Molina Healthcare (MOH): Buy, Sell, or Hold Post Q4 Earnings?

Molina Healthcare (MOH) has been a standout performer in the healthcare sector, with its latest Q4 earnings report revealing a 19% year-over-year increase in premium revenue, reaching $38.6 billion. This growth is driven by new contract wins, acquisitions, and expansion in existing markets, partially offset by Medicaid redeterminations. The company's strong financial performance has investors and analysts alike wondering: should they buy, sell, or hold MOH stock post Q4 earnings?



The company's earnings report paints a complex picture. On one hand, the 19% premium revenue growth is impressive, reflecting strong execution in market expansion and contract wins. However, the increase in the Medical Care Ratio (MCR) to 89.1% warrants attention, particularly in the Medicaid segment where higher utilization and redetermination-related acuity shifts impacted performance. The Medicare segment's 89.1% MCR reflects ongoing challenges in managing medical costs, while the Marketplace segment's strong 75.4% MCR demonstrates effective risk management in this line of business.

The 2025 guidance includes approximately $1.00 per share in implementation costs for new contracts, suggesting significant investment in future growth. The projected 13% earnings growth (adjusted for implementation costs) indicates management's confidence in operational execution. The embedded earnings from new stores at $7.75 per share represents substantial future value potential.

However, the decline in operating cash flow from $1.66 billion to $644 million primarily due to timing differences in government receivables requires monitoring, though it appears to be temporary. The company's capital deployment remains balanced, with $500 million in share repurchases during Q4 2024 demonstrating confidence in long-term value creation.



The company's stock price has been volatile, with a 19.82% decrease over the past year but a 13.17% increase year-to-date. The stock's 52-week high is 384.35, which is 19% above the current share price of 322.85. The 52-week low is 262.32, which is 18.7% below the current share price. The average stock price for the last 52 weeks is 319.67.

The company's P/E ratio of 16.05 is 21% less than the 5-year quarterly average of 20.3 and 8% less than the last 4 quarters average of 17.5. The company's EPS has increased by 9% year-on-year and by 3.7% quarter-on-quarter. The company's P/B is 24% below its 5-year quarterly average of 5.5, and its P/S is 22% below its 5-year quarterly average of 0.6 and 6% below its last 4 quarters average of 0.5.

The company's return on invested capital has declined by 30% year-on-year and by 7% since the previous quarter. The company's ROE has decreased by 13% year-on-year, and its return on sales has decreased by 9% year-on-year. The company's debt has grown by 31% year-on-year and by 23% from the previous quarter, and its debt to equity is up by 30% from the previous quarter and by 21% year-on-year.

In conclusion, Molina Healthcare's Q4 earnings report reveals a complex picture of the company's operational performance. The 19% premium revenue growth is impressive, but the increase in MCR and decline in operating cash flow warrant attention. The company's 2025 guidance suggests confidence in future growth, but investors should monitor the company's ability to manage medical costs and improve operational efficiency. The stock's volatility and valuation metrics suggest that it may be a hold for now, but investors should keep an eye on the company's performance in the coming quarters.