Molina Healthcare, Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 5 February 2026: press release. Guidance figures: 1 raised, 1 lowered, 10 new. The quarter’s numbers.

Read the filing

Key takeaways

• Full-year EPS fell on lower earnings: Full-year 2025 GAAP EPS was $8.92, down 56%; adjusted EPS was $11.03, down 51%. Premium revenue rose 11% to about $43.1 billion on acquisitions, rate increases and organic growth. Source
• Fourth quarter loss from retroactive items: Fourth quarter GAAP loss was $3.15 per diluted share and adjusted loss was $2.75. Both were burdened by about $2.00 of unfavorable retroactive revenue items. Source
• Marketplace medical cost ratio jumped: Full-year Marketplace MCR was 90.6% against 75.4%; fourth quarter was 99.0% against 83.3%. Year-end Marketplace membership was 655,000 against 403,000. Source
• Adjusted EPS guided at least $5.00: Full-year 2026 adjusted EPS is guided at no less than $5.00 and GAAP EPS at no less than $3.20. The October preliminary view had been about $14.00 adjusted. Source
• $2.50 per share burden on 2026: Management said the 2026 guidance carries a $2.50 per share burden: $1.50 from the Florida CMS contract and $1.00 from Medicare Advantage Part D underperformance. Source
• Operating cash flow turned to outflow: Operating cash flow was an outflow of $535 million, against an inflow of $644 million. Management cited Medicaid risk corridor settlements, tax payment timing and lower second-half performance. Source
• Embedded earnings tied to new contracts: The embedded earnings measure covers newly awarded contracts and acquisitions not yet in 2026 guidance, and excludes amortization and non-recurring acquisition costs. Source

“We remain confident in our durable and sustaining operating platform,”

Joseph Zubretsky, President and Chief Executive Officer

Guidance

What changed from last quarter

• New guidance: Formal full-year 2026 guidance was issued in this release, replacing the preliminary 2026 view given in October. Source
• Guidance lowered: Adjusted EPS guidance of at least $5.00 is below the October preliminary 2026 view of approximately $14.00.
• Guidance raised: New store embedded earnings rose to over $11.00 per diluted share from $8.65, with the measured window moved to 2027 to 2029. Source
• New: The company will exit the MAPD product for 2027 because it does not align with a focus on dual eligible Medicare business. Source
• New: The 2026 guidance includes an EPS charge from implementing the new Florida CMS Medicaid contract. Source

Results and growth drivers

• Full-year EPS fell on lower earnings: Full-year 2025 GAAP EPS was $8.92, down 56%; adjusted EPS was $11.03, down 51%. Premium revenue rose 11% to about $43.1 billion on acquisitions, rate increases and organic growth. Source
• Fourth quarter loss from retroactive items: Fourth quarter GAAP loss was $3.15 per diluted share and adjusted loss was $2.75. Both were burdened by about $2.00 of unfavorable retroactive revenue items. Source
• Operating income and interest expense: Full-year operating income was $781 million against $1,707 million in 2024. Interest expense rose to $192 million from $118 million. Source

Segments and membership

• Medicaid medical cost ratio rose: Full-year Medicaid MCR was 91.8% against 90.3% in 2024; fourth quarter was 93.5%. Management said rate updates offset medical cost pressure from high utilization. Source
• Medicare costs rose on high-acuity members: Full-year Medicare MCR was 92.4% against 89.1%. Management pointed to high-acuity members, long-term services and supports, pharmacy, and slower margin recovery in Part D. Source
• Marketplace medical cost ratio jumped: Full-year Marketplace MCR was 90.6% against 75.4%; fourth quarter was 99.0% against 83.3%. Year-end Marketplace membership was 655,000 against 403,000. Source
• Total membership slightly lower at year-end: Total membership was 5.49 million against 5.54 million. Medicaid fell to 4.57 million from 4.89 million, while Marketplace and Medicare rose. Source

“Even at this low point in the cycle, we continue to produce positive pretax margins in Medicaid.”

Joseph Zubretsky, President and Chief Executive Officer

Medical costs and reserves

• Utilization cited as cost pressure: Management said continued high utilization drove medical cost pressure, which in Medicaid was offset by rate updates effective during the year. Source
• Days in claims payable fell: Days in claims payable at year end were 47, against 48 a year earlier. Source

Operating costs and G&A

• Full-year G&A ratio improved: Full-year G&A ratio was 6.6% and adjusted 6.5%, against 6.7% in 2024. Management cited operating discipline and operating leverage. Source
• Intangible amortization and acquisition costs: Full-year 2025 adjustments included $91 million of intangible amortization and $55 million of acquisition-related expenses. Source
• Fourth quarter G&A ratio higher: Fourth quarter G&A ratio was 7.0% and adjusted 6.9%, against 6.3% a year earlier. Source

2026 guidance and burdens

• Adjusted EPS guided at least $5.00: Full-year 2026 adjusted EPS is guided at no less than $5.00 and GAAP EPS at no less than $3.20. The October preliminary view had been about $14.00 adjusted. Source
• $2.50 per share burden on 2026: Management said the 2026 guidance carries a $2.50 per share burden: $1.50 from the Florida CMS contract and $1.00 from Medicare Advantage Part D underperformance. Source
• Premium revenue to decline about 2%: Full-year 2026 premium revenue is guided at about $42 billion, down about 2% from 2025, as the planned Marketplace reduction takes effect. Source

Cash, capital and returns

• Parent company cash declined: Parent company cash and investments were about $223 million at year end, against $445 million a year earlier. Source
• Operating cash flow turned to outflow: Operating cash flow was an outflow of $535 million, against an inflow of $644 million. Management cited Medicaid risk corridor settlements, tax payment timing and lower second-half performance. Source
• Share repurchases and debt issuance: Common stock purchases were $1.0 billion in each of 2025 and 2024. Senior notes proceeds were $838 million, and long-term debt rose to $3,766 million from $2,923 million. Source
• Shares outstanding down to 51 million: Shares outstanding were 51 million at year end, against 56 million a year earlier. Diluted weighted average shares fell to 52.9 million from 57.7 million. Source

Strategy and new contracts

• Embedded earnings tied to new contracts: The embedded earnings measure covers newly awarded contracts and acquisitions not yet in 2026 guidance, and excludes amortization and non-recurring acquisition costs. Source
• Medicare Duals awards and acquisitions listed: Newly awarded Medicare Duals contracts in five states and the California Medicare Health Plans and ConnectiCare acquisitions are included in the measure. Source
• Florida Medicaid growth offsets Marketplace: The planned Marketplace reduction is expected to be partly offset by Florida CMS Medicaid growth and higher Medicare premium. Source

Coming up, as management said on 5 February 2026

• Rate restoration anticipated: Management is optimistic about the earnings trajectory, which includes anticipated rate restoration and future embedded earnings. No date was given. Source
• Embedded earnings timing set for 2027 to 2029: Management expects embedded earnings from newly awarded, not yet commenced contracts and recent acquisitions to arrive between 2027 and 2029. Source

Figures management reported

Risks management discussed

• Operational: Medicare Part D product underperformance and slower margin recovery in the MAPD product, which the company will exit for 2027. Source
• Financial: Operating cash flow decline was attributed to Medicaid risk corridor settlements, tax payment timing and lower second-half performance. Source
• Regulatory: Retroactive premium adjustments in the Medicaid business in California reduced fourth quarter and full-year results, alongside ongoing cost pressure in Medicare and Marketplace. Source
• External: Management described 2026 as a trough year for Medicaid industry margins because rates and cost trend are out of balance. Source
• External: Marketplace utilization ran well above risk adjustment revenue through 2025, which the company said continued into the period. Source

Earlier plans management reported on

• Met: The October release said formal 2026 guidance would come on this call; the February release issued it.
• Not stated: The October release implied fourth quarter adjusted earnings of about $0.35 per share. The February release reports a fourth quarter adjusted loss of $2.75.
• Not stated: The October release said margin challenges would not persist. The February release describes 2026 as a trough year for Medicaid industry margins.

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.