The paragraph is an introduction to Molina Healthcare's Fourth Quarter 2024 Earnings Conference Call, hosted by Jeffrey Geyer. It mentions that the call will be in listen-only mode, and a replay will be available later. The earnings release for Q4 and the full year 2024 was distributed the previous day and includes non-GAAP measures and forward-looking statements. Participants include Molina's President and CEO, Joe Zubretsky, and CFO, Mark Keim. The call will discuss 2025 guidance, potential earnings, Medicaid rate updates, acquisitions, revenue growth, and risks associated with forward-looking statements.

The paragraph discusses the financial performance and outlook of a company, with speakers including Joe Zubretsky and Jeffrey Geyer. The company reported adjusted earnings per share of $5.05 for the fourth quarter of 2024, based on $10 billion in premium revenue. Although their performance did not meet expectations, they maintained operational discipline amidst industry challenges. The higher-than-expected consolidated medical cost ratio was due to medical cost pressures in Medicaid and Medicare. For the full year 2024, adjusted earnings per share were $22.65, marking an 8.5% increase from the previous year. The company’s full-year premium revenue was $38.6 billion, reflecting a 19% growth, and their pre-tax margin of 4.3% aligned with long-term targets.

The paragraph discusses the company's financial performance and outlook. Despite their full-year results falling below guidance due to fourth-quarter challenges, they are optimistic about 2025 growth opportunities. In Medicaid, accounting for most revenues, they reported a strong 90.3% NCR, although influenced by new store expenses and a prior California adjustment. The year's medical cost trends showed initial higher costs due to acuity shifts but were managed by various protections. However, later utilization elevated costs beyond rate increases' offset capabilities. In Medicare, they managed an 89.1% MCR amid industry challenges. The Marketplace outperformed expectations with a 75.4% MCR, allowing reinvestment for future growth. The G&A ratio for the year was a commendable 6.7%.

The paragraph discusses the company's strategic initiatives and achievements in 2024 to ensure future growth. It highlights the successful acquisition of Connecticut from EmblemHealth, anticipating $1.2 billion in revenue, primarily from Marketplace. The company won significant contracts, including a Medicaid managed care services contract in Georgia worth an estimated $2 billion annually. Additionally, dual contracts in Ohio, Michigan, Massachusetts, and Idaho are expected to add over $3 billion in revenue, surpassing prior estimates. The company retained critical Medicaid contracts in Michigan, Florida, and Wisconsin, totaling over $2 billion in renewed premium revenue. Although they lost a contract in Virginia, it is under protest and will extend into 2025. Overall, the company is on track to achieve a premium revenue target of $46 billion by 2026 and at least $52 billion by 2027.

The paragraph discusses the company's growth outlook and financial projections for the coming years. Jeffrey Geyer and Joe Zubretsky highlight the company's clear path to achieving growth milestones, with embedded earnings projected to be $7.75 for 2026 and beyond. They note that embedded earnings now represent approximately 30% of run rate EPS, positioning the company well for future growth. The company's 2025 guidance includes projected premium revenue of around $42 billion and adjusted earnings per share of at least $24.50, marking an 8% year-over-year growth. This guidance accounts for $1 of contract implementation costs associated with new contracts, including a major one in Georgia and dual product launches in four states. The Medicaid segment is expected to return to desired performance levels with an 89.9% Medical Cost Ratio (MCR), despite an anticipated elevated medical cost trend in 2025. These earnings assumptions are considered investments with certain near-term value.

The article discusses the financial outlook and strategic positioning of a business, focusing on its flagship unit, Medicare, and Marketplace sectors. The flagship business is slightly below its long-term target but maintains a strong pretax margin. In Medicare, 2025 is seen as a transition year with ongoing utilization pressures and a slight dip below breakeven expected. Despite challenges in rate trends, the long-term earnings outlook remains unchanged. In the Marketplace sector, a 60% premium growth is projected, bolstered by competitive pricing and early enrollment success. The overall business is expected to achieve an earnings per share of $25.50 in 2025, reflecting 13% growth from 2024, with an adjusted EPS guidance of at least $24.50 after accounting for new contract implementation costs.

The paragraph discusses the political and legislative landscape with Republicans controlling Congress and the White House, anticipating two budget reconciliation bills in 2025, and the influence of state legislatures on policy changes. There is uncertainty surrounding potential Medicaid funding cuts, but it's believed any changes will be marginal as both parties aim to avoid increasing the uninsured count or reducing benefits. Despite falling short of fourth-quarter expectations, the company is pleased with its revenue growth and pre-tax margin, meeting long-term target ranges and achieving high embedded earnings. Confidence is expressed in achieving long-term targets due to a solid earnings profile for 2025. The leaders thank their 18,500 associates for their dedication.

The paragraph discusses the financial performance of a company, highlighting its fourth quarter and full year 2024 results. The company reported approximately $10.5 billion in total revenue and $10 billion in premium revenue, with an adjusted EPS of $5.05. The consolidated fourth quarter Medical Cost Ratio (MCR) was 90.2, and the full year MCR was 89.1, due to higher-than-expected medical costs in the latter half of the year for Medicaid and Medicare services. Higher utilization, particularly for Long-Term Services and Supports (LTSS), pharmacy, and behavioral health services, contributed to this trend. Despite these challenges, the company maintained strong operating performance, with the Medicaid MCR slightly above its long-term range and the Medicare MCR reflecting higher outpatient utilization.

In the fourth quarter, the company experienced seasonal impacts from CMS fee schedule increases and risk adjustments, while maintaining a conservative pricing strategy to address rising medical costs anticipated for 2025. Their Marketplace Medical Cost Ratio (MCR) for the full year was lower than their target, allowing reinvestment for growth. The adjusted General & Administrative expense ratio was improved, benefiting from vendor contract renegotiations and one-time items. Financially strong, the company harvested $327 million in dividends, maintained a cash balance of $445 million, completed a Connecticut acquisition, repurchased shares, and issued $750 million in senior notes. With manageable debt levels and consistent claim days payable, they are well-positioned to support future growth.

The paragraph provides an overview of the company's financials and membership growth expectations for 2025. It reports an operating cash flow of $644 million for 2024, influenced by risk corridor payments. The company anticipates significant membership growth in Medicaid and Medicare, with new contract wins and the acquisition of ConnectiCare contributing to this expansion. In Medicaid, the company expects to add over 100,000 members, ending 2025 with approximately 5 million members. In Medicare, the company projects starting 2025 with 217,000 members, increasing to approximately 250,000 by year-end due to organic growth and the acquisition. In the Marketplace segment, substantial enrollment growth and ConnectiCare's acquisition will lead to an anticipated ending of 580,000 members in 2025. The premium revenue guidance for 2025 is around $42 billion, a 9% increase from 2024, driven by growth in their current footprint, acquisitions, and recent RFP wins.

The paragraph discusses the company's 2025 financial guidance, highlighting both growth drivers and headwinds. They expect full-year adjusted earnings of at least $24.50 per share, backed by organic growth, new store earnings, and benefits from a lower share count. However, these gains are partially offset by higher interest expenses and lower investment income. The earnings outlook rises to $25.50 per share, a 13% increase over 2024, but implementation costs for new contracts in Georgia and other states bring adjusted EPS back down to $24.50. The company also provides 2025 MCR guidance, projecting a consolidated MCR of 88.7, with Medicaid MCR at 89.9, noting that rate increases are in line with trends and expecting a full-year rate increase of 4.5%.

The paragraph outlines the company's financial guidance and expectations for 2025. The projected Medicare Medical Cost Ratio (MCR) is 89%, with Marketplace MCR expected at 79%, fitting within the target range of 78-80%. The adjusted General & Administrative (G&A) ratio is anticipated to be 7%, reflecting new business costs and increased Marketplace membership. Normalizing these factors brings the G&A ratio to 6.6%. The effective tax rate is expected to be 25.3%, with an adjusted pretax margin of 4.1% and an average share count of 55.6 million. Earnings are expected to be evenly distributed quarterly. Embedded earnings include $9.25 from new acquisitions and contracts, with $1.50 expected to be realized in 2025, supporting a long-term growth rate of 13-15%. The company expresses confidence in its financial targets and opens the floor for a Q&A session.

In the given paragraph, Andrew Mok from Barclays asks about the factors affecting the Medicaid Medical Loss Ratio (MLR) projected for 2025. The discussion highlights that the MLR guidance for 2025 is expected to remain almost flat compared to 2024, with a projected rate and trend increase of 4.5% from the 2024 baseline. The known and estimated rate increases contribute to this projection. The paragraph notes that the pressures experienced in the second half of the previous year have been factored into the 2025 outlook. Despite being 90 basis points above the long-term MLR range, the team is optimistic about reaching the target with minor rate adjustments. Additionally, it is mentioned that the anticipated benefits from rates, corridors, and trends were neutral, contributing to a 60 basis point shortfall initially expected from the jump-off point.

In this discussion, Joe Zubretsky and other participants address the limited benefits from risk corridors, noting geographic variability affects their effectiveness. Despite expecting a 50 basis point benefit from trend pressure being absorbed by the corridors in the fourth quarter, the outcome was different, largely due to uneven distribution across their 21 states. This geographic discrepancy means that the benefit from corridors can either help significantly or provide no advantage at all. Steven Baxter from Wells Fargo then seeks clarification on the Medicaid Medical Loss Ratio (MLR) for the full year and any lingering fourth-quarter impacts, including those from new initiatives or retrospective adjustments, to better understand the baseline for future guidance.

In the discussion, Jeffrey Geyer and Joe Zubretsky address the Medicaid MCR for the fourth quarter, noting that the trend of service dates surpassed their forecast without any one-time items or retros impacting the results. The increase was attributed to higher utilization in specific populations and areas, such as LTSS, pharmacy, and BH inpatient services. Pharmacy pressures were not only due to GLP-1 medications but also other high-cost therapies. The trend pressure was consistent with the third quarter. In response to a question from Steven Baxter, Joe Zubretsky confirmed the ID and R balance, stating that medical claims payable stood at $4.6 billion and DCP at 48, which was within the expected range. Steven Baxter thanked him for this information, and Jeffrey Geyer then introduced the next question from Josh Raskin regarding market MLR performance in the fourth quarter.

The paragraph features a discussion among executives, including Joe Zubretsky, Jeffrey Geyer, and Mark, about financial performance and projections in healthcare plans. The conversation touches on pressures in Medicare Advantage, especially with the acquired book from Bright, and adjustments for 2025. Marketplace insurance is highlighted as having normal seasonal fluctuations, with a full-year metric of 75% indicating stability and growth opportunities. The company plans to significantly increase its member base and maintain a strong position in its pricing strategy. The executives are optimistic about achieving a 6% pretax margin and a 79% Medical Care Ratio (MCR) next year. Challenges in Medicare, attributed to industry trends and costs like pharmaceuticals and long-term services, are also acknowledged with a reported 93.8% metric.

In the paragraph, the discussion centers on Molina's financial performance and future outlook, highlighting the impact of both inpatient and outpatient services on their medical loss ratio (MLR) and revenue due to risk adjustment processes. They made adjustments, resulting in a one-time revenue decrease. The company is conservatively optimistic about trends for next year, expecting moderate MLR changes and aiming for a slightly higher guidance range. Furthermore, they are focusing on Medicare and highlighted the Bright business turnaround, although not reaching breakeven this year, with expectations of improvement in margins. Looking ahead to 2026, they anticipate margin expansion opportunities in Medicare, particularly with duals and integrated products.

The paragraph discusses the cost trends in Medicaid from 2023 to 2025. In 2024, there was a 6.5% cost trend, with half attributed to an acuity shift due to redetermination and half to high core utilization. The projected cost trend for 2025 is 4.5%, reflecting only core utilization, as the acuity shift won't recur. This is higher than the 3.25% core utilization trend in 2023. The prediction considers various factors and the cost trends in the latter half of the previous year, which are expected to influence rates by about 4.5% in 2025. This projection assumes a stronger trend compared to previous "normal" years, but it is considered a prudent estimate.

In the paragraph, the discussion centers around rate assumptions for 2025, with 75% of the rates known at 5% and 25% estimated conservatively at 2.5%, leading to a weighted average rate of 4.5%. The participants discuss the potential to meet their long-term Medicaid margin goals for 2025, noting that there could be upside potential if rate increases exceed the estimated 2.5%. They also mention that retroactive rate adjustments were not forecasted, although they could offer additional upside opportunities. Justin Lake then inquires about trend rates presented at an investor day, noting a sequential increase of 2.6% in the third quarter and 1.2% in the fourth quarter.

In the discussion, Joe Zubretsky emphasizes a two percent trend rate, suggesting it should be considered in quarterly increments, aligning with the investor day presentation framework. The previous year had a six and a half percent annual trend, but the current annual guidance is four and a half percent. He explains that if the second half of the previous year is taken as a baseline, the trend would be closer to two percent. Justin Lake confirms his understanding might be accurate regarding a fifty basis points quarterly increase. Lastly, Lake asks for more details on a one-time benefit mentioned in SG&A expenses.

In this paragraph, Joe Zubretsky discusses the company's current position in terms of rate adjustments and financial performance. He mentions that the company is operating 100 basis points above their long-term range and suggests that a few rate actions could bring them back to the desired level, which is the high 80s in terms of operating range. Joe indicates that their target is to reach a balance that provides 200 basis points of protection. He also notes that other market participants may be operating at a significantly higher range, and emphasizes the company's confidence in achieving its financial goals without needing multiple rate cycles. Jeffrey Geyer transitions by thanking Joe before introducing the next question from A.J. Rice of UBS.

The paragraph discusses the quarterly financial progression and earnings of a business, particularly focusing on how various factors like startup costs, rate updates, and public exchange business impact the earnings per share (EPS). Joe Zubretsky and A.J. Rice discuss the distribution of EPS throughout the year, noting that unlike being front-end loaded as usual, the EPS will be evenly distributed across quarters this year. This change is attributed to specific accounting of rates and seasonal trends. Additionally, the General and Administrative (G&A) expenses are front-end loaded due to several initiatives that are set to start by January 2026. There is also a minor influence from the carryover of new stores from the previous year.

The paragraph involves a discussion between A.J. Rice and Joe Zubretsky regarding the potential impact of Medicaid reform being considered in Washington. A.J. Rice asks about whether discussions have taken place with states on how they might respond, particularly concerning managed Medicaid. Joe Zubretsky, along with Jeffrey Geyer, explains the focus is on the methods through which reforms might be implemented, like per capita caps or funding match reductions, rather than the budget impact alone. The key concern is how the distribution of funds will change under these potential reforms.

The paragraph discusses challenges and considerations related to managing Medicaid and Medicare. Joe Zubretsky and Jeffrey Geyer discuss the political difficulties of reducing uninsured populations without decreasing benefits, enrollment, or payments to providers, as raising taxes or cutting education budgets are not viable solutions. They conclude that any changes to Medicaid would be marginal. Adam Ron from Bank of America asks about the impact of risk corridors on financials for 2024 and 2025, and inquires about Medicare's Medical Loss Ratio (MLR) expectations. Joe Zubretsky addresses these concerns, noting an increase in membership and a rise in utilization, while expressing comfort despite United's guidance indicating a higher MLR for Medicare.

In the paragraph, Jeffrey Geyer discusses the company's position on risk corridors, noting that their liability remains unchanged year over year, and there is potential for financial upside if performance exceeds forecasts, due to limited corridor protection. He emphasizes the impact on their profit and loss, suggesting that they are not heavily reliant on corridors but can benefit if they outperform. Joe Zubretsky then addresses the Medicare segment, explaining a reported rate of 89.1 for 2024 and adjustments due to exiting the Medicare Advantage prescription drug market in 13 states for 2025. He highlights the impact on medical ratio and various factors affecting their rates and trends, acknowledging challenges in the upcoming year for Medicare business.

In the paragraph, there is a discussion about Marketplace membership attrition and related factors. Ryan Langston from TD Cowen asks about assumptions regarding membership attrition and sensitivities to ATC changes. Joe Zubretsky and Jeffrey Geyer respond by explaining that a 4% monthly attrition rate is projected, considering factors such as SEP membership, natural attrition rates, and FTR. They emphasize the high retention rate and the integrity of their membership, attributing confidence to renewals and program integrity improvements. The conversation then shifts to Michael Hall from Baird, who inquires about the impact of risk adjustment errors on MLR, but the response is not included in the given text.

In the article paragraph, Joe Zubretsky discusses the company's strategy regarding DSNP (Dual Eligible Special Needs Plans) and the outlook for next year. The company is increasing its exposure to DSNP while reducing its exposure to Medicare Advantage (MATV) in thirteen states. Despite some trends and challenges, Zubretsky expresses confidence in their pricing and margins, noting that even with headwinds, the DSNP business remains attractive. He mentions a forward-looking strategy toward 2026 with expectations of growth and a more significant revenue footprint. Michael Hall asks an additional question about the exchange marketplace, and Zubretsky expresses confidence in achieving strong tax margins.

The paragraph involves a discussion on growth expectations and membership retention. Joe Zubretsky explains that their reported numbers already account for factors like attrition, so no additional calculations are needed. He addresses a misleading growth statistic, noting that quarterly growth isn't as high as some claim due to last year's strong performance in the Special Enrollment Period (SEP). Realistic growth from Q4 to Q1 is about half of the cited figure, but it's still significant. With a 70% renewal retention rate and a fluctuation rate in the mid-eighties, there is both growth and stability, giving confidence in maintaining margins.

The paragraph discusses higher-than-normal retention and enrollment rates attributed to increased renewal retention and improved member engagement, resulting in fewer lapses and non-payments. Jeffrey Geyer and Scott Fidel discuss retention and exchange margin expectations, noting retention accounts for about seventy percent of enrollment. Joe Zubretsky explains their strategy of maintaining competitive pricing and managing profit margins to align with regulatory requirements, highlighting their competitive positioning in many regions.

In the discussion, Joe Zubretsky and others outline their confidence in achieving a mid-single-digit margin, supported by stable membership and a focus on renewal, which aids in attaining appropriate risk scores. They plan to invest in growth with a double-digit margin and target a seventy-nine MOR for 2025, purposefully setting rates lower than anticipated trends to drive growth rather than offer rebates. They express optimism about their pricing strategy and project an investment income of around four hundred million, while also focusing on operating cash flow expectations for 2025.

The paragraph discusses the company's financial performance and cash flow dynamics. It highlights that the operating cash flow for 2024 is lower than in 2023 due to changes in accrued corridors and their payment. In 2023, the company accrued significant corridors without much cash payment, while in 2024, there were fewer accruals but significant payments for previous corridors. The CEO, Joe Zubretsky, assures that operating cash flow should generally exceed net income for a growing company, and anticipates improvement by 2025. He emphasizes the importance of cash flow at the parent company level and their effective strategy of transferring cash from subsidiaries to the parent, facilitating better capital deployment. The session concludes with a thank you from Jeffrey Geyer.

This summary was generated with AI and may contain some inaccuracies.