Molina's (MOH) California Medicaid Revenues to Double in 2024
Molina Healthcare, Inc. MOH recently announced that its California Medicaid revenues are expected to double, following the confirmation received from the California Department of Health Care Services. Thanks to the finalized Medi-Cal contracts, California’s Medicaid program (the largest in the country), MOH’s membership is expected to grow from around 600,000 members in third-quarter 2022 end to about 1.2 million members next year.
The Medi-Cal contracts will start on Jan 1, 2024. With increased members, the company’s annual premium revenues from Medi-Cal contracts are expected to jump from around $1.9 billion at present to $3.9 billion in 2024. However, the expected figure is lower than the previous estimation of $5.5 billion, derived from the state's announcement last August, which indicated that MOH might receive the full Los Angeles County.
Per the August announcement, Centene Corporation CNC, one of the largest Medicaid insurers in the country, was about to lose the Los Angeles County contract to Molina Healthcare. However, the announcement on Dec 30, 2022, confirmed that Centene is expected to serve Medicaid enrollees in Los Angeles County through its subsidiary, while Molina Healthcare will have a 50% subcontract.
MOH expects combined revenues from California, Nebraska, and Iowa in 2024 to reach $4.2 billion. It also anticipates that at a full run rate, the portfolio additions are likely to bring incremental earnings of at least $3.50 per share. In Los Angeles County, Molina expects California's health care services department’s grant of a D-SNP contract for the dual eligible members will generate additional revenues for the company.
Price Performance
MOH shares have climbed 12.7% in the past year compared with the 3.4% increase in the industry.
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Zacks Rank & Key Picks
Molina Healthcare currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are CareDx, Inc CDNA and AMN Healthcare Services, Inc. AMN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CareDx’s 2022 earnings has improved 24.5% in the past 60 days. CDNA has witnessed two upward estimate revisions during this time against none in the opposite direction. It beat earnings estimates by 57.1% in the last reported quarter.
The Zacks Consensus Estimate for AMN Healthcare’s 2022 bottom line indicates a 44% improvement from the prior-year reported number. The consensus estimate for AMN’s top line also indicates 30.1% year-over-year growth.
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