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Analysis

Revenues Decrease But Molina Healthcare Raises Guidance

By Jack O'Brien  
   July 30, 2019

CEO Joe Zubretsky said that the insurer's first half performance gives the company confidence to lift its year-end guidance.

Long Beach, California-based Molina Healthcare experienced a 10.3% drop in premium revenue during Q2 but company leadership indicated those metrics were in line with expectations, raising the insurer's year-end guidance, according to its latest earnings report released Tuesday afternoon.

As stated in its Q1 earnings report, Molina attributed the decline in premium revenue to the loss of its New Mexico Medicaid contract but also faulted the withdrawal of all but two Florida regions last year.

In addition to premium revenues, the company's total revenue and net income slid year-over-year, though its diluted earnings per share (EPS) rose from $3.02 to $3.06 per share.

Related: With Nearly $200M Gain in Q1, Molina Raises Guidance

Molina now projects its EPS guidance to be in a range of $11.20 to $11.50 per share, as well as premium revenue of $16.1 billion, an increase of $200 million compared to its Q1 guidance. 

C-SUITE PERSPECTIVE: 

"We are very pleased with our strong start to the year, a year in which we intend to demonstrate that we can sustain our attractive margin profile while pivoting to growth," Joe Zubretsky, CEO of Molina Healthcare, said in a statement. "The business continues to generate significant excess cash flow and our revenue growth initiatives are well under way. Our quarter and year to date results, and the earnings trajectory of our entire portfolio of businesses leading into the second half of the year, give us the confidence to raise full year guidance."

For the first half of 2019, Molina finished with $156 million in operating cash flows, which was lower than this time last year because of the "timing of government payments."

Still, Molina's stock greeted the release of the earnings report, jumping more than 4.7% in after hours trading. 

Related: Molina Healthcare Stock is Rising Because its Investor Day Has One Analyst Bullish

The company's medical care ratio declined after showing improvement in Q1, falling from 85.3% to 85.6%.

ADDITIONAL MOLINA Q2 EARNINGS REPORT HIGHLIGHTS:  

  • The insurer's net income margin totaled 4.7% for Q2, up from 4.1% in Q2 2018.
  • For Q2, the company received $345 million in dividends from health plan subsidiaries.
  • Molina stated that its results benefited from $12 million in repayment of convertible notes.

For complete financial information, review Molina's filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: Photo credit: Photo credit: KIEV, UKRAINE - Dec 18, 2018: Molina Healthcare company logo seen displayed on smartphone - Image / Editorial credit: IgorGolovniov / Shutterstock.com


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