Craig Jones • Stifel, Nicolaus & Company

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President & CEO Brandon Sim explained that the Medicaid environment remains volatile and that while a rate update has not yet occurred in California, they are in active negotiations with payers to address the rate-acuity mismatch. He noted that a conservative view is already baked into guidance and the 2027 outlook.

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President & CEO Brandon Sim acknowledged the volatility in the Medicaid environment and noted that California has not yet issued a rate update. He explained that Astrana is in active negotiations with payers to resolve the rate-acuity mismatch but has not factored any positive resolution into its guidance or its 2027 financial bridge, indicating a conservative outlook has been baked in.

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CEO Parth Mehrotra outlined a multi-layered value proposition that grows over time. Initially, partners see expense savings and immediate revenue lift from enhanced payer contracts. This is followed by a 10-20% productivity lift as physicians are freed from administrative tasks. Over time, value is compounded through participation in value-based care programs with increasing levels of shared savings. He cited past case studies where practices have doubled their top and bottom lines over 7-10 years with Privia, an unmatched value proposition that drives high retention.

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CFO David Mountcastle estimated that the normalized conversion rate would likely settle in the 70% to 80% range. He noted it would be close to the current 80% guidance but could be slightly lower once the company's NOLs are fully utilized and assuming neutral working capital.

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CFO Scott Blackley explained that Oscar's pricing is built from the ground up to cover all known risks, resulting in significant double-digit increases. He stated that on average, their price changes will be comparable to larger peers. He confirmed "double-digit" means 10% or more and that the increases would be "multiple times" what was seen in the prior year.

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CFO Jeff Schwaneke clarified that such programs are already present in the majority of contracts. The significant change, he noted, is that the dollar value of these incentives is escalating as payers place a higher premium on quality performance, which benefits agilon's model.

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CEO John Kao confirmed that they have seen a higher yield on marketing dollars but declined to quantify it ahead of the Annual Enrollment Period (AEP). He attributed much of the company's growth to word-of-mouth and strong broker partnerships focused on quality. Kao suggested that as the company scales, there is a future opportunity to invest more in brand development to accelerate growth further.

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Executive Robert Freeman stated that historically, Alignment sees approximately 300 basis points of MBR improvement as members transition from their first to their second year. He highlighted this as a significant, multi-year embedded profit opportunity, underscoring the importance of the company's strong member retention.

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