A month has gone by since the last earnings report for Molina (MOH Quick QuoteMOH - Free Report) . Shares have added about 13.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Molina due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Molina Healthcare Q4 Earnings Miss Estimates on Growing Medical Costs

Molina Healthcare reported fourth-quarter 2024 adjusted earnings per share (EPS) of $5.05, which missed the Zacks Consensus Estimate of $5.81. However, the bottom line grew 15.3% from the year-ago period.

Total revenues amounted to $10.5 billion, which improved 16% year over year. But the top line marginally missed the consensus mark.

The weaker-than-expected fourth-quarter results included higher medical care costs, lower investment income and lower-than-expected membership growth. The negatives were partly offset by growing premiums, footprint and contract wins.

MOH’s Full-Year 2024 Figures

Molina Healthcare’s total revenues of $40.65 billion increased from $34.07 billion a year ago and beat the estimate of $40.58 billion. Adjusted EPS grew from $20.88 per share to $22.65 in 2024 but missed the consensus mark of $23.44. Adjusted net income of $1.31 billion grew from $1.21 billion a year ago.

MOH’s Q4 Operational Update

Premium revenues of $9.98 billion increased 19.4% year over year in the quarter under review and beat the Zacks Consensus Estimate of $9.85 billion and our estimate of $9.82 billion. The improvement stemmed from contract wins, buyouts and an expanding nationwide footprint, partly offset by Medicaid redeterminations.

As of Dec. 31, 2024, total membership improved 10.8% year over year to around 5.5 million but missed the Zacks Consensus Estimate by 3.1%. The health insurer witnessed year-over-year increases in customers within its Medicaid, Medicare and Marketplace businesses.

Investment income fell 2.6% year over year to $111 million but beat the consensus mark of $108.2 million.

Total operating expenses of $10.1 billion increased 15.9% year over year and were higher than our model estimate of $9.7 billion due to a significant rise in medical care costs coupled with higher general and administrative expenses. Adjusted general and administrative expense ratio decreased to 6.3% in the fourth quarter from 7% a year ago. Interest expenses of $34 million rose from $27 million a year ago.

The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 90.2% in the quarter under review. The metric rose from 89.1% a year ago and was higher than the consensus mark of 88.72%. Also, the figure was higher than our estimate of 88.6%.

Molina Healthcare’s adjusted net income increased 12.2% year over year to $286 million.

MOH’s Financial Update (as of Dec. 31, 2024)

Molina Healthcare exited the fourth quarter with cash and cash equivalents of $4.66 billion, which declined from the 2023-end level of $4.85 billion. Total assets of $15.63 billion rose from $14.89 billion at 2023 end.

Long-term debt of $2.92 billion rose from $2.18 billion at 2023-end.

Total stockholders’ equity of $4.5 billion increased from the $4.2 billion figure at 2023-end.

Net cash provided by operating activities amounted to $644 million in 2024 compared with $1.66 billion in 2023. The significant decline was due to differences in the timing of government receivables and payables.

MOH’s 2025 Guidance

Management expects premium revenues to be around $42 billion, which indicates an improvement of around 9% from the 2024 reported figure. Adjusted EPS is forecasted at a minimum of $24.50 this year, which implies a rise of roughly 8% from the 2024 figure. The company’s expanding legacy footprint and continued realization of new store-embedded earnings are likely to support growth.

Adjusted net income is projected to be $1.36 billion, while GAAP net income is expected at $1.25 billion for 2025. Total membership is estimated to be 5.9 million by 2025-end. Consolidated MCR is likely to stay at 88.7%. It expects the effective tax rate to be 25.3% in 2025.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -11.22% due to these changes.

VGM Scores

At this time, Molina has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Molina has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Molina belongs to the Zacks Medical - HMOs industry. Another stock from the same industry, Cigna (CI Quick QuoteCI - Free Report) , has gained 9.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2024.

Cigna reported revenues of $65.68 billion in the last reported quarter, representing a year-over-year change of +28.4%. EPS of $6.64 for the same period compares with $6.79 a year ago.

For the current quarter, Cigna is expected to post earnings of $6.41 per share, indicating a change of -0.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.

Cigna has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.