,715 $ 7,600 1.5 % Net investment income (529 ) (373 ) (1,825 ) (1,485 ) Net losses on financial instruments 336 111 694 550 Interest expense 259 229 1,030 851 Amortization of other intangible assets 217 247 885 767 Reportable segments operating gain $ 1,284 $ 1,259 2.0 % $ 8,499 $ 8,283 2.6 % Adjustment items 74 56 930 79 Reportable segments adjusted operating gain $ 1,358 $ 1,315 3.3 % $ 9,429 $ 8,362 12.8 % Full Year 2024 Outlook Shareholders' earnings per diluted share Greater than $34.29 Add / (Subtract): Amortization of other intangibles $ 1.93 Net losses on financial instruments $ 1.35 Transaction and integration related costs $ 0.31 Litigation expenses $ 0.03 Tax impact of non-GAAP adjustments Approximately $(0.81) Net adjustment items $ 2.81 Adjusted shareholders' earnings per diluted share Greater Than $37.10 Elevance Health Financial Guidance Summary (Unaudited) Full Year 2023 Actual Full Year 2024 Outlook Year-End Medical Enrollment (in millions) Fee-Based 27.1 27.4 - 27.6 Risk-Based 19.9 18.4 - 19.0 Total 47.0 45.8 - 46.6 Premium Revenue $142.9 billion Approximately flat Product Revenue $19.5 billion Mid-single digit growth Service Fees $7.9 billion Low double-digit growth Total Operating Revenue $170.2 billion Flat to low-single digit growth Benefit Expense Ratio 87.0% 87.0% +/- 50 bps Adjusted Operating Expense Ratio 11.3% 11.1% +/- 50 bps Adjusted Operating Gain $9.4 billion Greater than $10.3 billion Other Pre-Tax Items: Net Investment income $1,825 million $1,900 million Interest Expense ($1,030) million ($1,100) million Amortization of Intangible Assets ($885) million ($450) million Net Pre-Tax Expense ($90) million $350 million Adjusted Effective Tax Rate 23.0% 22.0% - 24.0% GAAP Diluted EPS $25.22 Greater than $34.29 Adjusted Diluted EPS $33.14 Greater than $37.10 Diluted Shares 237.4 million 233 - 234 million Operating Cash Flow $8.1 billion Greater than $8.1 billion Segment Level Guidance Metrics Operating Revenue Growth Rate Health Benefits $148.6 billion Approximately flat CarelonRx $33.8 billion Low-single digit Carelon Services $14.1 billion High-teens to low-twenties Operating Margin vs. 2023 Health Benefits 4.6% 25 - 50 bps CarelonRx 5.8% 40 - 60 bps Carelon Services 4.8% (30) - 0 bps Forward-Looking Statements This document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our views about future events and financial performance and are generally not historical facts. Words such as “expect,” “feel,” “believe,” “will,” “may,” “should,” “anticipate,” “intend,” “estimate,” “project,” “forecast,” “plan” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to: financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. You are also urged to carefully review and consider the various risks and other disclosures discussed in our reports filed with the U.S. Securities and Exchange Commission from time to time, which attempt to advise interested parties of the factors that affect our business. Except to the extent required by law, we do not update or revise any forward-looking statements to reflect events or circumstances occurring after the date hereof. These risks and uncertainties include, but are not limited to: trends in healthcare costs and utilization rates; reduced enrollment; our ability to secure and implement sufficient premium rates; the impact of large scale medical emergencies, such as public health epidemics and pandemics, including COVID-19, and other catastrophes; the impact of new or changes in existing federal, state and international laws or regulations, including laws and regulations impacting healthcare, insurance, pharmacy services and other diversified products and services, or their enforcement or application; the impact of cyber-attacks or other privacy or data security incidents or breaches or our failure to comply with any privacy, data or security laws or regulations, including any investigations, claims or litigation related thereto; information technology disruptions; changes in economic and market conditions, as well as regulations that may negatively affect our liquidity and investment portfolios; competitive pressures and our ability to adapt to changes in the industry and develop and implement strategic growth opportunities; risks and uncertainties regarding Medicare and Medicaid programs, including those related to non-compliance with the complex regulations imposed thereon; our ability to maintain and achieve improvement in Centers for Medicare and Medicaid Services Star ratings and other quality scores and funding risks with respect to revenue received from participation therein; a negative change in our healthcare product mix; costs and other liabilities associated with litigation, government investigations, audits or reviews; our ability to contract with providers on cost-effective and competitive terms; failure to effectively maintain and modernize our information systems; risks associated with providing healthcare, pharmacy and other diversified products and services, including medical malpractice or professional liability claims and non-compliance by any party with the pharmacy services agreement between us and CaremarkPCS Health, L.L.C.; risks associated with mergers, acquisitions, joint ventures and strategic alliances; possible impairment of the value of our intangible assets if future results do not adequately support goodwill and other intangible assets; possible restrictions in the payment of dividends from our subsidiaries and increases in required minimum levels of capital; our ability to repurchase shares of our common stock and pay dividends on our common stock due to the adequacy of our cash flow and earnings and other considerations; the potential negative effect from our substantial amount of outstanding indebtedness and the risk that increased interest rates or market volatility could impact our access to or further increase the cost of financing; a downgrade in our financial strength ratings; the effects of any negative publicity related to the health benefits industry in general or us in particular; events that may negatively affect our licenses with the Blue Cross and Blue Shield Association; intense competition to attract and retain employees; risks associated with our international operations; and various laws and provisions in our governing documents that may prevent or discourage takeovers and business combinations.