Company: ELV
Filing Date: 2025-10-21
Form Type: 10-Q
Source: 0001156039-25-000136
Chunk: 63

Company: Elevance Health, Inc.
Filing Date: 2025-10-21
Form: 10-Q
Item: Item 8
Chunk 63
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) bp3Income before income tax expense as a percentage of total revenues2.8 %3.0 %4.3 %5.5 %(20) bp3(120) bp3Shareholders’ net income as a percentage of total revenues2.3 %2.2 %3.4 %4.2 %10 bp3(80) bp3

Certain of the following definitions are also applicable to all other results of operations tables in this discussion:

NM    Not meaningful.

1    Includes interest expense and amortization of other intangible assets.

2    Benefit expense ratio represents benefit expense as a percentage of premium revenue. Premiums for the three months ended September 30, 2025 and 2024 were $41,791 and $36,809, respectively. Premiums for the nine months ended September 30, 2025 and 2024 were $123,949 and $107,921, respectively. 

3    bp = basis point; one hundred basis points = 1%.

4    Operating expense ratio represents operating expense as a percentage of total operating revenue.

Three Months Ended September 30, 2025 Compared to the Three 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 business, partially offset by Medicaid membership attrition.

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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 decreased due to higher income from fixed maturities and lower impairments on other invested assets. 

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

Our benefit expense ratio increased primarily as a result of higher cost trend in Medicare, given pronounced Part D seasonality related to the IRA, and Commercial inclusive of Individual and Small Group ACA plans (“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.

Our operating expense ratio decreased primarily due to operating leverage associated with growth in operating revenue. 

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