MOLINA HEALTHCARE, INC. Q4 FY2024 earnings call

• Fourth Quarter and Full Year 2024 Results: Adjusted earnings per share was $5.05 on $10 billion of premium revenue in Q4. Full year 2024 adjusted EPS was $22.65, 8.5% Y/Y growth. Fourth quarter results didn't meet expectations but showed operating discipline. - Growth Initiatives: Acquired Connecticut from EmblemHealth, expect $1.2B revenue in 2025. Secured significant contract wins in Georgia, Ohio, Michigan, etc., with incremental revenue over $3B. Retained traditional Medicaid contracts in key states. - Embedded Earnings: Increased embedded earnings to $7.75 for 2026 and beyond, after harvesting $1.50 in 2025 guidance.

Medicaid: Fourth quarter MCR was 90.2%, full year 2024 reported MCR was 90.3% (restated to 89.8% adjusting for new stores and prior year California retro item). Medicaid is the flagship business, representing nearly 80% of revenue. Medicare: Fourth quarter MCR was 93.8%, full year 2024 MCR was 89.1%. Marketplace: Fourth quarter MCR was 83.3%, full year 2024 MCR was 75.4%, outperforming long-term target range for second consecutive year.

• 2025 Premium Revenue: Projected ~$42B, adjusted EPS at least $24.50 (8% Y/Y growth). - Segment Guidance: Medicaid projected 89.9% MCR with elevated medical cost trend; Medicare in transition with early growing pains and lower breakeven; Marketplace projected 79% MCR, 6% pre-tax margin, growing premium 60% with organic growth half of it.

• Medical cost pressure in Medicaid and Medicare segments. - Industry-wide headwinds affecting performance. - Political and legislative uncertainties, including potential cuts to Medicaid funding and impact on state policy changes.

Q: Could you give more color on components impacting Medicaid MLR?

A: Medicaid MLR guide for 2025 is flat with 2024. Rate increase of 4.5% and trend of 4.5% considered, with corridor protection providing no material benefit.

Q: What about Medicare MA pressures in 4Q?

A: Medicare MA had 93.8% MCR in 4Q due to higher medical costs in LTSS, pharmacy, and outpatient utilization. Rate increases not great for 2025, conservative on trend based on Q3/Q4.

Q: Thoughts on quarterly progression in 2025?

A: EPS expected to be evenly distributed. Factors like rate updates, contract implementation costs, and business mix impact quarterly progression.

Q: Assumptions on Marketplace membership attrition?

A: Modeled ~4% monthly attrition, considering SEP membership, natural attrition, and FTR, with high retention in renewal book.