Jack Slevin

Jack Slevin asked for the company's perspective on the potential for net margins to inflect going forward, considering the year-over-year increase in Q4 2025 but previous declines due to Medicare rate reductions and labor inflation.

Answer

Chris Reading, Chairman and CEO, stated that modest margin improvement is expected in 2026, with acceleration anticipated in 2027 as the hospital agreements fully kick in. He emphasized the goal is to return margins to levels seen before the Medicare headwinds and other challenges, indicating a forward movement that will gain momentum.

Jack Slevin asked about the MA contracting environment, specifically how payer concessions to value-based players might develop for Privia Health in 2026 and 2027, given payers' efforts to claw back margin while acknowledging the value of PCP-led groups.

Answer

Parth Mehrotra, CEO of Privia Health Group, noted that Privia Health's foresight in the MA environment helped avoid challenges. He reiterated belief in the shared risk model, where doctors, Privia Health, and payers all have skin in the game. He described the MA environment as nuanced, with payers adjusting benefits and lives moving between entities. Privia Health's payer contracting team navigates this by focusing on geography-specific, payer-specific, and risk-pool-specific dynamics. He emphasized the need to compensate physicians for their hard work in managing high-cost populations and delivering results, expressing a forward-leaning approach to taking risk if contracts are favorable.

Jack Slevin inquired about the MA contracting environment, specifically how concessions from payers to value-based players might develop for Privia Health's business in 2026 and 2027, given payers' efforts to claw back margin while acknowledging PCP-led groups' value.

Answer

Parth Mehrotra (CEO, Privia Health Group) stated that Privia's foresight in the MA environment helped them avoid pitfalls, emphasizing belief in the shared risk model. He explained that payer reactions are nuanced and vary by geography, payer, risk pool, and MLR trend, requiring a sophisticated approach from Privia's payer contracting team. He stressed the need for fair compensation for physicians' hard work in managing high-cost populations and delivering results, expressing confidence that the environment will stabilize post-V28 adjustments, positioning Privia well for future risk-taking.

Jack Slevin asked how conversations with potential health system clients are evolving, given the significant headwinds those systems are currently facing.

Answer

CEO Parth Mehrotra explained that while Privia has successful health system partnerships, it's not a core dependency for growth. He noted that Privia's value proposition is helping health systems align with independent physicians in their communities. However, he acknowledged that inherent strategic differences mean Privia is not a fit for every system. The company's primary model works independently and provides a viable alternative for physicians, so they will partner opportunistically where there is a good match.

Asked a two-part question: first, whether the IMS practice currently participates in government risk programs like MSSP or ACO REACH, and second, about fee-for-service utilization trends between primary care and specialists.

Answer

The executive confirmed that IMS does participate in a government risk program (MSSP/ACO REACH). Regarding utilization, he stated that they have seen strong ambulatory use across both PCPs and some specialists, a trend that is reflected in their results and guidance and is expected to continue.

Jack Slevin from Jefferies pointed out that the 2025 guidance seems to imply a drop in Care Margin per provider and asked what scenarios could lead to an upside beat on Care Margin and EBITDA for the year.

Answer

CEO Parth Mehrotra explained the implied trend is predominantly due to the flat assumption for value-based care shared savings in the guidance. He noted that since Privia's take rate on shared savings is 40%, a flat assumption directly impacts Care Margin growth. Better-than-expected performance in value-based contracts would be the primary driver of upside.

Jack Slevin of Jefferies asked two questions: whether CMS's changes to catheter codes related to a 2023 fraud scheme had a material impact on Q3 shared savings, and if the introduction of new passive APCM codes in the physician fee schedule changes Privia's market approach.

Answer

CEO Parth Mehrotra gave a direct response, stating that neither the catheter code changes nor the new APCM codes have a material impact on Privia's MSSP results or its overall approach to the program. He clarified that while Privia has care management programs, it is not a 'call center company' focused solely on hitting specific billing codes.

Jack Slevin asked for clarification on the Q3 and Q4 2025 cost trend assumptions, specifically the drivers behind the acceleration in Q3. He also inquired about the potential actions agilon health might take in 2027 regarding Medicare Advantage (MA) in light of the rate notice and the company's approach to the ACO front, particularly with the new LEAD program.

Answer

Jeff Schwaneke (EVP and CFO, agilon health) explained that Q3 2025 saw higher inpatient stays, including several large claims totaling $6.5 million, leading to an increase in the cost trend to 7.2%. He noted a prudent approach was taken for Q4, setting it at 7.4% due to limited claims visibility, bringing the full-year 2025 trend to 6.5%. For 2027, Mr. Schwaneke stated that agilon health would continue with the same levers as 2026, focusing on contracting, burden of illness programs, and monitoring payer bids and cost trends. Ron Williams (Executive Chairman, agilon health) added that the 10-year LEAD model for ACOs is encouraging, providing a longer planning horizon, and agilon health plans to be actively involved in its development.

Jack Slevin asked for clarification on the Q3 and Q4 2025 medical cost trend assumptions, specifically the acceleration to 7.2% and 7.4% respectively, and the drivers behind it. He also inquired about potential actions for 2027 in Medicare Advantage (MA) given the rate notice and the company's approach to the new ACO LEAD program.

Answer

Jeff Schwaneke (EVP and CFO, agilon health) explained that the Q3 cost trend increase was primarily due to higher inpatient stays, including several large claims, leading to a prudent increase in Q4 assumptions. Ron Williams (Executive Chairman, agilon health) described the ACO LEAD program as an encouraging 10-year model that provides a longer planning horizon and reinforces CMS's commitment to value-based care, positioning agilon well.

Jack Slevin of Jefferies sought confirmation that while the turnaround plan is underway, key decisions on market exits or portfolio sizing would wait until after 2026 payer bid details are finalized. He also asked about ACO REACH performance.

Answer

CFO Jeff Schwaneke confirmed that payer economics are a critical component of future decisions but stressed a new operational urgency to act on performance data more quickly. He also stated that the ACO REACH business performed in line with expectations during the quarter and continues to be a strong contributor.

Jack Slevin sought clarification on the 50 basis point impact from the 2 Midnight Rule and asked if there was a tailwind from supplemental benefit changes in 2025.

Answer

CFO Jeffrey Schwaneke confirmed the 50 bps estimate for the 2 Midnight rule is for the full year and incorporates its ramp-up. He noted that while total supplemental benefit dollars are lower in 2025 due to payor bid changes, agilon remains at-risk for them. CEO Steven Sell added that reducing this risk, similar to Part D, remains a key long-term priority.

Jack Slevin asked for the magnitude of the negative financial impact from Part D on medical margin and EBITDA, particularly looking back at 2023.

Answer

CEO Steven Sell acknowledged that Part D has a negative impact but declined to provide a specific number. He emphasized that the key issues are not just the underlying cost performance but also the significant data lag and lack of visibility. This challenge is driving the company's strategy to mitigate exposure through mechanisms like carve-outs and risk corridors in partnership with payers, who recognize the limited control physicians have over these costs.

Jack Slevin inquired about the 2026 guidance, specifically the EHR implementation process and its cost implications on G&A and EBITDA drop-through, and the KPIs or hurdle rates for evaluating organic growth versus M&A opportunities.

Answer

CFO Ryan McGroarty explained that the EHR implementation cash usage ($20M-$30M) will mostly be adjusted through EBITDA or capitalized, with any P&L impact reflected in 2026 guidance. He noted that 2025 G&A growth was unusually low, and the 2026 G&A growth rate (13% against 15% revenue growth) allows for operating leverage while investing in growth. CEO Dave Bourdon added that M&A decisions are guided by financial discipline (multiples, hurdle rates), with downmarket opportunities for geographic expansion being most attractive.

Jack Slevin questioned the 2026 guidance, specifically the G&A stacking and lower EBITDA drop-through, seeking details on the EHR implementation process and associated cost considerations. He also asked about the KPIs and hurdle rates for evaluating organic growth versus M&A opportunities.

Answer

CFO Ryan McGroarty explained that the EHR implementation cash usage ($20M-$30M) would largely be adjusted through EBITDA or capitalized, with the P&L impact reflected in 2026 guidance. He noted that 2025 G&A growth (7%) was unusually low, and the 2026 implied G&A growth (13% against 15% revenue growth) allows for operating expense leverage while supporting growth investments. CEO Dave Bourdon reiterated financial discipline for M&A, focusing on specific EBITDA multiples and hurdle rates, with downmarket opportunities for geographic expansion being most attractive, while organic growth is preferred in existing strong markets.

Jack Slevin expressed that the size of the strike revenue was disorienting and asked for a level set on expectations for the 2026 base scenario, the Q1 guide excluding strike revenue, and the general trajectory of the business compared to earlier in the year, specifically regarding margins.

Answer

CFO Brian Scott stated that the overall view for the year remains similar to prior expectations, with underlying business trends consistent. He noted that the Q1 guide, when excluding labor disruption, aligns with consensus. CEO Cary Grace emphasized the strategic importance of strike support for clients and its positive impact on cash flow and leverage reduction. She highlighted that successfully managing these large, simultaneous events validated AMN Healthcare's investments in automation and technology, boosting confidence in its ability to deliver in high-demand environments. Brian Scott added that the accelerated deployment of AI tools during these events is transferable to the core business, enhancing recruiting and operations.

Jack Slevin of Jefferies asked for clarification on AMN Healthcare's overall business trajectory and margin expectations for the year, particularly when excluding the significant labor disruption revenue, and how this aligns with earlier projections for 2026.

Answer

Brian Scott, Chief Financial and Operating Officer, stated that the overall view for the year remains consistent with earlier expectations, despite the unprecedented Q1 labor disruption events. He emphasized good conviction in the growth strategy and positive trends across most businesses. Cary Grace, President and CEO, added that the magnitude of the strike events significantly impacts cash flow and leverage ratio, and successfully managing these simultaneous events while supporting core business validates AMN's platform and automation investments, boosting confidence for future demand. Mr. Scott also highlighted accelerated AI tool deployment during strikes, which is transferable to core business operations.

Jack Slevin from Jefferies requested clarification on the margin impact of labor disruption revenue in the Q1 guidance and asked about expectations for free cash flow conversion.

Answer

CFO and COO Brian Scott clarified that labor disruption revenue does not have a materially different margin profile; its main effect is on revenue and EBITDA flow-through, with segment mix being a larger margin driver. He also affirmed that a free cash flow conversion rate in the 60s range remains a good benchmark for modeling purposes.

Jack Slevin inquired about the variable compensation expense in Q4 2025, its impact on earnings, and whether the new physician stock-based compensation structures are intended to smooth this dynamic in future years. He also pressed for clarification on any embedded assumptions regarding ACA exchange or subsidy impacts on volumes in the 2026 guidance, and how the flat pricing assumption balances against potential downside from exchange issues.

Answer

CEO Mark Ordan explained that various factors contributed to Q4 operations, without specific parsing, and clarified that the new physician programs are primarily for alignment, not smoothing effects. He noted that quantifying ACA exchange impacts is difficult due to many variables, and the 2026 guidance assumes metrics consistent with 2025. CFO Kasandra Rossi added that the flat pricing assumption is not tied to exchanges but reflects an average of 2025 trends, which included some favorable payer mix.

Jack Slevin inquired about the variable compensation expense in Q4 and its impact on earnings, drawing parallels to 2021. He also asked if the new physician stock-based compensation structures are intended to smooth out future variable comp dynamics. Additionally, Mr. Slevin sought to understand how potential exchange or ACA subsidy impacts are factored into the 2026 guidance, particularly regarding payer mix and pricing assumptions.

Answer

CEO Mark Ordan explained that Q4 operations were influenced by various factors, without specific parsing for variable comp. He clarified that the new physician alignment programs are primarily driven by fostering a strong mutual bond and shared responsibility, not by smoothing compensation effects. Regarding guidance, Mr. Ordan stated that the company assumes 2025 metrics will continue into 2026, acknowledging the difficulty in quantifying potential ACA subsidy impacts due to many variables. CFO Kasandra Belraoui added that the flat pricing assumption for 2026 is not tied to exchange issues but reflects an average of 2025 trends, including incremental favorable payer mix and strong RCM collections.

Jack Slevin from Jefferies asked for more detail on potential hospital contract wins and whether an acceleration in outsourcing could be expected. He also requested clarification on the run-rate for practice supplies expense and the specific drivers of Q1 NICU volume growth.

Answer

Executive Mark Ordan attributed potential contract wins to a renewed focus on being the best partner for hospitals in women's and children's services, which he believes will drive growth. CFO Kasandra Rossi confirmed the current level of practice supplies expense is a good run-rate post-dispositions and detailed that the 2% NICU day growth was driven by a ~2% increase in births and a slight increase in length of stay.

Jack Slevin questioned the 2025 guidance, noting that after adjustments it seemed to imply headwinds like wage inflation would offset core growth. He also asked about the potential impact of increased IVF activity.

Answer

CEO Mark Ordan clarified that the conservative guidance reflects general caution about uncertainty in the healthcare provider space and the broader economy, rather than a specific negative trend. Regarding IVF, he acknowledged it is a 'possible tailwind' and a 'potential strong sales' driver but confirmed it is not yet incorporated into financial forecasts.

Jack Slevin of Jefferies inquired about the financial modeling for the portfolio restructuring plan, specifically the Q4 revenue impact and the timing of the expected EBITDA benefit. He also asked about the potential long-term revenue or EBITDA opportunity from the now-stabilized RCM system.

Answer

CFO Kasandra Rossi explained that the portfolio restructuring is backloaded, with most of the impact needed to reach the $200 million revenue exit target occurring in Q4. She stated that about one-third of the expected $30 million in annualized EBITDA improvement will be realized in 2024, with the rest in 2025. Regarding the RCM, Rossi noted it is too early to quantify future financial benefits, as the 2024 focus was on a successful and non-disruptive transition.

Jack Slevin asked for more details on the encouraging double-digit application growth at Chamberlain, the typical lead time for these applications to translate into enrollment, and whether the rebound is expected in the second half or specifically around the fall cycle. He also questioned the scenario for Adtalem to meet or exceed the high end of its revenue guidance, given the projected second-half revenue improvement.

Answer

Chairman and CEO Steve Beard explained that Adtalem addressed marketing effectiveness and enrollment funnel conversion gaps at Chamberlain through process and personnel changes, noting positive early indicators like increased application volumes. He emphasized the fall cycle's importance and expressed confidence in a recovery trajectory, expecting flat total enrollment for the balance of the fiscal year but a return to positive year-over-year growth by the fall cycle. For revenue guidance upside, Mr. Beard indicated it would likely stem from a quicker-than-anticipated recovery at Chamberlain and potential acceleration in the Med Vet segment, as Walden is already performing optimally.

Jack Slevin from Jefferies asked about the lead time for Chamberlain's double-digit application growth to translate into enrollment, the effectiveness of recent operational changes, and the potential scenarios for Adtalem to meet or exceed its full-year revenue guidance.

Answer

Chairman and CEO Steve Beard explained that Adtalem addressed marketing effectiveness and enrollment funnel conversion gaps at Chamberlain through process and personnel changes, noting positive early indicators in application volumes. CFO Bob Phelan added that while total enrollment is expected to be flat quarter-over-quarter for the balance of the fiscal year, they anticipate a return to positive year-over-year total enrollment growth by the fall cycle. Mr. Beard indicated that exceeding revenue guidance would likely stem from a quicker recovery at Chamberlain or accelerated growth in the Med+Vet segment.

Jack Slevin asked for a long-term perspective on growth drivers, questioning what major initiatives, such as expansion into Allied Health or more health system partnerships, Adtalem is considering to maintain its above-average growth. He also had modeling-focused questions about the pacing of investments and the strategy for share buybacks.

Answer

Chairman & CEO Steve Beard highlighted the robust and growing secular demand for professionals in their current core areas (medicine, nursing, veterinary, behavioral sciences), which provides a long runway for growth within the existing portfolio. CFO Bob Phelan addressed the modeling questions, noting that margins are seasonally lower in Q1 and that a one-week academic calendar shift will boost Q2 results at the expense of Q3. Beard added that investments will continue across their strategic pillars, timed for optimal impact throughout the year.

Jack Slevin of Jefferies inquired about Adtalem's performance relative to its fiscal 2026 targets set at the 2023 Investor Day, given recent outperformance. He also asked for commentary on potential impacts from legislative proposals in Washington D.C. concerning student loans and accountability regulations.

Answer

Chairman and CEO Stephen Beard acknowledged that Adtalem is pacing ahead of its Investor Day targets and plans to recalibrate long-term goals at the next Investor Day in early 2025. Regarding Washington D.C., he stated that while it's too early to comment on specific proposals, the current environment is generally positive for career-focused education with a high return on investment, which is Adtalem's focus.

Jack Slevin asked if China's anti-involution campaign impacted Mettler-Toledo's industrial business, given worsening macro data intra-quarter, and sought granularity on core industrial activity. He also inquired about the evolution of onshoring conversations, particularly among pharma customers, following recent Most Favored Nation (MFN) deals.

Answer

Patrick Kaltenbach, Chief Executive Officer, explained that China's anti-involution policy primarily targets overcapacity in sectors like solar and steel, which are not large markets for Mettler-Toledo. He noted the company's industrial portfolio focuses on automation and digitalization, allowing it to compete well and achieve growth in Q3. Regarding onshoring, Mr. Kaltenbach reiterated that it's in the very early stages, taking time to build new manufacturing sites and labs. He emphasized Mettler-Toledo's focus on collaborating with customers during the planning phase to implement advanced automation and digitalization solutions, rather than MFN discussions being a primary customer concern.

Jack Slevin inquired about the impact of China's anti-involution campaign on Mettler-Toledo's industrial business, noting that macro data seemed to worsen intra-quarter but the company appeared largely unaffected. He requested additional granularity on core industrial activity. He also asked how onshoring conversations, particularly among pharma customers, have evolved in the past 45 days with improving commentary around MFN and other issues.

Answer

Patrick Kaltenbach, CEO, explained that China's anti-involution policy primarily targets overcapacity in sectors like solar and steel, which are not large markets for Mettler-Toledo since they exited heavy industrial infrastructure. He stated their industrial portfolio focuses on automation and digitalization, which drives productivity and led to Q3 growth, allowing them to outperform the underlying market. Regarding onshoring, Mr. Kaltenbach reiterated that Mettler-Toledo is in the very early stages, with pharma customers now focusing on addressing re/onshoring opportunities and commitments to the U.S. government, rather than MFN topics.

Jack Slevin, on behalf of Brian Tanquilut, asked for more color on pharma spending trends within the MSO assets, including growth rates and recent movements, particularly regarding deeper penetration in non-oncology specialties.

Answer

CEO Jason Hollar noted broad specialty growth across various therapeutic areas. He highlighted that MSO assets have diverse revenue streams, with drug spend representing approximately one-third of MSO revenue. He reiterated the company's MSO priorities in autoimmune, neurology, and oncology, which exhibit strong underlying volume and revenue growth.

Jack Slevin asked for more detail on pharma spending or drug spending growth rates within Cardinal Health's MSO assets, particularly in non-oncology specialties, as deeper penetration in these areas is core to the MSO thesis.

Answer

CEO Jason Hollar noted broad specialty growth across various therapeutic areas. He clarified that MSO revenue streams are diverse, with drug spend representing about one-third, complemented by visit-related revenue. He highlighted autoimmune, neurology, and oncology as priority areas exhibiting strong underlying volume and revenue growth, expressing satisfaction with the team's progress and investments in specialty lines.

Jack Slevin asked for commentary on Medicare Advantage plan bids for 2026 in Astrana's key markets, particularly California. He also inquired about the unique dynamics of the California health insurance exchange and the potential impact of expiring subsidies.

Answer

President & CEO Brandon Sim stated it was too early to comment on specific 2026 MA bids but expressed overall bullishness on the MA line of business due to scale and cost management. Regarding the exchange, he differentiated California as a more stable, state-based market with less fraud, positioning the company to manage potential headwinds from subsidy changes, given its limited exposure of under 5% of membership.

Jack Slevin asked for commentary on what Astrana is observing from managed care companies regarding their 2026 Medicare Advantage bids in California. He also requested a higher-level perspective on the unique dynamics of the California health exchange market and the potential impact of expiring subsidies.

Answer

President & CEO Brandon Sim responded that it is too early to comment on specific 2026 MA bids but reiterated a bullish outlook on the MA business. Regarding the exchanges, he highlighted that California is a unique, state-based market with less fraud, which may mitigate some negative impacts. He stated that while an expiring subsidy would be a headwind, it is considered manageable given the company's limited exposure of less than 5% of membership.

Jack Slevin asked for commentary on what Astrana is observing from managed care companies regarding their 2026 Medicare Advantage bids in California. He also inquired about the outlook for California's unique health insurance exchange market, particularly if federal subsidies expire.

Answer

President & CEO Brandon Sim responded that it is too early to comment on specific 2026 MA bids but reiterated a bullish outlook on the MA business, citing the company's care model and increased scale. Regarding the exchange market, he noted that California's state-based exchange is more stable and has less fraud than others, and while the loss of subsidies would be a headwind, the impact would be manageable given that the exchange business is less than 5% of revenue.

Jack Slevin, on behalf of Brian Tanquilut from Jefferies Financial Group Inc., asked about the potential for margin expansion in the GLP-1 drug category as more competition enters the market over time.

Answer

EVP & CFO James Cleary reiterated that GLP-1s are currently minimally profitable for Cencora despite driving top-line growth. He acknowledged that with more market competition, the category could eventually move to a more normalized fee-for-service model and become more profitable. However, he clarified that this potential shift is not something the company is anticipating or building into its financial plans for the upcoming fiscal year 2026.

Jack Slevin, on for Brian Tanquilut, pressed for more detail on tariff risks, specifically asking about the potential for a timing mismatch or 'air pocket' where procurement costs rise before reimbursement rates adjust. He also asked for clarification on whether recent clinic expansions were traditional infusion suites or advanced practitioner centers.

Answer

CFO Michael Shapiro downplayed the risk of a severe timing lag, noting that many procurement contracts have static prices for interim periods and that the company's robust balance sheet could be used to soften any volatility. CEO John Rademacher clarified that the clinic strategy is focused on expanding the number of 'chairs' available to patients, with new facilities capable of supporting both traditional and advanced practitioner models.

Jack Slevin asked if the gap between strong order growth and actual volumes could persist long-term and questioned how the company is balancing share buybacks against M&A, especially with a lower stock price.

Answer

CEO John Martins asserted that the gap between orders and filled volumes must eventually close, as hospitals need the staff to prevent burnout and patient diversion. CFO William Burns clarified that while they will remain opportunistic with buybacks, his comments were meant to signal a potential moderation from Q3's level to preserve 'firepower' for strategic M&A and other investments, especially as ABL availability fluctuates with receivables.

Jack Slevin inquired about the gap between strong order growth and resulting volumes, asking if this dissonance could persist. He also asked about the balance between share buybacks and M&A, considering the current stock price and market multiples.

Answer

CEO John Martins asserted that the gap between orders and filled volumes must eventually close, as hospitals require the staff to prevent burnout of their core employees and avoid diverting patients. CFO William Burns clarified that the commentary on reduced buybacks was to manage expectations after a larger Q3 repurchase and to preserve capital for strategic flexibility, including M&A, though the company will remain opportunistic with its buyback program.

Asked for clarification on the 2024 MER outlook, assumptions about prior year development (PYD), the 2024 strategy for growth and risk assumption, and Q4 seasonality.

Answer

The company believes improved data integration via its CareOptimize platform will significantly minimize future PYD. The 2024 strategy is confirmed to be a measured approach, focusing on capital-light de novos and profitable membership over aggressive growth. For Q4, the company acknowledges seasonal tailwinds from stop-loss and Part D, but the guidance includes a cushion for potential risks like PPD.