Molina Healthcare Slashes Profit Outlook

Molina Healthcare (NYSE: MOH) tumbled 18% after issuing sharply lower guidance for 2025, signaling mounting cost pressures across its healthcare segments.

The company now expects 2025 non-GAAP EPS of $14, down from its previous forecast of “no less than $19”, far below Wall Street’s $18.62 consensus.

Rising Medical Costs Drive Margin Compression

Molina cited elevated medical costs across all business lines, with particular stress in its marketplace division, where claim expenses have surged amid rising utilization and inflation.

Key metrics:

Medical Cost Ratio (MCR) 2025: Now projected at 91.3%, up from 90.2%
Q4 EPS guidance: Slashed to $0.35, reflecting marketplace and Medicare losses
Medicaid segment remains a relative bright spot, helping offset part of the pressure

The company said it is working on repricing contracts and adjusting risk models to restore profitability in 2026.

Q3 Results Show Strain Despite Revenue Growth

For the third quarter:

Non-GAAP EPS: $1.84 (vs. $6.01 a year ago)
Revenue: Beat expectations, but higher medical costs eroded margins
MCR: Spiked to 92.6%, indicating persistent cost inflation across care categories

While topline momentum remains steady, the cost environment continues to challenge Molina’s ability to sustain prior-year profitability levels.

Market Reaction

Investors reacted swiftly, sending MOH shares down 18%, marking one of the steepest single-day declines in the healthcare payer sector this year.

Analysts called the cut “a reset moment” for Molina, warning that elevated claims inflation could persist into early 2026.

Strategic Outlook

Molina plans to:

Reassess pricing across its marketplace and Medicare products
Focus on cost-containment programs
Maintain its Medicaid growth strategy amid strong state renewals

Management reaffirmed its long-term commitment to operating discipline and expanding value-based care partnerships, but near-term earnings visibility remains limited.