10-Q Business Optimization Initiatives

9 Months Ended

12 Months Ended

Sep. 30, 2023

Dec. 31, 2022

Business Optimization Initiatives [Abstract]

During the third quarter of 2023, based on a strategic review of our operations, assets and investments, management implemented the “2023-2024 Business Efficiency Program” to enhance operating efficiency, refine the focus of our investments, and optimize our physical footprint. The 2023-2024 Business Efficiency Program includes the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices. The 2023-2024 Business Efficiency Program is expected to be substantially complete by the end of the third quarter of 2024. Cash outlays associated with this program, which primarily relate to the personnel-related costs, are expected to be paid through 2024.

In the third quarter of 2023, we incurred $730 of costs towards the 2023-2024 Business Efficiency Program. This included $446 of pre-tax charges for information technology assets and contract write-offs related to projects that have been de-prioritized and stopped, $230 of pre-tax personnel-related charges for the reduction and/or relocation of staff, which includes severance and related costs primarily determined under the Company's existing severance plans, and $54 of pre-tax charges from asset impairments related to the closure or partial closure of data centers and offices, including operating lease-related right-of-use assets and other property and equipment. These charges were recognized in operating expense in the Corporate & Other segment; see Note 15, “Segment Information.”

In the third quarter of 2023, we also released $33 of severance related accruals from our business optimization initiatives introduced in 2020 (“2020 Business Optimization Initiatives”). A summary of the activity for the nine months ended September 30, 2023 and ending balance at September 30, 2023 related to the liability for employee termination costs, is as follows:


	Health Benefits		CarelonRx		Carelon Services		Corporate & Other		Total
2023-2024 Business Efficiency Program
Liabilities for employee termination costs at January 1, 2023	$	—	$	—	$	—	$	—	$	—
Charges	—		—		—		230		230
Payments and releases	—		—		—		—		—
Total liabilities for employee termination costs ending balance at September 30, 2023	$	—	$	—	$	—	$	230	$	230


	Health Benefits		CarelonRx		Carelon Services		Corporate & Other		Total
2020 Business Optimization Initiatives
Liabilities for employee termination costs at January 1, 2023	$	80	$	1	$	—	$	—	$	81
Payments	(31)		(1)		—		—		(32)
Releases	(33)		—		—		—		(33)
Total liabilities for employee termination costs ending balance at September 30, 2023	$	16	$	—	$	—	$	—	$	16

Business Optimization Initiatives

We believe that our properties are adequate and suitable for our business as presently conducted; however, we are continuing to evaluate our real estate strategy as it relates to the changing needs of a more hybrid remote workforce. As a result, during 2022, we identified additional reductions of office space and recorded a net charge of $39 in operating expense. This charge includes $34 for impairment and abandonment of operating-lease related ROU assets and $7 for impairment and abandonment of property and equipment. In addition, we released $2 of employee termination costs, as reflected in the table below. The net charges (benefits) recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2022, were $36, $0, $5 and $(2), respectively. See Note 20, “Segment Information” for a discussion of our segments.

During 2021, we identified reductions of office space and recorded a charge of $202 in operating expense. This charge included $136 for impairment and abandonment of operating-lease related ROU assets and $66 for impairment and abandonment of property and equipment. The charges recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2021, were $168, $1, $33 and $0, respectively.

During 2020, our management introduced enterprise-wide initiatives to optimize our business and, as a result, we recorded a charge of $653 in operating expense. This charge included $258 for impairment and abandonment of operating-lease related ROU assets, $198 for impairment and abandonment of property and equipment and $197 for future payments for employee termination costs in connection with the repositioning and reskilling of our workforce. The charges recognized in the Health Benefits, CarelonRx, Carelon Services and Corporate & Other segments in 2020, were $516, $4, $122 and $11, respectively.

A summary of the activity for the year ended December 31, 2022 and ending balance at December 31, 2022, related to the liability for employee termination costs previously incurred in 2020, is as follows:


	Health Benefits		CarelonRx		Carelon Services		Corporate & Other		Total
2020 Business Optimization Initiatives

Liabilities for employee termination costs at January 1, 2022	$	118	$	1	$	—	$	3	$	122
Payments	(38)		—		—		(1)		(39)
Releases	—		—		—		(2)		(2)
Total liabilities for employee termination costs ending balance at December 31, 2022	$	80	$	1	$	—	$	—	$	81