Sarah James

Asher ruled out a material accounting tailwind and attributed SG&A progress to execution; London separately laid out the data and context investment philosophy.

Drew confirmed Medicare segment Q1 beat but not to the 370bps extent calculated, with both MA and PDP contributing to outperformance. Medicare segment HBR slope should be steeper in 2026 due to PDP being $25B and higher proportion of segment. Has PDP sloping data back to program inception in 2006. Assumed reversion to prior Q2-Q4 assumptions though continuing to drive outperformance.

Sarah explained proactive state engagement since 2024 to push more recent data into actuarial process. Cited Florida CMS Q3 retro as proof point of quick turnaround. Two-year trailing look-back now organically capturing 2024 acuity shifts and 2025 trend. States also open to program reform as proxy for rate where budget pressure exists.

Sarah noted utilization was consistent through Q2 without June-specific acceleration. Attributed behavioral economics dynamic: media coverage of coverage loss fear combined with provider revenue concerns driving higher utilization and coding intensity.

Sarah confirmed year-end projected at high 4M members (vs mid-4M prior). New member utilization consistent with care informing acuity that should flow to risk adjustment.

Sarah cited early-in-year timing. Drew characterized the $4B as future earnings power, too early to quantify 2025 impact. PDP margin target stays at 1%, marketplace well into 5-7.5%.

Marks sized the split (80% exchange migration, 20% Medicaid conversion slowdown) and named two specific drivers behind the Texas conversion weakness.

Sam confirmed February and March were on plan and expressed confidence in 2-3% volume growth for the remaining three quarters.

Mike noted patient balances increasing slightly above historical mid-single-digit range, influenced by exchange growth. Exchange collectability lower but not material. Sam confirmed most uninsured qualify for charity programs.

Sam detailed capital pipeline of $6.2B approved through early 2027, with inpatient capacity additions of 2.5%+. Noted capital allocation between categories is largely unchanged.

Mike provided detailed bridge: lower exchange volume growth (from 44% to ~15%), Two-Midnight Rule benefit not repeating, Medicaid redetermination flattening. Still above long-term guide of 2-3%.

Filton acknowledged the 2.5-3% target has been elusive but maintains it's reasonable long-term. Admits historical inpatient-centric focus missed outpatient shift. Focus now changing with sequential improvement.

Filton clarified the $82M Nevada payment is gross (not net of provider taxes) and relates only to Q1, cautioning against annualizing the gross figure.

Filton confirmed the math requires an above-guide-range step-up in volumes for the remainder of the year to hit full-year targets.

Filton projected 10-12 new freestanding outpatient facilities annually; OUD expansion will be integrated with existing operations and slower to ramp.

Filton outlined strategy focused on freestanding outpatient behavioral facilities, military care specialization, and OUD services integrated with existing continuum.

Mark noted Wakely report supports their view of bronze shift and greater share of new sales but cautioned data is early and does not capture retro cancellations. Did not provide specific bronze/silver split percentages.

Mark confirmed employer group risk declining high single-digit percent from margin discipline. Morgan detailed spectacular ASO year: won 9 of 11 second blue bid opportunities, strong pipeline for 2027-2028, and strong CarelonRx pull-through in upmarket accounts.

Pete confirmed Carelon Services margins slightly below prior year from CareBridge and risk expansion, within expectations. CarelonRx margins lower from strongest growth year including large jumbo accounts.

Mark gave a broad overview of risk adjustment importance and V28 changes but did not provide specific RAAF score onboarding percentages or historical comparisons as requested.

Tim said too early for that level of specificity but no category spiked out as misaligned with expectations. Modest outperformance in government programs is broadly spread. Patrick added Optum Rx saving billions in drug costs and Optum Health programs purpose-built for complex patients.

Noel said no fundamental change to underwriting processes but more respectful of dynamic environment. Schumacher described strengthened forecasting with internal audit review of guidance, strengthened actuarial resource base, and AI-based analytics for earlier signal detection. Hemsley noted third-party experts already used but broadening oversight of judgments and conservativeness.

Witty cited multiple protection layers: IRA inflation penalties, Medicaid best price protections, Optum Rx contractual price protection. Said tariffs should not be significant exposure this year and company would work thoughtfully on next year bids.

Rex cited IRA impacts, more public sector mix, and second year CMS rate cuts as headwinds. Offsets include cyber/South America impacts (~30bps in 2024), trend affordability initiatives, and respectful view of care activity.

Celeste confirmed guide raise driven by CenterWell PCO growth sustainability, pharmacy specialty outperformance, DTC momentum, and better membership. Some Q1 timing items not run-rated.

Celeste explained Stars investments ramped later in Q1, only 10bps MLR impact. Same full-year investment level expected, just shifted to Q2-Q4.

James outlined four conditions for 3% margin: competitive Stars, normalized rates, clinical excellence, and optimized G&A. Acknowledged some will hit in 2026, some after. Celeste added need for more variable cost structure.