Molina plummets as it expects to halve its Obamacare presence

On the other hand, Molina's Obamacare members were using more of costlier drugs, said CEO Joe Zubretsky, though related risk-adjustment payments were not rising enough to offset the costs. "We just underestimated the stickiness of these high-cost members," he added on a post-earnings call on Thursday.

California-based Molina primarily sells Medicaid plans to low-income Americans and offers coverage under Obamacare.

Analysts also raised concerns about the future of its Medicaid business, citing tight state budgets, new work requirements and a shift from annual to twice-yearly eligibility checks that could increase drop-offs.

Molina's Medicaid membership continued to lag expectations and more attrition can become a larger challenge in the second half of 2026 and into 2027, said Baird analyst Michael Ha.

Shares of Molina Healthcare fell 12% on Thursday after the health insurer said it expects to halve its Obamacare footprint, citing higher-than-expected costs and an overall decline in enrollment.

Molina plans to shrink its Obamacare footprint to about six states in 2027 from roughly 13 or 14, cutting premium revenue by about $1 billion.

Americans are dropping off the plans established under former President Barack Obama's Affordable Care Act, with many struggling to pay as subsidies applied during the COVID-19 pandemic are taken away.

California's plan to move undocumented members off its managed Medicaid plans and into a state-run program will reduce Molina's 2027 premium revenue by about $500 million, the company said on Thursday's call.

It posted second-quarter profit and revenue above Wall Street estimates late on Wednesday, but premium revenue at its Obamacare business nearly halved to $628 million, year-over-year.