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Why Is Molina (MOH) Down 7.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Molina (MOH - Free Report) . Shares have lost about 7.9% 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 drivers.
Molina Healthcare Beats on Q1 Earnings, Ups '23 EPS View
Molina Healthcare reported first-quarter 2023 adjusted earnings per share (EPS) of $5.81, which beat the Zacks Consensus Estimate by 13.3% and our estimate of $5.14. The bottom line improved 18.6% year over year.
Total revenues of $8,149 million improved 4.9% year over year in the quarter under review. However, the top line missed the consensus mark by 1% and our estimate of $8,218.2 million.
It reported strong first-quarter earnings thanks to growing premiums, increased membership and new state contract wins. Yet, the positives were partially offset by an elevated expense level.
Quarterly Operational Update
Premium revenues of Molina Healthcare were $7,885 million, which rose 4.7% year over year, resulting from acquisitions and organic membership growth in its Medicaid and Medicare businesses. The figure fell behind the Zacks Consensus Estimate of $8,000 million and our estimate of $7,956 million.
Total operating expenses of $7,694 million climbed 4% year over year in the first quarter due to higher medical care costs, general and administrative expenses, and depreciation and amortization expenses. Our estimate for the metric was $7,812.6 million.
Interest expenses of $28 million remained flat year over year in the first quarter, lower than our estimate of $29.7 million.
MOH reported a net income of $321 million, which soared 24.4% year over year in the quarter under review.
The consolidated medical care ratio (medical costs as a percentage of premium revenues) or MCR came in at 87.1%, which remained consistent with the prior year’s figure, reflecting strong management of medical costs.
Adjusted general and administrative expense ratio deteriorated 10 bps year over year to 7.2%, reflecting increased business implementation spending in the quarter, ahead of contract wins.
As of Mar 31, total membership increased 4% year over year to roughly 5.3 million members. Strength across the Medicaid and Medicare businesses resulted in the upside partially offset by a weak Marketplace business. The reported figure beat the consensus mark by 2.4% and our estimate of 5 million.
Financial Update (as of Mar 31)
Molina Healthcare exited the first quarter with cash and cash equivalents of $4,554 million, which climbed from $4,006 million at 2022-end. Total assets of $13,371 million improved from $12,314 million at 2022-end.
Long-term debt of $2,177 million inched up from $2,176 million at 2022-end.
Total stockholders’ equity of $3,288 million rose 10.9% from the figure at 2022-end.
During the first quarter of 2023, MOH’s net cash provided by operating activities was $916 million. The figure skyrocketed nearly three-fold year over year due to the difference in timings of government payables and receivables, and also as a result of growth in operations.
2023 Guidance
The company raised the guidance for adjusted EPS, which is estimated to be a minimum of $20.25, implying a rise of around 13% from the 2022 reported figure of $17.92
The company had previously guided premium revenues to be roughly $32 billion, indicating an improvement of 4% from the 2022 reported figure of $30.9 billion.
Molina Healthcare total revenues were estimated to be $33 billion in 2023, suggesting 3.1% growth from the 2022 figure of $32 billion.
GAAP net income was earlier predicted to be $1.1 billion, which indicates a surge of 36% from the 2022 figure of $792 million.
Total membership at 2023-end was estimated at 5.1 million, down 3.8% from the 2022-end figure.
Consolidated MCR was expected at 88%, which remains in line with the 2022 figure.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward 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 D. 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 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.
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Why Is Molina (MOH) Down 7.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Molina (MOH - Free Report) . Shares have lost about 7.9% 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 drivers.
Molina Healthcare Beats on Q1 Earnings, Ups '23 EPS View
Molina Healthcare reported first-quarter 2023 adjusted earnings per share (EPS) of $5.81, which beat the Zacks Consensus Estimate by 13.3% and our estimate of $5.14. The bottom line improved 18.6% year over year.
Total revenues of $8,149 million improved 4.9% year over year in the quarter under review. However, the top line missed the consensus mark by 1% and our estimate of $8,218.2 million.
It reported strong first-quarter earnings thanks to growing premiums, increased membership and new state contract wins. Yet, the positives were partially offset by an elevated expense level.
Quarterly Operational Update
Premium revenues of Molina Healthcare were $7,885 million, which rose 4.7% year over year, resulting from acquisitions and organic membership growth in its Medicaid and Medicare businesses. The figure fell behind the Zacks Consensus Estimate of $8,000 million and our estimate of $7,956 million.
Total operating expenses of $7,694 million climbed 4% year over year in the first quarter due to higher medical care costs, general and administrative expenses, and depreciation and amortization expenses. Our estimate for the metric was $7,812.6 million.
Interest expenses of $28 million remained flat year over year in the first quarter, lower than our estimate of $29.7 million.
MOH reported a net income of $321 million, which soared 24.4% year over year in the quarter under review.
The consolidated medical care ratio (medical costs as a percentage of premium revenues) or MCR came in at 87.1%, which remained consistent with the prior year’s figure, reflecting strong management of medical costs.
Adjusted general and administrative expense ratio deteriorated 10 bps year over year to 7.2%, reflecting increased business implementation spending in the quarter, ahead of contract wins.
As of Mar 31, total membership increased 4% year over year to roughly 5.3 million members. Strength across the Medicaid and Medicare businesses resulted in the upside partially offset by a weak Marketplace business. The reported figure beat the consensus mark by 2.4% and our estimate of 5 million.
Financial Update (as of Mar 31)
Molina Healthcare exited the first quarter with cash and cash equivalents of $4,554 million, which climbed from $4,006 million at 2022-end. Total assets of $13,371 million improved from $12,314 million at 2022-end.
Long-term debt of $2,177 million inched up from $2,176 million at 2022-end.
Total stockholders’ equity of $3,288 million rose 10.9% from the figure at 2022-end.
During the first quarter of 2023, MOH’s net cash provided by operating activities was $916 million. The figure skyrocketed nearly three-fold year over year due to the difference in timings of government payables and receivables, and also as a result of growth in operations.
2023 Guidance
The company raised the guidance for adjusted EPS, which is estimated to be a minimum of $20.25, implying a rise of around 13% from the 2022 reported figure of $17.92
The company had previously guided premium revenues to be roughly $32 billion, indicating an improvement of 4% from the 2022 reported figure of $30.9 billion.
Molina Healthcare total revenues were estimated to be $33 billion in 2023, suggesting 3.1% growth from the 2022 figure of $32 billion.
GAAP net income was earlier predicted to be $1.1 billion, which indicates a surge of 36% from the 2022 figure of $792 million.
Total membership at 2023-end was estimated at 5.1 million, down 3.8% from the 2022-end figure.
Consolidated MCR was expected at 88%, which remains in line with the 2022 figure.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward 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 D. 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 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.