On Jan 8, we issued an updated research report on Molina Healthcare, Inc. (MOH).
Molina Healthcare has been witnessing a boost in premiums and revenues over the last few years. The Michigan Demonstration Program along with Medicaid expanded in Ohio, California, Illinois, Michigan, New Mexico and Washington. Moreover, the startup of the South Carolina health plan and the implementation of the Affordable Care Act contributed significantly in the rise of the revenues which is expected to keep increasing.
These initiatives and improvement across all the health plans have raised memberships over the years. Acquisition of the Lovelace Community Health Plan contract together with New Mexico’s State Coverage Insurance program also contributed in the membership growth which resulted in higher statutory and surplus capital than the minimum requirement. This reflects Molina Healthcare’s strong capacity to support its health plans in future.
Molina Healthcare has been boosting its membership base with the help of global expansion. Acquisition of the Health Information Management, Abri Health Plan along with the takeover of certain assets of Healthy Palm Beaches, Inc. reflects its endeavors in this respect. This has also resulted in the rise in cash flow from operations. The rising operating cash flow will strengthen the cash position of a company and pave way for efficient capital deployment.
However, the company remains cautious about the rising medical care costs, which are leading to margin compression.
Molina Healthcare’s investment income – one of the main components of its revenues – has been declining since 2007 owing to low interest rates. If the same environment continues in future we believe that Molina Healthcare will need to prudently hedge its investment portfolio from market fluctuations.
Molina Healthcare is exposed to losses related to delays in the enrollment and implementation of programs. Enrollment delays are impacted mainly by the execution of programs brought in by the state and federal government simultaneously. The delay in implementation of programs leads to a time extension where the company incurs administrative costs but no revenues are generated as the program is not implemented. These delays are likely to weigh on the company’s cash flow, which might make it difficult for the company to meet the debt and liquidity needs going forward.
Currently, Molina Healthcare carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks in the Medical Health Maintenance Organization sector include Centene Corp. (CNC), Anthem, Inc. (ANTM) and UnitedHealth Group Incorporated (UNH). While Centene sports a Zacks Rank #1 (Strong Buy), Anthem and UnitedHealth Group hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment