Molina Healthcare, Inc.

What they do

Molina provides managed healthcare services under Medicaid, Medicare, and state insurance marketplace programs, operating through four reportable segments: Medicaid, Medicare, Marketplace, and Other. The company contracted with states and the federal government to provide fixed monthly per-member premium payments and is obligated to deliver covered healthcare services during contract periods. Membership stood at approximately 5.5 million as of December 31, 2025, and approximately 4.9 million as of June 30, 2026.

Revenue drivers

• Medicaid — Largest segment with premium revenue of $32.24 billion in 2025, or 75% of total premium revenue, covering 4.57 million members as of December 31, 2025.
• Medicare — Premium revenue of $6.24 billion in 2025, representing 14% of total premium revenue, covering 262,000 members as of December 31, 2025.
• Marketplace — Premium revenue of $4.49 billion in 2025, representing 10% of total premium revenue, covering 655,000 members as of December 31, 2025.
• Other — Includes long-term services and supports consultative services in Wisconsin and the commercial portion of the ConnectiCare business acquired February 1, 2025; premium revenue of $90 million in 2025 and insignificant to consolidated results.

Recent performance

Second quarter 2026 premium revenue was $10.24 billion, down 6% year over year, with total revenue of $10.87 billion and GAAP net income of $60 million, or $1.19 per diluted share, down 76% from $255 million in the prior-year quarter. The consolidated MCR was 92.2% in Q2 2026 versus 90.4% a year earlier, with Medicaid MCR at 92.7%, Medicare MCR at 90.7%, and Marketplace MCR at 88.9%. For the six months ended June 30, 2026, net income was $74 million, or $1.46 per diluted share, compared to $553 million, or $10.19 per diluted share, in the first half of 2025. Operating cash flow was $788 million for the first six months of 2026 versus an outflow of $112 million in the same period of 2025. Full-year 2025 net income was $472 million, or $8.92 per diluted share, on total revenue of $45.43 billion, with a consolidated MCR of 91.7%.

Strategy

Molina remains a pure-play government-sponsored healthcare business, pursuing organic growth and accretive acquisitions. In 2025, the company won a sole contract to provide Florida Statewide Medicaid Managed Care and Children's Health Insurance Program services covering approximately 120,000 enrollees with expected annual premium revenue of $6 billion, commencing in Q4 2026. Renewal and new RFP wins in 2025, including Wisconsin, Georgia, and Texas Star-Chip, represent over $9 billion of incremental annual Medicaid premium revenue. The ConnectiCare acquisition closed February 1, 2025. The company also returns capital to shareholders through targeted share repurchase programs.

Risks

• Medicaid rate inadequacy — State premium rates are fixed by contract and typically adjusted annually, so if medical cost trends or utilization rise faster than rates, Medicaid margins compress or are eliminated, as seen in 2024 and 2025.
• Medical cost trend volatility — Molina's consolidated MCR rose to 91.7% in 2025 from 89.1% in 2024 and was 92.2% in Q2 2026, reflecting challenging cost trends across all segments, particularly in Marketplace.
• Medicaid enrollment reduction from OBBBA — The One Big Beautiful Bill Act is expected to drive a 15% to 20% reduction in the company's 1.2 million Medicaid Expansion members and further medical cost acuity shift over the next two to three years.
• Marketplace subsidy expiration — The expiration of subsidies in Marketplace in 2025 could affect membership and pricing strategy in that segment, which grew to 655,000 members and $4.49 billion of premium revenue in 2025.

Outlook

Management increased full-year 2026 adjusted earnings guidance by $0.25 to at least $5.25 per diluted share and full-year 2026 GAAP earnings guidance to at least $2.15 per diluted share. Premium revenue guidance for full-year 2026 is unchanged at approximately $42 billion. CEO Joseph Zubretsky stated that the imbalance between Medicaid rates and medical cost trend appears to have stabilized and that 2026 is the trough year for Medicaid pretax margins, with building blocks for profitable growth in 2027.