Molina Healthcare soars, bucking industry trend

Shares of Molina Healthcare climbed 17.7%, making it one of the biggest gainers among S&P 500 companies. 

The company reported sales that topped Wall Street estimates, mostly driven by premiums that its Medicaid patients paid. Premium revenues were $9.7 million, a year-on-year increase of 18%. That differentiates Molina Healthcare from its peers: Competitors Elevance Health and UnitedHealth dove when they warned about elevated medical costs that weighed on profits, as state governments backtracked from a Covid-era policy that allowed insurers to keep all patients enrolled. This means insurers can on longer receive premiums from a relatively healthier population.

To be sure, Molina Healthcare’s Medical Care Ratio, which compares the total medical expenses an insurer paid to its premium revenues, was still higher than estimates. But the company seems to be less negatively impacted by the policy changes, also in part because the state of California retroactively lowered the rate that insurers had to pay for 2024. The company’s CFO called the policy “highly unusual.”