Molina Healthcare's Q4 Challenge: Cost Pressures Threaten Earnings

Healthcare insurance provider Molina Healthcare, Inc. (MOH) recently disclosed fourth-quarter 2025 results on February 5, 2026, revealing the headwinds facing the sector. The company reported earnings of 43 cents per share against a consensus estimate of the same level, while revenues reached $10.8 billion as projected. However, beneath these headline numbers lies a troubling narrative about escalating medical expenses that are squeezing profitability across the industry. For Molina, the full-year 2025 earnings came in at $13.99 per share, representing a 38.23% year-over-year decline despite revenues climbing 10.4% to $44.89 billion.

Core Metrics Show Mixed Signals for Molina

The fourth-quarter performance reveals a complex picture. Premium growth for Molina came in at 2.4% year-over-year according to consensus estimates, while Medicare premiums specifically reached $1.4 billion, up 4.9% annually. Marketplace membership surged impressively with a 64.7% increase, and Medicare enrollment grew 3.3%. Yet these bright spots were overshadowed by troubling trends in Medicaid, where membership contracted 6.4% year-over-year according to Molina’s model estimates.

The real challenge emerged in medical care ratios (MCR)—a key metric measuring medical expenses relative to premiums. In the marketplace segment, MCR climbed to 94.8% from 83.3% a year prior. Total MCR across all segments rose to 93% from 90.2%, while Medicaid MCR increased to 92.47% from 90.2%. These rising ratios indicate that Molina is spending more on patient care relative to premium income, directly pressuring bottom-line results. Investment income also declined 9.8% year-over-year, compounding the earnings headwind. Operating expenses jumped 6.1%, driven by higher medical care costs and administrative expenses.

Medical Care Costs Rising Across the Board

The earnings decline of 91.5% quarter-over-quarter at Molina Healthcare underscores a brutal reality: the insurance industry is grappling with elevated medical spending that outpaces revenue growth. This pattern reflects broader healthcare inflation and increased utilization of services. For investors monitoring Molina and the sector, the core issue is whether premium increases can outpace medical cost inflation—a question that appears to have a negative answer in the current environment.

Molina’s historical performance offers little reassurance. The company beat consensus estimates in just one of the trailing four quarters, missing in the other three by an average of 15.8%. The consensus model predicted a 0% Earnings Surprise (ESP) for this quarter, with Molina carrying a Zacks Rank of #5 (Strong Sell), indicating analyst skepticism about near-term recovery.

How Molina Stacks Up Against Competitors

Other major players in the sector have recently reported, painting a similar picture of cost pressures combined with selective bright spots. UnitedHealth Group (UNH) reported fourth-quarter adjusted earnings of $2.11 per share, narrowly beating the $2.09 estimate. However, the bottom line declined 69% year-over-year despite revenues surging 12% to $113.2 billion, demonstrating that scale alone doesn’t insulate companies from medical cost inflation.

Elevance Health (ELV) delivered more encouraging results with adjusted EPS of $3.33, exceeding consensus by 7.3%, fueled by strong premium growth and robust performance in its Carelon division. The company benefited from Medicare Advantage membership gains and risk-based service scaling. However, Elevance also contended with elevated expense levels and declining overall medical membership, echoing Molina’s challenges.

The Cigna Group (CI) is projected to report 18.5% year-over-year earnings growth this quarter, with revenues expected to rise 6.5%, positioning it as a relative outperformer. CI has beaten estimates in three of the past four quarters, suggesting better cost management or more favorable member mix. The contrast between Cigna’s projected trajectory and Molina’s actual performance highlights the divergence in execution across healthcare insurers.

The Bottom Line for Investors

The takeaway for investors watching Molina Healthcare is clear: rising medical care costs are outpacing premium growth, creating an unfavorable operating environment. While revenue expansion continues, profitability is deteriorating as medical ratios expand. Until Molina demonstrates either superior cost control, successful premium repricing, or a shift in membership mix toward higher-margin segments like Medicare Advantage, the outlook remains challenged. The competitive landscape shows that Molina’s cost pressures are not universal—firms like Elevance Health and The Cigna Group are managing better—suggesting company-specific execution issues rather than purely systemic headwinds for Molina Healthcare.