Q3 2025 Consolidated Earning Insights

Payers: UnitedHealth, CVS Health, Elevance, Humana, Molina, Centene, Alignment Healthcare

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Key Industry Insight

2026 = Industry Trough Year

Medicare Advantage at inflection point: 7-10% medical cost acceleration, Stars recovery through 2028, margin pressure driving strategic exits

Q3 2025 Financial Performance

EPS

$3.24

vs $2.83 forecast

+14.49% surprise

Q3 Revenue

$32.65B

Full-Year EPS Guidance

~$17

(Reaffirmed)

Executive Commentary & Strategic Intent

Challenges: Balancing Growth and Experience

"Our focus is on maximizing customer lifetime value and customer NPV. That's our focus. The way we do that is delivering an exceptional experience that fuels member retention... We welcome new sales. However, we are prepared to take targeted actions to slow new sales if we reach the point where the volume risks negatively impacting member experience."

Jim Rechtin, CEO (On Growth Philosophy)

"We do recognize that you want us to provide a specific growth target. We do not think that focusing on a net growth target is the right metric because growth through retention is desirable, and we will take as much of it as we can. We also will not give a specific number around new sales targets because the amount that we can absorb is dependent upon member product and channel mix."

Jim Rechtin (On Why No Growth Target)

"There's been a bit of a cycle, right? Which is why there's all this question about, is growth good or is growth not good? That really comes from our approach that says, we're going to grow on plans that frankly don't have a very attractive margin. They're attractive for the customer. We bring them in, and then those plans tend to degrade over time. The problem is if you overgrow on those low-margin plans, you say growth might not be good."

David Dientfoss, President of Enterprise Growth (On Past Growth Challenges)

Objectives: Margin Expansion Over Volume

"We remain committed to achieving individual MA pretax margin of at least 3% over time."

Jim Rechtin (Long-Term Margin Target)

"We continue to expect that our margin for individual MA, excluding STARS, will double in 2026 over 2025, and then we'll continue to make progress in 2026 [meant 2027]."

Celeste Mellet, CFO (2026 Margin Trajectory)

"While we are focused on LTV and NPV, we recognize we can't have a long-term without the short-term. We are balancing the long-term value creation with delivering on the next year or the next quarter."

Celeste Mellet (Balancing Short and Long Term)

Targets: Early AEP Performance Indicators

"New sales are at the high end of the range, the high end of the anticipated range of outcomes that we expected in AEP. Channel mix is meaningfully improved relative to prior years. We have greater volume in our own distribution channel with select high-performing partners and in digital distribution."

Jim Rechtin (On Early AEP Trends)

"We are also seeing favorable product mix, including higher-than-initially-expected sales in plans with four stars and greater. We are not seeing outsized sales in areas where competitors have exited plans."

Jim Rechtin (On Product Mix)

"We are experiencing significantly reduced Humana plan-to-plan mix, with plan-to-plan sales down year over year. We believe that this is likely an early indicator that our stable benefit strategy and changes to our customer service approach are working to reduce voluntary attrition, though we need more time to validate this assumption."

Jim Rechtin (On Retention Proxy)

Next Steps: Execution Roadmap

"We will continue to monitor new sales volume and manage it dynamically. We are prepared to take further mitigating actions, as we did heading into AEP, if it appears that new sales will put member experience at risk."

Jim Rechtin (On Dynamic Growth Management)

"We've already decommissioned a number of plans. That is a potential lever, but there are other levers. Keep in mind that we own a big part of our own distribution, including our own marketing. We are able to do other levers beyond commissions if we want to have volume match our operational capacity."

David Dientfoss (On Mitigation Levers)

Compliance & Risk Management

"We are disappointed, but we are not surprised by our bonus year 27 STARS results. The results are consistent with our baseline planning scenario, and our outlook remains the same as we previously communicated at our investor conference in June."

Jim Rechtin (On Stars Disappointment but Confidence)

"We have taken measures such as taking Part D risk back, where we saw the IRA shift cost in a very significant way. We have been reducing benefits for two years to reset the product so that it is a product that we and our value-based partners want to grow. We are implementing STARS mitigation programs that mitigate the impact of the STARS revenue hit based upon their success and their performance."

George Renaudin, President of Insurance Segment (On VBC Partner Support)

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Key executive quotes flagged by theme (Stars, ACA, Medicaid, MLR, Compliance)

Market movements decoded by enrollment, benefit shifts & margin levers

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