Molina Healthcare Inc.
) reported second-quarter 2014 operating earnings of 62 cents per
share, beating the Zacks Consensus Estimate of 43 cents per share.
However, the figure declined from the year-ago quarter's earnings
of 80 cents per share.
The year-over-year decline was due to the delays in obtainment
of agreements for the reimbursement of the Health Insurer Fee (HIF)
as well as delay in the quality related revenue recognition.
Molina Healthcare, Inc - Earnings Surprise |
Including depreciation and amortization of capitalized software,
amortization of convertible senior notes and lease financing
obligations, amortization of intangible assets, Molina Healthcare
reported net income of 16 cents per share in the quarter, lower
than 34 cents earned in the year-ago quarter.
Total revenue in the reported quarter climbed approximately 44%
to $2.3 billion from $1.6 billion in the prior-year quarter.
Revenues were in line with the Zacks Consensus Estimate. The
year-over-year upside in revenues was mainly driven by higher
premium and service revenues, premium tax revenues, health insurer
fee revenues and investment income.
Premium revenues improved 44.3% year over year to $2.2 billion.
Molina Healthcare's service revenues also increased 1.1% to $50.2
Further, Molina Healthcare's investment income rose 19.5% year
over year to $1.9 million. Premium tax revenue also increased to
$70.1 million from $46.9 million in the second quarter of 2013.
Total operating expenses rose 46.2% year over year to $2.3
billion. The rise was owing to higher general and administrative
(G&A) expenses ($193.2 million from $161.5 million), premium
tax expenses ($70.1 million from $46.9 million), depreciation and
amortization (D&A) costs ($22.9 million from $17.0 million),
and medical care costs ($1.9 billion from $1.3 billion).
Operating income was $32.4 million in the reported quarter,
comparing unfavorably with operating income of $46.4 million in the
Additionally, Molina Healthcare's interest expenses increased to
approximately $14 million from $11.7 million in the year-ago
quarter. Further, medical care ratio (ratio of medical care costs
to premium revenue) deteriorated 310 basis points to 89.3% from
86.2% in the year-ago quarter.
As of Jun 30, 2014, cash and cash equivalents at Molina
Healthcare were $1 billion, up from $935.9 million at 2013-end.
During the second quarter of 2014, cash from operations amounted to
$24.6 million as against $129.2 million used in the year-ago
As of Jun 30, 2014, total assets increased to $3.5 billion from
$3 billion at 2013-end. Meanwhile, Molina Healthcare's shareholder
equity was $917.1 million as of Jun 30, 2014 against $892.9 million
as of Dec 31, 2013.
Molina Healthcare reiterated its 2014 net operating income
guidance at $1.65-$2.15 per share. The adjusted net income from
continuing operations outlook was also unchanged at $4.00-$4.50 per
share. This guidance takes into account the full reimbursement of
Affordable Care Act's Health Insurer Fee (ACA HIF) and the quality
incentive program revenue from the Texas Health plan.
Although Molina Healthcare's second-quarter earnings exceeded
our expectations, it was below the year-ago quarter figure mainly
due to the ACA HIF reimbursement delay. The top line, on the other
hand, was in line with the Zacks Consensus Estimate and improved
year over year.
Molina Healthcare started serving members in California,
Illinois and Ohio under the dual eligible pilot programs in the
second quarter, which is evident from its increase in aggregate
membership. We expect the company to ride on membership
growth and come up with better revenues going forward.
Performance of Other HMOs
Humana Inc. (
) posted second-quarter 2014 operating earnings of $2.19 per share,
which was in line with the Zacks Consensus Estimate.
WellPoint Inc. (
) reported second-quarter 2014 adjusted income of $2.44 per share,
beating the Zacks Consensus Estimate of $2.28.
Aetna Inc.'s (
) second-quarter 2014 earnings of $1.69 per share beat the Zacks
Consensus Estimate of $1.61 per share.
Molina Healthcare currently sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
WELLPOINT INC (WLP): Free Stock Analysis Report
AETNA INC-NEW (AET): Free Stock Analysis Report
HUMANA INC NEW (HUM): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis Report
To read this article on Zacks.com click here.