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President & CEO Brandon Sim confirmed Prospect's strong performance was in line with expectations and reiterated the $12-15M synergy target, noting potential upside. He stated that large-scale M&A is paused until leverage targets of below 2.5x are met. Sim characterized Medicaid headwinds as manageable, providing a sensitivity analysis, and confirmed these factors are already considered in their long-term outlook.

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President & CEO Brandon Sim confirmed Prospect's strong first-half performance was in line with expectations. He reiterated the $12-15 million synergy target over 12-18 months but noted potential upside. Sim stated that large-scale M&A is paused until the net leverage ratio is below 2.5x. Regarding policy headwinds, he framed the Medicaid impact as manageable, estimating a potential $10-15 million EBITDA headwind in a hyper-conservative scenario, which would not derail the 2027 target.

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CEO John Kao attributed the low SG&A to a modern, unified data architecture that reduces the need for manual reconciliation, creating a competitive advantage. He noted that investments in streamlining workflows and data quality are paving the way for future AI-driven efficiencies. CFO Jim Head clarified that the $14M final sweep payment was for 2024 and is a normal part of business as the company grows, reflecting a catch-up for new members. He did not comment on specific bid assumptions.

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CFO Robert Freeman explained that while modest Part D favorability and prior period reserve releases contributed, the primary driver of the MLR beat was strong underlying inpatient utilization management, which was better than expected. CEO John Kao added that while the 2026 rate notice is favorable and their relative advantages on Stars and V28 persist, they will not comment on the specific margin versus growth trade-off as they are currently in the bid process, but emphasized they are in a very strong competitive position.

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Executive Robert Freeman confirmed the thesis, stating the tailwinds provide a significant buffer to maintain a 4-star rating and support the goal of reaching 4.5 or 5 stars, widening their competitive advantage. Regarding cohort maturation, he affirmed that the dynamic is proceeding as expected and that the large number of members who joined in late 2024 provides an incremental margin tailwind for future years as engagement continues.

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Executive Robert Freeman clarified that the minor MBR update was due to investments supporting growth and did not affect confidence in the 2025 EBITDA target, as it was offset by SG&A leverage. He noted that a 4-star plan has a 5-10% revenue advantage over lower-rated competitors, which, combined with a relative advantage from the V28 risk model, positions them well for 2026.

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President and CEO James Rechtin declined to comment on any STARS data, citing the quiet period. On membership, he stated that while extreme growth could pose an operational challenge, the company would not turn off growth due to year-one economics and would focus on long-term value. CFO Celeste Mellet added that the timing of growth matters and is factored into guidance.

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CEO Jim Rechtin clarified there was no change in the margin target timeline, which is still 2027, and stated there is no structural impairment to CenterWell's performance from V28. CFO Celeste Mellet explained the GAAP EPS adjustment was due to a complex put/call valuation calculation and did not represent a write-down of assets.

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Executive VP & CFO Steve Filton expressed confidence in the company's ability to be nimble and adjust its business model to mitigate the DPP impacts over the multi-year phase-in period. Regarding work requirements, he noted it's difficult to predict the impact, but stated that on the behavioral side, the company has more optionality to target specific patient groups and that uninsured patients typically find their way to other settings.

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Executive Steve Filton confirmed the disclosed DPP figures in the 10-K are net of provider taxes and largely flow to earnings. He noted the flu season does not typically have a material impact on annual results. While structural challenges may prevent acute margins from fully returning to pre-COVID levels, he expects continued improvement and believes consolidated company margins can recover over the next couple of years.

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Executive Steve Filton confirmed the DPP upside number was reasonable and that such payments typically flow to the bottom line. He stated the flu season does not have a significant earnings impact. On margins, he noted that while structural hurdles make a full return to pre-COVID acute margins difficult, continued improvement is expected, and consolidated company margins should reach pre-COVID levels within a couple of years, aided by the strong behavioral business.

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CEO Sarah London acknowledged the risk and outlined a multi-pronged strategy. This includes developing more digital enrollment and verification processes, leveraging a recent TCPA rule change that facilitates digital outreach, and scaling up existing programs that help members find work. She stressed that these proactive measures, combined with strong state partnerships, are key to maximizing coverage for eligible members.

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CEO Sarah London emphasized that Centene's size and scale will be crucial for managing future policy changes efficiently. She outlined a strategy focused on reducing member friction through digital enrollment and verification, leveraging a recent TCPA rule change that facilitates more digital outreach. She also noted Centene's existing experience in states with work requirements, which provides a foundation for helping members maintain coverage.

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CFO Mark Keim defended the guidance's conservatism by highlighting the significant sequential increase in the normalized Marketplace MCR from 80% in the first half to a guided 86% in the second, a jump that exceeds normal seasonality. CEO Joseph Zubretsky addressed the work requirements, noting that many members will be exempt and that they are working with states to ensure a gradual, manageable process.

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CFO Mark Keim noted that new CMS integrity rules should bolster the Marketplace process, while emphasizing a focus on margin over growth. On integration, CEO Joseph Zubretsky pointed to recent RFP wins in Illinois, Ohio, and Michigan as proof of Molina's strong, truly integrated D-SNP offering. He acknowledged chatter about states allowing more plans but expressed confidence in Molina's competitive platform.

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CEO Steven Sell expressed overall optimism for 2026. He acknowledged the payer's star rating challenge but noted agilon has experience managing this through various mechanisms like increased premium percentages or lump-sum payments. He emphasized that agilon's ability to deliver high quality scores (4.25+ stars) is a key differentiator that provides leverage and opportunities for performance incentives.

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CEO Steven Sell stated that a full claims delegation model is not viable in most of their markets, nor is it supported by their payer partners. Instead, he highlighted the success of their financial data pipeline, particularly the 'big leap' in obtaining census data that provides a two-week lag view on inpatient utilization. He stressed that access to such data is now a prerequisite for partnership, influencing decisions to exit certain contracts or delay onboarding new partners.

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Dr. Saum Sutaria, Chairman and CEO, reiterated that the long-term USPI growth algorithm is roughly half volume and half price/mix, but they don't guide to it annually due to lumpiness. On policy, he noted that recent Medicaid redeterminations may have already addressed some issues, and he expects states to be allies in advocating for funding, which is critical for patient access.

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Chairman and CEO Dr. Saum Sutaria acknowledged the progress on length of stay but cautioned against targeting pre-COVID levels, as the portfolio's rising acuity naturally increases it. He expressed confidence in the durability of inpatient demand into 2025, attributing the strength to both urgent and elective business, as well as a favorable payer mix driven by commercial and significant health exchange growth.

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CFO Scott Blackley confirmed the implied adjusted EBITDA guidance would be around $415 million at the high end and affirmed that the 1.8 million paid member figure bakes in known risks, leaving more potential upside. He noted 'terrific' retention of the SEP cohort, which is expected to have a normalized MLR in 2025. CEO Mark Bertolini added that the risk scores for this SEP population will fully mature in 2025, providing a benefit not fully realized in 2024.

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CEO Mark Bertolini reaffirmed double-digit market growth expectations, driven by Medicaid redeterminations and subsidies, though he noted 15% may now be the high end of the range. CFO Scott Blackley added that known factors support this outlook. On SG&A, Blackley confirmed that improvement is driven by both fixed cost leverage and variable cost efficiencies, and agreed that a low-to-mid-teens ratio is a reasonable long-term floor.

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