MOH

Molina Healthcare is a government-sponsored managed-care insurer (Medicaid, Medicare, Marketplace) whose FY2025 captures the sector-wide margin squeeze. Membership and premiums kept growing — revenue rose 11.7% to $45.4B — but profitability collapsed: net income fell 60.0% to $472M, operating income dropped 54.2% to $781M, and diluted EPS fell 56.3% to $8.92. The cause is exactly what the 10-K warns about: 'medical expenses have risen higher than anticipated, and our capitation rates have not kept pace,' compressing medical margins. Operating margin is now razor-thin at 1.7% and net margin just 1.0%, the inherent reality of a high-volume, fixed-premium model.

The balance sheet absorbed the hit. Equity fell 9.5% to $4.07B while long-term debt rose 28.8% to $3.77B (2.83x liabilities/equity), and operating cash flow swung to -$535M (a 183.1% deterioration), though insurer operating cash flow is heavily timing-driven by premium/claims cycles. Management leaned into buybacks anyway — $1.00B repurchased, cutting shares 7.2% — a vote of confidence that the rate/cost gap is cyclical rather than permanent.