Molina Healthcare's share price plunged on Friday as it posted a $160 million loss in the fourth quarter as well as guidance for 2026 that fell short of analysts' expectations.
Shares in the company were down by about 28% at 11:30 a.m. ET, with its stock tumbling out of the gate at market open on Friday. By comparison, Molina earned $251 million in profit for the fourth quarter of 2024.
For the full year, Molina has posted $472 million in profit, down from $1.2 billion in 2024.
In the earnings report, Molina revealed that it will exit the Part D space in the 2027 plan year due to financial pressure, including Medicare Advantage prescription drug (MAPD) plans. The company will focus on its existing dual-eligible business in Medicare, according to the announcement.
"We have determined that the MAPD product does not align with our strategic shift to focus exclusively on dual-eligible members in Medicare, and we will exit the traditional MAPD product for 2027," CEO Joseph Zubretsky said on the company's earnings call Friday morning.
Medical costs in the Medicare space, particularly slow margin recovery in the MAPD plans, were factors in the decision, according to the earnings report. Molina posted a 92.4% medical loss ratio (MLR) in Medicare for the full year, compared to 91.7% across all of its business units for 2025.
The company's MLR for Medicaid was 91.8%, with elevated utilization continuing to sting this segment, Molina said. The insurer saw the utilization spike partially offset by rate updates that took effect during 2025.
In addition, the MLR for the Affordable Care Act plans was 90.6%, with this market also seeing higher-than-expected utilization when compared to revenue from risk adjustment.
Revenues for the fourth quarter were $11.4 billion, up from $10.5 billion in the prior-year quarter. Full-year revenues were $45.4 billion, increasing from $40.7 billion in 2024.
As the company navigates this cost environment, Zubretsky said that the team is eyeing strategic acquisitions that can bolster its core Medicaid business. He said that the team's strategy is working "to acquire as much Medicaid revenue as possible, and as we have done in the past, manage it to target margins."
"On the M&A side, our acquisition pipeline contains a number of actionable opportunities," Zubretsky said. "The current challenging operating environment is a catalyst for many smaller and less diverse health plans to consider their strategic options."
"We remain opportunistic about deploying capital to accretive acquisitions," he said.
For 2026, Molina expects to earn about $42 billion in revenue, down from 2025, as well as $2.50 in earnings per share. The company said that the implementation of a new Medicaid contract, as well as the underperformance in MA, are drags on the earnings outlook.