Elevance Health, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Elevents Health fourth quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session where participants are encouraged to present a single question. If you wish to ask a question, please press star then one on your telephone keypad. You will hear a prompt that you have been queued. You may withdraw your question at any time by pressing star then two. These instructions will be repeated prior to the question and answer portion of this call. As a reminder, today's conference is being recorded. I would now like to turn the conference over to the company's management. Please go ahead.

Good morning, and welcome to Elevance Health's fourth quarter 2025 earnings conference call. My name is Nathan Rich, Vice President of Investor Relations. With us on the earnings call are Gail Boudreau, President and CEO, Mark Kay, our CFO, Pete Hytian, President of Care Along, Morgan Kendrick, President of our Commercial Health Benefits business, and Felicia Norwood, president of our government health benefits business. Gail will begin the call with a discussion of our fourth quarter performance, our 2026 guidance, and the progress we continue to make on our strategic priorities. Mark will then discuss our financial results and outlook in greater detail. After our prepared remarks, the team will be available for Q&A. During the call, we will reference certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website, ElevanceHealth.com. We will also be making forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Elevance Health. These risks and uncertainties may cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors discussed in today's press release and in our quarterly filings with the SEC. I will now turn the call over to Gail.

Good morning, and thank you for joining us today. Affordability remains the central challenge in healthcare. At Elevance Health, our focus is on improving outcomes making care easier to access and navigate, and managing costs responsibly. Our commitment to whole person health shapes how we deliver on our strategy by strengthening care coordination, reducing unnecessary complexity, and creating a simpler experience for those we serve. Before I go through the business, there are three points I want to underscore. 2026 is a year of execution and repositioning, and the outlook we provided today reflects prudent, achievable assumptions grounded in pricing discipline, operational rigor, and targeted investments. Second, even in a dynamic environment, we are acting decisively in the areas within our control to strengthen margins, reduce volatility and improve the consistency of our performance. And third, as those actions take hold, we expect to return to at least 12% adjusted EPS growth in 2027, off our ending 2026 earnings baseline, supported by the earnings power of our diversified platform. Consistent with that approach, we are establishing 2026 adjusted diluted earnings per share guidance of at least $25.50. As you consider the year over year comparison, it's important to remember that our 2025 results included approximately $3.75 per share of favorable non-recurring items. Let me walk through how we are positioning the portfolio. In Medicaid, we continue to see our rates lag elevated acuity and utilization, and we are working urgently with state partners on both rate actions and program design changes that support the long-term sustainability of the Medicaid program. We continue to view 2026 as a trough year, we expect our Medicaid operating margin to be approximately negative 1.75%, with improvement over time as rates incorporate more current experience and our actions take hold. We are also preparing for new eligibility and community engagement requirements under recently enacted federal legislation, the One Big Beautiful Bill Act. As these changes are phased in by states, We expect Medicaid membership may decline and the acuity of the population may shift over time. And we have reflected that in our planning assumptions. We believe this is manageable within the context of our diversified enterprise and long-term growth strategy. And we're approaching these changes constructively with state partners with a focus on continuity of care and program stability. Turning to Medicare, Our execution during the annual election period was aligned with our emphasis on delivering greater value for members and strengthening our performance, while maintaining stable share in markets that are core to our long-term growth. We expect Medicare Advantage membership to decline in the high teens percentage range in 2026, reflecting deliberate portfolio actions and stability in our dual eligible membership. The actions we've taken and the composition of our membership should support meaningful margin improvement in 2026. In the individual ACA market, we've repositioned our plans with discipline to reflect higher costs observed this year and the exploration of enhanced subsidies while maintaining value and access for consumers. Our commercial business continues to have healthy momentum, particularly in national counts, supported by a productive selling season, favorable client retention, and new opportunities to expand our reach through the second blue bid process. We remain disciplined in our pricing and focused on delivering sustainable margins while helping employers address affordability through whole health solutions that integrate a member's medical, pharmacy, and behavioral health needs. Our integrated approach continues to resonate in the market, and we are pleased that 40 employers over the past five years have selected our Anthem-affiliated plans as their sole carrier. And finally, Caroline is increasingly recognized as a differentiated platform in the market, with growing demand for its solutions in managing high-cost complex areas of healthcare. Near-term growth will be moderated by lower health plan membership, most pronounced in Carillon Rx, while Carillon Services is less impacted by membership dynamics, reflecting its broad mix of external relationships and value-based arrangements. As our business mix evolves and we make targeted investments to strengthen the foundation, We are also refining certain long-term margin expectations to reflect a more prudent view of the forward environment. Our long-term enterprise margin target is 5 to 6%. For health benefits, Carillon, and CarillonRx, we are targeting mid-single-digit margins, with our Carillon services target unchanged. These updates are intended to provide a clearer, more durable framework for evaluating performance, and they do not change our focus on disciplined execution, durable earnings growth, and strong cash generation. Stepping back, we view 2026 as a year of execution and repositioning. Across Medicaid, Medicare Advantage, and ACA, The dynamics we've described reflect a combination of policy-driven changes and deliberate portfolio and pricing actions designed to strengthen performance consistency. And we are aligning our cost structure and operating priorities accordingly. That's why we believe we have a clear line of sight to improve performance as we move through this year and into 2027. Now let me turn to the actions we have underway. We are strengthening our ability to anticipate emerging utilization trends and improve care coordination by leveraging actionable data and advanced analytics. These capabilities help us identify trends earlier and address inefficiencies in the system while supporting timely access to appropriate high quality care. In Medicaid, We're strengthening our analytics to identify outlier utilization and billing patterns in high-cost substance use disorder treatment settings while maintaining access to clinically appropriate care. These insights are enabling targeted actions, including provider education, claims review enhancements, and payment accuracy and compliance initiatives where appropriate, consistent, with program requirements and clinical guidelines. We're able to execute with confidence because we've built on our scaling capabilities that improve outcomes and reduce costs in complex areas of healthcare. In 2026, we will further strengthen specialty pharmacy management, advance behavioral health support, and expand care management programs for members with elevated care needs. Established programs in oncology and serious mental illness are delivering savings for our health plans in the face of heightened utilization trend. Our patient advocacy programs now serve over 7 million members, up nearly 20% from last year. Through proactive, tailored support, we help members navigate the system with greater confidence, remove points of friction, and close gaps in care. especially for individuals with greater care needs where early engagement can materially improve outcomes and reduce downstream costs. And we remain deeply committed to improving the experience of care providers. We remain on track to exceed our commitment that 80% of prior authorization decisions will be made in real time in 2027, particularly for routine approved services supporting faster access to care, and reducing administrative burden for care providers. Through our HealthOS platform, we're enabling real-time data exchange that aligns information across the system, streamlines interactions with care providers, and makes it easier to deliver care. In summary, while the environment we operate in continues to evolve, our strategic direction remains clear. We are entering 2026 with prudent planning assumptions, focused execution, and targeted investments to unlock the embedded earnings power of our diversified platform. And based on the actions underway this year, we remain confident in our long-term algorithm and our expectation to return to at least 12% adjusted EPS growth in 2027. Before closing, I want to thank our associates for their unwavering commitment to our purpose throughout 2025. In the face of a challenging year for our industry, our teams operated with integrity, compassion, and a deep sense of responsibility to the people and communities we serve. Their dedication is the foundation of our performance today and the progress we are building for the future. And I am deeply grateful for the impact they continue to make across Elevance Health. With that, I'll turn the call over to Mark for a more detailed review of our financial results and outlook.