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Will a Fall in Medicaid Customers Hurt Molina's (MOH) Q4 Earnings?
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Molina Healthcare, Inc. (MOH - Free Report) is scheduled to release fourth-quarter 2023 results on Feb 7, 2024, after market close.
Q4 Estimates
The Zacks Consensus Estimate for Molina Healthcare’s fourth-quarter earnings per share is pegged at $4.31, which indicates an improvement of 5.1% from the year-ago quarter’s reported figure.
The consensus mark for revenues is $8.3 billion, suggesting 1% 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 7.46%. This is depicted in the chart below:
In the fourth quarter, the top line is likely to have benefited on the back of an increase in premium revenues, attributable to a growing customer base in the Medicare business line. An aging U.S. population is likely to have sustained the solid demand for MOH’s Medicare plans.
The Zacks Consensus Estimate for Medicare premiums is pegged at $1 billion, which indicates an improvement of 10.1% from the year-ago quarter’s reported figure. We expect it to grow 11.9% year over year in the to-be-reported quarter.
New contract wins, renewal of agreements and acquisitions are likely to have driven membership growth in MOH’s Medicare business. The consensus mark for Medicare membership suggests 12.2% year-over-year growth, which matches our estimate.
Though contract wins are also likely to have provided some respite to Molina Healthcare’s Medicaid business, disenrollment of members from Medicaid during the redetermination process is expected to have led to a decline in the customer base of the relevant business. The Zacks Consensus Estimate for Medicaid membership implies a 1.5% decline from the year-ago quarter’s reported figure, while our estimate projects the metric to witness a 1% year-over-year fall.
A reduction in customers within the Marketplace business is expected to have acted as a drag on MOH’s overall results in the fourth quarter. The consensus mark for Marketplace premiums is pegged at $463 million, which indicates a 15.5% drop from the year-ago quarter’s reported figure. We estimate Marketplace membership to plunge 33.8% year over year.
Improved interest rates are likely to have aided investment income in the to-be-reported quarter. The Zacks Consensus Estimate for investment income is $116 million, which implies a 90.2% surge year over year.
Despite continued medical and operating cost management efforts, medical care costs are likely to have witnessed an uptick in the Medicare business line due to the higher utilization of outpatient professional and in-home services. This, in turn, are expected to have inflicted adversities to the overall medical care ratio ("MCR") of Molina Healthcare in the fourth quarter.
An uptick in MCR signals lower leftover premiums consequent to the payment of insurance claims. The consensus mark for overall MCR is pegged at 89%, which indicates a deterioration of 100 bps year over year.
An increase in total operating expenses is expected to have strained MOH’s margins in the to-be-reported quarter. We estimate medical care costs to increase 1.1% year over year.
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 -0.84% because the Most Accurate Estimate of $4.27 is pegged lower than the Zacks Consensus Estimate of $4.31. 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 AMLX’s fourth-quarter 2023 earnings is pegged at 20 cents per share. A loss of 65 cents per share was reported in the prior-year quarter.
Amylyx Pharmaceuticals’ bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 773.61%.
Surgery Partners, Inc. (SGRY - Free Report) has an Earnings ESP of +7.38% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for SGRY’s fourth-quarter 2023 earnings is pegged at 37 cents per share, suggesting 37% growth from the year-ago quarter’s reported figure.
Surgery Partners’ bottom line beat estimates in each of the trailing four quarters, the average surprise being 316.07%.
DexCom, Inc. (DXCM - Free Report) currently has an Earnings ESP of +5.22% and a Zacks Rank of 3. The Zacks Consensus Estimate for DXCM’s fourth-quarter 2023 earnings is pegged at 43 cents per share, indicating an 26.5% increase from the prior-year quarter’s reported figure.
DexCom’s earnings beat estimates in each of the trailing four quarters, the average surprise being 36.43%.
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Will a Fall in Medicaid Customers Hurt Molina's (MOH) Q4 Earnings?
Molina Healthcare, Inc. (MOH - Free Report) is scheduled to release fourth-quarter 2023 results on Feb 7, 2024, after market close.
Q4 Estimates
The Zacks Consensus Estimate for Molina Healthcare’s fourth-quarter earnings per share is pegged at $4.31, which indicates an improvement of 5.1% from the year-ago quarter’s reported figure.
The consensus mark for revenues is $8.3 billion, suggesting 1% 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 7.46%. 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
In the fourth quarter, the top line is likely to have benefited on the back of an increase in premium revenues, attributable to a growing customer base in the Medicare business line. An aging U.S. population is likely to have sustained the solid demand for MOH’s Medicare plans.
The Zacks Consensus Estimate for Medicare premiums is pegged at $1 billion, which indicates an improvement of 10.1% from the year-ago quarter’s reported figure. We expect it to grow 11.9% year over year in the to-be-reported quarter.
New contract wins, renewal of agreements and acquisitions are likely to have driven membership growth in MOH’s Medicare business. The consensus mark for Medicare membership suggests 12.2% year-over-year growth, which matches our estimate.
Though contract wins are also likely to have provided some respite to Molina Healthcare’s Medicaid business, disenrollment of members from Medicaid during the redetermination process is expected to have led to a decline in the customer base of the relevant business. The Zacks Consensus Estimate for Medicaid membership implies a 1.5% decline from the year-ago quarter’s reported figure, while our estimate projects the metric to witness a 1% year-over-year fall.
A reduction in customers within the Marketplace business is expected to have acted as a drag on MOH’s overall results in the fourth quarter. The consensus mark for Marketplace premiums is pegged at $463 million, which indicates a 15.5% drop from the year-ago quarter’s reported figure. We estimate Marketplace membership to plunge 33.8% year over year.
Improved interest rates are likely to have aided investment income in the to-be-reported quarter. The Zacks Consensus Estimate for investment income is $116 million, which implies a 90.2% surge year over year.
Despite continued medical and operating cost management efforts, medical care costs are likely to have witnessed an uptick in the Medicare business line due to the higher utilization of outpatient professional and in-home services. This, in turn, are expected to have inflicted adversities to the overall medical care ratio ("MCR") of Molina Healthcare in the fourth quarter.
An uptick in MCR signals lower leftover premiums consequent to the payment of insurance claims. The consensus mark for overall MCR is pegged at 89%, which indicates a deterioration of 100 bps year over year.
An increase in total operating expenses is expected to have strained MOH’s margins in the to-be-reported quarter. We estimate medical care costs to increase 1.1% year over year.
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 -0.84% because the Most Accurate Estimate of $4.27 is pegged lower than the Zacks Consensus Estimate of $4.31. 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:
Amylyx Pharmaceuticals, Inc. (AMLX - Free Report) currently has an Earnings ESP of +29.13% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AMLX’s fourth-quarter 2023 earnings is pegged at 20 cents per share. A loss of 65 cents per share was reported in the prior-year quarter.
Amylyx Pharmaceuticals’ bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 773.61%.
Surgery Partners, Inc. (SGRY - Free Report) has an Earnings ESP of +7.38% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for SGRY’s fourth-quarter 2023 earnings is pegged at 37 cents per share, suggesting 37% growth from the year-ago quarter’s reported figure.
Surgery Partners’ bottom line beat estimates in each of the trailing four quarters, the average surprise being 316.07%.
DexCom, Inc. (DXCM - Free Report) currently has an Earnings ESP of +5.22% and a Zacks Rank of 3. The Zacks Consensus Estimate for DXCM’s fourth-quarter 2023 earnings is pegged at 43 cents per share, indicating an 26.5% increase from the prior-year quarter’s reported figure.
DexCom’s earnings beat estimates in each of the trailing four quarters, the average surprise being 36.43%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.