Molina Healthcare is seeing some bright spots in the Medicaid market heading into 2027, echoing commentary from other payers through several third quarter earnings calls so far.
CEO Joseph Zubretsky told investors Thursday morning that states are set to incorporate more recent data into Medicaid rate calculations, and that likely acuity shifts due to the impending work requirements could lead to higher rates. Work requirements programs will be in place nationwide beginning on Jan. 1.
Chief Financial Officer Mark Keim said that there have been states that have been willing to consider mid-year rate adjustments. Zubretsky added that he expects a medical cost trend rate of between 5.5% and 6%, with a flat medical loss ratio in Medicaid for the coming year.
"Using the upper end of our trend range, we take the early view that rates should, at a minimum, capture trend for 2027," Zubretsky said.
Zubretsky said that the Molina team is working closely with state partners as they implement the work requirements. Molina expects the timing to vary between states, but given the approaches that they are taking, there are likely disenrollments that will be delayed to 2028.
These include the use of ex parte reviews, flexible hardship exemptions and allowing for self-attestations, Zubretsky said.
"We continue to expect membership reductions to emerge gradually and to produce a minor acuity impact," he said.
The company's overall medical loss ratio for the quarter was 92.9%, with a Medicaid-specific medical loss ratio landing at 93%. Keim said that these trends fall in line with expectations, and that rate changes helped to largely upset the medical cost trend seen in Q3.
Molina reported $38 million in profit for the third quarter, down from $79 million in the prior-year quarter. Profits through three quarters were $112 million, a significant decline from the $632 million the company earned across the first nine months of 2025.
Revenues in Q3 were $11.1 billion, down from $11.5 billion in the prior-year quarter. Through the first nine months of 2026, Molina has brought in $32.8 billion in revenue, down from $34.1 billion a year ago.
Total membership was 4.9 million, with the bulk—about 4.4 million—in Medicaid plans.
For the full year, the company reaffirmed that it expects to earn $5.25 in earnings per share and revenue of about $42 billion.
"These building blocks position us well for profitable growth in 2027," Keim said.