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Molina Healthcare (MOH) Q3 Earnings Beat on Membership Growth
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Molina Healthcare, Inc. (MOH - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of $5.05, which outpaced the Zacks Consensus Estimate by 3.7%. The bottom line advanced 16% year over year.
Total revenues rose 7.8% year over year to $8,548 million in the quarter under review. Also, the top line surpassed the consensus mark by 2.9%.
The quarterly results benefited on the back of improved premiums, contract wins, and Medicaid and Medicare membership growth. However, the upside was partly offset by a decline in Marketplace membership and an elevated medical care expense level.
Molina Healthcare, Inc. Price, Consensus and EPS Surprise
Molina Healthcare’s premium revenues amounted to $8,240 million, which grew 8% year over year in the third quarter and beat the Zacks Consensus Estimate of $8,129 million as well as our estimate of $8,054.8 million. Premium growth stemmed from year-over-year changes in the member mix. Investment income of $112 million more than doubled year over year and surpassed the consensus mark of $73 million.
Total operating expenses escalated 7.9% year over year to $8,189 million, higher than our estimate of $7,947.4 million. The growth was due to increased medical care costs as well as higher general and administrative expenses.
Adjusted general and administrative expense ratio of 7.1% deteriorated 20 bps year over year in the quarter under review due to new business implementation spending linked with contract wins. Interest expenses declined 3.6% year over year to $27 million and fell short of our estimate of $29 million.
MOH reported an adjusted net income of $294 million, which advanced 15.7% year over year in the third quarter and outpaced our estimate of $279.2 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, deteriorated 30 bps year over year to 88.7% and came higher than our estimate of 88.5%.
Total membership was around 5.2 million as of Sep 30, 2023, which inched up 1% year over year and surpassed our estimate of 5.1 million. An expanding customer base in Medicaid and Medicare businesses contributed to MOH’s overall membership growth.
Financial Update (as of Sep 30, 2023)
Molina Healthcare exited the third quarter with cash and cash equivalents of $5,565 million, which surged 38.9% from the figure at 2022 end. Total assets of $14.9 billion increased 20.8% from the 2022-end level.
Long-term debt amounted to $2,179 million, up 0.1% from the figure as of Dec 31, 2022. Total stockholders’ equity of $3,879 million climbed 30.9% from the level in 2022 end.
MOH generated net cash from operations of $2,352 million in the first nine months of 2023, which more than doubled from the prior-year comparable period. The significant growth came on the back of the net impact of the difference in timings of government receivables and payables coupled with expanding operations.
2023 EPS View Reiterated
Management continues to expect adjusted EPS to be at a minimum of $20.75 this year, which represents a year-over-year improvement of 16%.
Other Projections for 2023
Earlier, Molina Healthcare estimated premium revenues to be $32 billion, which implies a 4% approximate rise from the 2022 reported figure. Total revenues were anticipated to be $33 billion in 2023, suggesting 3.1% growth from the 2022 figure.
Adjusted net income was projected to be $1,206 million for 2023. Total membership at 2023-end was estimated to be 5.1 million and the metric already crossed the mark in the third quarter of 2023 itself. Consolidated MCR was expected to stay at 88%.
Of the Medical sector players that have reported third-quarter 2023 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Centene Corporation (CNC - Free Report) and Quest Diagnostics Incorporated (DGX - Free Report) beat the Zacks Consensus Estimate.
UnitedHealth Group reported third-quarter 2023 adjusted EPS of $6.56, which outpaced the Zacks Consensus Estimate by 3.6%. The bottom line advanced 13.3% year over year. Revenues improved 14.2% year over year to $92.4 billion in the quarter under review, attributable to sound contributions made by the UnitedHealthcare and Optum business lines. The top line surpassed the consensus mark by 1%. Its MCR was 82.3%, which deteriorated 70 bps year over year. Revenues from the health benefits business of UNH, UnitedHealthcare, rose 13% year over year to $69.9 billion. As of Sep 30, 2023, the unit catered to 52.8 million people, which rose 2.8% year over year.
Centene’s third-quarter 2023 adjusted EPS of $2 beat the Zacks Consensus Estimate by 26.6%. The bottom line advanced 53.8% year over year. Revenues of CNC amounted to $38,042 million, which improved 6.1% year over year. The top line outpaced the consensus mark by 5.1%. Revenues from Medicaid rose 2% year over year to $21.6 billion, while Medicare revenues fell 4% year over year to $5.4 billion. Meanwhile, commercial revenues jumped 50% year over year to $6.5 billion. Overall premiums improved 6.3% year over year to $33.9 billion. Total membership was almost 28 million as of Sep 30, 2023, which increased 4.5% year over year.
Quest Diagnostics’ third-quarter 2023 adjusted EPS of $2.22 beat the Zacks Consensus Estimate by 1.4%. However, adjusted earnings declined 5.9% from the year-ago adjusted figure. Reported revenues in the third quarter declined 7.7% year over year to $2.29 billion. However, revenues exceeded the Zacks Consensus Estimate by 1.7%. Base Business (excludes COVID testing) revenues were $2.27 billion in the reported quarter, up 4.6% year over year. DGX’s adjusted operating margin of 16.2% represented a five-bps expansion year over year.
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Molina Healthcare (MOH) Q3 Earnings Beat on Membership Growth
Molina Healthcare, Inc. (MOH - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of $5.05, which outpaced the Zacks Consensus Estimate by 3.7%. The bottom line advanced 16% year over year.
Total revenues rose 7.8% year over year to $8,548 million in the quarter under review. Also, the top line surpassed the consensus mark by 2.9%.
The quarterly results benefited on the back of improved premiums, contract wins, and Medicaid and Medicare membership growth. However, the upside was partly offset by a decline in Marketplace membership and an elevated medical care expense level.
Molina Healthcare, Inc. Price, Consensus and EPS Surprise
Molina Healthcare, Inc. price-consensus-eps-surprise-chart | Molina Healthcare, Inc. Quote
Quarterly Operational Update
Molina Healthcare’s premium revenues amounted to $8,240 million, which grew 8% year over year in the third quarter and beat the Zacks Consensus Estimate of $8,129 million as well as our estimate of $8,054.8 million. Premium growth stemmed from year-over-year changes in the member mix. Investment income of $112 million more than doubled year over year and surpassed the consensus mark of $73 million.
Total operating expenses escalated 7.9% year over year to $8,189 million, higher than our estimate of $7,947.4 million. The growth was due to increased medical care costs as well as higher general and administrative expenses.
Adjusted general and administrative expense ratio of 7.1% deteriorated 20 bps year over year in the quarter under review due to new business implementation spending linked with contract wins. Interest expenses declined 3.6% year over year to $27 million and fell short of our estimate of $29 million.
MOH reported an adjusted net income of $294 million, which advanced 15.7% year over year in the third quarter and outpaced our estimate of $279.2 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, deteriorated 30 bps year over year to 88.7% and came higher than our estimate of 88.5%.
Total membership was around 5.2 million as of Sep 30, 2023, which inched up 1% year over year and surpassed our estimate of 5.1 million. An expanding customer base in Medicaid and Medicare businesses contributed to MOH’s overall membership growth.
Financial Update (as of Sep 30, 2023)
Molina Healthcare exited the third quarter with cash and cash equivalents of $5,565 million, which surged 38.9% from the figure at 2022 end. Total assets of $14.9 billion increased 20.8% from the 2022-end level.
Long-term debt amounted to $2,179 million, up 0.1% from the figure as of Dec 31, 2022. Total stockholders’ equity of $3,879 million climbed 30.9% from the level in 2022 end.
MOH generated net cash from operations of $2,352 million in the first nine months of 2023, which more than doubled from the prior-year comparable period. The significant growth came on the back of the net impact of the difference in timings of government receivables and payables coupled with expanding operations.
2023 EPS View Reiterated
Management continues to expect adjusted EPS to be at a minimum of $20.75 this year, which represents a year-over-year improvement of 16%.
Other Projections for 2023
Earlier, Molina Healthcare estimated premium revenues to be $32 billion, which implies a 4% approximate rise from the 2022 reported figure. Total revenues were anticipated to be $33 billion in 2023, suggesting 3.1% growth from the 2022 figure.
Adjusted net income was projected to be $1,206 million for 2023. Total membership at 2023-end was estimated to be 5.1 million and the metric already crossed the mark in the third quarter of 2023 itself. Consolidated MCR was expected to stay at 88%.
Zacks Rank
Molina Healthcare currently carries a Zacks Rank #2 (Buy). 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 2023 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Centene Corporation (CNC - Free Report) and Quest Diagnostics Incorporated (DGX - Free Report) beat the Zacks Consensus Estimate.
UnitedHealth Group reported third-quarter 2023 adjusted EPS of $6.56, which outpaced the Zacks Consensus Estimate by 3.6%. The bottom line advanced 13.3% year over year. Revenues improved 14.2% year over year to $92.4 billion in the quarter under review, attributable to sound contributions made by the UnitedHealthcare and Optum business lines. The top line surpassed the consensus mark by 1%. Its MCR was 82.3%, which deteriorated 70 bps year over year. Revenues from the health benefits business of UNH, UnitedHealthcare, rose 13% year over year to $69.9 billion. As of Sep 30, 2023, the unit catered to 52.8 million people, which rose 2.8% year over year.
Centene’s third-quarter 2023 adjusted EPS of $2 beat the Zacks Consensus Estimate by 26.6%. The bottom line advanced 53.8% year over year. Revenues of CNC amounted to $38,042 million, which improved 6.1% year over year. The top line outpaced the consensus mark by 5.1%. Revenues from Medicaid rose 2% year over year to $21.6 billion, while Medicare revenues fell 4% year over year to $5.4 billion. Meanwhile, commercial revenues jumped 50% year over year to $6.5 billion. Overall premiums improved 6.3% year over year to $33.9 billion. Total membership was almost 28 million as of Sep 30, 2023, which increased 4.5% year over year.
Quest Diagnostics’ third-quarter 2023 adjusted EPS of $2.22 beat the Zacks Consensus Estimate by 1.4%. However, adjusted earnings declined 5.9% from the year-ago adjusted figure. Reported revenues in the third quarter declined 7.7% year over year to $2.29 billion. However, revenues exceeded the Zacks Consensus Estimate by 1.7%. Base Business (excludes COVID testing) revenues were $2.27 billion in the reported quarter, up 4.6% year over year. DGX’s adjusted operating margin of 16.2% represented a five-bps expansion year over year.