Molina Lowers 2013 Expectation - Analyst Blog


Shutterstock photo

Molina Healthcare, Inc. ( MOH ) lowered its earnings expectation to $1.45 per share for 2013 from $1.55 per share guided during the fourth-quarter 2012 earnings release. The expectation was lowered to incorporate the impact from the $550 million cash convertible senior notes issuance and the anticipated increases to its premium revenue.

Molina projects operating income to be higher by $10 million or 13 cents per share, largely driven by higher premium revenue. Premium revenue is projected to be $6.7 billion. However, the new issuance will lower the full-year earnings by 23 cents per share (includes 21 cent of non-cash interest expense). Nonetheless, the combined positive impact of 5 cents from higher investment income and share repurchases will somewhat mute the negative impact from issuance.

Molina initially intended to issue $375 million cash convertible senior notes but finally made an issue of $550 million. This increase led to an additional interest expense of about 10 cents per share.

Earnings before interest, tax, deprecation and amortization (EBITDA) is now guided to be $255 million, up from $245 million.

It is likely that the lower guidance for 2013 prompted the share price to decline 2.1% to close at $32.75 on Wednesday.  

Total revenue for 2013 remains unchanged at $7 billion. In addition, medical care costs and medical care ratio remain unchanged at $5.9 billion and 88%, respectively.

Earlier this month, Molina reported fourth-quarter 2012 net earnings per share of 54 cents, significantly surpassing the Zacks Consensus Estimate of 21 cents and 51 cents earned in the year-ago quarter.

Among other health maintenance organizations, Aetna Inc ( AET ) expects operating earnings per share of a minimum of $5.40 in 2013, while Health Net Inc . ( HNT ) projects net income guidance of $2.00-$2.10 per share for the same period. Humana Inc. ( HUM ) projected its earnings per share to be $7.60-$7.80 for 2013.

Molina carries a Zacks Rank #2 (Buy).

AETNA INC-NEW (AET): Free Stock Analysis Report

HEALTH NET INC (HNT): Free Stock Analysis Report

HUMANA INC NEW (HUM): Free Stock Analysis Report

MOLINA HLTHCR (MOH): Free Stock Analysis Report

To read this article on 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 Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AET , HNT , HUM , MOH

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by