It has been about a month since the last earnings report for Molina (MOH). Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Molina due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Molina Q1 Earnings and Revenues Surpass Estimates
Molina’s first-quarter 2019 adjusted earnings of $3.04 per share surpassed the Zacks Consensus Estimate of $2.41 by a whopping 26.1%. This upside was driven by decreasing expenses. Moreover, the bottom line also soared 77.8% year over year.
Further, for the quarter under review, total revenues came in at $4.1 billion, beating the Zacks Consensus Estimate by 1.1%. However, the top line declined 11.3% year over year due to lower membership.
Quarterly Operational Update
The company’s net income totaled $308 million, up 25.2% year over year.
Total operating expenses fell about 13.2% year over year to $3.8 billion. This improvement was attributable to lower medical care costs and general and administrative costs.
For the first quarter, medical care cost was down 3.4% year over year to nearly $3.4 billion.
Molina Healthcare’s interest expenses were down 30.3% year over year to $23 million.
Total membership of the Government Program for 2019 stands at 3.4 billion, down 16.4% year over year.
As of Mar 31, 2019, Molina Healthcare’s cash and cash equivalents saw a reduction of 14.1% to $3.2billion from the level at year-end 2018.
Total assets rose 5.9% from 2018 end to $7.6 billion.
The company’s shareholder equity improved nearly 11.4% from the figure at year-end 2018 to $1.8 billion.
For the fourth quarter, net cash flow from operating activities stands at $249 million, lower than the net cash flow of $394 million as of Dec 31, 2018.
For 2019, the company expects its premium revenues to be $15.9 billion, up from the initial guidance of $15.8 billion.
Its total revenues are projected at $16.4 billion, higher than the previous expectation of $16.3 billion.
Moreover, Medicare costs are now expected to be $13.6 billion, down from the previous forecast of $13.7 billion. General and administrative expenses are anticipated at $1.3 billion, more from the previous estimate of $1.2 billion.
Net income of the company is predicted in the band of $680-$710 million, up from the prior guided range of $600-$630 million. EBITDA is projected in the $1080-$1120 million bracket, up from the previous expectation of $975-$1025 million.
Net income per share is assumed to be $10.50-$11.00, up from the former outlook of $9.25-$9.75.
Medicaid and Medicare membership is forecast to be around 3.1 million whereas Marketplace membership is estimated to be around 270000-280000, up from the preceding expectations of 3.2 million and 250000-270000, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Molina has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Molina has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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