Molina Healthcare's Q4 2024 Earnings: A Mixed Bag of Results

Molina Healthcare, Inc. (NYSE: MOH) reported its fourth quarter and full-year 2024 earnings on February 6, 2025, providing investors with a mixed bag of results. While the company's revenue growth and membership expansion were encouraging, its earnings per share (EPS) missed analysts' expectations, and medical care costs increased more than anticipated. Here's a breakdown of the key takeaways from the earnings call and the potential impact on the company's future performance.

Q4 2024 Earnings Summary

* EPS: $4.44 (missed analysts' estimate of $5.81 by 23.5%)
* Revenue: $10.5 billion (slightly missed analysts' estimate of $10.6 billion)
* Medical Care Ratio (MCR): 90.2% (up from 89.1% in Q4 2023)
* General and Administrative Expense Ratio (G&A): 6.3% (down from 7.1% in Q4 2023)

Key Drivers Behind the Results

1. Higher Medical Care Costs: Molina Healthcare's MCR increased to 90.2% in Q4 2024, primarily driven by higher-than-expected utilization in the Medicare segment and acuity shifts in the Medicaid segment. This led to an increase in medical care costs, which negatively impacted the company's EPS.
2. Lower Investment Income: Investment income fell 2.6% year over year to $111 million, missing the consensus mark of $108.2 million. This contributed to the shortfall in EPS.
3. Lower-than-Expected Membership Growth: Total membership grew by 10.8% year over year to around 5.5 million, but this was below the Zacks Consensus Estimate of 5.67 million. This slower growth in membership also impacted the company's EPS.



Full-Year 2024 Results

* Revenue: $40.65 billion (beat analysts' estimate of $40.58 billion)
* Adjusted EPS: $22.65 (missed analysts' estimate of $23.44)
* Adjusted Net Income: $1.31 billion (up from $1.21 billion in 2023)

2025 Guidance

Molina Healthcare issued its full-year 2025 earnings guidance with expected premium revenue of approximately $42 billion and adjusted earnings of at least $24.50 per diluted share. This guidance includes approximately $1.00 per diluted share of implementation costs for recent Medicaid and Medicare Duals contract wins scheduled to commence in 2026.

Potential Impact on Future Performance

The increase in medical care costs and the shortfall in EPS may lead to adjustments in future earnings guidance and potential changes in the company's strategies to control expenses. Molina Healthcare might need to adjust premiums or implement cost-cutting measures to maintain profitability. However, the company remains confident in its ability to achieve long-term financial targets and continues to execute on growth opportunities within all its businesses.

In conclusion, Molina Healthcare's Q4 2024 earnings results were mixed, with revenue growth and membership expansion offset by higher medical care costs and lower EPS. The company's guidance for 2025 reflects its confidence in future growth, but investors should monitor the impact of higher medical care costs and potential adjustments in the company's strategies to control expenses.