Molina Healthcare is planning further reductions in its marketplace business as high costs continue to pressure that segment, the company's top brass told investors on Thursday morning.
The insurer had 283,000 members in its Affordable Care Act exchange plans in Q2, a sharp decline from the 655,000 marketplace members reported by the company at the end of 2025 as well as the 690,000 members in these plans as of Q2 2025.
The medical loss ratio (MLR) in Molina's marketplace plans was 88.9% in the second quarter, up from 85.4% in the prior year quarter and beyond the company's expectations, CEO Joseph Zubretsky said.
Zubretsky said the insurer set an average rate increase of 30% for 2026 to account for ongoing cost pressures in this market. But that "underestimated" the effect that enrollment decreases would have on its risk pools, he said.
Because enrollment dropped significantly, and the insurer retained a significant number of high-acuity members, the costs associated with their care were more keenly felt even though the insurer had priced for a shift in acuity.
Zubretsky said that many of these members are on high-cost therapies for complex conditions like cancer and HIV, meaning that the costs will not be fully offset by risk adjustment.
"Going into next year, we again plan to put prices into the market to reduce our footprint again," he said. "Our philosophy is until we're convinced that the risk pool is stable in that market, we're going to allocate less capital to it."
Total membership at Molina was 4.9 million in the second quarter, with the bulk of that enrollment in Medicaid, which had 4.4 million members. Molina also had 224,000 individuals enrolled in Medicare Advantage plans.
The company's overall MLR for the quarter was 92.2%.
Molina earned $60 million in profit in Q2 2026, down $255 million from the prior-year quarter. Profits through the first half of the year were $74 million, down $553 million in the first half of 2025.
Revenue also declined year-over-year, from $11.4 billion in Q2 2025 to $10.9 billion in the second quarter of 2026. Revenues for the first half of 2026 were $21.7 billion, down from $22.6 billion in H1 2025.
Molina said it would bump up its guidance for the year to $5.25 in earnings per share, reflecting the performance of its Medicaid business in the first half of 2026. A boost in Medicare is offset by declines in the marketplace segment, the company said.
Molina's revenue guidance remains unchanged, and the insurer expects to bring in $42 billion.
Shares in Molina were down by about 12.4% following the earnings release.