Molina Healthcare, Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 21 October 2026: press release. Guidance figures: 3 raised, 4 kept. The quarter’s numbers.

Read the filing

Key takeaways

• GAAP and adjusted EPS roughly halved: Diluted EPS was $0.73 GAAP and $0.89 adjusted, against $1.51 and $1.84 a year earlier. Net income was $38 million GAAP and $46 million adjusted. Source
• Premium revenue fell 4%: Premium revenue was $10.5 billion, down 4% year over year. Lower membership in Medicaid and Marketplace was partly offset by rate updates. Source
• Consolidated MCR rose to 92.9%: The consolidated medical care ratio was 92.9%, against 92.6% in the third quarter of 2025 and 92.2% in the second quarter of 2026. Source
• Medicaid MCR 93.0%, in line: Medicaid premium was $8.2 billion, against $8.0 billion a year earlier. Medicaid MCR was 93.0%, against 92.0% a year earlier and 92.7% in the second quarter. Medical margin was $577 million, against $639 million. Source
• Traditional MAPD exit for 2027: The impairment charge results from the decision to exit the traditional MAPD product for 2027, which does not align with the focus on dual eligible members. The impairment was $93 million. Source
• Medicaid margin turn seen as likely: The CEO said the plateauing of medical cost trend, which remains elevated, and recent 2027 rate updates suggest the beginning of the turn in Medicaid margins. Source

“We are pleased with our third quarter results in this challenging environment and reaffirm our full year guidance,”

Joseph Zubretsky, President and Chief Executive Officer

Guidance

What changed from last quarter

• Guidance raised: GAAP diluted EPS guidance for 2026 was raised from at least $2.15 to at least $2.38. Source
• Guidance kept: Premium revenue guidance of approximately $42 billion and adjusted EPS guidance of at least $5.25 were reaffirmed, unchanged from the second quarter. Source

Third quarter results overview

• GAAP and adjusted EPS roughly halved: Diluted EPS was $0.73 GAAP and $0.89 adjusted, against $1.51 and $1.84 a year earlier. Net income was $38 million GAAP and $46 million adjusted. Source
• Premium revenue fell 4%: Premium revenue was $10.5 billion, down 4% year over year. Lower membership in Medicaid and Marketplace was partly offset by rate updates. Source
• Net income decline tied to MCR: Management attributed the decrease in net income mainly to a higher consolidated MCR. Pre-tax margin was 0.5% GAAP and 0.6% adjusted, against 0.8% and 1.0% a year earlier. Source

Medical costs and reserves

• Consolidated MCR rose to 92.9%: The consolidated medical care ratio was 92.9%, against 92.6% in the third quarter of 2025 and 92.2% in the second quarter of 2026. Source
• G&A ratio unchanged year over year: The G&A ratio was 6.4% GAAP and 6.3% adjusted, the same as in the third quarter of 2025. The second quarter 2026 ratios were 6.7% and 6.5%. Source
• Prior-year reserve components reduced costs: Prior-year components were $352 million in the nine months of 2026, against $124 million in the nine months of 2025, reducing medical care costs. Current-year costs were $28.8 billion. Source

“With the apparent plateauing of medical cost trend, which remains at elevated levels, and the strength of recent rate updates for 2027, we believe we are likely observing the beginning of the turn in Medicaid margins.”

Joseph Zubretsky, President and Chief Executive Officer

Segments and membership

• Medicaid MCR 93.0%, in line: Medicaid premium was $8.2 billion, against $8.0 billion a year earlier. Medicaid MCR was 93.0%, against 92.0% a year earlier and 92.7% in the second quarter. Medical margin was $577 million, against $639 million. Source
• Medicare MCR improved, membership lower: Medicare premium was $1.6 billion, against $1.61 billion a year earlier. Medicare MCR was 93.0%, against 93.6%. Medicare membership was 222,000, against 266,000 at September 30, 2025. Source
• Marketplace premium down almost half: Marketplace premium was $642 million, against $1.2 billion a year earlier. Marketplace MCR was 92.5%, against 95.6%. Marketplace membership was 267,000, against 713,000. Source
• Total membership down to 4.9 million: Ending membership was 4,862,000 at September 30, 2026, against 5,628,000 a year earlier. Medicaid membership was 4,372,000. Source

Medicare exit and non-GAAP items

• Traditional MAPD exit for 2027: The impairment charge results from the decision to exit the traditional MAPD product for 2027, which does not align with the focus on dual eligible members. The impairment was $93 million. Source
• Adjusted results exclude impairment and amortization: Nine-month adjustments totaled $176 million pre-tax, including the $93 million impairment and $29 million of amortization of acquired intangibles. Source
• Other items mainly termination benefits: Other adjustments were $21 million in the nine months of 2026, mainly termination benefits. Acquisition-related expenses were $33 million in the same period. Source

Cash flow and balance sheet

• Operating cash flow turned positive: Operating cash flow for the nine months was $629 million, against an outflow of $237 million a year earlier. The company cited lower government receivable and payable settlements. Source
• Parent company cash and investments rose: Parent company cash and investments were about $608 million at September 30, 2026, against $223 million at December 31, 2025 and $290 million at June 30, 2026. Source
• Days in claims payable steady at 44: Days in claims payable were 44 at September 30, 2026, the same as at June 30, 2026, and down from 46 at September 30, 2025. Source

Management view of Medicaid margins

• Management cites challenging environment: The CEO said results were in a challenging environment and that management reaffirms full-year guidance. Source
• Medicaid margin turn seen as likely: The CEO said the plateauing of medical cost trend, which remains elevated, and recent 2027 rate updates suggest the beginning of the turn in Medicaid margins. Source
• Guidance metrics across segments reaffirmed: Management said guidance metrics across all segments were also reaffirmed. Source

Coming up, as management said on 21 October 2026

• Florida Medicaid contract in Q4: The new Florida Medicaid contract is implemented in the fourth quarter of 2026. Source
• Traditional MAPD exit for 2027: The company previously announced it will exit the traditional MAPD product for 2027. Source
• 2027 Medicaid rate updates: Management cited recent rate updates for 2027 as a basis for its view on Medicaid margins. Source

Figures management reported

Risks management discussed

• Operational: Medical cost trend remains at elevated levels, although management describes it as plateauing. Source
• Financial: A higher consolidated MCR was the main reason net income declined in the quarter. Source
• Demand: Lower membership in Medicaid and Marketplace reduced premium revenue, partly offset by rate updates. Source
• Operational: Implementing the new Florida Medicaid contract in the fourth quarter carries a $1.50 per share loss in full-year guidance. Source
• Financial: Claims liabilities include additional reserves for moderately adverse conditions, based on historical experience and other factors. Source
• Operational: Exit of the traditional MAPD product for 2027 led to a $93 million impairment charge. Source

Earlier plans management reported on

• Met: Medicaid MCR of 93.0% was described as in line with expectations, reflecting rate updates and stable cost trend. Source
• Met: Marketplace MCR of 92.5% was described as in line with normal seasonality and expectations. Source
• Not stated: The company previously announced it will exit the traditional MAPD product for 2027. Source
• Not stated: Management reaffirmed full-year 2026 guidance in the third quarter release. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.