B-
Overall grade
B
Financial quality
The sleeper story is risk adjustment quietly becoming a bigger drag than management admits - it jumped from 14.5% of premiums to 16%+ and is eating their MLR improvements. While everyone celebrates the historic 15.8% SG&A ratio, management warned it increases 'gradually each quarter' to 17.6-18.1% by year-end. The binding constraint is regulatory uncertainty around 2026, forcing defensive positioning when they should be investing for growth. Mark's most telling quote: 'We may have a pricing issue as we get into 2026... could be a major change' - a far cry from last quarter's market confidence. My view changes if risk adjustment stabilizes below 15% of premiums and they provide specific AI ROI metrics showing real operational leverage.
The 30-second version
- Risk adjustment is quietly becoming a bigger drag than they're admitting
- SG&A hit 15.8% but guidance implies it gets worse from here
- The membership quality story is cracking under regulatory pressure
What changed this quarter
| Metric | Prior | This quarter |
|---|---|---|
| Total Revenue | $2.4B (+67% YoY) | $3.0B (+42% YoY) |
| Net Income | $25M full year 2024 | $275M (+$98M YoY) |
| MLR | 81.7% full year 2024 | 75.4% (+120 bps YoY) |
| SG&A Ratio | 19.1% full year 2024 | 15.8% (-260 bps YoY) |
| Operating Margin | Not provided for Q4 | 9.8% (+110 bps YoY) |
| Effectuated Members | 1.8M paid members | 2M effectuated, 1.9M paid |
| Revenue Growth YoY | 67% in Q4 | 42% in Q1 |
| Prior Period Development | $62M favorable in Q4 | $31M unfavorable |
Accountability tracked
8 new promises made4 narrative shifts flagged6 prior promises graded
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
Subscribe to Call Sheet Daily →