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Molina Healthcare (MOH) Q4 Earnings, Revenues Miss Estimates

Molina Healthcare Inc.MOH reported fourth-quarter 2016 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 75 cents by 16%. Earnings also declined 26% year over year. The downside was primarily attributable to continued weak marketplace performance of Affordable Care Act (ACA).

Adjusted net income per diluted share decreased 82% to $0.50 in 2016 from $2.78 in 2015 mainly due to the declining profitability of Molina Healthcare's Marketplace program.

Operational Update

In the fourth quarter, total revenue of $4.46 billion missed the Zacks Consensus Estimate of $4.5 billion by 1.3%. The same has grown 15.3% year over year primarily driven by a 14.5% increase in premium revenue and 22% increase in service revenues, also supported by a 50% growth in investment income and other revenues.

Backed by strong enrollment growth, the company generated nearly $16.3 billion of premium revenue in 2016, reflecting 23% year-over-year growth over 2015. Increased Marketplace enrollment and the acquisition of Medicaid managed care membership primarily drove the enrollment growth. As a result, full-year total revenue of $17.7 billion inched up 25% year over year.

For the fourth quarter, total operating expenses rose 19.5% year over year to $4.54 billion due to higher Medical care costs, increased cost of service revenues, a rise in general and administrative expenses, higher premium tax expenses, increase in Health Insurance Fee expense, along with a hike in depreciation and amortization costs. The same drivers resulted in total operating expenses of $17.5 million for 2016, up 27% year over year.

For the fourth quarter, Medical care cost increased 20% year over year to $3.8 billion. The same for 2016 increased 27% to $17.5 billion. Lower Marketplace margins led to this deterioration for both the quarter and the year.

Continuously rising debt burden resulted in Molina Healthcare's interest expenses of $25 million in the fourth quarter that increased 19% year over year. The same for 2016 rose 53% over 2015.

Financial Update

As of Dec 31, 2016, Molina Healthcare's cash and cash equivalents increased 21.7% from the year-end 2015 level to $2.8 billion. Total assets increased 13.6% to $7.5 billion from $6.6 billion at the end of 2015. Molina Healthcare's shareholder equity increased 13% from year-end 2015 to $1.6 billion at the end of 2016.

Net cash from operating activities amounted to $673 million at the end of 2016, down 40% year over year. For the fourth quarter, the same amounted $40 million reflecting 81% year over year decline.

Molina Healthcare Inc Price, Consensus and EPS Surprise

Molina Healthcare Inc Price, Consensus and EPS Surprise | Molina Healthcare Inc Quote

Zacks Rank and Performance of Other Insurers

Molina Healthcrare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Among the other firms in the medical sector that have reported their fourth-quarter earnings so far, the bottom line at Aetna Inc. AET , HCA Holdings Inc. HCA and UnitedHealth Group Inc. UNH beat their respective Zacks Consensus Estimate .

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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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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