CEO says Medicaid rate-cost imbalance appears stabilized and 2026 is a trough year
Molina Healthcare’s second-quarter net income fell to $60 million, or $1.19 a share, from $255 million, or $4.75 a share, a year earlier, the insurer reported Wednesday. Revenue dropped 4.8% to $10.87 billion, driven by a 6% decline in premium revenue as membership in its government-sponsored health plans continued to shrink.
Adjusted earnings per share were $1.51, topping the FactSet consensus of $1.39. The beat prompted Molina to raise its full-year 2026 outlook for adjusted earnings to at least $5.25 per share, up from its prior guidance. The company also projected GAAP earnings of at least $2.15 per share.
Molina attributed the second-quarter profit decline to lower premium revenue and an increase in the medical care ratio — the share of premiums spent on medical claims. Premium revenue fell 6% from a year earlier, reflecting the loss of members from its Medicaid and Medicare plans, though the decline was partially offset by rate updates that took effect this year.
Chief Executive Joseph Zubretsky said the company believes the gap between what states pay for Medicaid beneficiaries and the actual cost of care has stopped widening. “The imbalance between Medicaid rates and medical costs appears to have stabilized and is well positioned to be corrected with future rate increases,” he said. Zubretsky called 2026 “a trough year for Medicaid pretax margins,” but added that he is “confident Molina is well positioned for profitable growth in 2027.”
The company’s full-year earnings guidance includes two sizable drags: a projected $1.50-a-share loss tied to the implementation of a new Florida Medicaid contract, and a $1.00-a-share loss from its traditional Medicare Advantage prescription drug product. Molina said it plans to exit that product line for 2027.