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UnitedHealth vs. Molina: Who's Poised for the Healthiest Comeback?
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Key Takeaways
UNH's diversified services provide stability, protecting revenues from market volatility.
UNH's 3.3% net margin outperforms Molina's 2.6%, showing superior profitability and resilience.
Scale, cash conversion and commercial footprint position UNH for a stronger comeback.
The U.S. healthcare sector is navigating a turbulent landscape, shaped by rising medical costs, regulatory scrutiny and evolving patient behavior. Health insurers are under pressure as increasing utilization and reimbursement challenges test margins. Within this environment, two names stand out for their ability to adapt: UnitedHealth Group Incorporated (UNH - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) .
Both companies share a mission to provide access to care, but operate at different scales. UnitedHealth, the largest U.S. insurer, pairs its insurance business with a diversified healthcare services arm, while Molina concentrates mainly on Medicaid and government-sponsored programs. Each is pursuing strategies to stabilize profits and sustain growth in this shifting environment.
Both stocks exhibit below-market beta, yet MOH (0.54) is slightly more volatile than UNH (0.45). Investors are now weighing which health insurer has the stronger path to recovery. Let’s break down their fundamentals and see which stock is better positioned for a rebound.
The Case for UnitedHealth
UnitedHealth is often regarded as a bellwether in the health insurance industry, thanks to its scale (market cap $313 billion) and diversified model. UnitedHealthcare covers more than 51 million members, including a growing footprint in the commercial fee-based market, while Optum, its health services arm, spans pharmacy benefits, data analytics and care delivery. This breadth provides stability, cushioning the company from cost fluctuations that challenge many peers.
In its latest quarter, UnitedHealth reported revenues of $111.6 billion, up 12.9% year over year, with both UnitedHealthcare and Optum contributing to growth. The Optum segment stood out, generating $67.2 billion in revenue, a 6.8% increase from the prior year. This service diversification gives UNH a unique advantage over Molina, which is more narrowly concentrated in Medicaid and government programs and therefore more exposed to funding and policy risks.
Profitability remains a strong point for UNH, even as it navigates medical cost headwinds. Adjusted net margin came in at 3.3% in the last reported quarter, outperforming Molina’s 2.6%. The company recently reaffirmed its 2025 full-year EPS guidance, signaling confidence in its ability to manage near-term challenges. Compared to Molina, which posted thinner margins, UnitedHealth’s scale and earnings resilience put it in a stronger recovery position.
Risks persist, particularly around regulatory scrutiny and Medicare Advantage rate discussions. Yet management’s focus on long-term growth, including technology investments and expanded provider services, underscores why UnitedHealth is a reliable engine in the sector. Confidence is further boosted by Warren Buffett’s Berkshire Hathaway Inc. (BRK.B - Free Report) , which disclosed a $1.57 billion purchase of over 5 million shares, sparking follow-on interest from institutional and retail investors.
The Case for Molina
Molina Healthcare has established a strong presence in Medicaid and government programs, serving over 5.7 million members. Its niche focus has supported consistent growth, especially as states expanded Medicaid coverage and relied on private partners for administration. However, subsidy cuts and stricter eligibility verifications introduce uncertainty.
In its most recent quarter, Molina reported revenues of $11.4 billion, up 15.7% year over year, driven by Marketplace membership growth and higher premiums. However, profitability lagged, with its medical care ratio (MCR) rising to 90.4%, higher than UnitedHealth’s 89.4%. Rising utilization trend in its three dominant categories has pressured Molina’s earnings, and its reliance on reimbursement exposes it to political and regulatory swings.
Molina is working to diversify, particularly through its Medicare and Marketplace plans, but these remain relatively small contributors compared with its Medicaid core. The company’s growth trajectory is therefore more sensitive to policy shifts and funding allocations. While UnitedHealth benefits from Optum’s recurring revenue streams, Molina lacks a comparable services engine to stabilize results when insurance margins are under stress. MOH’s FCF to Net Income ratio of 0.38 is significantly lower than UnitedHealth’s 1.19, indicating lower cash conversion and financial flexibility.
The company’s comeback potential lies in its ability to expand Medicaid contracts, which declined 6.1% in the first quarter and 3.4% in the second quarter, and manage costs. Yet when compared to UnitedHealth’s diversified portfolio and stronger profitability metrics, Molina’s narrower base makes its recovery path less certain.
How Do Zacks Estimates Compare for UNH & MOH?
Analysts have set cautious expectations for both companies amid rising cost trends. The Zacks Consensus Estimates for EPS of UNH in 2025 and 2026 are pegged at $16.21 and $17.51, reflecting a 41.4% decline followed by 8.1% growth, respectively.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
Meanwhile, the same for MOH is pegged at $18.56 and $19.57 for 2025 and 2026, signaling an 18.1% drop and 5.4% growth, respectively. All these estimates remained stable over the past week.
Molina Healthcare, Inc Price, Consensus and EPS Surprise
On a valuation basis, Molina appears cheaper, trading at 9.81X forward earnings compared with UnitedHealth’s 20.19X multiple. It signals that investors are willing to pay a premium for UnitedHealth compared to Molina.
Image Source: Zacks Investment Research
Price Performance Comparison
After a brief recovery in the recent months, shares of UnitedHealth are down 31.7% in the year-to-date period, while Molinadeclined 35%. The broader industryhas slumped 25% during this time, while the S&P 500 Index witnessed 13.8% growth, largely backed by tech-related stocks.
YTD Price Performance – UNH, MOH, Industry & S&P 500
Image Source: Zacks Investment Research
Conclusion
Both UnitedHealth and Molina are executing comeback strategies amid a challenging healthcare environment. Molina’s focus on Medicaid gives it a defined niche, but also leaves it more vulnerable to funding pressures and thin margins.
UnitedHealth, by contrast, combines scale, profitability and diversification through Optum, positioning it as the stronger recovery candidate. With resilient cash conversion, growing commercial fee-based memberships and a lower MCR, UnitedHealth looks better equipped to restore confidence as the headwinds ease, even though the stocks currently carry a Zacks Rank #5 (Strong Sell) each.
Image: Bigstock
UnitedHealth vs. Molina: Who's Poised for the Healthiest Comeback?
Key Takeaways
The U.S. healthcare sector is navigating a turbulent landscape, shaped by rising medical costs, regulatory scrutiny and evolving patient behavior. Health insurers are under pressure as increasing utilization and reimbursement challenges test margins. Within this environment, two names stand out for their ability to adapt: UnitedHealth Group Incorporated (UNH - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) .
Both companies share a mission to provide access to care, but operate at different scales. UnitedHealth, the largest U.S. insurer, pairs its insurance business with a diversified healthcare services arm, while Molina concentrates mainly on Medicaid and government-sponsored programs. Each is pursuing strategies to stabilize profits and sustain growth in this shifting environment.
Both stocks exhibit below-market beta, yet MOH (0.54) is slightly more volatile than UNH (0.45). Investors are now weighing which health insurer has the stronger path to recovery. Let’s break down their fundamentals and see which stock is better positioned for a rebound.
The Case for UnitedHealth
UnitedHealth is often regarded as a bellwether in the health insurance industry, thanks to its scale (market cap $313 billion) and diversified model. UnitedHealthcare covers more than 51 million members, including a growing footprint in the commercial fee-based market, while Optum, its health services arm, spans pharmacy benefits, data analytics and care delivery. This breadth provides stability, cushioning the company from cost fluctuations that challenge many peers.
In its latest quarter, UnitedHealth reported revenues of $111.6 billion, up 12.9% year over year, with both UnitedHealthcare and Optum contributing to growth. The Optum segment stood out, generating $67.2 billion in revenue, a 6.8% increase from the prior year. This service diversification gives UNH a unique advantage over Molina, which is more narrowly concentrated in Medicaid and government programs and therefore more exposed to funding and policy risks.
Profitability remains a strong point for UNH, even as it navigates medical cost headwinds. Adjusted net margin came in at 3.3% in the last reported quarter, outperforming Molina’s 2.6%. The company recently reaffirmed its 2025 full-year EPS guidance, signaling confidence in its ability to manage near-term challenges. Compared to Molina, which posted thinner margins, UnitedHealth’s scale and earnings resilience put it in a stronger recovery position.
Risks persist, particularly around regulatory scrutiny and Medicare Advantage rate discussions. Yet management’s focus on long-term growth, including technology investments and expanded provider services, underscores why UnitedHealth is a reliable engine in the sector. Confidence is further boosted by Warren Buffett’s Berkshire Hathaway Inc. (BRK.B - Free Report) , which disclosed a $1.57 billion purchase of over 5 million shares, sparking follow-on interest from institutional and retail investors.
The Case for Molina
Molina Healthcare has established a strong presence in Medicaid and government programs, serving over 5.7 million members. Its niche focus has supported consistent growth, especially as states expanded Medicaid coverage and relied on private partners for administration. However, subsidy cuts and stricter eligibility verifications introduce uncertainty.
In its most recent quarter, Molina reported revenues of $11.4 billion, up 15.7% year over year, driven by Marketplace membership growth and higher premiums. However, profitability lagged, with its medical care ratio (MCR) rising to 90.4%, higher than UnitedHealth’s 89.4%. Rising utilization trend in its three dominant categories has pressured Molina’s earnings, and its reliance on reimbursement exposes it to political and regulatory swings.
Molina is working to diversify, particularly through its Medicare and Marketplace plans, but these remain relatively small contributors compared with its Medicaid core. The company’s growth trajectory is therefore more sensitive to policy shifts and funding allocations. While UnitedHealth benefits from Optum’s recurring revenue streams, Molina lacks a comparable services engine to stabilize results when insurance margins are under stress. MOH’s FCF to Net Income ratio of 0.38 is significantly lower than UnitedHealth’s 1.19, indicating lower cash conversion and financial flexibility.
The company’s comeback potential lies in its ability to expand Medicaid contracts, which declined 6.1% in the first quarter and 3.4% in the second quarter, and manage costs. Yet when compared to UnitedHealth’s diversified portfolio and stronger profitability metrics, Molina’s narrower base makes its recovery path less certain.
How Do Zacks Estimates Compare for UNH & MOH?
Analysts have set cautious expectations for both companies amid rising cost trends. The Zacks Consensus Estimates for EPS of UNH in 2025 and 2026 are pegged at $16.21 and $17.51, reflecting a 41.4% decline followed by 8.1% growth, respectively.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
Meanwhile, the same for MOH is pegged at $18.56 and $19.57 for 2025 and 2026, signaling an 18.1% drop and 5.4% growth, respectively. All these estimates remained stable over the past week.
Molina Healthcare, Inc Price, Consensus and EPS Surprise
Molina Healthcare, Inc price-consensus-eps-surprise-chart | Molina Healthcare, Inc Quote
Valuation: UNH vs. MOH
On a valuation basis, Molina appears cheaper, trading at 9.81X forward earnings compared with UnitedHealth’s 20.19X multiple. It signals that investors are willing to pay a premium for UnitedHealth compared to Molina.
Price Performance Comparison
After a brief recovery in the recent months, shares of UnitedHealth are down 31.7% in the year-to-date period, while Molinadeclined 35%. The broader industryhas slumped 25% during this time, while the S&P 500 Index witnessed 13.8% growth, largely backed by tech-related stocks.
YTD Price Performance – UNH, MOH, Industry & S&P 500
Conclusion
Both UnitedHealth and Molina are executing comeback strategies amid a challenging healthcare environment. Molina’s focus on Medicaid gives it a defined niche, but also leaves it more vulnerable to funding pressures and thin margins.
UnitedHealth, by contrast, combines scale, profitability and diversification through Optum, positioning it as the stronger recovery candidate. With resilient cash conversion, growing commercial fee-based memberships and a lower MCR, UnitedHealth looks better equipped to restore confidence as the headwinds ease, even though the stocks currently carry a Zacks Rank #5 (Strong Sell) each.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.