Will the Medicare Unit Aid Molina Healthcare's (MOH) Q3 Earnings?
Molina Healthcare, Inc. MOH is slated to report third-quarter 2023 results on Oct 25, after market close.
Q3 Estimates
The Zacks Consensus Estimate for Molina Healthcare’s third-quarter earnings per share is pegged at $4.87, which indicates an improvement of 11.7% from the prior-year quarter’s reported figure.
The consensus mark for revenues stands at $8,304 million, suggesting 4.8% growth from the year-ago quarter’s reported number.
Earnings Surprise History
Molina Healthcare boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 7.18%. This is depicted in the chart below:
Molina Healthcare, Inc. Price and EPS Surprise
Molina Healthcare, Inc. price-eps-surprise | Molina Healthcare, Inc. Quote
Factors to Note
The growing customer base in the Medicaid and Medicare businesses of Molina Healthcare is expected to have contributed to premium growth, the most significant contributor to the top line of a health insurer, in the third quarter.
We expect Medicaid premiums to grow 5.2% year over year to $6,442.1 million in the to-be-reported quarter. Our estimate for the Medicare premiums is $1,050.3 million, up 10.9% year over year.
Numerous contract wins from federal and state authorities, renewal of agreements as well as buyouts are likely to have contributed to membership growth in MOH’s Medicaid and Medicare businesses. An aging U.S. population is likely to have sustained the solid demand for its Medicare plans in the third quarter. However, the disenrollment of members from Medicaid during the redetermination process is expected to have inflicted some adversities on the membership figures of the relevant business.
Membership growth within the Medicaid business is expected to increase 0.4% year over year, while the same for MOH’s Medicare business is projected to witness 12.1% year-over-year growth.
However, a decrease in Marketplace membership is likely to have acted as a partial offset for the premium growth of Molina Healthcare in the to-be-reported quarter. We estimate Marketplace membership to plunge 35.7% year over year.
A favorable interest rate environment is likely to have driven higher investment income, which in turn, is likely to have aided revenue growth in the third quarter. Our estimate for investment income is $58.9 million, which indicates a 20.1% rise year over year.
The medical care ratio (MCR) is expected to have remained high in the to-be-reported quarter due to elevated medical expenses. An uptick in MCR signals lower leftover premiums consequent to the payment of insurance claims. We expect the overall MCR to be 88.5% in the third quarter, which indicates a deterioration of 10 bps year over year.
Besides, a high medical expense level is likely to have hurt the bottom line of Molina Healthcare in the to-be-reported quarter. Our estimate for medical care costs indicates a 5.7% year-over-year increase.
What our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Molina Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Molina Healthcare has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MOH currently carries a Zacks Rank of 2.
Stocks to Consider
While an earnings beat looks uncertain for Molina Healthcare, here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Ligand Pharmaceuticals Incorporated LGND has an Earnings ESP of +2.94% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LGND’s third-quarter 2023 earnings is pegged at 68 cents per share, indicating a surge of 65.9% from the prior-year quarter’s reported figure.
Ligand Pharmaceuticals’ bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 52.47%.
DENTSPLY SIRONA Inc. XRAY has an Earnings ESP of +1.85% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for XRAY’s third-quarter 2023 earnings is pegged at 48 cents per share, suggesting 17.1% growth from the year-ago quarter’s reported figure.
DENTSPLY SIRONA’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 12.51%.
BioMarin Pharmaceutical Inc. BMRN has an Earnings ESP of +11.09% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for BMRN’s third-quarter 2023 earnings is pegged at 46 cents per share, indicating an 2.2% increase from the prior-year quarter’s reported figure.
BioMarin Pharmaceutical’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 17.09%.
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BioMarin Pharmaceutical Inc. (BMRN) : Free Stock Analysis Report
Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
