--- title: "Molina Rallied on a $6 Billion Contract It Will Lose Money On in Year One" description: "Molina takes over Florida's Medicaid plan for about 120,000 children with special needs, a contract worth about $6 billion of annual premium at full scale and a guided first-year loss. The shares now trade at a premium multiple in a year when consensus has earnings down by half." publisher: "The Inference" section: "Health" published: 2026-10-14T17:16:14.133Z modified: 2026-10-14T17:16:14.133Z canonical: https://theinference.org/article/molina-rallied-on-a-6-billion-contract-it-will-lose-money-on-in-year-one language: en keywords: "Medicaid, Molina Healthcare, Managed Care, Insurance, Florida" --- # Molina Rallied on a $6 Billion Contract It Will Lose Money On in Year One > Molina takes over Florida's Medicaid plan for about 120,000 children with special needs, a contract worth about $6 billion of annual premium at full scale and a guided first-year loss. The shares now trade at a premium multiple in a year when consensus has earnings down by half. [Molina Healthcare](https://theinference.org/markets/companies/molina-healthcare)'s stock rose more than 3 percent on October 12 and again the next day, with the second day's surge credited to its new Florida children's Medicaid contract and its focus on dual-eligible members, people covered by both Medicare and Medicaid [1][2]. On October 1 the insurer [took over Florida's Children's Medical Services plan](https://www.beckerspayer.com/payer/medicaid/molina-assumes-6b-florida-medicaid-chip-special-contract/), coverage for about 120,000 children with special healthcare needs, from Sunshine Health, the Florida plan of rival insurer Centene [3]. At full scale it should add about $6 billion of annual premium [3][4]. Molina's own guidance expects the launch to lose $1.50 per share in the fourth quarter [5]. ## The win is real, and the first year is a loss Molina announced the award in November 2025 and expects to run the plan through 2030, with [Florida's continuity-of-care rules letting children keep current providers until May 2027](https://www.msn.com/en-us/news/other/medicaid-change-could-impact-services-for-florida-children/ar-AA2dnPqO) [3][6]. The company still guides to at least $5.25 of adjusted earnings per share for 2026, a figure that already absorbs the launch cost [5]. The rally also priced two retreats. Molina exits its loss-making Medicare Advantage prescription-drug business for 2027, a line guiding to a further $1.00 per-share loss [5]. That exit already forced a $93 million impairment last quarter, and Marketplace exposure shrinks by about $1 billion next year [5][4]. *Chart: **Revenue stalled and turned down just as the $6 billion contract begins** Line chart of Molina Healthcare quarterly revenue from Q1 2024 to Q2 2026, rising to a peak near $11.5 billion in Q3 2025 then easing to about $10.9 billion* *Quarterly total revenue in billions of dollars, from Molina's SEC filings [3][9]* ## The profit waits on Florida's rate schedule Nothing Molina has published states what the Florida contract will earn once implemented. That number follows the per-member rates Florida sets in coming payment cycles, and [analysts following the stock put the first test at January's Medicaid rate updates](https://seekingalpha.com/article/4954077-molina-healthcare-paying-21x-for-a-recovery-that-hasnt-happened-yet) [7]. The rest of the Medicaid book shows the bind. The segment [spent 92.7 cents of every premium dollar on medical care last quarter](https://uk.finance.yahoo.com/news/centene-vs-molina-managed-care-153700225.html), against full-year assumptions of rates rising 4 percent and costs rising 5 [4][5]. Chief executive Joseph Zubretsky calls 2026 the trough year, with the imbalance corrected by future rate increases [5]. Consensus has Molina's 2026 earnings down 52 percent [4], and the recovery plan reaches $25 of earnings per share only in 2029 [7]. The average analyst target is $205.81, [below the $209.50 close on October 13](https://tradersunion.com/news/stocks/show/3794359-molina-healthcare-surges-3-89percent-today/) [4][2][7]. *Chart: **Molina trades richer than its industry and its biggest Medicaid rival** Bar chart of forward price-to-earnings: Molina at 22.43x, industry average at 15.38x, Centene at 12.47x* *Molina trades richer than its industry and its biggest Medicaid rival [4]* ## The AI lever is the small lever Molina has moved its systems to the cloud and is automating administration with AI; Centene points to analytics in payment integrity and behavioral health [4]. Those programs deserve scrutiny, but they reach only the administrative slice, 6.7 percent of revenue last quarter [5]. Most of every premium dollar buys medical care whose price is set by state rate formulas, not software. ## The tests are October 21, then January [Third-quarter results land on October 21, after the close](https://247wallst.com/companies/moh/earnings/), and will show whether the trough is holding [5]. The law firm Bronstein, Gewirtz & Grossman said on September 20 [it was investigating potential shareholder claims](https://www.ad-hoc-news.de/boerse/news/corporate-news/molina-healthcare-stock-falls-after-legal-investigation-announcement/70143578), and on October 11 invited investors who bought before February 5, 2025, to inquire; the probe's subject remains undisclosed [8][1]. Meanwhile the Florida families mid-switch are re-confirming prescriptions, appointments and medical transport, with the state covering current providers through May 2027 [6]. The bull case pays today for a margin that exists so far only as management's expectation. The rate schedule that would make it a fact has not appeared in anything Molina has published. ## Takeaway The $6 billion Florida contract is real, but Molina guides to a first-year loss on it, the profit depends on state rates not yet published, and the stock now trades at 22x against an industry at 15x. ## Sources 1. [Traders Union, "Molina Healthcare rises 3.36% today", 13 October 2026](https://tradersunion.com/news/stocks/show/3774787-molina-healthcare-rises-3-36percent-today/) 2. [Traders Union, "Molina Healthcare surges 3.89% today", 14 October 2026](https://tradersunion.com/news/stocks/show/3794359-molina-healthcare-surges-3-89percent-today/) 3. [Becker's Payer Issues, "Molina assumes $6B Florida Medicaid, CHIP special contract", 6 October 2026](https://www.beckerspayer.com/payer/medicaid/molina-assumes-6b-florida-medicaid-chip-special-contract/) 4. [Zacks Equity Research via Yahoo Finance UK, "Centene vs. Molina: Which Managed Care Stock Has More Upside?", 12 October 2026](https://uk.finance.yahoo.com/news/centene-vs-molina-managed-care-153700225.html) 5. [24/7 Wall St, "Molina Healthcare (MOH) Q2 2026 Earnings: Results, Market Reaction & History", 22 July 2026](https://247wallst.com/companies/moh/earnings/) 6. [WESH 2 News via MSN, "Medicaid change could impact services for Florida children", 2 October 2026](https://www.msn.com/en-us/news/other/medicaid-change-could-impact-services-for-florida-children/ar-AA2dnPqO) 7. [Seeking Alpha, "Molina Healthcare: Paying 21x For A Recovery That Hasn't Happened Yet", 14 October 2026](https://seekingalpha.com/article/4954077-molina-healthcare-paying-21x-for-a-recovery-that-hasnt-happened-yet) 8. [Ad Hoc News, "Molina Healthcare stock falls after legal investigation announcement", 21 September 2026](https://www.ad-hoc-news.de/boerse/news/corporate-news/molina-healthcare-stock-falls-after-legal-investigation-announcement/70143578) 9. [Molina Healthcare, quarterly revenue from its SEC filings, retrieved 14 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001179929) --- Molina Rallied on a $6 Billion Contract It Will Lose Money On in Year One — The Inference. Canonical: https://theinference.org/article/molina-rallied-on-a-6-billion-contract-it-will-lose-money-on-in-year-one