Molina Healthcare (MOH) 25 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the Molina Healthcare Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jeffrey Geyer, Head of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Molina Healthcare's Second Quarter 2024 Earnings Call.

Molina's Keim. CEO, are our Zubretsky; today Mark CFO, me President Joe and and Joining

release our is replay access press conclusion available the release. Investor A for announcing earnings website. are of market distributed earnings Relations The replay closed in after this was XX call, the yesterday will after days. the and Shortly available a our second on the quarter be XXXX to numbers

remind you those Thursday, of we call. For has you this are subsequent remarks earnings to who July updated the to and today, all rebroadcast the that made of listen XXXX, not of the been initial of presentation, as XX,

On quarter reconciliation can GAAP this non-GAAP measures certain measures XXXX will found directly measures. to in the comparable earnings of be call, release. second A with we refer these the most

we but including, revenue our guidance, adjustments, acquisitions call, strategy, M&A projected and forward-looking the our not and and growth, redetermination, our limited realization. will and medical expected growth be our certain XXXX and future statements activity, earnings related Medicaid RFP rate power awards embedded regarding initiatives earnings Medicaid making statements, our long-term our During cost recent to, MCR,

open our to SEC. as remarks, as your completion risk the will subject cautioned to risk cause Form the our SEC factors of XX-K forward-looking are listeners to listed the review the our in advise filings XX-Q take that well to materially our Listeners our current X-K uncertainties discussed certain Form After from annual filed our statements all and differ are call prepared questions. risks the report results with of that could actual expectations. our We we and Form factors with in

the call Executive to I Officer, Joe will Chief Zubretsky. Joe? now our turn over

provide updates line which highlighted second Thank guidance, earnings with you, growth and for our Today, XXXX our $X.XX profitable of results financial expectations. at and $XX full the which share by billion with good share, we and was you on reaffirm our in $XX.XX premium quarter growth. on reported for our we will of and year morning. strategy Jeff, revenue initiatives per update An least earnings at sustaining per in

start me premium reported earnings night, of $X.XX, adjusted billion share per performance. quarter $X.X we second Last a with revenue. Let our of

consolidated XX.X% disciplined despite MCR experiencing modest management reflects cost some Our pressure. cost medical medical

within very produced We ranges. that margin a is pretax and pretax adjusted our X.X% target the MCR XX.X% also both adjusted target tax, strong consolidated middle in a long-term or range. Year-to-date, after our X.X% our margin long-term our of is X.X%, is result

costs focusing portfolio well-balanced of in continue businesses Our expectations. managing on results line and medical our to with produce

XX.X%, In a second our business of MCR range. produced Medicaid, above target quarter the long-term

in This a item quarter onetime business. California prior premium our year included retroactive

new consistent shift MCRs higher-than-expected medical in our Excluding to by attributable this was second store acuity Medicaid XX.X% elevated with of portfolio, quarter onetime higher quarter. MCR costs first also the redeterminations. the additions, It from a the dynamic ongoing the item, reflects slightly legacy

rate adjustments that will medical known the half adequately We many in continue risk corridor and in to this captured protection XXXX. cost geographies second of pressure be expect by have

improve in track in well are this of regard. Medicaid indicate points our the expect data We we half to Several year. on results the second

First, rate repeat. item the will California not retro

results did addition quarter. Second, our second improve the new store will to as they in continue

the that these off-cycle revenue for XXXX remainder through Combined trends. premium Medicaid adjustments states year. XX% of developing first many the with in rates Approximately received for MCR in second the half were with in we expected cost legacy account Medicaid line the several the second improvement Third, half of renews of half. our

year outlook renew Medicaid off-cycle for our our continued provide well of for early is XXXX. success upside revenue adjustments. could scheduled timed initiatives rate our that Then positive the on with Providing X, advocacy to approximately to with be cadence January rate rate would the premium of balance XX% cycle

Medicare. to Turning

across XX.X%. adjustments as quarter implemented better-than-expected second results for was XXXX. Representing Medicare benefit risk due MCR reported performance our all products, primarily as favorable well Our to adjustment

in in is acquired newly $X and expectations, per business line performing the in of Bright delivering run remain we ultimately share. accretion with California Our rate full confident

our Our strategy well. of acuity, footprint low-income high leveraging is existing to Medicaid beneficiaries working serve Medicare

XX.X%, second In saw period Marketplace, gains better special the redeterminations. enrollment higher even was our than performed as from quarter MCR this we business membership expectations

improved prior grow adjustment to members, continue position and profitably results Our well pricing year mix to book business. us risk of renewing this actions of

delivering $XX.XX the to and or driven by in known, investment on target. quarter our full remain half in and full MCRs increases experienced premium growth. Performance pressure strong, the reverting XX% year. new Turning item second onetime guidance We earnings rate for be in of rates now retro will business second remained income expect adjusted share known and Strong core offset year-over-year our and our year store improvements confident Medicaid. per the to we guidance off-cycle least to and at net

guidance Our Virginia extending also through year-end. and our includes contracts Florida

revenue approximately full XX% $XX remains unchanged. or And year at premium billion Our year-over-year growth.

earnings and profitable share foundation guidance per a provide growth strong in building and to XXXX there remain beyond, for get revenue XXXX blocks the intact. and Our

growth our on comments some initiatives. Now

well all long-term is to segments. in unique growth opportunities X business positioned Our on capitalize

our has lines and primarily membership in leverage serves currently Medicaid is play our billion announced $X.X in on with from Connecticut. Medicaid EmblemHealth. First, product government-sponsored core these XXX,XXX our only which premium to to annual well-diversified acquisition ConnectiCare a strategy care Marketplace establish ConnectiCare pre-existing footprint in health approximately members revenue. a serves Historically, few infrastructure. been Medicare our recently of comments This

is stable a deploy is Molina improve to While performance time-tested in and Connecticut, great proven opportunity capital reliable execute fee-for-service to a products, available the our and the stream the state, this way. Medicaid a us assets playbook. efficiently not in we M&A Acquire option Molina in believe core that revenue

is share, We now expect added per to accretion this acquisition of which earnings. earnings to our $X provide embedded earnings in

remains actionable pipeline Our M&A full of opportunities. many

contracts. winning business renewal in remain new and we Medicaid, In confident

on recently Some we Florida, were foothold state. that contract In successfully recent our comments retains awarded a in the developments.

region. members We our the in will retain XX,XXX Miami-Dade Medicaid

XX,XXX agreement, revenue grow will our state to members preferential $XXX to estimate as of a first intent approximately refinement. We we X, by Region annual of reprocurements. services LTSS announced auto defended its of successfully addition, Molina position award series In we contract the a million. the premium in Wisconsin, the provide through to regional

contract just the we our care sole self-directed IRIS in Additionally, were program. re-awarded personal position

award and are to well the Medicaid In state's population. we Georgia, remain serve that to await while our we believe that we confident announcement, as prospects positioned

years. out opportunity demonstrated over Kids This in significant a which Texas meaningful is there bid opportunity the for state represents where success. recent finally, STAR we And market a RFP, includes next the X have

eligible we most position to remain in dual-eligible populations penetration member a on members acuity Medicaid Medicare, us of years, products MAPD population footprint attract of over integrated high-acuity combines and on low-income our as further fully on The In states, dual our enabling well the our California. experience. and new coming integration CMS high sharply focused in Medicare rules both

this are new suite be process our establishing We and in will to the organization products, of further a we effort. lead duals of dedicated developing soon integrated

filings and organically In risk to given us are margins us well rate very for underpenetrated stabilized in in believe XXXX grow Marketplace, our geographies grow. positioned markets, we've make and competitive profile underpenetrated we achieved. We to position the

be us at rate in As outlook our this simply allows can that a margins. mid-single-digit sustain stated as grow a business reminder, to growth pretax

our are meet grow growth new our target we contracts execute to strategy. win revenue and expect of consistent ability pillars state in our our billion We These premium confident to strategy and $XX of organically, XXXX. remain M&A in of

of share earnings to growth $XX.XX and committed earnings per outlook $X, With our with guidance per our delivering reaffirmed at we targets. earnings XXXX long-term least our of remain share on embedded

building shortly, the describe there blocks will get intact. Mark to As are

year through the fundamentals, continue which executing been are outperformed MCR and new track Medicare Marketplace our financial store focus pleased half second meantime, quarter we our improve to summary, second the performance. on on financial on XXXX of to increases has while the In of In in hallmark known significantly the improvements. Medicaid with businesses and we rate The is the performance. continuing

unprecedented nothing view businesses this period these the process be that occurred long our sustained. XX-month for and end, from will some we and challenges to journey that be redetermination has attractive which presented near have changes growth and profitable that during term but has navigated will are The a beginning successfully can,

demonstrate against our protects results rates medical Molina's that rate In the transient quarter-to-quarter principle position that soundness costs. and fact, of works rate corridor of and fluctuations unique

for York City. Investor profitable sustaining you in X Finally, an on Day Friday, New at forward growth to look our on we November outlook updating event

growth past achieving will in targets As we for playbook with you and our detailed provide our maintaining industry-leading margins. years,

to come will outline transparency achieve you goals the our have expect that long-term We we and them, from how will specificity with us. and

the over that, on turn additional financials. Mark will for some With I to call the color

second Joe, the performance, Today, our XXXX blocks good some I'll quarter balance everyone. building our our discuss and sheet, EPS and of XXXX the Thanks, morning, outlook. guidance details additional on

our results. Beginning second with quarter

we with of revenue $X.X adjusted quarter, EPS the billion premium $XX reported total For of in revenue billion approximately and $X.XX.

was reported consolidated expectations, year our to on above XX.X%. case, second MCR many guidance. quarter Our XX.X% was MCR slightly track still support our of full but In our

are known this highly rates. to of state as states positive premium retroactive retroactively future mentioned, in reduce address from unusual trends. includes prior is rate adjustment a a point result expected year. for and As all related actions basis onetime It a XX Joe our California the recent to increase And

comprised than our Recall, this that to XX this Medicaid quarter points. but new onetime a MCR for lower store to expectations. basis store another falls year. line for MCR Within item, of higher additions reported XX.X% prior result, run Adjusting Adjusting at almost our our falls new XX.X%. impact, year continue MCR store additions first new and the in XX% with of reported segment our

MCR over this quarters margins. progress plans target to continue expect portfolio the of as the towards coming component to decline these We

end item new XX.X%, XX legacy prior Excluding above points of Medicaid MCR our the year onetime range. approximately top store long-term was and basis the target additions, our the

continue little second quarter. in acuity redetermination experience the pronounced more of related We to a shifts the impact

in MLRs typically in cost XXX we corridors. and Of in points And our basis into have Molina's strong recent performance course, expense within paying medical many minimum been MCR. means years, averaging management that reported states

As medical second observed between year. modestly expenses trends. Corridor of the the from difference shielding in cost us and and rates largely rates has quarters trend the temporary first declined outpaced

restored continuing and positions our known quarters cycles. corridor cost to with be these expected We medical the rate in discipline expect and coming

the as mentioned, of we ahead the drive the MCR items to number expect lower. to of a Looking Joe remainder second half Medicaid year,

For the reported MCR first half of Medicaid XXXX, was our XX.X%.

MCR driven includes half by a XX.X%, a guidance basis second items. Medicaid few XXX of the point Our improvement

the expected MCR First, this impact points of first XX benefit A second items. to compared of reduced rate half half we to MCR the retro the half. Medicaid basis second for quarter's the

to continue portfolio in will as book, legacy the as quarter than they second higher they running did improve target approach initially additions store margins. new Second, the

a new quarter-over-quarter, stores, New the the Molina to benefit of from and of first of compared points expect combination and basis acquisitions we playbook the improvement RFP to half XX MCR Medicaid half. second the execution wins

line our those in on well remainder for hypotheses Third, States the timed to into mix rather with actuarially working required and of market 'XX rates. rates rate Medicaid the determine return and with completed XXXX. trend speculation. cycle data MCOs states or than demonstrated are to trends rates is based state fund sound of Most the

seeing rates have hard trends, the observed process We half the the renewing XX% on most final second of are second the such, setting that our the As approximately quarters in provides in months. full trend year. higher representing rate and now of visibility revenue, first coming plans offset in for data higher

the half in off-cycle second adjustments states of yielded efforts In already that X the year. rate cycle, have advocacy rate to normal addition positive the our benefit

This basis the full several and that an first expectations year Combining guidance. explained although when those not up of encouraged other second Medicaid the the half of XX we year small reported this previous is point XX%. increase Medicaid improvement our benefit Together, follow these rate guidance to approach, quarter's guidance are our MCR expected adjustments full MCR detailed half XX.X% We entirely this MCR in half compared our for item. do to known will almost as half. states guidance results include first drive second in in basis from a retro in rate the by XXX Medicaid of points

on a in membership. Also few comments Medicaid,

Medicaid with process. the loss second our members the through states a are third XXX,XXX we redetermination the While continuing are quarter, quarter, redetermination, in estimate taking largely In cumulative we net the X through members of approximately gained XXX,XXX. Due XXX,XXX total for XX% to the or third into total of that and of the of is will timing to quarters, fourth our the reconnects loss the net continue unchanged. ultimate of outlook

eligibility remains Conversions as full membership members Marketplace Medicaid losing X.X strong Marketplace members. remains Our products. to at Molina year guidance moved million to

adjustment MCR was benefit the second Medicare, LTSS the expected, our reflected by All utilization. than from adjustments driven implemented better quarter Medicare Utilization products In in for reported consistent XX.X%. pressure risk XXXX. and pharmacy costs quarter favorable performed and we

integration mentioned, projected the track on to As of the business Joe Bright of earnings ultimate provide is $X accretion. the

our than period year-to-date. expected remain XX.X%, In enrollment We producing membership better Marketplace, quarter second this MCR special higher growing focused was reported mid-single-digit pretax margins. on business while despite

Our adjusted the the business. cost and continued expected fixed G&A of leverage X.X%, quarter and we as ratio was grow operating for as benefit discipline reflects our

sheet. to Turning balance

the ratio cash strength the our at dividends at reflect the our low of debt-to-cap Days the claims with leverage for our ample capacity and and our X.Xx growth with was quarter, remain foundation XX approximately of at parent strong. quarters. prior remains quarter of the and trailing quarter. unchanged harvested confident and Our In and in reserves. and payable in XX-month of the capital cash end million balance end Debt XX%. consistent was about was million we of quarter subsidiary $XXX investment. We These the company end $XXX capital additional EBITDA position ratios at the approximately

lower for CMS the cash XXXX receipts, than made related X periods. payments This of was several corridor flow year, taxes. settlement well year to we as operating to the due Our corridor timing prior as months large first of payments, prior

guidance. a few XXXX our on comments Next,

reaffirm we with $XX guidance billion. revenue year our mentioned, premium full approximately Joe of As

least to expect of at continue EPS We year $XX.XX. full

for Our now through expected contracts extension year-end. from as are and investment income expected MCR EPS performance longer $X.XX the the current second Virginia driven slightly the the hold up guidance includes and in higher from $X.XX $X.XX quarter. items $X.XX Medicaid. retro second performance the quarter approximately in XXXX our higher of the of full consolidated by short-term increases rates These to year, through adjustment offset Medicaid guidance, to premium the XX.X%, due Within and are onetime to year by Florida

MCR up basis As approximately quarter XX.X%, onetime detailed, points, the now primarily due Medicaid to second year expected XX the to full item. be is

on year-to-date remains the guidance Medicare XX% MCR consistent membership at our Our in unchanged and strong, performance acquisition. Bright duals with

its are the at pretax margins. In expected expect into full Marketplace, continue range, end low to long-term redeterminations producing be Medicaid target and we the the while to to year to due MCR half mid-single-digit the continue of Marketplace of to XX% Conversion second the year.

XXXX comes While our higher this MCR, with SEP growth a pricing typically we considered of and the bids. guidance XXXX our in

Turning to EPS embedded of earnings XXXX and the outlook. building our blocks

on $X increase of earnings embedded from This our outlook ConnectiCare per store share, the an is a new $X. now prior guidance Our acquisition. from increase reflects $X

in of earnings half expect XXXX embedded We new little a in store than more the to with remainder the emerge XXXX.

With the expect growth Finally, target The our we in embedded organic EPS our we allowing to next rate the well revenue XXXX, earnings and margin clear for our path in-flight in next cycle compelling. see on achieve current and initiatives. heading strategic and declining of XXXX. some include is likely organic continuing and blocks footprint building headwinds timed XXXX. is a path year, renewing for of into year, growth clear rates from our interest our X Even inorganic the January XX%

questions. Operator, to This we ready concludes now take remarks. prepared are our

comes with from question first UBS. the And Instructions] [Operator A.J. Rice

of to a you risk how as public both adjustment you're about size maybe it and in true-up Medicare and point out variance talk Any was exchanges Just in that guidance. to clarification, way helped a of Advantage. positive relative calling much that's

the would my Medicaid be side. then follow-up And on other

of on the previously utilization redeterminations? related this what's a to any XXX% not having bit they're of seems It's legacy to Or with your seeing what risk Have population the of some are little just pool result had peers, a in them, redeterminations. they deterioration seen as but happening is Medicaid calling a be you higher that? you're related left than just to all out of Some not seen.

of and and about the Remember, second the some benefit that quarter. the up A.J., other and of you files, $XX and Marketplace, on On take Great. seen prior from Medicare. Joe Marketplace service let's I'll have recognized will the through the adjustment, CMS risk touch one the On risk first of pick first million we development additional adjustment second from have insights we between things. Wakely on year one.

first across the million half, prior But about the from $XX year.

So about first revenues, half billion. $X.X

and first than our second basis first MLRs You XX do a less little Marketplace. quarter half, for math in the bit points

Just for ago. about reference, it a the year was same

XX the So the compares points benefit. of about basis -- about year-over-year same

ahead. I'm to your -- go A.J on question sorry. Please related second

the on [Technical Difficulty] Just

Say it again, A.J.

you. categories. A.J., health related trends in various I is second home-based never of always, care to the cost business. medical and take skilled before. but But increases various nursing increases, pockets lost see you spiking of and we've facility in some see We we of pockets geographies as geographies, question a hours let me in Medicaid, the seen nothing utilization think cost care. couple BH In

then in high-cost these out cost But corridor pressure to again, ordinary of the drugs as on absorbs putting pick to position certainly our system. trend slack. with, can't the dealt particularly the kick be and Pharmacy up some rates and in trends nothing nothing the GLP-Xs, that

next comes with Andrew the from Mok Barclays. question And Okay.

portfolio. Just correct? developed the have And that Medicaid underlying a question but clarify core don't Medicaid same-store that remember in year? you started when calling I can on pressure this worse. pressure may to like it sounds pressure QX, slightly out you the Is materialize in

Sure.

is drivers just pressure saw right. are book quarter of And the first the second a in simply bit the versus little legacy the more in We one You quarter. membership.

in about XXX,XXX. to redetermination. were We about first second quarter, quarter that little at recall, that noticed You we XX,XXX in due lost more than a we the might members the

out, cumulative at get to rest expect that about year the we're reconnects. XX,XXX of back round to XXX,XXX currently and Just the in total we through

a second bit saw. the of quarter. I a don't doubt the legacy higher drove the volume, So lot the we in impact membership little up that

come had when it. expected worse the claims? you did kind you also than QX saw in Got of what But actually the

normal, It expected was we in quarter. a little the bit worse not but higher than first than

a like pressure peers. secondly, relative then sounds more describing And you're to it Okay. modest

in states So across How by to corridor better risk experience. modest do states? I concentrated was few or understand pressure the offset that see most want much buffer? And just you pressure pressure a

XXX isolated. you're of plans. And of in care reporting an an for it MCR, health acuity if this covered been trend. remarks, health past gives The performing Mark XX% various basically his sometimes you our cost into which pressure routinely -- the reason, MLRs you're points It's normal cost cushion or it's a the basis it's to about whether of the which extent is minimum overlooked. corridors risk over paying years, individual inside XX, it basis our shift if is categories XXX should We've a various means points inflect in prepared and medical whether it's X any at

pockets our various second in and cycle So described of categories, largely rate but in second on with in the the particularly picked half the I plans, in various mid-cycle we renews of and corridors see half. year the increases as increases, of utilization revenue XX% by rate increases, up

And Ryan TD comes Langston next Cowen. from with

effect utilizing be folks are peers experience. their heard enrollment of that services you are kind there's I from same loss they Just pull-through commentary more guess might following they just this that receiving actually before use Medicaid. then information when some up some and on seeing it. We've

sense that like actually of folks actually sort once population? reenroll the being to normal you And any different looks maybe off? any what redetermined further, than Is do who able then profile of for utilization are the have

in discussion losing heard advance of about coverage. We've overutilizing

We have that. not experienced

process, leaving of [ are services know advance, No don't and same in Our end. process no redetermined. them beginning that because the MCR levers that the from at many particularly the of redetermination the determination using indication to they've been are they ] change in

notice. redetermination just have they're off They're They So through enrolls. they services the process. now advanced an using the off and weren't don't Medicaid

So seen that. we haven't

citing build redetermined, what that out the is and Ryan, XX% didn't I'd that of means lose are just for others they we've weren't on just eligibility That reasons. many that. the aware. their been procedural paperwork get seeing or fill they folks What are

of weren't they So minute that argues when last certainly kind coverage. any were fact, aware, usage in against they losing

X Yes, see know lost think not about resolve in? bit also typically, script. when and you utilizing think go At or back of eligibility lost a a X we'll out to store higher quickly often higher. they're And might their I first later to they little until the that be the drug for it that to portfolio they reconnects, first the the utilization. when come they somebody asked very they months month But going point, little month, might fill a they're average. bit it, about to

we're not meaningful seeing any there. So impact

Research. question next the Raskin Josh comes And Nephron from with

margin on a Just the side clarification of the Medicaid book.

So versus us tell XQ? could margins in half? in second guidance what embedded what's were And XQ for you just the Medicaid

MLR last question then And my the just commercial exchanges is were XX%. year bigger

I said you're It probably year. this that. tracking think favorable XX% MLR like to looks you

how be are about XXXX? about strategy for membership the of higher should price a potential thinking we thinking you reducing to next And get rebates year? So for

running XX But half of half of coming are mindful and at predicting be seems you that that in then the those first, is XX and the Marketplace. business. membership. the high, in seasonality SEP a take have the part Josh, in first the the push. for to Clearly, quite course, the higher last rates at back be And fact membership existing natural I'll members of than the for utilization

be 'XX. ramp, on business XXXX little see could to this over revenue year, at we we're this right. this Where you're year billion think invested absolutely actually grow in think year, growth in $X.X you and $X at margin grew we billion We mid-single-digit we're par. try could, growth, to a next running we Now year. we're aggressive and right us as but in Last of more we we did

just be again, the growth position mid-single-digit determined business And rate to produce itself. the volatility the given going is our margins, our ability inherent margin exists by So that solid. to in is

results, I'll take for And a the and XX.X%, in as go one. quarter Medicaid XX.X% across on That's an in full year. know, MCR reported the gave XX.X%. ahead reported I you tracking that. second prepared walk the of per year. Great. how average the XX.X% we our the the in Josh, you first We're an And supports of the half second remarks to half was first of my the

in have that We confidence that. those building support X blocks great

Now the XX.X% for the full year guidance is were up from XX%, together. the last time we

year X/X had in So the that over we've second raised that recognizing full item guidance of jump California just XX was by bps, onetime to we the quarter.

quarter rest the from on the much pressure XX.X% full business. very a Otherwise, So little bit is track year. legacy just of an for second

Okay.

target towards right, margins, maybe. the this not of off target sort end, -- year, terribly from lower So

Okay. Perfect.

Correct. that strength in than the think pointed And XX overcome enough out bps increase. we business there's otherwise I more that to

shape. think I we're in good So

with from Bank America. the comes question Fischbeck Kevin of And next

MLR Medicaid a hard where I having guess view doing. your is reconciling kind we're what peers time a of are of versus Great. your about lot

everything? then So the the only of lot now a had a XXX and net I gross saying completely of core basis of, matching XX risk you and corridors Can your in then MLR or sense XXX you what this XX pressure? you because Are to seems of payables comment another it's you corridor allowing that not there's points risk kind guess be give us basis are to offset pressure. on of your a

between seems goes reconcile. it year the building MLR like back for X hear -- everybody anything upward half points in X the be half. your you hard is as people expect on. Shouldn't that half pressure else pressure it to from the MLR it to seems doesn't on Just then XX in for just were basis in year? in like or I saying of be MLR size rejoiners and bridge seem you you I because core XXX on back to pressure. XX mentioned putting coming guess a the And didn't the And to XXX of of kind somewhere be

the in of Well, have are last that that exactly this the slack, extent of XXX what's rates pick said points XXX points. gave such to basis Medicaid corridors we We in happening. X to buffer is the going of the corridors the until basis the process. We the business numbers repeatedly remarks Mark up financial you the prepared paying the been redetermination as years to at MCR beginning actually which said contributing were times

So it geographies in corridor isn't year, various points. does basis yes, some of in remain our suffice meaningful cushion to used say some We've to this but it XXX results, of the it liability way. a

point the they at other the state Now rate year to the next cycle, on replenish disappear is. make forever. the They corridors is don't fiscal just whatever

XXX basis into of rates sound the and recreating And the relatively you're points so actuarially can back you're and you cushion. rate that if next at cycle you to continue benchmark, corridors outperform that

thought guidance a couple trend of and business trend points, see And that first fourth. for the what higher basis what we're before. And more of the second our includes point, probably quarter our X.X% the the quarter, in the third as the we expecting Since just for year up in dynamic Kevin, we second XXX capturing course, your to thoughts. jumping rejoiners we That's last we're quarter. the across saw just for than actually what importantly, off and in and

we than previously trend of higher X.X%. a seeing thought we're So

full Now as known across trend. the the about that of we which second both off cycle, half, cycle got in detailed, on X% adjustments and defray year rate we've

up corridors. picked is bps XX other by The

table. higher as to dynamic pretty feel the we from trend And a on corridor we bring important here, insulated Joe known both So rates. very mentioned, this

lower MCR. actual we've carrying will within yes, our bps years function over reported ultimate couple a of been XXX be So that and rates last year, the will this but the trend. It be of

question And Lake comes next Justin Wolfe the Research. from with

PYD the with it or benefit that among in Curious corridors. the X was in XXX MLR you like us done X if spread was looks segments points could to share specifically? basis or your First, X it almost whether was evenly

lot if end A subsidies enhanced early can us the XXXX, Joe, extended, talk exchange what's focus about at the If I -- then, they view if to -- view to exchanges. population say, in extended of should on, general? the the a happens elections? your aren't And think you the bit you going aren't do of the into little subsidies, what

the I'll did to to by was business it, of but to... do Mark, it it point Mark, point, first nearly make of it On all of affect. before prior not you the lines year PYD which picked want if Most up corridors. kick

Right.

in question, a we've we've integrity things your business, this yes, make the addressed. bigger our sure waste stems the that are in to of been back from that little we're Justin, like past prior what So abuse, A which fraud, reaches it's business payment a seen bigger and bit than into years past. than lot

little bigger. it's So a bit

and was course, in little out it to is Medicaid bit mostly. Medicaid it Marketplace, see of see Q And comes in you'll where you in that's what expect Of Medicare Medicare. it the but most when and

course, time last year mentioned, were development a of year. year's goes payers Joe As prior last this it year really corridors. And because the we big good guide isn't to corridor

prior of most that So year got caught in corridors. up

We've industry. models. related models question And everybody's the in seen got to exchanges, your the but

estimates the terms if industry happen enhanced in in our We the of what are, our models do have have And fact, expire. own subsidies would we own.

your of of out be affected XX%, FPL priced cohorts. product. You level can XX% you subsidies, And silver your at look argue could the of and that look membership at you

But you product, lower-priced it. next sitting then right to a again, bronze perhaps have

sitting at XX% into going So lower of you those then of a many we've have say. bronze a recapture products product product to you recapture estimates And bronze are in price? alongside seen some the of in will of one wildcard geography, to is industry the to But silver XX%. certain Hard a how if bronze. your that

And Stephen with comes the Wells next question from Baxter Fargo.

Medicaid directly percentage your more is. then protection can level to also you in performance And premiums underlying what on update versus Just of a the here some specifically they're on the us couple the of comparable cite. first discussion. the guess of expense I Medicaid you that that's typical corridor follow-ups could provide XXX you the points half basis exposed whatever number book the of have to us

then [ in on [indiscernible], developed lot suggested, I the to operate data And ] happening fully it quarter, based trying think the at like this of understand deterioration you obviously, not seems which hard but update just does point. on second and rate is process, is a

the is more so earlier largely level could this enrollment just of it trend? I'm than kind [ your of to understand this maybe acuity ] recently compelled back contemplated developing lower likes [ your because the adjustment So conversation. be ] trying

it. unpack Mark. Stephen, to I to there. I you with the make a There's first Can one? understand start it's lot want sure

Yes.

of premiums the about points just know I expense. think first basis we metric year, us the And then XXX half give corridor would are in of specifically the comparable percentage to there. underlying directly Medicaid if your when risk typical about corridors like could So a of it XX%? you versus performance more some exposed that How the have from is of to think XX%, we protection business? Like the level should of it that? is

Sure.

years, our prior in reported think year. Corridors to an XXX roughly the across MCR. track about corridors, was in usually way ultimate embedded full the to Now

you in out. really trend. is I you until normal the was come rate to about going tell where first half, that is again, that's within of know you over, be a And of can the number. and what I our think half So don't function But rate year

our what's expected ultimate. If we happened look and at

year-to-date. of the we use using some as remarks So in our to we're And the definitely we're of year. it expecting of mentioned here, in rest it some

normal of the think full half rate number. run that So across year, roughly

detailed have Stephen, And very models. we

we one reasons protected. protected it's medical generally say, where if it's well So corridor and if XX% corridor, a the specific system of give minimum And numbers of Well, that's MLR has on cost or you only XX% we is the happens. have your premium entire an accounting don't tracking. deterioration

looking so And number, be can at gross very, misleading. the very just

around protected. and We have know have we're you corridor. there's it. upside opportunity We where know we the some where geographies, We upside in on opportunity depending our where arms are

protected much how premium don't think false to I numbers is a generally we because So specific it on like give positive. gives

next question Fitzgerald. from comes with Sarah The James Cantor

premium hoping bridge that a XXXX guidance. you reiterating you refresh appreciate I I could little the was the bit.

you initiatives. of still you strategic that $X.X about either and billion So the $X.X base, out of laid when were that how after about so the do through mix you billion Is [ M&A that mix M&A, ] 'XX play see? talking the that you exchange out your exists you then about XXXX think when could Medicaid And and pipeline? think in between it

redoing right very in given we M&A are where in the reprocurement that possible just projection just But be a we're little as cycle. have active is the that we're space It if to now, it would demonstrated. influenced we M&A, more by

They're They're been Marketplace, active We're Medicaid have pursuing that X very Medicare working are XX see mean we transactions were made to executed the The that them. transactions two, months. with here the Medicaid last some is very Medicaid. our as people which we're noncore. last you'll next were them And non-Medicaid. calling core core. in pipeline But hopefully actively over did comments not as that we and that active opportunities. And Yes, still doesn't space. with and XX still

from Our Ha Baird. with next question comes Michael

cash surprised my quick far was you out real CMS, a larger the know helper see cetera. amounts break half I'm so cash to then out of et flow So [ Maybe wondering some PCP was. could dispatch ] of question. of I I the The looks corridor no you and ] the Street ops [ normalized special [indiscernible] some like? from timing, first payments, year. called clarification if

from risk but if MLR? generally, in MA a payments. you benefit. just result plans the some Wondering [ in MA don't real it the could fleet risk it to it see generally because accrue understanding, then adjustment from your how And on benefit did yes, And specifically for favorability whatever risk that, XQ you huge adjustment much -- also was ] is slight XQ true early adjustment their the my to simply benefit question tend

recognize you risk more question benefit? did there going accrual. something adjustment approach the a where with my on Was Bright assets So unique Health such large a took conservative is, maybe on how MA you

great. color that be on would So more

Michael, it's Mark.

Let me take OCF.

As we cash difference mentioned, X first in and operating for everybody's flow benefit, years. Michael is months versus asking large about prior year's this a

because on have that, much government of services of stable maybe Just a think more tend payments, lot I the MCOs a people will be OCF businesses and timing than corridors services some cash businesses as of that some to bit do quarter-to-quarter large competitors. our diversified flow forget adjustment risk lumpier note Commercial businesses. have Government a lumpier. little

is and investment way comment we ahead the business Michael, income other should I'll of the get business capital growing working that's make, always business, because only and And net cycle a OCF into I'll a growing growing the we do. are have The details, works.

at will that. broader If you see look any you time frame,

last So that is Unique really items up. the first are of catching unique sort half benefited about couple now year items. us and of a

there's timing my payments. you'll release. that these flow earnings corridor about. in of X And So The we'll cash the is largest on see risk talk operating one the

Here's how accruing about we less year this and Joe all down discussed. to think were for this. risk last year balances. on last paying corridors just I'm separately, We're year's reasons the than I But

billion. than a that's more a So big little call $X.X it in OCF, swing

that the see end of is flow funny, reported About a the CMS the payments. end on you'll OCF quarter. that. payments the Next XXX big one swing a on a before It's is difference of after or days in flow. of of the cash quarter of exactly the couple statement. days that And And makes CMS couple come usually cash our operating

$XXX unique. benefit is from one taxes. about California bit last of a We million cash year-over-year the flow And little had

little You that in a might California on dates XXXX. back Federal delay a their got due tax of bit recall taxpayers

half So year. XXXX we're delayed as This as final on payments back the tax the both tax were payments year, the XXXX well into right the second of estimated target.

right year last a year. Difficulty] guy good So bad million year-over-year, that's guy [Technical this there. That's $XXX

the cash in the We're and of walk any relationship about. over normalization business. deficit a talking you're very of majority great income. OCF characteristics flow in of through just that look between And again, vast comfortable flow you time, probably see I'd net periods that broader So cash operating the you'll

just some always risk that but at sure, was Unlike Bright equation We've Medicare And there. we're benefit, better the comments lot of On And getting little the bigger Marketplace, business. a just individual got it. getting business. we're operations. the a there's adjustment year from this a adjustment, this our Medicare at businesses. We've benefit prior each bit of year's Medicare of better got gosh, a a most couple risk across of is

Stephens. The with next question comes from Scott Fidel

can cash or for of 'XX you up, follow to expecting full out I Actually, the just give what guess, of us sort back half to for complete for operating year discussion. you're Mark, flow the CFFO? the

accretion would that second, you of be, just thought maybe terms of the or from then get I be main if in you're drivers that key segment of would to the earnings ConnectiCare expecting question dollar it dollar And guess, want of to the sort helpful embedded build. definitely to bucket

Sure.

ahead net normal income. a is OCF, half, second the On a of little relationship bit

that So normalized over in of years Again, year. so think half much unique last year-over-year like a something of to expect or unique the the things year a that, relationship to of year. total, the more relationship X.X, second I this in X.X, X.X, looking comparison would X about was

you'll very net relationship combined, and half get will between of income, year. normalize that 'XX this a in 'XX, normal at Looking certainly OCF second the

It marketplace and huge margins. typical target business Molina okay. ConnectiCare perform does as And intend rationalize situations, the is the G&A both the these to Scott, on and Medicare not spend. business in MCRs the performs we improve to acquisition, a not the undertaking. business And the It in

I but underperforming. As underperforming said, targets, not our they're woefully

the will from targets. moving improve We Molina to by simply where performance are these they

accretion, then target the unleashed Molina revenue, recognition, us. and Stable our good capital, which playbook great deal bought is hard at margins, XX% we of we of for get dollar half to membership, brand it to

George Bank. And last this question Hill with comes Deutsche morning from

I where or states ones and worse here. getting quick hope rates. have you about I acuity example X I guess have you talked the cutting

actuarial with budget. confident that about be kind us of book the percentage how in hear but Just we you'll hearing -- So some state talk we when increasingly I to subject talk hear of to phrase that we kind that regulators, you'll soundness, guess the rate of forward? we're as going to about soundness actuarial get

there? the and of worried timing mismatch the kind about So

the discussed, how corridor and talk the But up in in back guess, half kind that of XXX about risk in can some like it about -- the the this contributions, risk corridor you decrease you risk the utilization contributions like basis in of about on should the the like was points risk half the up in varies QX how that year? much through corridor then guess, sucked we can think in And I QX? how year. of I back corridor your suck we confidence the And will like talk

Sure. of A things couple there.

the retro the and year, rate So [ don't one rate and personally the another expect rate the not half adjustment. That's second of Those had one. about that negative the I I ] for increases year, there's I the the rates. you're of rest but one. mentioning the off speculation. seen cycle both cycle only Look, California normal Joe talked in

All committed. and of are those known

So not a there. lot of speculation

concept. an corridors about year On a the annual but about of quarterly talking can't historical, you're XXX on that really think they're basis points you fiscal basis,

ultimate, all to So you're you're quarter always X specific. any accruing which out means an impact across not quarters, spreading

trends somewhere XXX in about and a about management. is the fiscal think we're That's, historical year around it year of of down I the medical our will think rates half and said when ultimately guess, year again, using. accounting, full we come what full the So our to we development

maybe it's give best a George, couple examples. of to And

Things We high a hot in got second year. is Texas -- impact will Texas X running a rate a -- have in acuity shift, -- cetera. That the little September were had we single-digit known. So increase. high It's have et renewal. a market

rates it. in draft up, but can very we're it form, never confident have in We they declined, draft go

outpatient the Kentucky as the Another the the trend In that's inflection example taken. behavior. did one. rate did, of market mobilized is We market. we the UM talked and pandemic, actions regulators It about very due are some to on really to a actually explains the that interesting suspend ask

actuarial The What happens? rate underfunded. program the mid-cycle Cost because state, up. presents the behavioral goes then market the was approaches data, increase

acuity program They're that customer, and with it's whether state supported. an whether database, something positions, actuarially very can regulators, they're the productive. are reasonable taking is our our related shift conversations So very or be

Thank question presentation. And this the attending the you. for well event itself. so as concludes today's both answer you Thank as much session

your may You now disconnect lines.