Molina Healthcare (NYSE:MOH) outlined a challenging finish to 2025 and introduced a sharply lower earnings outlook for 2026, as management pointed to persistent medical cost trend pressure in Medicare and the Marketplace, and unexpected retroactive Medicaid premium actions in California that weighed on fourth-quarter results.
Fourth-quarter results missed expectations
For the fourth quarter, Molina reported an adjusted loss of $2.75 per share on $10.7 billion of premium revenue. CEO Joe Zubretsky said results “fell well below” expectations due to continued trend pressure in Medicare and the Marketplace and two retroactive items in Medicaid that together totaled $2 per share.
In Medicare, the fourth-quarter MCR was 97.5%, with management citing elevated utilization in LTSS and high-cost drugs and slower-than-expected margin improvement in its MAPD product. In the Marketplace, the fourth-quarter MCR was 99%, driven by elevated utilization and prior-period provider claim settlements.
Full-year 2025: growth continued, but margins compressed
For full-year 2025, Molina reported $43 billion of premium revenue, up 11% year over year. Adjusted earnings per share were $11.03, and pretax margin was 1.6%, below the company’s long-term target range.
Management described 2025 as “a tale of two halves.” The company earned “over $11 per share” in the first half, but trend pressure worsened in the third and fourth quarters. Comparing initial 2025 EPS guidance of $24.50 to the final $11.03 result, Zubretsky attributed nearly half of the underperformance to “unprecedented trend” and increased acuity in the Marketplace segment, which he noted is about 10% of total premium revenue. Roughly one-third of the underperformance was tied to Medicaid rate and trend imbalance, with the remainder attributed to higher utilization in Medicare.
In Medicaid—about 75% of total premium—Molina posted a full-year MCR of 91.8% and 2.8% pretax margin. Zubretsky said rates increased to about 6% for the year (from 4.5% in initial guidance), but medical cost trend increased to 7.5%. He said 250 basis points of that trend was attributable to an acuity shift from membership declines related to the final stages of redeterminations.
California retroactive Medicaid items explained
On the call, management detailed the drivers behind the California retroactive items. Zubretsky said the state introduced a retroactive corridor tied to the company’s undocumented population, which he said did not use services during the year at levels assumed in pricing. Separately, he said Los Angeles County experienced significant membership churn that altered risk profiles among carriers, prompting a year-end risk adjustment update that required Molina to pay money back.
Keim said the two items totaled about $135 million and were “pretty unusual in nature.” He added that because the undocumented program is state-funded, California was able to implement a retroactive corridor that would not be allowed under typical CMS restrictions. Management also said it pulled the California impact through into 2026 guidance “out of conservatism,” expecting similar dynamics to apply.
Growth initiatives: Florida CMS win and continued RFP focus
Despite near-term margin headwinds, management emphasized continued Medicaid growth opportunities. Molina highlighted a “historic” win in Florida, where the state awarded Molina the sole Children’s Medical Services (CMS) contract. The company said the contract is expected to yield $6 billion in annual run-rate premium and is expected to go live in late 2026. Molina also referenced a Wisconsin LTSS renewal and previously announced wins in Georgia and Texas STAR & CHIP.
Zubretsky said the Florida win and prior Georgia and Texas awards represent over $9 billion of Medicaid premium and contribute to embedded earnings. He also cited an RFP win rate of 90% on renewal contracts (representing $14 billion in retained revenue) and 80% on new contracts (representing $20 billion of new revenue). Molina said it has an active pipeline of $50 billion of new opportunities over the next few years.
On M&A, management said the operating environment is prompting smaller, less diverse health plans to consider strategic options. Molina said it remains opportunistic about deploying capital to accretive acquisitions and is actively evaluating “actionable opportunities,” though it noted some targets have been “so troubled” they pursued alternatives rather than being acquired.
2026 outlook: lower premium, at least $5 EPS, and portfolio changes
Molina guided to approximately $42 billion of 2026 premium revenue—slightly below 2025—reflecting growth from Florida and Medicare offset by a planned reduction in Marketplace exposure. The company guided to a 0.8% pretax margin and adjusted EPS of at least $5.
Management said 2026 guidance includes notable burdens, including $1.50 tied to performance and start-up impacts related to the Florida CMS contract and $1 due to underperformance of the traditional MAPD product. Zubretsky said Molina will exit the traditional MAPD product for 2027 as it shifts to focus exclusively on dual-eligible Medicare members. After adjusting for those items, he said the guidance implies underlying earnings of about $7.50 per share.
Keim walked through key drivers behind the guidance cut versus a prior $14 per share outlook discussed on the third-quarter call. He said the largest driver was Medicaid, with 2026 Medicaid MCR guidance of 92.9%, which is 140 basis points higher than previously expected. Keim cited several contributors, including:
- Ongoing impact of the California retro items (about 40 basis points of full-year pressure).
- Florida CMS contract start-up performance (about 30 basis points of full-year pressure, as the first quarter of the contract is expected to run higher before reaching target margins).
- Rates in 2026 expected to be about 50 basis points lower than the company’s initial outlook, with no expected benefit to MCR from rates exceeding trend.
He added that underlying Medicare performance deteriorated by about $1 per share, largely due to MAPD. Higher tax rate, interest expense, and lower volumes were also headwinds, partially offset by G&A efficiencies.
By segment, Molina expects in 2026:
- Medicaid: $33.4 billion of premium, 1.2% pretax margin, and MCR of 92.9%, based on rates averaging about 4% and medical cost trend of 5%.
- Medicare: $6.6 billion of premium, MCR of 94%, and pretax margin of -1.7%. Excluding MAPD, management said the margin is closer to breakeven as members transition to integrated duals products, which are expected to produce lower margins in year one before improving in years two and three.
- Marketplace: $2.2 billion of premium and 1.7% pretax margin, with MCR of 85.5%, reflecting conservative pricing amid volatility and risk pool changes tied to subsidy expiration.
Membership expectations include flat Medicaid year-end membership of about 4.6 million, Medicare membership of about 230,000 at both the start and end of the year, and Marketplace membership falling to 280,000 by the end of the first quarter and 220,000 by year-end. Management said Marketplace forecasting is harder in 2026, with uncertainty around renewal retention and grace-period nonpayment. Keim said the company is seeing roughly 60% effectuation on new members, versus a historical 70%–80% range.
On trend, management said its 5% Medicaid medical cost trend assumption for 2026 is effectively the “core trend” experienced in 2025 once redetermination-related acuity shift is excluded. Zubretsky cited ongoing pressure from behavioral health, pharmacy, LTSS, and professional office visits as factors embedded in the 5% outlook.
Molina also reiterated its view that the Medicaid market is underfunded by 300–400 basis points based on statutory filings across its markets, and said it expects Medicaid margins to trough in 2026 before improving as rates and trend return to equilibrium. The company plans to provide an updated long-term outlook and further detail on embedded earnings at an Investor Day on May 8.
About Molina Healthcare (NYSE:MOH)
Molina Healthcare, Inc is a managed care company specializing in government-sponsored health insurance programs. The company offers Medicaid managed care plans, Medicare Advantage and prescription drug plans, and individual Marketplace plans under the Affordable Care Act. Through an integrated care model, Molina emphasizes preventive and primary care services, care coordination, and disease management to improve health outcomes for its members.
The company traces its roots to the early 1980s, when Dr.
