Ryan Langston

Ryan Langston sought clarification on Alignment Healthcare's exposure to chart reviews, specifically if total exposure is 1% of HCC value and if unlinked chart reviews constitute an even smaller subset. He also inquired about the potential for MA brokers to evolve into health navigators, as suggested by a non-competitor, and how the payer-broker relationship might change over time.

Answer

Founder and CEO John Kao confirmed that Alignment's total HCC value derived from chart reviews is approximately 1%, with an even smaller subset related to unlinked chart reviews, emphasizing their minimal reliance on this. CFO Jim Head added that the amount is immaterial. Regarding broker relationships, Mr. Kao reiterated their value for beneficiaries and noted CMS's potential interest in a more FMO-like role. He expressed skepticism about competitors' claims regarding the high cost of distribution (4-6% of premiums) and the efficacy of brokers as health navigators.

Ryan Langston sought confirmation on Alignment Healthcare's limited exposure to chart reviews, specifically the unlinked portion, and asked about the company's view on the evolving payer-broker relationship, including a competitor's strategy to use brokers as health navigators.

Answer

CEO John Kao confirmed that Alignment Healthcare's exposure to total HCC value from chart reviews is approximately 1%, with an even smaller subset from unlinked chart reviews, deeming it immaterial. He expressed value for broker partners and noted CMS's potential interest in a more FMO-like role, while expressing skepticism about competitors' plans to integrate brokers into patient experience as health navigators.

Ryan Langston of TD Cowen asked about the confidence in achieving 20%+ growth in 2026, the expected split between California and other markets, and whether the recent Arizona Star score upgrade allowed for bid adjustments.

Answer

CEO John Kao reiterated confidence in achieving at least 20% growth, viewing it as an opportunity in both California and ex-California markets, not an either/or choice. He emphasized the company's focus on balancing growth with margin expansion. Kao confirmed that following the successful appeal of their Arizona Star Rating, they were permitted by CMS to modify their 2026 bids to reflect the improved rating.

Ryan Langston of TD Cowen asked for clarification on the strong prior year development (PYD), noting a discrepancy in reported figures, and inquired about the drivers of this strength. He also requested Alignment's weighted average rate for 2026 to compare against the previously provided 2025 figure.

Answer

CFO Robert Freeman explained the difference in PYD figures is due to a standard margin pad (~7%) applied to IBNR reserves for compliance, which is not expected to be used. The key figure was a $6 million favorable release, a portion of which is shared with providers. He also stated that Alignment's weighted average effective growth rate for 2026 is approximately 8%, compared to about 5% for 2025.

Ryan Langston inquired about the 3.5-4% behavioral FTE growth in 2025, specific job classes that were difficult to fill, and how this growth translates into the 2-3% behavioral health volume growth outlook.

Answer

CFO Steve Filton explained that behavioral staffing challenges vary by market, affecting different job classes like nurses, therapists, or mental health technicians. The headcount increase in 2025 was a conscious decision to ramp up hiring across the board in markets where vacancies hindered volume growth. Having filled many of these positions, the company has greater confidence in achieving the 2-3% patient day volume growth target in 2026.

Ryan Langston inquired about the 3.5%-4% behavioral FTE growth in 2025, specifically which job classes were most difficult to fill, and how this growth translates into the 2%-3% behavioral health volume outlook for 2026.

Answer

Steve Filton, Executive Vice President and Chief Financial Officer, explained that behavioral staffing challenges vary by market, impacting nurses, therapists, or mental health technicians. He noted that Universal Health Services made a conscious decision in 2025 to ramp up hiring in markets with vacancies, and having filled many of these positions, the company is more confident in achieving the 2%-3% patient day volume growth target in 2026.

Ryan Langston appreciated the commentary on capital deployment but noted that leverage ratios continue to decline despite share repurchase activity. He asked if the company has contemplated additional areas to increase capital spending, absent M&A, or if they are comfortable allowing those ratios to decline further.

Answer

CFO Steve Filton stated that they do not anticipate leverage ratios getting lower than they currently are and are not seeking to spend capital merely to increase leverage. He affirmed that they will continue to invest where compelling returns are expected. Filton noted that leverage ratios have been intentionally kept low due to policy and regulatory uncertainty, and they may be more comfortable increasing leverage levels if certainty improves.

Ryan Langston commented on declining leverage ratios despite share repurchase activity and asked if management is contemplating additional areas for capital spending beyond the new Alan D. Miller Medical Center, or if they are comfortable with the ratios continuing to decline in the absence of M&A or increased spending.

Answer

CFO Steve Filton stated that UHS does not anticipate leverage ratios getting lower and is not looking for ways to spend capital solely to increase them. He emphasized investing where compelling returns can be earned. He noted that leverage ratios have been intentionally kept low due to policy and regulatory uncertainty, and they may be more comfortable increasing leverage levels once more certainty is experienced.

Ryan Langston of TD Cowen requested an update on the Nevada and Las Vegas markets, including volume trends and payer mix. He also asked about the company's capital deployment strategy, particularly regarding share repurchases, given the declining net leverage.

Answer

Executive VP & CFO Steve Filton noted a slight slowdown in Nevada volumes, reflecting some economic softness in the Las Vegas market, but described performance as still very solid. Regarding capital deployment, Filton indicated that the incremental free cash flow from the revised guidance would likely be dedicated to an elevated level of share repurchases beyond the initial $600-$700 million guidance.

Ryan Langston of TD Cowen inquired about the drivers behind the strong performance in salaries, wages, and benefits (SW&B) in the behavioral segment. He also asked if the company might front-load its share repurchases in 2025 given market conditions.

Answer

Executive Steve Filton attributed the strong behavioral labor cost performance to a combination of improved productivity and moderation in both premium pay and wage inflation. Regarding share repurchases, he indicated that while market conditions are a consideration, UHS's approach is typically programmatic and ratable throughout the year rather than attempting to time the market.

Ryan Langston asked about the drivers of strong salary, wage, and benefits (SWB) performance in the behavioral segment and whether the 2025 share repurchase program might be front-loaded.

Answer

Executive Steve Filton attributed the strong behavioral labor performance to improved productivity, moderated wage inflation, and lower use of premium pay as the labor environment has improved post-pandemic. Regarding share repurchases, he stated that while the market is a consideration, UHS's approach is typically more programmatic and ratable throughout the year rather than attempting to time the market.

Ryan Langston from TD Cowen asked if the D.C. supplemental payment benefit includes the new hospital and for thoughts on the increased frequency of legal headlines.

Answer

Steve Filton confirmed the new D.C. hospital will participate in the supplemental program, but the estimated benefit is based on the existing hospital's history, so the new facility represents potential upside. Regarding legal headlines, he noted that while UHS is increasing malpractice reserves due to rising severity, the two large disclosed verdicts are considered extraordinary and are subject to significant appeal activity.

Ryan Langson asked for insight into the organic pickup from the IMS acquisition in Arizona and the broader growth trajectory for larger deals as Privia Health ramps up in new states.

Answer

Parth Mehrotra, CEO of Privia Health Group, stated that Privia Health does not break out specific organic pickup numbers for individual groups like IMS. He noted that IMS was a sizable multi-specialty group, and such anchor groups help accelerate growth through physician referrals. He emphasized that building a large medical group in a new state is a five-year strategy, where initial efforts involve establishing presence, sales teams, and consistent performance, leading to a snowball effect over time.

Ryan Langston asked for a sense of the organic pickup from the IMS acquisition in Arizona and the growth trajectory for larger deals as Privia Health ramps up in new states.

Answer

Parth Mehrotra (CEO, Privia Health Group) stated that Privia does not break out specific numbers for individual groups but noted IMS was a meaningful multi-specialty group. He explained that a sizable anchor group like IMS helps accelerate the 'snowballing' effect, as physicians are the best salespeople. He reiterated that the strategy is a five-year plan to build a large medical group in a state, starting small and building up, with continued expectations for new signings and implemented providers.

Ryan Langston asked for an update on the IMS integration progress, its expected accretion this year, and whether to expect typical second-half seasonality.

Answer

CEO Parth Mehrotra reported that the IMS integration is proceeding well, with the group expected to be implemented on Privia's platform in Q3, leading to Care Margin and EBITDA contributions from Q4 onwards. He stated there is no reason to expect different seasonality this year. CFO David Mountcastle added that they still expect positive EBITDA from IMS in Q4.

Ryan Langston of TD Cowen noted a discrepancy in the 2025 guidance, where provider growth is expected to outpace attributed lives growth (10% vs 7.5%), a reversal from 2024, and asked for the reason.

Answer

CEO Parth Mehrotra pointed out that the guidance for lives has a wide range, with the high end representing 11.5% growth, closer to provider growth. He attributed the potential difference at the midpoint to the law of large numbers and the influence of provider mix, as the company builds multi-specialty groups and attribution is predominantly driven by primary care physicians.

Ryan Langston of TD Cowen asked about Medicare Advantage risk contracting for 2025, inquiring if Privia is seeing more willingness from payers to share risk or create more successful capitated contracts.

Answer

CEO Parth Mehrotra reiterated his differentiated view, stating that the significant MA headwinds will persist through 2025-2026. Consequently, Privia will not massively increase its full-risk capitated book. Instead, the strategy is to grow MA attributed lives through flexible shared-risk arrangements, which he believes is a more sustainable approach than the 'false view' that 100% capitation is necessary for value-based care in MA.

Ryan Langston asked about the expected margin recovery in group MA, the current and projected 2026 percentage mix of group MA membership, and how this potential recovery is reflected in the company's guidance.

Answer

Jeff Schwaneke (EVP and CFO, agilon health) stated that it is too early to determine the final 2026 membership mix but does not anticipate a substantial difference from the previous 17-18% mix. He noted that final membership data would be available towards the end of Q1.

Ryan Langston inquired about the expected margin recovery in group MA, asking for the current and projected 2026 percentage mix, given the last disclosure was around 17-18% midway through 2025. He also asked how this potential recovery is reflected in the company's guidance.

Answer

Jeff Schwaneke (EVP and CFO, agilon health) indicated that it is still early to determine the final membership mix for 2026, but he does not anticipate a substantially different mix from the previously disclosed percentages. He noted that final membership figures would be available towards the end of the first quarter.

Ryan Langston from TD Cowen asked about the key qualifications agilon is looking for in its CEO search and whether the company is considering any partnership exits.

Answer

Executive Chairman Ron Williams detailed that the ideal CEO will have experience in multi-market management, strong relationships with primary care physicians, and a focus on operational rigor. CFO Jeff Schwaneke added that while there are no immediate plans for market exits, the company continuously evaluates the profitability of all its partnerships.

Ryan Langston asked if failure to carve out remaining Part D risk could lead to material membership reductions in 2026 and requested a reminder of the company's group Medicare Advantage membership proportion.

Answer

CEO Steven Sell stated that Part D risk could be managed through other means like risk corridors or higher premium percentages, so it would not necessarily cause membership reductions. He confirmed group MA penetration is about 18%, in line with the national average, and that trends within this population are consistent with the individual MA book.

Ryan Langston asked about the financial impact of an exiting ACO client and the reason for a 100 basis point lower cost trend assumption for a specific cohort.

Answer

CFO Jeffrey Schwaneke stated the exiting MSSP partnership was unprofitable but did not quantify the loss. CEO Steven Sell clarified the 100 bps cost trend reduction from 6.3% to 5.3% is not cohort-specific but reflects the net impact of 2025 payor bid changes, which are expected to lower both revenue and medical expenses.

Ryan Langston asked for the rationale behind exiting only two unprofitable partnerships when data suggests three others remain unprofitable, and if further actions on those partnerships would be considered.

Answer

CEO Steven Sell explained that the decision was based on the 'magnitude of loss' and the 'time frame' to achieve profitability. The two partnerships being exited faced a much longer and more challenging path back to profitability. In contrast, the other three unprofitable partnerships are much closer to breakeven, with several expected to become profitable in 2025.

Ryan Langston asked about the six-day year-over-year increase in Days Sales Outstanding (DSO), seeking clarification on specific payers or denial rates driving this. He also inquired if other geographies in Acadia's portfolio could face similar out-of-state care limitations as seen with New York and Pennsylvania.

Answer

CFO Todd Young attributed the DSO increase to slower payments from two states due to program finalizations, including supplemental payments, which have since started to come in. He noted denials were in line with expectations for Q4 and cash collection is a focus for 2026. CEO Debbie Osteen characterized New York as an outlier regarding out-of-state care limits, stating it's not a general risk for other states, which often lack sufficient resources and rely on out-of-state referrals. Acadia is advocating in New York and diversifying payer mix for impacted facilities.

Ryan Langston asked for an update on conversations with referral sources for underperforming facilities and for more detail on the 'local market pressure' affecting one specific facility.

Answer

CEO Christopher Hunter detailed the strategy for engaging referral sources, which includes facility tours and sharing data on quality investments, patient safety, and strong clinical outcomes. He clarified that the 'local market pressure' at the one specific facility was related to problematic local media coverage that has persisted for years.

Ryan Langston asked about the company's confidence in the near-future repeal of the 80/20 provision, specifically inquiring if this belief stems from direct feedback from CMS or lobbyists.

Answer

Dirk Allison, Chairman and CEO, Addus HomeCare, confirmed that the company has received positive indications from lobbyists and CMS regarding changes to the 80/20 rule, with expectations for a sooner rather than later timeline. He emphasized that while the rule's implementation is years away, a repeal would provide significant clarity and confidence to the industry and investors.

Ryan Langston asked about the company's confidence in the 80/20 rule being repealed in the near future, specifically inquiring if there's any concrete information from CMS or lobbyists supporting this belief.

Answer

Dirk Allison, Chairman and CEO, confirmed hearing positive indications from lobbyists and CMS that the rule is being reviewed for changes, with timing potentially sooner rather than later. He cautioned that while encouraging, it remains subject to change and the rule's implementation is still years away.

Ryan Langston of TD Cowen followed up on labor commentary, asking for the specific reasons why clinical hiring is considered more challenging than personal care hiring.

Answer

President & COO Bradley Bickham clarified that the primary driver of the challenge in clinical hiring is a systemic shortage of nurses, which creates a more competitive labor market. He characterized it as a long-term dynamic but stressed that it is not currently constraining the company's ability to accept patients or impacting volumes.

Ryan Langston of TD Cowen requested details on employee turnover rates by service line and at Gentiva pre-acquisition. He also asked for an update on the integration and performance of the Tennessee Quality Care and Journey Care acquisitions.

Answer

W. Bickham, President and COO, stated that Personal Care turnover is currently between 50-55%, a significant improvement from the COVID era. He reported that Journey Care has performed better than expectations, and Tennessee Quality Care has seen strong traction from implementing the home health-to-hospice bridge program, with admission conversions improving significantly.

Ryan Langston from TD Cowen asked for quantification of Q1 weather impacts, any effect from the flu season, and details on the Personal Care segment's caregiver turnover rate, including how Gentiva compares.

Answer

President and COO W. Bickham acknowledged a negative impact from January storms but did not quantify it, stating he felt good about the quarter overall. He noted no major impact from the flu season. He reported the legacy Addus turnover rate is around 50-55% and expects Gentiva's to be consistent, potentially lower due to its high concentration of preferred (family) caregivers.

Ryan Langston of TD Cowen questioned if the strong personal care rate environment, like the 5.5% increase in Illinois, is a structural shift or if rates will revert to lower single-digit growth post-2025. He also asked about any unusual seasonality in the Gentiva business and the ability to deploy Addus technology before the full EMR integration.

Answer

CFO Brian Poff noted that while some rate increases are now aimed at improving access, the company's high-level expectation is for the overall rate environment to moderate back toward a historical norm, supporting a 3-5% total growth rate. He also confirmed there is no unusual seasonality in the Gentiva business and that Addus plans to quickly deploy its payroll system and caregiver support apps well ahead of the full EMR conversion.

Ryan Langston inquired about Tenet Healthcare's exchange volumes and revenues in Q4 2025 and sought insight into the approval process for pending supplemental Medicaid programs in states like Florida, Arizona, and California.

Answer

EVP and CFO Sun Park reported that in Q4 2025, HIX accounted for almost 7.5% of total admissions and a little over 6-6.5% of total consolidated revenues. CEO Saum Sutaria added that Tenet Healthcare is tracking pending Medicaid supplement program submissions and approvals but has no specific updates to provide at this time. He re-emphasized that the 2026 guidance does not assume any incremental contributions from programs that have not yet received approval.

Ryan Langston asked about Q4 exchange volumes and revenues, and any insights into the approval process for pending Medicaid supplemental programs in states like Florida, Arizona, and California.

Answer

Sun Park, Executive Vice President and Chief Financial Officer, reported that Q4 exchange volumes were almost 7.5% of total admissions and a little over 6.5% of consolidated revenues. Saum Sutaria, Chairman and Chief Executive Officer, reiterated that the guidance does not assume any incremental contributions from programs not yet approved, and there are no specific updates on pending approvals.

Ryan Langston asked about the specific service lines or geographies driving positive ASC volumes and any stronger or weaker hospital service lines in Q3.

Answer

CEO Saum Sutaria noted that USPI's volume growth was driven by higher acuity services (ortho, spine, robotics) and a healthier GI recovery in Q3, as expected. On the hospital side, acuity and net revenue per case remained strong, with trauma and high-acuity emergency visits consistent. The only weaker area was respiratory and infectious disease volumes, potentially signaling a slower start to the respiratory season.

Ryan Langston asked about the specific service lines or geographies driving positive ASC volumes and, similarly, which hospital service lines performed stronger or weaker than expected in Q3.

Answer

Chairman and CEO Saum Sutaria attributed USPI's volume growth primarily to higher-acuity services like orthopedics and spine, alongside a healthier GI recovery in Q3. For hospitals, he noted strong acuity and revenue per case but observed lower respiratory and infectious disease volumes, potentially indicating a slower start to the respiratory season.

Ryan Langston of TD Cowen asked about Salaries, Wages, and Benefits (SWB) performance, questioning if the current low levels represent a new baseline and what opportunities remain for further improvement.

Answer

Chairman & CEO Saum Sutaria explained that the strong performance is the result of sustainable strategies, including effective labor management, improved recruiting, strong nursing school partnerships, and better retention rates. He noted that real investments in nursing and hospital management have created a stable and effective workforce, driving these efficiencies.

Ryan Langston asked about the tight labor management in the first quarter, questioning how much more improvement is possible and what specific initiatives are in place to maintain this level of performance.

Answer

Saumya Sutaria, Chairman and CEO, clarified that further decreasing contract labor isn't necessarily an 'improvement,' as it can be used strategically to open capacity. He emphasized the long-term strategy has been to reduce reliance on contract labor by focusing on recruiting and retaining full-time staff, leveraging nursing school relationships, and returning to a focus on overall SWB inflation rather than just contract labor expense.

Ryan Langston asked for a general idea of how long bounce-back members have been away from Humana and if the previously stated V28 impact of 160 basis points is still in the ballpark given the new growth.

Answer

President of Enterprise Growth David Dintenfass stated that Humana looks back over several years for bounce-back members, with more recent membership forming a larger percentage of the overall. He confirmed that the V28 impact of 160 basis points is still in the ballpark.

Ryan Langston asked for a general understanding of how long bounce-back members have typically been away from Humana, given the higher recapture rate, and whether the previously stated 160 basis point impact for V28 (related to new growth) is still in the ballpark.

Answer

David Dintenfass (President of Enterprise Growth) stated that specific details on how long bounce-back members have been away would not be disclosed, but mentioned that Humana looks back over several years, with more recent membership forming a larger percentage of the close to 30% bounce-back figure. He confirmed that the 160 basis point impact for V28 remains correct and unchanged.

Ryan Langston asked about the decision not to crosswalk group MA members from H5216, questioning if it was due to expected Star rating recovery or other logistical reasons.

Answer

Jim Rechtin, President and CEO, cited a balanced portfolio, member stability for retention, and the Stars outlook as key factors. George Renaudin, President of Insurance, added that Humana is focused on improving group MA margins through renewal cycles, with 91% of current members renewed, and expects solid growth in 2026. Celeste Mellet, CFO, emphasized balancing short-term gains with long-term Stars risk.

Ryan Langston asked about the decision not to crosswalk group MA members from H5216, inquiring if it's related to achieving appropriate STAR ratings for 2028 or other logistical reasons.

Answer

Jim Rechtin, President and CEO, explained the decision was based on having a balanced portfolio, providing member stability for retention, and the outlook on STARS. George Renaudin, President of Insurance, added that they are focused on improving group MA margins through renewal cycles and are making good progress on STARS and margin recovery, expecting solid growth in 2026. Celeste Mellet, CFO, emphasized balancing short-term gains with long-term STARS risk.

Ryan Langston requested more detail on the margin pressure in the Group MA business, its specific drivers, and the expected slope of margin improvement compared to the Individual MA segment, as well as what is assumed for Group in 2025 guidance.

Answer

George Renaudin, President of the Insurance Segment, explained that the Group MA market is less mature and has been impacted by multi-year rate guarantees. While this is changing, it will take time to flow through financials. He stated that margin pressure in 2025 is built into guidance, with improvement expected in 2026 as long-term contracts come up for renewal.

Ryan Langston requested a breakdown of the components within Molina's 5% cost trend assumption, specifically identifying cost categories assumed to be higher or lower, and any swing factors with the widest potential range, either positive or negative.

Answer

President and CEO Joe Zubretsky reiterated that the 5% core trend for 2026 (after removing the 2.5% acuity shift from 2025's 7.5% trend) incorporates significant increases in several categories. These include behavioral health services (9% cohort trend, 18% services trend), pharmacy (13% global trend, 35% for top 10 therapeutic classes), LTSS, skilled nursing facility admits, and professional office visits (up 16% in 2025, with more procedures per visit). He emphasized that these high trends, off a cost base 20% higher than three years ago, are fully loaded into the 2026 numbers, indicating no softening of these assumptions. CFO Mark Keim confirmed that pharmacy, professional office visits, and behavioral health continue to be high but are considered within the 5% outlook.

Ryan Langston asked for a breakdown of the components within the 5% cost trend assumption for 2026, including categories assumed higher or lower, and any swing factors with the widest positive or negative range.

Answer

President and CEO Joe Zubretsky reiterated that the 5% core trend for 2026 follows a 7.5% trend in 2025 (with 2.5% from acuity shift). He highlighted that behavioral health services are trending at 18% (9% for the cohort), pharmacy at 13% (35% for top 10 classes), and professional office visits at 16% in 2025, with increased procedures per visit. He emphasized that these high trends, along with LTSS and SNF admits, are fully incorporated into the 5% projection, which is off a cost base 20% higher than three years ago. CFO Mark Keim confirmed that once the acuity shift is behind, pharmacy, professional office visits, and behavioral health continue to be high but are considered within the 5% outlook.

Ryan Langston asked if states are offering any relief beyond rate adjustments, specifically if there's signaling for changes in utilization management constraints on allowable services, as previously mentioned by Molina Healthcare.

Answer

CEO Joseph Zubretsky stated that program construction, such as benefit changes or eligibility reductions, is not a major factor for the 2026 outlook. While isolated utilization pauses (mostly behavioral) have occurred, most states are returning to full utilization protocols. Benefit changes have been marginal, not significant. States are, however, taking enrollment processes more seriously, leading to a 1% quarterly membership decline. The primary pressure in Medicaid comes from higher utilization by existing members, not acuity shifts from those leaving the program. Program integrity efforts are also ongoing state by state.

Ryan Langston asked if states are offering any relief beyond rates, specifically regarding utilization management constraints on allowable services, and if Molina sees any signaling that this could change over time.

Answer

CEO Joseph Zubretsky noted that states can change programs (reduce benefits, eligibility) but this is not a major phenomenon for 2026. He mentioned isolated utilization pauses (mostly behavioral) but most states are returning to full protocols. Benefit changes are marginal and not significant. He also highlighted states taking enrollment processes more seriously, leading to a 1% quarterly membership decline, primarily from "leavers" who typically have lower MCRs, but the main pressure is higher utilization by "stayers."

Ryan Langston from TD Cowen asked for a 'same-store' comparison of utilization between renewing and new members on the ACA exchanges. He also questioned if achieving long-term targets now relies more heavily on accretive M&A given the pressures in core businesses.

Answer

CEO Joseph Zubretsky noted that, unusually, there was very little distinction in performance between member cohorts this year; all segments ran hotter than expected. He reaffirmed the 'small, silver, stable' strategy for the exchanges. CFO Mark Keim added that despite the pressures, the Marketplace business is still expected to achieve low single-digit pretax margins for the year.

Ryan Langston asked if the uncertain political backdrop is impacting the M&A environment, particularly the willingness of potential targets to engage or the multiples on deals.

Answer

CEO Joseph Zubretsky stated that the challenging environment is actually increasing M&A deal flow, as smaller, single-state plans are struggling. He described the pipeline as "replete with opportunities" and noted the political uncertainty is not a deterrent but may even be a catalyst for consolidation. He expressed high confidence in meeting growth targets via M&A.

Speaking for Ryan Langston of TD Cowen, Christian inquired about Molina's assumptions for Marketplace membership attrition if Advanced Premium Tax Credits (APTCs) are not extended and whether the newest cohort of members might be more or less sensitive to such a change.

Answer

CEO Joe Zubretsky stated that all factors, including potential policy changes, were incorporated into their membership forecast, which assumes a net 4% membership reduction over the course of the year. CFO Mark Keim added that they have high confidence in the quality and stability of their membership due to a high 70% renewal rate and improved program integrity from the agent of record lock, which should mitigate volatility.

Ryan Langston from TD Cowen inquired if any service lines performed better than expected in Q3 to offset pressures. He also asked if the higher behavioral health utilization, previously highlighted in Kentucky, is now a more broad-based trend across other states.

Answer

President and CEO Joe Zubretsky explained that the higher behavioral health trend is indeed a national phenomenon, driven by reduced stigma and pent-up demand, though it was more pronounced in Kentucky due to a specific program change. CFO Mark Keim stated that while there are unique stories in each of their 21 states, he would not cite any specific service lines as having a 'good guy' trend on a national basis.

Ryan Langston asked for clarification on flu vaccination rates in Q4 2025 compared to previous quarters and seasonal trends, and how the flat Medicare Advantage (MA) advance notice for 2027 might directionally impact the growth outlook for 2027.

Answer

Javier Rodriguez, CEO, clarified that current flu vaccination rates are around 80%, with an aspiration to return to 90%+, and noted that Q4 typically sees a seasonal increase in vaccinations impacting RPT and costs. Joel Ackerman, CFO and Treasurer, and Javier Rodriguez, CEO, explained that the ESRD population has its own MA funding pool, which CMS has recognized as underfunded, leading to a 6% increase for 2027, making these patients attractive to MA plans due to distinct reimbursement and coding regimes.

Ryan Langston from TD Cowen sought clarification on whether the flu vaccine commentary indicated an actual change in Q4 vaccination rates versus prior Q4s or merely seasonal trends, and inquired about the potential impact of the flat advance notice for 2027 Medicare Advantage (MA) rates on DaVita's growth outlook.

Answer

CEO Javier Rodriguez clarified that DaVita aims to return to 90%+ flu vaccination rates, currently at 80%, while CFO Joel Ackerman added that flu vaccines typically increase in Q4 over Q3, influencing RPT and costs. Regarding 2027 MA rates, Joel Ackerman highlighted that the ESRD population has its own funding pool, with CMS recognizing prior underfunding, leading to a projected 6% increase for the ESRD population in 2027. Javier Rodriguez further noted that the ESRD MA coding and reimbursement regimes differ, making V28 and rebasing less impactful.

Ryan Langston asked for more specifics on the drivers behind the strong patient care cost performance and its sustainability into the next year. He also inquired about any long-term impact on spending from the recent cyber incident.

Answer

CEO Javier J. Rodriguez attributed the cost outperformance primarily to improved labor productivity, stemming from better teammate retention and more effective training. Regarding the cyber attack, he characterized any incremental long-term spending on security as a 'marginal cost,' stating that while prudent investments have been made, they are not material as the company must constantly innovate against evolving threats.

Ryan Langston from TD Cowen asked how DaVita is maintaining its full-year guidance despite lower treatment volume forecasts, questioning if outperformance in phosphate binders was the primary offset. He also requested clarification on a decrease in professional fees and a gain mentioned within G&A.

Answer

CFO Joel Ackerman explained that the guidance is maintained because two headwinds (lower volume and cyber costs) are offset by two tailwinds (strong Q1 performance and increased profitability from phosphate binders). He clarified that the professional fee decrease and the gain within G&A were minimal, single-digit million-dollar items and not significant drivers.

Ryan Langston of TD Cowen inquired about expected 2025 seasonality for both consolidated results and the IKC business. He also asked about the IKC patient count outlook and the timeline for that segment to reach breakeven.

Answer

CFO Joel Ackerman outlined typical seasonality, with Q1 being the low point for operating income (around 20% of full-year) due to RPT resets, and IKC results being back-half loaded. CEO Javier Rodriguez reaffirmed the company's expectation for the IKC business to reach breakeven in 2026, noting 2025 OI will be flattish to 2024 due to a timing pull-forward of revenue.

Ryan Langston asked about the drivers behind increased Q3 advocacy costs and whether the elevated mistreatment rates from weather were expected to normalize.

Answer

CEO Javier Rodriguez attributed the rise in advocacy costs to initiatives in California, efforts in Washington D.C., and activities related to the inclusion of oral-only drugs in the Medicare bundle. CFO Joel Ackerman explained that mistreatment rates remain elevated versus pre-COVID levels and would be expected to increase seasonally in Q4, even without further storm activity.

Christian Borgmeyer, on behalf of Ryan Langston, asked about Elevance Health's ACA membership at year-end after the annual enrollment period, noting higher national signups despite expiring subsidies, and any notable changes in utilization patterns from this line of business in January.

Answer

Mark Kaye, CFO, stated that Elevance Health is guiding towards at least 900,000 ACA members at year-end 2026, reflecting the expiration of enhanced premium tax credits and intentional exits. Membership is up approximately 10% post-open enrollment, aided by growth in new markets. Trends through open enrollment are largely in line with the broader market, with effectuation rates (member premium payments and lapse behavior) being the key swing factor, expected to become clearer by early April. Gail Boudreaux, President and CEO, added a brief closing remark.

Ryan Langston asked if state partners are explicitly contemplating pulling back on benefits or other non-rate relief initiatives, and if so, the typical implementation and benefit timing for such adjustments.

Answer

Felicia Norwood (President of Government Health Benefits, Elevance Health) confirmed that states are looking at all levers, including program changes and optional medical services, to improve affordability, especially with the end of enhanced FMAP. She noted that implementation generally aligns with the new contract year (January or July) and that Elevance Health is collaborating with states on total cost of care, value-based arrangements, and care innovations.

Ryan Langston asked if Elevance Health's state partners are explicitly considering benefit pullbacks or other relief measures beyond rate adjustments, and the typical implementation timeline and benefit realization for such changes.

Answer

Felicia Norwood, President of Government Health Benefits, confirmed states are exploring all levers, including program changes to optional medical services, due to the end of enhanced FMAP. She stated implementation generally aligns with the new contract year (January or July) and that Elevance is collaborating with states on total cost of care, value-based arrangements, and care innovations.

Ryan Langston asked for clarification on Medicaid trends, noting the seeming contradiction of decelerating cost trend but increasing utilization, and inquired if benefit carve-ins were a factor.

Answer

CFO Mark Kaye clarified that cost trend deceleration was slower than expected due to higher-acuity members remaining after redeterminations. He identified LTSS, behavioral health, and inpatient care as utilization hotspots and updated the trend drivers to one-third acuity and two-thirds utilization/coding. CEO Gail Boudreaux added that benefit carve-ins are not a significant contributor, as rate alignment is typically a timing issue.

Ryan Langston asked for the specific impact of flu and respiratory illnesses on the first quarter MLR and whether these trends differed across the company's various service lines or patient populations.

Answer

Mark Kaye, CFO, stated that while the company had prudently modeled for a flu season similar to pre-COVID norms, Q1 flu-driven costs came in modestly above those expectations. He quantified the impact on the benefit expense ratio as being between 15 and 20 basis points for the quarter. He also noted that flu incidence rates have recently decreased, and no outsized impact is anticipated for Q2.

Ryan Langston of TD Securities asked if Elevance might revisit the acquisition of Blue Cross of Louisiana and inquired about the company's broader M&A priorities for 2025, following recent acquisitions like CareBridge.

Answer

CEO Gail Boudreaux declined to comment on specific M&A possibilities but noted the existing partnership with Blue Cross Blue Shield of Louisiana. Peter Haytaian, President of Carelon, outlined their M&A strategy, which is focused on acquiring capabilities for whole-person health, particularly in areas of specialty trend, pharmacy, and technology to solve healthcare complexity and enhance the patient experience.

Ryan Langston of Cowen asked about the margin profile for the Individual ACA exchange business and the overall Commercial segment, given the expected growth in exchanges for 2025.

Answer

Morgan Kendrick, President of Commercial Health Benefits, stated that the company feels very good about its Commercial business in aggregate. He noted a disciplined approach to ACA expansion over the last 36 months has positioned them well for continued growth and market share gains, with new market expansions expected to align with the company's economic expectations.

Ryan Langston asked about HCA's M&A opportunities, given its strong balance sheet and the potential for smaller hospitals to face detrimental impacts from subsidy expiration and the One Big Beautiful Bill Act. He also inquired about the size of the M&A pipeline, asset types, and capital budget priorities for 2026.

Answer

CEO Sam Hazen noted an acceleration in the outpatient M&A pipeline, with more in-market transactions complementary to existing networks. However, he has not seen significant hospital or tax-exempt hospital M&A opportunities that make financial sense. Hazen emphasized HCA's strong organic investment opportunities in its markets, with hospitals running 73%-74% occupancy and a capital pipeline of almost $7 billion for approved projects. He confirmed an increased capital spending range of $5 billion-$5.5 billion for 2026, focusing on outpatient development and inpatient capacity/capabilities.

Ryan Langston asked about HCA Healthcare's M&A opportunities, specifically if the pipeline for smaller hospitals and health systems is growing due to subsidy expiration impacts, and also inquired about capital budget priorities for 2026.

Answer

CEO Sam Hazen stated that HCA has seen some acceleration in the outpatient M&A pipeline, with in-market transactions complementary to their network. However, he noted no significant opportunities for hospital or tax-exempt hospital acquisitions that make financial sense yet. He emphasized HCA's strong balance sheet and organic investment opportunities in existing markets, with a capital pipeline of almost $7 billion for approved projects coming online through early 2028. HCA is increasing its capital spending range to $5 billion-$5.5 billion for 2026, focusing on outpatient development and inpatient capacity/capabilities.

Ryan Langston asked about the progress of HCA's AI initiatives in revenue cycle, particularly regarding utilization intensity, coding intensity, and the future runway for technology advancements.

Answer

CFO Mike Marks clarified that HCA's coding practices remain consistent and accurate, with case mix index consistent with prior year trends. He noted AI and automation in revenue cycle focus on responding to payer denials and underpayments, and ambient AI documentation tools are being piloted/rolled out to aid physicians.

Ryan Langston with TD Cowen questioned HCA's initiatives and progress in utilizing AI in hospital operations, particularly in the revenue cycle, and the future runway for technology advancements.

Answer

CFO Mike Marks stated that HCA's AI and automation focus in the revenue cycle is on responding to growing denial and underpayment activities. He also mentioned piloting and rolling out ambient AI documentation tools to improve physician documentation completeness and timeliness.

Ryan Langston from TD Cowen asked for an update on commercial contracting for the coming years and whether HCA might increase capital spending to gain share if non-profits become more cautious.

Answer

CEO Sam Hazen reported that HCA is ~80% contracted for 2026 and about one-third for 2027, meeting its targets. On capital expenditures, he noted high occupancy rates and a $5.5 billion project pipeline. While HCA continually evaluates opportunities to accelerate investment, he does not foresee a rapid acceleration of spending at this time but will proceed in the normal course.

Ryan Langston asked about current surgical scheduling trends and whether external factors like tariff risks or declining consumer confidence are affecting patient behavior for elective procedures.

Answer

CEO Sam Hazen stated that HCA does not aggregate forward-looking surgical scheduling data at the corporate level. However, he expressed confidence that the underlying demand for healthcare services remains robust. He expects surgical volumes to align with the company's market share gain expectations, supported by ongoing investments in medical staff, facilities, and technology, and sees no material impact from consumer behavior at this time.

Ryan Langston asked for details on the drivers of strong inpatient surgical growth and whether the decline in outpatient surgical volume was still attributable to Medicaid and uninsured categories.

Answer

CEO Sam Hazen confirmed that inpatient surgical growth was broad-based, with strong performance in neurosciences, orthopedics, general surgery, and vascular. He also affirmed that the outpatient surgery volume decline was driven by a 10% drop in Medicaid cases, while commercial and exchange volumes were up slightly. Consequently, revenue and profitability in outpatient surgery grew due to the favorable payer mix.

Ryan Langston of Northcoast Research asked if the recent severe hurricane activity would alter HCA's long-term capital allocation or M&A strategy, potentially causing a shift away from hurricane-prone regions.

Answer

CEO Sam Hazen responded with a definitive 'no,' stating that the company's portfolio is well-positioned for long-term growth. He provided examples of previously storm-damaged hospitals in Florida and Texas that have since recovered and are performing at higher levels than before the hurricanes, demonstrating the effectiveness of HCA's enterprise disaster response capabilities and investment strategy.

Ryan Langston asked if the revised full-year adjusted EBITDA guidance reduction was primarily driven by issues with a single payer or market, or if it was more broad-based. He also inquired about the performance of non-core assets that were previously noted as dragging performance and the potential to divest them in 2026 or 2027.

Answer

CFO Leif Pedersen clarified that the guidance reduction was more broad-based, mainly due to mid-year settlement adjustments coming in lower than expected (a $21 million impact in Q3), and a smaller portion related to medical cost initiatives being pushed into 2026. He confirmed that P3 is still experiencing headwinds from one specific market in 2025, and that contractual adjustments related to this market are a component of the $120 million-$170 million adjusted EBITDA expansion opportunity targeted for 2026.

Ryan Langston inquired if the guidance reduction was primarily driven by issues with a single payer or market, or if it was more broad-based. He also asked about the performance of non-core assets, specifically if there's an opportunity to shed them in 2026 or 2027.

Answer

Leif Pedersen (CFO, P3 Health Partners) stated the guidance reduction was more broad-based, primarily due to mid-year settlements coming in less than expected and a smaller portion related to medical cost initiatives being pushed to 2026. He confirmed that headwinds from one market are still impacting 2025, but contractual adjustments related to that market are part of the $120-$170 million EBITDA opportunities for 2026.

Ryan Langshon from TD Cowen asked for a breakdown of the revised full-year guidance, questioning the delta between the prior period development and the total reduction. He also inquired about the EBITDA profile of the three performing markets and the potential to exit the one underperforming market.

Answer

CFO Leif explained the guidance revision by starting with the original midpoint of a $15 million loss, adding approximately $18 million for prior period adjustments, and factoring in a $20 to $30 million impact from the underperformance of the Oregon market. CEO Eric Hoffman stated that P3 does not disclose market-by-market EBITDA but affirmed that the company has worked closely with the partner in the underperforming market on structural fixes and is confident in a 2026 turnaround, while reserving the option to take further steps if needed.

Ryan Langston from TD Cowen questioned whether the company was observing the same accelerating negative utilization trends in Medicare Advantage that other public payers had recently highlighted. He also asked for details on the one market that was not yet at breakeven.

Answer

Executive Amir Bacchus responded that, contrary to broader reports, the company is seeing improving trends, with decreasing hospital census volumes and lower utilization. Executive Aric Coffman added that this positive trend is also evident in their ACO REACH business. Executive Leif Pedersen confirmed that the one underperforming market is where the single outlier payer is located. Aric Coffman noted that other payer partners in that same market are not exhibiting the same negative performance.

Ryan Langston from TD Cowen asked about the expected seasonality for 2025 given the changes in Part D risk, and requested elaboration on why the macro environment for Medicare is considered to be improving.

Answer

Chief Medical Officer Amir Bacchus noted that Q1 and Q4 are typically high-utilization quarters, making the early positive trends in Q1 2025 encouraging. He credited this to P3's care model and plan benefit changes like higher ER co-pays. Executive Aric Coffman added that the improving macro environment is primarily due to the rationalization of plan benefit designs from 2024 to 2025, including reductions in supplemental benefits, which is helping to lower utilization.

Ryan Langston asked for a geographic breakdown of the 4.5% medical cost trend, specifically comparing California to other markets. He also sought clarification on whether the 1.02 Medicare Advantage RAF score included Prospect and its expected future trend.

Answer

President & CEO Brandon Sim stated the company is not breaking out trend by geography but noted that ex-California markets are tracking toward profitability goals. He clarified the 1.02 RAF score was for the legacy Astrana business but that Prospect's scores are in line, and the company is not baking in future RAF increases.

Ryan Langston asked for a geographic breakdown of the 4.5% blended utilization trend, specifically comparing California to non-California markets. He also questioned whether the reported 1.02 RAF score included the Prospect acquisition and how that score might trend into 2026.

Answer

President & CEO Brandon Sim stated that the company is not breaking out utilization trends by geography, as the vast majority of revenue comes from California, but noted that its Nevada and Texas markets are tracking toward profitability. He clarified that the 1.02 RAF score was for the legacy Astrana business in Q2 and did not include Prospect, whose RAF scores are in line. The company is not projecting RAF increases going forward.

Ryan Langston asked for a geographic breakdown of the 4.5% blended utilization trend, specifically between California and non-California markets. He also questioned if the reported 1.02 RAF score included the Prospect acquisition and how that score is expected to trend into 2026.

Answer

President & CEO Brandon Sim stated that the company is not providing a geographic breakdown of medical cost trends at this time but noted that non-California markets are tracking toward their profitability goals. He clarified that the 1.02 RAF score was for the legacy Astrana business but that Prospect's scores are in line. Sim added that the company does not bake in future RAF increases and feels its model is insulated from risk model changes.

Ryan Langston of TD Cowen asked if the hospice average daily census (ADC) grew each month during the second quarter and inquired about the company's long-term leverage targets and the potential timeline for pivoting to M&A.

Answer

CEO Barb Jacobsmeyer confirmed that hospice ADC did experience monthly sequential growth throughout the second quarter. CFO Ryan Solomon stated that deleveraging the balance sheet remains a key priority and that the company has not set a specific leverage target that would trigger a pivot to M&A, indicating the focus on debt reduction will continue.

Ryan Langston of TD Cowen questioned the remaining leverage in centralized hospice operations, the potential need for future step-investments to support growth, and the sustainability of the impressive ADC growth trend.

Answer

CFO Ryan Solomon indicated that while significant leverage has been achieved, future needs will likely require only minor incremental investments without materially altering the current margin profile. CEO Barbara Jacobsmeyer affirmed that capacity is managed locally and the growth trajectory is expected to continue. Solomon further noted that hospice RN capacity growth of 16% YoY has outpaced ADC growth of 12.3%, demonstrating their ability to stay ahead of volume demands.

Ryan Langston asked for clarification on how the 49 new payor innovation opportunities and 31 renegotiations factor into the 2025 guidance, and whether they represent potential upside. He also requested a breakdown of the strong hospice revenue per day, seeking to separate the impact of rate increases from hospice cap accrual benefits.

Answer

CFO Ryan Solomon clarified that the 2025 guidance already includes an anticipated $19 million to $21 million revenue improvement from pricing, which covers the CMS final rule and the new national agreement. He stated that the guidance does not assume any material incremental revenue from new payor innovation contracts, suggesting they could offer upside. Solomon also quantified the hospice cap accrual benefit at approximately $1.4 million, noting that when normalized, the remaining rate increase is consistent with Medicare's update.

Ryan Langston questioned the specific tactics driving the positive momentum in hospice business development and asked about Enhabit's capacity to retake UnitedHealthcare volume if a favorable agreement is reached.

Answer

CEO Barbara Jacobsmeyer attributed the hospice success to a combination of expanding the business development team, using data to target referral sources, diversifying referral types, and improving response times with centralized admission departments. Regarding UnitedHealthcare, she explained that resuming volume would be a 'slower turn,' with the immediate benefit of a new agreement being the ability to stop turning away referrals and return to a normal cadence of accepting patients.

Ryan Langston of TD Cowen inquired about the financial and clinical benefits of the Philips ventilator exchange program and sought management's perspective on the new CMS leadership's potential stance on the Durable Medical Equipment (DME) industry.

Answer

COO & Director Todd Zehnder detailed the financial benefits of the vent exchange, noting cash back was generally higher than net book value, and the clinical advantages of receiving new, technologically advanced assets with lower maintenance needs. CEO & Director Casey Hoyt addressed the regulatory question, stating that while the new CMS head's specific views are unknown, the administration's focus on cost-cutting is driving competitive bidding pressure, and the industry is actively educating regulators for a more effective program.

Ryan Langston of TD Cowen inquired about the financial and clinical benefits of the recent ventilator program upgrade with Philips and sought insights into the current administration's perspective on the Durable Medical Equipment (DME) sector, particularly regarding competitive bidding.

Answer

Todd Zehnder, COO & Director, detailed the financial benefits, noting cash back for exchanged vents was higher than book value, and the clinical value of receiving new, technologically advanced assets with lower maintenance needs. Casey Hoyt, CEO & Director, added that pressure for competitive bidding comes from the highest levels of the administration and that the industry is focused on providing feedback to ensure any new program is structured effectively.

Ryan Langston from TD Cowen inquired about the financial and clinical benefits of Viemed's ventilator exchange program and asked for management's perspective on the new CMS leadership's potential stance on the DME industry.

Answer

COO & Director Todd Zehnder detailed the financial gains from the ventilator exchange, noting cash back was generally higher than net book value, and highlighted the clinical advantage of acquiring a newer, technologically superior fleet with lower maintenance needs. CEO & Director Casey Hoyt addressed the CMS question, stating that while the new leadership's specific views are unknown, the administration's cost-cutting focus is driving competitive bidding pressure, and the industry is actively educating regulators.

Ryan Langston of TD Cowen inquired about the financial and clinical benefits of the ventilator exchange program and sought views on the new CMS leadership's perspective on DME and competitive bidding.

Answer

COO & Director Todd Zehnder detailed the financial benefits, noting cash back from Philips for old vents was often above book value, and the clinical value of receiving new, technologically advanced equipment with lower maintenance needs. CEO & Director Casey Hoyt addressed the regulatory question, stating that while the new CMS head's specific views are unknown, the administration's cost-cutting focus is driving competitive bidding discussions. He emphasized the industry's effort to educate regulators for a well-structured program.

Ryan Langston asked for more details on the Lehan's acquisition, including its product mix beyond breast pumps and the key attractions of the asset. He also inquired about any new insights into the potential impact of the current administration and regulatory environment on the business.

Answer

CEO Casey Hoyt explained that Lehan's is a full-line DME with six locations, offering products like rehab equipment and wound care, which helps expand payer contract access. COO Todd Zehnder commented on the regulatory environment, stating it's still early but the administration has been receptive regarding the NCD. He noted no major impacts are expected in 2025 but sees potential long-term positives, while continuing to monitor discussions around Medicaid.

Ryan Langston asked a bigger-picture question about the ability of states to fund necessary Medicaid rate improvements, given their current budget situations and the backdrop of potential federal funding cuts.

Answer

CEO Sarah London explained that states have budget savings from post-redetermination membership declines and are legally required to set actuarially sound rates. She added that state budget pressure has historically been a tailwind for managed care, as states look to move more populations into predictable, cost-saving models, creating growth opportunities for Centene, particularly in complex populations.

Will, on behalf of Ryan Langston from TD Cowen, asked about the long-term outlook for physician recruitment and if there are any new shifts in physician preferences for working in an ASC environment versus hospital employment.

Answer

CEO J. Evans stated that the recruitment environment remains very stable and strong. He explained that Surgery Partners offers physicians greater efficiency, consistent scheduling, and more control over their practice, which is a compelling alternative for surgeons frustrated with the traditional system. He affirmed that interest from independent physicians has not waned.

Ryan Langston inquired about the drivers behind the rapid growth of the EnCircleRx program for GLP-1 drugs, which has grown to nearly 8 million lives in just a few months.

Answer

Evernorth CEO Eric Palmer and CEO David Cordani explained that the growth is driven by intense client interest in managing the affordability of GLP-1s. Cordani added that the program's value proposition resonates because it provides clinical and behavioral support wrappers to address the 'start and stop' dynamic often seen with these medications, aiming for more sustained and effective patient outcomes.