Financial Data and Key Metrics Changes - The company reported adjusted EPS of $1.84 on $10.8 billion of premium revenue, which was below expectations [7][19] - The consolidated MCR for the quarter was 92.6%, reflecting a challenging medical cost environment [7][19] - Year-to-date, the consolidated MCR stands at 90.8% with an adjusted pre-tax margin of 2.7% [7] Business Line Data and Key Metrics Changes - In Medicaid, which represents 75% of total premium revenue, the MCR was reported at 92% with an adjusted pre-tax margin of 2.6% [8][19] - The Medicare segment reported a third quarter MCR of 93.6%, with higher utilization in high-acuity populations [8][20] - The Marketplace segment had a significantly higher-than-expected MCR of 95.6%, driven by elevated utilization [8][21] Market Data and Key Metrics Changes - The company anticipates full-year premium revenue to increase to approximately $42.5 billion [9][24] - The adjusted EPS guidance for 2025 has been revised down to approximately $14 per share, reflecting a consolidated MCR of 91.3% [9][24] - The medical cost trend for Medicaid is now expected to be 7%, which is 100 basis points higher than previous guidance [10][25] Company Strategy and Development Direction - The company aims to surpass the $50 billion premium revenue mark in the coming years, with a focus on winning RFPs and pursuing M&A opportunities [16] - The strategy includes reducing exposure in the Marketplace while stabilizing the risk pool [17] - The company is optimistic about Medicaid rates keeping pace with medical cost trends, with expectations for slight improvements [42][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging medical cost environment but expressed confidence in the long-term growth potential of the business [17][18] - The company views the current operating environment as temporary and expects rates to eventually align with medical cost trends [17][60] - Management highlighted the importance of state responsiveness to rate adjustments in light of increased medical costs [42][44] Other Important Information - The company has a strong capital foundation, with RBC ratios at 340% and total subsidiary capital 70% above state minimums [22] - Share repurchases totaled approximately 2.8 million shares at a cost of $500 million, reflecting confidence in the company's long-term value [23] - The company has an active pipeline of $54 billion in new opportunities over the next few years [16] Q&A Session Summary Question: Can you elaborate on the drivers of ACA MCR pressure in the quarter? - Management indicated that the pressure was due to increased medical cost trends across all categories, with a higher percentage of special enrollment membership contributing to the trend [34][35] Question: Are you expecting Medicaid rates to be in excess of the 7% cost trend? - Management expressed optimism that rates will at least keep pace with the trend, citing state responsiveness and a solid baseline for rate projections [41][42] Question: How does the expiration of subsidies affect your pricing assumptions? - Management stated that pricing was conservatively set to account for the expiration of subsidies, with an aim to break even or better in the Marketplace segment [46][47] Question: What is the outlook for embedded earnings? - Management indicated that embedded earnings are expected to be realized over time, with some components contributing positively in the upcoming year [62][65] Question: Can you discuss the M&A pipeline and capital allocation priorities? - Management confirmed that capital priorities remain focused on organic growth, inorganic growth, and returning capital to shareholders, with a full pipeline of actionable M&A opportunities [71][74]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $1.84 on premium revenue of $10.8 billion, which was below expectations [5][20] - The consolidated Medical Care Ratio (MCR) was 92.6%, reflecting a challenging medical cost environment [5][20] - Year-to-date, the consolidated MCR stands at 90.8% with an adjusted pretax margin of 2.7% [5][20] - The full-year 2025 adjusted earnings per share guidance has been revised down to approximately $14, which is $5 below prior guidance of $19 per share [7][27] Business Line Data and Key Metrics Changes - In Medicaid, which represents 75% of total premium revenue, the MCR was reported at 92% with an adjusted pretax margin of 2.6% [5][21] - The Medicare segment reported a third-quarter MCR of 93.6%, with higher utilization in high-acuity populations [6][21] - The marketplace segment had a significantly higher MCR of 95.6%, indicating elevated utilization compared to risk adjustment revenue [7][21] Market Data and Key Metrics Changes - The company anticipates premium revenue growth in its current footprint and new Medicaid contracts in Georgia and Texas, targeting $46 billion in revenue for 2026 [12][31] - The marketplace business is expected to face revenue headwinds due to pricing strategies aimed at reducing exposure [13][31] Company Strategy and Development Direction - The company aims to surpass $50 billion in premium revenue in the coming years, with a strong pipeline of $54 billion in new opportunities [17][91] - The acquisition pipeline is robust, focusing on smaller health plans that may consider strategic options due to current operating challenges [18][91] - The company is strategically reducing its footprint in the marketplace to stabilize risk pools and improve margins [32][91] Management's Comments on Operating Environment and Future Outlook - Management noted that the medical cost trend is higher than expected, driven by increased utilization across various categories [6][21] - The company remains optimistic about Medicaid rates keeping pace with cost trends, citing responsiveness from state partners [49][51] - The outlook for 2026 suggests a potential return to target margins as rates are expected to improve [60][62] Other Important Information - The effective tax rate in the third quarter dropped significantly due to federal tax credits and lower non-deductible expenses [22] - The company repurchased approximately 2.8 million shares at a cost of $500 million, indicating confidence in the value of its shares [25][91] Q&A Session Summary Question: Can you elaborate on the drivers of ACA MLR pressure in the quarter? - The pressure was strictly related to increased medical cost trends across all categories, with a higher percentage of special enrollment membership contributing to the trend [40][41] Question: Are you expecting Medicaid rates to be in excess of the 7% cost trend? - Management expressed optimism that rates will at least keep pace with the trend, citing responsive state actions and visibility into cost categories [48][49] Question: How does the expiration of subsidies affect your pricing assumptions? - The company has priced for the expiration of subsidies, targeting breakeven or better margins, with significant price increases planned [54][56] Question: What is the outlook for embedded earnings? - The company has $8.65 in embedded earnings, with expectations for a portion to emerge in 2026, although the timing may be affected by current margin levels [77][80] Question: Can you break down the performance of the Medicare business? - The Medicare business is undergoing rejuvenation, with expectations for slight margin erosion in MMPs transitioning to Phydes and Hydes, but overall starting at margin neutral for next year [82][87] Question: How is the M&A pipeline developing? - The M&A pipeline is full of actionable opportunities, with a focus on acquiring revenue streams from struggling local health plans at or near book value [89][91]

Financial Data and Key Metrics Changes - The company reiterated its 2025 outlook, indicating improved utilization trends throughout the second quarter and into the third quarter, with no significant concerns regarding core performance [3][4] - Membership loss due to dual enrollment and failure to reconcile was modest and deemed immaterial, suggesting positive trends for market morbidity in 2025 [5][8] - The company expects an increase in Medical Loss Ratio (MLR) in the second half of the year, aligning more closely with 2023 dynamics rather than 2024 [11][12] Business Line Data and Key Metrics Changes - The company has seen a strong amount of Special Enrollment Period (SEP) growth, but anticipates less pressure from SEPs in the second half of the year due to the end of continuous SEP for individuals at 150% of the federal poverty level [11][12] - Membership is expected to be modestly below second quarter amounts by the end of the year, but more member months are anticipated in the second half compared to the first half [19][20] Market Data and Key Metrics Changes - The company is preparing for the 2026 rate re-filing, considering various factors including market morbidity shifts and the expiration of subsidies [21][22] - Pricing strategies for 2026 are being built on historical trends and expected market conditions, with a focus on ensuring appropriate pricing for risks [22][24] Company Strategy and Development Direction - The company is optimistic about the ICHRA market, having launched new plans and formed partnerships to enhance community engagement [59][61] - There is a focus on leveraging technology to improve operational efficiency and reduce costs, with ongoing initiatives in areas like fraud prevention and administrative expenses [55][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current market environment, noting that utilization trends are not causing concern [4][35] - There is cautious optimism regarding the potential extension of enhanced subsidies, which could positively impact financial performance [42][43] Other Important Information - The company has significant excess capital and feels well-positioned to fund operations across various scenarios, with minimal leverage on its balance sheet [48][49] - The company is actively working with brokers to ensure members are informed about changes and can navigate potential subsidy losses effectively [30][29] Q&A Session Summary Question: What are the expectations regarding dual enrollment and FTR populations? - Management noted that the impact of dual enrollment and FTR populations has been modest, with a slight positive effect on market morbidity [7][8] Question: How does the company view MLR progression in the first half of the year? - Management expects MLR to increase in the second half, aligning more with 2023 trends, and has built expectations for increased utilization in Q4 [11][14] Question: What is the company's strategy for pricing in 2026? - The company is stacking risks in pricing for 2026, considering various factors including market morbidity shifts and the expiration of subsidies [22][23] Question: How does the company plan to manage capital levels? - Management feels confident about capital levels, indicating that they have adequate resources to fund operations and minimal leverage on the balance sheet [48][49] Question: What are the prospects for the ICHRA market? - Management remains optimistic about the ICHRA market, highlighting recent partnerships and the potential for growth despite short-term pricing challenges [59][61]

Financial Data and Key Metrics Changes - The company ended 2024 with approximately $440 million in cash, outperforming cash flow projections, and expects to burn about $110 million in 2025 [49] - The company aims to achieve cash flow breakeven by 2027, with several levers to pull, including contracting and cost control [50][52] Business Line Data and Key Metrics Changes - The company operates in two programs: Medicare Advantage (MA) and ACO REACH, with ACO REACH showing about $150 million in savings and a 13% gross savings rate [8] - Quality scores in the Medicare Advantage program are above 4 stars, with year two plus markets running at 4.25 or better, which is a key differentiator [6][7] Market Data and Key Metrics Changes - The company has seen a consistent cost trend of approximately 7% in 2023 and 2024, with a projected 5.3% for 2025 [30][31] - Utilization trends have remained consistent, with inpatient spend being a significant driver, particularly in oncology drugs [55] Company Strategy and Development Direction - The company is focused on transitioning from fee-for-service to value-based care, emphasizing the importance of the primary care physician-patient relationship [4][10] - The company is being measured in its growth strategy, with a reduction in new member classes for 2025 to 20,000, while planning for 30,000 to 45,000 in 2026 [15][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging macro environment but notes strong demand from physician groups and payers for the move to value-based care [14][19] - The company is focused on improving performance and reducing volatility, having exited two partnerships last year [41][46] Other Important Information - The company has reduced its Part D exposure from 70% to 30% of its membership for 2025, aiming to further decrease this by 2026 [44] - The company is implementing a new financial data pipeline to enhance revenue and claims information accuracy [34] Q&A Session Summary Question: What are the implications of the current risk adjustment process? - The company emphasizes the importance of the PCP-patient relationship and has a robust risk adjustment process in place, including a 100% chart review process [22][24] Question: How is the company managing utilization trends? - Utilization trends are consistent with expectations, with inpatient spend being a significant driver, particularly in oncology [55] Question: What is the company's strategy for physician partnerships? - The company maintains high net promoter scores from physicians, indicating strong engagement and satisfaction with the value-based care model [59][63]

Financial Data and Key Metrics Changes - The company reported total revenue of $3 billion for the quarter, a 42% increase year over year [6] - Net income was approximately $275 million, a significant improvement of $98 million over the prior year period [7][22] - Earnings from operations grew by $112 million to $297 million, with an operating margin of 9.8%, an increase of 110 basis points year over year [8][21] - The medical loss ratio (MLR) increased by 120 basis points year over year to 75.4% [8][18] - The selling, general and administrative (SG&A) expense ratio improved to 15.8%, a 260 basis point improvement year over year, marking the lowest in the company's history [8][20] Business Line Data and Key Metrics Changes - The company closed the quarter with approximately 2 million effectuated members, a 41% increase year over year [9][16] - Membership growth was driven by strong retention and above-market growth during open enrollment [16] - The company launched Oscar Community Resources with Find Help, enhancing member services beyond medical care [10] Market Data and Key Metrics Changes - The company noted that the individual market is a cornerstone of American healthcare, driving a record low uninsured rate [13] - The proposed program integrity initiatives by CMS are seen as positive for the long-term sustainability of the market, although the shortened enrollment window may constrain shopping for plans [12][51] Company Strategy and Development Direction - The company aims to deepen market presence through new partnerships and innovative plan designs [10][14] - The focus remains on building a scalable and efficient technology infrastructure to enhance member experience and operational efficiency [11] - The company is engaged with policymakers to advocate for solutions that strengthen the individual market [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 targets due to disciplined execution and strong top-line growth [14][24] - The company anticipates membership trends to rise in the first half of the year but expects a decline in the latter half due to regulatory changes [31] - Management highlighted the importance of a trustworthy market and the need for adequate time for individuals to shop for plans [51] Other Important Information - The company reaffirmed its full-year guidance metrics, expecting total revenue in the range of $11.2 billion to $11.3 billion for 2025 [23][24] - Adjusted EBITDA for the quarter was $329 million, reflecting a substantial year-over-year improvement [22] Q&A Session Summary Question: Membership expectations for the second quarter and the rest of the year - Management expects membership to trend up in the first half of the year but to decline in the latter half due to regulatory changes [31][32] Question: Grace period membership context and its impact on MLR - Management indicated that the gap between effectuated and paid membership is expected to normalize, with prior period development impacting MLR [36][38] Question: Utilization patterns between new and retired members - Management noted higher inpatient utilization with favorable pharmacy trends, but specific drivers were not identified [42] Question: Thoughts on competitor exits and their impact on risk adjustment - Management views competitor exits as an opportunity, emphasizing disciplined pricing and effective risk adjustment [46][62] Question: Regulatory environment and potential impacts on enrollment - Management supports CMS efforts to strengthen ACA integrity but expressed concerns about the shortened enrollment period affecting consumer choice [51] Question: Expectations for risk adjustment as a percentage of premiums - Management does not anticipate significant adjustments to risk adjustment percentages at this time, but elevated claims could impact future expectations [64] Question: Drivers of SG&A performance and future expectations - Management attributed SG&A improvements to fixed cost leverage, variable cost efficiencies, and lower exchange fees, with expectations for gradual increases moving forward [74][75]

Financial Data and Key Metrics Changes - The company reported total revenue of $1.53 billion for Q1 2025, down from $1.6 billion in Q1 2024, primarily due to market and partnership exits, partially offset by premium growth [21][22] - Medical margin for Q1 2025 was $128 million, compared to $157 million in Q1 2024, reflecting elevated medical costs driven by increased utilization and flu-related expenses [21][22] - Adjusted EBITDA for Q1 2025 was $21 million, down from $29 million in Q1 2024, impacted by ongoing elevated cost trends [23] Business Line Data and Key Metrics Changes - Medicare Advantage membership at the end of Q1 2025 was 491,000, a decrease from 523,000 in Q1 2024, due to a cautious approach to membership growth and partner exits [19][20] - ACO REACH membership for Q1 2025 was 114,000, down from 131,000 in Q1 2024, primarily due to exiting an underperforming partnership [20] Market Data and Key Metrics Changes - The Medicare Advantage market continues to expand, with CMS data showing a year-over-year growth trend of 3.9% [10] - Overall market trends in 2025 remain consistent with the prior year, with a full-year trend expected at 5.3% [9] Company Strategy and Development Direction - The company is focused on disciplined growth, reducing exposure to costs outside of its control, and enhancing clinical and operational capabilities [7][11] - Investments in technology are seen as a key competitive advantage, aimed at improving automation, efficiency, and clinical outcomes [13][14] - The company aims to reduce Part D exposure and improve economic terms for Part C, with a focus on quality incentives [12][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the 2026 environment, citing a favorable final rate notice from CMS and supportive comments from administration officials regarding value-based care [8][17] - The company anticipates clearer signals from Congress regarding Medicare policy as the year progresses [8] - Management remains cautious about ongoing utilization pressures and is taking a conservative approach to assumptions for 2025 [25][66] Other Important Information - The company ended Q1 2025 with $369 million in cash and marketable securities, expecting to use approximately $110 million of cash in 2025 [28] - The company is targeting cash flow breakeven by 2027 while maintaining a disciplined approach to capital allocation [28] Q&A Session Summary Question: Impact of V-28 risk model transition on value-based care companies - Management indicated that the risk adjustment perspective for 2025 is in line with expectations, with a 2% net increase year-over-year, inclusive of a 3% headwind from V-28 [33][34] Question: Contribution from previously exited areas - Management noted that unfavorable development from exited markets would not impact 2025 significantly, with minimal remaining IBNR for those service dates [38][39] Question: Clarity on 2026 MA final rate notice - Management confirmed that 40% of membership was repriced for January 2025, with expected benefits from the average 9% increase across the network [42][43] Question: Expectations for 2026 MA bit cycle - Management expressed optimism about the 2026 environment, with a focus on quality incentives and clinical cost-saving initiatives [60][61] Question: Visibility on completed claims and medical cost trends - Management highlighted improved visibility through a new financial data pipeline, which provides detailed member-level revenue and claims data [67][70] Question: Potential membership reduction into 2026 - Management stated that they do not anticipate a reduction in membership due to ongoing efforts to reduce Part D exposure and improve economic terms [76][77] Question: Impact of Humana's star ratings decline - Management acknowledged the potential headwind from Humana's star ratings but emphasized the company's strong quality performance as a differentiator [96][100] Question: Development of clinical programs - Management confirmed that while 2025 is an investment year for new clinical programs, benefits are expected to materialize in 2026 and beyond [107]

Financial Data and Key Metrics Changes - The company reaffirmed its full-year guidance, indicating a strong start to 2025 with Q1 results ahead of plan [5][14] - Adjusted EPS guidance for the year is approximately $16.25, with an expected insurance segment benefit ratio of 90.1% to 90.5% [15][14] - G&A costs for the quarter were slightly better than expectations, attributed to the timing of costs expected in the second and third quarters [11][14] Business Line Data and Key Metrics Changes - The Medicare product and experience maintained membership guidance for 2025, with strong performance in the Open Enrollment Period (OEP) [8] - CenterWell and Medicaid businesses showed robust patient and membership growth, with 30 new centers added through acquisition and partnership [12][14] - The company reported a 30% to 50% reduction year over year in members with weight refills due to medication adherence campaigns [11] Market Data and Key Metrics Changes - The company is seeing strong year-to-date performance in markets with high concentrations of members, particularly in Florida, Illinois, and Texas [41] - Medicaid membership growth is on track, with approximately 100,000 growth year-to-date, aligning with the expected annual growth of 175,000 to 250,000 [74] Company Strategy and Development Direction - The company is focused on operational efficiencies, increasing flexibility, and operating leverage while making investments to improve member outcomes [14] - The integration between the insurance segment and CenterWell is aimed at delivering better health outcomes and improving STARS performance [58][60] - The company is committed to returning to a 3% pre-tax margin in Medicare Advantage (MA) by 2027, with ongoing focus on quality and operational excellence [48][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying progress of the business despite external challenges, emphasizing control over medical costs and operational efficiencies [50][52] - The company is monitoring changes in consumer behavior due to the Inflation Reduction Act (IRA) and is prepared for potential impacts on future performance [6][14] - Management highlighted the importance of navigating regulatory headwinds while focusing on controllable factors [51][52] Other Important Information - The company is actively working through STARS strategy and bids, with a focus on balancing membership and margins [32][33] - Recent fulfillment agreements with multiple companies are expected to contribute positively to growth [12][63] Q&A Session Summary Question: How much of your investments moved out of Q1? - Management indicated that most of the impact of incremental investments flowed through the MLR in Q1, with expectations for higher levels in the second through fourth quarters [20] Question: Update on the path to the 3% MA margin target? - Management reiterated focus on achieving the 3% margin, with timing tied to STARS outcomes, and no significant changes from previous communications [23] Question: Update on STARS initiatives and bids? - Management expressed confidence in progress made on STARS initiatives and ongoing work on bids, emphasizing a balanced approach to membership and margins [27][32] Question: Experience in Part D relative to expectations? - Trends in the business are consistent with expectations, with mid-single-digit growth on the medical side and low double-digit growth on the pharmacy side [36] Question: Visibility on risk adjustment and Group MA? - Management reported strong membership changes and visibility into risk adjustment, with no significant behavioral changes noted in Group MA [41][43] Question: Comments on Medicaid visibility and utilization? - Medicaid is performing in line with expectations, with strong growth and positive trends in member engagement and outcomes [75][76] Question: Clarification on GAAP EPS and valuation adjustments? - Management clarified that the adjustment in GAAP EPS guidance is unrelated to structural impairment and is part of a complex calculation [93]