Molina Healthcare (MOH) Q3 2026 earnings review
Molina's profit halves, but it keeps its full-year plan
Molina Healthcare, the Medicaid and Medicare insurer, earned far less than a year ago but stayed on its plan. Premium revenue fell 4% because fewer people are enrolled in its Medicaid and exchange plans. Profit per share excluding one-offs came in at $0.89, above the roughly $0.70 a quarter its full-year floor pointed to by our math. Chief executive Joseph Zubretsky said medical cost growth appears to have plateaued and called the 2027 rate updates strong.
| Premium revenue | $10.46B −4% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.89 $1.84 a year ago |
| Medicaid medical care ratio | 93.0% 92.0% a year ago |
| Full-year profit floor, excluding one-offs | Unchanged at least $5.25 a share |
⚖️ Verdict: ⚪ Neutral
The case is unchanged, because the figure that decides it, the Medicaid rate increase for 2027, is still a description rather than a number. The good news: parent-company cash already sits at the year-end target, and the fourth quarter needs only about $0.51 a share to reach the floor. One caution: Medicaid's own profit fell 10% from a year ago, so the turn Zubretsky describes is not yet in the segment's numbers.
The question now is whether states will pay enough in January for Medicaid margins to recover next year. Either the new rates run ahead of medical cost growth and the turn shows up by mid-2027, or they match it again and next year's profit rests on the Florida contract and the Medicare exit alone. The fourth-quarter report, with the rate figure and the first Florida results, will tell.
🐂 Bull Case
Molina Earned More Than Its Own Plan Required
Molina Healthcare set a floor of at least $5.25 a share for the year, excluding one-offs, and kept it this quarter. After the first half that floor left about $1.39 for the second half by our math, or roughly $0.70 a quarter if the halves split evenly.
The third quarter delivered $0.89, so the fourth now needs a bit more than half of that to reach the floor. That final quarter carries the planned loss from launching the Florida children's Medicaid contract, so the small number is by design. A result above an even split says the plan was cautious, not that the fourth quarter will be easy.
What to watch: fourth-quarter profit per share excluding one-offs, due in February. Anything above the remainder the floor leaves means the year beat its own plan despite the Florida launch.
Parent Cash Reached the Year-End Target Early
Molina keeps most of its cash inside regulated health plans, so what the parent company can spend on debt or deals is the figure that matters. Last quarter it projected about $600 million at the parent by year end.
The parent held $608 million at the end of September, up from $290 million in June, so the target arrived a quarter early. Nine-month operating cash flow swung to an inflow of $629 million, which Molina attributes to "lower government receivable and payable settlements in 2026".
This matters because the balance sheet is a standing concern, with long-term debt close to half of debt plus equity by our math and a credit rating cut earlier this year. Parent cash is the first lever to bring that down, but the third quarter on its own consumed cash.
What to watch: year-end parent cash in February. A figure well above $600 million would mean the health plans sent dividends up faster than the plan assumed.
Medicare Earns More With Fewer Members
Molina is rebuilding its Medicare business around dual-eligible members, people covered by both Medicare and Medicaid. It will leave its traditional Medicare Advantage drug plan, called MAPD, in 2027 because that product "does not align with the Company’s strategic shift to focus exclusively on dual eligible members in Medicare".
The segment's medical margin, premium left after paying for care, rose 10% to $113 million. Membership fell 17%, so the gain came from costs. The medical care ratio, the share of premium spent on care, was 93.0% against 93.6% a year ago, which Molina attributes to "stable medical cost trend".
This matters because the duals book is where the insurer has placed its Medicare future, so earning more on a smaller base is the right direction. But the exit is shrinking the segment before duals growth replaces it, and the full-year ratio target of 92.2% assumes a weaker fourth quarter.
What to watch: Medicare membership on January 1, after the MAPD plan closes. A duals count that keeps the segment near today's size would show the exit cuts losses rather than revenue.
🐻 Bear Case
Medicaid Profit Falls While Molina Calls the Turn
Chief executive Joseph Zubretsky said Molina is likely seeing "the beginning of the turn in Medicaid margins", citing "the apparent plateauing of medical cost trend" and "the strength of recent rate updates for 2027". Medicaid is the insurer's largest business: states pay it a premium to cover low-income members.
The quarter's numbers do not show a turn yet. Medicaid premium rose 2% from a year ago, but the medical margin, premium left after paying for care, fell 10%, because the share of premium spent on care kept climbing.
- Medical care ratio: 93.0%, against 92.0% a year ago and 92.7% last quarter
- Medicaid members: 4.37 million, down 6% from a year ago
- Full-year ratio target: 92.9%, which puts the fourth quarter near 94% by our math
This matters because the ratio has risen every quarter this year, and Zubretsky himself says the cost trend "remains at elevated levels". A plateau in costs only stops the margin from falling further; recovery needs 2027 rates that run ahead of cost growth, and the release gives no figure for them.
What to watch: the percentage rate increase on the roughly 55% of Medicaid premium that resets on January 1, due with the fourth-quarter report. A figure at or above the 5% cost trend Molina has assumed would make the turn visible in next year's numbers.
Smaller Marketplace Still Faces a Weak Fourth Quarter
Marketplace is Molina's business selling individual health plans on the state insurance exchanges, and it has mispriced that book for two years running. The insurer raised prices by about 30% on average for 2026 and pulled out of many counties, and it plans to cut roughly another $1 billion of premium in 2027.
Membership fell 63% from a year ago, to 267,000, and premium dropped by almost half. The medical care ratio was 92.5%, up from 88.9% last quarter, which Molina calls "in line with normal seasonality and the Company’s expectations".
This matters because the full-year ratio target of 90% implies a fourth quarter near 95% by our math, so the smaller book still loses money in its final quarter, as it did last year. The 2027 plan repeats the same lever, higher prices and fewer states, and Molina's outlook for next year assumes this business stops losing money.
What to watch: Marketplace members and the state count on January 1, plus the fourth-quarter ratio. A ratio well below last year's 99% would show the repricing held even in the seasonally weakest quarter.
Still No Buybacks as Parent Cash Doubles
Molina bought back $1 billion of stock in each of the last two years, but it has not repurchased a share since the third quarter of 2025. Its latest quarterly filing showed $500 million of authorisation left, and that expires at the end of December.
The pause continued this quarter even as parent cash reached its year-end target, and the nine-month cash flow statement shows no share purchases against $1 billion a year earlier. Molina let cash build instead, while long-term debt stayed near 48% of debt plus equity by our math.
This matters because the choice shows where the insurer ranks its priorities: protecting the credit rating and the loan covenant it amended in February comes ahead of returning capital. That is defensible with debt this high, but it means the recovery in profit per share must come from operations alone.
What to watch: whether Molina repurchases any shares before the authorisation lapses in December, and whether the board renews it. A renewal without use would confirm that debt levels, not results, set the timing.
Risks this quarter didn't answer
Molina's release is a short document, and no prepared remarks were supplied with it, so several standing concerns got no new numbers this quarter and wait for the call or the quarterly filing.
- 2027 Medicaid rates: Zubretsky calls the recent updates strong but gives no percentage; the fourth-quarter report should state the rate assumption for the roughly 55% of premium that resets on January 1.
- Florida children's contract: the launch loss stays at $1.50 a share, but the release does not confirm the October 1 start or the member count; the filing's membership table will.
- New-store embedded earnings, the future profit from contracts already won: last put at $9 a share, absent from the release, so the figure that funds half of next year's plan is not readable this quarter.
- Credit and covenants: the interest-coverage test Molina loosened in February tightens again through 2027; the filing will show the headroom, and the parent cash build helps.
- Securities class action over past earnings outlooks: the hearing on the motion to dismiss was set for September 2; the filing should report the outcome.
- Federal funding rules: limits on provider taxes and state-directed payments narrow states' room to raise rates from 2028; only the January rate cycle shows whether states still pay enough.
👓 Other Themes
Higher GAAP Outlook Comes From Lower One-Off Charges
Molina lifted its full-year GAAP earnings floor to $2.38 a share from $2.15. The figure excluding one-offs did not move, so by our math the one-off items it expects to book, net of tax, shrank to $2.87 from $3.10. The raise is an accounting change, not a sign of stronger operations.
Members Keep Leaving Medicaid and the Exchanges
Molina ended the quarter with 4.86 million members, 14% fewer than a year ago, as Medicaid rolls shrink across its states and as it deliberately cuts its exchange book. Medicaid alone lost about 46,000 members in the quarter, so the attrition the insurer planned for continues at a steady pace. The full-year target of 5 million members relies on the Florida children's contract adding roughly 120,000 from October 1.
💲 Other KPIs
Unchanged at 44 days for a third straight quarter, down from 46 a year ago. Days in claims payable measures how many days of medical costs Molina holds in reserve for bills not yet paid, so a lower number means thinner reserves. It sits below the 48 to 50 days the insurer once described as its normal range.
Down 5% since December, to $3.36 billion. Receivables are mostly money states owe Molina for premiums and risk-sharing settlements, so a falling balance means states are paying, which is the main reason nine-month operating cash flow turned positive after last year's outflow. Medical claims payable moved the other way, up 2% since December.
Flat at 6.4% of revenue from a year ago. Administrative spending itself fell 3% to $710 million, which Molina credits to "continued operating discipline". The insurer has held its full-year target on the adjusted basis all year even though revenue is below the original plan, so the cost base is shrinking with the business.
🔮 Guidance
Unchanged. The plan still has premium revenue falling about 2% from 2025. By our math that leaves about $11.1 billion for the fourth quarter, up 6% from this quarter and the first year-over-year increase since last year, because the Florida children's contract starts October 1 and adds premium on top of the January rate updates.
Unchanged. Profit excluding one-offs still has a floor of $5.25 a share. With $4.74 earned in nine months, the fourth quarter needs only about $0.51 by our math, against a loss in the same quarter last year. That number already carries the full-year Florida launch loss and the loss on the Medicare product Molina is leaving. The record: cut from about $14 to $5.00 last winter, raised a quarter ago, now held.
Raised. The GAAP floor moves up to $2.38 a share from $2.15. The raise comes entirely from smaller expected one-off charges, so the underlying plan did not move. By our math the fourth quarter needs about $0.19 after $2.19 in nine months, against a loss in the same quarter last year.
Unchanged. Molina reaffirmed its segment targets without restating them, so the figures here are the ones it gave last quarter. The consolidated target of 92.6% implies a fourth-quarter ratio near 94.0% by our math. That is worse than this quarter but better than the same quarter last year, and it reflects normal seasonality plus the Florida launch, whose first months carry a cautious cost assumption.
❓ Key Questions
What rate increase do the 2027 Medicaid updates deliver?
Zubretsky calls the recent rate updates strong but gives no number. About 55% of Medicaid premium resets on January 1, and each point of medical care ratio is worth about $5 a share, so this figure decides next year.
Where do new-store embedded earnings stand now?
The future profit from contracts already won was last put at $9 a share, down from more than $11 at year end with no explanation of the drop. Half of it is supposed to arrive in 2027.
Why no share repurchases with cash at the parent?
The $500 million authorisation expires in December and nothing has been bought since 2025. Which condition, debt level, credit rating or covenant headroom, would restart the programme?
Did the Florida children's contract start on October 1?
The release keeps the $1.50 a share launch loss but does not confirm the start date or the roughly 120,000 members. Any delay or a worse first-period cost ratio would push the drag into 2027.
How many Marketplace states and members remain for 2027?
Molina plans to cut another $1 billion of exchange premium next year and assumes the book at least breaks even. The state list, member count and the pricing allowance for sicker-than-expected members are not disclosed.