On Dec 28, 2015, we issued an updated research report on health maintenance organization (HMO) Molina Healthcare, Inc. MOH.
Molina Healthcare operates two of the fastest growing programs in the managed care industry-dual eligibles and Medicaid. Also, the company by virtue of its superior operational capability has been winning government contracts. These are boosting premiums and service revenues. Care intensive benefits and related higher premiums associated with the aged, blind or disabled and Medicare members are also contributing to consistent top-line growth.
The inorganic story remains impressive with strategic acquisitions. Adding companies not only increase the membership base but also boost operating scale and capacity to offer superior quality healthcare services.
Moreover, Molina Healthcare remains focused on the creation of new health plans and the development of the existing ones. These in turn increase the membership base and fuel top-line growth.
Molina Healthcare’s strong financial position allows prudent capital deployment that supports the enhancement of shareholder returns.
However, rising medical care cost that is weighing on margin expansion, higher medical care costs which are increasing the medical care ratio, and delays in the enrollment and implementation of programs keep us on the sideline.
We respect to third-quarter results, Molina Healthcare outperformed the Zacks Consensus Estimate and improved year over year on increased revenues, greater medical cost efficiency, and full state reimbursement of the Affordable Care Act Health Insurer Fee. Notably, This Zacks Rank #2 (Buy) HMO surprised in the last four quarters, with an average beat of 16.83%.
Other Stocks to Consider
Investors interested in HMOs can also look at Magellan Health, Inc. MGLN, Triple-S Management Corporation GTS and UnitedHealth Group Incorporated UNH. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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