Molina bets on medical cost control for fivefold profit jump by 2029

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)