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- **EPS Downgrade**: 2025 EPS revised to $14 (from $19), with Marketplace underperformance (50% of reduction) and Medicaid rate/trend imbalance as key drivers.
- **Marketplace Restructuring**: 2026 rate increases of 15-45%, reduced footprint by 20%, targeting breakeven on $1.5-$2B revenue.
- **Medicaid Margin Outlook**: 2026 baseline MCR of 91.3%, with potential upside from 100bps rate catch-up ($4.50 EPS) and $8.65 embedded earnings pipeline.
- **Balance Sheet Strength**: Parent company cash of $108M, RBC ratios at 340%, and debt-to-EBITDA of 2.5x support growth initiatives.
- **Growth Catalysts**: Georgia/Texas Medicaid wins, Medicare duals expansion, and $54B M&A pipeline targeting low-margin, book-value acquisitions.

**【CEO Summary Section】**
- **Q3 2025 Performance**: Adjusted EPS of $1.84, consolidated MCR of 92.6%, and premium revenue of $10.8 billion. Medicaid MCR of 92%, Medicare MCR of 93.6%, and Marketplace MCR of 95.6% reflect elevated medical cost trends across segments.
- **2025 Guidance Update**: Full year EPS revised to $14 (down from $19), driven by Marketplace underperformance (50% of EPS reduction) and Medicaid rate/trend imbalance. Full year MCR expected at 91.3%.
- **2026 Outlook**: Baseline EPS similar to 2025 guidance ($14), with potential upside from Medicaid rate catch-up (100bps of MCR yields $4.50 EPS) and embedded earnings ($8.65 per share pipeline). Marketplace revenue expected to decline to $1.5-$2 billion but targeted for breakeven margins.
- **Growth Initiatives**: $46 billion 2026 revenue target includes Georgia/Texas Medicaid wins, Medicare duals growth, and M&A pipeline of $54 billion opportunities. Share repurchases ($500M in Q3) reflect confidence in long-term margin targets despite short-term challenges.

**【CFO Financial Commentary】**
- **Q3 Financials**: GAAP net income of $278M, adjusted G&A ratio of 6.3%, and operating cash flow outflow of $237M due to risk corridor settlements. Parent company cash balance of $108M, RBC ratios at 340%, and debt-to-EBITDA of 2.5x.
- **2025 Guidance**: Full year premium revenue of $42.5B, MCR of 91.3%, and EPS of $14. Medicaid pretax margin of 3.2%, Medicare breakeven, and Marketplace negative pretax margin.
- **Capital Allocation**: Prioritized organic growth (Medicaid expansion, Medicare duals) over M&A, with disciplined approach to Marketplace exposure. 2026 G&A ratio expected to rise to 6.8% due to normalized compensation costs.

**【Q&A Highlights】**
- **Marketplace Strategy**: 2026 rate increases of 15-45% (30% average), reduced footprint by 20%, and exit from 50% of top-tier price positions to stabilize risk pool. Target mid-single-digit pretax margins on reduced revenue.
- **Medicaid Rates**: States 300-400bps underfunded, early 2026 rate cycle suggests modest catch-up (50bps above trend). LTSS, pharmacy, and behavioral health trends visible in rating cells support rate adequacy.
- **Embedded Earnings**: $8.65 per share pipeline includes $1 of implementation cost reversal and $0.40 Virginia contract loss. Partial realization in 2026 will depend on trend/rate alignment.
- **Medicare Performance**: MAPD margin improvement offset by FIDE/HIDE conversions. Bright ConnectiCare (MAPD) expected to reach target margins in 2026.
- **M&A Pipeline**: Full $54B pipeline with focus on low-margin, book-value acquisitions in struggling local plans. No plans to exit profitable Medicaid contracts despite industry-wide margin challenges.


Molina Healthcare, Inc. (MOH) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

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Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

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Income Tax Expense

Current Income Tax

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Income Tax Adjustments

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Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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MOH

MOH fundamentals

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