Molina Healthcare (MOH) Q2 Earnings Beat, Hikes '22 EPS View
Molina Healthcare, Inc. MOH reported second-quarter 2022 adjusted earnings of $4.55 per share, which beat the Zacks Consensus Estimate by 4.8%. The bottom line surged 33.8% year over year.
Total revenues of MOH improved 18.4% year over year to $8.1 billion in the quarter under review. The top line outpaced the consensus mark by 6.2%.
The quarterly results benefited from a solid rise in premiums and strong membership growth. However, the net COVID effect had an unfavorable impact of 68 cents on the adjusted earnings per share (EPS) figure of Molina Healthcare.
Molina Healthcare, Inc. Price, Consensus and EPS Surprise
Molina Healthcare, Inc. price-consensus-eps-surprise-chart | Molina Healthcare, Inc. Quote
Operational Update
Premium revenues of MOH rose 18% year over year to around $7.8 billion in the second quarter, thanks to buyouts and higher organic membership growth within its Medicaid and Medicare lines of business.
Total operating expenses of $7.7 billion escalated 17.9% year over year, mainly due to increased medical care costs, general and administrative expenses as well as premium tax expenses.
Interest expenses declined 10% year over year to $27 million in the quarter under review.
Molina Healthcare’s net income of $248 million climbed 34.1% year over year.
In the second quarter, the consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, came in at 88.1%. The metric improved 30 basis points (bps) year over year despite the unfavorable impact of around 60 bps on the consolidated MCR due to the net COVID effect.
As of Jun 30, 2022, the total membership of MOH stood at roughly 5.1 million members, up 9% year over year. The membership growth came on the back of well-performing Medicaid and Medicare businesses.
Financial Update (as of Jun 30, 2022)
Molina Healthcare exited the second quarter with cash and cash equivalents of $4.3 billion, which declined 2.8% from the 2021-end level. Total assets of $12.6 billion increased 3% from the figure at the 2021 end.
Long-term debt amounted to $2.2 billion, which marginally increased from the figure as of Dec 31, 2021.
Total stockholders’ equity of Molina Healthcare improved 7.6% from the 2021-end level to $2.8 billion.
During the six months ended Jun 30, 2022, net cash provided by operating activities of $731 million declined 31.1% from the prior-year comparable period due to timing differences in government receivables and payables. However, the metric was partly offset by improved net earnings.
2022 Guidance Revised
Management anticipates premium revenues to be around $30 billion, up from the prior estimate of around $29.25 billion. The revised guidance implies an improvement of 11.5% from the 2021 figure. The Public Health Emergency, extended from July to October, coupled with strong second-quarter results and additional pass-through revenue payments, positively influenced the guidance revision.
Adjusted EPS is expected to be a minimum of $17.60, up from the previous projection of “at least $17.10.” The hiked outlook suggests growth of 30% from the 2021 reported figure.
Net income of Molina Healthcare is forecast at $937 million, up from the prior projection of $911 million. The updated guidance indicates an improvement of 42.2% from the 2021 reported figure.
Prior Projections
Total revenues for 2022 were anticipated to be around $29.5 billion, implying an approximate 6% growth from the 2021 figure.
Total membership at the end of 2022 is estimated at 4.5 million, suggesting a 13.5% fall from the 2021-end figure.
The MCR for 2022 is projected at 88%, indicating a 30 bps improvement from the 2021 figure.
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 second-quarter results so far, the bottom lines of Humana Inc. HUM, Centene Corporation CNC and Universal Health Services, Inc. UHS beat the Zacks Consensus Estimate.
Humana reported second-quarter 2022 adjusted earnings per share of $8.67, which outpaced the Zacks Consensus Estimate by 13%. The bottom line improved 26% year over year. Revenues of Humana amounted to $23.7 billion, which improved 15% year over year in the second quarter. The top line beat the consensus mark by 1.2%. Total premiums of HUM climbed 11.5% year over year in the quarter under review, while revenues from services increased nearly three-fold year over year.
Centene's second-quarter 2022 adjusted earnings per share of $1.77surpassed the Zacks Consensus Estimate by 2.3%. The bottom line also increased from $1.25 per share a year ago. Total revenues of Centene rose 16% year over year to $35,936 million in the second quarter. The top line also beat the consensus mark by 1.1%. While CNC’s revenues from Medicaid rose 8% year over year in the second quarter, revenues from Commercial and Medicare jumped 11% and 26%, respectively.
Universal Health reported second-quarter 2022 adjusted earnings of $2.20 per share, which outpaced the Zacks Consensus Estimate by 5.8%. However, the bottom line plunged 41.5% year over year. Net revenues of Universal Health grew 3.9% year over year to $3.3 billion in the second quarter. The top line beat the consensus mark by a whisker. UHS’s total operating costs of $3.1 billion escalated 12% year over year in the quarter under review.
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