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Molina (MOH) Down 5.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Molina (MOH - Free Report) . Shares have lost about 5.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Molina due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Molina Healthcare Q1 Earnings Beat on Higher Premiums

Molina Healthcare reported first-quarter 2022 adjusted earnings of $4.90 per share, beating the Zacks Consensus Estimate of $4.74. Also, the bottom line increased from the year-ago earnings of $4.44 per share.

Total revenues of $7,770 million beat the consensus mark of $7,538 million. The top line also surged from the year-ago level of $6,522 million.
The strong first-quarter results were supported by increased membership and significant growth in premiums.

Operational Update

Premium revenues for the company increased to $7,531 million from $6,306 million a year ago on the back of positive impacts from acquisitions and organic membership growth in the Medicaid and Medicare lines of business.

Total operating expenses shot up to $7,398 million for the first quarter from $6,187 million a year ago, primarily due to higher medical care costs, general and administrative expenses as well as premium tax expenses. Molina Healthcare’s interest expenses declined 6.7% year over year to $28 million.

The company’s net income totaled $258 million, up from $228 million a year ago.

The medical care ratio (medical costs as a percentage of premium revenues) for the first quarter was 87.1%, up from 86.8% in the year-ago period due to the net effect of COVID.

Total membership at first quarter-end increased 10% year over year to 5.1 million, reflecting improving business.

Financial Update (as of Mar 31, 2022)

Molina Healthcare’s cash and cash equivalents rose to $4,804 million at first quarter-end from $4,438 million at fourth quarter-end. Total assets rose to $12,360 million from $12,209 million at December quarter-end.

Long-term debt at first quarter-end was $2,174 million, up sequentially from $2,173 million.

The company’s shareholder equity improved to $2,794 million from $2,630 million in the fourth quarter.

Net cash flow provided by operating activities was $363 million for the first quarter, up from $568 million a year ago due to timing differences in government receivables and payables. It was partially offset by higher net earnings.

Guidance

Molina Healthcare expects its 2022 business to witness reduced impacts from COVID. Strong Medicare and Medicaid performance will buoy results. Premium revenues for 2022 are now projected to be $29.25 billion, up from the previous projection of $28.5 billion, indicating a rise from the 2021 level of $26.9 billion. The Public Health Emergency has been extended from April to July, which positively impacted the guidance.

It expects net income for 2022 at $911 million. Adjusted earnings per share for 2022 are now expected to be higher than $17.10, improving from the previous guidance of more than $17, implying growth from $13.54 witnessed in 2021.

Prior Projections

Total revenues for 2022 are anticipated to be $29.5 billion, suggesting an increase from $27.8 billion in 2021. Total membership at 2022-end is anticipated at 4.5 million, pointing to a decline from the 2021 level of 5.2 million. Medical care ratio for 2022 is expected at 88%, calling for a decrease from 88.3% in 2021.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Molina has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Molina has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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