Molina Healthcare Q1 Earnings Call Highlights

Key Points

• Molina reported Q1 adjusted EPS of $2.35 on premium revenue of $10.2 billion, and management reaffirmed full-year guidance of roughly $42 billion in premium revenue and at least $5 in adjusted EPS despite a consolidated MCR of 91.1% and a 1.6% adjusted pre-tax margin.
• Management raised its expected same-store Medicaid attrition to a 6% decline in 2026 (from 2%), forecasting ~4.5 million Medicaid members, but said the prior acuity shift has largely run its course and reiterated a 5% medical cost trend assumption for 2026.
• Strategic changes include exiting the MAPD product for 2027 (to remove an estimated ~$1.2 billion revenue drag), reducing Marketplace exposure to about 250,000 members while pursuing margin improvements, and ramping up the Florida CMS Kids contract (about $6 billion revenue at full run rate) which may carry a high initial MLR.

Molina Healthcare NYSE: MOH reported first-quarter 2026 adjusted earnings per share of $2.35 on premium revenue of $10.2 billion, and management reaffirmed its full-year outlook of approximately $42 billion in premium revenue and at least $5 in adjusted EPS.

President and CEO Joe Zubretsky said the quarter was “solid under the circumstances” and pointed to continued medical cost management in what he described as a challenging cost environment. Molina posted a consolidated medical care ratio (MCR) of 91.1% and an adjusted pre-tax margin of 1.6% for the quarter, Zubretsky said.

Quarterly performance by segment

In Medicaid, Molina reported a first-quarter MCR of 92%. Zubretsky said January 1 rate updates came in as expected, while medical cost trend was “modestly favorable” versus the company’s expectations. He also reiterated confidence in Molina’s full-year 2026 medical cost trend assumption of 5%, after the company observed a 7.5% medical cost trend in 2025 that included 250 basis points of acuity shift related to post-pandemic redeterminations.

“Our expectation that the acuity shift trend that we had experienced in 2025 was behind us and would not recur is holding up,” Zubretsky said.

In Medicare, Molina reported a first-quarter MCR of 89.8%. Zubretsky said the company completed the transition of Medicare-Medicaid Plan (MMP) members to new integrated products at the beginning of the year. The company’s “dual business is the strategic focus” in Medicare, he said, adding that Molina plans to exit the Medicare Advantage Prescription Drug (MAPD) product for 2027.

In Marketplace, first-quarter MCR was 84%, with membership at 305,000, “slightly higher” than prior guidance, Zubretsky said. CFO Mark Keim noted that adjusting for prior year risk adjustment and program integrity impacts would reduce Marketplace MCR to approximately 79.5%. Keim said Molina has reduced its exposure in Marketplace through pricing actions and is prioritizing margin improvement.

Guidance reaffirmed; Medicaid attrition assumption rises

Despite what management described as favorable first-quarter indicators across businesses, Molina reaffirmed full-year 2026 adjusted EPS guidance of at least $5 and premium revenue guidance of approximately $42 billion.

Keim said Molina now expects same-store Medicaid membership to decline 6% in 2026, up from prior guidance of a 2% decline, and expects to end the year with approximately 4.5 million members. Zubretsky said the company was “pretty spot on” for about 15 to 17 states at around 2% attrition but underestimated declines in California, Illinois, New York, and “somewhat in Texas.” Keim added that in California, attrition is “very disproportionately” driven by undocumented immigration status members.

Management said the associated Medicaid revenue impact is expected to be offset by higher Marketplace revenue. Keim said Molina expects Marketplace membership to end 2026 at approximately 250,000, with renewing members representing 70% of its book. Zubretsky described the expected decline from 305,000 to 250,000 as roughly 40,000 terminations per quarter offset by 20,000 special enrollment period additions, or about a net 20,000 decline per quarter over three quarters.

Keim said Molina’s full-year consolidated MCR and each segment MCR guidance were unchanged. He provided the following full-year MCR assumptions discussed on the call:

• Medicaid: 92.9%, including rate increases of 4% and medical cost trend of 5%
• Medicare: 94%
• Marketplace: 85.5%, including normal seasonality

Management also discussed why it chose not to raise guidance after the first quarter. Zubretsky said the company wants a “time-tested” base of two quarters of results given the “highly volatile medical cost inflection environment” in 2025. He cited different sources of uncertainty by segment, including monitoring Medicaid medical cost trends, waiting for June weekly Marketplace data, and observing early performance of new integrated Medicare products.

Acuity shift and “low and no utilizers”

Both Zubretsky and Keim said they do not expect additional acuity shift from further Medicaid membership declines, pointing to what they described as a materially reduced presence of “low and no utilizers” in the Medicaid population. Zubretsky said the percentage of members considered low or no utilizers under Molina’s internal definition is 7.5 percentage points lower than at the peak of the pandemic and is below pre-pandemic levels.

Keim said Molina’s analysis of “stayers and leavers” in Medicaid also supports the view that membership leaving the rolls is now closer to portfolio averages than in prior periods, suggesting the prior acuity shift has “largely” run its course.

Balance sheet, cash flow, and leverage

Keim said Molina’s capital foundation remains strong. In the quarter, the company harvested approximately $35 million of subsidiary dividends, and parent company cash ended the quarter at approximately $213 million. Operating cash flow was $1.1 billion, which Keim said was driven by the timing of government payments in Medicaid and Marketplace.

Keim emphasized that parent-level cash generation is more meaningful than consolidated operating cash flow for Molina’s regulated structure. He said he expects parent cash to exceed $600 million by year-end based on anticipated subsidiary dividends.

Leverage metrics cited on the call included debt of 6.1x trailing 12-month EBITDA and a debt-to-cap ratio of about 48%. Keim said Molina typically targets debt-to-cap “in the low 40s” as a more enduring level, while calling the current level “very comfortable.”

Days in claims payable (DCP) was 44, which Keim said was modestly lower than typical due to payment timing. He added that Molina remains confident in its actuarial processes and reserves, and said subsidiary dividends would not reduce regulated entities below a 300% risk-based capital (RBC) target.

Medicare repositioning, Florida CMS implementation, and M&A comments

In Medicare, management discussed the upcoming exit from MAPD. Zubretsky said Molina is still working with potential counterparties to transfer the MAPD business and would prefer a “warm transfer” to a strategic partner; otherwise, the company would wind the product down. Keim provided additional detail, saying 2026 Medicare guidance includes about $6.6 billion in revenue and a loss of $1.25 per share, with MAPD contributing “a dollar loss” on $1.2 billion of revenue that “goes away next year.” He said the remaining dual business run rate is about $5.5 billion with an MLR around 94% and noted Molina’s “stars profile for payment year 2027 has improved.”

Management also addressed implementation of the Florida CMS Kids contract (referred to on the call as “Florida CMS” and “Florida Kid”). Zubretsky said the program is expected to be approximately $6 billion of revenue at full run rate and that Molina is in “full implementation mode.” Keim said G&A timing in the first quarter reflected “some IT projects” and expenses related to gearing up for the Florida contract. He also said the Florida business is expected to come in at a “pretty high MLR” in its first quarter, which he said is typical for new business and would pressure the fourth quarter.

On acquisitions, Zubretsky said Molina did not discuss M&A in its prepared remarks primarily because the company plans to cover growth topics at its Investor Day on May 8. He said the M&A pipeline remains “quite replete with actionable opportunities,” while emphasizing discipline and strategic fit.

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.

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