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Why Is Molina (MOH) Down 3.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Molina (MOH - Free Report) . Shares have lost about 3.2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Molina Healthcare Q1 Earnings Beat on Growing Membership
Molina Healthcare reported first-quarter 2024 adjusted earnings per share (EPS) of $5.73, which beat the Zacks Consensus Estimate by 5%. However, the bottom line dipped 1.4% year over year.
Total revenues amounted to $9.9 billion, which improved 21.9% year over year. Also, the top line outpaced the consensus mark by 4.3%.
The quarterly results were aided by membership growth in each of the business lines of Molina Healthcare. This, in turn, drove premiums, the most significant contributor to a health insurer’s top line. Strong investment income also contributed to the upside. However, the upside was partly offset by escalating medical care costs.
Quarterly Operational Update
Premium revenues of $9.5 billion climbed 21% year over year in the quarter under review, higher than the Zacks Consensus Estimate of $9.2 billion and our estimate of $9 billion. The improvement stemmed from contract wins, buyouts and an expanding nationwide footprint, partly offset by Medicaid redeterminations.
Investment income soared 52.1% year over year to $108 million and beat the consensus mark of $107.3 million as well as our estimate of $96.2 million.
Total operating expenses of $9.5 billion increased 23.5% year over year due to a significant rise in medical care costs coupled with higher general and administrative expenses and premium tax expenses.
Adjusted general and administrative expense ratio deteriorated 10 bps year over year to 7.1% in the first quarter. Interest expenses of $27 million slid 3.6% year over year.
Molina Healthcare’s adjusted net income dipped 0.9% year over year to $334 million but surpassed our estimate of $303.3 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 88.5% in the quarter under review. The metric deteriorated 140 bps year over year but came higher than the consensus mark of 88.3%. However, the figure was lower than our estimate of 88.6%.
As of Mar 31, 2024, total membership advanced 9% year over year to around 5.7 million, which beat the Zacks Consensus Estimate of 5.5 million and our estimate of 5.6 million. The health insurer witnessed year-over-year increases in customers within its Medicaid, Medicare and Marketplace businesses.
Financial Update (as of Mar 31, 2024)
Molina Healthcare exited the first quarter with cash and cash equivalents of $4.5 billion, which declined 6.9% from the 2023-end level. Total assets of $15.5 billion rose 4.2% from the figure at 2023 end.
Long-term debt remained flat at $2.2 billion from the 2023-end level.
Total stockholders’ equity of $4.5 billion advanced 6.6% from the figure at 2023 end.
Net cash provided by operating activities amounted to $214 million in the quarter under review, which plunged 76.6% year over year. The significant decline was due to differences in timing in government receivables and payables.
2024 Guidance Reiterated
Management anticipates premium revenues at around $38 billion, which indicates an improvement of around 17% from the 2023 reported figure.
Total revenues are estimated at $39.6 billion in 2024, suggesting 16.1% growth from the 2023 figure.
Adjusted EPS is forecasted at a minimum of $23.50 this year, which implies a rise of roughly 13% from the 2023 figure.
Adjusted net income is projected to be $1.4 billion while GAAP net income is expected at $1.3 billion for 2024.
Total membership is estimated to be 5.7 million in 2024 end, which indicates growth of 14.7% from the 2023 figure. Consolidated MCR is likely to stay at 88.2%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
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 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Molina has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Molina is part of the Zacks Medical - HMOs industry. Over the past month, UnitedHealth Group (UNH - Free Report) , a stock from the same industry, has gained 4.7%. The company reported its results for the quarter ended March 2024 more than a month ago.
UnitedHealth reported revenues of $99.8 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $6.91 for the same period compares with $6.26 a year ago.
For the current quarter, UnitedHealth is expected to post earnings of $6.76 per share, indicating a change of +10.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for UnitedHealth. Also, the stock has a VGM Score of A.
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Why Is Molina (MOH) Down 3.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Molina (MOH - Free Report) . Shares have lost about 3.2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Molina Healthcare Q1 Earnings Beat on Growing Membership
Molina Healthcare reported first-quarter 2024 adjusted earnings per share (EPS) of $5.73, which beat the Zacks Consensus Estimate by 5%. However, the bottom line dipped 1.4% year over year.
Total revenues amounted to $9.9 billion, which improved 21.9% year over year. Also, the top line outpaced the consensus mark by 4.3%.
The quarterly results were aided by membership growth in each of the business lines of Molina Healthcare. This, in turn, drove premiums, the most significant contributor to a health insurer’s top line. Strong investment income also contributed to the upside. However, the upside was partly offset by escalating medical care costs.
Quarterly Operational Update
Premium revenues of $9.5 billion climbed 21% year over year in the quarter under review, higher than the Zacks Consensus Estimate of $9.2 billion and our estimate of $9 billion. The improvement stemmed from contract wins, buyouts and an expanding nationwide footprint, partly offset by Medicaid redeterminations.
Investment income soared 52.1% year over year to $108 million and beat the consensus mark of $107.3 million as well as our estimate of $96.2 million.
Total operating expenses of $9.5 billion increased 23.5% year over year due to a significant rise in medical care costs coupled with higher general and administrative expenses and premium tax expenses.
Adjusted general and administrative expense ratio deteriorated 10 bps year over year to 7.1% in the first quarter. Interest expenses of $27 million slid 3.6% year over year.
Molina Healthcare’s adjusted net income dipped 0.9% year over year to $334 million but surpassed our estimate of $303.3 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 88.5% in the quarter under review. The metric deteriorated 140 bps year over year but came higher than the consensus mark of 88.3%. However, the figure was lower than our estimate of 88.6%.
As of Mar 31, 2024, total membership advanced 9% year over year to around 5.7 million, which beat the Zacks Consensus Estimate of 5.5 million and our estimate of 5.6 million. The health insurer witnessed year-over-year increases in customers within its Medicaid, Medicare and Marketplace businesses.
Financial Update (as of Mar 31, 2024)
Molina Healthcare exited the first quarter with cash and cash equivalents of $4.5 billion, which declined 6.9% from the 2023-end level. Total assets of $15.5 billion rose 4.2% from the figure at 2023 end.
Long-term debt remained flat at $2.2 billion from the 2023-end level.
Total stockholders’ equity of $4.5 billion advanced 6.6% from the figure at 2023 end.
Net cash provided by operating activities amounted to $214 million in the quarter under review, which plunged 76.6% year over year. The significant decline was due to differences in timing in government receivables and payables.
2024 Guidance Reiterated
Management anticipates premium revenues at around $38 billion, which indicates an improvement of around 17% from the 2023 reported figure.
Total revenues are estimated at $39.6 billion in 2024, suggesting 16.1% growth from the 2023 figure.
Adjusted EPS is forecasted at a minimum of $23.50 this year, which implies a rise of roughly 13% from the 2023 figure.
Adjusted net income is projected to be $1.4 billion while GAAP net income is expected at $1.3 billion for 2024.
Total membership is estimated to be 5.7 million in 2024 end, which indicates growth of 14.7% from the 2023 figure. Consolidated MCR is likely to stay at 88.2%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
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 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Molina has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Molina is part of the Zacks Medical - HMOs industry. Over the past month, UnitedHealth Group (UNH - Free Report) , a stock from the same industry, has gained 4.7%. The company reported its results for the quarter ended March 2024 more than a month ago.
UnitedHealth reported revenues of $99.8 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $6.91 for the same period compares with $6.26 a year ago.
For the current quarter, UnitedHealth is expected to post earnings of $6.76 per share, indicating a change of +10.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for UnitedHealth. Also, the stock has a VGM Score of A.