Molina (MOH) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended March 2025. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April 23. On the ...

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Core Viewpoint - Molina Healthcare's fourth-quarter 2024 earnings report showed mixed results, with adjusted EPS missing estimates but total revenues increasing significantly year over year. The company faces challenges from rising medical costs and lower-than-expected membership growth, which may impact future performance [2][3][4]. Financial Performance - Adjusted EPS for Q4 2024 was $5.05, missing the Zacks Consensus Estimate of $5.81, but representing a 15.3% increase from the previous year [2]. - Total revenues reached $10.5 billion, a 16% year-over-year improvement, although it slightly missed consensus expectations [2]. - For the full year 2024, total revenues were $40.65 billion, up from $34.07 billion in 2023, exceeding the estimate of $40.58 billion [4]. Operational Insights - Premium revenues in Q4 2024 were $9.98 billion, a 19.4% increase year over year, surpassing estimates [5]. - Total membership grew by 10.8% year over year to approximately 5.5 million, although it fell short of the Zacks Consensus Estimate by 3.1% [6]. - The consolidated medical care ratio (MCR) was 90.2%, up from 89.1% a year ago, indicating rising medical costs [8]. Expense and Income Analysis - Total operating expenses for Q4 2024 were $10.1 billion, a 15.9% increase year over year, driven by higher medical care costs and administrative expenses [7]. - Investment income decreased by 2.6% year over year to $111 million, but it exceeded the consensus estimate [6]. Future Guidance - For 2025, Molina expects premium revenues to reach around $42 billion, indicating a 9% increase from 2024 [11]. - Adjusted EPS is projected to be at least $24.50, reflecting an 8% rise from the previous year [11]. - Total membership is anticipated to grow to 5.9 million by the end of 2025, with a consolidated MCR expected to remain at 88.7% [12]. Market Position and Trends - The consensus estimate for Molina has seen a downward trend, with a shift of -11.22% in the past month [13]. - The company currently holds a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the near term [15]. - In comparison, Cigna, a competitor in the same industry, reported a revenue increase of 28.4% year over year, highlighting competitive pressures [16].

Financial Performance - Premium revenue for 2024 reached $38,627 million, a 18.9% increase from $32,529 million in 2023[17] - Total revenue for 2024 was $40,650 million, up 19.4% from $34,072 million in 2023[17] - Net income for 2024 was $1,179 million, compared to $1,091 million in 2023, reflecting an 8.0% increase[17] - The company achieved a 19% revenue growth and 12% earnings per share growth from 2019 to 2024[26] - The company targets 11% to 13% revenue growth and 13% to 15% earnings per share growth, aiming for $52 to $55 billion in premium revenue by 2027[27] - The company paid $997 million in total dividends to the parent company in 2024, indicating strong cash flow management[46] - Investment income increased by $58 million in 2024, or 15%, due to growth in invested assets[46] Membership Growth - Membership grew to approximately 5.5 million members in 2024, up from 4.995 million in 2023, representing an 11.0% increase[20] - Medicaid enrollment is expected to increase by over 100,000 in 2025, reaching a total of five million members by year-end[49] - Medicare enrollment is projected to increase by approximately 3% in 2025, totaling 250,000 members, including 39,000 from the ConnectiCare acquisition[65] - Marketplace enrollment is expected to increase by almost 50% in 2025, reaching a total of 580,000 members, contributing to an estimated 60% increase in Marketplace premium revenue[78] - Approximately 1 million new Medicaid members were added since March 31, 2020, but an estimated loss of 675,000 members occurred due to the resumption of redeterminations[88] - The company expects to retain approximately 30% of the membership gained since March 31, 2020[88] Medicaid and Medicare Revenue - Medicaid premium revenue constituted 79% of consolidated premium revenue for the year ended December 31, 2024[52] - California Medicaid contracts generated approximately $4,121 million, or 13% of consolidated Medicaid premium revenue in 2024, with an addition of 500,000 new members[53] - New York Medicaid contracts accounted for approximately $3,373 million, or 11% of consolidated Medicaid premium revenue in 2024[54] - Texas Medicaid contracts represented approximately $4,126 million, or 14% of consolidated Medicaid premium revenue in 2024[55] - For the year ended December 31, 2024, Medicaid program PMPM premium rates ranged from $290 to $1,380[58] - For the year ended December 31, 2024, Medicare program PMPM premium rates ranged from $1,140 to $4,310[73] Acquisitions and Growth Strategy - Recent acquisitions and RFP successes in 2024 are expected to contribute nearly $7 billion in incremental annual premium revenue, mostly realized by 2026[30] - The company closed the acquisition of Bright Health Medicare in January 2024 and ConnectiCare in February 2025, aiming for operational synergies and incremental earnings accretion[158] - The company plans to continue focusing on organic growth through new state procurement opportunities and inorganic growth through accretive acquisitions[28] Regulatory and Compliance Risks - The company is subject to stringent regulatory requirements, which may lead to additional costs for compliance with evolving laws and regulations[122] - The Consolidated Appropriations Act of 2023 allowed states to resume redeterminations, leading to disenrollment of members gained during the PHE[86] - The company is exposed to operating sanctions and financial fines for noncompliance with encounter data submission requirements[184] - Non-compliance with laws regarding PHI, PII, or non-public personal information could lead to civil and criminal penalties, adversely affecting the company's financial condition and operations[204] - New laws and regulations may require significant costs and changes in business operations, potentially hindering growth and leading to legal claims or regulatory investigations[205] Operational Challenges - The company operates with very low profit margins, which are in the single digits, making it sensitive to small changes in operating performance[196] - The company faces risks related to outsourcing services to third parties, which could lead to operational disruptions and increased costs[151] - Cybersecurity threats pose significant risks, including potential data breaches that could harm operations and reputation[152] - The company maintains cybersecurity insurance, but coverage may not be sufficient to cover all financial losses from incidents[155] - Integration of acquired businesses is complex and may not yield anticipated benefits, affecting financial performance[159] Market Competition - Molina Healthcare's Medicaid managed care industry faces increasing competition from large national health plans, with primary competitors including Centene Corporation and CVS Health[118] - The Medicare market is highly competitive, with significant players such as CVS Health Corporation and UnitedHealth Group Inc.[119] Employee Engagement and Benefits - The company is focused on employee engagement and development, with annual surveys showing improvement that exceeds industry benchmarks[134] - Molina Healthcare offers a comprehensive suite of employee benefits, including health insurance, 401(k) matching, and wellness programs[138] Financial Risks - A substantial portion of premium revenue is subject to complex contract provisions, which, if misinterpreted, could require adjustments that negatively impact financial results[164] - Medicaid premium revenues may be adversely affected by retroactive adjustments or delays in rate changes by states, creating uncertainty in revenue recognition[166] - Loss of significant contracts could lead to stranded administrative costs, adversely affecting the company's financial condition and cash flows[163] - The company's medical care ratio was 89.1% for the year ended December 31, 2024; a one percentage point increase could have reduced net income per diluted share by approximately $5.24[171] - The company relies on state-provided eligibility lists for premium payments, and inaccuracies could lead to reimbursement obligations that adversely affect results[178] Future Outlook - The economic impact of transitioning from MMPs to D-SNPs by January 1, 2026, remains uncertain for premium revenue[192] - Changes in laws and regulations could impose additional capital requirements and increase administrative costs, negatively impacting profitability[212] - Rising pharmaceutical costs, including new specialty drugs, could jeopardize the actuarial soundness of capitation rates, adversely impacting financial results[207] - Large-scale medical emergencies could significantly increase utilization rates and medical costs, negatively affecting the company's financial condition[208]

Core Insights - Molina Healthcare, Inc. reported fourth-quarter 2024 adjusted EPS of $5.05, missing the Zacks Consensus Estimate of $5.81, but reflecting a 15.3% year-over-year growth [1] - Total revenues for the quarter reached $10.5 billion, a 16% increase year-over-year, although it slightly missed the consensus mark [1][2] Financial Performance - Full-year 2024 total revenues were $40.65 billion, up from $34.07 billion the previous year, surpassing the estimate of $40.58 billion [3] - Adjusted EPS for 2024 grew to $22.65 from $20.88, but fell short of the consensus estimate of $23.44 [3] - Adjusted net income for 2024 was $1.31 billion, an increase from $1.21 billion year-over-year [3] Operational Highlights - Premium revenues in Q4 2024 were $9.98 billion, a 19.4% increase year-over-year, exceeding the Zacks Consensus Estimate of $9.85 billion [4] - Total membership as of December 31, 2024, rose 10.8% year-over-year to approximately 5.5 million, although it missed the consensus estimate by 3.1% [5] - Investment income decreased by 2.6% year-over-year to $111 million, but was above the consensus mark of $108.2 million [5] Expense and Ratios - Total operating expenses for Q4 2024 were $10.1 billion, a 15.9% increase year-over-year, exceeding model estimates due to rising medical care costs and higher administrative expenses [6] - The consolidated medical care ratio (MCR) was 90.2% for the quarter, up from 89.1% a year ago, and higher than the consensus mark of 88.72% [7] Balance Sheet and Cash Flow - As of December 31, 2024, cash and cash equivalents were $4.66 billion, down from $4.85 billion at the end of 2023 [8] - Total assets increased to $15.63 billion from $14.89 billion at the end of 2023, while long-term debt rose to $2.92 billion from $2.18 billion [8] - Net cash provided by operating activities was $644 million in 2024, a significant decline from $1.66 billion in 2023 [9] 2025 Guidance - Management projects premium revenues to reach around $42 billion in 2025, indicating a 9% improvement from 2024 [11] - Adjusted EPS is expected to be at least $24.50, reflecting an 8% increase from 2024 [11] - Total membership is estimated to grow to 5.9 million by the end of 2025, with a projected consolidated MCR of 88.7% [12]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $5.05 on $10 billion of premium revenue for Q4 2024, with full-year adjusted earnings per share of $22.65, representing an 8.5% year-over-year growth [10][12][34] - Full-year premium revenue reached $38.6 billion, reflecting a 19% year-over-year growth, while the pretax margin was 4.3%, within the long-term target range [13][14] - The consolidated Net Cost Ratio (NCR) for Q4 was 90.2%, higher than expected due to medical cost pressures, with a full-year NCR of 89.1% [11][63] Business Line Data and Key Metrics Changes - In Medicaid, the full-year MCR was 90.3%, or 89.8% when adjusted for prior year items, with a Q4 MCR also at 90.2% due to higher utilization [14][63] - Medicare's full-year MCR was 89.1%, with Q4 MCR at 93.8%, reflecting higher medical costs [19][67] - Marketplace performed well with a full-year MCR of 75.4%, significantly below the long-term target range, allowing for reinvestment into pricing for growth [20][69] Market Data and Key Metrics Changes - The company expects to end 2025 with approximately 5 million Medicaid members, 250,000 Medicare members, and 580,000 Marketplace members, reflecting significant growth [75][78] - The 2025 premium revenue guidance is approximately $42 billion, representing about 9% growth from 2024 [79] Company Strategy and Development Direction - The company is focused on growth initiatives, including recent acquisitions and new contract wins, projecting a path to $46 billion in premium revenue by 2026 and at least $52 billion by 2027 [28][31] - The company aims to maintain a solid earnings profile with embedded earnings projected to reach $7.75 for 2026 and beyond, supporting future EPS growth [31][88] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that Q4 results fell short of expectations but emphasized the ability to manage through industry-wide headwinds [53][56] - The company remains confident in achieving long-term targets and believes that any changes to the Medicaid program will be marginal [47][51] Other Important Information - The company closed its acquisition of Connecticut from EmblemHealth, expected to generate $1.2 billion in revenue, primarily in Marketplace [22] - The company repurchased 1.7 million shares at a total cost of $500 million and closed a bond offering of $750 million [72] Q&A Session Summary Question: Can you provide more color on the components within the Medicaid MLR for 2025? - Management indicated that the MLR guidance for 2025 is flat with 2024, projecting a 4.5% rate increase and a 4.5% trend off the 2024 baseline [92][93] Question: What were the specific drivers for the Marketplace MLR in Q4? - Management attributed the Q4 Marketplace MCR of 83.3% to normal seasonality, noting that the full-year MCR of 75.4% was satisfactory [122] Question: Can you clarify the cost trends and what drives the assumptions for 2025? - Management explained that the 2024 cost trend was 6.5%, while the 2025 projection is 4.5%, reflecting a more stable utilization trend without the acuity shift seen in 2024 [135][136]

Core Insights - Molina (MOH) reported $10.5 billion in revenue for Q4 2024, a 16% year-over-year increase, with an EPS of $5.05 compared to $4.38 a year ago, indicating a revenue surprise of -0.04% and an EPS surprise of -13.08% against consensus estimates [1] Financial Performance Metrics - Molina's total Membership Care Ratio (MCR) was 90.2%, exceeding the estimated 88.7% [4] - Medicare MCR was reported at 93.8%, higher than the estimated 90.2% [4] - Marketplace MCR stood at 83.3%, above the estimated 78.2% [4] - Total ending membership was 5.54 million, below the average estimate of 5.71 million [4] - Medicaid membership was 4.89 million, compared to the estimated 5.03 million [4] Revenue Breakdown - Premium tax revenue was $383 million, significantly lower than the estimated $617.30 million, reflecting a -30.6% year-over-year change [4] - Premium revenue reached $9.98 billion, slightly above the estimated $9.85 billion, marking a +19.4% year-over-year increase [4] - Investment income was reported at $111 million, slightly above the estimated $108.16 million, representing a -2.6% year-over-year change [4] - Other revenue was $22 million, exceeding the estimated $20.28 million, with a +10% year-over-year increase [4] - Medicare premium revenue was $1.29 billion, below the estimated $1.35 billion, with a +22.2% year-over-year change [4] - Medicaid premium revenue was $8.04 billion, surpassing the estimated $7.88 billion, reflecting an +18.6% year-over-year increase [4] - Marketplace premium revenue was $650 million, below the estimated $691.79 million, with a +24.3% year-over-year change [4] Stock Performance - Molina's shares returned +6.4% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Core Viewpoint - Molina's quarterly earnings of $5.05 per share fell short of the Zacks Consensus Estimate of $5.81 per share, marking an earnings surprise of -13.08% [1] - The company reported revenues of $10.5 billion for the quarter, slightly missing the consensus estimate by 0.04%, but showing an increase from $9.05 billion year-over-year [2] Financial Performance - Earnings per share (EPS) for the same quarter last year was $4.38, indicating a year-over-year increase [1] - Over the last four quarters, Molina has surpassed consensus EPS estimates three times [2] - The current consensus EPS estimate for the upcoming quarter is $6.60, with expected revenues of $10.71 billion, and for the current fiscal year, the EPS estimate is $26.06 on revenues of $43.78 billion [7] Market Performance - Molina shares have increased approximately 8.4% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] - The company's stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Outlook - The Medical - HMOs industry, to which Molina belongs, is currently ranked in the bottom 8% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Molina's stock performance [5]

Financial Performance - For the full year 2024, Molina Healthcare reported premium revenue of approximately $38.6 billion, an increase of 19% year over year[3]. - GAAP net income for the full year 2024 was $20.42 per diluted share, reflecting a 9% increase year over year[6]. - Adjusted net income for the full year 2024 was $22.65 per diluted share, representing an 8% increase year over year[6]. - The company expects full year 2025 premium revenue to be approximately $42 billion, indicating a 9% growth from 2024[11]. - Full year 2025 adjusted earnings per diluted share are projected to be at least $24.50, reflecting an 8% growth over 2024[12]. - Net income for the year ended December 31, 2024, was $1,179 million, up from $1,091 million in 2023, reflecting a year-over-year increase of 8.0%[26]. - For the year ended December 31, 2024, the company reported a GAAP net income of $1,251 million, translating to $22.50 per diluted share[39]. - Adjusted net income for the same period was $1,362 million, or $24.50 per diluted share, after accounting for adjustments totaling $111 million[39]. - Adjusted net income for the year was $1,308 million, up from $1,213 million in 2023, reflecting an increase of 7.8%[36]. Membership and Market Presence - As of December 31, 2024, Molina Healthcare served approximately 5.5 million members[3]. - Ending membership in Medicaid increased to 4,890,000 in 2024, up from 4,542,000 in 2023, marking a growth of 7.7%[28]. - The company reported a total of 5,535,000 members across all segments by the end of 2024, compared to 4,995,000 in 2023, an increase of 10.9%[28]. - The company is focused on expanding its market presence through newly awarded state Medicaid contracts and acquisitions[41]. Financial Ratios and Cash Flow - The consolidated Medical Care Ratio (MCR) for the full year 2024 was 89.1%, indicating effective management of medical costs[10]. - The medical care ratio (MCR) for Medicaid improved to 90.3% in 2024 from 88.7% in 2023, indicating better cost management[28]. - Operating cash flow for the year ended December 31, 2024, was $644 million, a decrease from $1,662 million in 2023[10]. - Cash and cash equivalents at the end of the period were $4,741 million, down from $4,908 million in 2023, a decrease of 3.4%[26]. Assets and Liabilities - Total assets increased to $15,630 million in 2024 from $14,892 million in 2023, representing a growth of 4.9%[24]. - Total current liabilities decreased to $7,896 million in 2024 from $8,168 million in 2023, a reduction of 3.3%[24]. - The company’s long-term debt rose to $2,923 million in 2024 from $2,180 million in 2023, an increase of 34.0%[24]. Future Outlook - The company anticipates approximately 13% growth in earnings due to recent Medicaid and Medicare Duals contract wins scheduled to commence in 2026[4]. - The company anticipates incremental diluted earnings per share from new Medicaid contracts and acquisitions to be included in the 2026-2028 period, with a focus on states like California, Iowa, and Texas[41]. - Non-recurring costs associated with recently announced acquisitions are estimated at approximately $20 million[41]. - The company’s guidance for 2025 includes a statutory tax rate effect of approximately 24.1% on income tax adjustments[39]. Shareholder Actions - The company purchased approximately 1.7 million shares for $500 million in the fourth quarter of 2024[9]. - The diluted weighted average shares outstanding for the calculations were approximately 55.6 million[40]. Adjustments and Non-Recurring Items - The adjustments for amortization of intangible assets amounted to $96 million, contributing $1.73 per diluted share[39]. - The year ended December 31, 2023, included non-recurring litigation and a credit loss due to the insolvency of an issuer in the Texas risk pool[37]. - The company’s performance metrics include non-GAAP measures such as "new store embedded earnings," which reflect expected earnings from new contracts not included in the 2025 guidance[41].

Core Viewpoint - Molina Healthcare, Inc. is expected to report its fourth-quarter 2024 results on February 5, 2025, with earnings estimated at $5.81 per share and revenues of $10.5 billion, indicating a year-over-year earnings increase of 32.7% and revenue growth of 16.1% [1][2]. Earnings Estimates - The earnings estimate for Molina Healthcare has remained stable over the past month, with a consensus indicating a significant year-over-year increase [2]. - The company has a history of exceeding earnings estimates, having beaten the consensus in each of the last four quarters with an average surprise of 2.4% [3]. Earnings Prediction Model - Despite a positive Earnings ESP of +1.91%, Molina Healthcare holds a Zacks Rank of 4 (Sell), which diminishes the likelihood of an earnings beat this quarter [4]. Factors Influencing Q4 Results - Growth in the Medicaid and Medicare customer base is expected to drive premium growth, with a consensus estimate indicating a 17.8% year-over-year increase in premiums for the fourth quarter [6]. - Medicaid premiums are projected to grow nearly 15% year-over-year, while Medicare premiums are expected to reach $1.35 billion, reflecting a 28% increase [6]. Membership Growth - Contract wins and renewals from federal and state authorities are likely to contribute to membership growth in Molina's Medicaid and Medicare segments [7]. - Medicaid membership is expected to increase by 10.8% year-over-year, while Medicare membership is projected to grow by 44.4% [9]. Medical Care Ratio (MCR) - The consensus estimate for the medical care ratio in the Marketplace is pegged at 78.16%, down from 79.80% a year ago, indicating improved margins [10]. - The total MCR is estimated at 88.7%, a slight decrease from 89.1% year-over-year, suggesting potential for growing margins [10]. Cost and Income Challenges - Rising costs and a projected 5.1% decline in investment income may pose challenges for Molina Healthcare, with total operating expenses expected to increase by over 11% from the previous year [11].