Company: ELV
Filing Date: 2025-10-21
Form Type: 10-Q
Source: 0001156039-25-000136
Chunk: 95

Company: Elevance Health, Inc.
Filing Date: 2025-10-21
Form: 10-Q
Item: Item 2
Chunk 95
---
, 2025 Compared to the Nine Months Ended September 30, 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, and growth in our Medicare Advantage membership.

Net investment income increased primarily due to higher income from alternative investments, partially offset by lower income from fixed maturity securities.

Net losses on financial instruments increased due to higher losses on other invested assets, partially offset by lower losses from fixed maturity securities sales.

Benefit expense increased primarily due to higher medical cost trend across all lines of business within our Health Benefits and Carelon Services segments, partially offset by a favorable out-of-period settlement from a value-based care provider.

Our benefit expense ratio increased primarily as a result of higher medical cost trend in our Medicare Advantage and Medicaid businesses and Affordable Care Act health plans.

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 volume and utilization. 

Operating expense increased primarily due to increases in premium tax expenses and assessments, partially offset by disciplined cost management.

Our operating expense ratio decreased primarily due to operating leverage associated with growth in operating revenue, partially offset by increases in premium tax expenses and assessments.

Other expense increased primarily due to higher interest expense related to our issuance of senior notes during the fourth quarter of 2024. The increase also reflects higher amortization expense due to intangible assets acquired in the fourth quarter of 2024.

-45-

Our effective tax rate decreased primarily due to the impact of certain investment credits.

Our shareholders’ net income as a percentage of total revenues decreased in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 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 intangible assets or income taxes, as these items are managed in our corporate shared