Healthcare insurance company Molina Healthcare (NYSE: MOH) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 8.3% year on year to $11.38 billion. On the other hand, the company’s full-year revenue guidance of $44.5 billion at the midpoint came in 4.9% below analysts’ estimates. Its non-GAAP loss of $2.75 per share was significantly below analysts’ consensus estimates.

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Company Overview

Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Molina Healthcare grew its sales at an impressive 18.7% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Molina Healthcare’s annualized revenue growth of 15.5% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can dig further into the company’s revenue dynamics by analyzing its number of customers, which reached 5.49 million in the latest quarter. Over the last two years, Molina Healthcare’s customer base averaged 50,884,975% year-on-year growth. Because this number is better than its revenue growth, we can see the average customer spent less money each year on the company’s products and services.

This quarter, Molina Healthcare reported year-on-year revenue growth of 8.3%, and its $11.38 billion of revenue exceeded Wall Street’s estimates by 3.7%.

Looking ahead, sell-side analysts expect revenue to grow 2.7% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Molina Healthcare was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.5% was weak for a healthcare business.

Looking at the trend in its profitability, Molina Healthcare’s operating margin decreased by 1.9 percentage points over the last five years. This performance was caused by more recent speed bumps as the company’s margin fell by 2.9 percentage points on a two-year basis. We still like Molina Healthcare but would like to see it make some adjustments.

In Q4, Molina Healthcare generated an operating margin profit margin of negative 1.4%, down 5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Molina Healthcare, its EPS declined by 5.9% annually over the last five years while its revenue grew by 18.7%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Molina Healthcare’s earnings to better understand the drivers of its performance. As we mentioned earlier, Molina Healthcare’s operating margin declined by 1.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q4, Molina Healthcare reported adjusted EPS of negative $2.75, down from $5.05 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Molina Healthcare’s full-year EPS of $10.65 to grow 26.5%.

Key Takeaways from Molina Healthcare’s Q4 Results

We enjoyed seeing Molina Healthcare beat analysts’ revenue expectations this quarter. On the other hand, its full-year revenue guidance missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 33.4% to $117.85 immediately after reporting.

The latest quarter from Molina Healthcare’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).