Molina sees Medicaid costs pressures waning in 2025

Medicaid costs that squeezed Molina Healthcare last year will ease in 2025, CEO Joseph Zubretsky said Thursday.

Like competitors Centene, Elevance Health and UnitedHealth Group, Molina has struggled to control Medicaid expenses as their risk mixes worsened following the nationwide Medicaid eligibility redeterminations process in 2023 and 2024. But Molina believes those struggles are behind it, even as it faces other pressures.

Related: Molina closes ConnectiCare acquisition

Molina’s Medicaid medical expenses surged 6.5% in 2024 according to the company's fourth-quarter and full-year earnings report, which it released Wednesday. Higher-acuity care, long-term care, behavioral healthcare and high-cost therapies such as glucagon-like peptide-1 agonists drove the increase, Zubretsky said during a call with investor analysts.

The insurer projects a 4.5% increase in Medicaid medical spending this year, less than last year but more than the 3.3% trend in 2023.

Molina net income grew 8.1% to $1.2 billion as revenue spiked 19.3% to $40.7 billion in 2024. For the fourth quarter, net income rose 16.2% to $251 million as revenue increased 16% to $10.5 billion. The company recorded an 89.1% medical loss ratio in 2024, one percentage point higher than in 2023. MLR measures the share of premiums spent on care.

Membership expanded 10.8% to 5.5 million owing to Molina's acquisition of Bright Health’s Medicare Advantage business, higher health insurance exchange enrollment and new Medicaid managed care contracts, according to the company.

Medicaid represents 88% of Molina’s membership and "nearly 80%" of Molina's revenue, Zubretsky said.

The chief executive attempted to assuage investors about the trillions of dollars in Medicaid cuts President Donald Trump and congressional Republicans are considering.

"We continue to believe that any changes to the Medicaid program as we know it today will be marginal. Neither side of the aisle wants to see an increase in the number of uninsured, a reduction in benefits for those relying on government assistance or the related impact to providers," Zubretsky said.

Molina share prices fell in after-hours trading Wednesday following the company's earnings disclosure. On Thursday, Molina opened at $287.09 on the New York Stock Exchange, down 9.4% from the previous day’s close.