Contract Losses Offset
Q: Can core strength offset Virginia and Florida contract losses?
A: Management confirms that the core business's strength will offset earnings losses from Virginia and Florida contract losses. The company estimates a $0.80 earnings headwind from losing these contracts, which will be offset by $0.80 of accretion from new Texas contracts and CHIP reprocurement. Projected improvements in Medicaid and Medicare MCRs by 90 basis points in the remaining quarters also contribute to offsetting any potential earnings drag.

EPS Growth Outlook
Q: Is the 15%-18% EPS growth outlook for 2025 still expected?
A: Yes, management maintains its outlook for 15%-18% EPS growth by 2025, stating that the building blocks haven't changed. They continue to harvest earnings from the existing footprint, leverage operating efficiencies, and capitalize on embedded earnings.

Revenue Targets Confidence
Q: Are you confident in achieving the $46 billion revenue target by 2026?
A: Management feels confident in reaching the $46 billion revenue target by 2026, supported by a $60 billion new contract pipeline, including opportunities in Kansas, Georgia, and Texas. They anticipate continued 13%-15% revenue growth, despite recent RFP disappointments.

M&A Pipeline and Growth
Q: Has there been a slowdown in the Medicaid M&A pipeline?
A: No, management states that the M&A pipeline remains robust with advanced-stage discussions ongoing. They actively pursue both formal processes and bespoke discussions, expecting future deals to contribute to growth.

Medicaid Redetermination Impact
Q: How are Medicaid redeterminations affecting membership?
A: The company expects to lose 600,000 members due to redeterminations but is experiencing a 30% reconnect rate. Special enrollment in marketplace plans has doubled from 12,000-15,000 to 30,000 per month, indicating members are moving from Medicaid to marketplace.

Bright Acquisition Accretion
Q: Has the Bright acquisition changed your view on Medicare Advantage?
A: Management remains confident in achieving $1 of accretion from the Bright acquisition by year three. They improved the MCR from 95% to 87% and reduced G&A expenses from 13% to 8%, resulting in significant operational turnaround.

Rate Adequacy and Acuity
Q: Do you need higher rate increases next year due to acuity?
A: No, management expects rates next year to be actuarially sound and commensurate with medical cost trends. They received acuity-related adjustments in 19 states, representing 95% of revenue, and believe current rates adequately reflect acuity shifts from redeterminations.

Medicare Advantage Margins
Q: What are your margin targets for Medicare Advantage?
A: The company targets mid-single-digit pretax margins for its Medicare business, aiming for MCRs in the 87%-88% range. They focus on dual eligibles, providing opportunities to manage high-acuity, high-dollar members effectively.

Marketplace Strategy
Q: What's your long-term strategy for marketplace growth?
A: Management plans cautious, steady growth in marketplace membership while maintaining high single-digit pretax margins. By investing 300-400 basis points of margin into growth, they achieved 30% membership and 20% premium revenue growth.

ACA Subsidy Expiration Impact
Q: How will expiring ACA subsidies affect exchange membership?
A: The company doesn't expect significant impact if enhanced subsidies expire, as their membership largely consists of low-income, highly subsidized individuals. They anticipate minimal membership loss since they did not significantly benefit from the subsidy enhancements.

Florida Appeal Status
Q: Any updates on the Florida contract appeal?
A: Management is not predicting the appeal's outcome but notes that historical precedent suggests extended discussions in Florida procurements. They consider this the beginning of the process and expect further developments.

Prior Year Development Impact
Q: Was there favorable prior year development affecting earnings?
A: Yes, there was favorable prior year development, which is typical in the reserving process. The company replenished reserves, maintaining 49% days claims payable, and feels adequately reserved with nothing unusual impacting this quarter's earnings.