Financial Data and Key Metrics Changes - The company reported an adjusted loss per share of $2.75 on premium revenue of $10.7 billion for Q4 2025, which was below expectations due to strong trend pressure in Medicare and Marketplace, along with retroactive items in Medicaid totaling $2 per share [6][19] - For the full year 2025, premium revenue was $43 billion, reflecting an 11% year-over-year growth, while adjusted earnings per share were $11.03, with a pretax margin of 1.6% [7][8] - The Medicaid Medical Care Ratio (MCR) for Q4 was 93.5%, and for the full year, it was 91.8% with a pretax margin of 2.8% [9][21] Business Line Data and Key Metrics Changes - In Medicaid, the MCR for Q4 was 93.5%, impacted by retroactive premium rate actions, while the adjusted MCR was 92.3% with a pretax margin of 2% [7][20] - The Medicare MCR for Q4 was 97.5%, with elevated utilization affecting margins, while the full year MCR was 92.4% [21] - The Marketplace MCR was 99% for Q4, influenced by high utilization and prior period claim settlements, with a full year MCR of 90.6% [22] Market Data and Key Metrics Changes - The company secured a historic RFP win in Florida, expected to yield $6 billion in annual run rate premium, complementing previous contract wins in Wisconsin, Georgia, and Texas, contributing over $9 billion in Medicaid premium [11] - The company anticipates 2026 premium revenue of approximately $42 billion, slightly lower than 2025, with growth from the Florida CMS contract offset by a planned reduction in the Marketplace segment [12][29] Company Strategy and Development Direction - The company aims to focus on dual-eligible members in Medicare, planning to exit the traditional MAPD product for 2027 [14] - The acquisition pipeline remains active, with the company looking to capitalize on opportunities in a challenging operating environment [12] - The company projects a low single-digit margin in Medicaid for 2026, indicating confidence in future rate restoration and earnings potential [17] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the 2025 results but remains confident in the long-term outlook, expecting Medicaid rates and medical cost trends to reach equilibrium [10][17] - The company believes the 2026 forecast for Medicaid represents a trough for managed Medicaid margins, with potential for recovery in subsequent years [17] - Management highlighted that every 100 basis points on the Medicaid MCR is worth nearly $5 per share, indicating significant upside potential [17] Other Important Information - The company reported a capital foundation that remains strong, with a parent company cash balance of approximately $223 million at year-end [23] - The adjusted G&A ratio for Q4 was 6.9%, reflecting disciplined cost management [22] Q&A Session Summary Question: Variance in Medicaid margins across states and potential exit considerations - Management indicated that rates are generally underfunded across the portfolio, with no current plans for exits from any states [36] Question: Adjustments to benefit design in Medicaid - Management noted some sporadic adjustments but no wholesale shifts in benefit design across states [42][48] Question: Membership attrition assumptions for 2026 - Management expects a 2% membership attrition, attributing the decline to program integrity and tightening enrollment processes [50][52] Question: Size of Medicaid expansion enrollment and attrition sources - The Medicaid expansion population is approximately 1.3 million members, with expected attrition of 15%-20% due to new work requirements [59][60] Question: Positive and negative dynamics affecting 2026 guidance - Management believes there are no significant negative dynamics, with a focus on potential upside from rate adjustments and cost trends [62][64]

Financial Data and Key Metrics Changes - The company reported an adjusted loss per share of $2.75 on $10.7 billion of premium revenue for Q4 2025, which was below expectations due to strong trend pressure in Medicare and Marketplace, along with retroactive items in Medicaid totaling $2 per share [6][19] - For the full year 2025, premium revenue was $43 billion, representing an 11% year-over-year growth, while adjusted earnings per share were $11.03, with a pretax margin of 1.6% [7][8] - The Medicaid MCR for Q4 was 93.5%, impacted by unfavorable retroactive premium rate actions, while the full year MCR was 91.8% with a pretax margin of 2.8% [7][21] Business Line Data and Key Metrics Changes - In Medicaid, the MCR for Q4 was 93.5%, and adjusting for retroactive items, it restates to 92.3% with a pretax margin of 2% [19][20] - The Medicare MCR for Q4 was 97.5%, reflecting elevated utilization of LTSS and high-cost drugs, while the full year MCR was 92.4% [21] - The Marketplace MCR for Q4 was 99%, impacted by elevated utilization and prior period claim settlements, with a full year MCR of 90.6% [22] Market Data and Key Metrics Changes - The company secured a historic RFP win in Florida, expected to yield $6 billion in annual run rate premium, complementing previous contract wins in Wisconsin, Georgia, and Texas, representing over $9 billion of Medicaid premium [10][11] - The company anticipates 2026 premium revenue of approximately $42 billion, slightly lower than 2025, driven by new contracts and planned reductions in the Marketplace segment [12][13] Company Strategy and Development Direction - The company aims to focus on dual-eligible members in Medicare, planning to exit the traditional MAPD product for 2027 [14] - The acquisition pipeline contains actionable opportunities, with the company remaining opportunistic about deploying capital for accretive acquisitions [12] - The company expects Medicaid rates and medical cost trends to eventually reach equilibrium, with a forecast for low single-digit margins in Medicaid [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the business despite disappointing 2025 results, citing that the medical cost trend in 2025 was an anomaly [10][17] - The company believes that Medicaid rates are underfunded by 300-400 basis points and anticipates that actuarial soundness will prevail, allowing for target margins to be achieved [17][18] - Management expects 2026 to be a trough year for managed Medicaid margins, projecting a low single-digit margin rather than losses [17] Other Important Information - The company reported a capital foundation remains strong, with a parent company cash balance of approximately $223 million at year-end [23] - The adjusted G&A ratio for Q4 was 6.9%, reflecting disciplined cost management [22] Q&A Session Summary Question: Variance in Medicaid margins across states and potential exit considerations - Management indicated that rates are generally underfunded across the portfolio, and there are no states where an exit is being contemplated [37] - The negative retro adjustments in California were due to situational factors, including a retroactive corridor for undocumented populations and a risk adjustment update [38][39] Question: Adjustments to benefit design in Medicaid - Management noted some sporadic adjustments to benefit design but emphasized that there is no wholesale shift occurring [48] Question: Membership attrition assumptions for 2026 - Management projected a 2% membership attrition, believing that the effects of redetermination are largely over [51][54] Question: Size of Medicaid expansion enrollment and attrition sources - The Medicaid expansion population is about 1.3 million members, with expected attrition of 15%-20% due to new policies [59][60] Question: Potential negative dynamics affecting 2026 guidance - Management acknowledged that while there are potential upside components, they believe rates at 4% are a floor, with no significant downside expected [64]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $6.08 on premium revenue of $10.6 billion for Q1 2025, reflecting strong operating metrics across all lines of business [8][26] - The consolidated Medical Care Ratio (MCR) was 89.2%, indicating effective medical cost management and an improving rate environment [9][26] - The adjusted pre-tax margin was 3.9%, with a 3% after-tax margin, showcasing strong financial performance [9] Business Line Data and Key Metrics Changes - In the Medicaid segment, the MCR was 90.3%, aligning with expectations, with moderate medical cost increases due to high-cost drugs and seasonal illnesses [10][26] - The Medicare segment reported an MCR of 88.3%, consistent with expectations, with medical cost trends adequately captured by rates and risk adjustments [10][27] - The Marketplace segment had a reported MCR of 81.7%, which was higher than expected due to prior year items, but normalized to approximately 77.7% when excluding these items [11][29] Market Data and Key Metrics Changes - The company successfully defended its position in Nevada for Medicaid contracts and was awarded a new contract in Illinois for a dual eligible special needs plan, projecting an incremental annual premium revenue of approximately $800 million [12][13] - The company anticipates achieving premium revenue targets of $46 billion in 2026 and at least $52 billion in 2027 [13] Company Strategy and Development Direction - The company aims to leverage its existing Medicaid footprint to serve high acuity, low-income Medicare beneficiaries, which is proving effective [11] - The acquisition pipeline remains strong, with a focus on capital deployment for accretive acquisitions, increasing embedded earnings from approximately $7.75 to $8.65 per share [14][40] - The company reaffirms its full-year 2025 premium revenue guidance of approximately $42 billion and adjusted EPS guidance of at least $24.50, reflecting an 8% year-over-year growth [15][38] Management's Comments on Operating Environment and Future Outlook - Management believes that any changes to the Medicaid program will be marginal in the near term, with confidence that membership volume and risk pool acuity will remain manageable [17][18] - The recent CMS final rate notice for Medicare Advantage is viewed positively, and the integration of Medicaid and Medicare is expected to benefit the company [20] - The company remains confident in its ability to achieve a long-term EPS growth target of 13% to 15% [24][40] Other Important Information - The company harvested approximately $110 million in subsidiary dividends, with a parent company cash balance of approximately $190 million at the end of the quarter [30] - The company repurchased approximately 1.7 million shares at a total cost of $500 million, maintaining a strong capital foundation [31] Q&A Session Summary Question: Can you expand on risk adjustment and member reconciliation dynamics? - Management explained that member reconciliation involved members who were not authorized to be in the plan, which was a one-time scrub by CMS [46][47] Question: What are the updated assumptions for rates and cost trends? - Management indicated that Medicaid rates were updated in Q1, leading to a full-year rate increase assumption of 5% [56][60] Question: How does the marketplace fit into long-term strategies? - Management emphasized the synergies between marketplace products and government-sponsored managed care, capturing members across various life circumstances [70][71] Question: Is the Washington backdrop impacting state discussions on rate updates? - Management stated that rate discussions are based on actuarial data and are not influenced by political discussions in Washington [78][79] Question: What are the effectuation rates and MLR for new members? - Management reported strong effectuation rates and indicated that MLR for new members is still being assessed due to the high percentage of new membership [82][84] Question: How is G&A progressing this year? - Management noted that G&A is expected to remain flat throughout the year, with a focus on maintaining operational efficiencies [92][93] Question: What is the outlook for Medicaid RFPs and integration? - Management expressed confidence in their competitive position for Medicaid RFPs, particularly with their integrated offerings [129][130]