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Molina Healthcare Q3 Earnings Beat Estimates on Growing Premiums
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Molina Healthcare, Inc. (MOH - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of $6.01, which beat the Zacks Consensus Estimate of $5.96. Also, the bottom line grew 19% from the year-ago period.
Total revenues amounted to $10.3 billion, which improved 20.9% year over year. Also, the top line outpaced the consensus mark by 3.8%.
The strong third-quarter 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. However, the upside was partly offset by escalating medical care costs.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Molina Healthcare, Inc Price, Consensus and EPS Surprise
Premium revenues of $9.7 billion increased 18% year over year in the quarter under review, higher than the Zacks Consensus Estimate of $9.6 billion and our estimate of $9.5 billion. The improvement stemmed from contract wins, buyouts and an expanding nationwide footprint, partly offset by Medicaid redeterminations.
As of Sept. 30, 2024, total membership improved 8% year over year to around 5.6 million, which missed the Zacks Consensus Estimate and our model estimate. The health insurer witnessed year-over-year increases in customers within its Medicaid, Medicare and Marketplace businesses.
Investment income rose 5.4% year over year to $118 million and beat the consensus mark of $117.1 million.
Total operating expenses of $9.9 billion increased 20.6% year over year and were higher than our model estimate of $9.4 billion 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 decreased to 6.4% in the third quarter from 7.1% a year ago. Interest expenses of $29 million rose 7.4% year over year.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 89.2% in the quarter under review. The metric rose from 88.7% a year ago and came higher than the consensus mark of 88.4%. Also, the figure was higher than our estimate of 88%.
Molina Healthcare’s adjusted net income increased 18% year over year to $347 million but missed our estimate of $349.3 million.
Financial Update (as of Sept. 30, 2024)
Molina Healthcare exited the third quarter with cash and cash equivalents of $4.7 billion, which declined from the 2023-end level of $4.8 billion. Total assets of $15.8 billion rose from the $14.9 billion figure at 2023-end.
Long-term debt of $2.3 billion rose from $2.2 billion at 2023-end.
Total stockholders’ equity of $4.8 billion increased from the $4.2 billion figure at 2023-end.
Net cash provided by operating activities amounted to $868 million in the first nine months of the year compared with $2.4 billion in the same year-ago period. The significant decline was due to differences in timing in government receivables and payables.
2024 Guidance Reiterated
Management continues to expect premium revenues at around $38 billion, which indicates an improvement of around 17% from the 2023 reported figure. Adjusted EPS is forecasted at a minimum of $23.50 this year, which implies a rise of roughly 13% from the 2023 figure. Increased net investment income and robust performance in the Marketplace business are expected to offset headwinds witnessed in Medicaid and Medicare in the second half of 2024.
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 by 2024-end, which indicates growth of 14.7% from the 2023 figure. Consolidated MCR is likely to stay at 88.2%.
Of the Medical sector players that have reported third-quarter results so far, the bottom lines of UnitedHealth Group Incorporated (UNH - Free Report) and Abbott Laboratories (ABT - Free Report) beat the Zacks Consensus Estimate.
UnitedHealth Group reported third-quarter 2024 adjusted earnings per share (EPS) of $7.15, which surpassed the Zacks Consensus Estimate by 1.9%. The bottom line increased 9% year over year.
Revenues rose 9.1% year over year to $100.8 billion, attributable to a higher number of people served through the UnitedHealthcare and Optum businesses. The top line beat the consensus mark by 1.3%.
Abbott Laboratories reported third-quarter 2024 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 0.8%. The figure also improved 6.1% from the prior-year quarter’s level.
Worldwide sales of $10.64 billion were up 4.9% year over year on a reported basis. The top line beat the Zacks Consensus Estimate by 0.7%.
Upcoming Release
Here is a company fromthe Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Encompass Health Corporation (EHC - Free Report) currently has an Earnings ESP of +0.13% and a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for EHC’s third-quarter 2024 earnings is 94 cents per share, implying 9.3% growth from the year-ago quarter’s figure.
Encompass Health’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.12%.
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Molina Healthcare Q3 Earnings Beat Estimates on Growing Premiums
Molina Healthcare, Inc. (MOH - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of $6.01, which beat the Zacks Consensus Estimate of $5.96. Also, the bottom line grew 19% from the year-ago period.
Total revenues amounted to $10.3 billion, which improved 20.9% year over year. Also, the top line outpaced the consensus mark by 3.8%.
The strong third-quarter 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. However, the upside was partly offset by escalating medical care costs.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Molina Healthcare, Inc Price, Consensus and EPS Surprise
Molina Healthcare, Inc price-consensus-eps-surprise-chart | Molina Healthcare, Inc Quote
Q3 Operational Update
Premium revenues of $9.7 billion increased 18% year over year in the quarter under review, higher than the Zacks Consensus Estimate of $9.6 billion and our estimate of $9.5 billion. The improvement stemmed from contract wins, buyouts and an expanding nationwide footprint, partly offset by Medicaid redeterminations.
As of Sept. 30, 2024, total membership improved 8% year over year to around 5.6 million, which missed the Zacks Consensus Estimate and our model estimate. The health insurer witnessed year-over-year increases in customers within its Medicaid, Medicare and Marketplace businesses.
Investment income rose 5.4% year over year to $118 million and beat the consensus mark of $117.1 million.
Total operating expenses of $9.9 billion increased 20.6% year over year and were higher than our model estimate of $9.4 billion 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 decreased to 6.4% in the third quarter from 7.1% a year ago. Interest expenses of $29 million rose 7.4% year over year.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 89.2% in the quarter under review. The metric rose from 88.7% a year ago and came higher than the consensus mark of 88.4%. Also, the figure was higher than our estimate of 88%.
Molina Healthcare’s adjusted net income increased 18% year over year to $347 million but missed our estimate of $349.3 million.
Financial Update (as of Sept. 30, 2024)
Molina Healthcare exited the third quarter with cash and cash equivalents of $4.7 billion, which declined from the 2023-end level of $4.8 billion. Total assets of $15.8 billion rose from the $14.9 billion figure at 2023-end.
Long-term debt of $2.3 billion rose from $2.2 billion at 2023-end.
Total stockholders’ equity of $4.8 billion increased from the $4.2 billion figure at 2023-end.
Net cash provided by operating activities amounted to $868 million in the first nine months of the year compared with $2.4 billion in the same year-ago period. The significant decline was due to differences in timing in government receivables and payables.
2024 Guidance Reiterated
Management continues to expect premium revenues at around $38 billion, which indicates an improvement of around 17% from the 2023 reported figure. Adjusted EPS is forecasted at a minimum of $23.50 this year, which implies a rise of roughly 13% from the 2023 figure. Increased net investment income and robust performance in the Marketplace business are expected to offset headwinds witnessed in Medicaid and Medicare in the second half of 2024.
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 by 2024-end, which indicates growth of 14.7% from the 2023 figure. Consolidated MCR is likely to stay at 88.2%.
Zacks Rank
Molina Healthcare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported third-quarter results so far, the bottom lines of UnitedHealth Group Incorporated (UNH - Free Report) and Abbott Laboratories (ABT - Free Report) beat the Zacks Consensus Estimate.
UnitedHealth Group reported third-quarter 2024 adjusted earnings per share (EPS) of $7.15, which surpassed the Zacks Consensus Estimate by 1.9%. The bottom line increased 9% year over year.
Revenues rose 9.1% year over year to $100.8 billion, attributable to a higher number of people served through the UnitedHealthcare and Optum businesses. The top line beat the consensus mark by 1.3%.
Abbott Laboratories reported third-quarter 2024 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 0.8%. The figure also improved 6.1% from the prior-year quarter’s level.
Worldwide sales of $10.64 billion were up 4.9% year over year on a reported basis. The top line beat the Zacks Consensus Estimate by 0.7%.
Upcoming Release
Here is a company fromthe Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Encompass Health Corporation (EHC - Free Report) currently has an Earnings ESP of +0.13% and a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for EHC’s third-quarter 2024 earnings is 94 cents per share, implying 9.3% growth from the year-ago quarter’s figure.
Encompass Health’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.12%.