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Molina (MOH) Up 2.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Molina (MOH - Free Report) . Shares have added about 2.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Molina due for a pullback? 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 Q4 Earnings Beat on Premium Growth
Molina Healthcare reported fourth-quarter 2023 adjusted earnings per share (EPS) of $4.38, which outpaced the Zacks Consensus Estimate by 1.6%. The bottom line advanced 6.8% year over year.
Total revenues rose 10% year over year to $9 billion in the quarter under review. Also, the top line surpassed the consensus mark by 9%.
The strong quarterly results benefited on the back of improved premiums, contract wins, and Medicare membership growth. However, the upside was partly offset by a decline in Medicaid and Marketplace membership and an elevated operating expense level.
Quarterly Operational Update
Molina Healthcare’s premium revenues amounted to $8.4 billion, which grew 5.6% year over year in the fourth quarter and beat the Zacks Consensus Estimate of $8 billion as well as our estimate of $7.9 billion. Premium growth stemmed from the favorable impact of new RFP wins and acquisitions. Medicaid redeterminations partially offset the positives. Investment income of $114 million rose nearly one-fold year over year but missed the consensus mark of $116 million.
Total operating expenses escalated 7.6% year over year to $8.7 billion, higher than our estimate of $7.9 billion. The growth was due to increased medical care costs, higher general and administrative expenses and premium tax expenses.
Adjusted general and administrative expense ratio of 7% improved 50 bps year over year in the quarter under review due to continued execution of cost discipline. Interest expenses remained flat year over year at $27 million and fell short of our estimate of $28.7 million.
Molina Healthcare reported an adjusted net income of $255 million, which advanced 6.3% year over year in the fourth quarter and outpaced our estimate of $248.2 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, deteriorated 80 bps year over year to 89.1% and matched our estimate.
Total membership was around 5 million as of Dec 31, 2023, which declined 5% year over year and missed our estimate of 5.1 million. A declining customer base in Medicaid and Marketplace businesses affected Molina Healthcare’s overall membership growth.
Financial Update (as of Dec 31, 2023)
Molina Healthcare exited the fourth quarter with cash and cash equivalents of $4.8 billion, which increased from $4 billion at 2022-end. Total assets of $14.9 billion increased from $12.3 billion at 2022-end.
Long-term debt amounted to $2.18 billion, up from $2.17 billion at 2022-end. Total stockholders’ equity of $4.2 billion climbed from $3 billion at 2022-end.
Molina Healthcare generated net cash from operations of $1.7 billion in 2023, which rose more than one-fold year over year. The significant growth came on the back of the net impact of the difference in timings of government receivables and payables coupled with expanding operations and earnings from organic and acquisitions.
Full-Year Update
Molina Healthcare’s total revenues of $34.1 billion rose 6.6% year over year and beat our estimate of $33.3 billion.
Total operating expenses rose 5.5% year over year in 2023 to $32.5 billion and surpassed our estimate of $31.7 billion.
The company’s 2023 adjusted net income of $20.88 per share rose 16.5% year over year and beat our estimate of $20.78 per share.
2024 Guidance
Molina Healthcare expects premium revenues to be $38 billion, which implies an approximate 16.9% rise from the 2023 reported figure.
Total revenues are anticipated to be $39.6 billion in 2024, which suggests 16.1% growth from the 2023 figure.
Molina Healthcare expects adjusted EPS to be at a minimum of $23.5 in 2024, which represents a year-over-year improvement of 12.5%.
Adjusted net income is projected to be $1.4 billion for 2024, 12.6% higher than the 2023 figure. GAAP net income is projected to be $1.3 billion, 17.1% higher than the 2023 figure.
Total membership for 2024-end is estimated to be 5.7 million, 14% higher than the 2023-end figure of 5 million.
Consolidated MCR is expected to stay at 88.2%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.85% due to these changes.
VGM Scores
At this time, Molina has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 indicates a downward shift. Notably, Molina has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Molina belongs to the Zacks Medical - HMOs industry. Another stock from the same industry, Cigna (CI - Free Report) , has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Cigna reported revenues of $51.15 billion in the last reported quarter, representing a year-over-year change of +11.8%. EPS of $6.79 for the same period compares with $4.96 a year ago.
Cigna is expected to post earnings of $6.16 per share for the current quarter, representing a year-over-year change of +13.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.
Cigna has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Molina (MOH) Up 2.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Molina (MOH - Free Report) . Shares have added about 2.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Molina due for a pullback? 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 Q4 Earnings Beat on Premium Growth
Molina Healthcare reported fourth-quarter 2023 adjusted earnings per share (EPS) of $4.38, which outpaced the Zacks Consensus Estimate by 1.6%. The bottom line advanced 6.8% year over year.
Total revenues rose 10% year over year to $9 billion in the quarter under review. Also, the top line surpassed the consensus mark by 9%.
The strong quarterly results benefited on the back of improved premiums, contract wins, and Medicare membership growth. However, the upside was partly offset by a decline in Medicaid and Marketplace membership and an elevated operating expense level.
Quarterly Operational Update
Molina Healthcare’s premium revenues amounted to $8.4 billion, which grew 5.6% year over year in the fourth quarter and beat the Zacks Consensus Estimate of $8 billion as well as our estimate of $7.9 billion. Premium growth stemmed from the favorable impact of new RFP wins and acquisitions. Medicaid redeterminations partially offset the positives. Investment income of $114 million rose nearly one-fold year over year but missed the consensus mark of $116 million.
Total operating expenses escalated 7.6% year over year to $8.7 billion, higher than our estimate of $7.9 billion. The growth was due to increased medical care costs, higher general and administrative expenses and premium tax expenses.
Adjusted general and administrative expense ratio of 7% improved 50 bps year over year in the quarter under review due to continued execution of cost discipline. Interest expenses remained flat year over year at $27 million and fell short of our estimate of $28.7 million.
Molina Healthcare reported an adjusted net income of $255 million, which advanced 6.3% year over year in the fourth quarter and outpaced our estimate of $248.2 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, deteriorated 80 bps year over year to 89.1% and matched our estimate.
Total membership was around 5 million as of Dec 31, 2023, which declined 5% year over year and missed our estimate of 5.1 million. A declining customer base in Medicaid and Marketplace businesses affected Molina Healthcare’s overall membership growth.
Financial Update (as of Dec 31, 2023)
Molina Healthcare exited the fourth quarter with cash and cash equivalents of $4.8 billion, which increased from $4 billion at 2022-end. Total assets of $14.9 billion increased from $12.3 billion at 2022-end.
Long-term debt amounted to $2.18 billion, up from $2.17 billion at 2022-end. Total stockholders’ equity of $4.2 billion climbed from $3 billion at 2022-end.
Molina Healthcare generated net cash from operations of $1.7 billion in 2023, which rose more than one-fold year over year. The significant growth came on the back of the net impact of the difference in timings of government receivables and payables coupled with expanding operations and earnings from organic and acquisitions.
Full-Year Update
Molina Healthcare’s total revenues of $34.1 billion rose 6.6% year over year and beat our estimate of $33.3 billion.
Total operating expenses rose 5.5% year over year in 2023 to $32.5 billion and surpassed our estimate of $31.7 billion.
The company’s 2023 adjusted net income of $20.88 per share rose 16.5% year over year and beat our estimate of $20.78 per share.
2024 Guidance
Molina Healthcare expects premium revenues to be $38 billion, which implies an approximate 16.9% rise from the 2023 reported figure.
Total revenues are anticipated to be $39.6 billion in 2024, which suggests 16.1% growth from the 2023 figure.
Molina Healthcare expects adjusted EPS to be at a minimum of $23.5 in 2024, which represents a year-over-year improvement of 12.5%.
Adjusted net income is projected to be $1.4 billion for 2024, 12.6% higher than the 2023 figure. GAAP net income is projected to be $1.3 billion, 17.1% higher than the 2023 figure.
Total membership for 2024-end is estimated to be 5.7 million, 14% higher than the 2023-end figure of 5 million.
Consolidated MCR is expected to stay at 88.2%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.85% due to these changes.
VGM Scores
At this time, Molina has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 indicates a downward shift. Notably, Molina has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Molina belongs to the Zacks Medical - HMOs industry. Another stock from the same industry, Cigna (CI - Free Report) , has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Cigna reported revenues of $51.15 billion in the last reported quarter, representing a year-over-year change of +11.8%. EPS of $6.79 for the same period compares with $4.96 a year ago.
Cigna is expected to post earnings of $6.16 per share for the current quarter, representing a year-over-year change of +13.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.
Cigna has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.