Will the New Medicare Rates Boost Finally Lift Molina Healthcare?

Molina Healthcare (NYSE:MOH | MOH Price Prediction) reports first-quarter 2026 results after the market closes today. After a brutal year that sent shares down 50.01% over the past 12 months, the question is whether a long-awaited Medicare rate boost can mark a turning point.

Falling Further Than Peers in a Rough Sector

The past year has been painful for managed care broadly, but Molina has suffered far more than most. While UnitedHealth Group (NYSE:UNH) is down 16.34% over the same period, Molina’s 50% one-year decline reflects company-specific damage piled on top of sector headwinds.

The Q4 2025 report, released in February, was the low point. Adjusted EPS came in at -$2.75 against an estimate of $0.50, a miss of historic proportions. The consolidated medical cost ratio (MCR) surged to 94.6% from 90.2% a year earlier, driven by roughly $2.00 per share in unfavorable retroactive Medicaid premium adjustments in California and elevated costs across Medicare and Marketplace. Shares fell more than 28% on the day.

Management issued 2026 full-year adjusted EPS guidance of at least $5.00, explicitly framing the year as a “trough year” for Medicaid industry margins. That guidance carries $2.50 per share in known burdens: $1.50 from Florida CMS Medicaid contract implementation and $1.00 from Medicare Advantage Part D underperformance. CEO Joseph Zubretsky said the company “remain[s] optimistic about the future earnings trajectory of the enterprise which includes anticipated rate restoration and future embedded earnings.”

Consensus Estimates: Q1 2026

Note: Specific Q1 2026 consensus figures are approximated from full-year guidance context. YoY EPS comparisons will show meaningful declines given known 2026 cost burdens.

Medicare Rates, MCR Trajectory, and Cash Flow Are the Real Tests

The MCR will be the critical metric to watch. Management guided a full-year 2026 consolidated MCR of 92.6%, down from 94.6% in Q4 2025. The Marketplace MCR target of 85.5% is a dramatic improvement from 99.0% last quarter, reflecting Molina’s deliberate pullback in that segment. If Q1 shows meaningful progress toward those targets, the trough-year thesis gains credibility.

The Medicare rate backdrop is genuinely constructive. CMS finalized a 5.06% average rate increase for Medicare Advantage for 2026, a meaningful tailwind after years of pressure. UNH’s results yesterday offer a positive read-through: its Community and State (Medicaid) revenue grew 4%, driven explicitly by Medicaid rate updates, and its medical cost ratio improved 90 basis points to 83.9%. That suggests the rate environment is working in managed care’s favor heading into Q1.

Operating cash flow is equally important. Full-year 2025 operating cash flow turned deeply negative at -$535M versus +$644M in 2024. Any sign of stabilization here matters as much as the EPS print. Additionally, management needs to address whether the California retroactive Medicaid adjustment issue is fully behind them, and whether the Florida contract ramp is tracking to plan.

Insider activity adds an interesting layer. CEO Zubretsky acquired 66,417 shares on March 1, and eight board directors made coordinated purchases on April 1 at $135.82, suggesting conviction at current prices from those closest to the business.

A Trough Only Matters If the Recovery Is Real

Molina has missed earnings expectations in three of the last four quarters, with an average same-day stock decline of -19.95% on misses. Management’s credibility is on the line tonight. If MCR trends are moving in the right direction and cash flow shows early signs of recovery, investors may finally have a reason to believe the more than $11.00 per share in embedded new-store earnings projected for 2027 through 2029 is achievable. A print that misses again resets that timeline entirely.