Back to top

Analyst Blog

Molina Healthcare Inc. (MOH - Analyst Report) reported fourth-quarter 2012 net earnings per share of 54 cents, significantly surpassing the Zacks Consensus Estimate of 21 cents. Moreover, earnings per share increased from the year-ago quarter’s earnings of 51 cents.

Including a $64.6 million Missouri health plan impairment charge in the year-ago quarter, net income for the quarter came in at $25.6 million or 54 cents compared with net loss of $33 million or 72 cents in the prior-year quarter.

Total revenue for the reported quarter climbed to $1.58 billion from $1.31 billion in the prior-year quarter. Total revenue marginally exceeded the Zacks Consensus Estimate of $1.57 billion.

Premium revenues surged 22% year over year to $1.48 billion. Moreover, Molina’s service revenue jumped to $55.4 million from $49.2 million in the year-ago quarter. Additionally, rental income increased to $3.97 million in the quarter from $0.55 million in the year-ago quarter.

However, investment income declined to $1.19 million from $1.74 million a year ago. Premium tax also declined to $38.04 million from $43.96 million in the fourth quarter of 2011.

Total expenses also surged 21% year over year to $1.52 billion. The surge was driven by medical care costs that escalated to $1.27 billion from $1.04 billion in the prior-year quarter, cost of service revenues that increased to $43.1 million from $39.0 million, general and administrative (G&A) expenses that escalated to $153.4 million from $125.0 million and depreciation and amortization (D&A) costs that increased to $16.3 million from $12.1 million. However, premium tax expenses declined to $38.0 million from $44.0 million in the prior-year quarter.

Additionally, interest expense increased to $4.35 million from $3.85 million in the year-ago quarter. Further, medical care ratio (ratio of medical care costs to premium revenue) deteriorated to 86.1% from 85.7% in the year-ago quarter.

Earnings before interest and taxes were $54.1 million in the reported quarter compared with a loss of $16.1 million in the comparable prior-year quarter.

Full-Year 2012 Highlights

For full year 2012, Molina reported operating income of 21 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 13 cents but lagged $1.82 earned in 2011. Operating income for 2011 excludes a $64.6 million Missouri health plan impairment charge.

Net income came in at $9.8 million or 21 cents per share, compared with $20.8 million or 45 cents per share in 2011. The decline was due to contracted margins in the Health Plans segment, which offset increased premium revenues.

Molina’s total revenue amounted to $6.03 billion in 2012, showing a 26% year-over-year increase from $4.77 billion. Total revenue also marginally exceeded the Zacks Consensus Estimate of $6.02 billion.

Moreover, premium revenues came in at $5.7 billion, up 27% year over year as a result of favorable demographic shift, benefit expansion and higher membership. Additionally, total expenses increased to $5.99 billion from $4.63 billion.

Financial Update

Molina exited 2012 with $1.2 billion in cash and investments, while the parent company had cash and investments of $46.9 million. At the end of 2012, Molina’s total assets increased to $1.93 billion from $1.65 billion at 2011 end, while shareholders’ equity improved to $782.3 million from $755.1 million as of Dec 31, 2012.

During the reported quarter, cash flow from operations increased to $80.3 million from $70.2 million in the prior-year quarter. In 2012, Molina generated operating cash flows of $344.3 million, increasing from $225.4 million in 2011.

Outlook for 2013

Molina expects operating earnings per share of $1.55 in 2013.

Results at Other HMOs

Another health maintenance organization (HMO), WellPoint Inc. (WLP - Analyst Report) reported fourth-quarter 2012 adjusted income of $1.03 per share, beating the Zacks Consensus Estimate of 95 cents. Adjusted income also surpassed the year-ago earnings of 99 cents per share by 4%.

UnitedHealth Group Inc. (UNH - Analyst Report) reported fourth-quarter 2012 earnings of $1.20 per share, in line with the Zacks Consensus Estimate. Earnings, however, increased 2.6% on a year-over-year basis.

Coventry Health Care Inc. reported fourth-quarter 2012 operating earnings per share of 88 cents, which surpassed the Zacks Consensus Estimate of 67 cents as well as the prior-year earnings of 60 cents. Coventry reported net income of $119.3 million compared with $85.7 million in the prior-year quarter.

Zacks Rank

Molina currently carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%