Molina Lowers 2013 Expectation - Analyst Blog

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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

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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.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AET , HNT , HUM , MOH

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