Breaking Down Molina Healthcare, Inc. (MOH) Financial Health: Key Insights for Investors

You're looking at Molina Healthcare, Inc. (MOH) and seeing a confusing picture: strong top-line growth but a significant earnings reset, so you need to know what's driving the volatility. The direct takeaway is that while the company is growing its footprint, rising medical costs are eating into profitability, forcing a major recalibration of expectations. For the full 2025 fiscal year, Molina Healthcare is now projecting premium revenue to hit approximately $42.5 billion-a solid 10% increase-but they've had to slash their adjusted earnings per share (EPS) guidance to around $14.00, a defintely sharp drop from earlier forecasts. This shift is clearly visible in the third quarter Medical Care Ratio (MCR), which jumped to 92.6% from 89.2% a year ago, showing the real pressure from higher utilization in their Medicare and Marketplace segments. This stock is a classic case of revenue beating expectations while profitability misses by a mile, and that's the core risk investors must analyze right now.

Revenue Analysis

You need to know where the money is coming from, and for Molina Healthcare, Inc. (MOH), the answer is simple: government-sponsored programs. The good news is that total revenue continues its strong upward trajectory, but the critical point for investors is the shifting profitability within those segments, especially the Marketplace business.

Molina Healthcare, Inc. is projecting its core premium revenue for the full fiscal year 2025 to be approximately $42.5 billion, a slight raise from earlier guidance. This growth is defintely a positive signal, but it masks underlying cost pressures you need to pay attention to. For the trailing twelve months (TTM) ending September 30, 2025, the company's total revenue stood at around $44.55 billion, showing a robust year-over-year growth rate of about 14.11%.

The Dominance of Premium Revenue and Medicaid

Molina Healthcare, Inc.'s revenue is overwhelmingly driven by premium revenue, which is the money they receive from government entities-like state Medicaid programs and Medicare-and individual members for providing managed healthcare services. The company is structured around four key business segments, but one drives the bulk of the business.

• Medicaid: The cornerstone of the business, it accounted for roughly 75% of total premium revenue in Q3 2025. This segment's premium revenue grew by 5% year-over-year in Q3 2025, primarily due to premium rate increases.
• Medicare: This segment saw a significant jump in Q3 2025, with premium revenue surging by 18% year-over-year. This spike was largely fueled by membership growth from strategic acquisitions, like ConnectiCare.
• Marketplace: This segment, which offers health plans on the Affordable Care Act (ACA) exchanges, is the current source of volatility.

Near-Term Risk: The Marketplace Segment Shift

While the overall revenue picture looks solid, the profitability story is changing, and the Marketplace segment is the main culprit. In Q3 2025, this segment was a major drag on earnings, contributing a loss of $1.68 per diluted share, while Medicaid was still producing a strong gain. The issue is the Medical Care Ratio (MCR)-the percentage of premium revenue spent on medical claims-which hit an unexpectedly high 95.6% for the Marketplace in Q3 2025. This is a clear sign of higher-than-anticipated utilization, meaning people are using their health services more than the company budgeted for.

Here's the quick math: a higher MCR means thinner margins, even with rising revenue. The company's consolidated MCR rose to 92.6% in Q3 2025, up from 89.2% in the prior year, directly reflecting this cost pressure. Management is expecting margin improvements in 2026, but right now, the Marketplace is the segment creating earnings pressure. You can dive deeper into the players behind these moves in Exploring Molina Healthcare, Inc. (MOH) Investor Profile: Who's Buying and Why?

The other major change you should track is the ongoing impact of Medicaid redeterminations. While acquisitions and new contracts are boosting premium revenue, the process of states re-verifying Medicaid eligibility is causing a general contraction in Medicaid membership, slightly offsetting the growth from rate increases.

Profitability Metrics

You need to know if Molina Healthcare, Inc. (MOH) is making money efficiently, especially given the rising medical costs across the healthcare sector. The direct takeaway is that while Molina Healthcare's revenue growth is strong, its profit margins are under significant pressure in 2025, particularly when compared to its larger, more diversified peers.

The company's profitability is best viewed through its core margins, which show a clear compression trend in the near-term. For the trailing twelve months (TTM) ending September 30, 2025, Molina Healthcare's Operating Margin stood at 2.97%, with the Net Profit Margin at 1.98%. However, the most recent quarterly data paints a more challenging picture.

• Gross Profit Margin (Medical Margin): For a managed care organization (MCO) like Molina Healthcare, the Medical Care Ratio (MCR) is the key operational efficiency metric. The MCR for the third quarter of 2025 (Q3 2025) was 92.6%. This means that for every dollar of premium revenue, 92.6 cents went directly to paying medical claims, leaving a gross margin (or medical margin) of only 7.4% before administrative costs.
• Operating and Net Profit Margins: The Q3 2025 Adjusted After-tax Margin (Net Profit Margin) dropped to a very low 0.8%, down sharply from 3.4% in the same quarter in 2024. This is a defintely a red flag.

Margin Trends and Operational Efficiency

The trend over the past five years shows a decline in both gross and operating margins, a pattern that accelerated in 2025 due to higher-than-anticipated healthcare utilization. This is not unique to Molina Healthcare, but the company's heavy reliance on the Medicaid segment (which faces structural reimbursement challenges) makes it acutely sensitive to these cost pressures. The CEO specifically cited a challenging medical cost trend environment across all segments-Medicaid, Medicare, and Marketplace-in the Q2 2025 results.

Here's the quick math on cost management: Operational efficiency is a two-part equation-managing medical costs (MCR) and administrative costs (General & Administrative or G&A Ratio). While the MCR surged to 92.6% in Q3 2025, Molina Healthcare has maintained a tight leash on administrative spending. The Adjusted G&A Ratio for Q3 2025 was 6.3%, a slight improvement from 6.4% a year prior. This shows strong cost control on the administrative side, but it's not enough to offset the spike in medical costs.

Industry Comparison: A Relative View

When you compare Molina Healthcare's profitability to the broader managed care industry, the recent margin compression becomes even clearer. For the first quarter of 2025 (Q1 2025), the unweighted average Net Profit Margin for four major public health insurers (Cigna, CVS Health/Aetna, Elevance, and UnitedHealthcare) was 5.3% of premium revenue. Molina Healthcare's Q3 2025 Adjusted Net Profit Margin of 0.8% is significantly lower, indicating a substantial gap. This is partly a function of their business mix, as you can read more about in the Mission Statement, Vision, & Core Values of Molina Healthcare, Inc. (MOH).

However, you need to be fair and compare apples to apples. Molina Healthcare's focus on government programs means a comparison to the Medicaid Managed Care sector is also necessary. In that segment, profitability is generally much tighter. For all Medicaid MCOs, the average underwriting margin was negative -0.9% in 2024, down from 1.9% in 2023. Against this backdrop of sector-wide pressure, Molina Healthcare's TTM Net Margin of 1.98% still shows a level of resilience, but the recent quarterly drop to 0.8% suggests they are now feeling the full force of the trend.

What this estimate hides is the one-time impact of rate adjustments and the timing lag between rising medical costs and state-level premium rate increases, which Molina Healthcare expects to provide margin improvement potential in 2026. The company is forecasting a full-year 2025 adjusted earnings per share of approximately $14.00, a significant downward revision from earlier guidance, but still a positive earnings number. The current margin pressure is real, but management is signaling it's a near-term headwind, not a permanent structural flaw.

Debt vs. Equity Structure

You're looking at Molina Healthcare, Inc. (MOH)'s balance sheet to see how they fund their growth, and the quick takeaway is this: the company is moderately leveraged, but their reliance on debt is slightly higher than the industry average, which is a trend to watch. As of the third quarter ending September 30, 2025, Molina Healthcare, Inc. (MOH)'s Debt-to-Equity (D/E) ratio stood at approximately 0.92. This means for every dollar of shareholder equity, the company uses 92 cents of debt to finance its assets.

Here's the quick math on their capital structure. The company's long-term debt is the main driver of leverage, totaling approximately $3.664 billion as of September 30, 2025. Critically, their short-term debt is negligible, reported at essentially $0 million in Q3 2025, which is a defintely positive sign for near-term liquidity. Total stockholders' equity for the same period was approximately $4.191 billion. They have a solid equity base.

To be fair, a D/E ratio of 0.92 isn't alarming on its own, but it does sit above the Healthcare Plans industry average of around 0.74. This suggests Molina Healthcare, Inc. (MOH) is slightly more aggressive than its peers in using financial leverage (borrowing) to boost returns. While leverage can amplify shareholder returns, it also increases financial risk, especially in a tightening credit environment.

The company is actively managing this debt. In November 2025, Molina Healthcare, Inc. (MOH) announced a private offering of $750 million in senior notes due 2031. The plan is to use the proceeds to repay outstanding delayed draw term loans under their existing credit agreement, which is a smart move for balance sheet optimization. This is a refinancing play, not an immediate increase in overall leverage, and it extends the maturity profile, which is good for stability.

Still, the credit market is paying attention. S&P Global Ratings revised its outlook on Molina Healthcare, Inc. (MOH) to negative from stable in November 2025, citing concerns over reduced 2025 earnings guidance and higher-than-expected medical utilization. This is a direct risk mapping to their debt strategy; higher debt costs could follow if the rating were to drop. For a deeper dive into the institutional view, you should check out Exploring Molina Healthcare, Inc. (MOH) Investor Profile: Who's Buying and Why?

The key points on their financing mix are clear:

• D/E ratio of 0.92 is above the 0.74 industry average.
• Long-term debt is $3.664 billion, with minimal short-term debt.
• Refinancing $750 million in notes pushes maturity to 2031.
• Credit outlook is now negative, signaling increased scrutiny.

The company balances debt and equity by using long-term, fixed-rate debt (like the notes) to fund acquisitions and growth, while maintaining a large equity cushion. This is typical for a growth-oriented managed care provider, but the recent negative outlook means the cost of future debt could rise.

Liquidity and Solvency

Molina Healthcare, Inc. (MOH) shows a solid balance sheet position, but a deep dive into the 2025 cash flow statement reveals a near-term liquidity shift you need to understand. The company's current and quick ratios signal strong immediate coverage, but a significant swing in operating cash flow is the headline here.

As of September 30, 2025, Molina Healthcare's current ratio stands at a healthy 1.68. This is a very good sign for a managed care organization, meaning the company has $1.68 in current assets to cover every dollar of current liabilities. What's more telling is that the quick ratio-which strips out less-liquid assets like inventory-is also 1.68. This parity is common in the service-heavy healthcare sector, where inventory is negligible, and it confirms the company's high-quality, immediate liquidity position.

Here's the quick math on the working capital (current assets minus current liabilities):

• Total Current Assets: $12,552 million
• Total Current Liabilities: $7,481 million
• Working Capital: $5,071 million

This positive working capital of over $5 billion is a clear strength, providing a substantial buffer against unexpected claims or payment delays. This financial cushion is defintely a key factor in their ability to manage the evolving regulatory landscape, a topic you can learn more about by reviewing the Mission Statement, Vision, & Core Values of Molina Healthcare, Inc. (MOH).

Still, the cash flow statement for the first nine months of 2025 shows a concerning trend. Cash flow from operating activities (OCF) was an outflow of $237 million. This is a massive reversal from the $868 million inflow reported in the same period of 2024. The primary drivers for this downturn were timing differences in government receivables and payables, plus settlement activities related to Medicaid risk corridor and Marketplace risk transfer. This outflow is a near-term risk because it means the core business is not generating the cash it needs right now.

Mapping the three cash flow components for the nine months ended September 30, 2025, shows how Molina Healthcare managed this operating deficit:

The company offset the operating cash loss by generating $82 million from investing activities, primarily through net proceeds from investments. But the financing side is where you see the most strategic movement: Molina Healthcare used $1.0 billion for common stock repurchases, which was largely funded by $1.1 billion in new borrowings under its credit facilities. This is a crucial point: the company is using debt to fund its share buyback program while its core operations are experiencing a cash outflow. This is a clear trade-off-supporting the stock price but increasing leverage.

The risk here isn't immediate insolvency, given the 1.68 quick ratio and the $5.071 billion working capital. The liquidity concern is a structural one: the core business must quickly return to positive operating cash flow to avoid continued reliance on borrowing to fund shareholder returns and acquisitions. Your action item is to watch the Q4 2025 earnings for a definitive turnaround in OCF. Finance: check for OCF guidance in the next earnings call transcript by January.

Valuation Analysis

You are looking at Molina Healthcare, Inc. (MOH) after a significant price drop, and the core question is whether the stock is now a value play or a value trap. The direct takeaway is this: Molina Healthcare appears undervalued based on traditional multiples compared to its historical and industry averages, but the market is pricing in significant near-term execution risk, particularly around its revised 2025 earnings guidance.

The company's valuation multiples for the trailing twelve months (TTM) as of November 2025 are notably low. Here's the quick math on the key ratios, which are the tools we use to judge if a stock is cheap or expensive relative to its earnings, assets, and debt-adjusted cash flow:

• Price-to-Earnings (P/E): The TTM P/E ratio sits around 8.51. To be fair, this is a very low multiple for a healthcare plan provider, suggesting the stock is inexpensive relative to its past year's earnings.
• Price-to-Book (P/B): The P/B ratio is approximately 1.67. This indicates the stock is trading at a modest premium to the company's net asset value, which is generally a healthy sign, but it's much lower than its recent historical range.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple, which accounts for debt (Enterprise Value) and is capital structure-neutral, is around 4.65. This is significantly lower than the industry median of approximately 10.3x, suggesting a deep discount on a cash-flow basis.

These depressed multiples are a direct consequence of the stock's performance over the last 12 months. The stock price has fallen by over 54.97% from late 2024 to November 2025, moving from a 52-week high of $359.97 in April 2025 to a recent low near $136.48. That's a brutal correction, defintely driven by the revised full-year 2025 earnings per share (EPS) guidance of $14.00, which missed the analyst consensus of nearly $24.40.

When it comes to capital return, Molina Healthcare, Inc. (MOH) is a growth-focused stock, not an income stock. The company does not currently pay a dividend, so both the dividend yield and the payout ratio are 0.00%. This is common for companies prioritizing organic growth and M&A over shareholder distributions.

The Wall Street consensus reflects this mixed signal: cheap valuation but high risk. The average analyst rating is a 'Hold,' with 11 out of 16 analysts suggesting this position as of November 2025. The average 12-month price target is set at $198.93, which implies a substantial upside from the current price. This gap between the current price and the target suggests analysts believe the stock is undervalued, but they are hesitant to issue a strong 'Buy' due to the uncertainty around the company's ability to hit its revised 2025 guidance and stabilize margins. This is a classic case of the market demanding a higher margin of safety before it rewards the stock. For a deeper dive into the operational risks driving this discount, check out Breaking Down Molina Healthcare, Inc. (MOH) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Molina Healthcare, Inc. (MOH) after a turbulent 2025, and the key takeaway is this: while their core Medicaid business remains a rock, the rising cost of care in their other segments has created a significant earnings headwind. The company has cut its full-year adjusted earnings guidance three times, so we need to be clear-eyed about where the pressure points are.

The biggest near-term risk is operational-a sharp and unexpected spike in medical costs, which is causing a major margin squeeze. This is not a theoretical risk; it's happening right now. For the full fiscal year 2025, Molina Healthcare now expects its adjusted earnings to be approximately $14.00 per diluted share, a dramatic step down from the initial forecast of at least $24.50 per share.

Here's the quick math on the operational challenges:

• Medical Cost Inflation: The consolidated Medical Care Ratio (MCR) hit 92.6% in the third quarter of 2025, up from 89.2% in the prior year.
• Marketplace Segment Loss: The Marketplace (Affordable Care Act exchange) segment is the biggest headache, with a Q3 2025 MCR of 95.6%.
• Segment Imbalance: In Q3 2025, the combined loss from Medicare and Marketplace was a substantial $1.68 per diluted share, which nearly wiped out the strong $3.52 per diluted share gain from the Medicaid business.

That 95.6% MCR in the Marketplace means that for every dollar of premium revenue, over 95 cents is going out the door for medical claims. That's defintely not sustainable.

External and Regulatory Headwinds

Beyond the internal cost structure, Molina Healthcare operates in a highly regulated environment, and external factors are always a major concern. The industry-wide process of 'Medicaid Unwinding'-the redetermination of eligibility after the COVID-19 Public Health Emergency ended-is still a factor, creating a population with higher acuity (more complex, costly health needs) among the remaining members.

Also, new regulatory proposals are causing market anxiety, and you have to factor in the constant threat of changes to government reimbursement rates, which directly impact revenue. Plus, the company is facing legal pressure. A securities fraud class action lawsuit was filed in July 2025, alleging that the company misled investors about the escalating medical cost trends. This kind of litigation is a drain on resources and can damage investor confidence, even if the company ultimately prevails.

Management's Mitigation Strategy

To be fair, management is not sitting still. They have clear plans to address these risks, which is what you want to see. The primary focus is on getting the Marketplace business to a healthier place.

Their strategic response includes:

• Reducing Marketplace Exposure: Management has signaled a clear intent to reduce risk in the Marketplace segment, aiming for at least break-even earnings in their preliminary 2026 outlook.
• Cost Control Initiatives: They are implementing enhanced data analytics to pinpoint cost drivers, renegotiating provider contracts, and investing in care management programs to improve efficiency over the medium term.
• Strategic Growth: Molina Healthcare is leveraging its core strength by focusing on high-value, high-need segments like Dual Special Needs Plans (D-SNP) for 2025, aligning with new Centers for Medicare & Medicaid Services (CMS) rules.

The company is also projecting a full-year 2025 premium revenue of approximately $42.5 billion, an increase of about 10% from 2024, showing that top-line growth is still strong despite the profitability issues. This growth provides the operating leverage needed to absorb some of the cost pressure. For a deeper dive into who is buying and selling the stock during this period of volatility, you should read Exploring Molina Healthcare, Inc. (MOH) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for a clear map of where Molina Healthcare, Inc. (MOH) goes from here, especially after the recent market volatility, and the short answer is: growth is still the core story, but the path is getting more expensive. The company is defintely leaning into strategic acquisitions and state contract wins to drive its top line, even as rising medical costs squeeze margins in the near term.

For the 2025 fiscal year, the company's guidance reflects this dual reality. They project premium revenue to hit approximately $42.5 billion, which is about a 10% increase from 2024, showing strong underlying business expansion. However, the full-year 2025 adjusted earnings per diluted share is now expected to be around $14.00, a clear sign that higher medical cost trends are hitting the bottom line. Here's the quick math on the top-line expectations compared to the analyst consensus for total revenue.

The core of Molina Healthcare, Inc.'s future growth isn't just organic enrollment; it's a disciplined strategy of market expansion and product innovation. They have an active pipeline of new opportunities, including Requests for Proposals (RFPs) in several states, valued at a massive $54 billion over the next few years. That's a huge addressable market they are actively pursuing.

The company is also using strategic acquisitions to deepen its geographic reach and premium base. They bought ConnectiCare in February 2025, for instance, which added 144,000 members and helped them expand into Connecticut. This kind of move is a clear action; they are acquiring as much Medicaid revenue as possible to work up to their target margins.

• Win new state Medicaid contracts (~80% win rate).
• Expand Medicare Advantage, aiming for 20%+ of revenue.
• Invest in AI administrative tools for operational efficiency.
• Deploy capital to accretive acquisitions like ConnectiCare.
• Secure new contract wins, like those in Nevada and Illinois.

Their competitive advantage is really built on their operational discipline in the government-funded space. Molina Healthcare, Inc.'s business model is specifically designed to manage the complexities of Medicaid and Medicare. They have a strong track record, boasting an approximately 80% new-contract win rate and over 90% re-procurement success in state Medicaid contracts. Plus, their focus on operational efficiency is clear: they maintain a competitive General & Administrative (G&A) expense ratio of around 6.4%, which is a key lever for profitability as the business scales. They're also diversifying into higher-margin Medicare Advantage plans and expanding value-based care programs to mitigate the current cost pressures in their core segments. For a deeper look at the financial foundation supporting this growth, you can check out Breaking Down Molina Healthcare, Inc. (MOH) Financial Health: Key Insights for Investors.