Molina Healthcare, Inc. MOH reported second-quarter 2015 adjusted net income from continuing operations of 86 cents per share that handily beat the Zacks Consensus Estimate of 66 cents per share. Earnings also improved significantly from 32 cents in the year-ago period.
Higher revenues, enrollment and growth in health plans led to the upside.
Including extraordinary items, net income per share came in at 72 cents per share, up from 16 cents earned in the year-ago quarter.
Operational Update
Total revenue in the reported quarter surged 52% year over year to $3.5 billion. The year-over-year upside in revenues was mainly driven by higher membership. The top line, however, missed the Zacks Consensus Estimate of $3.6 billion.
Premium revenues improved nearly 52% year over year to $3.3 billion driven by Medicaid expansion and Marketplace enrollment, commencement of the Puerto-Rico health plan and the expansion of the Illinois health plan. However, Molina Healthcare’s service revenues decreased nearly 6% to $47.2 million.
Further, Molina Healthcare’s investment income rose 96.8% year over year to $3.8 million. Premium tax revenues also increased 34.9% to $94.6 million in the second quarter.
Total operating expenses rose 49.6% year over year to $3.4 billion. The rise stemmed from an increase in general and administrative (G&A) expenses ($286.5 million from $193.2 million), premium tax expenses ($94.6 million from $70.1 million), health insurer fee expenses ($40.7 million from $21.9 million), and depreciation and amortization (D&A) costs ($25.2 million from $22.9 million).
Operating income was $115.6 million in the reported quarter compared with $32.4 million in the year-earlier quarter.
Additionally, Molina Healthcare’s interest expenses increased to approximately $14.95 million from $13.99 million in the year-ago quarter. Further, medical care ratio (ratio of medical care costs to premium revenues) was 88.7%, down from 89.3% in the year-ago period.
Financial Update
As of Jun 30, 2015, cash and cash equivalents at Molina Healthcare were $2.0 billion, up from $1.5 billion at year-end 2014. Cash from operations amounted to $94 million as against $24.6 million in the year-ago quarter.
As of Jun 30, 2015, total assets increased to $5.7 billion from $4.5 billion at the end of 2014. Molina Healthcare’s shareholder equity was $1.5 billion as of Jun 30, 2015, higher than $1 billion as of Dec 31, 2014.
Performance of Other Insurers
Among other health maintenance organizations (HMOs), Centene Corp. CNC, Anthem Inc. ANTM and Humana Inc. HUM all surpassed their respective Zacks Consensus Estimates in the second-quarter of 2015.
Zacks Rank
Molina Healthcare currently carries a Zacks Rank #3 (Hold).
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