Hua Ha • Robert W. Baird & Co.

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CFO Scott Blackley attributed the 260 basis point SG&A ratio improvement to technology-driven efficiencies and disciplined expense management, breaking it down into fixed cost leverage (~40%), variable cost improvements (~15%), and lower fees/geography. He described a significant portion as durable. CEO Mark Bertolini declined to quantify fraudulent enrollment but affirmed that Oscar is not changing its long-term targets and is preparing for potential 2026 pricing impacts from regulatory changes.

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CEO Sarah London addressed fraud concerns by highlighting program integrity measures started over a year ago, like the agent of record lock, and noted that observed utilization from new members is a good sign against 'ghost members'. She reiterated the full-year Marketplace margin target of 5% to 7.5%. EVP and CFO Andrew Asher explained the revenue math, noting the $10.1B Q1 premium and full-year guidance of $39B already account for attrition.

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CEO Sarah London and CFO Andrew Asher both emphasized that the company is being prudent by carrying its original assumptions about the impact of these programs into Q1 and Q2 to avoid surprises. They noted the impact has been more muted than anticipated so far, and they are starting the year from a position of strength, but want to see how the next few months play out before changing their outlook.

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CEO Sarah London reiterated that Centene expects to grow in the Marketplace but the primary focus for 2025 is on achieving target margins. CFO Andrew Asher repeated that Q3 was the Medicaid HBR peak, with Q4 benefiting from new rates. He stressed the focus is on matching rates to the new, higher PMPM expense base post-redeterminations.

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CEO Steven Sell described the model as a constructive and flexible approach that payors were receptive to in the current environment. He clarified it's the first year they've used this structure and its future application will be situational, depending on market dynamics. The ultimate goal is to transition these partners to full-risk, potentially as soon as their second year.

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CEO Parth Mehrotra noted that the ACPT primarily impacts newer ACOs, whereas Privia's book is diversified and includes many mature ACOs. He stated that all known trends are factored into their guidance and that their performance ultimately depends on their results relative to the benchmark, a process they have managed successfully for years.

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CFO Susan Diamond confirmed the 80 bps headwind for 2025, noting it was already factored into their membership expectations. CEO Jim Rechtin addressed the Stars question by stating that visibility into performance is limited at this stage, and while the team is making progress, there is still risk. He concluded it was too early to give a definitive answer on the outcome.

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Steve Filton stated that cost management and productivity efforts have resumed post-pandemic, contributing to margin recovery, and the company is now more flexible in adjusting to volume changes. Regarding supplemental payments, he noted New Mexico is not significant for UHS. For California, while the potential is large, the benefit cannot be sized until the state creates a formal allocation plan, which is not expected until next year.

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President and CEO Joe Zubretsky expressed bullishness on the D-SNP business, highlighting its profitability, recent contract wins, and the strategic advantage Molina has under the new CMS integration rule. Regarding PYD, CFO Mark Keim stated that he does not expect a headwind next year. He explained that as the business grows, PYD naturally grows, and it is a continuous part of the business driven by improving payment integrity and fraud, waste, and abuse initiatives.

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