Molina Healthcare’s first quarter results were met with a negative market reaction, despite exceeding Wall Street revenue and non-GAAP EPS expectations. Management attributed the results to strong customer growth and disciplined medical cost management, but also acknowledged that the Marketplace segment faced one-time pressures from risk adjustment and membership reconciliations. CEO Joe Zubretsky described the company’s consolidated medical cost ratio as “reflect[ing] strong medical cost management and an improving rate environment,” but was quick to note that elevated costs in behavioral health, high-cost drugs, and seasonal illnesses were only partially offset by rate updates. Management’s cautious approach and transparency about segment-level challenges indicated a more reserved outlook than in prior quarters.
Is now the time to buy MOH? Find out in our full research report (it’s free).
Molina Healthcare (MOH) Q1 CY2025 Highlights:
- Revenue: $11.15 billion vs analyst estimates of $10.86 billion (12.2% year-on-year growth, 2.6% beat)
- Adjusted EPS: $6.08 vs analyst estimates of $5.96 (2.1% beat)
- Adjusted EBITDA: $506 million vs analyst estimates of $520.8 million (4.5% margin, 2.8% miss)
- Adjusted EPS guidance for the full year is $24.50 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 3.9%, in line with the same quarter last year
- Customers: 5.75 million, up from 5.54 million in the previous quarter
- Market Capitalization: $16.01 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Molina Healthcare’s Q1 Earnings Call
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Stephen Baxter (Wells Fargo) asked for detail on Marketplace risk adjustment and membership reconciliation, to which CEO Joe Zubretsky and CFO Mark Keim explained these were non-recurring items that elevated costs and should not repeat, with Keim adding, “the new integrity rules go a long way to stop churn and maybe some fraudulent activity.”
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Andrew Mok (Barclays) questioned the rationale behind higher Medicaid cost trend assumptions, and Zubretsky clarified that the guidance reflects “appropriate conservatism” early in the year, with Keim confirming that most rate increases are already known and built into guidance.
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Josh Raskin (Nephron Research) inquired about the long-term role of Marketplace in Molina’s strategy. Zubretsky emphasized Marketplace’s synergy with Medicaid and Medicare, noting that it helps retain members as they move between public insurance options.
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John Stansel (JP Morgan) focused on G&A trends, with Zubretsky and Keim highlighting structural improvements and stating there is room for further scale-driven reductions in G&A ratio over time.
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Ryan Langston (TD Cowen) explored the effects of legislative uncertainty on M&A appetite. Zubretsky responded that uncertainty may actually increase acquisition opportunities, as smaller insurers seek scale or exit difficult markets.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will focus on (1) the timing and impact of further Medicaid rate adjustments as cost trends evolve, (2) evidence that Marketplace margins normalize as non-recurring items subside and new members are integrated, and (3) progress on integration of recent contract wins and acquisitions. We will also monitor legislative developments affecting Medicaid funding and any shifts in the competitive landscape that could impact Molina’s growth trajectory.
Molina Healthcare currently trades at $295.46, down from $331.67 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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