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Healthcare Q2 Earnings Due on Aug 2: HUM, PRXL, MOH, TDOC

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Second-quarter earnings have already crossed the halfway mark. As of Jul 28, 286 S&P 500 companies reported results with strong earnings numbers.

Per the latest Earnings Preview, total earnings for the 286 S&P 500 members, constituting 68.8% of the index’s total market capitalization, are up 11.3% year over year on a 6.1% rise in revenues. Going by the scorecard, 74.5% companies delivered an earnings beat while 69.2% surpassed revenue estimates.

The Healthcare industry falls under the Medical sector, which is one of the seven sectors in the S&P 500 group. As of Jul 28, 58.2% of the total Medical sector reported second-quarter results. The beat ratio is strong with 84.4% companies surpassing bottom-line expectations.

The sector has been in talk ever since Donald Trump became the President. Trump’s intention to repeal and replace the Health Care Reform Act, popularly known as Obamacare, has resulted in an uncertain future for the whole sector.

The U.S healthcare industry substantially benefits from the strong membership base built under the Obamacare act. Aggressive inorganic strategies have helped the players achieve fast-paced growth. In addition, new product launches, improving service, expansion into ancillary businesses, and expense management strategies are expected to add to the top line.

The medical stocks faces threats like the rising level of bad debt, demand for increasing investments in technological innovation, integration cost related to acquisitions and high interest expenses on debt-funded acquisitions that are likely to put pressure on the bottom line.

Let’s have a look at the healthcare companies that are gearing up to report their second-quarter 2017 results on Aug 2.

Humana, Inc. (HUM - Free Report) has an Earnings ESP of +1.30% as the Most Accurate estimate of $3.12 is pegged above the Zacks Consensus Estimate of $3.08. The company has a Zacks Rank #4 (Sell). Despite having a positive ESP, the unfavorable Zacks Rank makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Last quarter, Humana’s earnings surpassed the Zacks Consensus Estimate. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, Humana surpassed expectations in each of the last four quarters, with an average positive surprise of 3.75%. This is depicted in the graph below.

Humana’s revenue base is likely to receive a boost from the strong performance of Individual Medicare Advantage, the Group Medicare Advantage and Healthcare Services businesses in the second quarter.

The standalone Prescription Drug Plans membership is likely to grow, adding significantly to the Medicare business.

Nevertheless, Humana is expected to suffer from rising benefit expenses, which will put pressure on margins (read more: What's in the Cards for Humana this Earnings Season?).

Humana Inc. Price and EPS Surprise

PAREXEL International Corporation ) has an Earnings ESP of 0.00% as the both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 94 cents. Though the company has a favorable Zacks Rank #3 (Hold), we need a positive ESP to predict an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Last quarter, PAREXEL beat the Zacks Consensus Estimate by 1.37%. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, PAREXEL surpassed expectations in three of the last four quarters, with an average miss of 1.42%. This is depicted in the graph below:

PAREXEL International Corporation Price and EPS Surprise

Molina Healthcare, Inc. (MOH - Free Report) has an Earnings ESP of -18.61% as the Most Accurate estimate of 70 cents is pegged lower than the Zacks Consensus Estimate of 86 cents. A negative ESP, along with Zacks Rank #4 makes surprise prediction difficult for the Molina Healthcare stock.

Last quarter, it surpassed the Zacks Consensus Estimate by 157.89%. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, Molina Healthcare’s earnings surpassed expectations in three of the last four quarters, with an average positive surprise of 45.65%. This is depicted in the graph below:

Molina Healthcare Inc Price and EPS Surprise

Teladoc, Inc.(TDOC - Free Report) has an Earnings ESP of 0.00% as the Most Accurate estimate of 26 cents matches the Zacks Consensus Estimate. This makes surprise prediction difficult despite the company’s Zacks Rank #3.

Last quarter, Teladoc beat the Zacks Consensus Estimate by 9.09%. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, the company surpassed expectations in each of the last four quarters with an average positive surprise of 7.85%. This is depicted in the graph below.

Teladoc is likely to benefit in the to-be-reported quarter from significant growth in business driven by its premier consumer engagement capabilities, broad network and scalable platform.

Telehealth services provided by the company are fast gaining acceptance due to their flexibility, cost effectiveness and superior quality, which are driving demand. This is likely to propel patient visits, leading to considerable membership growth. Also, the acquisition of HealthiestYou, closed in 2016, is expected to result in higher visits and call volume. (read more: Will Teladoc Pull Off a Surprise in Q2 Earnings?).

Teladoc, Inc. Price and EPS Surprise

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