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Will High Medical Costs Hurt Molina Healthcare's (MOH) Q2 Earnings?
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Molina Healthcare, Inc. (MOH - Free Report) is scheduled to release second-quarter 2023 results on Jul 26 after market close.
Q2 Estimates
The Zacks Consensus Estimate for Molina Healthcare’s second-quarter earnings per share is pegged at $5.05, implying 11% growth from the prior-year quarter’s reported figure.
The consensus mark for revenues stands at $8,284 million, which indicates 2.9% growth from the year-ago quarter’s reported number.
Earnings Surprise History
Molina Healthcare boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 5.42%. This is depicted in the chart below:
Premiums of Molina Healthcare are likely to have benefited on the back of an expanding customer base within its Medicaid and Medicare businesses in the second quarter. Being the most significant contributor to a health insurer’s top line, higher premiums are expected to have driven revenue growth in the to-be-reported quarter.
We expect premiums from MOH’s Medicaid business to be $6,455.2 million, suggesting 2.4% growth from the prior-year quarter’s reported figure. Our estimate for the Medicare unit’s premiums stands at $1,056.3 million, which indicates a rise of 10.4% from the year-ago quarter’s reported number.
The Medicaid and Medicare customer base of Molina Healthcare is expected to have received an impetus from several contract wins from federal and state authorities, renewal of agreements and acquisitions. An aging U.S. population is likely to have boosted Medicare membership growth of MOH in the second quarter.
We expect membership growth within its Medicaid and Medicare business lines to register year-over-year improvements of 0.4% and 13.8%, respectively, from their corresponding year-ago quarters’ reported numbers.
However, a declining membership base is likely to have inflicted an adverse impact on the premiums of Molina Healthcare’s Marketplace business in the to-be-reported quarter. Our estimate for Marketplace business’ premiums stands at $533.2 million, which hints toward a decline of 1.4% year over year.
An increase in investment income, attributable to improved interest rates, is also expected to have aided the top-line growth. We expect investment income at $59 million in the second quarter, which indicates a nearly three-fold increase year over year.
An elevated medical care ratio (MCR) level is likely to have partly offset premium growth of Molina Healthcare in the to-be-reported quarter. A rising MCR implies lower leftover premiums consequent to payment of insurance claims. MOH’s MCR is expected to have suffered a blow due to escalating medical costs resulting from deeper venturing into high acuity low-income consumer segment by the Medicare business and a shift in Medicaid member acuity. Our estimate for total medical costs stands at $7,063.6 million, up 2.8% year over year.
Its margins are likely to have taken a hit from increased general and administrative costs as well as other operating expenses in the second quarter. Our estimate for general and administrative expenses indicates 4.7% year-over-year growth, while the same for other operating expenses implies a 43% increase.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Molina Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Molina Healthcare has an Earnings ESP of -3.36% because the Most Accurate Estimate of $4.88 is pegged lower than the Zacks Consensus Estimate of $5.05. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MOH currently carries a Zacks Rank of 3.
Stocks to Consider
While an earnings beat looks uncertain for Molina Healthcare, here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for JAZZ’s second-quarter 2023 earnings is pegged at $4.48 per share, indicating a rise of 4.2% from the prior-year quarter’s reported figure.
The consensus mark for Jazz Pharmaceuticals’ second-quarter earnings has moved 0.2% north in the past 30 days.
Humana Inc. (HUM - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for HUM’s second-quarter 2023 earnings is pegged at $8.88 per share, suggesting 2.4% growth from the year-ago quarter’s reported figure.
Humana’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 8.87%.
Addus HomeCare Corporation (ADUS - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for ADUS’s second-quarter 2023 earnings is pegged at 99 cents per share, indicating an 8.8% increase from the prior-year quarter’s reported figure.
Addus HomeCare’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6.10%.
Image: Bigstock
Will High Medical Costs Hurt Molina Healthcare's (MOH) Q2 Earnings?
Molina Healthcare, Inc. (MOH - Free Report) is scheduled to release second-quarter 2023 results on Jul 26 after market close.
Q2 Estimates
The Zacks Consensus Estimate for Molina Healthcare’s second-quarter earnings per share is pegged at $5.05, implying 11% growth from the prior-year quarter’s reported figure.
The consensus mark for revenues stands at $8,284 million, which indicates 2.9% growth from the year-ago quarter’s reported number.
Earnings Surprise History
Molina Healthcare boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 5.42%. This is depicted in the chart below:
Molina Healthcare, Inc. Price and EPS Surprise
Molina Healthcare, Inc. price-eps-surprise | Molina Healthcare, Inc. Quote
Factors to Note
Premiums of Molina Healthcare are likely to have benefited on the back of an expanding customer base within its Medicaid and Medicare businesses in the second quarter. Being the most significant contributor to a health insurer’s top line, higher premiums are expected to have driven revenue growth in the to-be-reported quarter.
We expect premiums from MOH’s Medicaid business to be $6,455.2 million, suggesting 2.4% growth from the prior-year quarter’s reported figure. Our estimate for the Medicare unit’s premiums stands at $1,056.3 million, which indicates a rise of 10.4% from the year-ago quarter’s reported number.
The Medicaid and Medicare customer base of Molina Healthcare is expected to have received an impetus from several contract wins from federal and state authorities, renewal of agreements and acquisitions. An aging U.S. population is likely to have boosted Medicare membership growth of MOH in the second quarter.
We expect membership growth within its Medicaid and Medicare business lines to register year-over-year improvements of 0.4% and 13.8%, respectively, from their corresponding year-ago quarters’ reported numbers.
However, a declining membership base is likely to have inflicted an adverse impact on the premiums of Molina Healthcare’s Marketplace business in the to-be-reported quarter. Our estimate for Marketplace business’ premiums stands at $533.2 million, which hints toward a decline of 1.4% year over year.
An increase in investment income, attributable to improved interest rates, is also expected to have aided the top-line growth. We expect investment income at $59 million in the second quarter, which indicates a nearly three-fold increase year over year.
An elevated medical care ratio (MCR) level is likely to have partly offset premium growth of Molina Healthcare in the to-be-reported quarter. A rising MCR implies lower leftover premiums consequent to payment of insurance claims. MOH’s MCR is expected to have suffered a blow due to escalating medical costs resulting from deeper venturing into high acuity low-income consumer segment by the Medicare business and a shift in Medicaid member acuity. Our estimate for total medical costs stands at $7,063.6 million, up 2.8% year over year.
Its margins are likely to have taken a hit from increased general and administrative costs as well as other operating expenses in the second quarter. Our estimate for general and administrative expenses indicates 4.7% year-over-year growth, while the same for other operating expenses implies a 43% increase.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Molina Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Molina Healthcare has an Earnings ESP of -3.36% because the Most Accurate Estimate of $4.88 is pegged lower than the Zacks Consensus Estimate of $5.05. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MOH currently carries a Zacks Rank of 3.
Stocks to Consider
While an earnings beat looks uncertain for Molina Healthcare, here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for JAZZ’s second-quarter 2023 earnings is pegged at $4.48 per share, indicating a rise of 4.2% from the prior-year quarter’s reported figure.
The consensus mark for Jazz Pharmaceuticals’ second-quarter earnings has moved 0.2% north in the past 30 days.
Humana Inc. (HUM - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for HUM’s second-quarter 2023 earnings is pegged at $8.88 per share, suggesting 2.4% growth from the year-ago quarter’s reported figure.
Humana’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 8.87%.
Addus HomeCare Corporation (ADUS - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for ADUS’s second-quarter 2023 earnings is pegged at 99 cents per share, indicating an 8.8% increase from the prior-year quarter’s reported figure.
Addus HomeCare’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6.10%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.