Molina (MOH) to Post Q4 Earnings: What You Should Expect
Molina Healthcare, Inc. MOH is set to report its fourth-quarter 2022 results on Feb 8, after the closing bell.
In the last reported quarter, this leading multi-national healthcare company reported adjusted earnings per share of $4.36, surpassing the Zacks Consensus Estimate by 2.6%, on higher premium revenues and new business wins. However, the adjusted earnings per share figure suffered an adverse impact of 59 cents due to the net COVID effect.
Let’s see how things have shaped up prior to the fourth-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter earnings per share of $4.06 has witnessed no movement in the past week. The estimate suggests a 41% increase from the prior-year figure of $2.88 per share while our estimate suggests 37.7% year-over-year growth. Molina beat the consensus estimate in all the prior four quarters, with the average surprise being 3.2%. This is depicted in the graph below:
Molina Healthcare, Inc Price and EPS Surprise
Molina Healthcare, Inc price-eps-surprise | Molina Healthcare, Inc Quote
The consensus estimate for fourth-quarter revenues of $7.9 billion indicates a 6.1% increase from the year-ago reported figure while our estimate suggests a 5.2% increase.
Factors to Note
In the fourth quarter, Molina Healthcare’s revenues are expected to have gained on improved premiums owing to solid membership growth in its Medicaid business. Numerous contract wins from state authorities are also likely to have contributed to MOH’s top-line growth.
The Zacks Consensus Estimate for premium revenues indicates an improvement of 6.5% from the prior-year quarter’s reported figure, while our estimate suggests a 4.8% increase.
Two other revenue components, namely investment income and other revenue, are expected to have witnessed an increase in the to-be-reported quarter, though their contribution remains meager to the overall revenues of MOH. Investment income is likely to have registered an uptick, courtesy of growing interest rates. The Zacks Consensus Estimate for investment income indicates a rise of 131.3% from the year-ago quarter’s reported number.
Molina Healthcare’s Medicaid business, accounting for a major chunk of its overall revenues followed by Medicare and Marketplace businesses, is expected to have been driven by benefits from acquisitions, state contract wins, and strength exhibited by D-SNP and MAPD products. While the Medicare business is likely to have gained from a favorable rate environment and an aging U.S. population, results of the Marketplace business are expected to reflect a recovery phase for the fourth quarter.
Solid medical cost-management efforts and a reduction in COVID costs are likely to have led to a reduction in the Medical Care Ratio (MCR) of Molina Healthcare. The consensus mark for the same is pegged at 88%, indicating an improvement of 100 basis points from the year-ago quarter’s reported figure. A lower MCR ratio indicates more premiums left in the insurer's hands, even after paying customers' insurance claims.
The factors stated above are expected to have positioned the company for year-over-year growth. However, the margins of Molina Healthcare are likely to have suffered a blow in the fourth quarter due to an escalation in premium tax expenses and others. Our estimate suggests a 3.8% increase in total operating costs for the fourth quarter.
Also, the consensus mark for total ending membership suggests a 4.8% decline from the prior-year quarter’s reported figure, which is likely to have put pressure on MOH’s business, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Molina this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -2.14%. This is because the Most Accurate Estimate is currently pegged at earnings of $3.97 per share, lower than the Zacks Consensus Estimate of $4.06.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Molina currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Molina, here are some companies from the broader medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
ADC Therapeutics SA ADCT has an Earnings ESP of +59.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ADC Therapeutics’ bottom line for the to-be-reported quarter has witnessed one upward estimate revision in the past 60 days against none in the opposite direction. ADCT beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 26.1%.
Haemonetics Corporation HAE has an Earnings ESP of +2.53% and a Zacks Rank #2.
The Zacks Consensus Estimate for Haemonetics’s bottom line for the to-be-reported quarter is pegged at 79 cents per share. It has witnessed one upward estimate revision in the past 30 days against none in the opposite direction. HAE beat earnings estimates in all the past four quarters, the average surprise being 12.1%.
OPKO Health, Inc. OPK has an Earnings ESP of +15.09% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for OPKO Health’s bottom line for the to-be-reported quarter remained stable over the past week. The consensus mark for OPK’s revenues is pegged at $167.5 million.
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Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
Haemonetics Corporation (HAE) : Free Stock Analysis Report
ADC Therapeutics SA (ADCT) : Free Stock Analysis Report
OPKO Health, Inc. (OPK) : Free Stock Analysis Report
