The insurer is the latest to report signs of momentum in the safety-net insurance program as states increase their payment rates and costs plateau.

Molina’s third quarter was mixed overall. The insurer outperformed expectations for revenue and earnings, though both metrics degraded compared to the prior year — especially earnings. Molina brought in $38 million in profit, half of what it posted in the prior-year period, despite revenue dipping just 3% to $11.1 billion.

Molina’s results “err more on the side of pressure than progress,” Jefferies analyst David Windley wrote in a note.

But Molina executives argued that positive developments in Medicaid — which makes up 90% of the insurer’s membership and almost 80% of its premiums — bode well for the company’s ability to dig itself out of the trough.

Medicaid costs remained elevated in the third quarter, particularly in outpatient care and high-cost drugs, CFO Mark Keim said on a call with investors Thursday morning. The segment posted a medical loss ratio, a marker of spending on patient care, of 93%, worse than Wall Street had expected.

Analysts said the MLR increase could be due in part to ongoing membership attrition saddling the insurer with a smaller and sicker population, and the start of a new Medicaid contract in Florida for children with complex conditions. Both factors appear to be pushing up Molina’s Medicaid spending.

5% after the third quarter, executives said. 5%, up from Molina’s previous expectation of 4%, leaving an unwelcome delta.

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