Molina Beats Estimate, Lags Y/Y - Analyst Blog

By
A A A
Share |

Molina Healthcare Inc. ( MOH ) reported third-quarter 2012 net earnings per share of 7 cents, surpassing the Zacks Consensus Estimate of a loss of 13 cents. However, earnings per share lagged the year-ago earnings of 41 cents. Net income for the quarter came in at $3.4 million compared with $19 million in the prior-year quarter.

Total revenue for the reported quarter climbed to $1.54 billion from $1.18 billion in the prior-year quarter. Total revenue also exceeded the Zacks Consensus Estimate of $1.52 billion.

Premium revenues surged 31% year over year to $1.5 billion, primarily due to membership growth, favorable change in membership mix and impact of benefit expansion. Moreover, Molina's service revenue jumped to $48.4 million from $37.7 million in the year-ago quarter and investment income increased to $1.17 million from $0.76 million a year ago. Additionally, the company recorded a rental income of $1.88 million in the quarter.

Total expenses also surged 34% year over year to $1.53 billion. The surge was driven by medical care costs that escalated to $1.31 billion from $0.96 billion in the prior-year quarter, cost of service revenue that increased to $37.0 million from $34.58 million, general and administrative (G&A) expenses that escalated to $127.5 million from $99.6 million, depreciation and amortization (D&A) costs that increased to $16.0 million from $13.4 million and premium tax expenses that inched up to $37.9 million from $36.4 million in the prior-year quarter.

However, interest expense declined to $4.32 million from $4.38 million in the year-ago quarter. Further, medical care ratio (ratio of medical care costs to premium revenue) went up to 88.3% from 84.3% in the year-ago quarter.

Operating income was $27.5 million in the reported quarter compared with $51.4 million in the comparable quarter last year.

Financial Update

Molina exited the reported quarter with $1.1 billion in cash and investments, while the parent company had cash and investments of $41 million. At the end of the quarter, Molina's total assets increased to $1.91 billion from $1.65 billion at 2011 end, although shareholders' equity inched down to $755.0 million from $755.1 million as of December 31, 2012. During the reported quarter, cash flow from operations declined to $28.0 million from $40.3 million in the prior-year quarter.

Peer Take

Molina's competitor, UnitedHealth Group Inc. ( UNH ) reported its third quarter 2012 earnings of $1.50 per share, significantly ahead of the Zacks Consensus Estimate of $1.31 per share. Higher revenue across the board, strong enrollment growth, partially offset by higher operating costs were responsible for the better-than-expected results. Also, share repurchases boosted the bottom-line earnings.

Another peer, Coventry Health Care Inc. ( CVH ) will report its third-quarter financial results before the opening bell on October 26.

Zacks Rank

Molina currently carries a Zacks #2 Rank, implying a short-term Buy rating. Considering the fundamentals, we maintain a long-term 'Neutral' recommendation on the shares.



COVENTRY HLTHCR (CVH): Free Stock Analysis Report

MOLINA HLTHCR (MOH): Free Stock Analysis Report

UNITEDHEALTH GP (UNH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CVH , MOH , UNH

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

89,970,926
  • $16.15 ▲ 0.12%
77,131,582
  • $58.94 ▼ 1.31%
67,336,935
  • $26.56 ▲ 1.68%
48,814,124
  • $86.20 ▲ 0.02%
47,526,126
  • $23.21 ▲ 0.78%
44,660,424
  • $23.91 ▲ 6.36%
38,799,699
  • $4.289 ▲ 4.36%
36,199,890
  • $40.01 ▼ 0.97%
As of 4/17/2014, 04:07 PM