Molina Healthcare Revenue Jumps in Q2

Key Points

• - GAAP revenue rose to $11.43 billion in Q2 2025, exceeding expectations by 4.3%, driven by premium growth and acquisitions.

• - Adjusted earnings per share for Q2 2025 missed estimates at $5.48, with margin pressure from higher medical costs.

• - Full-year 2025 earnings guidance was cut, reflecting ongoing cost challenges, particularly in the Marketplace segment.

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Molina Healthcare (NYSE:MOH), a national managed care organization focused on providing health insurance through government programs, released its second-quarter results on July 23, 2025. The headline was robust revenue growth, with GAAP total revenue reaching $11.43 billion in Q2 2025 and beating analyst forecasts of $10.95 billion. However, adjusted earnings per share (EPS) for Q2 2025 came in at $5.48, short of the $5.62 estimate. Margins declined year over year in Q2 2025 due to higher medical costs. Management reduced its full-year 2025 earnings guidance, signaling continued pressure on profits despite healthy top-line expansion. The quarter underscored both the company's contract and membership gains, but also mounting challenges in medical cost management and cash flow.

Source: Analyst estimates for the quarter provided by FactSet.

Understanding Molina Healthcare’s Business and Current Focus

Molina Healthcare specializes in providing health insurance for individuals and families through government-sponsored programs such as Medicaid, Medicare, and the Affordable Care Act (ACA) Marketplace. The company's revenue streams are dominated by government contracts, making procurement success a fundamental driver of its top line.

In recent years, its business focus has centered on strengthening its presence in key states via contract wins, re-procurement efforts, and strategic acquisitions. Core priorities include managing medical costs, integrating acquired businesses, and remaining compliant with evolving regulatory requirements. Success factors include a high win rate for government contracts and smooth integration of acquisitions to scale membership and revenue.

Quarter Highlights: Revenue Outperformance and Margin Pressures

This jump was driven by premium growth, new contracts, and contributions from acquisitions such as ConnectiCare. Premium revenue grew sharply, notably in the Marketplace product segment—a health insurance offering via the ACA Marketplace—which saw GAAP premium revenue nearly double from $627 million in Q2 2024 to $1.20 billion in Q2 2025.

Membership trends painted a mixed picture. Total members rose by 167,000 from a year earlier, reaching approximately 5.7 million as of June 30, 2025. Medicaid membership declined by 116,000 from December 31, 2024, to June 30, 2025, mainly due to national eligibility redeterminations. Marketplace membership increased by 304,000 from June 30, 2024, to June 30, 2025. Acquisitions also contributed to the gain in membership, especially in Marketplace and Medicare lines.

Margins, however, experienced significant pressure. The consolidated medical care ratio (MCR)—a measure of medical expenses as a percentage of premium revenue—rose to 90.4% from 88.6% (GAAP). This increase affected all product segments: Medicaid MCR edged up to 91.3%, Medicare jumped to 90.0%, and Marketplace MCR surged to 85.4%. Management linked these increases to elevated utilization of behavioral health, pharmacy, and long-term services. In Marketplace, the integration of ConnectiCare drove up the MCR further, with management noting that “approximately 300 basis points was due to prior year member reconciliations and a higher ‘new store’ MCR related to the ConnectiCare acquisition.”

Despite the top-line beat, adjusted earnings per share (non-GAAP) fell below analyst forecasts as these medical cost increases outpaced premium rate updates. Operating cash flow for the first six months of 2025 was also negative at $112 million, compared to a $5 million outflow for the first six months of 2024, mainly due to timing differences in government payables and risk corridor settlements. Parent company cash and investments declined from $445 million as of December 31, 2024, to approximately $100 million as of June 30, 2025.

Financial Outlook and Investor Considerations

The company lowered its full-year 2025 adjusted (non-GAAP) earnings guidance to no less than $19.00 per diluted share. Management also reduced its GAAP EPS projection to no less than $16.90. The company reaffirmed premium revenue guidance at $42 billion, representing an approximately 9% increase from the prior year, but now forecasts a higher medical care ratio (GAAP) of 90.2% for the full year. This outlook reflects the expectation that cost and utilization pressures will persist, particularly in the Marketplace segment, through the rest of the year.

Looking ahead, investors should closely follow trends in medical cost management, the pace of membership gains or losses—especially in Medicaid—and the company’s contract pipeline as indicators of future revenue strength. Parent-level liquidity and cash flow stability are also important watchpoints, given recent declines in cash and investments and negative operating cash flow. Molina Healthcare (NYSE:MOH) does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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