Anthem Inc

2026 earnings raised; 2027 growth target reiterated - Q2 adjusted diluted EPS: $7.45 (ahead of outlook). - 2026 guidance: raised to at least $27 adjusted diluted EPS (vs prior guidance; exact prior number not stated in transcript). - 2026 baseline for modeling: now views at least $26 as the “earnings baseline.” - 2027 outlook: confident in returning to ≥12% adjusted EPS growth off the ending-2026 baseline. - Seasonality: expects Q3 adjusted EPS ≈17% of revised full-year guidance (indicates normal seasonal pattern with conservative full-year framing).

Profit driver theme: favorable claims/benefit expense + disciplined execution; targeted one-time investments - Performance strength attributed to favorable benefit expense in Medicare Advantage and Individual ACA, plus disciplined expense management and progress on care management initiatives. - Below-the-line item (non-recurring): net negative $0.80 per share in Q2, primarily from valuation adjustments within net investment income. - Management plan for that non-recurring benefit: intended to fund one-time (non-recurring) investments in H2 2026 aimed at: - medical cost management - member engagement - provider connectivity - Carelon’s integrated capabilities - Notably, management emphasizes these investments are not expected to recur into 2027 (i.e., intended to improve *durability* of earnings rather than permanently raise expense).

Medicaid: still a key risk area, but performance supports framework; expects improvement, not reversal, and prudent stance on trend - Q2 Medicaid: supports full-year margin framework; rate updates higher than anticipated, with membership and acuity broadly aligned with assumptions. - Cost environment: “elevated” and concentrated in behavioral health (incl. ABA therapy), specialty pharmacy, outpatient surgery, and ED utilization. - Margin trajectory expectation: second-half Medicaid margin profile improves vs Q2 (supported by constructive July 1 rate activity and continued cost actions). - Full-year Medicaid operating margin outlook remains ~ -1.75% and described as appropriately prudent; management says they do not assume material trend improvement in the back half. - Important clarification on “acuity”: management says no material “stepwise acuity reset” is being assumed; incremental pressure increasingly from utilization among members who remain (acuity reset dynamic has moderated post-PHE).