Molina Healthcare (MOH) had a rough Thursday. The health insurer reported second-quarter earnings that beat Wall Street estimates, but investors zeroed in on declining premium revenue and shrinking membership, sending shares down more than 12%.
Adjusted earnings came in at $1.51 per share, down sharply from $5.48 a year ago but above the analyst consensus of $1.39. Revenue fell 4.8% year over year to $10.87 billion, which still managed to top expectations of $10.79 billion. The problem? Premium revenue — the lifeblood of any insurer — dropped 6% to about $10.2 billion, reflecting lower membership that was only partially offset by rate updates.
Net income took a big hit, falling to $60 million, or $1.19 per share, from $255 million, or $4.75 per share, a year earlier. The combination of lower premium revenue and a higher medical care ratio squeezed profitability.
Membership Declines Across the Board
Molina's total membership fell to 4.926 million in the second quarter, down from 5.49 million at the end of 2025 and 5.746 million a year earlier. Medicaid membership, the company's largest segment, dropped to 4.418 million from 4.774 million a year earlier.
The consolidated medical care ratio (MCR) — the percentage of premium revenue spent on medical claims — rose to 92.2% from 90.4% a year ago, an increase of 180 basis points. That's not great, but the details tell a more nuanced story.
Medicaid MCR was 92.7%, in line with the company's expectations, supported by rate updates and stable medical cost trends. Medicare MCR came in at 90.7%, better than expected, thanks to lower medical costs and pricing changes implemented for 2026. The Marketplace segment, however, saw its MCR rise to 88.9%, exceeding expectations due to prior-year risk adjustment and program integrity initiatives, as well as an unfavorable member acuity mix this year.
Guidance: A Mixed Bag
Molina reaffirmed its fiscal 2026 premium revenue guidance of approximately $42 billion. The company raised its full-year GAAP earnings outlook to at least $2.15 per share from at least $1.90 previously, but that still falls short of the Wall Street consensus of $2.60.
On an adjusted basis, earnings guidance increased to at least $5.25 per share from at least $5.00, ahead of the analyst estimate of $5.15. The higher outlook reflects stronger first-half Medicaid performance. But there's a lot of moving parts: Molina said a $1.50 per-share improvement in Medicare, driven by developing medical cost trends, is expected to be offset by a $1.50 per-share reduction related to its Marketplace business. Excluding the Marketplace revision, full-year adjusted earnings guidance would have been $6.75 per share.
The outlook also includes a projected $1.50 per-share loss from the implementation of a new Florida Medicaid contract in the fourth quarter and a $1.00 per-share loss tied to the company's traditional Medicare Advantage Prescription Drug plan, which it previously announced it will exit in 2027.
Following Molina's update, shares of Centene Corp. (CNC) also traded lower. In June, Centene said it would offer voluntary buyouts to most employees as it seeks to reduce costs after a significant decline in health plan membership.
MOH Price Action: Molina Healthcare shares were down 12.69% at $193.60 at the time of publication on Thursday.
