Molina's fourth-quarter operating loss came wider than the Zacks
Consensus Estimate and also compared unfavorably with the year-ago
earnings. Moreover, top-line growth was more than offset by higher
operating expense taking a toll on margins. Although medical care
costs increased, Molina was successful in stabilizing the rise.
Growth in premium and service revenues, investment income and
rental income and rental and other income remained the highlights
of the quarter. However, the negative impact of healthcare reforms
and persistent low interest rate environment are likely to weigh on
Medical health plan business that is primarily aided by expansions
via acquisitions. Although, delays in enrollment and program
execution, declining cash flows are some headwinds, new contracts
are likely to offset the negatives. Hence we maintain our Neutral
recommendation on the stock.
Founded in 1980 and headquartered in Long Beach, Calif., Molina
Healthcare Inc. is a multi-state managed care organization
participating exclusively in government-sponsored healthcare
programs such as the Medicaid program and the State Children's
Health Insurance Program (SCHIP), catering to low-income
The health plans are locally operated by wholly-owned
subsidiaries of Molina, each of which is licensed as a health
maintenance organization, or HMO. Molina derives revenues primarily
from premiums paid to its health plans by the relevant state
Medicaid authority. The premium revenues are jointly financed by
the federal government and the states. The company also derives
revenues from the federal Centers for Medicare and Medicaid
Services (CMS) in connection with its Medicare services.
Molina was formerly known as American Family Care Inc. until it
changed its name to Molina Healthcare Inc. in Mar 2000. The company
currently serves approximately 1.8 million members in 9 states
California, Florida, Michigan, New Mexico, Ohio, Texas, Utah,
Washington and Wisconsin. Effective Dec 31, 2009, Molina terminated
operations at the small Medicare health plan in Nevada.
Molina acquired the Health Information Management (HIM) business
of Unisys Corporation on May 1, 2010 for $131.3 million. The
acquired division now operates as Molina Medicaid Solutions, a
subsidiary of Molina Healthcare. Molina Medicaid Solutions offers
design, development, implementation and business process
outsourcing services to state governments in Idaho, Louisiana,
Maine, New Jersey, and West Virginia. The subsidiary also provides
drug rebate administration services in Florida.
Molina also completed its acquisition of Abri Health Plan on Sep
1, 2010, for approximately $16.0 million. Additionally, on Dec 7,
2011, the company purchased Molina Center, an office building in
California, for $81 million.
Molina Healthcare Inc. (MOH): Read the Full
To read this article on Zacks.com click here.