MOH earnings analysis
What we found in MOH's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Molina's Q2 2026 revenue was $10.874 billion, down 4.8% year over year but up 1.8% sequentially, while GAAP diluted EPS fell to $1.19 from $4.75 in Q2 2025. Margin pressure was pronounced: MCR rose 180 basis points to 92.2%, reducing operating income by $228 million to $145 million. Cash generation and liquidity improved materially, with $788 million of six-month operating cash flow and $1.25 billion of undrawn revolver capacity, but the sharp Marketplace contraction and management's expectation of another $1.0 billion Marketplace premium decline in 2027 weigh on the outlook.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Sequential recovery, but sharp year-over-year decline
- Second-quarter revenue was $10.874 billion, down $553 million, or 4.8%, from $11.427 billion in Q2 2025, but up $194 million, or 1.8%, from $10.680 billion in Q1 2026. GAAP diluted EPS was $1.19, versus $4.75 a year earlier and $0.27 in Q1 2026.
- Cash conversion turned strongly positive
- Operating cash flow improved to $788 million for the first six months of 2026 from an outflow of $112 million in the prior-year period. Less $57 million of capex, six-month free cash flow was $731 million, equal to 7.3% of $10.874 billion Q2 revenue on an annualized quarterly comparison; capex was only 0.5% of six-month revenue.
- Core government programs were relatively resilient
- Medicaid Q2 premium revenue rose $20 million to $8.049 billion, while Medicare declined only $43 million to $1.565 billion. Medicare's 90.7% MCR was favorable to management's expectations because medical-cost trend in new integrated duals products was lower than expected.
- Balance-sheet liquidity increased
- Liquidity strengthened: cash and equivalents increased $737 million to $4.985 billion from $4.248 billion at December 31, while cash plus investments rose to $9.2 billion from $8.6 billion. Consolidated working capital increased to $5.2 billion from $5.1 billion.
- New contract wins support future growth
- Management received new Medicaid awards in Illinois, expected to begin January 1, 2027, and Wisconsin Region 3, also expected January 1, 2027. The Florida Kids contract is expected to begin October 1, 2026 and serve approximately 120,000 enrollees.
- Leverage stable and revolver fully available
- Debt was stable at $3.769 billion versus $3.766 billion at year-end, with no revolver borrowings and $1.25 billion available under the Credit Facility as of June 30, 2026. The company reported compliance with all debt covenants.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Medical-cost pressure compressed earnings
- Profitability deteriorated substantially: operating income fell $228 million to $145 million year over year, operating margin contracted to 1.3% from 3.3%, and diluted EPS fell $3.56 to $1.19. The consolidated MCR rose 180 basis points to 92.2%, while G&A ratio rose 50 basis points to 6.7%.
- Marketplace remains the largest margin risk
- Marketplace premium revenue fell $572 million, or 47.7%, to $628 million, and Marketplace medical margin fell $106 million to $69 million. Its MCR increased 350 basis points to 88.9%, above management's expectations, driven by prior-year risk-adjustment estimate changes, CMS integrity initiatives, and unfavorable acuity mix.
- Enrollment contraction will continue
- Total membership declined 820,000, or 14%, year over year to 4.926 million. Marketplace membership fell 407,000 to 283,000, and management expects a further $1.0 billion reduction in Marketplace premiums in 2027 versus 2026.
- Government-settlement obligations increased
- Amounts due government agencies increased $325 million to $1.651 billion from $1.326 billion at year-end. Net Marketplace risk-adjustment payable increased $154 million to $565 million, comprising $693 million payable and $128 million receivable.
- MAPD exit produced impairment charge
- Molina recorded a $93 million impairment during the first half of 2026 after deciding to exit MAPD in 2027. The charge included $62 million of contract rights and licenses, $27 million of trade name, and $4 million of provider-network intangibles.
- No formal risk-factor update; policy risk quantified
- Risk-factor disclosure itself was not updated in Part II; the filing refers investors to the 2025 Form 10-K. Nonetheless, management quantifies OBBBA-related enrollment pressure at a 2% to 3% annual premium reduction through 2029, with Medicaid work requirements and redeterminations scheduled over 2027-2029.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.19
- Gross margin
- 13.2%
- Operating margin
- 1.3%
- Segment
- Medicaid premium revenue: $8.049 billion; medical margin: $585 million; MCR: 92.7%
- Segment
- Medicare premium revenue: $1.565 billion; medical margin: $146 million; MCR: 90.7%
- Segment
- Marketplace premium revenue: $628 million; medical margin: $69 million; MCR: 88.9%
- Segment
- Other external revenue: $26 million; service margin: $2 million
What they said about what is next.
The 10-Q does not restate a company-wide numerical revenue or EPS outlook. Embedded operating outlook: Medicaid enrollment is expected to end 2026 at 4.5 million, Medicare at 230,000, and Marketplace at approximately 250,000; management estimates further 2027 Marketplace actions will reduce Marketplace premiums by $1.0 billion versus 2026. Management also estimates OBBBA-related enrollment changes could reduce premium revenue by 2% to 3% annually through 2029, primarily in Medicaid Expansion.
The filing reads worse than the one before it.
What came before.
- 10-Q · April 23, 2026
- Molina reported Q1 2026 total revenue of $10,796 million and GAAP diluted EPS of $0.27, with operating income of $83 million. Results were driven by lower membership (5.0 million, down 718,000 YoY), higher medical care…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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