AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Contractual territorial brand rights and their current use across numerous states establish a differentiated franchise. Provider-cost superiority remains an issuer assertion.
durability · 2/4 · Licensing and multi-year provider contracts support persistence, but second-Blue bidding rights already weaken territorial protection and licenses impose continuing obligations.
customer dependency · 1/4 · Digital engagement establishes use, but does not demonstrate dependence or material switching costs. Actual attrition and an external contract modification show that demand remains contestable.
erosion resilience · 1/4 · Higher medical costs reduced operating gain despite premium increases. Broader Blue bidding and enacted pharmacy reforms create further pressure; the latter's full earnings effect remains prospective.
Pricing power38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Premium increases across all Health Benefits lines raised yields in the first half of 2026. Attrition and declining operating gain limit evidence that these increases represent durable economic pricing power.
retention · 2/4 · Substantial membership and approximately 50% quarterly engagement among registered Sydney Health users support continuing demand indirectly. Attrition and a partially terminated external contract offset that evidence; no retention rate or causal price elasticity is established.
margin resilience · 1/4 · Realized premium increases did not prevent lower operating gain as medical costs rose. Improved specialty pharmacy profitability provides a partial offset rather than consolidated protection.
contractual freedom · 1/4 · Some premiums require state approval and government pricing can lag costs. CarelonRx has contractual pricing discretion, but enacted rebate-remittance reforms constrain its future economics.
Predictability100
Financial-sector stability over five consecutive reported annual periods: equal weights for nondeclining revenue frequency, revenue-growth volatility (5–40pp), positive consolidated earnings frequency, and net-income/revenue margin volatility (3–20pp). Uses reported accounting scope; not industrial FCF or a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.85
- positiveEarningsShare
- 100.00
- netMarginStdDev
- 0.52
Financial strength56
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital adequacy · 3/4 · All regulated subsidiaries exceeded applicable mandatory requirements at December 2025, with BCBSA and California compliance reaffirmed in July. Disclosed required statutory RBC was $9.1 billion; the broader non-DMHC capital/surplus pool was $22.611 billion. These scopes do not establish a standard RBC ratio. DMHC requirements and GAAP equity are separately disclosed, with no exceptional headroom inferred.
liquidity funding · 2/4 · June consolidated cash was $10.232 billion and first-half operating cash generation was $6.245 billion. Some cash represents customer or restricted-purpose funds, parent funding depends on regulated subsidiary dividends, and available facility capacity is not quantified. Management's adequacy statement is supporting judgment rather than demonstrated unrestricted liquidity.
asset liability risk · 2/4 · The disclosed diversified fixed-maturity portfolio averaged approximately A quality, but current-security credit-loss allowances increased from $21 million to $55 million and medical claims payable rose. Actual medical-cost pressure demonstrates insurance exposure. Missing reserve-development, reinsurance and duration-matching detail limits confidence; the portfolio rating is not an issuer credit rating.
earnings resilience · 2/4 · GAAP shareholder earnings remained positive at $5.662 billion in 2025 versus $5.980 billion in 2024 and $5.987 billion in 2023. First-half consolidated net income declined to $3.214 billion from $3.928 billion. Continued profitability demonstrates resilience, while medical-cost pressure and the risk-adjustment accrual show meaningful vulnerability.
Capital allocation56
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital efficiency · 2/4 · First-half consolidated net income of $3.214 billion relative to average beginning/end total equity of approximately $44.524 billion implies about 7.2% for the six-month period, without annualization. This GAAP consolidated measure includes noncontrolling interests and is not a statutory-capital return. Earnings deterioration limits the assessment despite positive capital productivity.
distributions and buffers · 2/4 · First-half cash dividends of $749 million and buybacks of $1.358 billion were below consolidated net income of $3.214 billion. Disclosed capital compliance supports distribution capacity, but parent dividend restrictions and absent updated entity-level headroom prevent a stronger buffer assessment.
dilution and cost · 3/4 · First-half diluted weighted-average shares fell to 219.1 million from 226.5 million, while share-based compensation declined to $130 million from $162 million. Actual net debt repayments and lower outstanding shares support effective dilution control; buyback valuation superiority and an optimal financing cost are not established.
investment discipline · 2/4 · Carelon's 2025 growth supports some productive reinvestment, but acquisition contributions are not separated into investment returns. Mosaic's actual $34 million additional funding under a commitment without additional equity and subsequent operating pressure show mixed outcomes. Technology spending is not assumed to have earned its intended return.
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half 2026 operating cash generation supported distributions, capital spending and debt repayments. Cash generation benefited materially from liability movements, while Mosaic required additional funding without additional equity; superior allocation outcomes are unproven.
incentive alignment · 2/4 · Actual equity grants, ownership/holding requirements and clawback policies support alignment. The Committee approved raising the completed-period PSU payout from 41.0% to 62.5% of target, weakening mechanical pay-for-performance discipline. This was an approved adjustment, not a proposed award.
execution · 2/4 · Carelon's reported 2025 growth and improved future-payment-year Stars mix demonstrate achievements. Subsequent operating-gain pressure, a contract modification and a historical risk-adjustment exposure accrual produce a mixed record; Stars improvement is not assumed to be realized bonus revenue.
governance · 2/4 · An independent chair, 11 independent directors and independent committees support oversight. A classified board, discretionary upward compensation adjustment and a risk-adjustment exposure accrual temper the assessment. The accrual alone does not prove governance failure.
Evidence
-10- Our provider networks give us a highly competitive unit cost position and provide distinctive service levels which allow us to offer a broad range of affordable health benefit products to our customers.
Business: provider-network unit-cost assertion · Filed 06/02/2026
To build our provider networks, we compete with other health benefits plans for the best contracts with hospitals, physicians and other providers.
Business: competition for provider contracts · Filed 06/02/2026
In addition, the pharmacy industry is highly competitive, and CarelonRx is subject to competition from national, regional and local pharmacy service providers, insurers, health plans, large retail pharmacy chains, large retail stores, supermarkets, mail order pharmacies, web pharmacies and specialty pharmacies.
Business: generic pharmacy competitor categories · Filed 06/02/2026
In addition, Congress recently passed the Consolidated Appropriations Act of 2026, which includes pharmacy benefit manager reforms requiring pharmacy benefit managers to remit all rebates, fees (other than bona fide service fees), and other remuneration received from entities such as manufacturers and group purchasing organizations to commercial plan sponsors, and to provide detailed commercial claims reporting, effective thirty months after enactment.
Risk factors: enacted pharmacy benefit manager reforms and implementation timing · Filed 06/02/2026
Across our markets, we deploy multi-year contracting strategies, including fixed rates and standard fee schedules, to enhance cost predictability, mitigate exposure to medical cost inflation, and establish long-term stability with providers.
Business: multi-year provider contracts and fixed rates · Filed 06/02/2026
We are a party to license agreements with the BCBSA that entitle us to the exclusive, and in certain areas, non-exclusive, use of the Blue Cross and Blue Shield names and marks in assigned geographic territories.
Business: territorial Blue license rights · Filed 06/02/2026
Although previously we did not have a right to sell products and services using the BCBS names and marks outside of our exclusive service areas, under the terms of the In re Blue Cross Blue Shield Antitrust Litigation subscriber settlement agreement and release (the “Subscriber Settlement Agreement”), some large national employers with self-funded plans (specifically identified in the Subscriber Settlement Agreement) have a right to request a second Blue plan bid in addition to a bid from the local Blue plan, effective as of September 2024.
Business: second Blue bid rights effective September 2024 · Filed 06/02/2026
We are required to pay an annual license fee to the BCBSA based on enrollment and to comply with various requirements and restrictions regarding our operations and our use of the BCBS names and marks.
Business: license fees and operating restrictions · Filed 06/02/2026
As of December 31, 2025 and 2024, all of our regulated subsidiaries exceeded the minimum applicable mandatory RBC requirements and/or capital and solvency requirements of their applicable governmental regulator.
Note 21: regulated subsidiaries' capital compliance at December 2025 and 2024 · Filed 06/02/2026
The statutory RBC necessary to satisfy regulatory requirements of our statutory basis insurance and HMO subsidiaries was approximately $9,100 as of December 31, 2025.
Note 21: statutory RBC necessary to satisfy regulatory requirements · Filed 06/02/2026
The tangible net equity required for the DMHC regulated entities was approximately $1,100 as of December 31, 2025.
Note 21: DMHC required tangible net equity · Filed 06/02/2026
Statutory-basis capital and surplus of our insurance and HMO subsidiaries and capital and surplus of our other regulated subsidiaries, excluding the DMHC regulated entities, was $22,611 at December 31, 2025.
Note 21: subsidiary capital and surplus excluding DMHC entities · Filed 06/02/2026
GAAP equity of the DMHC regulated entities was $2,969 at December 31, 2025.
Note 21: DMHC entities' GAAP equity · Filed 06/02/2026
Our ability to pay dividends and credit obligations is significantly dependent on receipt of dividends from our subsidiaries.
Note 21: parent dependence on subsidiary dividends · Filed 06/02/2026
The payment of dividends to us by our insurance and HMO subsidiaries without prior approval of the insurance departments of each subsidiary’s domiciliary jurisdiction is limited by formula.
Note 21: regulatory limits on subsidiary dividends · Filed 06/02/2026
The result is a well-diversified portfolio of fixed maturity securities, with an average credit rating of approximately “A.”
Market risk: fixed-maturity portfolio diversification and approximate average rating · Filed 06/02/2026
Consolidated Balance Sheets June 30, 2026 December 31, 2025 (Unaudited) (In millions, except share and per share data) Assets Current assets: Cash and cash equivalents $ 10,232 $ 9,491 Fixed maturity securities (amortized cost of $25,962 and $25,773; allowance for credit losses of $55 and $21) 25,719 25,884 Equity securities 1,563 740 Premium receivables, net 10,991 10,073 Self-funded receivables, net 5,583 5,162 Other receivables 6,818 6,307 Other current assets 6,278 5,344 Total current assets 67,184 63,001 Long-term investments: Fixed maturity securities (amortized cost of $1,263 and $1,116; allowance for credit losses of $0 and $0) 1,259 1,121 Other invested assets 11,130 10,839 Property and equipment, net 4,645 4,679 Goodwill 28,339 28,344 Other intangible assets 10,983 11,200 Other noncurrent assets 2,898 2,310 Total assets $ 126,438 $ 121,494 Liabilities and equity Liabilities Current liabilities: Medical claims payable $ 18,463 $ 17,084 Other policyholder liabilities 3,463 3,632 Unearned income 1,640 1,493 Accounts payable and accrued expenses 6,632 7,322 Short-term borrowings — 150 Current portion of long-term debt 375 1,099 Other current liabilities 13,681 10,255 Total current liabilities 44,254 41,035 Long-term debt, less current portion 30,669 30,797 Deferred tax liabilities, net 2,206 2,110 Other noncurrent liabilities 4,287 3,526 Total liabilities 81,416 77,468 Commitments and contingencies – Note 10 Shareholders’ equity Preferred stock, without par value, shares authorized 100,000,000; shares issued and outstanding – none — — Common stock, par value $0.01, shares authorized 900,000,000; shares issued and outstanding – 216,841,146 and 220,723,898 2 2 Additional paid-in capital 8,917 8,938 Retained earnings 36,675 35,393 Accumulated other comprehensive loss (711) (451) Total shareholders’ equity 44,883 43,882 Noncontrolling interests 139 144 Total equity 45,022 44,026 Total liabilities and equity $ 126,438 $ 121,494 See accompanying notes.
Consolidated balance sheets: cash, investments, claims payable, debt and equity · Filed 15/07/2026
Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30 2026 2025 (In millions) Operating activities Net income $ 3,214 $ 3,928 Adjustments to reconcile net income to net cash provided by operating activities: Net losses on financial instruments 134 595 Equity in net earnings of other invested assets (567) (138) Depreciation and amortization 720 753 Deferred income taxes (123) (226) Impairment of property and equipment 37 — Share-based compensation 130 162 Changes in operating assets and liabilities: Receivables, net (1,831) (4,097) Other invested assets — (35) Other assets (1,441) (604) Policy liabilities 1,216 387 Unearned income 147 53 Accounts payable and other liabilities 4,124 1,690 Income taxes 488 603 Other, net (3) — Net cash provided by operating activities 6,245 3,071 Investing activities Purchases of investments (7,867) (8,102) Proceeds from sale of investments 6,070 7,683 Maturities, calls and redemptions from investments 984 748 Changes in securities lending collateral (142) (466) Purchases of subsidiaries, net of cash acquired 5 54 Purchases of property and equipment (522) (463) Other, net (11) (38) Net cash used in investing activities (1,483) (584) Financing activities Repayments of long-term borrowings (750) (1,250) Proceeds from short-term borrowings 825 — Repayments of short-term borrowings (975) (5) Changes in securities lending payable 142 466 Changes in bank overdrafts (1,181) 631 Repurchase and retirement of common stock (1,358) (1,258) Cash dividends (749) (771) Proceeds from issuance of common stock under employee stock plans 63 21 Taxes paid through withholding of common stock under employee stock plans (35) (40) Other, net 9 (11) Net cash used in financing activities (4,009) (2,217) Effect of foreign exchange rates on cash and cash equivalents (12) 2 Change in cash and cash equivalents 741 272 Cash and cash equivalents at beginning of period 9,491 8,288 Cash and cash equivalents at end of period $ 10,232 $ 8,560 See accompanying notes.
Consolidated cash flows: first-half earnings, operating cash, compensation, capital spending and financing · Filed 15/07/2026
We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield (“BCBS”) licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in the New York City metropolitan area and upstate New York), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.) and Wisconsin.
Business overview: current Blue licensed territories · Filed 15/07/2026
Premium rates for certain lines of business are subject to approval by the Department of Insurance of each respective state.
Revenue recognition: state approval of certain premium rates · Filed 15/07/2026
CarelonRx determines whether it is the principal based on its contractual rights to design and develop a listing of prescription drugs offered to the customer (formulary management); its control over establishing the pharmacy network available to the customer to have its prescription fulfilled (network management); and its discretion over establishing the pricing for prescription drugs.
Revenue recognition: CarelonRx contractual pricing and network discretion · Filed 15/07/2026
-29- 12. Shareholders' Earnings per Share The denominator for basic and diluted shareholders' earnings per share for the three and six months ended June 30, 2026 and 2025 is as follows: Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Denominator for basic shareholders' earnings per share – weighted-average shares 217.0 225.2 218.4 225.8 Effect of dilutive securities – employee stock options and non-vested restricted stock awards 0.9 0.6 0.7 0.7 Denominator for diluted shareholders' earnings per share 217.9 225.8 219.1 226.5 During the three months ended June 30, 2026 and 2025, weighted-average shares related to certain stock options of 1.8 and 1.9, respectively, were excluded from the denominator for diluted shareholders' earnings per share because the stock options were anti-dilutive.
Note 12: weighted-average shares and employee-award dilution · Filed 15/07/2026
We are one of the largest health insurers in the United States in terms of medical membership, serving approximately 44.9 million medical members through our affiliated health plans as of June 30, 2026.
MD&A overview: medical membership at June 2026 · Filed 15/07/2026
Pricing of the Medicare and Medicaid programs may not adequately reflect current underlying healthcare cost trends given the timing lag between when pricing is established and the start of the applicable contract, which could adversely affect our financial results.
MD&A: government pricing lag relative to healthcare costs · Filed 15/07/2026
Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025 Total operating revenue increased primarily as a result of premium rate increases in our Health Benefits segment in recognition of medical cost trends and growth in CarelonRx product revenues, partially offset by membership attrition.
Second-quarter results: premium increases and membership attrition · Filed 15/07/2026
These increases were partially offset by decreases related to the partial termination and modification of a care delivery services contract with an unaffiliated customer and fewer post-acute solutions services provided as a result of lower Medicare membership.
Carelon Services results: external contract modification and lower membership · Filed 15/07/2026
Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025 Health Benefits Operating revenue increased primarily as a result of higher premium yields driven by premium increases in all of our lines of business, partially offset by deliberate repositioning in our Medicare Advantage business and Medicaid membership attrition.
First-half Health Benefits results: premium yields, Medicare repositioning and Medicaid attrition · Filed 15/07/2026
Operating loss increased primarily due to increased unallocated corporate expenses, primarily associated with the loss contingency accrual for our best estimate of the identified potential exposure for the resubmission of certain historical Medicare Advantage risk adjustment data and the Transformation Program.
Corporate results: historical Medicare risk-adjustment exposure accrual · Filed 15/07/2026
These amounts totaled $668 and $348 at June 30, 2026 and December 31, 2025, respectively, and are included in the cash and cash equivalents line on our consolidated balance sheets.
Accounting policies: customer funds and cash held for regulatory or contractual requirements · Filed 15/07/2026
In addition to the term loan and line of credit, we committed to providing $70 of additional funding with no additional equity interest in Mosaic Health to meet any shortfall in operating cash flow and regulatory capital requirements of certain businesses that were contributed by us to Mosaic Health through December 31, 2026.
Investments: Mosaic Health additional funding commitment without additional equity · Filed 15/07/2026
Additional funding of $34 was provided during the six months ended June 30, 2026.
Investments: actual additional Mosaic Health funding · Filed 15/07/2026
Operating gain decreased primarily due to higher overall medical costs and increases in targeted investments to support and strengthen our workforce and accelerate technology adoption, partially offset by higher operating revenue.
First-half results: operating-gain decline despite higher revenue · Filed 15/07/2026
The increase in operating gain was primarily driven by improved specialty pharmacy profitability and lower operating expenses, partially offset by normal timing variations in recognition of performance-related adjustments.
CarelonRx results: specialty profitability and operating-expense improvement · Filed 15/07/2026
In addition to exceeding these RBC requirements, we are in compliance with the liquidity and capital requirements for a licensee of the BCBSA and with the tangible net worth requirements applicable to certain of our California subsidiaries.
Capital resources: BCBSA liquidity/capital and California tangible-net-worth compliance · Filed 15/07/2026
We believe that cash on hand, future operating cash receipts, investments and funds available under our commercial paper program, our 5-Year Facility and borrowings available from the FHLBs will be adequate to fund our expected cash disbursements over the next twelve months.
Liquidity: management's assessment of funding sources · Filed 15/07/2026
CEO COO/EXECUTIVE LEADERSHIP INSURANCE INDUSTRY FINANCE/ CAPITAL MARKETS HEALTHCARE INDUSTRY ● ● ● ● ● ● ● ● ● ● ⭘ ⭘ ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ● ● ● ● ● ● ● ● ● ● ● ⭘ ● ● ● ● ● ● ● ⭘ ⭘ ⭘ ⭘ ⭘ 10 of 12 Directors 12 of 12 Directors 4 of 12 Directors 11 of 12 Directors 7 of 12 Directors MARKETING/ CONSUMER INSIGHTS TECHNOLOGY REGULATORY/ PUBLIC POLICY GOVERNANCE & SUSTAINABILITY DIVERSITY ● ● ● ● ● ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ● ● ● ● ● ● ●● ⭘ ⭘ ⭘ ⭘ ● ● ● ● ● ● ● ● ⭘ ⭘ ⭘ ⭘ ● ● ● ● ● ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ⭘ ● ● ● ● ● ● ●● ⭘ ⭘ ⭘ ⭘ 5 of 12 Directors 8 of 12 Directors 8 of 12 Directors 5 of 12 Directors 8 of 12 Directors 9 Table of Contents Proxy Summary Corporate Governance Highlights Our corporate governance policies and practices reflect our commitment to effective corporate governance and high ethical standards: Board / Committee Independence Board Practices Accountability •Separate CEO and Independent Board Chair •Independent Board – 11 of 12 directors are independent •Fully independent Audit, Compensation and Talent, Finance and Governance Committees •Annual Board, committee and individual director performance evaluations facilitated by an external party •Independent directors hold executive sessions •Board oversees Enterprise Risk Management activities •Majority voting for uncontested director elections •Proxy access for shareholder-nominated director nominees •Commitment to declassify the Board if the Blue Cross and Blue Shield Association ("BCBSA") requirement for a classified board is no longer applicable Stock Ownership / Compensation •Significant director and executive stock ownership and holding requirements •Clawback policy for executive officers’ incentive compensation, including for reputational harm •Policy against short sales, hedging and pledging stock for directors and executive officers •Rigorous establishment and oversight of incentive measures, goals and pay / performance relationship •Say-on-Pay advisory vote conducted annually •Pre-established grant dates for equity awards to executive officers •Limited executive perquisites •Double-trigger change-in-control provisions •No re-pricing of stock options or stock appreciation rights without shareholder approval •No change-in-control excise tax gross-ups •No guaranteed annual salary increases or bonuses •No compensation plans that encourage excessive risk taking •Independent compensation consultant 2026 Proxy Statement 10 Table of Contents Proxy Summary Compensation Highlights Pay-for-performance.
Proxy governance highlights: independence, ownership policies and shareholder rights · Filed 27/03/2026
Improve Accessibility Sydney Health, our digital engagement platform for health plan members, had approximately 20 million registered users in 2025, and nearly 50% of registered users engaged with Sydney Health in the fourth quarter of 2025.
Corporate impact: Sydney Health registrations and fourth-quarter engagement · Filed 27/03/2026
We also continued to invest for long-term growth, supported by disciplined execution in our Health Benefits business and meaningful progress scaling Carelon, our health services platform, which delivered approximately 33% operating revenue growth and approximately 17% growth in operating gain year-over-year.
2025 performance: Carelon revenue and operating-gain growth · Filed 27/03/2026
We also advanced quality performance, improving Payment Year 2027 Medicare Stars results to 59% of our Medicare Advantage members in 4+ Star plans as of January 1, 2026, up from 40% in the prior year.
2025 performance: Medicare Stars improvement for payment year 2027 · Filed 27/03/2026
The total grant date fair value of LTIP awards granted in 2025 to each NEO is shown in the following table: Name 2025-2027 PSU Target Award Grant Date Fair Value Annual Stock Options Grant Date Fair Value Annual RSU Grant Date Fair Value Total 2025 LTIP Granted Gail Boudreaux $ 9,240,067 $ 4,199,765 $ 4,200,210 $ 17,640,042 Mark Kaye $ 3,135,129 $ 1,424,506 $ 1,425,382 $ 5,985,017 Peter Haytaian $ 2,639,963 $ 1,199,710 $ 1,200,343 $ 5,040,016 Felicia Norwood $ 2,639,963 $ 1,199,710 $ 1,200,343 $ 5,040,016 Morgan Kendrick $ 2,475,039 $ 1,124,813 $ 1,125,198 $ 4,725,050 2023-2025 LTIP PSU Awards and Payouts In February 2026, the Committee approved a payout of 62.5% of target based on the following results of the 2023-2025 performance period: Performance Measure Weighting Threshold (0% Payout) Target (100% Payout) Maximum (200% Payout) Actual: $22,366(1) 2023-2025 Cumulative Adjusted Shareholders' Net Income (in millions) 60% $24,750 $25,780 $27,552 Actual: $543 2023-2025 Cumulative Operating Revenue (in billions) 40% $510.8 $542.5 $562.1 2023-2025 Approved PSU Payout (% of Target) 62.5% (1)See the GAAP Reconciliation table in Annex A for information on our as-reported Adjusted Shareholders' Net Income for the years ended December 31, 2025, 2024 and 2023.
Compensation: actual 2025 grants and approved 2023–2025 PSU payout · Filed 27/03/2026
(In millions, except per share data) Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Shareholders’ net income $ 5,662 $ 5,980 $ 5,987 Add / (Subtract): Net losses on financial instruments 653 445 694 Amortization of other intangible assets 628 580 885 Transaction and integration related costs 236 224 213 Business dispositions and related items 41 281 — Litigation and settlement expenses 24 692 (2) Gain on sale of business — (201) — Business optimization charges (38) 268 719 Tax impact of non-GAAP adjustments (402) (575) (628) Net adjustment items 1,142 1,714 1,881 Adjusted shareholders’ net income $ 6,804 $ 7,694 $ 7,868 Shareholders’ earnings per diluted share $ 25.21 $ 25.68 $ 25.22 Add / (Subtract): Net losses on financial instruments 2.91 1.91 2.92 Amortization of other intangible assets 2.80 2.49 3.73 Transaction and integration related costs 1.05 0.96 0.90 Business dispositions and related items 0.18 1.21 — Litigation and settlement expenses 0.11 2.97 (0.01) Gain on sale of business — (0.86) — Business optimization charges (0.17) 1.15 3.03 Tax impact of non-GAAP adjustments (1.79) (2.47) (2.65) Rounding Impact (0.01) — — Net adjustment items 5.08 7.36 7.92 Adjusted shareholders’ earnings per diluted share $ 30.29 $ 33.04 $ 33.14 Income before income tax expense $ 6,710 $ 7,904 $ 7,715 Net investment income (2,194) (2,051) (1,825) Gain on sale of business — (201) — Net losses on financial instruments 653 445 694 Interest expense 1,402 1,185 1,030 Amortization of other intangible assets 628 580 885 Reportable segments operating gain $ 7,199 $ 7,862 $ 8,499 2026 Proxy Statement 84 Table of Contents Corporate Impact Recognitions & Ratings We were included in Fortune’s 2025 “100 Best Companies to Work For” list and Fortune's "Best Workplaces in Health Care 2025," ranking second in the large company category.
Annex A: GAAP earnings history and reconciliation to operating gain · Filed 27/03/2026
This classified Board structure is one of the specific requirements imposed by the BCBSA in license agreements with all Blue Cross Blue Shield licensees, including us.
Board elections: BCBSA-required classified board · Filed 27/03/2026
Accordingly, the Committee approved an increase to the PSU awards above the percentage calculated using the as-reported results for the performance measures from 41.0% of target to 62.5% of target.
Compensation: approved upward adjustment of PSU payout · Filed 27/03/2026
