01—Abstract
Summary
Summary of the 10-Q filed July 17, 2025. Cited figures are marked; the original filing is the authoritative source.
Elevance Health, Inc. reported a decrease in net income for the three and six months ended June 30, 2025, compared to the prior year, primarily driven by increased benefit expenses and higher net losses on financial instruments.
Despite the net income decline, total operating revenue saw a significant increase of 14.3%a and 14.8% for the respective periods, driven by premium rate increases in the Health Benefits segment, recent acquisitions, and membership growth in Medicare Advantage and Individual ACA businesses. The company is actively managing its capital, evidenced by continued share repurchases and dividend payments, while also navigating evolving regulatory landscapes and integrating recent acquisitions. Key financial shifts include a substantial increase in benefit expenses due to higher medical cost trends, particularly in the Medicaid and Affordable Care Act (ACA) plans, which more than offset revenue growth in the Health Benefits segment.
Conversely, the CarelonRx and Carelon Services segments demonstrated strong revenue and operating gain growth. The company maintained a solid liquidity position, with net cash provided by operating activities increasing year-over-year, supported by favorable working capital impacts.
02—Key points
Key Highlights
- Total operating revenue increased by 14.3% ($6.2 billion) for the three months ended June 30, 2025, and by 14.8% ($12.7 billion) for the six months ended June 30, 2025, driven by premium rate adjustments and membership growth in key segments.
- Net income decreased by 24.2% ($557 million) for the three months and 13.7% ($622 million) for the six months ended June 30, 2025, compared to the prior year, largely due to increased benefit expenses and higher net losses on financial instruments.
- Benefit expense rose significantly by 20.1% for the three months and 17.8% for the six months, attributed to higher medical cost trends, particularly in Medicaid and ACA plans, outpacing premium rate adjustments.
- The CarelonRx and Carelon Services segments showed robust growth, with operating revenue increasing by 21.3% and 63.7% respectively for the three-month period, indicating successful integration and expansion of these service lines.
- The company repurchased $1.26 billion of common stock in the six months ended June 30, 2025, and declared a regular quarterly dividend of $1.71 per share, demonstrating a commitment to returning capital to shareholders.
- Medical membership experienced a slight overall decline of 0.3% to 45.6 million, primarily due to Medicaid attrition from eligibility redeterminations and a decrease in Commercial Fee-Based business, though offset by growth in Medicare Advantage and Individual ACA.
- The company recognized its estimated payment obligation of $666 million related to the Provider Settlement Agreement in the Blue Cross Blue Shield Antitrust Litigation, underscoring a significant legal contingency management.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Elevance Health, Inc. kept $0.04.
- Revenue$49.78B100.0%
- Cost of revenue−$5.29B10.6%
- Gross profit$44.48B89.4%
- Operating costs−$42.06B84.5%
- Operating income$2.42B4.9%
- Interest, other & tax−$681.0M1.4%
- Net income$1.74B3.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 17, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $49.78B$43.89B | +13.4% |
| Cost of Revenue | $5.29B$4.82B | +9.8% |
| Gross Profit | $44.48B$39.07B | +13.9% |
| SG&A Expenses | $5.00B$5.07B | −1.4% |
| Operating Income | $2.42B$2.77B | −12.3% |
| Net Income | $1.74B$2.30B | −24.2% |
| EPS (Basic) | $7.74$9.91 | −21.9% |
| EPS (Diluted) | $7.72$9.85 | −21.6% |
| Shares Outstanding (Basic) | 225.20M232.20M | −3.0% |
| Shares Outstanding (Diluted) | 225.80M233.40M | −3.3% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the increase in operating revenue?
The primary drivers for the increase in operating revenue are premium rate increases implemented in the Health Benefits segment to account for medical cost trends, the impact of recent acquisitions, and growth in Medicare Advantage and Individual ACA membership. These factors were partially offset by a decline in Medicaid membership.
Why did net income decrease despite revenue growth?
Net income decreased primarily due to a substantial increase in benefit expenses, driven by higher medical cost trends across all lines of business within the Health Benefits segment. Additionally, increased net losses on financial instruments also contributed to the decline in profitability.
How is Elevance Health managing its capital and returning value to shareholders?
Elevance Health is actively managing its capital through share repurchases, having bought back $1.26 billion of common stock in the first six months of 2025. The company also continued its dividend payments, declaring a quarterly dividend of $1.71 per share, demonstrating a commitment to shareholder returns.
What is the impact of the Blue Cross Blue Shield Antitrust Litigation on the company?
Elevance Health recognized its estimated payment obligation of $666 million related to the Provider Settlement Agreement in the Blue Cross Blue Shield Antitrust Litigation. This settlement includes monetary payments and non-monetary terms aimed at resolving claims related to market allocation and licensing agreements.
06—Continue