Healthcare insurance company Molina Healthcare (NYSE: MOH) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 11% year on year to $11.48 billion. The company expects the full year’s revenue to be around $44.5 billion, close to analysts’ estimates. Its non-GAAP profit of $1.84 per share was 52.7% below analysts’ consensus estimates.

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Company Overview

Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Molina Healthcare’s 19.3% annualized revenue growth over the last five years was impressive. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Molina Healthcare’s annualized revenue growth of 15.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

Molina Healthcare also reports its number of customers, which reached 5.63 million in the latest quarter. Over the last two years, Molina Healthcare’s customer base averaged 4.2% year-on-year growth. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Molina Healthcare reported year-on-year revenue growth of 11%, and its $11.48 billion of revenue exceeded Wall Street’s estimates by 4.7%.

Looking ahead, sell-side analysts expect revenue to grow 5% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and implies the market is forecasting success for its products and services.

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Operating Margin

Molina Healthcare’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 3.7% over the last five years. This profitability was paltry for a healthcare business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Molina Healthcare’s operating margin of 3% for the trailing 12 months may be around the same as five years ago, but it has decreased by 1.1 percentage points over the last two years. Still, we’re optimistic that Molina Healthcare can correct course and expand its profitability on a longer-term horizon due to its business quality.

This quarter, Molina Healthcare generated an operating margin profit margin of 1.2%, down 3.3 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Molina Healthcare’s EPS grew at a decent 5.8% compounded annual growth rate over the last five years. However, this performance was lower than its 19.3% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

In Q3, Molina Healthcare reported adjusted EPS of $1.84, down from $6.01 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Molina Healthcare’s full-year EPS of $18.45 to grow 1.2%.

Key Takeaways from Molina Healthcare’s Q3 Results

We enjoyed seeing Molina Healthcare beat analysts’ revenue expectations this quarter. On the other hand, its full-year EPS guidance missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 17.9% to $159.88 immediately after reporting.

Molina Healthcare may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.