On Aug 29, 2014, Molina Healthcare Inc. (MOH) scaled a 52-week high of $48.03 following a couple of good tidings at the company. These comprised strong second-results and an agreement to acquire some Medicaid assets from First Coast Advantage, LLC.
In July, Molina Healthcare reported second-quarter financial results, which included a 44.2% positive earnings surprise. In fact, the stock rose nearly 10.8% over the last one month to close at $47.84, since the company reported second-quarter earnings on Jul 30, 2014. Furthermore, the one-year return on the stock is 43.3%, much above the S&P 500’s return of 22.7% as well as that of other players in the healthcare services space like Centene Corp. (CNC), WellCare Health Plans, Inc. (WCG) and Humana Inc. (HUM) that generated returns of 36.7%, 3.4% and 39.8% respectively, over the same period.
In the reported quarter, Molina Healthcare’s bottom line surpassed the Zacks Consensus Estimate but declined year over year on delay in procuring agreements for the reimbursement of the Health Insurer Fee (HIF) as well as delay in quality related revenue recognition. The company’s revenues were in line with the Zacks Consensus Estimate and increased year over year on rise in premium and service revenues, premium tax revenues, health insurer fee revenues and investment income.
Molina Healthcare started serving members in California, Illinois and Ohio under the dual eligible pilot programs in the second quarter, which is evident from its increase in aggregate membership. The company’s financial position also remained strong at the end of second-quarter 2014.
Another news that contributed to the 52-week high was the deal signed by Molina Healthcare of Florida, Inc. – a wholly owned subsidiary of Molina Healthcare – with First Coast Advantage. After closure of the deal, Molina Healthcare of Florida will assume Medicaid contracts and some of the provider agreements of First Coast Advantage for Region 4 under the Statewide Medicaid Managed Care (SMMC) Managed Medical Assistance (MMA) program in Florida.
The deal is currently awaiting approval from the Florida Agency for Health Care Administration (AHCA). On culmination, this acquisition will not only benefit Molina Healthcare in terms of scale but will also boost the company’s capacity to offer quality healthcare services.
Currently, Molina Healthcare carries a Zacks Rank #3 (Hold).
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