MediaAlpha Swings to Profit as Growth Reaccelerates, Then Guides for a Slowdown
The insurance-marketplace operator posted diluted earnings of $0.65 a share in the second quarter, a reversal from a year-earlier loss, aided by a one-time gain from buying back part of its tax liability.
MediaAlpha, Inc. (MAX), which operates an online marketplace connecting insurance carriers and distributors with consumers, reported second-quarter revenue of $316.9 million, up 26% from a year earlier, and net income of $41.8 million against a net loss of $(22.5) million in the same period last year.
The results mark a turn in trajectory for a company whose top line had been decelerating as recently as the fourth quarter of 2024, when revenue fell 3% year over year to $291 million. Growth returned to 17% in the first quarter of 2025 before accelerating further to 26% in the second.
Profitability improved even faster than revenue. Diluted earnings per share attributable to MediaAlpha reached $0.65, compared with a loss of $(0.33) a year earlier, even as the diluted share count climbed to 62.1 million from 56.1 million as previously out-of-the-money securities turned dilutive with the return to profitability. Adjusted EBITDA grew 20% year over year to $29.3 million, a reacceleration after adjusted EBITDA growth of just 7% in the first quarter and an outright 16% decline in the fourth quarter of 2024.
A large share of the net income swing traced to a one-time item: MediaAlpha repurchased a portion of its Tax Receivables Agreement liability, which carried a book value of $69 million, for $31 million, recording a $37.7 million gain that had no analog in any prior quarter. General and administrative expense also fell sharply, to $14.0 million from $47.1 million, after legal costs tied to a Federal Trade Commission matter that added a $33.0 million reserve increase in the year-earlier quarter proved immaterial this quarter.
Beneath the headline growth, margins kept compressing. Gross margin fell to 14.3% from 15.0% a year earlier, the fourth straight quarter of year-over-year contraction, following declines to 15.1% in the first quarter and 15.4% in the fourth quarter of 2024. Contribution margin followed the same pattern, slipping to 14.9% from 15.8%. The company also stopped disclosing Transaction Value, the non-GAAP metric that had headlined its fourth-quarter release as a record $613 million; neither the first- nor second-quarter releases of 2025 broke it out by segment.
Within that broader margin pressure, the drag from MediaAlpha's under-65 Health vertical appeared to be easing. Guidance given alongside the first-quarter release had called for a roughly $2 million year-over-year decline in Contribution from that business in the second quarter; the new guidance for the third quarter narrows the expected decline to about $1 million, even as the Health vertical continues to represent roughly 1% of revenue.
For the third quarter, MediaAlpha guided to revenue of $330 million to $355 million, a midpoint implying 12% year-over-year growth, a deceleration from both the 26% growth just delivered and the 19% growth the company had guided for the second quarter back in its first-quarter release. Adjusted EBITDA guidance points to 15% year-over-year growth at the midpoint, down from the 19% growth guided for the prior quarter.
MediaAlpha continued returning cash to shareholders, repurchasing $20 million of stock in the second quarter after $25 million in the first, bringing cumulative buybacks to $88 million of the $100 million program the board had doubled in size in the fourth-quarter release.