Josh Raskin

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 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 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.

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.