Here's Why MOH Shares Are Attracting Prudent Investors Now

Core Insights - Molina Healthcare, Inc. (MOH) is a multi-state managed care organization providing healthcare services under Medicaid and Medicare programs, with a stock performance of +1.5% year-to-date against an industry decline of -28.4% [1][2] Company Overview - Headquartered in Long Beach, CA, MOH has a market capitalization of $16 billion and focuses on affordable health insurance plans for lower-income individuals and families [2] - The trailing 12-month P/E ratio is 12.84X, higher than the industry average of 10.79X, indicating growing investor confidence [2] - MOH currently holds a Zacks Rank 2 (Buy) [2] Financial Estimates - The Zacks Consensus Estimate for MOH's 2025 earnings is $24.44 per share, reflecting a 7.9% year-over-year increase [3] - Revenue estimates for 2025 are projected at $44.1 billion, with the company beating earnings estimates in three of the past four quarters [3] Growth Drivers - MOH's premium revenues grew by 11.8% year-over-year to $10.6 billion in Q1 2025, with expectations of a 9% increase in 2025, targeting around $42 billion [4][9] - Total membership increased by 0.4% year-over-year to approximately 5.8 million, with projections of reaching 5.9 million in 2025, a 7.3% increase from 2024 [5][9] - The company secured a new contract for a Fully Integrated Dual Eligible Special Needs Plan (D-SNP) in Illinois, enhancing its service offerings [6] Financial Metrics - MOH's return on equity stands at 28.4%, surpassing the industry average of 24%, indicating effective utilization of shareholder funds [7] - The balance sheet shows cash and cash equivalents of $4.9 billion compared to long-term debt of $3.6 billion, providing financial flexibility [7] Operational Challenges - The company's operating expenses have risen due to increasing medical care costs, with total operating costs increasing by 5.5%, 19.8%, and 12.7% year-over-year in 2023, 2024, and Q1 2025, respectively [8] - The medical care ratio (MCR) has deteriorated by 70 basis points year-over-year in Q1 2025, indicating a lower proportion of remaining premiums after claims [10]