On Nov 12, 2014, shares of Molina Healthcare, Inc. (MOH) reached a new 52-week high of $50.07. Stock price of this company soared owing to the stellar third-quarter 2014 earnings, primarily attributable to a record low in G&A expenses and expansion of Medicare Medicaid dual eligible plans in California, Illinois and Ohio.
The shares gained almost 57% in the one-year period to close at $49.99 in the last trading session. Moreover, Molina Healthcare’s one-year return of 55.20% was higher than the S&P 500’s return of 13.50% and that of the other industry players like Magellan Health, Inc. (MGLN), Humana Inc. (HUM) and WellCare Health Plans, Inc. (WCG) that recorded returns of 3.64%, 44.18% and 6.40%, respectively.
Last month, Molina Healthcare reported third-quarter earnings that not only surpassed the Zacks Consensus Estimate but also improved year over year. Notably, this health maintenance organization delivered positive earnings surprises in two of the last three quarters with an average beat of 45.73%.
The dynamic operating environment has contributed to the company’s growth. Molina Healthcare served members in California, Illinois and Ohio under the dual eligible pilot programs, which is evident from its increase in aggregate membership. In fact, rise in membership in the first nine months of 2014 was equal to membership growth over the last 23 years, which is impressive. Increase in enrolments drove premium revenues.
Additionally, business strengthening at South Carolina and Illinois paved the way for more revenue generation. In August, the Florida health plan rolled out a new Managed Medicaid Assistance (MMA) program and acquired two entities, one in Plam Beach and the other in the Jackonsville area. We expect these initiatives to enhance the membership base of the company further, thereby attracting more investors. In fact, such moves are driving bullish sentiment on the stock, as evident from a 7.5% rise in the company’s share price since it released third-quarter earnings.
Molina Healthcare currently carries a Zacks Rank #3 (Hold).
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