Molina Healthcare 2026 UBS Global Healthcare Conference

Well, AJ, thanks for having us here, and it is always great to see you. Thanks so much. We outlined on our third quarter earnings call the building blocks to $9.50. That is a starting point. That is not guidance. That is also before the impacts of MLR year-over-year on the Medicaid business. You mentioned uncertainty. I would put it in the category of cautious optimism. But when we look at next year, the two big drivers, the membership impact of OB3, obviously with work requirements and biannual redeterminations, there is some uncertainty around membership. I think the environment for that is probably improved in the last few weeks. Guess we will talk more about that later this morning. But the other one is certainly rates versus trend. For Medicaid, we are coming off a 92.6% in our guidance for 2026. The building blocks to $9.50 assume no change to that for next year.

Any benefit on the MLR line is only upside to the $9.50.

Yeah, so thanks for asking that. The $9 of embedded earnings, just to level set, I do not know how some of our competitors do it, but at Molina, embedded earnings are what we call a new store concept. It is not about changes to the legacy business. It is about new discrete pieces of business that we bring in, typically RFPs and acquisitions, things like that. So the $9 is truly incremental things, not the legacy business. I mentioned we would harvest $4 of the $9 of embedded earnings in 2027, and what that specifically comes from is the Florida CMS Kids contract. In 2026, we expect to lose about $1.50 on Florida CMS Kids. We expect to get that to at least break even in 2027. So that is $1.50. We announced that we would be leaving our MAPD or general issue Medicare business for 2027.

That currently loses $1, so that is a good guy for $1. Then finally, we have become very good at harvesting the leverage in our G&A administration ratios with growth. Next year, we will grow $3 billion from $42 billion to $45 billion of premium revenue. Associated with that, we will drive $1.50 of G&A efficiencies. So that is the $4 that we will harvest in 2027. The remaining $5 is for 2028 and 2029.

Yeah, that is probably a little in the weeds at the moment. I am not ready to give guidance, let alone the seasonality. But AJ, I will make a more broad comment. Typically at Molina, we are a little front-end loaded in our earnings. We are typically anyplace between 55% and 70% front-end loaded across the year. That is not commentary on next year, but typically expect us to be a little front-end loaded.

Yeah, let me walk through explicitly the math to when we say at least $9.50. We start with $5.25, which is guidance for 2026. We add the $4 of embedded earnings I talked about. In addition to that, Marketplace currently loses about $0.75 a share. We expect to at least get that to break even next year, so add another $0.75, you are at $10. When we say at least $9.50, one headwind you have to consider is for 2027, California UIS, or Undocumented Immigration Status members, will go back to fee-for-service due to federal regulation. That will be a $0.20-$0.25 headwind for us, so $10 comes on back to about $9.75. We say at least $9.50.

Well, the natural growth is in our revenue projections.

Okay. Remember, we're going 42 to 45.

The other thing, I'd just remind everybody that $9.50 in the building blocks is before improvement on the MLR.