Molina plunges after issuing 2026 profit forecast much below expectations

Feb 6 (Reuters) - Molina Healthcare MOH.N shares plunged about 30% in premarket trading on Friday after the U.S. health insurer forecast 2026 profit at less than half of Wall Street expectations as medical costs rose across its government-backed health plans.

It also said it would exit Medicare Advantage prescription drug plans in 2027 due to underperformance of the business.

Like other peers, the company has been grappling with high costs, which caused it to lower its forecast several times last year.

"We believe that the imbalance between rates and trend marks 2026 as a trough year for Medicaid industry margins," said Molina CEO Joseph Zubretsky.

Molina primarily sells Medicaid plans to low-income Americans and also offers coverage under the Affordable Care Act, commonly known as Obamacare.

These government-subsidized plans, which are based on income, include a risk-adjustment pool that reimburses insurers covering a disproportionate share of sicker members.

While Molina has significantly reduced 2026 earnings expectations, the company's earnings sensitivity to potential Medicaid margin pressure is considerable, said Baird analyst Michael Ha.

Molina expects adjusted profit per share of at least $5.00 in 2026, far below analysts’ estimate of $13.76, according to LSEG data.

The company said it will exit the federal government’s Medicare Advantage Part D program in 2027, a business that generates about $1 billion in annual premiums from providing prescription drug coverage to older adults and the disabled.

The underperformance of that business reduced the 2026 forecast by $1 per share, while the rollout of a new Florida Medicaid contract cut earnings by an additional $1.50 per share.