Molina Healthcare Inc

Good day and welcome to the Molina Healthcare 3rd Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Jeffrey Geyer. Please go ahead.

Good morning and welcome to Molina Healthcare's third quarter 2026 earnings call. Joining me today are Molina's president and CEO, Joseph Zubretsky, and our CFO, Mark Keim. A press release announcing our third quarter 2026 earnings was distributed after the market closed yesterday and is available on our investor relations website. Shortly after the conclusion of this call, a replay will be available for 30 days. The numbers to access the replay are in the earnings release. For those of you who listened to the rebroadcast of this presentation, we remind you that all of the remarks are made as of today, Thursday, October 22, 2026, and have not been updated subsequent to the initial earnings call. On this call, we will refer to certain non-GAAP measures. Reconciliation of these measures with the most directly comparable GAAP measures can be found in the earnings release. During the call, we will be making certain forward-looking statements including, but not limited to, statements regarding our 2026 guidance and expected segment performance, rates and medical cost trend, the implementation and performance of the Florida CMS contract, our preliminary 2027 premium and earnings outlook and related building blocks, marketplace pricing, footprint, and program integrity initiatives, Medicare STARS and DUALS performance, Medicaid work requirements and re-verifications and associated medical costs, our RFP awards and implementation timing, our long-term financial targets, and the amount and realization of embedded earnings. Listeners are cautioned that all of our forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in our Form 10-K Annual Report filed with the SEC, as well as our risk factors listed in our Form 10-Q and Form 8-K filings with the SEC. After the completion of our prepared remarks, we will open the call to take your questions. I will now turn the call over to our Chief Executive Officer, Joe Zubretsky. Joe?

Thank you, Jeff, and good morning. Today, I will discuss several topics. Our third quarter results, our reaffirmed full year 2026 guidance, and our preliminary 2027 premium and earnings outlook. Let me start with our third quarter performance. Last night, we reported adjusted earnings per share of 89 cents on $10.5 billion of premium revenue. Our 92.9% consolidated MCR reflects solid operating performance as we continue to navigate a challenging medical cost environment. We produced a 0.6% adjusted pretax margin in the quarter and 1.1% year to date. In Medicaid, the business produced an MCR of 93% in the third quarter. The result was in line with our expectations as rate updates largely offset a slight increase in medical costs. In Medicare, We reported a third quarter MCR of 93%. Results were in line with our expectations as our duals business performed well, giving us a very positive start for our duals focused Medicare strategy. In Marketplace, the third quarter MCR was 92.5% and in line with our expectations. The result includes the impact of the latest CMS program integrity initiatives which was not material. Turning now to our 2026 guidance. Our full year 2026 premium revenue guidance remains approximately $42 billion. We also reaffirmed 2026 adjusted earnings guidance of at least $5.25 per share. Our full year guidance on the medical cost ratio and G&A ratio is unchanged. In Medicaid, our full year MCR guidance remains 92.9%, unchanged from our prior guidance. We increased our full year rate outlook from 4% to 4.5% due to the combination of off-cycle and on-cycle rate updates in the third and fourth quarters. We also increased our full year medical cost trend outlook from 5% to 5.5% to account for slightly elevated utilization Thank you very much. The temporary imbalance between rates and trend is gradually being corrected. Our Medicaid business is expected to contribute approximately $5.75 per share for the full year. The legacy Medicaid business is projected to achieve a 1.6% pre-tax margin for the full year, a strong result given the current rate environment. In Medicare, Full-year MCR guidance remains 92.2% and the segment is expected to contribute approximately 25 cents per share. Within the Medicare segment, the duals product is core to our Medicare strategy and expected to produce a pre-tax margin of 1.4% and earn $1.25 per share this year. We expect a loss of $1 per share in our MAPD business which we are exiting for 2027. In Marketplace, full-year MCR guidance remains 90%. The segment is expected to produce a loss of approximately 75 cents per share, a result which, due to our reduced footprint and pricing strategy for 2027, is not expected to recur. Our embedded earnings. The earnings contribution from known backlogged revenue remains at $9 per share. Now, some updated commentary on the outlook for 2027. Our 2027 premium revenue is expected to be at least $45 billion. We now expect the new Medicaid contracts in Georgia and Texas to be delayed from our previously expected implementation dates, which delays Thank you for joining us. later in 2027 or in 2028. The preliminary 2027 earnings per share building blocks sum to more than $9.50 per share from known items and do not yet assume any improvement in the legacy Medicaid or Medicare MCRs at this very early stage. Mark will elaborate more on the building blocks, but let me offer a few high-level comments on the Medicaid rate and Tren environment. With respect to rates, our January 1st renewal cohort represents 55% of full year premium. We know draft rates on 80% of this cohort and they average approximately 7%. When we combine those known January 1 rates with the carryover of rates from late 2026, we know the rates on 70% of our full year 2027 premium. These known rates along with an estimation of rates we do not yet know provide an early indication that overall 2027 rate increases may approximate 6%. Several dynamics give us confidence in the continuation of stronger rates. States will continue to incorporate more recent medical claims data into the baseline period when setting rates and states are expected to grant prospective rate adjustments in anticipation of acuity shifts caused by the implementation of work requirements. With regard to medical cost trend for 2027, we project medical cost trend in a range of five and a half to 6%, which at this early stage includes 50 basis points of conservatism. Using the upper end of the trend range, we take the early view that rates should at a minimum capture trend for 2027 and our legacy Medicaid MCR should at least be flat year over year with the potential for margin improvement. We will update this view in our initial 2027 guidance in February. In Medicare, our duals business is building on strong 2026 performance as we look to grow profitably. We are pleased with our 2027 bids and our supplemental benefits are competitive in most of our markets. In Marketplace, we will reduce our footprint to seven states, but will maintain adequate scale in each market. This will ensure we enter 2027 with risk scores commensurate with the acuity of the retained population. Finally, we remain bullish on our RFP pipeline. Recall, we just implemented the $6 billion Florida CMS contract, which is off to a great start. Among the near-term prospects, we submitted a bid on the Texas Star Kids program, a process which is on hold in the state. We have also submitted bids in Missouri and Arizona, and our bid for Indiana will be finalized very soon. In total, these RFPs represent approximately $26 billion of the $90 billion total opportunity that we highlighted at our investor day. We have great confidence in favorable RFB award outcomes. 2027 will also be the first year in which our industry is impacted by work requirements and biannual re-verifications. States continue to prepare for the implementation of federal work requirements and more frequent eligibility verifications. In Nebraska, an early adopter, the rollout of work requirements is in the very early stages, but progressing in line with our initial expectations. We are working closely with all our state partners on readiness and administrative execution of work requirements. Most of our states are selecting policies that should limit disenrollment, such as the use of certain ex parte reviews, flexible medical or hardship exemptions, and allowing self-attestations. The ultimate timing and impact on membership will vary by state, and the phased approach that states are taking will delay some disenrollments to 2028. We continue to expect membership reductions to emerge gradually and to produce a minor acuity impact, all of which is contemplated in our 2027 premium outlook and the 2029 targets we presented at our investor day. In summary, we are pleased with our third quarter results in this challenging environment and reaffirm full year guidance of at least $5.25 per share. We are also pleased that without yet counting on any improvement in legacy Medicaid margins, our preliminary 2027 building blocks reached more than $9.50 per share of adjusted earnings. With the apparent plateauing of medical cost trend, which remains at elevated levels, and the strength of recent rate updates, we believe we are likely observing the beginning of the turn in Medicaid margins. With that, I will turn the call over to Mark for some additional color on the financials. Mark?