Molina Healthcare Inc. (MOH): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Molina Healthcare's fourth quarter earnings surpassed the Zacks Consensus Estimate on increased memberships, higher revenues and enhanced administrative cost efficiencies. Financial position at 2014-end also remained strong with higher cash flows and increased assets. The company's ability to engage in inorganic growth initiatives and capital deployment also reflect an improved financial position. However, higher medical care costs are a dampener. Additionally, the adverse effects of enrollment delays and program execution as well as low interest rates raise caution for the future. Nevertheless, the ACA implementation is boosting membership, and premium revenues. We maintain our Neutral recommendation on the stock.


Overview:

Founded in 1980 and headquartered in Long Beach, CA, 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 persons.

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 Healthcare 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 Healthcare was formerly known as American Family Care Inc. until it changed its name in Mar 2000. Effective Dec 31, 2009, Molina Healthcare terminated operations at the small Medicare health plan in Nevada.

Molina Healthcare 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 Healthcare Medicaid Solutions, a subsidiary of Molina Healthcare. Molina Healthcare 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 Healthcare 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 Healthcare Center, an office building in California, for $81 million. In 2013 the company acquired Lovelace Community Health Plan's contract for the New Mexico Medicaid Salud! Program, for $53 million.

As of Sep 30, 2014, Molina Healthcare serves approximately 2.4 million members in 11 states.


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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.




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