Yahoo Finance Molina (MOH) Down 12.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Molina (MOH). Shares have lost about 12.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
Molina Healthcare Q4 Earnings Beat on Solid Medicaid Unit
Molina Healthcare reported fourth-quarter 2022 adjusted earnings per share (EPS) of $4.10, which beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 42.4% year over year.
Total revenues of $8.2 billion improved 11% year over year in the quarter under review. The top line surpassed the consensus mark by 4.6%.
The quarterly results benefited on the back of growing premium revenues, which in turn, was driven by membership growth and new contract wins. Yet, the bottom line was hurt by an elevated expense level and adversities inflicted by the net COVID effect.
Quarterly Operational Update
Premium revenues of Molina Healthcare were $7.9 billion, which rose 10.5% year over year resulting from buyouts and organic membership growth in its Medicaid and Medicare businesses. The figure outpaced the Zacks Consensus Estimate of $7.6 billion.
Total operating expenses of $8.1 billion escalated 12.5% year over year in the fourth quarter due to higher medical care costs, general and administrative expenses, and premium tax expenses. Interest expenses dropped 10% year over year to $27 million.
MOH reported a net income of $56 million, which plunged 45.6% 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 88.3%, which improved 50 basis points (bps) year over year.
Adjusted general and administrative expense ratio deteriorated 10 bps year over year to 7.5%.
As of Dec 31, 2022, total membership inched up 1.1% year over year to roughly 5.3 million members. The growth came on the back of strength across the Medicaid and Medicare businesses of Molina Healthcare. The reported figure beat the consensus mark of 5 million.
Financial Update (as of Dec 31, 2022)
Molina Healthcare exited the fourth quarter with cash and cash equivalents of $4 billion, which fell 9.7% from the 2021-end level. Total assets of $12.3 billion inched up 0.9% from the figure at 2021 end.
Long-term debt was $2.2 billion, up 0.1% from the figure as of Dec 31, 2021.
Total stockholders’ equity advanced 12.7% from the 2021-end level to $3 billion.
During 2022, MOH’s net cash provided by operating activities came in at $773 million. The figure declined nearly three-fold year over year due to a cash settlement linked with a large prior-year marketplace risk adjustment and Medicaid risk corridor payments that took place last year.
2023 Guidance
Premium revenues are anticipated to be roughly $32 billion, which indicates an improvement of 4% from the 2022 reported figure of $30.9 billion.
The total revenues of Molina Healthcare are estimated to be $33 billion in 2023, suggesting 3.1% growth from the 2022 figure of $32 billion.
Adjusted EPS is forecasted to be a minimum of $19.75, implying a rise of around 10% from the 2022 reported figure of $17.92.
GAAP net income is predicted at $1.1 billion, which indicates a surge of 36% from the 2022 figure of $792 million.
Total membership at 2023-end is estimated at 5.1 million, down 3.8% from the 2022-end figure.
Consolidated MCR is expected at 88%, which remains in line with the 2022 figure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Molina has an average Growth Score of C, though it is lagging a bit 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 B. 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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Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
