Molina Healthcare's 2026 Outlook: Stock Decline and Medicare Changes

Molina Healthcare, headquartered in Long Beach, California, has revealed its 2026 projections, which fall short of industry expectations, leading to a steep decline in its stock value. The company plans to discontinue its traditional Medicare Advantage Part D offerings by 2027, which contributes to these projections. The healthcare sector, especially insurers, faces rising medical costs due to increased demand for behavioral health services and specialty pharmaceuticals within government-supported healthcare plans.

The company's forecasted adjusted earnings stand at a minimum of $5 per share for 2026, a notable decrease from the analyst consensus of $13.76, according to LSEG data. This announcement led to significant share price declines in extended trading sessions for other key players in the industry, such as Centene, UnitedHealth, Humana, and Elevance Health. Chief Executive Officer Joseph Zubretsky highlighted that the new Florida CMS Medicaid contract and underperformance in the Medicare Advantage Part D segment are major factors impacting profitability.

Molina's revenue projections include a premium income estimate of about $42.2 billion for 2026, which is nearly 2% lower than 2025 and falls short of the analyst prediction of $45.46 billion. The expected medical cost ratio is predicted to rise to 92.6%, contrasting with an anticipated 89.78%. The total expected revenue for 2026 stands at roughly $44.5 billion, below the projected $46.55 billion. Moreover, for the fourth quarter ending December 31, the company reported an adjusted loss of $2.75 per share, missing the expected profit of 33 cents per share. Despite these challenges, Zubretsky maintains optimism about maintaining positive pre-tax margins in Medicaid amidst the current financial challenges seen as a low point for industry margins.