MOLINA HEALTHCARE, INC.

Previous wording

•Medicaid, Medicare, or Marketplace capitation rates that are insufficient to fully cover our medical care costs and/or the rates of utilization and the health acuity status of our members, including without limitation inpatient and outpatient costs, pharmacy costs, and behavioral health care costs, and insufficient rate increases that do not keep pace with or catch up to the medical care cost trend;

Current wording

•Medicaid, Medicare, or Marketplace capitation rates that are insufficient to fully cover our medical care costs and/or the rates of utilization and the health acuity status of our members, including without limitation inpatient and outpatient costs, pharmacy costs, and behavioral health care costs, and insufficient rate increases that do not keep pace with or catch up to the prevailing medical care cost trend on an actuarially sound basis;

Previous wording

•fraud, waste and abuse matters, including the recent expressions of a federal crackdown on Medicaid fraud in certain of the states in which we operate, government audits, reviews, investigations, or comment letters, and any fine, sanction, enrollment freeze, debarment, corrective action plan, monitoring program, or premium recovery that may result therefrom;

Current wording

•fraud, waste and abuse matters, including the recent expressions of a federal crackdown on purported Medicaid fraud in certain of the states in which we operate, government audits, reviews, investigations, demands, or comment letters, and any fine, sanction, enrollment freeze, debarment, corrective action plan, monitoring program, settlement, or premium recovery that may result therefrom;

Previous wording

•the favorable resolution of litigation, arbitration, or administrative proceedings consistent with our expectations;

Current wording

•the favorable resolution of litigation, arbitration, investigations, or administrative proceedings consistent with our expectations;

Previous wording

•changes generally affecting the managed care industry, including any new federal or state legislation that impacts the business space in which we operate, or negative perceptions that may arise about managed care practices or government healthcare programs;

Current wording

•changes generally affecting the managed care industry, including any new federal or state legislation that impacts the business space in which we operate, or negative public perceptions that may arise about managed care practices or government healthcare programs;

Previous wording

We reported net income of $60 million, or $1.19 per diluted share, for the second quarter of 2026, which reflected the following:

Current wording

We reported net income of $38 million, or $0.73 per diluted share, for the third quarter of 2026, which reflected the following:

Previous wording

•Membership of 4.9 million at June 30, 2026, which decreased 820,000, or 14%, compared with June 30, 2025, primarily due to general market contraction in Medicaid, the expiration of our Medicaid Virginia contract, and a decrease in Marketplace membership resulting from our product and pricing strategy;

Current wording

•Membership of 4.9 million at September 30, 2026, which decreased 766,000, or 14%, compared with September 30, 2025, primarily due to general market contraction in Medicaid, and a decrease in Marketplace membership resulting from our product and pricing strategy;

Previous wording

•Premium revenue of $10.2 billion, which decreased 6% compared with the second quarter of 2025, mainly reflects the impact of lower membership, partially offset by rate updates;

Current wording

•Premium revenue of $10.5 billion, which decreased 4% compared with the third quarter of 2025, mainly reflects the impact of lower membership, partially offset by rate updates;

Previous wording

•Consolidated medical care ratio (“MCR”) of 92.2% compared with 90.4% for the second quarter of 2025, as we continue to navigate a challenging medical cost environment;

Current wording

•Consolidated medical care ratio (“MCR”) of 92.9% compared with 92.6% for the third quarter of 2025, as we continue to navigate a challenging medical cost environment;

Previous wording

Net income in the second quarter of 2026 amounted to $60 million, or $1.19 per diluted share, compared with $255 million, or $4.75 per diluted share, in the second quarter of 2025. Net income in the six months ended June 30, 2026 amounted to $74 million, or $1.46 per diluted share, compared with $553 million, or $10.19 per diluted share, in the six months ended June 30, 2025.

Current wording

Net income in the third quarter of 2026 amounted to $38 million, or $0.73 per diluted share, compared with $79 million, or $1.51 per diluted share, in the third quarter of 2025. Net income in the nine months ended September 30, 2026 amounted to $112 million, or $2.19 per diluted share, compared with $632 million, or $11.79 per diluted share, in the nine months ended September 30, 2025.

Previous wording

Operating income decreased to $145 million in the second quarter of 2026, compared with $373 million in the second quarter of 2025. Operating income in the six months ended June 30, 2026 decreased to $228 million, compared with $806 million in the six months ended June 30, 2025.

Current wording

Operating income decreased to $106 million in the third quarter of 2026, compared with $137 million in the third quarter of 2025. Operating income in the nine months ended September 30, 2026 decreased to $334 million, compared with $943 million in the nine months ended September 30, 2025.

Previous wording

Premium revenue decreased $624 million, or 6%, in the second quarter of 2026, when compared with the second quarter of 2025, and decreased $1.1 billion, or 5%, in the six months ended June 30, 2026, when compared with the six months ended June 30, 2025. The lower premium revenue in both periods reflects the impact of lower membership, partially offset by rate updates. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Current wording

Premium revenue decreased $384 million, or 4%, in the third quarter of 2026, when compared with the third quarter of 2025, and decreased $1.5 billion, or 5%, in the nine months ended September 30, 2026, when compared with the nine months ended September 30, 2025. The lower premium revenue in both periods reflects the impact of lower membership, partially offset by rate updates. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Previous wording

The consolidated MCR in the second quarter of 2026 increased to 92.2%, compared with 90.4% in the second quarter of 2025, or 180 basis points, and the consolidated MCR in the six months ended June 30, 2026 increased to 91.6%, compared with 89.8% MCR for the six months ended June 30, 2025, or 180 basis points. The increase in both periods reflects a higher MCR in all of our segments, as we continue to navigate a challenging medical cost environment. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Current wording

The consolidated MCR in the third quarter of 2026 increased to 92.9%, compared with 92.6% in the third quarter of 2025, or 30 basis points, and the consolidated MCR in the nine months ended September 30, 2026 increased to 92.1%, compared with 90.8% MCR for the nine months ended September 30, 2025, or 130 basis points. The increase in the third quarter of 2026 is mainly attributable to our Medicaid segment. The increase in the nine months ended September 30, 2026, reflects a higher MCR in all of our segments, as we continue to navigate a challenging medical cost environment. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

Previous wording

The impact of prior year reserve development in the six months ended June 30, 2026 was mostly absorbed by minimum MLRs and medical cost corridors.

Current wording

The impact of prior year reserve development in the nine months ended September 30, 2026 was partially 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 4.7% and 3.8% for the second quarter of 2026 and 2025, respectively, and 4.7% and 3.7% for the six months ended June 30, 2026 and 2025, respectively. The current year ratio changes were mainly due to state mix changes in our Medicaid segment.

Current wording

The premium tax ratio (premium tax expense as a percentage of premium revenue plus premium tax revenue) was 4.6% and 4.5% for the third quarter of 2026 and 2025, respectively, and 4.7% and 3.9% for the nine months ended September 30, 2026 and 2025, respectively. The increased ratio for both periods was mainly due to state mix changes in our Medicaid segment.

Previous wording

Investment income decreased to $101 million in the second quarter of 2026, compared with $106 million in the second quarter of 2025, and decreased to $199 million in the six months ended June 30, 2026, compared with $214 million in the six months ended June 30, 2025. The decrease was mainly attributable to a decline in prevailing interest rates and investment yields.

Current wording

Investment income decreased to $102 million in the third quarter of 2026, compared with $108 million in the third quarter of 2025, and decreased to $301 million in the nine months ended September 30, 2026, compared with $322 million in the nine months ended September 30, 2025. The decrease was mainly attributable to a decline in prevailing interest rates and investment yields.

Previous wording

Other revenue amounted to $24 million in the second quarter of 2026, compared with $22 million in the second quarter of 2025, and totaled $46 million in the six months ended June 30, 2026, compared with $45 million in the six months ended June 30, 2025. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.

Current wording

Other revenue amounted to $23 million in the third quarter of 2026, compared with $22 million in the third quarter of 2025, and totaled $69 million in the nine months ended September 30, 2026, compared with $67 million in the nine months ended September 30, 2025. 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 6.7% in the second quarter of 2026, compared with 6.2% in the second quarter of 2025. The G&A expense ratio was 6.9% in the six months ended June 30, 2026, compared with 6.6% in the six months ended June 30, 2025. The change in G&A ratios reflect the impact of lower premium revenues and continued operating discipline.

Current wording

The G&A expense ratio was 6.4% in the third quarter of 2026, consistent with the third quarter of 2025. The G&A expense ratio was 6.8% in the nine months ended September 30, 2026, compared with 6.5% in the nine months ended September 30, 2025. The increase in G&A ratio for the nine months ended September 30, 2026 reflects the impact of lower premium revenues, partially offset by the impact of continued operating discipline.

Previous wording

Depreciation and amortization was $40 million in the second quarter of 2026, compared with $58 million in the second quarter of 2025, and was $79 million in the six months ended June 30, 2026, compared with $106 million in the six months ended June 30, 2025. The decrease is due to certain intangibles becoming fully amortized.

Current wording

Depreciation and amortization was $38 million in the third quarter of 2026, compared with $45 million in the third quarter of 2025, and was $117 million in the nine months ended September 30, 2026, compared with $151 million in the nine months ended September 30, 2025. The decrease is due to certain intangibles becoming fully amortized and the resulting impact from the impairment discussed below.

Previous wording

Other operating expenses decreased by $5 million in the second quarter of 2026, compared with the second quarter of 2025, and decreased by $2 million in the six months ended June 30, 2026, compared with the six months ended June 30, 2025. Other operating expenses primarily include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above.

Current wording

Other operating expenses amounted to $9 million in the third quarter of 2026, a decrease of $7 million compared with the third quarter of 2025, and amounted to $57 million in the nine months ended September 30, 2026, a decrease of $9 million compared with the nine months ended September 30, 2025. Other operating expenses primarily include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above. Additionally, the changes in both periods reflect lower non-recurring costs associated with acquisitions compared to 2025.

Previous wording

Interest expense was $54 million and $48 million in the second quarter of 2026 and 2025, respectively, and $108 million and $91 million for the six months ended June 30, 2026 and 2025, respectively. The increase is mainly attributable to the issuance of $850 million of notes in November 2025.

Current wording

Interest expense was $53 million and $49 million in the third quarter of 2026 and 2025, respectively, and $161 million and $140 million for the nine months ended September 30, 2026 and 2025, respectively. The increase is mainly attributable to the issuance of $850 million of notes in November 2025.

Previous wording

Income tax expense amounted to $31 million in the second quarter of 2026, or 33.5% of pretax income, compared with income tax expense of $70 million, or 21.5% of pretax income, in the second quarter of 2025. Income tax expense amounted to $46 million in the six months ended June 30, 2026, or 38.1% of pretax income, compared with income tax expense of $162 million, or 22.7% of pretax income, in the six months ended June 30, 2025. The difference in the effective tax rate is due to the impact of nondeductible expenses and unfavorable discrete tax items as a percentage of lower pretax income in 2026, net of a decrease in state and local income taxes.

Current wording

Income tax expense amounted to $15 million in the third quarter of 2026, or 28.5% of pretax income, compared with income tax expense of $9 million, or 10.1% of pretax income, in the third quarter of 2025. Income tax expense amounted to $61 million in the nine months ended September 30, 2026, or 35.2% of pretax income, compared with income tax expense of $171 million, or 21.3% of pretax income, in the nine months ended September 30, 2025. The differences in the effective tax rate is due to the impact of higher nondeductible expenses and lower tax benefits related to transferrable federal tax credits on lower pretax income in 2026, and differences in discrete tax items recognized in the respective periods.

Previous wording

The President signed the OBBBA into law in July 2025, which contains changes to the Medicaid and Marketplace programs. For Medicaid, the law requires states to establish work requirements, more frequent redeterminations, and cost sharing for the Expansion program over the period from 2027 to 2029, among other modifications. These changes are expected to reduce enrollment in state Medicaid programs, but the timing and magnitude of the reductions may vary by state depending on how quickly states implement the changes, as well as macroeconomic factors since some changes are subject to suspension in case of increases in local unemployment rates. We estimate the reduction in enrollment will emerge gradually and reduce premium 2% to 3% annually through 2029, primarily in Medicaid Expansion, and any acuity shift should be minor and gradual. An estimated two-thirds of our Expansion members already work in some capacity. The law also reduces revenues that states can raise through provider taxes to finance their share of Medicaid spending and limits payments to Medicaid providers to 100 percent of the mandated Medicare rate for Expansion states and 110 percent of the Medicare rate for non-Expansion states. These changes are scheduled to begin in 2028, and we expect they may take 5 to 10 years to be fully implemented. Their impact is uncertain at this time and will depend on how states may adapt their future tax and Medicaid funding policies in response.

Current wording

The President signed the OBBBA into law in July 2025, which contains changes to the Medicaid and Marketplace programs. For Medicaid, the law requires states to establish work requirements, more frequent redeterminations, and cost sharing for the Expansion program over the period from 2027 to 2029, among other modifications. These changes are expected to reduce enrollment in state Medicaid programs, but the timing and magnitude of the reductions may vary by state depending on how quickly states implement the changes, as well as macroeconomic factors since some changes are subject to suspension in case of increases in local unemployment rates. We estimate the reduction in enrollment will emerge gradually and reduce premium at compounded annual growth of 2% to 3% through 2029, primarily in Medicaid Expansion, and any acuity shift should be minor and gradual. An estimated two-thirds of our Expansion members already work in some capacity. The law also reduces revenues that states can raise through provider taxes to finance their share of Medicaid spending and limits payments to Medicaid providers to 100 percent of the mandated Medicare rate for Expansion states and 110 percent of the Medicare rate for non-Expansion states. These changes are scheduled to begin in 2028, and we expect they may take 5 to 10 years to be fully implemented. Their impact is uncertain at this time and will depend on how states may adapt their future tax and Medicaid funding policies in response.

Previous wording

In June 2025, the Department of Health and Human Services (“HHS”) finalized the Marketplace Program Integrity and Affordability Rule. The rule, among other changes, shortens the open enrollment period starting in 2027, eliminated the special enrollment period for people with incomes at or below 150% federal poverty level, and tightened eligibility verification requirements for all enrollees. Certain provisions of the Marketplace Program Integrity and Affordability Rule have been subject to legal challenges and stayed pending a final ruling. The Notice of Benefit and Payment Parameters (“NBPP”) Final Rule for the 2027 plan year reintroduces updated versions of certain of the stayed provisions, which could significantly impact the Marketplace. Certain of the provisions have been subject to legal challenge, and the outcome of these legal challenges and the long term impacts of the Marketplace Program Integrity and Affordability Rule and the NBPP Rule are uncertain.

Current wording

In June 2025, the Department of Health and Human Services (“HHS”) finalized the Marketplace Program Integrity and Affordability Rule. The rule, among other changes, shortens the open enrollment period starting in 2027, eliminated the special enrollment period for people with incomes at or below 150% federal poverty level, and tightened eligibility verification requirements for all enrollees. Certain provisions of the Marketplace Program Integrity and Affordability Rule have been subject to legal challenges. The Notice of Benefit and Payment Parameters (“NBPP”) Final Rule for the 2027 plan year reintroduces updated versions of certain of these provisions, which could significantly impact the Marketplace. Certain of the provisions have been subject to legal challenge, and the outcome of these legal challenges and the long-term impacts of the Marketplace Program Integrity and Affordability Rule and the NBPP Rule are uncertain.

Previous wording

Florida Procurement—Medicaid. In November 2025, the Florida Agency for Health Care Administration issued a Notice of Agency Decision that it intends to award a contract to provide Statewide Medicaid Managed services to enrollees of the Title XIX and Title XXI Children’s Medical Services Program (“Florida Kids”) to our Florida health plan. We are the sole plan selected and expect to serve approximately 120,000 enrollees. The contract is expected to commence on October 1, 2026, and is expected to run through January 2030.

Current wording

Florida Procurement—Medicaid. In November 2025, the Florida Agency for Health Care Administration issued a Notice of Agency Decision that it intended to award a contract to provide Statewide Medicaid Managed services to enrollees of the Title XIX and Title XXI Children’s Medical Services Program (“Florida Kids”) to our Florida health plan. We were the sole plan selected and we expect to serve approximately 120,000 enrollees. The contract commenced on October 1, 2026, and is expected to run through December 2030.

Previous wording

Geographic Service Region 3 to our Wisconsin health plan. The new contract is expected to begin on January 1, 2027 with an expected duration of one year, with an option to renew for an additional seven, one-year renewals.

Current wording

Wisconsin Procurement—Medicaid. In July 2026, the Wisconsin Department of Health Services issued a notice of intent to award a contract to provide services under the Family Care and Family Care Partnership programs in its Geographic Service Region 3 to our Wisconsin health plan. The new contract is expected to begin on January 1, 2027 with an expected duration of one year, with an option to renew for an additional seven, one-year renewals.

Previous wording

Medicaid. We expect our Medicaid enrollment to decrease in 2026, to a total of 4.5 million members by the end of the year, due to general market contraction. The associated revenue loss from the additional member attrition is expected to be offset by higher revenue in Marketplace, as discussed below.

Current wording

Medicaid. We expect our Medicaid enrollment to decrease in 2026, to a total of 4.4 million members by the end of the year, excluding the 120,000 members we expect to serve in the new Florida Kids program that commenced on October 1, 2026, due to general market contraction.

Previous wording

MMP Transition—Medicare. On January 1, 2026, we successfully completed the transition of Medicare-Medicaid Plan (“MMP”) members in five states (Illinois, Michigan, Ohio, South Carolina, and Texas) to new integrated dual eligible special needs plans, which totaled approximately $1.9 billion in total premium revenue in 2025. Our duals business will be the long-term strategic focus for our Medicare segment. As previously mentioned, we will exit the MAPD product in 2027.

Current wording

MMP Transition—Medicare. On January 1, 2026, we successfully completed the transition of Medicare-Medicaid Plan (“MMP”) members in five states (Illinois, Michigan, Ohio, South Carolina, and Texas) to new integrated dual eligible special needs plans (“FIDE/HIDE”), which totaled approximately $1.9 billion in total premium revenue in 2025. Our duals business will be the long-term strategic focus for our Medicare segment. As previously mentioned, we will exit the MAPD product in 2027.

Previous wording

Medicare. We continue to expect our Medicare enrollment to decrease by approximately 12% in 2026, including further reductions in MAPD membership aimed at improving margins to a total of 230,000 members by the end of the year. In 2026, we are participating in Medicare in all our markets except Florida.

Current wording

Medicare. We expect our Medicare enrollment to decrease in 2026, including further reductions in MAPD membership aimed at improving margins to a total of 230,000 members, or 12%, by the end of the year. In 2026, we are participating in Medicare in all our markets except Florida.

Previous wording

Marketplace. In 2026, we are participating in the Marketplace in all our markets except Arizona, Iowa, Massachusetts, Nebraska, and New York. We now expect our Marketplace enrollment to decrease to approximately 250,000 members by the end of the year, in line with our product and pricing strategy towards restoring our target margins. We expect to make further reductions in Marketplace enrollment for 2027 towards restoring our target margins, which we estimate to result in a $1 billion decrease in Marketplace premiums compared to 2026.

Current wording

Marketplace. In 2026, we are offering Marketplace health plans in all our markets except Arizona, Iowa, Massachusetts, Nebraska, and New York. We now expect our Marketplace enrollment to decrease to approximately 250,000 members by the end of the year, in line with our product and pricing strategy towards restoring our target margins. We expect to make further reductions in Marketplace enrollment for 2027 towards restoring our target margins, which we estimate to result in a $1 billion decrease in Marketplace premiums compared to 2026.

Previous wording

Medicaid premium revenue increased $20 million, or 0.2%, in the second quarter of 2026, when compared with the second quarter of 2025, but decreased $183 million, or 1%, in the six months ended June 30, 2026, when compared with the six months ended June 30, 2025. The change in both periods reflects the impact of lower membership due to general Medicaid market contraction and the expiration of our Medicaid Virginia contract effective June 30, 2025, rate updates, program changes, and member mix changes.

Current wording

Medicaid premium revenue increased $184 million, or 2.3%, in the third quarter of 2026, when compared with the third quarter of 2025, but was relatively unchanged on a net basis in the nine months ended September 30, 2026, when compared with the nine months ended September 30, 2025. Both periods in 2026 reflect the impact of rate updates, program changes, and member mix changes, offset by the impact of lower membership due to general Medicaid market contraction. Additionally, the change in the nine months ended September 30, 2026 when compared with the nine months ended September 30, 2025, reflects the expiration of our Virginia Medicaid contract effective June 30, 2025.

Previous wording

The medical margin in our Medicaid program decreased $112 million, or 16%, in the second quarter of 2026 when compared with the second quarter of 2025, and decreased $272 million, or 18%, in the six months ended June 30, 2026 when compared with the six months ended June 30, 2025. The changes for both periods were driven by the decreased premium revenues discussed above and the increase in the MCR, as described below.

Current wording

The medical margin in our Medicaid program decreased $62 million, or 10%, in the third quarter of 2026 when compared with the third quarter of 2025, and decreased $334 million, or 16%, in the nine months ended September 30, 2026 when compared with the nine months ended September 30, 2025. The changes for both periods were mainly driven by the increases in the MCR, as described below.

Previous wording

The Medicaid MCR increased 140 basis points to 92.7% in the second quarter of 2026, from 91.3% in the second quarter of 2025, and increased 160 basis points to 92.4% in the six months ended June 30, 2026, from 90.8% in the six months ended June 30, 2025. The increase in both periods reflects a challenging medical cost environment, program changes, and member mix changes, partially offset by rate updates that were in effect during the six months ended June 30, 2026. The MCR is in line with our expectations.

Current wording

The Medicaid MCR increased 100 basis points to 93.0% in the third quarter of 2026, from 92.0% in the third quarter of 2025, and increased 140 basis points to 92.6% in the nine months ended September 30, 2026, from 91.2% in the nine months ended September 30, 2025. The increase in both periods reflects a challenging medical cost environment, particularly in outpatient and high-cost drug cost categories, program changes, and member mix changes, partially offset by rate updates that were in effect during the nine months ended September 30, 2026. The MCR is in line with our expectations.

Previous wording

Medicare premium revenue decreased $43 million, or 3%, in the second quarter of 2026 compared to the second quarter of 2025, and increased $6 million, or 0.2%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in the second quarter mainly reflects the impact of further reductions in our MAPD footprint due to our pricing strategy aimed at improving margins. The increase in the six months ended June 30, 2026 primarily reflects changes in product mix, as we transitioned MMP members into integrated duals products, and membership growth associated with the ConnectiCare acquisition that closed on February 1, 2025, partially offset by the impact of further reductions in our MAPD footprint due to our pricing strategy aimed at improving margins.

Current wording

Medicare premium revenue increased $6 million, in the third quarter of 2026 compared to the third quarter of 2025, and increased $12 million, or 0.3%, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase in both periods primarily reflects changes in product mix, as we transitioned MMP members into integrated duals products, and membership growth associated with the ConnectiCare acquisition that closed on February 1, 2025, partially offset by the impact of further reductions in our MAPD footprint due to our pricing strategy aimed at improving margins.

Previous wording

The medical margin for Medicare decreased $15 million in the second quarter of 2026, and decreased $33 million in the six months ended June 30, 2026, when compared to the same periods in 2025. The decrease in both periods was mainly due to the increase in MCR discussed below, and the year-over-year changes in premium revenues discussed above.

Current wording

The medical margin for Medicare increased $10 million in the third quarter of 2026, and decreased $23 million in the nine months ended September 30, 2026, when compared to the same periods in 2025. The changes for both periods were mainly due to the changes in MCR discussed below, and the year-over-year changes in premium revenues discussed above.

Previous wording

The Medicare MCR increased to 90.7% in the second quarter of 2026, or 70 basis points, compared to the second quarter of 2025, and increased to 90.3% in the six months ended June 30, 2026, or 110 basis points, compared to the six months ended June 30, 2025. The increase in both periods was mainly attributable to the product mix changes resulting from transitioning MMP members into integrated duals products discussed above, partially offset by product pricing and benefit adjustments implemented for 2026. The second quarter MCR is favorable to our expectations, mainly due to lower than expected medical cost trend in our new integrated duals products.

Current wording

The Medicare MCR decreased to 93.0% in the third quarter of 2026, or 60 basis points, compared to the third quarter of 2025, and increased to 91.2% in the nine months ended September 30, 2026, or 50 basis points, compared to the nine months ended September 30, 2025. The decrease in the third quarter was primarily due to favorable risk adjustment premiums and prior period reserve development, partially offset by the impact of product mix changes. The increase in the nine months ended September 30, 2026 was mainly attributable to the impact of product mix changes from transitioning MMP members into integrated duals products discussed above. The third quarter MCR is in line with our expectations.

Previous wording

Marketplace premium revenue decreased $572 million in the second quarter of 2026 compared to the second quarter of 2025, and decreased $852 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, due to an expected decrease in membership in line with our product and pricing strategy towards restoring our target margins and the impact of changes in estimate for prior year risk adjustment. Our Marketplace membership as of June 30, 2026, amounted to 283,000 members, representing a decrease of 407,000 members compared to June 30, 2025.

Current wording

Marketplace premium revenue decreased $555 million in the third quarter of 2026 compared to the third quarter of 2025, and decreased $1.4 billion in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, due to an expected decrease in membership in line with our product and pricing strategy towards restoring our target margins, and the impact of changes in estimate for prior year risk adjustment. Our Marketplace membership as of September 30, 2026, amounted to 267,000 members, representing a decrease of 446,000 members compared to September 30, 2025.

Previous wording

The Marketplace medical margin decreased $106 million in the second quarter of 2026 when compared with the second quarter of 2025, and decreased $173 million in the six months ended June 30, 2026 when compared with the six months ended June 30, 2025. The changes in each period were primarily due to the decline in premium revenue discussed above and the MCR changes discussed below.

Current wording

The Marketplace medical margin decreased $5 million in the third quarter of 2026 when compared with the third quarter of 2025, and decreased $178 million in the nine months ended September 30, 2026 when compared with the nine months ended September 30, 2025. The changes in each period were primarily due to the decline in premium revenue discussed above and the MCR changes discussed below.

Previous wording

The Marketplace MCR increased to 88.9% in the second quarter of 2026, or 350 basis points, compared to 85.4% in the second quarter of 2025, and increased to 86.3% in the six months ended June 30, 2026, or 260 basis points, compared to 83.7% in the six months ended June 30, 2025. The increase in MCR for both periods mainly reflects the impact of changes in estimate for prior year risk adjustment, continued CMS program integrity initiatives resulting in unfavorable prior year premium adjustments and unfavorable current year member acuity mix. The second quarter MCR was higher than our expectations.

Current wording

The Marketplace MCR decreased to 92.5% in the third quarter of 2026, or 310 basis points, compared to 95.6% in the third quarter of 2025, and increased to 88.3% in the nine months ended September 30, 2026, or 40 basis points, compared to 87.9% in the nine months ended September 30, 2025. The decrease in the MCR for the third quarter of 2026 was mainly due to the impact of favorable changes in estimate for risk adjustment premiums, partially offset by the impact of unfavorable current year member acuity mix changes and continued CMS program integrity initiatives. The increase in MCR for the nine months ended September 30, 2026 mainly reflects the impact of changes in estimate for prior year risk adjustment premiums, continued CMS program integrity initiatives resulting in unfavorable prior year premium adjustments and the impact of unfavorable current year member acuity mix changes. The MCR is in line with our expectations.

Previous wording

The Other segment includes service revenues and costs associated with long-term services and supports consultative services we provide in Wisconsin, the commercial portion of the business acquired in connection with the ConnectiCare transaction that closed effective February 1, 2025, and certain corporate amounts not allocated to the Medicaid, Medicare, or Marketplace segments. Such amounts were immaterial to our consolidated results of operations for the three and six months ended June 30, 2026 and 2025.

Current wording

The Other segment includes service revenues and costs associated with long-term services and supports consultative services we provide in Wisconsin, the commercial portion of the business acquired in connection with the ConnectiCare transaction that closed effective February 1, 2025, and certain corporate amounts not allocated to the Medicaid, Medicare, or Marketplace segments. Such amounts were immaterial to our consolidated results of operations for the three and nine months ended September 30, 2026 and 2025.

Previous wording

Our regulated health plan subsidiaries’ primary liquidity requirements include payment of medical claims and other health care services; payment of certain settlements with our state and federal customers, such as minimum medical loss ratio and risk corridors and Marketplace risk transfers on behalf of CMS; general and administrative costs directly incurred or paid through an administrative services agreement to the parent company; and federal tax payments to the parent company under an intercompany tax sharing agreement. Our regulated health plan subsidiaries meet their liquidity needs by generating cash flows from operating activities, primarily from premium revenue; cash flows from investing activities, including investment income and sales of investments; and capital contributions received from our parent company.

Current wording

Our regulated health plan subsidiaries’ primary liquidity requirements include payment of medical claims and other health care services; payment of certain settlements with our state and federal customers, such as minimum medical loss ratio and risk corridors and Marketplace risk transfers on behalf of CMS; general and administrative costs directly incurred or paid through an administrative services agreement to the parent company; and federal tax payments to the parent company under an intercompany tax sharing agreement. Our regulated health plan subsidiaries meet their liquidity needs by generating cash flows from operating activities, primarily from premium revenue; cash flows from investing activities, including investment income and sales of investments; and capital contributions received from our parent company. In the three and nine months ended September 30, 2026, the parent company contributed capital in the aggregate amount of $100 million and $130 million, respectively, to our regulated health plan subsidiaries in California, Connecticut, Florida, New Mexico and South Carolina to satisfy statutory capital and surplus requirements.