We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Molina Healthcare (MOH) Down 8.2% Since the Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Molina Healthcare Inc. (MOH - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? 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, Revenues Miss Estimates
Molina Healthcare reported fourth-quarter 2016 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 75 cents by 16%. Earnings also declined 26% year over year. The downside was primarily attributable to continued weak marketplace performance of Affordable Care Act (ACA).
Adjusted net income per diluted share decreased 82% to $0.50 in 2016 from $2.78 in 2015 mainly due to the declining profitability of Molina Healthcare’s Marketplace program.
Operational Update
In the fourth quarter, total revenue of $4.46 billion missed the Zacks Consensus Estimate of $4.5 billion by 1.3%. The same has grown 15.3% year over year primarily driven by a 14.5% increase in premium revenue and 22% increase in service revenues, also supported by a 50% growth in investment income and other revenues.
Backed by strong enrollment growth, the company generated nearly $16.3 billion of premium revenue in 2016, reflecting 23% year-over-year growth over 2015. Increased Marketplace enrollment and the acquisition of Medicaid managed care membership primarily drove the enrollment growth. As a result, full-year total revenue of $17.7 billion inched up 25% year over year.
For the fourth quarter, total operating expenses rose 19.5% year over year to $4.54 billion due to higher Medical care costs, increased cost of service revenues, a rise in general and administrative expenses, higher premium tax expenses, increase in Health Insurance Fee expense, along with a hike in depreciation and amortization costs. The same drivers resulted in total operating expenses of $17.5 million for 2016, up 27% year over year.
For the fourth quarter, Medical care cost increased 20% year over year to $3.8 billion. The same for 2016 increased 27% to $17.5 billion. Lower Marketplace margins led to this deterioration for both the quarter and the year.
Continuously rising debt burden resulted in Molina Healthcare’s interest expenses of $25 million in the fourth quarter that increased 19% year over year. The same for 2016 rose 53% over 2015.
Financial Update
As of Dec 31, 2016, Molina Healthcare’s cash and cash equivalents increased 21.7% from the year-end 2015 level to $2.8 billion. Total assets increased 13.6% to $7.5 billion from $6.6 billion at the end of 2015. Molina Healthcare’s shareholder equity increased 13% from year-end 2015 to $1.6 billion at the end of 2016.
Net cash from operating activities amounted to $673 million at the end of 2016, down 40% year over year. For the fourth quarter, the same amounted $40 million reflecting 81% year over year decline.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five downward revisions for the current quarter. In the past month, the consensus estimate has shifted downward by 29.1% due to these changes.
At this time, Molina Healthcare's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value and momentum investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Molina Healthcare (MOH) Down 8.2% Since the Last Earnings Report?
A month has gone by since the last earnings report for Molina Healthcare Inc. (MOH - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? 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, Revenues Miss Estimates
Molina Healthcare reported fourth-quarter 2016 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 75 cents by 16%. Earnings also declined 26% year over year. The downside was primarily attributable to continued weak marketplace performance of Affordable Care Act (ACA).
Adjusted net income per diluted share decreased 82% to $0.50 in 2016 from $2.78 in 2015 mainly due to the declining profitability of Molina Healthcare’s Marketplace program.
Operational Update
In the fourth quarter, total revenue of $4.46 billion missed the Zacks Consensus Estimate of $4.5 billion by 1.3%. The same has grown 15.3% year over year primarily driven by a 14.5% increase in premium revenue and 22% increase in service revenues, also supported by a 50% growth in investment income and other revenues.
Backed by strong enrollment growth, the company generated nearly $16.3 billion of premium revenue in 2016, reflecting 23% year-over-year growth over 2015. Increased Marketplace enrollment and the acquisition of Medicaid managed care membership primarily drove the enrollment growth. As a result, full-year total revenue of $17.7 billion inched up 25% year over year.
For the fourth quarter, total operating expenses rose 19.5% year over year to $4.54 billion due to higher Medical care costs, increased cost of service revenues, a rise in general and administrative expenses, higher premium tax expenses, increase in Health Insurance Fee expense, along with a hike in depreciation and amortization costs. The same drivers resulted in total operating expenses of $17.5 million for 2016, up 27% year over year.
For the fourth quarter, Medical care cost increased 20% year over year to $3.8 billion. The same for 2016 increased 27% to $17.5 billion. Lower Marketplace margins led to this deterioration for both the quarter and the year.
Continuously rising debt burden resulted in Molina Healthcare’s interest expenses of $25 million in the fourth quarter that increased 19% year over year. The same for 2016 rose 53% over 2015.
Financial Update
As of Dec 31, 2016, Molina Healthcare’s cash and cash equivalents increased 21.7% from the year-end 2015 level to $2.8 billion. Total assets increased 13.6% to $7.5 billion from $6.6 billion at the end of 2015. Molina Healthcare’s shareholder equity increased 13% from year-end 2015 to $1.6 billion at the end of 2016.
Net cash from operating activities amounted to $673 million at the end of 2016, down 40% year over year. For the fourth quarter, the same amounted $40 million reflecting 81% year over year decline.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five downward revisions for the current quarter. In the past month, the consensus estimate has shifted downward by 29.1% due to these changes.
Molina Healthcare Inc Price and Consensus
Molina Healthcare Inc Price and Consensus | Molina Healthcare Inc Quote
VGM Scores
At this time, Molina Healthcare's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value and momentum investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.