Group 1 - Molina Healthcare (NYSE: MOH) is rated as a Strong Buy despite concerns over the U.S. plan to cut Medicaid expenses by $880 billion over the next ten years [1] - The article emphasizes the potential for investment opportunities in Molina Healthcare amidst the proposed budget cuts [1] Group 2 - The author, Daniel Mellado, has extensive experience in analyzing agricultural commodities and financial investment portfolios, which supports the credibility of the analysis presented [1] - Mellado's background includes managing trading and data analysis teams, indicating a strong foundation in financial markets [1]

Core Insights - The article emphasizes the importance of the Zacks Rank and Style Scores system in identifying strong stocks, particularly focusing on value investing strategies [1][2][3] Company Analysis - Molina Healthcare (MOH) is highlighted as a stock to watch, currently holding a Zacks Rank of 2 (Buy) and a Value grade of A [4] - MOH's current P/E ratio is 11.48, which is slightly below the industry average of 11.51, indicating potential undervaluation [4] - Over the past 52 weeks, MOH's Forward P/E has fluctuated between 10.15 and 14.07, with a median of 12.32 [4] - The company has a PEG ratio of 0.94, which is lower than the industry average of 1.01, suggesting that it may be undervalued relative to its expected earnings growth [5] - MOH's PEG ratio has ranged from 0.81 to 1.24 over the last 12 months, with a median of 1 [5] - The combination of these metrics indicates that MOH is likely undervalued and presents an attractive investment opportunity based on its earnings outlook [6]

Molina Healthcare (MOH) Q1 2025 Earnings Call April 24, 2025 04:37 PM ET Company Participants Jeffrey Geyer - Vice PresidentJoseph Zubretsky - President & CEOMark Keim - Senior EVP, CFO & TreasurerAndrew Mok - DirectorA.J. Rice - Managing DirectorJohn Stansel - VP - Equity ResearchLance Wilkes - Managing DirectorDave Windley - Managing Director Conference Call Participants Stephen Baxter - Senior Equity Research AnalystJoshua Raskin - Research AnalystJustin Lake - Analyst - Healthcare ServicesSarah James - ...

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $6.08 on premium revenue of $10.6 billion for Q1 2025, reflecting strong operating metrics across all lines of business [8][26] - The consolidated Medical Care Ratio (MCR) was 89.2%, indicating effective medical cost management and an improving rate environment [9][26] - The adjusted pre-tax margin was 3.9%, with a 3% after-tax margin, showcasing strong financial performance [9] Business Line Data and Key Metrics Changes - In the Medicaid segment, the MCR was 90.3%, aligning with expectations, with moderate medical cost increases due to high-cost drugs and seasonal illnesses [10][26] - The Medicare segment reported an MCR of 88.3%, consistent with expectations, with medical cost trends adequately captured by rates and risk adjustments [10][27] - The Marketplace segment had a reported MCR of 81.7%, which was higher than expected due to prior year items, but normalized to approximately 77.7% when excluding these items [11][29] Market Data and Key Metrics Changes - The company successfully defended its position in Nevada for Medicaid contracts and was awarded a new contract in Illinois for a dual eligible special needs plan, projecting an incremental annual premium revenue of approximately $800 million [12][13] - The company anticipates achieving premium revenue targets of $46 billion in 2026 and at least $52 billion in 2027 [13] Company Strategy and Development Direction - The company aims to leverage its existing Medicaid footprint to serve high acuity, low-income Medicare beneficiaries, which is proving effective [11] - The acquisition pipeline remains strong, with a focus on capital deployment for accretive acquisitions, increasing embedded earnings from approximately $7.75 to $8.65 per share [14][40] - The company reaffirms its full-year 2025 premium revenue guidance of approximately $42 billion and adjusted EPS guidance of at least $24.50, reflecting an 8% year-over-year growth [15][38] Management's Comments on Operating Environment and Future Outlook - Management believes that any changes to the Medicaid program will be marginal in the near term, with confidence that membership volume and risk pool acuity will remain manageable [17][18] - The recent CMS final rate notice for Medicare Advantage is viewed positively, and the integration of Medicaid and Medicare is expected to benefit the company [20] - The company remains confident in its ability to achieve a long-term EPS growth target of 13% to 15% [24][40] Other Important Information - The company harvested approximately $110 million in subsidiary dividends, with a parent company cash balance of approximately $190 million at the end of the quarter [30] - The company repurchased approximately 1.7 million shares at a total cost of $500 million, maintaining a strong capital foundation [31] Q&A Session Summary Question: Can you expand on risk adjustment and member reconciliation dynamics? - Management explained that member reconciliation involved members who were not authorized to be in the plan, which was a one-time scrub by CMS [46][47] Question: What are the updated assumptions for rates and cost trends? - Management indicated that Medicaid rates were updated in Q1, leading to a full-year rate increase assumption of 5% [56][60] Question: How does the marketplace fit into long-term strategies? - Management emphasized the synergies between marketplace products and government-sponsored managed care, capturing members across various life circumstances [70][71] Question: Is the Washington backdrop impacting state discussions on rate updates? - Management stated that rate discussions are based on actuarial data and are not influenced by political discussions in Washington [78][79] Question: What are the effectuation rates and MLR for new members? - Management reported strong effectuation rates and indicated that MLR for new members is still being assessed due to the high percentage of new membership [82][84] Question: How is G&A progressing this year? - Management noted that G&A is expected to remain flat throughout the year, with a focus on maintaining operational efficiencies [92][93] Question: What is the outlook for Medicaid RFPs and integration? - Management expressed confidence in their competitive position for Medicaid RFPs, particularly with their integrated offerings [129][130]

Core Viewpoint - Molina Healthcare Inc. reported strong first-quarter 2025 results, with adjusted EPS of $6.08, exceeding estimates and showing a year-over-year growth of 6.1% [1][2] Financial Performance - Total revenues reached $11.15 billion, reflecting a 12.2% year-over-year increase and slightly surpassing consensus estimates [1][3] - Premium revenues amounted to $10.63 billion, an 11.8% increase year over year, driven by contract wins, buyouts, and rate hikes, although partially offset by Medicaid redeterminations [3][4] - Total operating expenses were $10.7 billion, up 12.7% year over year, primarily due to rising medical care costs and higher administrative expenses [5][6] Membership and Income - Total membership increased by 0.4% year over year to approximately 5.8 million, although it fell short of consensus estimates by 3.3% [4] - Adjusted net income decreased by 0.3% year over year to $333 million [6] Financial Position - As of March 31, 2025, cash and cash equivalents rose to $4.9 billion from $4.7 billion at the end of 2024, while total assets increased to $16.4 billion [7] - Long-term debt increased to $3.6 billion from $2.9 billion at the end of 2024 [7][8] Guidance - The company reaffirmed its 2025 guidance, expecting premium revenues of around $42 billion, indicating a 9% improvement from 2024 [9] - Adjusted EPS is projected to be a minimum of $24.50, reflecting an 8% increase from the previous year [9][10]

Financial Performance - Total revenue for Q1 2025 was $11,147 million, a 12.2% increase from $9,931 million in Q1 2024[7] - Premium revenue increased to $10,628 million, up 11.8% from $9,504 million year-over-year[7] - Net income for Q1 2025 was $298 million, slightly down from $301 million in Q1 2024, resulting in a diluted net income per share of $5.45[7][8] - Operating income for the quarter was $433 million, compared to $426 million in the same period last year, reflecting a 1.6% increase[7] - Comprehensive income for Q1 2025 was $327 million, up from $298 million in Q1 2024[8] - The consolidated medical care ratio (MCR) was 89.2%, up from 88.5% in Q1 2024, primarily due to higher medical benefits utilization[88] - General and administrative expense (G&A) ratio improved to 6.9% from 7.2% in Q1 2024, indicating better operating discipline[88] Membership and Service Expansion - Molina Healthcare served approximately 5.8 million members across 22 states as of March 31, 2025[16] - Membership increased to 5.8 million as of March 31, 2025, reflecting a growth of 25,000 members, or 0.4%, compared to the previous year[88] - The company is focused on expanding its operations in new states and integrating acquisitions to support growth[83] Medical Care Costs - The company reported a decrease in medical care costs to $9,479 million from $8,414 million year-over-year, reflecting improved cost management[7] - For the three months ended March 31, 2025, total medical care costs amounted to $9,479 million, a decrease from $9,665 million in the prior year[57] - Medical care costs totaled $9,479 billion in Q1 2025, compared to $8,414 billion in Q1 2024[88] Assets and Liabilities - Total assets increased to $16,386 million from $15,630 million at the end of 2024, marking a 4.8% growth[10] - Long-term debt rose to $3,574 million, up from $2,923 million at the end of 2024, indicating a significant increase in leverage[10] - Cash and cash equivalents at the end of the period were $4,955 million, compared to $4,572 million at the end of Q1 2024[14] - The ending balance of medical claims and benefits payable as of March 31, 2025, was $4,804 million, compared to $4,571 million as of March 31, 2024[57] Acquisitions - The acquisition of ConnectiCare was completed for $350 million in cash, with acquisition costs amounting to $2 million recorded as general and administrative expenses[38] - The provisional fair value of assets acquired in the ConnectiCare acquisition included current assets of $450 million and goodwill of $197 million[41] - The company closed the acquisition of ConnectiCare for $350 million on February 1, 2025, expanding its presence in the Marketplace and Medicare segments[109] Cash Flow and Financing Activities - Net cash provided by operating activities was $190 million in Q1 2025, down from $214 million in Q1 2024, mainly due to timing differences in payments[137] - Net cash used in investing activities was $123 million in Q1 2025, a decrease of $365 million compared to $488 million in Q1 2024, reflecting changes in investment activity[138] - Net cash provided by financing activities was $147 million in Q1 2025, an increase of $209 million compared to a cash outflow of $62 million in Q1 2024[139] Stock Repurchase - The company repurchased approximately 1,679,000 shares for $500 million in the first quarter of 2025, exhausting the $1 billion repurchase authorization from October 2024[69] - The company has authorized an additional $1 billion for stock repurchases in April 2025, extending through December 31, 2026[71] Tax and Regulatory Considerations - The effective tax rate may fluctuate due to various factors, including projected pretax earnings and changes in tax laws[34] - The effective income tax rate decreased to 23.7% in Q1 2025 from 24.5% in Q1 2024, influenced by increased tax benefits and lower state taxes[104] Future Risks - Future risks include potential Medicaid funding reductions and regulatory changes impacting the healthcare industry[83]

For the quarter ended March 2025, Molina (MOH) reported revenue of $11.15 billion, up 12.2% over the same period last year. EPS came in at $6.08, compared to $5.73 in the year-ago quarter. The reported revenue represents a surprise of +0.24% over the Zacks Consensus Estimate of $11.12 billion. With the consensus EPS estimate being $5.86, the EPS surprise was +3.75%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expecta ...

Molina (MOH) came out with quarterly earnings of $6.08 per share, beating the Zacks Consensus Estimate of $5.86 per share. This compares to earnings of $5.73 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.75%. A quarter ago, it was expected that this provider of Medicaid-related services would post earnings of $5.81 per share when it actually produced earnings of $5.05, delivering a surprise of -13.08%.Over the last four qu ...

"Our first quarter results reflect our team's disciplined approach to medical cost management in an improving rate environment," said Joseph Zubretsky, President and Chief Executive Officer. "Our 2025 earnings and growth profiles are solid, and we remain confident in our ability to achieve our 13% to 15% long-term adjusted EPS growth target." News Release Investor Contact: Jeffrey Geyer, Jeffrey.Geyer@molinahealthcare.com, 305-317-3012 Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, ...

Healthcare plan provider Molina Healthcare, Inc. (MOH) is set to report first-quarter 2025 results on April 23, 2025, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $5.86 per share on revenues of $11.12 billion. (See the Zacks Earnings Calendar to stay ahead of market-making news.)The first-quarter earnings estimate declined 2.5% over the past 60 days. However, the bottom-line projection indicates a year-over-year increase of 2.3%. The Z ...