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Molina Healthcare (MOH) Q4 Earnings, Revenues Miss Estimates
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Molina Healthcare Inc. (MOH - Free Report) reported fourth-quarter 2016 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 75 cents by 16%. Earnings also declined 26% year over year. The downside was primarily attributable to continued weak marketplace performance of Affordable Care Act (ACA).
Adjusted net income per diluted share decreased 82% to $0.50 in 2016 from $2.78 in 2015 mainly due to the declining profitability of Molina Healthcare’s Marketplace program.
Operational Update
In the fourth quarter, total revenue of $4.46 billion missed the Zacks Consensus Estimate of $4.5 billion by 1.3%. The same has grown 15.3% year over year primarily driven by a 14.5% increase in premium revenue and 22% increase in service revenues, also supported by a 50% growth in investment income and other revenues.
Backed by strong enrollment growth, the company generated nearly $16.3 billion of premium revenue in 2016, reflecting 23% year-over-year growth over 2015. Increased Marketplace enrollment and the acquisition of Medicaid managed care membership primarily drove the enrollment growth. As a result, full-year total revenue of $17.7 billion inched up 25% year over year.
For the fourth quarter, total operating expenses rose 19.5% year over year to $4.54 billion due to higher Medical care costs, increased cost of service revenues, a rise in general and administrative expenses, higher premium tax expenses, increase in Health Insurance Fee expense, along with a hike in depreciation and amortization costs. The same drivers resulted in total operating expenses of $17.5 million for 2016, up 27% year over year.
For the fourth quarter, Medical care cost increased 20% year over year to $3.8 billion. The same for 2016 increased 27% to $17.5 billion. Lower Marketplace margins led to this deterioration for both the quarter and the year.
Continuously rising debt burden resulted in Molina Healthcare’s interest expenses of $25 million in the fourth quarter that increased 19% year over year. The same for 2016 rose 53% over 2015.
Financial Update
As of Dec 31, 2016, Molina Healthcare’s cash and cash equivalents increased 21.7% from the year-end 2015 level to $2.8 billion. Total assets increased 13.6% to $7.5 billion from $6.6 billion at the end of 2015. Molina Healthcare’s shareholder equity increased 13% from year-end 2015 to $1.6 billion at the end of 2016.
Net cash from operating activities amounted to $673 million at the end of 2016, down 40% year over year. For the fourth quarter, the same amounted $40 million reflecting 81% year over year decline.
Molina Healthcare Inc Price, Consensus and EPS Surprise
Among the other firms in the medical sector that have reported their fourth-quarter earnings so far, the bottom line at Aetna Inc. , HCA Holdings Inc. (HCA - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.
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Molina Healthcare (MOH) Q4 Earnings, Revenues Miss Estimates
Molina Healthcare Inc. (MOH - Free Report) reported fourth-quarter 2016 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 75 cents by 16%. Earnings also declined 26% year over year. The downside was primarily attributable to continued weak marketplace performance of Affordable Care Act (ACA).
Adjusted net income per diluted share decreased 82% to $0.50 in 2016 from $2.78 in 2015 mainly due to the declining profitability of Molina Healthcare’s Marketplace program.
Operational Update
In the fourth quarter, total revenue of $4.46 billion missed the Zacks Consensus Estimate of $4.5 billion by 1.3%. The same has grown 15.3% year over year primarily driven by a 14.5% increase in premium revenue and 22% increase in service revenues, also supported by a 50% growth in investment income and other revenues.
Backed by strong enrollment growth, the company generated nearly $16.3 billion of premium revenue in 2016, reflecting 23% year-over-year growth over 2015. Increased Marketplace enrollment and the acquisition of Medicaid managed care membership primarily drove the enrollment growth. As a result, full-year total revenue of $17.7 billion inched up 25% year over year.
For the fourth quarter, total operating expenses rose 19.5% year over year to $4.54 billion due to higher Medical care costs, increased cost of service revenues, a rise in general and administrative expenses, higher premium tax expenses, increase in Health Insurance Fee expense, along with a hike in depreciation and amortization costs. The same drivers resulted in total operating expenses of $17.5 million for 2016, up 27% year over year.
For the fourth quarter, Medical care cost increased 20% year over year to $3.8 billion. The same for 2016 increased 27% to $17.5 billion. Lower Marketplace margins led to this deterioration for both the quarter and the year.
Continuously rising debt burden resulted in Molina Healthcare’s interest expenses of $25 million in the fourth quarter that increased 19% year over year. The same for 2016 rose 53% over 2015.
Financial Update
As of Dec 31, 2016, Molina Healthcare’s cash and cash equivalents increased 21.7% from the year-end 2015 level to $2.8 billion. Total assets increased 13.6% to $7.5 billion from $6.6 billion at the end of 2015. Molina Healthcare’s shareholder equity increased 13% from year-end 2015 to $1.6 billion at the end of 2016.
Net cash from operating activities amounted to $673 million at the end of 2016, down 40% year over year. For the fourth quarter, the same amounted $40 million reflecting 81% year over year decline.
Molina Healthcare Inc Price, Consensus and EPS Surprise
Molina Healthcare Inc Price, Consensus and EPS Surprise | Molina Healthcare Inc Quote
Zacks Rank and Performance of Other Insurers
Molina Healthcrare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other firms in the medical sector that have reported their fourth-quarter earnings so far, the bottom line at Aetna Inc. , HCA Holdings Inc. (HCA - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>