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Molina Healthcare Q2 Earnings Miss on Rising Medical Care Costs
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Key Takeaways
Molina Healthcare posted Q2 EPS of $5.48, missing estimates and down 6.5% year over year.
Premium revenues grew 15% to $10.9B, driven by rate hikes, buyouts and new contracts.
MCR rose to 90.4% from 88.6%, reflecting higher medical care costs and pressuring margins.
Molina Healthcare, Inc. (MOH - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) of $5.48, which marginally missed the Zacks Consensus Estimate of $5.50. Also, the bottom line fell 6.5% from the year-ago period.
Total revenues amounted to $11.4 billion, which improved 15.7% year over year. The top line also beat the consensus mark by 5.4%.
The quarterly revenues were aided by rising premiums and rate hikes, but were partially offset by higher medical care costs and general and administrative expenses.
Molina Healthcare, Inc Price, Consensus and EPS Surprise
Premium revenues of $10.9 billion increased 15% year over year in the quarter under review and beat the Zacks Consensus Estimate of $10.4 billion. The improvement stemmed from contract wins, buyouts, rate hikes and an expanding nationwide footprint, partly offset by Medicaid redeterminations.
As of June 30, 2025, total membership improved 3% year over year to around 5.7 million but missed the Zacks Consensus Estimate by 0.8%. The health insurer witnessed year-over-year increases in customers within its Medicare and Marketplace businesses.
Investment income declined 7.8% year over year to $106 million but beat the consensus mark of $101 million.
Total operating expenses of $11.1 billion increased 17% year over year and were higher than our model estimate of $10.2 billion due to a rise in medical care costs, coupled with higher general and administrative expenses. The adjusted general and administrative expense ratio decreased to 6.1% in the second quarter from 6.9% a year ago. Interest expenses of $48 million rose from $28 million in the prior year.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 90.4% in the quarter under review. The metric rose from 88.6% a year ago and was higher than the consensus mark of 88.9%. Also, the figure was higher than our estimate of 89%.
Molina Healthcare’s adjusted net income decreased 13.8% year over year to $294 million.
MOH’s Financial Update (As of June 30, 2025)
Molina Healthcare exited the second quarter with cash and cash equivalents of $4.5 billion, which declined from the 2024-end level of $4.7 billion. Total assets of $16.2 billion rose from $15.6 billion at 2024-end.
Long-term debt of $3.4 billion rose from $2.9 billion at 2024-end.
Total stockholders’ equity of $4.6 billion increased from the $4.5 billion figure at 2024-end.
Net cash used in operating activities amounted to $112 million in the first half of 2025 compared with $5 million in the prior year.
MOH’s 2025 Guidance
Management still expects premium revenues to be around $42 billion, which indicates an improvement of around 9% from the 2024 reported figure. Adjusted EPS is now forecasted to be at least $19 this year, which implies a reduction from its prior forecast figure of at least $24.50. The company’s expanding legacy footprint and continued realization of new store-embedded earnings are likely to support growth.
Adjusted net income is now projected to be $1.028 billion, while GAAP net income is expected to be $912 million for 2025. Total membership was earlier estimated to be 5.9 million by 2025-end. Consolidated MCR is likely to stay at 90.2%. It is also expected that the effective tax rate would be 25.3% in 2025.
MOH’s Zacks Rank & Key Picks
MOH currently carries a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for Encompass Health’s current-year earnings of $5.01 per share has witnessed one upward revision in the past seven days against no movement in the opposite direction. Encompass Health beat earnings estimates in each of the trailing four quarters, with the average surprise being 12.3%. The consensus estimate for current-year revenues is pegged at $5.9 billion, implying 9.5% year-over-year growth.
The consensus estimate for Fresenius Medical Care’s current-year earnings of $2.23 per share has witnessed four upward revisions in the past 60 days against no movement in the opposite direction. Fresenius Medical Care beat earnings estimates in three of the trailing four quarters and met once, with the average surprise being 6.6%. The consensus estimate for current-year revenues is pegged at $21.9 billion, implying 4.8% year-over-year growth.
The Zacks Consensus Estimate for Doximity’s current-year earnings of $1.46 per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. Doximity beat earnings estimates in each of the trailing four quarters, with the average surprise being 29.9%. The consensus estimate for current-year revenues is pegged at $625.7 million, implying 9.7% year-over-year growth.
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Molina Healthcare Q2 Earnings Miss on Rising Medical Care Costs
Key Takeaways
Molina Healthcare, Inc. (MOH - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) of $5.48, which marginally missed the Zacks Consensus Estimate of $5.50. Also, the bottom line fell 6.5% from the year-ago period.
Total revenues amounted to $11.4 billion, which improved 15.7% year over year. The top line also beat the consensus mark by 5.4%.
The quarterly revenues were aided by rising premiums and rate hikes, but were partially offset by higher medical care costs and general and administrative expenses.
Molina Healthcare, Inc Price, Consensus and EPS Surprise
Molina Healthcare, Inc price-consensus-eps-surprise-chart | Molina Healthcare, Inc Quote
MOH’s Q2 Operational Update
Premium revenues of $10.9 billion increased 15% year over year in the quarter under review and beat the Zacks Consensus Estimate of $10.4 billion. The improvement stemmed from contract wins, buyouts, rate hikes and an expanding nationwide footprint, partly offset by Medicaid redeterminations.
As of June 30, 2025, total membership improved 3% year over year to around 5.7 million but missed the Zacks Consensus Estimate by 0.8%. The health insurer witnessed year-over-year increases in customers within its Medicare and Marketplace businesses.
Investment income declined 7.8% year over year to $106 million but beat the consensus mark of $101 million.
Total operating expenses of $11.1 billion increased 17% year over year and were higher than our model estimate of $10.2 billion due to a rise in medical care costs, coupled with higher general and administrative expenses. The adjusted general and administrative expense ratio decreased to 6.1% in the second quarter from 6.9% a year ago. Interest expenses of $48 million rose from $28 million in the prior year.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 90.4% in the quarter under review. The metric rose from 88.6% a year ago and was higher than the consensus mark of 88.9%. Also, the figure was higher than our estimate of 89%.
Molina Healthcare’s adjusted net income decreased 13.8% year over year to $294 million.
MOH’s Financial Update (As of June 30, 2025)
Molina Healthcare exited the second quarter with cash and cash equivalents of $4.5 billion, which declined from the 2024-end level of $4.7 billion. Total assets of $16.2 billion rose from $15.6 billion at 2024-end.
Long-term debt of $3.4 billion rose from $2.9 billion at 2024-end.
Total stockholders’ equity of $4.6 billion increased from the $4.5 billion figure at 2024-end.
Net cash used in operating activities amounted to $112 million in the first half of 2025 compared with $5 million in the prior year.
MOH’s 2025 Guidance
Management still expects premium revenues to be around $42 billion, which indicates an improvement of around 9% from the 2024 reported figure. Adjusted EPS is now forecasted to be at least $19 this year, which implies a reduction from its prior forecast figure of at least $24.50. The company’s expanding legacy footprint and continued realization of new store-embedded earnings are likely to support growth.
Adjusted net income is now projected to be $1.028 billion, while GAAP net income is expected to be $912 million for 2025. Total membership was earlier estimated to be 5.9 million by 2025-end. Consolidated MCR is likely to stay at 90.2%. It is also expected that the effective tax rate would be 25.3% in 2025.
MOH’s Zacks Rank & Key Picks
MOH currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Medical space are Encompass Health Corp (EHC - Free Report) , Fresenius Medical Care AG & Co. (FMS - Free Report) and Doximity, Inc. (DOCS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Encompass Health’s current-year earnings of $5.01 per share has witnessed one upward revision in the past seven days against no movement in the opposite direction. Encompass Health beat earnings estimates in each of the trailing four quarters, with the average surprise being 12.3%. The consensus estimate for current-year revenues is pegged at $5.9 billion, implying 9.5% year-over-year growth.
The consensus estimate for Fresenius Medical Care’s current-year earnings of $2.23 per share has witnessed four upward revisions in the past 60 days against no movement in the opposite direction. Fresenius Medical Care beat earnings estimates in three of the trailing four quarters and met once, with the average surprise being 6.6%. The consensus estimate for current-year revenues is pegged at $21.9 billion, implying 4.8% year-over-year growth.
The Zacks Consensus Estimate for Doximity’s current-year earnings of $1.46 per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. Doximity beat earnings estimates in each of the trailing four quarters, with the average surprise being 29.9%. The consensus estimate for current-year revenues is pegged at $625.7 million, implying 9.7% year-over-year growth.