MOLINA HEALTHCARE INC

Previous wording

•the continuing impact of Medicaid redeterminations in all of our state health plans, including the accuracy of our projections regarding the number of members we expect to retain, their health acuity levels, and the actuarially sound adjustment of rates with regard to the members we retain;

Current wording

•the continuing impact of Medicaid redeterminations, including the health acuity levels of our continuing members, and the actuarially sound adjustment of rates with regard to the members we retain;

Previous wording

•our ability to integrate, and realize benefits from acquisitions, including the completed acquisitions of My Choice Wisconsin, and Brand New Day/Central Health Plan of California and the announced acquisition of ConnectiCare;

Current wording

•our ability to integrate, and realize benefits from acquisitions, including the completed acquisitions of My Choice Wisconsin, and Bright Health Medicare, and the timely closing of the announced acquisition of ConnectiCare;

Previous wording

•the transition of Medicare-Medicaid pilot programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas serving those dually eligible for both Medicare and Medicaid, and the increasing integration of Medicare and Medicaid programmatic and compliance requirements, and the extension or incorporation of federal Medicare requirements developed by CMS into state-administered Medicaid programs;

Current wording

•the transition of Medicare-Medicaid pilot programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas serving those dually eligible for both Medicare and Medicaid, the increasing integration of Medicare and Medicaid programmatic and compliance requirements, and the extension or incorporation of federal Medicare requirements developed by CMS into state-administered Medicaid programs;

Previous wording

•the failure to comply with the financial or other covenants in our credit agreement or the indentures governing our outstanding senior notes;

Current wording

•the failure to comply with the financial or other covenants in the credit agreement governing our revolving credit facility or the indentures governing our outstanding senior notes;

Previous wording

We reported net income of $301 million, or $5.17 per diluted share, for the second quarter of 2024, which reflected the following:

Current wording

We reported net income of $326 million, or $5.65 per diluted share, for the third quarter of 2024, which reflected the following:

Previous wording

•Membership of 5.6 million at June 30, 2024 increased 403,000, or 8%, compared with June 30, 2023, across all segments, primarily due to the new Medicaid contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations;

Current wording

•Membership of 5.6 million at September 30, 2024 increased 392,000, or 8%, compared with September 30, 2023, across all segments, primarily due to the new Medicaid contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations;

Previous wording

•Premium revenue of $9.4 billion, which increased 17% compared with the second quarter of 2023 due to the increased membership in all segments mentioned above;

Current wording

•Premium revenue of $9.7 billion, which increased 18% compared with the third quarter of 2023 due to the increased membership in all segments mentioned above;

Previous wording

•Investment income of $115 million, which increased 19% compared with the second quarter of 2023, and continues to bolster our operating income results;

Current wording

•Investment income of $118 million, which increased 5% compared with the third quarter of 2023, and continues to bolster our operating income results;

Previous wording

•General and administrative expense (“G&A”) ratio of 7.0%, compared with 7.4% for the second quarter of 2023, reflecting operating discipline and the continued benefit of fixed cost leverage as we grow our business; and

Current wording

•General and administrative expense (“G&A”) ratio of 6.5%, compared with 7.1% for the third quarter of 2023, reflecting operating discipline and the continued benefit of fixed cost leverage as we grow our business; and

Previous wording

•After-tax margin of 3.0%, which was in line with our expectations.

Current wording

•After-tax margin of 3.2%, which was in line with our expectations.

Previous wording

Net income in the second quarter of 2024 amounted to $301 million, or $5.17 per diluted share, compared with $309 million, or $5.35 per diluted share, in the second quarter of 2023. Net income in the six months ended June 30, 2024 amounted to $602 million, or $10.33 per diluted share, compared with $630 million, or $10.87 per diluted share, in the six months ended June 30, 2023. The decrease in net income for both periods is due to decrease in operating income from the higher MCRs related to new contracts, recent acquisitions and organic growth, partially offset by improvement in the G&A expense ratio and increase in investment income.

Current wording

Net income in the third quarter of 2024 amounted to $326 million, or $5.65 per diluted share, compared with $245 million, or $4.21 per diluted share, in the third quarter of 2023. Net income in the nine months ended September 30, 2024 amounted to $928 million, or $15.97 per diluted share, compared with $875 million, or $15.08 per diluted share, in the nine months ended September 30, 2023. The increase in net income for both periods is driven by the impact of increased premiums and medical margin stemming from our membership growth, improved G&A expense ratio, and increased investment income, partially offset by an increase in the consolidated MCR. In addition, the three and nine months ended September 30, 2023 results reflect a $41 million credit loss on 2022 Marketplace risk adjustment receivables.

Previous wording

Premium revenue increased $1.4 billion, or 17%, in the second quarter of 2024, when compared with the second quarter of 2023, and increased $3.0 billion, or 19%, in the six months ended June 30, 2024, when compared with the six months ended June 30, 2023. The higher premium revenue reflects the impact of a balanced combination of the new Medicaid contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Current wording

Premium revenue increased $1.5 billion, or 18%, in the third quarter of 2024, when compared with the third quarter of 2023, and increased $4.5 billion, or 19%, in the nine months ended September 30, 2024, when compared with the nine months ended September 30, 2023. The higher premium revenue reflects the impact of a balanced combination of the new Medicaid contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Previous wording

The consolidated MCR in the second quarter of 2024 increased to 88.6%, compared with 87.5% in the second quarter of 2023, or 110 basis points. The consolidated MCR in the six months ended June 30, 2024 increased to 88.6%, compared with 87.3% MCR for the six months ended June 30, 2023, or 130 basis points. The increase in both periods reflects changes in member mix due to growth across all segments, due to the expected higher initial MCRs related to new contracts, recent acquisitions and organic growth, and modest medical cost pressure, partially offset by minimum MLRs and medical cost corridors and continued disciplined medical cost management. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Current wording

The consolidated MCR in the third quarter of 2024 increased to 89.2%, compared with 88.7% in the third quarter of 2023, or 50 basis points, and was higher than expected as we experienced medical cost pressure in our Medicaid and Medicare segments. The consolidated MCR in the nine months ended September 30, 2024 increased to 88.8%, compared with 87.8% MCR for the nine months ended September 30, 2023, or 100 basis points, and was slightly above our long-term range. The year-over-year increase in both periods is driven mainly by our Medicaid segment, reflecting the higher than expected medical cost pressure in our legacy portfolio, and higher initial MCRs related to new contracts, expansion and the MyChoice acquisition, partially offset by minimum MLRs and medical cost corridors, continued disciplined medical cost management and year-over-year improvement in our Medicaid and Marketplace segments. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Previous wording

The prior year reserve development in the six months ended June 30, 2024 was favorable, but its impact on earnings has been mostly absorbed by minimum MLRs and medical cost corridors.

Current wording

The prior year reserve development in the nine months ended September 30, 2024 was favorable, but its impact on earnings has been mostly absorbed by minimum MLRs and medical cost corridors.

Previous wording

The premium tax ratio (premium tax expense as a percentage of premium revenue plus premium tax revenue) was 3.1% and 2.0% for the second quarter of 2024 and 2023, respectively, and 3.0% and 2.1% for the six months ended June 30, 2024 and 2023, respectively. The current year ratio increases were mainly due to the reinstatement of the California managed care organization tax by the state’s Department of Health Care Services in the fourth quarter of 2023 and changes in business mix.

Current wording

The premium tax ratio (premium tax expense as a percentage of premium revenue plus premium tax revenue) was 5.0% and 2.1% for the third quarter of 2024 and 2023, respectively, and 3.7% and 2.1% for the nine months ended September 30, 2024 and 2023, respectively. The current year ratio increases were mainly due to the reinstatement of the California managed care organization tax by the state’s Department of Health Care Services in the fourth quarter of 2023 and changes in business mix.

Previous wording

Investment income increased to $115 million in the second quarter of 2024, compared with $97 million in the second quarter of 2023, and increased to $223 million in the six months ended June 30, 2024, compared with $168 million in the six months ended June 30, 2023. The increase in both periods was primarily driven by higher average yields on the investment portfolio.

Current wording

Investment income increased to $118 million in the third quarter of 2024, compared with $112 million in the third quarter of 2023, and increased to $341 million in the nine months ended September 30, 2024, compared with $280 million in the nine months ended September 30, 2023. The increase in both periods was primarily driven by higher average yields on the investment portfolio.

Previous wording

Other revenue increased slightly to $21 million in the second quarter of 2024, compared with $19 million in the second quarter of 2023, and increased to $43 million in the six months ended June 30, 2024, compared with $40 million in the six months ended June 30, 2023. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.

Current wording

Other revenue was consistent at $20 million in the third quarter of 2024 and 2023, and totaled $63 million in the nine months ended September 30, 2024, compared with $60 million in the nine months ended September 30, 2023. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.

Previous wording

The G&A expense ratio was 7.0% in the second quarter of 2024, compared with 7.4% in the second quarter of 2023. The G&A expense ratio was 7.1% in the six months ended June 30, 2024, compared with 7.3% in the six months ended June 30, 2023. G&A expenses in the six months ended June 30, 2024 reflect operating discipline and the continued benefit of fixed cost leverage as we grow our business, partially offset by new business implementation costs associated with the Nebraska and California Medicaid contracts wins that started in January 2024.

Current wording

The G&A expense ratio was 6.5% in the third quarter of 2024, compared with 7.1% in the third quarter of 2023. The G&A expense ratio was 6.9% in the nine months ended September 30, 2024, compared with 7.3% in the nine months ended September 30, 2023. G&A expenses in the nine months ended September 30, 2024 reflect operating discipline, including labor cost management, one-time credits related to certain vendor contracts, and the continued benefit of fixed cost leverage as we grow our business, partially offset by new business implementation costs associated with the Nebraska and California Medicaid contracts wins that started in January 2024 and the New Mexico Medicaid contract that started on July 1, 2024.

Previous wording

Depreciation and amortization was $46 million in the second quarter of 2024, compared with $42 million in the second quarter of 2023, and was $91 million in the six months ended June 30, 2024, compared with $86 million in the six months ended June 30, 2023. The increase in both periods is due to the closing of the My Choice Wisconsin and Bright Health Medicare acquisitions.

Current wording

Depreciation and amortization was $47 million in the third quarter of 2024, compared with $42 million in the third quarter of 2023, and was $138 million in the nine months ended September 30, 2024, compared with $128 million in the nine months ended September 30, 2023. The increase in both periods is due to the closing of the My Choice Wisconsin and Bright Health Medicare acquisitions.

Previous wording

Other operating expenses increased to $43 million in the second quarter of 2024, compared with $17 million in the second quarter of 2023, and increased to $81 million in the six months ended June 30, 2024, compared with $33 million in the six months ended June 30, 2023. The increases in both periods reflect non-recurring costs associated with acquisitions, and costs for litigation dating back to 2013. Other operating expenses also include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above.

Current wording

Other operating expenses decreased by $58 million in the third quarter of 2024, compared with the third quarter of 2023, and decreased by $10 million in the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023. The decrease in both periods is primarily due to the $41 million credit loss on 2022 Marketplace risk adjustment receivables recorded in the third quarter of 2023. This was partially offset by increases in non-recurring costs associated with acquisitions, and costs for litigation dating back to 2013. Other operating expenses also include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above.

Previous wording

Interest expense was $28 million and $27 million in the second quarter of 2024 and 2023, respectively, and $55 million for both the six months ended June 30, 2024 and 2023.

Current wording

Interest expense was $29 million and $27 million in the third quarter of 2024 and 2023, respectively, and $84 million and $82 million for the nine months ended September 30, 2024 and 2023, respectively. The increase is due to borrowings under the Credit Facility occurring in the third quarter of 2024.

Previous wording

Income tax expense amounted to $105 million in the second quarter of 2024, or 25.8% of pretax income, compared with income tax expense of $107 million, or 25.5% of pretax income, in the second quarter of 2023. Income tax expense amounted to $203 million in the six months ended June 30, 2024, or 25.2% of pretax income, compared with income tax expense of $213 million, or 25.2% of pretax income, in the six months ended June 30, 2023. The difference in the effective tax rate during the quarters is primarily due to state income taxes.

Current wording

Income tax expense amounted to $112 million in the third quarter of 2024, or 25.7% of pretax income, compared with income tax expense of $87 million, or 26.3% of pretax income, in the third quarter of 2023. Income tax expense amounted to $315 million in the nine months ended September 30, 2024, or 25.3% of pretax income, compared with income tax expense of $300 million, or 25.5% of pretax income, in the nine months ended September 30, 2023. The difference in the effective tax rate is due to a decrease in nondeductible expenses, net of an increase in state income taxes, and differences in discrete tax benefits recognized in the respective periods.

Previous wording

Excluding acquisitions and our exit from Puerto Rico, we estimate we added approximately one million new Medicaid members since March 31, 2020, when we first began to report on the impacts of the pandemic. We believe this membership increase was mainly due to the suspension of redeterminations for Medicaid eligibility. The Consolidated Appropriations Act of 2023 authorized states to resume redeterminations and terminate coverage for ineligible enrollees starting on April 1, 2023, irrespective of the status of the PHE. Consequently, during the third quarter of 2023, all states in which we operate had begun disenrolling members. In the second quarter of 2024, we estimate we lost approximately 100,000 members due to the net effect of redeterminations. This was on track with our expectations and brings the total count of members lost through redeterminations to 650,000. Given the high number of procedural terminations and increasing interventions by CMS and various states, we expect reconnects will likely continue, including 50,000 in the second half of 2024. Although the medical cost profile of members who have been disenrolled is more favorable than the Medicaid segment average, when combined with the beneficial impact of corridor offsets and rates in several states, our Medicaid MCR for the six months ended June 30, 2024 was in line with our expectations. Based on the experience to date, we expect that we will ultimately retain approximately 40% of the membership gained since March 31, 2020.

Current wording

Excluding acquisitions and our exit from Puerto Rico, we estimate we added approximately one million new Medicaid members since March 31, 2020, when we first began to report on the impacts of the pandemic. We believe this membership increase was mainly due to the suspension of redeterminations for Medicaid eligibility. The Consolidated Appropriations Act of 2023 authorized states to resume redeterminations and terminate coverage for ineligible enrollees starting on April 1, 2023, irrespective of the status of the PHE. Consequently, during the third quarter of 2023, all states in which we operate had begun disenrolling members. In the third quarter of 2024, we estimate we lost approximately 50,000 members due to the net effect of redeterminations. This was on track with our expectations and brings the total count of members lost through redeterminations to 700,000, and we expect reconnects will continue, resulting in net membership additions of 50,000 in the fourth quarter of 2024. Although the medical cost profile of members who have been disenrolled is more favorable than the Medicaid segment average, when combined with the beneficial impact of corridor offsets and rates in several states, our Medicaid MCR for the nine months ended September 30, 2024 was in line with our expectations. Based on the experience to date, we expect that we will ultimately retain approximately 35%of the membership gained since March 31, 2020.

Previous wording

Connecticut Acquisition—Marketplace and Medicare. On July 23, 2024, we announced a definitive agreement to acquire ConnectiCare Holding Company, Inc. (“ConnectiCare”), a wholly owned subsidiary of EmblemHealth, Inc. ConnectiCare is a leading health plan in the state of Connecticut serving approximately 140,000 members across Marketplace, Medicare, and certain commercial products as of June 30, 2024. The purchase price for the transaction is approximately $350 million, which we intend to fund with cash on hand. The transaction is subject to applicable federal and state regulatory approvals and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the first half of 2025.

Current wording

Connecticut Acquisition—Marketplace and Medicare. On July 23, 2024, we announced a definitive agreement to acquire ConnectiCare Holding Company, Inc. (“ConnectiCare”), a wholly owned subsidiary of EmblemHealth, Inc. ConnectiCare is a leading health plan in the state of Connecticut serving members across Marketplace, Medicare, and certain commercial products. The purchase price for the transaction is approximately $350 million, which we intend to fund with cash on hand. The transaction is subject to applicable federal and state regulatory approvals and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the first quarter of 2025.

Previous wording

Wisconsin Procurement—Medicaid. In May 2024, we were notified that the Wisconsin Department of Health Services intends to make an award for the purchase of services under the Family Care and Family Care Partnership program in its Geographic Service Region 5 to Molina Healthcare of Wisconsin. The go-live date is expected to be January 1, 2025, and the contract is expected to have a duration of two years, with an option for three two-year extensions.

Current wording

Wisconsin Procurement—Medicaid. In May 2024, we were notified that the Wisconsin Department of Health Services intends to make an award for the purchase of services under the Family Care and Family Care Partnership program in its Geographic Service Region 5 to Molina Healthcare of Wisconsin. The go-live date is expected to be January 1, 2025, and the contract is expected to have a duration of two years, with an option for three two-year extensions. Additionally, we were re-awarded our sole contract position in the self-directed long-term services and supports personal care program.

Previous wording

Michigan Procurement—Medicaid. In April 2024, we announced that the Michigan Department of Health and Human Services intends to award a Comprehensive Health Care Program contract to Molina Healthcare of Michigan. We were awarded the contract in six service regions. The go-live date for the new Medicaid contract is expected to be October 1, 2024. The new contract is expected to have a duration of five years, with an option for three one-year extensions.

Current wording

Michigan Procurement—Medicaid. In April 2024, we announced that the Michigan Department of Health and Human Services intends to award a Comprehensive Health Care Program contract to Molina Healthcare of Michigan. We were awarded the contract in six service regions. The new Medicaid contract commenced on October 1, 2024. The new contract is expected to have a duration of five years, with an option for three one-year extensions.

Previous wording

Texas Procurement—Medicaid. In the first quarter of 2024, we were notified of the Texas Health and Human Services Commission’s intent to award us a contract for TANF and CHIP (known in Texas as the STAR & CHIP programs, and both existing contracts for Molina), expanding our footprint and expecting to grow our market share. The start of operations for the new contract is expected to begin in the third quarter of 2025.

Current wording

Texas Procurement—Medicaid. In the first quarter of 2024, we were notified of the Texas Health and Human Services Commission’s intent to award us a contract for Temporary Assistance for Needy Families (“TANF”) and Children’s Health Insurance Program (“CHIP”) (known in Texas as the STAR & CHIP programs, and both existing contracts for Molina), expanding our footprint and expecting to grow our market share. The expected start of operations and other final contract terms are still pending. The new STAR+PLUS contract began on September 1, 2024 and grew our market share.

Previous wording

Virginia Procurement—Medicaid. In the first quarter of 2024, the Virginia Department of Medical Assistance Services (“DMAS”) issued a notice of intent to award which did not include Molina Healthcare of Virginia as an awardee for its Cardinal Care Managed Care (“CCMC”) procurement. We exercised our right to protest that decision. On April 19, 2024, DMAS upheld its notice of intent to award in response to our protest. On April 26, 2024, Molina filed a legal action in Virginia Circuit Court over DMAS’s decision not to award Molina a CCMC contract. In addition, DMAS separately notified us that they were exercising the contractual extension option for the period from July 1, 2024 through June 30, 2025. Despite the extension, subject to a 90-day advance notice obligation, DMAS retains its right to terminate the contract for convenience in order to transition members to the new CCMC contracts.

Current wording

Virginia Procurement—Medicaid. In the first quarter of 2024, the Virginia Department of Medical Assistance Services (“DMAS”) issued a notice of intent to award which did not include Molina Healthcare of Virginia as an awardee for its Cardinal Care Managed Care (“CCMC”) procurement. We exercised our right to protest that decision. On April 19, 2024, DMAS upheld its notice of intent to award in response to our protest. On April 26, 2024, Molina filed a legal action in Virginia Circuit Court over DMAS’s decision not to award Molina a CCMC contract. In addition, DMAS separately notified us that they were exercising the contractual extension option for the period from July 1, 2024 through June 30, 2025. The noticed CCMC awards are subject to a statutory stay pending the resolution of Molina’s legal action.

Previous wording

Nebraska Procurement—Medicaid. Our new contract with the Nebraska Department of Health and Human Services commenced on January 1, 2024, which added approximately 112,000 members.

Current wording

Nebraska Procurement—Medicaid. Our new contract with the Nebraska Department of Health and Human Services commenced on January 1, 2024, which added approximately 114,000 members.

Previous wording

On February 21, 2024, Change Healthcare (“CHC”), a major claims processing vendor to Molina, experienced a significant cybersecurity incident. Immediately upon becoming aware of the incident, Molina disconnected and isolated its systems from CHC, and confirmed that no Molina owned or operated systems were compromised by any pre-incident interaction or connectivity with CHC. As a result of the disconnection of our systems from CHC, Molina’s ability to receive claims submissions and process remits and payments to providers was partially and temporarily impaired. We promptly enacted our incident response and business continuity plans, which included the implementation of alternative, work-around solutions in order to resume electronic claims intake and payment to providers, and, as a result, we experienced minimal impact to our claims payment operations. To date the event has not had a material impact on the Company’s financial condition or results of operations.

Current wording

On February 21, 2024, Change Healthcare (“CHC”), a major claims processing vendor to Molina, experienced a significant cybersecurity incident. Immediately upon becoming aware of the incident, Molina disconnected and isolated its systems from CHC, and confirmed that no Molina owned or operated systems were compromised by any pre-incident interaction or connectivity with CHC. As a result of the disconnection of our systems from CHC, Molina’s ability to receive claims submissions and process remits and payments to providers was partially and temporarily impaired. We promptly enacted our incident response and business continuity plans, which included the implementation of alternative, work-around solutions in order to resume electronic claims intake and payment to providers, and, as a result, we experienced minimal impact to our claims payment operations. To date the event has not had a material impact on the Company’s financial condition or results of operations. We have implemented enhanced vendor-related security protocols to mitigate potential risks to providers and members related to this incident.

Previous wording

UnitedHealth Group, the parent company to CHC, has indicated a substantial portion of U.S. residents may have had their PHI/PII affected by the incident. However, we currently have no specific indication from CHC as to whether our members’ data has been breached.

Current wording

UnitedHealth Group Incorporated, the parent company to CHC, has indicated a substantial portion of U.S. residents may have had their PHI/PII affected by the incident. CHC has notified Molina that certain members’ data has been breached. CHC is in the process of notifying the individuals impacted by this data breach.

Previous wording

Medicaid premium revenue increased $893 million, or 14%, in the second quarter of 2024, when compared with the second quarter of 2023. Medicaid premium revenue increased $2.0 billion, or 16%, in the six months ended June 30, 2024, when compared with the six months ended June 30, 2023. The higher premium revenue reflects new contract wins, including the Iowa contract that commenced in July 2023, and the Nebraska and California expansion that commenced on January 1, 2024, and the My Choice acquisition that closed in the third quarter of 2023. These increases were partially offset by the impact of Medicaid redeterminations.

Current wording

Medicaid premium revenue increased $957 million, or 14%, in the third quarter of 2024, when compared with the third quarter of 2023. Medicaid premium revenue increased $3.0 billion, or 15%, in the nine months ended September 30, 2024, when compared with the nine months ended September 30, 2023. The higher premium revenue reflects new contract wins in Iowa (commenced in July 2023), Nebraska (commenced in January 2024), and New Mexico (commenced in July 2024), expansions in California and Texas that commenced in January 2024, and September 2024, respectively, and the My Choice acquisition that closed in September 2023. These increases were partially offset by the impact of Medicaid redeterminations.

Previous wording

The medical margin in our Medicaid program decreased $73 million, or 10%, in the second quarter of 2024 when compared with the second quarter of 2023, and decreased $32 million, or 2%, in the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The decrease in both periods was driven by an increase in the MCR, as discussed below, partially offset by increased premium revenues and margin associated with the membership growth discussed above.

Current wording

The medical margin in our Medicaid program decreased $22 million, or 3%, in the third quarter of 2024 when compared with the third quarter of 2023, and decreased $54 million, or 2%, in the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023. The decrease in both periods was driven by an increase in the MCR, as discussed below, partially offset by the impact of increased premium revenues and margin associated with the membership growth discussed above.

Previous wording

The Medicaid MCR increased 250 basis points to 90.8% in the second quarter of 2024, from 88.3% in the second quarter of 2023, and increased 180 basis points to 90.2% in the six months ended June 30, 2024, from 88.4% in the six months ended June 30, 2023. The increase for both periods was mainly attributable to the expected higher initial MCR associated with the start of new contracts and the recent acquisition, and the acuity impact from Medicaid redetermination. Additionally, the MCR increase in the second quarter of 2024 includes a 70 basis point impact from a one-time retroactive premium adjustment in California related to the prior year. The increases in both periods were partially offset by minimum MLR and medical cost corridors, and medical cost management. Excluding the one-time, prior year premium adjustment, new contracts and the recent acquisition, our legacy Medicaid MCR in 2024 is moderately above our long-term target range.

Current wording

The Medicaid MCR increased 170 basis points to 90.5% in the third quarter of 2024, from 88.8% in the third quarter of 2023, and increased 180 basis points to 90.3% in the nine months ended September 30, 2024, from 88.5% in the nine months ended September 30, 2023. The increase for both periods was mainly attributable to higher than expected medical costs in our legacy portfolio from the continued impact of redetermination-related acuity shifts and higher utilization among our continuing population, particularly for LTSS, pharmacy, and behavioral health services. The increase is also driven by the higher initial MCR associated with the start of new contracts, the My Choice acquisition, and a short-term disparity in timing between premium rates and medical trend. Additionally, the MCR in the third quarter included a 50 basis point impact from a premium rate reduction retroactive to January 1, 2024 in our California business. For the nine months ended September 30, 2024, the MCR was impacted by 40 basis points from retroactive premium rate reductions in our California business, including the intra-year adjustment mentioned above and the prior year adjustment recognized in the second quarter of 2024. The increases in both periods were partially offset by minimum MLR and medical cost corridors, on-cycle and off-cycle rate adjustments that went into effect in several states during the quarter, and medical cost management. Excluding new contracts and the recent acquisition, our legacy Medicaid MCR in 2024 is above our long-term target range.

Previous wording

Medicare premium revenue increased $397 million, or 38%, in the second quarter of 2024 compared to the second quarter of 2023, and increased $793 million, or 38%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increases were primarily due to the Bright Health Medicare acquisition that closed on January 1, 2024, the impact of MAPD and D-SNP membership expansion and organic membership growth in existing states, and increased premiums that are more commensurate with the acuity of our population.

Current wording

Medicare premium revenue increased $335 million, or 32%, in the third quarter of 2024 compared to the third quarter of 2023, and increased $1,128 million, or 36%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increases were primarily due to the Bright Health Medicare acquisition that closed on January 1, 2024, the impact of MAPD and D-SNP membership expansion and organic membership growth in existing states, and increased premiums that are more commensurate with the acuity of our population.

Previous wording

The medical margin for Medicare increased $104 million in the second quarter of 2024, and increased $141 million in the six months ended June 30, 2024, when compared to the same periods in 2023. The increase in both periods was mainly due to the year-over-year growth in membership and premium revenues combined with the decrease in MCR discussed below.

Current wording

The medical margin for Medicare increased $64 million in the third quarter of 2024, and increased $205 million in the nine months ended September 30, 2024, when compared to the same periods in 2023. The increase in both periods was mainly due to the year-over-year growth in membership and premium revenues combined with the decrease in MCR discussed below.

Previous wording

The Medicare MCR decreased to 84.9% in the second quarter of 2024, from 89.2% in the second quarter of 2023, or 430 basis points. The Medicare MCR decreased to 86.8% in the six months ended June 30, 2024, compared to 88.6% in the six months ended June 30, 2023, or 180 basis points. The decreases in each period were primarily driven by higher risk adjustment premiums that are more commensurate with the acuity of our membership, pricing and benefit design changes implemented in 2024 and operational improvements. The Medicare MCR for the six months ended June 30, 2024 is slightly below our long-term target range.

Current wording

The Medicare MCR decreased to 89.6% in the third quarter of 2024, or 280 basis points, compared to the third quarter of 2023, and decreased to 87.7% in the nine months ended September 30, 2024, or 210 basis points, compared to the nine months ended September 30, 2023. The decreases in each period were primarily driven by higher risk adjustment premiums that are more commensurate with the acuity of our membership, pricing and benefit design changes implemented in 2024 and operational improvements, partially offset by elevated LTSS and pharmacy costs and higher outpatient utilization. The Medicare MCR for the third quarter of 2024 is slightly above our long-term target range due to elevated LTSS and pharmacy costs and higher outpatient utilization.

Previous wording

Marketplace premium revenue increased $114 million in the second quarter of 2024 compared to the second quarter of 2023, and increased $194 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, mainly driven by an increase in membership. Our Marketplace membership as of June 30, 2024, amounted to 386,000 members, representing an increase of 117,000 members compared to June 30, 2023, which is in line with our product and pricing strategy to achieve growth, while maintaining target margins in this segment.

Current wording

Marketplace premium revenue increased $162 million in the third quarter of 2024 compared to the third quarter of 2023, and increased $356 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, mainly driven by an increase in membership. Our Marketplace membership as of September 30, 2024, amounted to 410,000 members, representing an increase of 134,000 members compared to September 30, 2023, which is in line with our product and pricing strategy to achieve growth, while maintaining target margins in this segment, and membership gained from redeterminations this year.

Previous wording

The Marketplace medical margin increased $43 million in the second quarter of 2024 when compared with the second quarter of 2023, and increased $41 million in the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The change is primarily due to the increase in premiums and margin associated with membership growth and the impact of MCR changes discussed below.

Current wording

The Marketplace medical margin increased $75 million in the third quarter of 2024 when compared with the third quarter of 2023, and increased $116 million in the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023. The increase in each period is primarily due to the growth in premiums and margin associated with the higher membership and the impact of MCR changes discussed below.

Previous wording

The Marketplace MCR decreased to 71.6% in the second quarter of 2024, compared to 73.7% in the second quarter of 2023, or 210 basis points, and increased to 72.4% in the six months ended June 30, 2024, compared to 71.2% in the six months ended June 30, 2023, or 120 basis points. The changes in both periods reflect our product and pricing strategy to achieve growth, changes in membership mix discussed above, continued operational improvements, and risk adjustment premiums that are more commensurate with the acuity of our membership. The Marketplace MCR for the six months ended June 30, 2024 is in line with our full year expectations and consistent with seasonality patterns. Silver metal tier products incur less MCR seasonality than bronze metal tier products due to lower deductibles.

Current wording

The Marketplace MCR decreased to 73.0% in the third quarter of 2024, or 590 basis points, compared to 78.9% in the third quarter of 2023, and decreased to 72.6% in the nine months ended September 30, 2024, or 120 basis points, compared to 73.8% in the nine months ended September 30, 2023. The changes in both periods reflect our product and pricing strategy to achieve growth, changes in membership mix, risk adjustment premiums that are more commensurate with the acuity of our membership, and continued operational improvements. Silver metal tier products incur less MCR seasonality than bronze metal tier products due to lower deductibles. The Marketplace MCR for the nine months ended September 30, 2024 is performing better than our expectations.