Molina Healthcare's Q1 2025 Earnings Call: Unpacking Key Contradictions in Medicaid and Medicare Assumptions

Medicaid MLR assumptions, Marketplace MLR and seasonality, Molina's outlook on Medicare Advantage, Marketplace MCR and Trend Assumptions, Medicaid Cost Trend Assumptions are the key contradictions discussed in Molina Healthcare's latest 2025Q1 earnings call.



Financial Performance:
- Molina Healthcare reported adjusted earnings per share of $6.08 on $10.6 billion of premium revenue for Q1 2025.
- The consolidated medical care ratio (MCR) was 89.2%, reflecting strong medical cost management and an improving rate environment.
- The earnings were supported by a 3.9% adjusted pre-tax margin or 3% after tax.

Segment Performance:
- In Medicaid, the MCR was 90.3%, aligned with expectations, with medical costs increasing moderately due to various factors.
- Medicare reported an MCR of 88.3%, in line with expectations, and medical cost trends were as expected.
- Marketplace reported an MCR of 81.7%, higher than expected due to prior year items and a higher new store MCR for the ConnectiCare acquisition.

Growth Initiatives and RFP Wins:
- Molina successfully defended its position in Nevada, winning a contract to serve Medicaid beneficiaries in two urban areas.
- In Medicare dual eligible business, they won a contract in Illinois, expecting incremental annual premium revenue of $800 million.
- These wins are expected to contribute to reaching premium revenue targets of $46 billion by 2026 and $52 billion by 2027.

Guidance and Rate Increases:
- Full-year 2025 premium revenue guidance remains unchanged at $42 billion, with an adjusted EPS guidance of at least $24.50.
- Medicaid rates are projected to be slightly higher than expected, with state partners updating actuarial data to reflect cost trends.
- The company's 2025 guidance is supported by an improved outlook for Medicaid rates, reflecting recent cost trends.