Market Overview - U.S. equity markets experienced a rebound, with stocks rising approximately 1.7%, while small-cap stocks surged by 3.4% [1][3] - Bitcoin saw a significant increase of nearly 12%, reaching $70,000 per coin, after being about $10,000 lower the previous day [2] Sector Performance - The rotation in the market is shifting focus from large-cap tech stocks to sectors such as biotech, electronic components, airlines, trucking, and banks [3][8] - The S&P 500 and NASDAQ indices rose by almost 2%, while the Russell 2000 small-cap index outperformed with over 3% gains [3][4] Earnings Reports - 78.5% of S&P 500 companies that reported earnings exceeded expectations, although this is a decline from previous quarters [5][6] - The mixed reactions to big tech earnings indicate ongoing market focus on these companies despite the broader market rotation [6][8] Investment Strategies - There is a growing interest in diversifying investments beyond large-cap tech stocks into small-cap and cyclical value stocks [16][78] - The market is seeing a shift towards non-U.S. equities, which have gained 7.25% year-to-date, contrasting with a 4.5% decline in concentrated tech names [78][80] Demographic Trends in Real Estate - The senior housing market is experiencing growth due to demographic trends, with a significant increase in the aging population, particularly as baby boomers turn 80 [20][24] - Ventas, a real estate trust, is focusing on acquiring senior housing properties, targeting $2.5 billion in investments, driven by strong demand and limited new construction [24][28] Prediction Markets - The rise of prediction markets is impacting traditional sports betting, with estimates suggesting they could account for about 5% of total wagers [38][42] - Interactive Brokers is positioning itself in the prediction market space, focusing on economic and environmental contracts rather than sports [50][55]

Core Viewpoint - Centene Corporation reported a fourth-quarter adjusted loss despite revenue exceeding Wall Street expectations, primarily due to high costs in the Commercial segment, leading to a more than 6% drop in shares following the announcement [1]. Financial Performance - The company recorded an adjusted loss of $1.19 per share for the quarter, which was slightly better than analyst expectations of a $1.22 loss [2]. - Revenue increased by 23% year over year to $49.73 billion, surpassing the consensus estimate of $48.39 billion [2]. - The consolidated health benefits ratio (HBR) rose sharply to 94.3%, compared to 89.6% in the same quarter last year [2]. Segment Analysis - The Commercial segment had an HBR of 95.4%, which was approximately 100 basis points above company expectations due to net out-of-period items [3]. - The Medicaid segment showed improvement with an HBR of 93.0%, reflecting a 40-basis-point sequential improvement from the third quarter [3]. Future Guidance - For the full year 2025, Centene reported adjusted earnings of $2.08 per share on revenue of $194.78 billion, indicating a 20% increase compared to 2024 [4]. - The company provided guidance for 2026, projecting adjusted earnings per share of more than $3.00, demonstrating confidence in its recovery efforts [4].

Core Insights - Humana Inc. (HUM) is expected to report a loss of $4.01 per share for Q4 2025, with revenues projected at $31.9 billion, indicating a year-over-year revenue growth of 9.2% despite a significant earnings decline of 85.7% [1][2]. Financial Performance - The consensus estimate for Humana's full-year 2025 revenues is $128.9 billion, reflecting a 10% increase year-over-year, while the EPS for the current year is estimated at $17.07, indicating a 5.3% gain year-over-year [3]. - Humana's earnings have beaten consensus estimates in three of the last four quarters, with an average surprise of 7.5% [3]. Earnings Predictions - The current Earnings ESP for Humana is 0.00%, and it holds a Zacks Rank of 4 (Sell), suggesting low odds for an earnings beat this quarter [4]. - The Zacks Consensus Estimate for premiums indicates an 8.9% increase year-over-year, while service revenues are expected to grow by 22.2% [6]. Revenue and Membership Trends - Despite revenue growth, Humana is projected to experience a sharp decline in earnings due to falling insurance and investment income, with medical membership expected to drop by 7.6% year-over-year [7][10]. - The operating income from the CenterWell unit is estimated to grow by 6.4%, while the Insurance unit's operating income is expected to decrease by 9.7% [8]. Cost and Expense Analysis - Total operating costs are anticipated to rise by 7% in Q4, exceeding $31.8 billion, contributing to the expected decline in net income [9]. - The overall benefits expense ratio is projected to worsen to 93.26%, compared to 91.5% a year ago [10].

Core Viewpoint - Centene Corporation's stock declined due to a mixed outlook for fiscal 2026, despite reporting better-than-expected earnings for Q4 2025 [1]. Earnings Snapshot - The company reported a fourth-quarter 2025 adjusted loss of $1.19 per share, which was better than the consensus loss of $1.22 per share, contrasting with an income of $0.80 per share a year ago [2]. - Centene's sales increased from $40.81 billion to $49.73 billion, surpassing the consensus estimate of $48.39 billion [2]. - The health benefits ratio (HBR) rose to 94.3%, up from 89.6% a year ago [2]. Membership and Costs - Total membership across Centene's portfolio decreased to 27.63 million from 28.60 million a year ago, mainly due to a drop in Medicaid membership from 13.00 million to 12.52 million [4]. - Commercial membership increased from 4.81 million to 5.99 million [4]. - The increase in HBR was primarily driven by higher Marketplace morbidity impacting medical costs and program changes in the PDP business due to the Inflation Reduction Act [3]. Management Commentary and Guidance - Centene anticipates adjusted earnings for fiscal 2026 to exceed $3 per share, compared to the consensus of $2.94 [5]. - The CEO stated that the company is positioned for significant margin improvement and renewed adjusted diluted EPS growth, aiming for adjusted diluted EPS greater than $3.00 in 2026 [6]. - The company expects 2026 sales to be between $186.5 billion and $190.5 billion, below the consensus of $193.43 billion, with premium revenues projected between $170 billion and $174 billion [7].

Company Performance - Molina Healthcare Inc. (NYSE:MOH) experienced a significant decline of 29%, marking its worst trading session since 2012, following an unexpected quarterly loss and a weak earnings outlook for 2026 [2] Market Context - Despite the overall rally in Wall Street indices, with the Dow Jones Industrial Average rising nearly 2% to a new all-time high of 49,870 points, small-cap stocks outperformed large-cap indices, as evidenced by the Russell 2000 soaring more than 3% [1] - The S&P 500 and Nasdaq 100 also saw gains of approximately 1.6% [1] Commodity Market - Gold prices increased by 3.8%, reaching $4,960 per ounce, while silver surged by 8% to $77 per ounce, indicating a strong performance in the commodity market [2]

Group 1 - Molina Healthcare (MOH) experienced a significant decline, reaching a nearly six-year low after reporting an unexpected loss due to rising health benefit costs [1] - Centene (CNC) also reported a loss, which was anticipated, indicating challenges within the health insurance sector [1] - Molina expects its Affordable Care Act Marketplace membership to decrease from 713,000 at the end of Q3, highlighting potential issues in enrollment [1]

Roblox - Roblox reported better-than-expected revenue and daily active users, leading to a stock rally of over 10% [1] - The company reported an adjusted loss of 45 cents per share, which was in line with expectations, while revenue was slightly above $2.22 billion [2] - Daily active users reached 144 million, up 69% year-over-year, with fourth-quarter bookings increasing by 63% [2] - For the first quarter, Roblox expects bookings between $1.69 billion and $1.74 billion, indicating strong engagement and platform expansion [3] - The user base is skewing younger, with 35% under age 13 and 38% between ages 13 and 17, which Roblox considers a strategic asset [4] Molina Health - Molina Health shares fell 25% following weak guidance for 2026 and disappointing quarterly results, reporting an adjusted loss of $2.75 per share [5] - The company projected earnings of about $5 per share for 2026, significantly lower than Wall Street's expectations [6] - Molina attributed its challenges to the rollout of a new Medicaid contract and underperformance in its Medicare drug business, indicating a tough year ahead for margins [6][8] Affirm - Affirm's stock rose after reporting better-than-expected results, with EPS at 37 cents per share compared to the expected 30 cents [8] - Revenue reached $1.12 billion, surpassing expectations, and the company experienced strong growth in usage and customer engagement [9] - Gross merchandise volume surged to $13.8 billion, up from $10.1 billion the previous year, with over 40% of growth coming from direct merchant integrations [10]

Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted diluted loss per share of $1.19, contributing to a full year adjusted diluted EPS of $2.08 for 2025, which was slightly ahead of expectations [6][7][38] - The fourth quarter GAAP diluted loss per share was $2.24, including a $389 million net loss from divesting the remaining Magellan business [38] - The company anticipates full year 2026 adjusted EPS to exceed $3, representing over 40% year-over-year growth [8][58] Business Line Data and Key Metrics Changes - Medicaid's health benefits ratio (HBR) improved to 93.0% in Q4, showing a 40 basis points sequential improvement and 190 basis points improvement from Q2 levels [10][40] - The Marketplace segment's HPR was about a point higher than forecasted, with medical cost trends slightly better than expectations in Q4 [42] - The Medicare segment delivered strong results, with Q4 fundamentals in line with expectations, and the company aims for break-even in Medicare Advantage by 2027 [26][27][46] Market Data and Key Metrics Changes - The company closed 2025 with approximately 12.5 million Medicaid members, with expectations of a 5%-6% decline in member months for 2026 [41][51] - Marketplace membership is projected to be around 3.5 million by the end of Q1 2026, down from 5.5 million in December [22][52] - Medicare segment premium revenue is expected to grow by approximately $7.5 billion, driven by the PDP business and membership growth [53] Company Strategy and Development Direction - The company is focused on restoring Medicaid to sustainable profitability while improving quality outcomes for members [9] - Key levers for Medicaid improvement include optimizing networks, implementing clinical programs, and enhancing fraud detection [11][14] - The company is integrating data and AI into operations to enhance efficiency and member experience [32][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was challenging but expressed confidence in the ability to execute against the 2026 outlook, with expectations for margin expansion [36] - The company is proactively engaging with state partners to ensure appropriate rate adjustments and program reforms [99][102] - Management emphasized the importance of data-driven decisions and the need for timely adjustments to rates based on recent trends [100][102] Other Important Information - The company ended 2025 with about $400 million in cash available for corporate use and reduced debt by $189 million, resulting in a debt-to-cap ratio of 46.5% [48] - The adjusted SG&A expense ratio for Q4 was 7.5%, bringing the full year to 7.4%, reflecting continued discipline [48] Q&A Session Summary Question: Medicaid rate expectation for 4.5% - Management explained that the 4.5% rate assumption is prudent, considering the favorable maturation of 2025 rates and ongoing efforts to manage trends [63][65] Question: Trend comparison for Medicaid in 2025 - Management indicated that the 2025 trend was in the mid-6s, with the 2026 assumption reflecting a net trend of mid-4s based on recent performance [67][69] Question: Confidence in exchange member dynamics - Management expressed confidence in margin improvement for exchanges, citing improved visibility and historical data to support pricing strategies [76][78] Question: Membership attrition in Medicaid - Management discussed expectations for continued attrition in membership, considering state eligibility tightening and program changes [88][90] Question: Actuarial soundness lookback process - Management highlighted efforts to shorten the lookback period for actuarial adjustments and the importance of recent data in rate negotiations [96][98] Question: Segment margins in 2026 guidance - Management provided insights into expected margins, indicating opportunities for improvement across all business lines, with specific targets for Medicaid and Medicare segments [105][106]

Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted diluted loss per share of $1.19, contributing to a full year 2025 adjusted diluted EPS of $2.08, which was slightly ahead of expectations outlined in the previous quarter [4][22] - The fourth quarter GAAP diluted loss per share was $2.24, including a $389 million net loss from the divestiture of the remaining Magellan business [22] - The company anticipates full year 2026 adjusted EPS to exceed $3, representing over 40% year-over-year growth [5][32] Business Line Data and Key Metrics Changes - Medicaid's health benefits ratio (HBR) improved to 93.0% in Q4, showing a 40 basis points sequential improvement and 190 basis points improvement from Q2 levels [6][22] - The Marketplace segment experienced a slight improvement in medical cost trends, with Q4 results better than expectations [10][24] - The Medicare segment delivered strong results, with fourth quarter performance in line with expectations, setting a solid foundation for 2026 [15][25] Market Data and Key Metrics Changes - The company closed 2025 with approximately 12.5 million Medicaid members, reflecting slight attrition [23] - Marketplace membership is expected to decline to around 3.5 million by the end of Q1 2026, down from 5.5 million in December [12][29] - Medicare Advantage revenue is projected to be flat from 2025 to 2026, with membership intentionally reduced [29] Company Strategy and Development Direction - The company is focused on restoring Medicaid business to sustainable profitability while maintaining quality outcomes for members [5][7] - There is a strong emphasis on leveraging data and technology, including AI, to enhance operational efficiency and member engagement [18][19] - The company aims to achieve break-even results in Medicare Advantage by 2027, with ongoing improvements in service and member experience [15][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year but expressed confidence in the company's ability to execute against the 2026 outlook [20][21] - The company expects continued margin expansion opportunities while keeping members at the center of its operations [21] - Management highlighted the importance of proactive engagement with state partners to ensure program sustainability and address cost pressures [34][38] Other Important Information - The company ended 2025 with approximately $400 million in cash available for corporate use and reduced debt by $189 million, resulting in a debt-to-cap ratio of 46.5% [27] - The medical claims liability totaled $20.5 billion, representing 46 days in claims payable, a decrease of 2 days compared to the previous quarter [28] Q&A Session Summary Question: Medicaid rate expectation for 2026 - Management explained that the 4.5% rate expectation for Medicaid is based on constructive conversations with state partners and reflects a prudent assumption given the data available [33][34] Question: Trend comparison for Medicaid in 2025 - Management indicated that the 2025 trend was in the mid-6s, and the 2026 assumption of mid-4s is a net trend expectation, considering the elevated baseline and actions taken in the latter half of 2025 [35][36] Question: Confidence in Marketplace margin improvement - Management expressed confidence in margin improvement for the Marketplace segment due to effective repricing and repositioning strategies, as well as favorable membership dynamics observed during open enrollment [39][40] Question: Membership attrition in Medicaid - Management acknowledged slight attrition in membership and discussed the impact of state eligibility tightening and program changes on future membership [43][44] Question: Actuarial soundness lookback process - Management emphasized the importance of shortening the lookback period for actuarial soundness and maximizing the inclusion of recent data in rate adjustments [46][49] Question: Segment margins in 2026 guidance - Management provided insights into expected margins across segments, indicating opportunities for improvement while noting that long-term targets are still being assessed due to ongoing policy changes [51][52]

Molina Healthcare shares plunged about 30% in premarket trading on Friday after the U.S. health insurer forecast 2026 profit at less than half of Wall Street expectations as medical costs rose across ... ...