By Puyaan Singh and Sneha S K
May 8 (Reuters) – Molina Healthcare on Friday forecast its 2029 adjusted profit at about five times its 2026 outlook, provided the health insurer can keep medical costs in check.
However, J.P. Morgan and Barclays analysts said the forecast fell short of investor expectations, sending its shares down 5%.
The forecast suggests Molina will “present significant earnings power in 2029; however, we think much of the investor focus is on the path to those earnings and any embedded conservatism,” J.P. Morgan analysts said.
Health insurers, including Molina, UnitedHealth and Elevance, reported strong first-quarter results, signaling easing healthcare service costs after more than two years of margin pressure from elevated expenses.
Molina projects 2029 premium revenue of about $64 billion, up from around $42 billion it expects in 2026. It sees 2029 adjusted profit between $20 and $30 per share, compared with at least $5 per share in 2026.
A key highlight was Molina’s new pre-tax margin goal of around 2% to 3% for 2029 as opposed to about 4% to 5% previously, said Mizuho’s Ann Hynes. “While lower … this goal is achievable for the company.”
The profit forecast is a “very solid baseline” if medical cost trends moderate and government reimbursement rates catch up faster, CEO Joe Zubretsky said at the company’s investor day, adding that high medical costs will stabilize.
“Maybe it already has, but we have to wait and see in 2026 whether the second- and third-quarter data points support that.”
The company said enrollment in government-backed Medicaid plans is expected to decline 2% to 3% annually through 2029, pressured by provisions in U.S. President Donald Trump’s One Big Beautiful Bill Act.
Molina primarily sells Medicaid plans to low-income Americans, jointly funded by state and federal governments. It also offers coverage under the Affordable Care Act, commonly known as Obamacare.
(Reporting by Mariam Sunny, Sneha S K and Puyaan Singh in Bengaluru; Editing by Shreya Biswas and Vijay Kishore)
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