Molina Healthcare Inc. (MOH) had a rough Thursday evening, with shares plummeting after the company delivered fourth-quarter results that were, to put it mildly, not what Wall Street was expecting.
The Numbers Tell a Brutal Story
Molina Healthcare reported a quarterly loss of $2.75 per share, a dramatic miss against the Street's estimate for earnings of 33 cents per share. Revenue at least provided some good news, coming in at $11.38 billion and beating the consensus estimate of $10.86 billion.
But here's where things get interesting. For the full fiscal year 2025, the company posted premium revenue of approximately $43.1 billion, representing an 11% year-over-year increase. That sounds solid until you dig into the medical care ratio (MCR) data, which shows why the bottom line disappointed so dramatically.
The MCR Problem
The consolidated MCR for 2025 came in at 91.7%. Breaking that down by segment reveals persistent headwinds across the board. The Medicaid MCR hit 91.8%, driven by continued high utilization levels. Medicare wasn't much better at 92.4%, reflecting higher utilization among high-acuity members, particularly for long-term services and supports and pharmacy, plus slower-than-anticipated margin recovery in the Medicare Advantage Part D product. Even the Marketplace MCR registered at 90.6%, pressured by much higher utilization relative to risk adjustment revenue.
Management's Take
"We remain confident in our durable and sustaining operating platform," said CEO Joseph Zubretsky, attempting to reassure investors despite the challenging numbers.
He added context about the industry dynamics: "We believe that the imbalance between rates and trend marks 2026 as a trough year for Medicaid industry margins. Even at this low point in the cycle, we continue to produce positive pretax margins in Medicaid."
Looking Ahead
Molina Healthcare expects fiscal 2026 adjusted EPS of at least $5. The company is projecting premium revenue of approximately $42 billion for the full year, representing a decline of roughly 2% from 2025. That drop reflects a planned reduction in the Marketplace segment, which the company expects will be partially offset by growth from a new Florida CMS contract in Medicaid and higher premiums in Medicare.
Following the earnings release, Molina stock dropped 33.3% to $118 in after-hours trading.
