MOLINA HEALTHCARE, INC. (MOH)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements. We intend such forward-looking statements to be covered under the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Securities Exchange Act. Many of the forward-looking statements are located under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions, and all statements other than statements of historical fact contained in this Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by words such as “guidance,” “future,” “anticipates,” “assumes,” “believes,” “embedded,” “estimates,” “expects,” “growth,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Form 10-Q include, but are not limited to, statements regarding our future results of operations and financial position, industry and business trends, legislative and regulatory developments and their potential impact, business strategy, strategic transactions and commercial arrangements, market and offering changes, membership, medical cost and market trends and our objectives for future operations. Readers are cautioned not to place undue reliance on any forward-looking statements, as the future is inherently unpredictable. Thus, forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly due to numerous known and unknown risks and uncertainties.

Those known risks and uncertainties include, but are not limited to, the risk factors identified in the section titled “Risk Factors” in our 2025 Annual Report on Form 10-K, including without limitation risks related to the following matters:

•Medicaid, Medicare, or Marketplace capitation rates that are insufficient to fully cover our medical care costs and/or the rates of utilization and the health acuity status of our members, including without limitation inpatient and outpatient costs, pharmacy costs, and behavioral health care costs, and insufficient rate increases that do not keep pace with or catch up to the medical care cost trend;

•federal or state legislative or regulatory changes, including changes effected by, or negative public perceptions of the Medicaid program created by, the One Big Beautiful Bill Act, or changes effected through Executive Orders or HHS/CMS administrative agency rulemaking with regard to the Medicaid, Medicare, or Marketplace programs, including potential reductions in Medicaid funding, political pressures directed at the health insurance industry regarding managed care and prior authorization practices, advocacy for and potential implementation of aspects of the so-called Great Healthcare Plan, changes to the federal matching percentage paid to states, the implementation of Medicaid work requirements, block grants or per capita caps, the reduction or elimination of provider taxes, uncertainty regarding the status or effect of Marketplace subsidies, the implementation of new program integrity rules, insufficient Medicare Advantage rate adjustments, new rules pertaining to Medicare Risk Adjustment Data Validation, or amendments of the Affordable Care Act (“ACA”);

•budget pressures on state governments, CMS’ withholding of FMAP payments to states based on allegations of fraud, and states’ efforts to reduce rates and limit rate increases to avoid budget deficits;

•evolving Marketplace dynamics including issues impacting enrollment, special enrollment periods, member choice, premium subsidies, broker rates, risk adjustment estimates and results, Marketplace plan insolvencies or receiverships, and the potential for disproportionate enrollment of higher acuity members;

•the success of our efforts to retain existing or awarded government contracts, the success of our bid submissions in response to requests for proposal, our ability to identify merger and acquisition targets to support our continued growth over time at projected levels, and our ability to realize the full amount of our embedded earnings;

•the success of the scaling up of our operations in new states in connection with request for proposal wins, including our new Florida Kids program contract and operations, and the satisfaction of all readiness review requirements under the new Medicaid contracts;

•our ability to integrate our acquisitions and realize expected benefits and limit our liabilities as projected;

•subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including retroactive Medicaid rate adjustments in a state or changes to estimated amounts payable or receivable related to Marketplace risk adjustment;

•effective management of our medical costs, and the accurate estimation of incurred but not reported or paid medical costs across our health plans;

•our ability to predict with a reasonable degree of accuracy utilization rates;

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•cyber-attacks, ransomware attacks, or other privacy or data security incidents involving either ourselves or our contracted vendors, that result in an inadvertent unauthorized disclosure of protected information or operational delays;

•the ability to manage our operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of our care management initiatives;

•operational improvements, efficiencies, and cost savings that are less than anticipated, or that result in unforeseen consequences, from our investments in artificial intelligence (“AI”) administrative tools and initiatives;

•the impact of our working in a remote work environment;

•our receipt of rates adequate to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;

•the interpretation, implementation, and estimates of amounts owed for federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions and requirements;

•the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and our ability to recognize revenue amounts associated therewith;

•the transition of Medicare-Medicaid pilot programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas serving those dually eligible for both Medicare and Medicaid, the increasing integration of Medicare and Medicaid programmatic and compliance requirements, and the extension or incorporation of federal Medicare requirements developed by CMS into state-administered Medicaid programs;

•changes in our annual effective tax rate due to federal and/or state legislation, or changes in our mix of earnings and other factors;

•the efficient and effective operations of the vendors on whom our business relies;

•complications, member confusion, or enrollment backlogs related to the renewal of Medicaid coverage;

•fraud, waste and abuse matters, including the recent expressions of a federal crackdown on Medicaid fraud in certain of the states in which we operate, government audits, reviews, investigations, or comment letters, and any fine, sanction, enrollment freeze, debarment, corrective action plan, monitoring program, or premium recovery that may result therefrom;

•the success of our providers, including delegated providers, the adequacy of our provider networks, the successful maintenance of relations with our providers, the accuracy of our provider directories incidental to provider turnover and network changes, and potential medical or pharmaceutical supply shortfalls suffered by our providers incidental to the implementation of tariffs;

•approval by state regulators of dividends and distributions by our health plan subsidiaries;

•high dollar claims related to catastrophic illness;

•the favorable resolution of litigation, arbitration, or administrative proceedings consistent with our expectations;

•the greater scale and revenues of our health plans in California, New York, Texas, and Washington, and risks related to the concentration of our business in those states;

•the failure to comply with the financial or other covenants in the Credit Agreement (as defined below) or the indentures governing our outstanding senior notes;

•the availability of adequate financing on acceptable terms to fund and capitalize our expansion and growth, and to meet our general liquidity needs;

•the failure of a state in which we operate to renew its federal Medicaid waiver;

•risks associated with vaccine hesitancy and the potential for a new epidemic or pandemic, including risks presented by the flu, measles, or other contagious diseases;

•changes generally affecting the managed care industry, including any new federal or state legislation that impacts the business space in which we operate, or negative perceptions that may arise about managed care practices or government healthcare programs;

•increases in government surcharges, taxes, and assessments;

•the impact of inflation on our medical costs and the cost of refinancing our outstanding indebtedness;

•the unexpected loss of the leadership of one or more of our senior executives; and

•increasing competition and consolidation in the Medicaid or general healthcare sector.

Each of the terms “Molina Healthcare, Inc.” “Molina Healthcare,” “Company,” “we,” “our,” and “us,” as used herein, refers collectively to Molina Healthcare, Inc. and its wholly owned subsidiaries, unless otherwise stated. The forward-looking statements in this Form 10-Q are based upon information available to us as of the date of this Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive

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inquiry into, or review of, all potentially available relevant information. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Form 10-Q. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

This Form 10-Q and the following discussion of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the notes to those statements appearing elsewhere in this report, and the audited financial statements and Management’s Discussion and Analysis appearing in our 2025 Annual Report on Form 10-K.

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OVERVIEW

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We served approximately 4.9 million members as of June 30, 2026, located across 21 states.

SECOND QUARTER 2026 HIGHLIGHTS

We reported net income of $60 million, or $1.19 per diluted share, for the second quarter of 2026, which reflected the following:

•Membership of 4.9 mil

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)

Management’s discussion and analysis of financial condition and results of operations as of and for the years ended December 31, 2025 and 2024, are presented in the sections that follow. Our MD&A as of and for the year ended December 31, 2023, may be found in our 2024 Annual Report on Form 10-K, which prior disclosure is incorporated by reference herein. The following discussion and analysis does not include certain items related to the year ended December 31, 2023, including year-to-year comparisons between the year ended December 31, 2024 and the year ended December 31, 2023. For a comparison of our results of operations for the fiscal years ended December 31, 2024 and December 31, 2023, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 11, 2025.

OVERVIEW

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We served approximately 5.5 million members as of December 31, 2025, located across 21 states.

2025 HIGHLIGHTS

Highlights of our full-year 2025 results included the following:

•Net income of $472 million, or $8.92 per diluted share, compared to $1,179 million, or $20.42 per diluted share in 2024;

•Membership of 5.5 million at December 31, 2025, down slightly compared to the prior year, despite the impact of our growth initiatives, due to the impact of Medicaid redeterminations;

•Total revenue of $45.4 billion, which increased 12% compared to 2024;

•Premium revenue of $43.1 billion, which increased 11% compared to 2024;

•Consolidated medical care ratio (“MCR”) of 91.7%, compared to 89.1% in 2024, reflecting a challenging medical cost trend environment in all our segments;

•General and administrative expense ratio (“G&A ratio”) of 6.6%, which decreased from 6.7% in 2024; and

•Pre-tax margin of 1.3%, compared to 3.9% in 2024.

Growth Initiatives

Despite margin challenges, we had another strong year executing on our growth strategy.

In 2025, we continued our successful track record of winning renewal and new Medicaid state procurements.

•In November 2025, the Florida Agency for Health Care Administration (“AHCA”) announced its intent to award us the sole contract to provide Statewide Medicaid Managed Care and Children’s Health Insurance Program services. This contract is expected to cover approximately 120,000 enrollees and yield $6 billion in annual premium revenue and is expected to commence in the fourth quarter of 2026.

•The award in Florida complements our previously announced contract win in Wisconsin, where we renewed our Wisconsin MyChoice LTSS contract in Regions 2 and 7, and our previously announced Georgia and Texas Star-Chip wins. Collectively, the new RFP wins in 2025 represent over $9 billion of incremental annual Medicaid premium revenue.

On February 1, 2025, we closed our acquisition of ConnectiCare Holding Company, Inc. (“ConnectiCare”), and our acquisition pipeline contains a growing number of actionable opportunities.

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FINANCIAL RESULTS SUMMARY

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(1)MCR represents medical care costs as a percentage of premium revenue.

(2)G&A ratio represents general and administrative expenses as a percentage of total revenue.

(3)Pre-tax margin represents income before income tax expense as a percentage of total revenue.

CONSOLIDATED RESULTS

NET INCOME AND OPERATING INCOME

Net income amounted to $472 million, or $8.92 per diluted share in 2025, compared with net income of $1,179 million, or $20.42 per diluted share in 2024.

The decline in net income in 2025 reflects a decline in operating income, which totaled $781 million in 2025, compared with $1,707 million in 2024. The decrease in operating income was mainly attributable to an increase in the MCR across all our segments, higher interest expense and lower investment income, partially offset by the benefit of higher premium revenues, and G&A expense efficiencies.

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PREMIUM REVENUE

Premium revenue increased $4.4 billion, or 11%, in 2025, when compared with 2024. The higher premium revenue mainly reflects the ConnectiCare acquisition that closed in the first quarter of 2025, Medicaid rate increases, an increase in Marketplace membership resulting from our product and pricing strategy, and growth in our current footprint, partially offset by the impact of lower membership in Medicaid.

MEDICAL CARE RATIO

The consolidated MCR increased to 91.7% in 2025, compared with 89.1% in 2024, or 260 basis points. The increase reflects a higher MCR in all of our segments, driven mainly by a challenging medical cost trend environment due to increased utilization that was higher than we expected and acuity shifts in our membership. The consolidated MCR for 2025 is above our long-term target range. See further discussion in “Reportable Segments—Segment Financial Performance,” below.

The impact of prior year reserve development in 2025 was partially absorbed by minimum MLRs and medical cost corridors and was ultimately not material to our consolidated MCR.

PREMIUM TAX REVENUE AND EXPENSES

The premium tax ratio (premium tax as a percentage of premium revenue plus premium tax revenue) increased to 4.1% in 2025, compared with 3.7% in 2024, due mainly to state mix changes in our Medicaid segment.

INVESTMENT INCOME

Investment income decreased to $420 million in 2025, compared with $452 million in 2024. The decrease was mainly attributable to a decline in prevailing interest rates and investment yields.

OTHER REVENUE

Other revenue amounted to $91 million in 2025, compared with $85 million in 2024. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.

GENERAL AND ADMINISTRATIVE (“G&A”) EXPENSES

The G&A ratio was 6.6% in 2025, compared to 6.7% in 2024. The decrease in G&A ratio reflects operating discipline, the continued benefit of operating leverage as we grow our business, and reduced incentive compensation tied to lower actual and expected performance.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization totaled $195 million in 2025, compared with $186 million in 2024. The increase is due to the impact of the ConnectiCare acquisition that closed in the first quarter of 2025.

OTHER OPERATING EXPENSES

Other operating expenses totaled $90 million in 2025, compared with $100 million in 2024. Other operating expenses mainly include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above. The year-over-year change reflects the impact of certain non-recurring costs associated with acquisitions, and costs for litigation incurred in 2024.

INTEREST EXPENSE

Interest expense was $192 million in 2025, compared with $118 million in 2024. The increase is due to term loan debt and credit facility borrowings related to a prior credit agreement that occurred in the first and third quarter of 2025, and were outstanding until they were repaid in November 2025, the issuance of $750 million of notes in November 2024, and the issuance of $850 million of notes in November 2025.

INCOME TAXES

Income tax expense amounted to $117 million in 2025, or 19.8% of pretax income, compared with income tax expense of $410 million in 2024, or 25.8% of pretax income. The difference in the effective tax rate is due to an increase in tax benefits related to transferable federal tax credits, decreases in nondeductible expenses and state and local income taxes, and differences in discrete tax items recognized in the respective periods.

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REPORTABLE SEGMENTS

As of December 31, 2025, we served approximately 5.5 million members eligible for Medicaid, Medicare, and other government-sponsored healthcare programs for low-income families and individuals, including Marketplace members, most of whom receive government premium subsidies.

We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other.

The Medicaid, Medicare, and Marketplace segments represent the government-funded or sponsored programs under which we offer managed healthcare services. The Other segment, which is insignificant to our consolidated results of operations, includes long-term services and supports consultative services in Wisconsin and the commercial portion of the business acquired in connection with the ConnectiCare transaction that closed effective February 1, 2025.

See "Item 1. Business,” for further description of our segments.

HOW WE ASSESS PERFORMANCE

We derive our revenues primarily from health insurance premiums. Our primary customers are state Medicaid agencies and the federal government.

The key metrics used to assess the performance of our segments are revenue, margin and medical care ratio (“MCR”). MCR represents the amount of medical care costs as a percentage of premium revenue. Therefore, the underlying margin, or the amount earned by the segments after medical costs or service costs are deducted from revenue, represents the most important measure of earnings reviewed by management, and is used by our chief executive officer, who is our chief operating decision maker, to review results, assess performance, and allocate resources. Such oversight and decision making includes, among others, pricing, approving capital expenditures, and identifying growth opportunities. We do not report total assets by segment since this is not a metric used to assess segment performance or allocate resources.

Management’s discussion and analysis of the change in medical margin is discussed below under “Segment Financial Performance.” For more information, see Notes to Consolidated Financial Statements, Note 16, “Segments.”

TRENDS AND UNCERTAINTIES

For a discussion of the trends, uncertainties and other developments that affected our reportable segments, refer to “Item 1. Business—Our Business,” “—Trends and Uncertainties,” “—Operations—Medical Management,” and “—Regulation.”

SEGMENT FINANCIAL PERFORMANCE

The following table summarizes our membership by segment as of the dates indicated:

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