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Molina Healthcare's (MOH) Q3 Earnings Beat Estimates, Up Y/Y

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Molina Healthcare, Inc.’s (MOH - Free Report) third-quarter 2018 adjusted earnings of $2.90 per share surpassed the Zacks Consensus Estimate by a whopping 75.8%. This upside was driven by the execution of margin recovery along with sustainability plan and an effective performance management. The bottom line also reversed its year-ago period’s loss of $1.70.

Molina Healthcare, Inc Price, Consensus and EPS Surprise

Molina Healthcare, Inc Price, Consensus and EPS Surprise | Molina Healthcare, Inc Quote

For the quarter under review, total revenues came in at $4.6 billion, in line with the Zacks Consensus Estimate. However, the top line declined 6.6% year over year, mainly due to lower premium revenues.

Quarterly Operational Update

Total operating expenses declined about 13.2% year over year to $4.4 billion. This improvement was attributable to lower medical care cost, general and administrative expenses, restructuring and separation costs.

For the third quarter, medical care cost was lowered 10.2% year over year to $3.8 billion.

Molina Healthcare’s interest expenses were down 19% year over year to $26 million.

In the quarter under review, the company sold its Medicaid management information systems (MMIS) business to DXC Technology Company for $233 million.

Financial Update

As of Sep 30, 2018, Molina Healthcare’s cash and cash equivalents saw a reduction of 11.7% from the level at year-end 2017 to $2.8 billion.

Total assets fell 5% to $8.1 billion from the tally at 2017 end.

The company’s shareholder equity improved nearly 17% from the figure at year-end 2017 to $1.5 billion.

For the third quarter, net cash outflow for operating activities stood at $505 million against net cash inflow of $285 million for the same time frame in 2017.

Guidance Revised

Adjusted net income per share is expected in the band of $8.80-$9 (up from the prior guidance of $7.15-$7.35).

The company has reiterated its total revenue expectation of $18.8 billion in 2018.

Medical Care Costs are now predicted at $15.1 billion, lower than the earlier projection of $15.2 billion.

The company still envisions to incur general and administrative expenses of $1.4 billion in 2018 (in line with the preliminary estimate).

Net income is anticipated within $585-$600 million (up from the past forecast of $471-$484 million).

The company’s EBITDA is estimated between $1,105 million and $1,125 million (up from the prior outlook of $968-$985 million).

Zacks Rank

Molina Healthcare sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Releases From the Medical Sector

UnitedHealth Group Incorporated’s (UNH - Free Report) third-quarter bottom line beat estimates on the back of higher revenues.

Centene Inc.’s (CNC - Free Report) third-quarter earnings surpassed estimates, majorly driven by the company’s execution of its growth strategy and solid operating metrics.

Community Health Systems, Inc.’s (CYH - Free Report) loss wider than estimated is due to lower admissions in the reported quarter.

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