Molina Healthcare Inc. (NYSE:MOH) is one of the most undervalued mid cap stocks to buy now. On February 12, Goldman Sachs lowered its price target on Molina Healthcare to $124 from $167 while keeping a Neutral rating. This adjustment was made following the company’s Q4 2025 earnings miss. The firm noted that the return profiles for even the strongest operators in low-margin, government-priced cyclical businesses can diminish rapidly during a broad-based downturn. Goldman Sachs expects these challenges to ...

Core Viewpoint - Molina Healthcare is facing legal scrutiny while maintaining a robust market presence, with a new price target suggesting potential growth despite challenges [2][3][5]. Group 1: Company Overview - Molina Healthcare (NYSE: MOH) provides managed health care services under Medicaid and Medicare programs, targeting low-income families and individuals across several U.S. states [1]. - The company competes with major players like UnitedHealth Group and Centene Corporation [1]. Group 2: Stock Performance - As of the latest data, Molina's stock is priced at $127.53, reflecting a decrease of 3.18% or $4.19 [4][6]. - The stock has shown significant volatility, with a daily trading range between $123.73 and $135.94, and a yearly high of $359.97 and low of $123.73 [4]. Group 3: Market Capitalization and Trading Activity - Molina Healthcare has a market capitalization of approximately $6.56 billion, indicating its substantial size and market presence [5]. - The trading volume for the day is reported at 4,660,173 shares on the NYSE, suggesting active investor interest despite ongoing legal challenges [5]. Group 4: Analyst Insights - Andrew Mok from Barclays has set a new price target for Molina Healthcare at $133, indicating a potential increase of 4.29% from the current stock price [2][6]. Group 5: Legal Issues - Grabar Law Office is investigating potential breaches of fiduciary duties by Molina's officers and directors, linked to a securities fraud class action complaint regarding undisclosed adverse facts about its "medical cost trend assumptions" [3][6].

Core Insights - Health Net, a managed care health plan under Centene Corporation, partnered with the Pro Football Hall of Fame to host impactful events in Sacramento, "Salute to Service" and "Strong Youth, Strong Communities," aimed at recognizing local heroes and empowering the next generation [1][10] Group 1: Salute to Service Event - The "Salute to Service" event honored healthcare heroes at WellSpace Health Alhambra Community Health Center, recognizing the essential work of medical professionals serving vulnerable communities in Sacramento [2][4] - Health Net emphasized the importance of community support and honoring those who dedicate their lives to helping others, aiming to inspire youth leadership with compassion and resilience [3][10] Group 2: Strong Youth, Strong Communities Event - The "Strong Youth, Strong Communities" assembly at River City High School engaged over 2,000 students with motivational talks from professional football legends and community leaders, providing life skills and leadership lessons [7][9] - The event focused on educating youth about mental health and empowering them to improve their lives and communities, highlighting the importance of resilience and support systems [8][9] Group 3: Organizational Commitment - Both events reflect Health Net's and the Pro Football Hall of Fame's commitment to honoring those who serve and inspiring youth in the Sacramento metropolitan area [10] - Health Net and Centene Corporation maintain a long-standing commitment to the military community, addressing a wide range of healthcare needs for veterans and active military families [10][12]

Core Viewpoint - Centene has forecasted its 2026 profit to exceed Wall Street expectations, which stands in contrast to other peers that have indicated ongoing challenges due to high medical costs [1] Group 1 - Centene's profit forecast for 2026 is positioned above market expectations, highlighting a positive outlook for the company [1] - Other companies in the industry are facing persistent pressure from elevated medical costs, indicating a contrasting performance trend within the sector [1]

Financial Data and Key Metrics Changes - The company reported an adjusted loss per share of $2.75 on $10.7 billion of premium revenue for Q4 2025, which was below expectations due to strong trend pressure in Medicare and Marketplace, along with retroactive items in Medicaid totaling $2 per share [6][19] - For the full year 2025, premium revenue was $43 billion, representing an 11% year-over-year growth, while adjusted earnings per share were $11.03, with a pretax margin of 1.6% [7][8] - The Medicaid MCR for Q4 was 93.5%, impacted by unfavorable retroactive premium rate actions, while the full year MCR was 91.8% with a pretax margin of 2.8% [7][21] Business Line Data and Key Metrics Changes - In Medicaid, the MCR for Q4 was 93.5%, and adjusting for retroactive items, it restates to 92.3% with a pretax margin of 2% [19][20] - The Medicare MCR for Q4 was 97.5%, reflecting elevated utilization of LTSS and high-cost drugs, while the full year MCR was 92.4% [21] - The Marketplace MCR for Q4 was 99%, impacted by elevated utilization and prior period claim settlements, with a full year MCR of 90.6% [22] Market Data and Key Metrics Changes - The company secured a historic RFP win in Florida, expected to yield $6 billion in annual run rate premium, complementing previous contract wins in Wisconsin, Georgia, and Texas, representing over $9 billion of Medicaid premium [10][11] - The company anticipates 2026 premium revenue of approximately $42 billion, slightly lower than 2025, driven by new contracts and planned reductions in the Marketplace segment [12][13] Company Strategy and Development Direction - The company aims to focus on dual-eligible members in Medicare, planning to exit the traditional MAPD product for 2027 [14] - The acquisition pipeline contains actionable opportunities, with the company remaining opportunistic about deploying capital for accretive acquisitions [12] - The company expects Medicaid rates and medical cost trends to eventually reach equilibrium, with a forecast for low single-digit margins in Medicaid [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the business despite disappointing 2025 results, citing that the medical cost trend in 2025 was an anomaly [10][17] - The company believes that Medicaid rates are underfunded by 300-400 basis points and anticipates that actuarial soundness will prevail, allowing for target margins to be achieved [17][18] - Management expects 2026 to be a trough year for managed Medicaid margins, projecting a low single-digit margin rather than losses [17] Other Important Information - The company reported a capital foundation remains strong, with a parent company cash balance of approximately $223 million at year-end [23] - The adjusted G&A ratio for Q4 was 6.9%, reflecting disciplined cost management [22] Q&A Session Summary Question: Variance in Medicaid margins across states and potential exit considerations - Management indicated that rates are generally underfunded across the portfolio, and there are no states where an exit is being contemplated [37] - The negative retro adjustments in California were due to situational factors, including a retroactive corridor for undocumented populations and a risk adjustment update [38][39] Question: Adjustments to benefit design in Medicaid - Management noted some sporadic adjustments to benefit design but emphasized that there is no wholesale shift occurring [48] Question: Membership attrition assumptions for 2026 - Management projected a 2% membership attrition, believing that the effects of redetermination are largely over [51][54] Question: Size of Medicaid expansion enrollment and attrition sources - The Medicaid expansion population is about 1.3 million members, with expected attrition of 15%-20% due to new policies [59][60] Question: Potential negative dynamics affecting 2026 guidance - Management acknowledged that while there are potential upside components, they believe rates at 4% are a floor, with no significant downside expected [64]

Financial Data and Key Metrics Changes - The company reported an adjusted loss per share of $2.75 on premium revenue of $10.7 billion for Q4 2025, which was below expectations due to strong trend pressure in Medicare and Marketplace, along with retroactive items in Medicaid totaling $2 per share [4][5][18] - For the full year 2025, premium revenue was $43 billion, representing an 11% year-over-year growth, while adjusted earnings per share were $11.03 with a pretax margin of 1.6% [5][6][19] - The Medicaid MCR for Q4 was 93.5%, impacted by unexpected retroactive premium rate actions, while the full year MCR was 91.8% with a pretax margin of 2.8% [5][19] Business Line Data and Key Metrics Changes - In Medicaid, the MCR for Q4 was 93.5%, and adjusting for retroactive items, it restates to 92.3% with a pretax margin of 2% [5][19] - The Medicare MCR for Q4 was 97.5%, reflecting elevated utilization of LTSS and high-cost drugs, while the full year MCR was 92.4% [19][20] - The Marketplace MCR was 99% for Q4, impacted by elevated utilization and prior period claim settlements, with a full year MCR of 90.6% [20] Market Data and Key Metrics Changes - The company secured a historic RFP win in Florida, expected to yield $6 billion in annual run rate premium, complementing previous contract wins in Wisconsin, Georgia, and Texas, representing over $9 billion of Medicaid premium [10] - The company anticipates 2026 premium revenue of approximately $42 billion, slightly lower than 2025, driven by the new Florida CMS contract and higher revenues in Medicare, offset by a planned reduction in Marketplace [11][27] Company Strategy and Development Direction - The company aims to focus on dual-eligible members in Medicare, planning to exit the traditional MAPD product for 2027 [12] - The acquisition pipeline contains actionable opportunities, with the company remaining opportunistic about deploying capital to accretive acquisitions [11] - The company expects to achieve a low single-digit margin in Medicaid, with confidence in the long-term outlook for the business as rates and trends are expected to reach equilibrium [16] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the 2025 results but remains confident in the operating platform as the rate environment returns to equilibrium [5][16] - The company believes the medical cost trend in 2025 was an anomaly and anticipates a moderation in Medicaid cost trends for 2026 [12][16] - Management highlighted that every 100 basis points on the Medicaid MCR is worth nearly $5 per share, indicating significant potential for margin recovery [16] Other Important Information - The company reported a capital foundation remains strong, with a parent company cash balance of approximately $223 million at year-end [22] - The adjusted G&A ratio for Q4 was 6.9, reflecting disciplined cost management [20] Q&A Session Summary Question: Is there a large variance in Medicaid margins across states, and are there any states where the company is contemplating an exit? - Management indicated that rates are generally underfunded across the portfolio, and there is no state where an exit is being contemplated [34][36] Question: What were the drivers of the negative retro adjustments in California? - Management explained that the adjustments were event-driven, related to the undocumented population and a risk adjustment update in L.A. County [36][37] Question: Are states allowing adjustments to benefit design? - Management noted that some states are reintroducing tighter utilization controls, but there is no wholesale shift in benefit design [41][47] Question: What is the company's assumption for membership attrition in 2026? - Management projected a 2% membership attrition, offset by new members from the Florida contract, and believes the redetermination effects are largely over [49][50] Question: How does the company view the trend assumptions for 2026? - Management expressed confidence in a 5% trend for 2026, citing that core trend includes various factors and is based on historical data [71][74]

Core Insights - Centene Corporation reported a GAAP diluted loss per share of $(13.53) for the full year 2025, primarily due to a goodwill impairment of $6.7 billion, while the adjusted diluted earnings per share (EPS) was $2.08 [1][19] - For 2026, the company expects adjusted diluted EPS to exceed $3.00, indicating a positive outlook for profitability and margin improvement [1] Financial Performance - Total revenues for Q4 2025 were $49.725 billion, a 23% increase from $36.296 billion in Q4 2024; full-year revenues reached $194.777 billion, up 20% from $145.505 billion in 2024 [1][12] - Premium and service revenues for Q4 2025 were $44.727 billion, compared to $36.296 billion in Q4 2024, driven by growth in the PDP and Marketplace businesses [1][12] - The health benefits ratio (HBR) for Q4 2025 was 94.3%, up from 89.6% in Q4 2024, while the full-year HBR was 91.9%, an increase from 88.3% in 2024 [1][12] Membership Trends - Total at-risk membership as of December 31, 2025, was 27.634 million, a slight decrease from 28.601 million in 2024; traditional Medicaid membership decreased to 10.933 million from 11.408 million [6] - Marketplace membership increased significantly to 5.541 million from 4.382 million in 2024, indicating strong growth in this segment [6] Operational Efficiency - The SG&A expense ratio for Q4 2025 was 7.5%, down from 8.9% in Q4 2024; the full-year SG&A expense ratio was also 7.4%, compared to 8.5% in 2024, reflecting improved expense management [1][12] - Cash flow from operations for the full year 2025 was $5.088 billion, driven by improved timing of pharmacy rebates and higher medical claims liabilities [1][19] Strategic Developments - In December 2025, Centene signed an agreement to divest the remaining Magellan Health businesses, resulting in non-cash impairment charges of $513 million [2][12] - The company has engaged in community support initiatives, including contributions to food banks and partnerships aimed at addressing housing insecurity [5][9]

Core Viewpoint - Centene Corporation is expected to report a quarterly loss of $1.22 per share for the first quarter, an increase from $0.80 per share in the same period last year [1] Financial Performance - The consensus estimate for Centene's quarterly revenue is $48.35 billion, compared to $40.8 billion reported last year [1] - Centene reported better-than-expected third-quarter financial results on October 29 [1] Stock Performance - Shares of Centene fell 2.5% to close at $39.92 on Thursday [2]

Core Insights - Cigna Group reported an increase in revenue for its latest quarter, driven by the growth of its pharmacy-benefit business, Evernorth [1] Group 1 - Cigna Group's revenue growth is attributed to the performance of its Evernorth segment, which focuses on pharmacy benefits [1]

Core Insights - Molina Healthcare, Inc. operates in the managed healthcare services sector, focusing on low-income families and individuals through government-sponsored programs, serving approximately 5.2 million members across 18 states as of the end of 2021 [1] Price Target and Analyst Expectations - The consensus price target for Molina's stock has varied, with an initial average of $204, adjusted to $195.2 in the last quarter, reflecting concerns or changes in analyst expectations [3] - Over the past year, the average price target was significantly higher at $234.57, indicating a downward revision possibly due to shifts in the company's performance or broader market conditions [3][6] Earnings Outlook - Molina anticipates a 92.5% decline in earnings per share (EPS) for its fourth-quarter earnings report compared to the previous year, primarily due to rising costs despite expected growth in revenues and premiums [3][6] - Analyst Scott Fidel from Stephens maintains a long-term price target of $300 for Molina, indicating confidence in its future performance despite short-term challenges [4][6] Medicare Segment Impact - Molina's Medicare segment, which accounts for 14.5% of its revenue and contributes 14.6% to its operating medical margin profit, is affected by proposed changes in Medicare Advantage rates by the Centers for Medicare & Medicaid Services (CMS) [5] - The proposed flat 0.09% increase in Medicare Advantage rates for 2027 is significantly lower than the expected 5%, contributing to sector volatility [4] Future Earnings Report - Molina Healthcare will release its earnings report for the fourth quarter and full year ending December 31, 2025, after the market closes on February 5, 2026, followed by a conference call and webcast on February 6, 2026 [5]