Molina (MOH) Q2 2025: Revenue Growth Tested by Rising Medical Costs

Molina Healthcare, a major provider of government-sponsored healthcare plans, recently released its financial results for the second quarter of 2025. In this post, we'll dive into the income statement from its latest 10-Q filing to see how the company is performing. The results show a classic case of impressive revenue growth being tested by the rising cost of care.

Strong Revenue Growth, Led by Marketplace

Molina's top-line revenue grew to $11.4 billion for the quarter, a healthy 15.7% jump from $9.9 billion in the same period last year. This growth was distributed across all its main business lines, which include:

• Medicaid: The company's largest segment, which provides health plans for low-income individuals and families, grew its revenue to $8.0 billion.
• Medicare: This segment, serving seniors and people with certain disabilities, saw its revenue climb to $1.6 billion.
• Marketplace: The star performer was the Marketplace segment, which offers individual health plans under the Affordable Care Act (ACA). Its revenue nearly doubled to $1.2 billion from $627 million a year ago, driven by a sharp increase in membership.

This expansion demonstrates Molina's success in capturing a larger share of the government-sponsored healthcare market.

Rising Medical Costs Squeeze Profitability

Despite the surge in revenue, the company's net income fell to $255 million ($4.75 per share) from $301 million in the second quarter of 2024. The main culprit is a key metric for any health insurer: the Medical Care Ratio (MCR).

The MCR tells you what percentage of premium dollars an insurer spends on medical claims. A higher MCR means lower gross profit. Molina's MCR for the quarter increased to 90.4%, up from 88.6% a year earlier. This signals that the costs of providing healthcare services are rising faster than the premiums the company is collecting.

The following chart provides a visual breakdown of how Molina's revenue is allocated between its various costs and what's left over as profit.

As the chart illustrates, of the $11.4 billion in total revenue, a substantial $9.8 billion went directly to cover medical care costs. While Molina managed its administrative costs well—its General and Administrative (G&A) expense ratio actually improved from 7.0% to 6.2% of revenue—it wasn't enough to fully offset the pressure from higher medical claims.

The Path Forward

Molina Healthcare's Q2 report tells a story of successful expansion met with industry-wide challenges. The company is effectively growing its business and attracting new members, particularly in the competitive Marketplace segment. However, like many in the industry, it's grappling with rising healthcare utilization and costs.

The company's ability to manage its Medical Care Ratio will be the critical factor for its financial performance going forward. While strong control over administrative expenses is a positive sign, the main challenge lies in aligning premium pricing with medical cost trends. Investors will be watching closely to see if Molina can successfully navigate these headwinds and translate its impressive revenue growth into stronger profitability.