Elevance Health, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Elevance Health Second 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 cued. 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 second quarter 2026 earnings conference call. My name is Nathan Rich, vice president of investor relations. With us on the earnings call are Gail Boudreaux, president and CEO, Mark Kaye, our CFO, Felicia Norwood, our chief health benefits officer, Morgan Kendrick, president of our commercial health benefits business, and Amy Daly, president of our government health benefits business. Gail will begin with a review of our second quarter results, the progress we have made against our strategic priorities, and targeted investments designed to strengthen the enterprise over time. Mark will then discuss our financial performance and outlook in greater detail. After our prepared remarks, the team will be available for a question and answer session. 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. Elevance Health delivered second quarter results ahead of our outlook, reflecting favorable benefit expense performance, disciplined execution, and the actions we are taking to manage health care costs more effectively across the enterprise. Today, we are raising our 2026 adjusted diluted earnings per share guidance to at least $27, and we remain confident in our ability to return to at least 12% adjusted EPS growth in 2027 off our ending 2026 earnings baseline. Importantly, our confidence is not based on a single line of business or a single quarter. We are seeing progress across the breadth of our portfolio. Medicare Advantage reflects the deliberate actions we took to improve performance. Our commercial and individual ACA businesses are developing as anticipated, and Carillon and our AI enabled capabilities are becoming more meaningful contributors. We remain focused on discipline management of the Medicaid business as the operating environment remains dynamic. The broader enterprise is performing against the framework we laid out, and the targeted investments underway are designed to strengthen the durability of that performance. Healthcare should be easier to navigate and more responsive to the people it serves. Consumers expect more from the healthcare system, greater transparency, better connectivity, and more personalized support that meets their needs. and we share that expectation. At Elevance Health, trust is earned through every interaction. To be our members' lifetime trusted health partner, we must continue to make healthcare simpler, more personal and more affordable. That's why we're accelerating investments in capabilities that directly support our strategy. These capabilities are tied to the operating levers that drive performance. Earlier detection of medical cost trend, More precise clinical intervention, a simpler member experience, and better provider connectivity. Let me share a few examples. First, we are managing medical cost trends with greater speed and precision. In a dynamic environment, we're improving our ability to detect cost pressures earlier and respond quickly with targeted action plans across our clinical, Network, Payment Integrity, and Operating Teams. In many cases, we've compressed months of work into days. These capabilities are already helping us identify emerging cost drivers more quickly and deploy more focused interventions across the enterprise. Second, we're improving how members access care and support through Sydney Health, concierge care, and proactive member engagement. We're using data, digital tools, and dedicated care teams to help members navigate benefits, schedule care, manage conditions, and close gaps in care. The result is a more proactive, seamless, and personal experience. Third, we're expanding Carillon's value-based solutions to address complex and fast-growing areas of healthcare spend. CareBridge extends Caroline's Whole Health model into the home, where better coordination can improve outcomes and lower costs. CareBridge can generate medical savings in the mid-teens for these members, and we're expanding it to new markets. Finally, we're reducing friction for care providers and members. With HealthOS, we collaborate with providers earlier in the care journey to review care plans Thank you. Thank you. Thank you. to long-term performance, earlier trend detection, more precise intervention, and a scalable operating model. Turning now to our performance by line of business. Let me start with Medicaid because I know it's an important area of focus for investors. The Medicaid environment continues to be dynamic, and we're managing it with discipline. Second quarter performance supports our full-year framework. reflecting stronger than expected rate updates, membership and acuity that remain broadly aligned with our assumptions, and targeted actions against known areas of elevated trend. Based on what we see today, our Medicaid operating margin outlook remains appropriately prudent and unchanged from our prior guidance. Our outlook reflects a balanced view of the second half, an elevated trend environment Improving rate alignment, acuity that remains broadly consistent with our expectations, and the growing impact of the actions we are taking to manage healthcare costs. We continue to see 2026 as the trough year for our Medicaid margin, with improvement over time supported by better rate alignment and the maturation of our care management actions. Medicaid remains an important part of our portfolio, and we are managing it with clear strategic and financial discipline. We regularly assess each market based on strategic fit, operational requirements, and the ability to generate an appropriate return on capital. We recently reached a mutual agreement with the District of Columbia to exit the DC Medicaid market. As we continue our assessment, We expect to exit additional Medicaid markets over the next 12 to 18 months where we do not see a path to sustainable performance. These are targeted portfolio actions, and they do not change our commitment to serving Medicaid members in markets where we can deliver value for states, members, and shareholders. In Medicare Advantage, we are seeing clear evidence that the deliberate actions we took to reposition the portfolio are translating into stronger performance. Discipline plan design, a more focused mix of DSNP and HMO products, favorable claims experience, and the growing impact of our care management programs support our path to at least a 2% operating margin this year. Our 2027 bids were developed with the same discipline, reflecting a prudent view of cost trend, continued focus on margin improvement and stability in the benefits that members value most. We will continue to manage this business with focus on delivering long-term value for seniors and sustainable performance for the enterprise. In the individual ACA business, performance is developing broadly consistent with how we priced and planned the year. Member retention has been encouraging, and the composition of the risk pool remains broadly aligned with our assumptions. As expected, the higher mix of bronze plans creates more pronounced seasonality, and we are not extrapolating early year favorability. As we prepare for 2027, our focus remains on offering value for consumers while improving the long-term financial sustainability of this business. In commercial, the market is focused on affordability and experience, and that aligns directly with our differentiated offerings. Employers are looking for solutions that lower healthcare costs, simplify navigation, and better support their employees. Our integrated medical and pharmacy model is resonating, and we're seeing strong demand for our patient advocacy, behavioral health, and digital engagement capabilities. Turning to Carillon, performance remains in line with our expectations, and we're focused on scaling solutions that improve outcomes for members with complex and chronic needs. Behavioral health is a clear example. When members need additional support, our programs help identify those needs earlier, connect them to appropriate care, and coordinate services more effectively. Through stronger member engagement and fewer adverse events, These programs have delivered 10% cost savings on average. As we expand these capabilities across new populations and external client relationships, Caroline is becoming an increasingly important and durable driver of enterprise growth over time. In summary, our second quarter performance gives us increased confidence in the year. We're raising our earnings guidance, managing the business with discipline, Gailen Carillon's value-based capabilities in investing in the areas that matter most to our future financial performance. Before closing, I want to thank our associates. The progress we are making is a direct reflection of their focus, discipline, and commitment to the people we serve. With that, I'll turn the call over to Mark to review our second quarter financial results and outlook in greater detail.