Molina Healthcare(MOH) - 2025 Q4 - Annual Report

Financial Performance - Molina Healthcare reported premium revenue of $43,052 million for the year ended December 31, 2025, an increase of 11.7% from $38,627 million in 2024[18]. - Total revenue for Molina Healthcare reached $45,426 million in 2025, up from $40,650 million in 2024, reflecting a growth of 11.7%[18]. - Net income decreased to $472 million in 2025 from $1,179 million in 2024, resulting in a net income per diluted share of $8.92 compared to $20.42 in the previous year[18]. - Medicaid premium revenue constituted 75% of the company's consolidated premium revenue for the year ended December 31, 2025[148]. - The company's overall medical care ratio was 91.7% for the year ended December 31, 2025; a one percentage point increase would have reduced net income per diluted share from $8.92 to $2.72, a difference of $6.20[145]. Membership and Enrollment - Molina Healthcare's total membership as of December 31, 2025, was approximately 5.5 million, a slight decrease from 5.5 million in 2024, with Medicaid membership declining to 4,568,000[21]. - The company anticipates a 15% to 20% reduction in Medicaid Expansion membership due to the One Big Beautiful Bill Act (OBBBA) over the next two to three years[27]. - Expected Medicare enrollment decrease of approximately 12% in 2026, totaling 230,000 members, including 80,000 Medicare Advantage-Part D members[57]. - Marketplace enrollment expected to decrease to approximately 220,000 members by the end of 2026, representing an estimated premium revenue decrease of approximately 50%[70]. - The company estimates a reduction in Medicaid enrollment of 15% to 20% by 2029, affecting approximately 1.2 million members in its Medicaid Expansion population[77]. Strategic Initiatives - Molina Healthcare's strategic plan includes a long-term premium revenue growth target of 11% to 13%, aiming to surpass $50 billion in premium revenue by 2027[33]. - The company completed the acquisition of ConnectiCare for $350 million, which is expected to contribute approximately $9 billion in incremental annual premium revenue[37][28]. - Company is focused on operational restructuring and enrollment alignment to support long-term growth opportunities in the dual eligible market[56]. - The company’s growth strategy includes targeted acquisitions, but successful integration and realization of anticipated benefits are complex and uncertain[160]. Regulatory and Compliance - The company is subject to stringent regulatory capital requirements that limit its ability to pay dividends[129]. - The company has implemented HIPAA compliance programs to ensure adherence to privacy and security regulations, which may incur additional costs[121]. - The company is subject to extensive fraud and abuse laws, which may result in significant fines, civil penalties, or other sanctions[198]. - The company is subject to various federal and state data privacy laws, including HIPAA and the CCPA, which impose significant compliance obligations[210]. Market Competition - The company faces significant competition in the Medicaid market from organizations like Centene Corporation and UnitedHealth Group Inc., impacting contract retention and member acquisition[114]. - The Medicare market is highly competitive, with major competitors including CVS Health Corporation and Humana, influencing pricing and bid strategies[116]. Operational Risks - The company is exposed to cybersecurity risks that could result in operational impacts and significant legal liabilities[154]. - The company may face cyberattacks and incidents that could adversely impact operations and financial results, although no material incidents have occurred to date[158]. - The company is vulnerable to operational disruptions if third-party vendors fail to perform adequately[182]. - The company faces risks related to the accuracy and completeness of encounter data, which is critical for compliance and premium rate determination[184]. Healthcare Costs and Pricing - The medical care costs are influenced by various factors, including hospital costs, pharmacy costs, and changes in healthcare regulations[149]. - The introduction of new high-cost specialty drugs and sudden cost spikes for existing drugs could jeopardize the actuarial soundness of the company's capitation rates[214]. - The unpredictable nature of pharmaceutical costs, including geographic variations and changes in discounts, may materially affect the company's financial results[213]. Employee Engagement and Benefits - Employee engagement survey results indicate continued high levels of engagement that exceed industry benchmarks[132]. - The company offers a comprehensive suite of benefits, including 401(k) matching contributions and paid parental leave, to attract and retain talent[138].