Josh Raskin

Josh Raskin asked about the motivations for payers to cede margin in their Medicare Advantage books during renegotiation efforts, especially given their own goals to increase margins for 2026, and whether the benefit changes for 2026 aligned with P3 Health Partners' recontracting discussions. He also inquired if P3's 2026 contracts are all full capitation and how incentives are aligned for medical management to prevent prior period adjustments.

Answer

CEO Aric Coffman explained that benefit designs varied by geography but met P3's expectations. He noted that payers are motivated by P3's investment in their membership, particularly for high-risk patients, medical expense reduction, and STARS/quality performance. Coffman confirmed that P3's model involves taking full risk (100% capitation), with payers retaining administrative margin and P3 using a percentage of premium to run its business. He emphasized that payer 'skin in the game' relates to their execution outside P3's direct business and hitting plan-related STARS performance. He also mentioned increased cadence of Joint Operating Committee meetings and clearer expectations with payers to improve bilateral accountability and reduce miscommunications.

Josh Raskin asked about the motivations for payers to cede margin in their Medicare Advantage books during renegotiation efforts for 2026, and whether the benefit design changes made by plans were consistent with prior recontracting discussions. He also inquired if P3 Health Partners attempts to have plans participate in potential surpluses or if all 2026 contracts are full capitation.

Answer

Aric Coffman (CEO, P3 Health Partners) confirmed that benefit design changes across geographies met expectations. He explained that payers are motivated by P3's investment in their membership, especially for high-risk patients, medical expense reduction, and STARS/quality performance. Coffman clarified that P3 takes the risk from payers, receiving a percentage of premium, and that the partnership involves bilateral accountability for outcomes, with increased meeting cadence and visibility.

Josh Raskin from Nathron Research inquired about the specific causes of the prior period adjustments, the data exchange processes with health plans to prevent future issues, and the company's confidence in its partners' Medicare Advantage bids for 2026.

Answer

CEO Eric Hoffman attributed the prior period issues to a payer's claims system migration and a data delay from another, noting that improved joint operating committee processes are now in place. CFO Leif detailed the $9 million Q2 adjustment, breaking it down into a 2024 RAF receivable adjustment, a missed quality measure, and a favorable payment integrity program pickup. Leif also confirmed P3 uses its own data alongside plan data for reserves. Regarding 2026, Eric Hoffman expressed confidence based on directional discussions with plans about benefit design and network structure, despite not having final bid information.

Josh Raskin asked about Centene's confidence in managing Marketplace trends, the impact of competitor exits on 2026 risk pool stability, and whether adverse selection could lead to rethinking certain markets or the entire segment.

Answer

Sarah London, Chief Executive Officer, explained that Centene saw an uptick in Marketplace utilization in September, leading to a prudent $75 million additional provision for Q4. For 2026, she detailed that revised rates, averaging in the mid-30%, account for 2025 baseline morbidity, forecasted trend, program integrity rules, and the sunset of eAPTCs, reinforcing confidence in margin recovery. She also noted that advanced premium tax credits prevent a 'death spiral' in the market.

Josh Raskin asked about Centene's confidence in getting ahead of Marketplace trend, the potential impact of competitor exits on 2026 risk pool stability, and if adverse selection could lead to rethinking certain markets or the segment entirely.

Answer

CEO Sarah London explained that Centene's Q4 2025 Marketplace medical expense forecast includes an additional $75 million provision due to an uptick in September utilization. For 2026, revised rates, averaging in the mid-30%, account for adjusted 2025 baseline morbidity, year-over-year trend, EAPTC expiration, and program integrity measures, aiming for meaningful margin recovery. London expressed confidence that Advanced Premium Tax Credits (APTCs) prevent a 'death spiral' and that peers were thoughtful in 2026 pricing.

Josh Raskin sought clarification on the contribution of exchanges to revenue versus admissions and asked about changes in the competitive landscape and valuations in the ASC M&A environment, as well as physicians' perspectives on ASC opportunities.

Answer

Chairman and CEO Saum Sutaria clarified that USPI's exposure to exchanges (volumes or revenue) is proportionally less than in the hospital business. He emphasized USPI's strong position as a partner of choice in the ASC market due to its consistent track record, growth capabilities, and ability to help physicians diversify and grow centers into multi-specialty facilities. Executive Vice President and CFO Sun Park reiterated that HICS represented 8.4% of admissions and 7% of consolidated revenues in Q3 2025.

Josh Raskin sought clarification on the exchange contribution to revenue versus adjusted admissions and asked about changes in the ASC M&A environment, including competitive landscape, valuations, and physicians' perspectives on opportunities.

Answer

CEO Saum Sutaria clarified that USPI's exposure to exchanges, both in volumes and revenue, is proportionally less than the hospital business. Regarding ASCs, he highlighted USPI's multi-dimensional growth platform (de novo, MSO partnerships, diverse service lines) and its position as a partner of choice in the acquisition market. Physicians seek consistent track records, growth ability, and support for diversification and multi-specialty center development. CFO Sun Park reiterated that exchange business represented 8.4% of admissions and 7% of consolidated revenues in Q3 2025, with admissions slightly higher than revenue.

Josh Raskin asked for an updated and more specific view on Optum Health's sub-businesses, inquiring about the revenue base from capitated premiums (including the split between UnitedHealthcare and other payers), fee-for-service billings from employed physicians, and directional membership details for 2026.

Answer

Stephen Hemsley, Chairman and CEO, directed the question to Patrick Conway, CEO of Optum, and Krista Nelson, COO of Optum Health. Patrick Conway detailed that Optum Health's revenue is 65% value-based care (VBC), 15% care delivery fee-for-service, and 20% payer employer services. He noted that two-thirds of the VBC business serves UnitedHealthcare. Krista Nelson reaffirmed commitment to the 6%-8% long-term margin target, with 5% for VBC, expressing optimism for long-term positioning.

Josh Raskin asked for an updated and more specific view on the sub-businesses within Optum Health, particularly the revenue breakdown from capitated premiums (including the portion from UnitedHealthcare) and fee-for-service billings from employed physicians, along with directional membership details for 2026.

Answer

Stephen Hemsley (Chairman and CEO, UnitedHealth Group) directed the question to Patrick Conway (CEO of Optum) and Krista Nelson (COO of Optum Health). Patrick Conway stated that Optum Health's revenue breakdown is 65% value-based care (VBC), 15% care delivery fee-for-service, and 20% payer employer services. He noted that approximately two-thirds of the VBC business serves UnitedHealthcare. Krista Nelson reiterated the commitment to a long-term margin of 6-8% for Optum Health, with 5% for VBC, expressing optimism for 2026 positioning.

Josh Raskin inquired whether Molina Healthcare's early 2026 outlook, similar to the $14 EPS guidance for 2025, represents a new baseline for future growth and embedded earnings realization, or if it's still considered abnormally depressed, implying above-average growth for margins to return to target levels.

Answer

CEO Joseph Zubretsky and CFO Mark Keim clarified that while they expect rates to eventually balance with medical cost trend, they are not forecasting the exact timing. For 2026, they assume rates will be modestly in excess of trend. They emphasized that their long-term margin outlook for Medicaid (4.5%) remains unchanged, and the company's better performance relative to the industry means it needs a smaller rate catch-up. The 2026 outlook implies reduced margins (2% consolidated, 2.5% Medicaid pre-tax) compared to long-term targets, suggesting significant growth potential as the rate cycle normalizes.

Josh Raskin asked if the early 2026 outlook of $14 EPS is considered a new baseline for future growth or if it's abnormally depressed, implying above-average growth for a couple of years to reach target margins across all segments.

Answer

CEO Joseph Zubretsky stated that while the $14 EPS outlook is a jumping-off point, Molina has not changed its long-term outlook on target margins (e.g., 4.5% for Medicaid). He believes rates will rebalance with trend over time, and Molina, needing only a fraction of the rate increase the market needs, will return to target margins. CFO Mark Keim added that the implied 2% pre-tax margin for the company and 2.5% for Medicaid in 2026 are significantly below longer-term targets (4-5% for company, 4.5% for Medicaid), suggesting reduced margins with significant growth potential as the rate cycle normalizes.