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 [4][5][18] - 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% [5][6][19] - The Medicaid MCR for Q4 was 93.5%, impacted by unexpected retroactive premium rate actions, while the full year MCR was 91.8% with a pretax margin of 2.8% [5][19] 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% [5][19] - 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% [19][20] - The Marketplace MCR was 99% for Q4, impacted by elevated utilization and prior period claim settlements, with a full year MCR of 90.6% [20] 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] - The company anticipates 2026 premium revenue of approximately $42 billion, slightly lower than 2025, driven by the new Florida CMS contract and higher revenues in Medicare, offset by a planned reduction in Marketplace [11][27] 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 [12] - The acquisition pipeline contains actionable opportunities, with the company remaining opportunistic about deploying capital to accretive acquisitions [11] - The company expects to achieve a low single-digit margin in Medicaid, with confidence in the long-term outlook for the business as rates and trends are expected to reach equilibrium [16] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the 2025 results but remains confident in the operating platform as the rate environment returns to equilibrium [5][16] - The company believes the medical cost trend in 2025 was an anomaly and anticipates a moderation in Medicaid cost trends for 2026 [12][16] - Management highlighted that every 100 basis points on the Medicaid MCR is worth nearly $5 per share, indicating significant potential for margin recovery [16] Other Important Information - The company reported a capital foundation remains strong, with a parent company cash balance of approximately $223 million at year-end [22] - The adjusted G&A ratio for Q4 was 6.9, reflecting disciplined cost management [20] Q&A Session Summary Question: Is there a large variance in Medicaid margins across states, and are there any states where the company is contemplating an exit? - Management indicated that rates are generally underfunded across the portfolio, and there is no state where an exit is being contemplated [34][36] Question: What were the drivers of the negative retro adjustments in California? - Management explained that the adjustments were event-driven, related to the undocumented population and a risk adjustment update in L.A. County [36][37] Question: Are states allowing adjustments to benefit design? - Management noted that some states are reintroducing tighter utilization controls, but there is no wholesale shift in benefit design [41][47] Question: What is the company's assumption for membership attrition in 2026? - Management projected a 2% membership attrition, offset by new members from the Florida contract, and believes the redetermination effects are largely over [49][50] Question: How does the company view the trend assumptions for 2026? - Management expressed confidence in a 5% trend for 2026, citing that core trend includes various factors and is based on historical data [71][74]