Molina's Third-Quarter Net Income Falls 52% To $38 Million, Yet 2026 Guidance Stands
The health insurer's medical costs took a bigger share of premiums, but its CEO said Medicaid margins may be starting to turn.
Molina Healthcare's third-quarter net income fell 52% to $38 million, or $0.73 per diluted share, the company said in an 8-K filed Wednesday. Management reaffirmed its full-year 2026 guidance anyway.
What the results show
Adjusted net income fell 53% to $46 million, or $0.89 per share. The company attributed the decline mainly to a higher consolidated medical care ratio, the share of premium revenue spent on medical costs.
That ratio was 92.9%, versus 92.6% a year earlier. Medicaid came in at 93.0% against 92.0%, which the company said was in line with its expectations. Medicare was 93.0% against 93.6%, and Marketplace was 92.5% against 95.6%.
Premium revenue fell 4% to about $10.5 billion, which the company said reflected lower Medicaid and Marketplace membership, partly offset by rate updates. Molina served about 4.9 million members at September 30.
For the first nine months, net income was $112 million versus $632 million a year earlier, and operating cash flow was $629 million versus an outflow of $237 million. The company said the cash flow gain came mainly from lower government receivable and payable settlements.
Guidance and the Medicaid view
Molina kept its 2026 outlook at about $42 billion in premium revenue and adjusted earnings of at least $5.25 per share. It also expects standard-accounting earnings of at least $2.38 per share.
The guidance includes a loss of $1.50 per share from implementing the new Florida Medicaid contract in the fourth quarter. It also includes a loss of $1.00 per share from the traditional Medicare Advantage prescription drug product (MAPD), which the company previously said it will exit for 2027.
CEO Joseph Zubretsky pointed to the "apparent plateauing of medical cost trend, which remains at elevated levels," and to recent 2027 rate updates. "We believe we are likely observing the beginning of the turn in Medicaid margins," he said.
Parent-company cash and investments were about $608 million at September 30, versus $223 million at December 31, 2025.
What to watch
Management hosts a call at 8:00 a.m. Eastern on Thursday, October 22, to discuss the results. Shares closed at $214.90 on Wednesday, before the release after the market closed.
The Thursday call is the first chance to test Zubretsky's claim that Medicaid margins are turning, against a Medicaid ratio that rose to 93.0% from 92.0%.
