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Molina Healthcare (MOH) Tops on Q4 Earnings, Issues ’18 View

Zacks

Molina Healthcare Inc. MOH reported fourth-quarter 2017 adjusted earnings of 34 cents per share, which surpassed the Zacks Consensus Estimate of 23 cents. The bottom line, however, declined 46% from the year-ago quarter.

The company’s fourth-quarter results include $356 million of impairment loss, restructuring and separation costs plus loss on debt extinguishment. The numbers also comprise $53 million of increased medical care costs for termination of cost sharing reduction subsidy payments (effective October 1, 2017) and other Marketplace reserve adjustments.

Including asset impairment costs and restructuring costs, net loss came in at $4.59 per share in the reported quarter, wider than the net loss of 85 cents incurred in the prior-year quarter.

Despite the loss suffered in the fourth quarter, the company states that the performance of core operations and overall administrative cost efficiency improved in the period, sequentially.


In the quarter under review, total revenues of $4.9 billion rose 9.1% year over year, primarily driven by an increase in premium revenues and investment income. The top line, however, slightly missed the Zacks Consensus Estimate by 0.2%.

Full-Year Update

For 2017, the company reported net loss of $9.07 per share, comparing unfavorably with the net income of 92 cents in 2016.

For the full year, total revenues came in at $19.9 billion, up 11.8% year over year on the back of higher premium revenues and investment income.

Quarterly Operational Update

For the fourth quarter, total operating expenses rose about 15% year over year to $5.2 billion. This deterioration was due to higher medical care costs, rise in general and administrative expenses, higher restructuring costs and impairment loss.

For the quarter, medical care cost increased 10.6% year over year to $4.2 billion.

Continuously rising debt burden resulted in Molina Healthcare’s interest expenses, surging 32% year over year to $33 million.

Molina Healthcare Inc Price, Consensus and EPS Surprise

Financial Update

As of Dec 31, 2017, Molina Healthcare’s cash and cash equivalents increased 13% from year-end 2016 to $3.2 billion.

Total assets grew nearly 14% from the end of 2016 to $8.5 billion.

The company’s shareholder equity declined 19% from year-end 2016 to $1.3 billion.

Net cash provided by operating activities totaled $804 million for 2017, up 19% from $673 million in 2016.

2018 Preliminary Guidance

Adjusted net income per share is expected within the band of $3.23-$3.73

Molina Healthcare is likely to generate total revenues of $18.8 billion in 2018.

Medical Care Costs of $15.6 billion are projected to be incurred in 2018.

The company estimates to incur General and administrative expenses of $1.4 billion in 2018.

Net income is anticipated to be within $202-$236 million.

The company forecasts EBITDA to range between $632 million and $676 million.

Zacks Rank

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

Performance of Other Insurers

Among other medical sector firms having reported fourth-quarter earnings so far, the bottom line of Anthem Inc. ANTM, Aetna Inc. AET and UnitedHealth Group Inc. UNH beat the respective Zacks Consensus Estimate.

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