Molina Healthcare Inc: Q&A Our Way: Mgmt Argues Core is On Track Despite Volatility

Research evidence excerpt

Molina Healthcare Inc: Q&A Our Way: Mgmt Argues Core is On Track Despite Volatility

changing its view of target margins at this juncture. The company reiterated that for the Q3E 1.79 0.70 -61 1.25

forward outlook, every 100 bps improvement in Medicare translates to $0.75 EPS. On Q4E (0.23) 0.69 NM 0.15

Marketplace, the company noted that while ~70% of the book are renewing members, 12/26E 5.50 5.25 -5 5.15

the members the company got were the lower performing members. Additionally, 12/27E 13.50 11.00 -19 9.36

utilization was concentrated in pharmacy and specialty drugs. MOH framed the Wakely 12/28E 15.50 15.50 0 13.29

data as unreliable this early as it relates to 2026 trends, and the company is unsure if a

AJ Rice

benefit will arise in terms of risk adjustment next year. As for 2027, the company expects

Analyst

revenues to decline by $1 bln and while profit margins get back to breakeven. aj.rice@ubs.com

+1-212-713 4299

Earnings Visibility

Jonathan Yong

Management highlighted that the company went out of the way to discuss the current Analyst

business and that the company has visibility to $10 of earnings for 2027. Management jonathan.yong@ubs.com

noted that relative to the investor day targets, the trajectory hasn't changed but the +1-212-713 6268

company's jump-off point is higher at $5.25 vs $5.00 previously. The $1.50 headwind Michael Wei

related to Florida will no longer be a drag as revenue comes in next year The Duals Associate Analyst

business generates $1.25 EPS, which is masked by the MAPD drag of $1. The company michael.wei@ubs.com

is expected to generate fixed cost leverage of ~$2 EPS. As such, there is underlying +1-212-713 2565

strength in the business. Getting Marketplace to breakeven ($0.75) will also help to

build the earnings.