Company: ELV
Filing Date: 2025-04-22
Form Type: 10-Q
Source: 0001156039-25-000057
Chunk: 85

Company: Elevance Health, Inc.
Filing Date: 2025-04-22
Form: 10-Q
Item: Item 2
Chunk 85
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, 2025 Compared to the Three Months Ended March 31, 2024 

Total operating revenue increased primarily as a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends, recent acquisitions, growth in Medicare Advantage and Individual ACA membership, and growth in CarelonRx product revenue, partially offset by membership attrition in our Medicaid business.

Net investment income increased primarily due to higher income from alternative investments.

Net losses on financial instruments increased due to losses on other invested assets and equity securities. 

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Benefit expense increased primarily due to higher medical cost trends across all lines of business within our Health Benefits segment. 

Our benefit expense ratio increased primarily as a result of Medicaid rates being inadequate to cover medical cost trends, partially offset by higher Medicaid premium increases to cover out of period premium taxes.

Cost of products sold reflects the cost of pharmaceuticals dispensed by CarelonRx for our unaffiliated pharmacy customers. Cost of products sold increased as a result of higher script utilization.

Operating expense increased primarily due to premium tax expenses, some of which were out of period.

Our operating expense ratio decreased primarily due to operating expense leverage associated with growth in operating revenue and ongoing cost management, partially offset by an out of period premium tax expense related to Medicaid.

Other expense increased primarily due to higher interest expense related to our issuances of senior secured notes during the latter half of 2024. The increase was also due to higher amortization of other intangible assets related to the intangible assets acquired during the acquisitions we completed in the fourth quarter of 2024.

Our effective tax rate decreased primarily due to the favorable resolution of uncertain tax positions and the impact of certain investment credits. 

Our shareholders’ net income as a percentage of total revenues decreased in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 as a result of all factors discussed above.

Reportable Segments Results of Operations

Our results of operations discussed throughout this MD&A are determined in accordance with U.S. generally accepted accounting principles (“GAAP”). We also calculate operating gain and operating margin to further aid investors in understanding and analyzing our core operating results and comparing them among periods. We define operating revenue as premium income, product revenue and service fees. Operating gain is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net losses on financial instruments, loss/gain on sale of business, interest expense, amortization of other