Transcripts
Molina Healthcare, Inc.'s management answers for the business every quarter. These are the exchanges that explain it best — verbatim, from the call transcripts preserved in Sources. Each link opens the full transcript at that page in a new tab.
Q1 FY2026 Earnings Call — Q1 FY2026 (Apr 2026)
The current state of the recovery: how management splits trend from acuity, why it is holding guidance, the Medicare-to-duals rebuild, and its M&A math. · Open the full transcript →
Splits 2025's 7.5% Medicaid trend into a one-time redetermination acuity shift and the 5% core carried into 2026.
Joe Zubretsky, President & CEO: Last year, we observed a 7.5% medical cost trend that included 250 basis points of acuity shift related to the post-pandemic redetermination process. However, the acuity shift in core utilization impacts diminished as the year progressed. Our expectation that the acuity shift trend that we had experienced in 2025 was behind us and would not recur is holding up. We feel confident in our 5% medical cost trend assumption for 2026.
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Asked why not raise guidance after a strong quarter, he explains the prudence and the loss-ratio cushion in the full-year number.
Joe Zubretsky, President & CEO (responding to Kevin Fischbeck, Bank of America): We use the term time tested because I think it is prudent to see 6 months of results before updating our guidance, particularly coming off a highly volatile medical cost inflection environment in 2025, bearing in mind in Medicaid with a 92% result in the first quarter a 92.9% indication in our guidance for the full year, we can actually produce loss ratios north of 93% and still hit our guidance for the rest of the year. So cautious perhaps, but in this environment, we think it's entirely prudent to do so.
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Lays out the Medicare rebuild — D-SNP, the MMP-to-HIDE/FIDE conversion, and the MAPD exit — into a pure duals business.
Scott Fidel (Goldman Sachs), analyst; Joe Zubretsky, President & CEO: You're right to point out that the Medicare story is a little more complicated than most because it's a combination of our D-SNP product, which has been in force for many years; our MMP members who have now converted to HIDE and FIDE; and our MAPD product, which we are going to eliminate for 2027. We cited a drag on this year's earnings due to the MAPD product — I think we said it produced about a $1 earnings per share drag that won't repeat next year — and it is tracking to plan. D-SNPs have always produced a modest profit and continue to.
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M&A capital allocation: buying plans near book value can beat a new contract win when you're mostly paying for regulatory capital.
John Stansel (JPMorgan), analyst; Joe Zubretsky, President & CEO: Our M&A pipeline is full of actionable opportunities. We'll remain disciplined and focus on properties that fit our core strategy. Mark and I debate this often: historically we paid around 22 to 23 percent of revenue, but book value now seems the best benchmark. If you're only paying for regulatory capital, an M&A deal can be as good as, if not better than, a new contract win.
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The recovery math: a cost base 20% above three years ago, states catching up on rates, Molina running 300-400 bps better than market.
Lance Wilkes (Bernstein), analyst; Joe Zubretsky, President & CEO: Generally speaking, we're seeing states step up to the reality that a cost inflection has occurred and they are catching up to it. What do they need to catch up to? If you look at the trends we've experienced over the past three years, 4.5, 6.5 and 7.5, the cost baseline is 20% higher than it was three years ago. That's what they need to catch up to. Now we believe we're operating 300 to 400 basis points better than the average market. So as they catch up, we should be moving into much more positive territory than we already are. Bearing in mind, our guidance in Medicaid is for a 1.5% pretax margin this year, eliminating the impact of Florida Kids.
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Q4 & Full-Year 2025 Earnings Call — Q4 FY2025 (Feb 2026)
The reset: full-year attribution of a halved EPS, the anatomy of the Medicaid rate/trend gap, the growth engine, and the case that 2026 is the trough. · Open the full transcript →
Attributes the halving of EPS: Marketplace, at 10% of premium, drove nearly half the miss; Medicaid a third; Medicare the rest.
Joe Zubretsky, President & CEO: As we compare our initial 2025 EPS guidance of $24.50 to our final result of $11.03, nearly half of the underperformance for the year was attributable to the unprecedented trend and increased acuity in our Marketplace segment. A very disproportionate outcome given that the segment is just 10% of our total premium. The rate and trended balance in Medicaid accounted for approximately one-third of the underperformance, while the remainder was due to persistent higher utilization in Medicare.
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The miss in one line: Medicaid rates rose to 6% while trend hit 7.5%, 250 bps of it the one-time redetermination acuity shift.
Joe Zubretsky, President & CEO: Rates increased from 4.5% in our initial guidance to 6% for the year, but medical cost trend continually increased from 4.5% in initial guidance to 7.5%, an unprecedented inflection in such a short period of time. 250 basis points of this 7.5% trend is attributable to the acuity shift from membership declines related to the final stages of redeterminations. While we are disappointed in our fourth quarter and full year results, many published reports indicate our Medicaid performance is industry-leading by 300 to 400 basis points in pretax margin.
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The growth engine still running in the downturn: 90%/80% RFP win rates, a $50B pipeline, and a historic $6B Florida CMS win.
Joe Zubretsky, President & CEO: During the quarter, Molina secured a historic RFP win in Florida where the state awarded Molina the sole Children's Medical Services or CMS contract. This contract is expected to yield $6 billion in annual run rate premium and is expected to go live in late 2026. […] Since we embarked on this growth strategy, we have achieved an RFP win rate of 90% on renewal contracts, representing $14 billion in retained revenue and 80% on new contracts representing $20 billion of new revenue. We are engaged in active RFPs in several states and have an active pipeline of $50 billion of new opportunities over the next few years.
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The forward thesis: 2026 is the margin trough, the market lags 300-400 bps, and each 100 bps of Medicaid MCR is worth ~$5 of EPS.
Joe Zubretsky, President & CEO: We believe our 2026 forecast for Medicaid is the trough for managed Medicaid margins. In this margin trough, we expect that Molina Medicaid will produce a low single-digit margin, not losses, and that the market is underfunded by 300 to 400 basis points. We are confident in the outlook for this business and that rates and trend will eventually reach equilibrium. […] This potential is significant as every 100 basis points on the Medicaid MCR is worth nearly $5 per share. […] Embedded earnings are now greater than $11 per share.
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Challenged that a 5% 2026 trend is too low after 7.5%, he strips out the 250 bps acuity shift and details the cost categories.
Ann Hynes (Mizuho), analyst; Joe Zubretsky, President & CEO: Therefore, when I see a 5% trend projected for the future, I find that insufficient. I would appreciate more detailed information regarding specific state actions, utilization management, or anything else that could clarify why you believe the trend will only grow by 5%. […] we had a 7.5% trend in '25 off of '24. With perfect hindsight, 2.5 percentage points of that was related to the redetermination related acuity shift as we've just been describing in a couple of questions that were asked. So core trend is 5%. Core trend includes every impact. It's a supply and demand economy. It includes the higher acuity of the American population that we serve. It includes any 'upcoding' or aggressive billing from providers. 5% is what we experienced in 2025. And again, it's off a cost base that's increased 20% over the past 3 years. It's 50% higher than historical averages. Medicaid trend over the last 10, 15 years has been 2% to 3%.
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Q2 FY2025 Earnings Call — Q2 FY2025 (Jul 2025)
The shock: a $5.50 guidance cut mid-year. The thesis gets tested — what is driving costs, why the corridor hedge ran out, and whether rates can ever catch up. · Open the full transcript →
Catalogs the cost drivers of the shock — behavioral, high-cost drugs, inpatient, ER — and calls their persistence unprecedented.
Joe Zubretsky, President & CEO: Behavioral health costs have increased nationally reflecting both supply side and demand side drivers and imposed limitations on utilization management in certain states. High-cost drugs remain a source of pressure driven by higher script volumes and the introduction of a variety of expensive therapies beyond GLP-1s for conditions such as cancer and HIV. Higher inpatient utilization in the quarter was driven by a higher volume of admissions for complex health episodes, many of which originated from increased ER visits. […] This is the fourth consecutive quarter we have observed some combination of these trends. The magnitude and persistence of these medical cost increases are unprecedented.
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The clearest teaching on the mechanism: how rates and risk corridors buffered trend, then were exhausted quarter by quarter.
Joe Zubretsky, President & CEO: Starting in the third quarter of 2024, while an increasing trend emerged from the end of the redetermination process, rates and Molina's risk corridor positions at the time were sufficient to offset that increasing trend. By the fourth quarter of 2024, the increasing medical cost trend moved beyond the 2024 midyear rate updates, and corridors have largely become depleted. Moving into the first quarter of 2025, the January 1 rate cycle captured much of the continued trend pressure. And now in the second quarter of 2025, we experienced yet another increase in trend, which moved beyond the rate updates received in the first quarter, and risk corridor protection at this point is very limited and isolated.
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The cut, and the concentration lesson: Marketplace is 10% of revenue but nearly half the 140 bps of MCR pressure behind it.
Joe Zubretsky, President & CEO: Our full year 2025 adjusted earnings per share guidance is now expected to be no less than $19 per share, a floor, if you will, which is $5.50 below our initial guidance of $24.50 […] Our full year guidance now includes 140 basis points of consolidated MCR pressure compared to our initial guidance at $24.50, which is disproportionately attributed to Marketplace. Marketplace is 10% of our revenue and accounts for nearly half of this 140 basis point MCR revision.
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Why Marketplace's natural hedge failed: a market-wide 8% jump in risk-pool acuity means risk adjustment can't keep up with trend.
Josh Raskin (Nephron Research), analyst; Joe Zubretsky, President & CEO: So I guess I'm just still struggling with what do you think is the root cause of this pickup in utilization and now, I guess, market-wide? […] The acuity of the entire marketplace risk pool is higher by 8% year-over-year, which means on a relative basis, risk adjustment is not going to keep up with the elevated trend. As I said, we've increased our trend assumption from 7% that went into pricing to 11% in our forecast.
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The hardest question — if rates always lag a shifting risk pool, do you ever catch up? — answered with candid uncertainty on timing.
Kevin Fischbeck (Bank of America), analyst; Joe Zubretsky, President & CEO: you'll get the rate cycle to reflect last year's cost, but this year's cost will be high. This year's cost, we'll still see risk pool shifts. So like do you ever catch up? […] Currently, we are operating at a 91% medical cost ratio, which is 190 basis points above the upper limit of our range. To reach our target margin, we need an additional 200 basis points on top of the trend. Based on external evaluations, we believe that the wider market will require even more than this. If we can secure those extra 200 basis points along with an appropriate trend, we should be able to return to our target margin. Whether this will be achieved by January 1, 2026, is still uncertain.
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Q4 & Full-Year 2024 Earnings Call — Q4 FY2024 (Feb 2025)
The pre-crisis annual: the growth algorithm, how risk corridors really work, Marketplace pricing calibration, and Medicaid's political durability. · Open the full transcript →
The growth algorithm in plain terms — new state wins — and why embedded earnings near 30% of run-rate EPS underwrite future growth.
Joe Zubretsky, CEO: 2024 was an extraordinary year for securing future growth on top of the reported 19% premium revenue growth, starting with recent acquisitions. […] in Georgia, the state announced its intent to award it to Medicaid managed care services contract. This was a significant win with an estimated $2 billion in annual premium revenue based on expected market share. […] Having embedded earnings of at least 20 to 25% of run rate EPS is an attractive benchmark to support future EPS growth. Now at approximately 30%, we are very well positioned to meet our long-term targets.
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The best explanation of why risk corridors are an imperfect hedge: protection is uneven across 21 states, may miss where trend hits.
Andrew Mok (Barclays), analyst; Joe Zubretsky, CEO; Mark Keim, CFO: It's a matter of geography. As we've always said, we're almost loathed to give a number of how deep we are in corridors because while it is a hedge, it's an imperfect hedge. If you have underperformance, it depends where that underperformance happens, whether you get the benefit of the corridor. In the fourth quarter this year, while we had forecasted, I believe, 50 basis points of trend pressure absorbed by the corridors, it didn't pan out that way. […] We're in 21 states. And the benefit of the corridor is not evenly distributed across 21 states. So what really matters is where does the trend pressure show up versus where is corridor protection remaining. That could either help you significantly or it can leave you no benefit, which is more or less what happened in the fourth quarter.
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The political-durability thesis: whatever the funding mechanism, neither party wants more uninsured, so Medicaid change stays marginal.
A.J. Rice (UBS), analyst; Joe Zubretsky, CEO: the market really focuses on the how. You know, if you come up with a per capita cap scheme, FMA match for reduction FMAP match reduction on expansion, block match, whatever the mechanism is the CBO can score. That's not the issue. The issue is what are you going to reduce in terms of where the money goes? […] Neither side of the aisle wants to see more uninsured. It's below ten percent of eligibles for the first time in decades. Reduction in benefits. Reduction in enrollment, reduction in payments to providers, or none of the above. And I either have to, as a state, decrease my education budget or raise taxes. None of those solutions is politically tenable. That's why we conclude that any changes to manage Medicaid as we know it today would be marginal.
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How Marketplace pricing is calibrated: reinvest excess margin into growth or hit the three-year minimum-MLR rebate.
Scott Fidel (Stephens), analyst; Joe Zubretsky, CEO: we consciously when you're producing ten percent to eleven percent pretax margins two years in a row, one, you gotta remain competitive. And two, if you keep it there, you're gonna run into the three-year minimum MLR. So it makes perfect sense to invest the excess margin and growth. It's a calibration. You try to set your product to be competitively positioned. As I said, we are number one or two silver priced in fifty percent of our geographies. We netted a hundred and thirty thousand members in open enrollment. Had, I think, two hundred fifty thousand ads and a hundred and thirty terms, which gave us a nice jumping-off point. So we have high confidence in the mid-single-digit margin.
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More calls
Q3 FY2025 Earnings Call — Q3 FY2025 (Oct 2025) · 13 pages · The second cut of the year ($19 to $14). Go here for the Marketplace swing from +$3 to -$2 of EPS and how H2 Medicaid was annualized into the 2026 baseline. · Open →
Q1 FY2025 Earnings Call — Q1 FY2025 (Apr 2025) · 12 pages · The calm before the storm: guidance still $24.50. The clearest statement of the actuarial-soundness thesis and Molina running 200-300 bps better than the market. · Open →
Q3 FY2024 Earnings Call — Q3 FY2024 (Oct 2024) · 14 pages · Mid-unwinding: management calls Q3 the 'widest point' between rates and trend, details the corridor burn-down, and points to a 9% Q4 rate update as proof states respond. · Open →
Q2 FY2024 Earnings Call — Q2 FY2024 (Jul 2024) · 13 pages · Where the corridor-as-buffer thesis was first stress-tested — the '200 basis points deep' concept defined, and Fischbeck pressing on why Molina saw less pressure than peers. · Open →
Q4 & Full-Year 2023 Earnings Call — Q4 FY2023 (Feb 2024) · 13 pages · The foundational annual: the plainest statement of the capitated-risk model, the growth track record ($12B reprocured, $7B new since 2019), and Bright acquisition accounting. · Open →
Q3 FY2023 Earnings Call — Q3 FY2023 (Oct 2023) · 12 pages · Redetermination mechanics as they unfolded: procedural vs. verification disenrollments, ~30% reconnect rate, and the Medicare cost drivers that led to 2024 benefit-design cuts. · Open →
Q2 FY2023 Earnings Call — Q2 FY2023 (Jul 2023) · 15 pages · The launch of Medicaid redeterminations explained from the ground up — ex parte renewals, retroactive reconnection, and the bottoms-up 2024 revenue bridge. · Open →