What to Expect From Molina Healthcare's (MOH) Q2 Earnings?

Molina Healthcare, Inc. MOH is slated to report second-quarter 2022 results on Jul 27, after the market closes.

Q2 Estimates

The Zacks Consensus Estimate for Molina Healthcare’s second-quarter earnings per share is pegged at $4.43, which indicates an improvement of 30.3% from the prior-year quarter’s reported figure.

The consensus mark for revenues stands at $7.6 billion, suggesting an 11.3% growth from the year-ago quarter’s reported number.

Earnings Surprise History

Molina Healthcare has a decent earnings surprise history. Its bottom line beat estimates in three of the trailing four quarters and missed once, the average surprise being 1.51%. This is depicted in the chart below:

Molina Healthcare, Inc. Price and EPS Surprise

Molina Healthcare, Inc. price-eps-surprise | Molina Healthcare, Inc. Quote

Factors to Note

Revenues of Molina Healthcare are likely to have benefited from solid membership growth in its Medicaid and Medicare businesses, which in turn might have driven higher premiums of the managed healthcare services provider in the second quarter. The Zacks Consensus Estimate for MOH's premiums is pegged at $7.4 billion, which indicates an improvement of 12.1% from the prior-year quarter’s reported figure. However, the consensus mark for investment income and other revenues stands at $31.2 million, suggesting a 2.5% growth from the year-ago quarter’s reported number.

While the Medicaid business is likely to have gained on the back of higher membership and continuous buyouts, organic gains and strength exhibited by MOH’s D-SNP and MAPD products might have provided a boost to its Medicare business in the to-be-reported quarter.

The Zacks Consensus Estimate for total ending membership indicates a 6.5% rise from the prior-year quarter’s reported figure. However, the ending membership in the Marketplace business of Molina Healthcare is likely to have witnessed a downside in the second quarter, and the consensus mark for the same indicates a plunge of 48.1% year-over-year.

In the to-be-reported quarter, the consensus mark for total Medical Care Ratio (MCR) is pegged at 88%, which indicates an increase of 100 basis points year over year. A higher MCR ratio indicates that lesser premiums will remain consequent to paying insurance claims.

Operating expenses of Molina Healthcare are likely to have witnessed an uptick in the second quarter due to increased medical care costs, general and administrative expenses, and premium tax expenses. This, in turn, is expected to put pressure on its margins in the days ahead.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Molina Healthcare this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Earnings ESP: Molina Healthcare has an Earnings ESP of -2.26% because the Most Accurate Estimate of $4.33 is pegged lower than the Zacks Consensus Estimate of $4.43. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: MOH currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for Molina Healthcare, here are some companies from the Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:

Neurocrine Biosciences, Inc. NBIX has an Earnings ESP of +40.43% and a Zacks Rank #2, currently. The Zacks Consensus Estimate for Neurocrine Biosciences’ second-quarter 2022 earnings is pegged at $1.92 per share, which indicates more than doubling itself from the prior-year quarter’s reported figure.

The consensus mark for NBIX’s second-quarter earnings has moved 1.8% north over the past 30 days.

Avanos Medical, Inc. AVNS has an Earnings ESP of +6.49% and a Zacks Rank #3, currently. The Zacks Consensus Estimate for Avanos Medical’s second-quarter 2022 earnings is pegged at $1.66 per share, which indicates a 44.4% increase from the prior-year quarter’s reported figure.

AVNS beat earnings estimates in two of the trailing four quarters and missed twice.

Repligen Corporation RGEN has an Earnings ESP of +4.79% and a Zacks Rank #3, currently. The Zacks Consensus Estimate for Repligen’s second-quarter 2022 earnings is pegged at $3.10 share, which indicates a 1.3% increase from the prior-year quarter’s reported figure.

RGEN beat earnings estimates in each of the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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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.