Molina Healthcare (MOH) Q4 Earnings Beat on Premium Growth
Molina Healthcare, Inc. MOH reported fourth-quarter 2023 adjusted earnings per share (EPS) of $4.38, which outpaced the Zacks Consensus Estimate by 1.6%. The bottom line advanced 6.8% year over year.
Total revenues rose 10% year over year to $9 billion in the quarter under review. Also, the top line surpassed the consensus mark by 9%.
The strong quarterly results benefited on the back of improved premiums, contract wins, and Medicare membership growth. However, the upside was partly offset by a decline in Medicaid and Marketplace membership and an elevated operating 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 $8.4 billion, which grew 5.6% year over year in the fourth quarter and beat the Zacks Consensus Estimate of $8 billion as well as our estimate of $7.9 billion. Premium growth stemmed from the favorable impact of new RFP wins and acquisitions. Medicaid redeterminations partially offset the positives. Investment income of $114 million rose nearly one-fold year over year but missed the consensus mark of $116 million.
Total operating expenses escalated 7.6% year over year to $8.7 billion, higher than our estimate of $7.9 billion. The growth was due to increased medical care costs, higher general and administrative expenses and premium tax expenses.
Adjusted general and administrative expense ratio of 7% improved 50 bps year over year in the quarter under review due to continued execution of cost discipline. Interest expenses remained flat year over year at $27 million and fell short of our estimate of $28.7 million.
MOH reported an adjusted net income of $255 million, which advanced 6.3% year over year in the fourth quarter and outpaced our estimate of $248.2 million.
The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, deteriorated 80 bps year over year to 89.1% and matched our estimate.
Total membership was around 5 million as of Dec 31, 2023, which declined 5% year over year and missed our estimate of 5.1 million. A declining customer base in Medicaid and Marketplace businesses contributed to MOH’s overall membership growth.
Financial Update (as of Dec 31, 2023)
Molina Healthcare exited the fourth quarter with cash and cash equivalents of $4.8 billion, which increased from $4 billion at 2022-end. Total assets of $14.9 billion increased from $12.3 billion at 2022-end.
Long-term debt amounted to $2.18 billion, up from $2.17 billion at 2022-end. Total stockholders’ equity of $4.2 billion climbed from $3 billion at 2022-end.
MOH generated net cash from operations of $1.7 billion in 2023, which rose more than one-fold year over year. 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 and earnings from organic and acquisitions.
Full-Year Update
MOH’s total revenues of $34.1 billion rose 6.6% year over year and beat our estimate of $33.3 billion.
Total operating expenses rose 5.5% year over year in 2023 to $32.5 billion and surpassed our estimate of $31.7 billion.
The company’s 2023 adjusted net income of $20.88 per share rose 16.5% year over year and beat our estimate of $20.78 per share.
2024 Guidance
Molina Healthcare expects premium revenues to be $38 billion, which implies an approximate 16.9% rise from the 2023 reported figure.
Total revenues are anticipated to be $39.6 billion in 2024, which suggests 16.1% growth from the 2023 figure.
MOH expects adjusted EPS to be at a minimum of $23.5 in 2024, which represents a year-over-year improvement of 12.5%.
Adjusted net income is projected to be $1.4 billion for 2024, 12.6% higher than the 2023 figure. GAAP net income is projected to be $1.3 billion, 17.1% higher than the 2023 figure.
Total membership for 2024-end is estimated to be 5.7 million, 14% higher than the 2023-end figure of 5 million.
Consolidated MCR is expected to stay at 88.2%.
Zacks Rank
Molina Healthcare currently carries a Zacks Rank #3 (Hold). 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 fourth-quarter results so far, the bottom lines of Elevance Health, Inc. ELV, UnitedHealth Group Incorporated UNH and The Cigna Group CI beat the Zacks Consensus Estimate.
Elevance Health reported fourth-quarter 2023 adjusted net income of $5.62 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 15.2% year over year.
ELV’s operating revenues, which amounted to $42.5 billion, rose 7% year over year in the fourth quarter. The top line surpassed the consensus mark by 1.5%.
UnitedHealth Group reported fourth-quarter 2023 adjusted EPS of $6.16, which outpaced the Zacks Consensus Estimate by 3%. The bottom line advanced 15.4% year over year.
Revenues improved 14.1% year over year to $94.4 billion in the fourth quarter, attributable to sound contributions made by the UnitedHealthcare and Optum business lines. The top line surpassed the consensus mark by 2.6%.
Cigna reported fourth-quarter 2023 adjusted EPS of $6.79, which outpaced the Zacks Consensus Estimate by 4.1%. The bottom line advanced 36.9% year over year.
CI’s operating revenues, which amounted to $51.1 billion, rose 12% year over year in the fourth quarter. The top line surpassed the consensus mark by 4.8%.
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