Molina Healthcare Surpasses Earnings Estimates in Q1 2025

Molina Healthcare Inc. (MOH) has reported adjusted earnings per share (EPS) of $6.08 for the first quarter of 2025, exceeding the Zacks Consensus Estimate of $5.86. This figure represents an annual growth of 6.1% compared to the previous year.

Total revenues for the quarter reached $11.15 billion, reflecting a year-over-year improvement of 12.2%. Notably, this figure also slightly surpassed analysts’ expectations.

The solid performance in the first quarter was driven by higher premiums and rate increases, though these gains were somewhat mitigated by rising medical care costs.

Molina Healthcare, Inc. Price, Consensus, and EPS Surprise

Molina Healthcare, Inc price-consensus-eps-surprise-chart | Molina Healthcare, Inc Quote

Operational Update for Q1 2025

Premium revenues totaled $10.63 billion, a rise of 11.8% from the previous year, exceeding the Zacks Consensus Estimate of $10.61 billion. This growth is attributed to new contracts, acquisitions, rate hikes, and an expanding national presence, partially offset by Medicaid redeterminations.

By March 31, 2025, Molina Healthcare reported a total membership of approximately 5.8 million, reflecting a modest year-over-year growth of 0.4%, but this figure fell short of the Zacks Consensus Estimate by 3.3%. The company experienced an increase in members within its Medicare and Marketplace segments.

Investment income remained stable at $108 million, surpassing the consensus estimate of $102.1 million.

Total operating expenses rose to $10.7 billion, a 12.7% increase from the previous year and slightly above our forecast of $10.6 billion, driven by increased medical care costs and higher general and administrative expenses. The adjusted general and administrative expense ratio improved to 6.8% from 7.1% year-over-year. Interest expenses increased from $27 million to $43 million year-over-year.

The consolidated medical care ratio (MCR), which measures medical costs as a percentage of premium revenues, stood at 89.2%, up from 88.5% a year ago and higher than the consensus expectation of 88.5%, as well as above our estimate of 88.4%. Adjusted net income for Molina Healthcare fell slightly by 0.3% year-over-year to $333 million.

Financial Position as of March 31, 2025

At the end of the first quarter, Molina Healthcare held cash and cash equivalents of $4.9 billion, an increase from $4.7 billion at the end of 2024. Total assets rose to $16.4 billion, up from $15.6 billion at the end of 2024.

Long-term debt also increased to $3.6 billion, compared to $2.9 billion at the end of 2024. Conversely, total stockholders’ equity fell to $4.3 billion from $4.5 billion at 2024-end. Net cash provided by operating activities decreased to $190 million in Q1 2025 from $214 million in the previous year.

Reaffirmed 2025 Guidance

Management has reaffirmed its expectation for premium revenues to be around $42 billion for 2025, marking an anticipated growth of approximately 9% from the 2024 figure. Adjusted EPS remains projected at a minimum of $24.50 for the year, indicating an 8% increase from 2024. Continued expansion of its service regions and realization of new store-embedded earnings are expected to drive growth.

Additionally, adjusted net income is now estimated at $1.33 billion, with GAAP net income anticipated to be $1.21 billion for 2025. The total membership goal for 2025 is set at 5.9 million, with a consolidated MCR forecast to remain at 88.7%. The effective tax rate is expected to be 25.3% for the year.

Stock Ranking and Comparisons

Currently, MOH carries a Zacks Rank #4 (Sell).

In the broader medical sector, several stocks are ranked higher, including Aveanna Healthcare Holdings Inc. (AVAH), Addus Homecare Corporation (ADUS), and Option Care Health, Inc. (OPCH), each rated Zacks Rank #1 (Strong Buy).

The Zacks Consensus Estimate for Aveanna Healthcare’s current-year earnings stands at 12 cents per share, with one upward revision in the past month and a strong average surprise of 163.3% over four quarters. Current-year revenue estimates are $2.1 billion, reflecting a 4.6% growth.

For Addus Homecare, the current-year earnings estimate remains stable at $6.04 per share, with an average surprise of 5.8% based on past performance. Projected revenues are $1.4 billion, indicating a 21.2% increase.

Meanwhile, Option Care Health’s earnings estimate for the current year is $1.68 per share, with six upward revisions lately and an average surprise of 15.9% over the last four quarters. Current-year revenue expectations are $5.4 billion, implying 8.9% year-over-year growth.

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This article originally published on Zacks Investment Research (zacks.com).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.