Molina Health Q2 Earnings Top On Premiums, Subdued Costs
Molina Healthcare reported second-quarter profit Thursday that more than quadrupled as premiums increased 52% and it kept costs under control.
The managed health care provider's earnings per share from continuing operations shot up 350% to 72 cents, beating forecasts by 9 cents a share. Revenue jumped 52% to $3.53 billion, lighter than Wall Street's $3.6 billion target.
Shares of Molina (MOH), which operates mostly Medicaid programs for low-income and needy patients, rose 0.3% late after closing down 1.2%.
Its stock has been climbing amid skyrocketing profits. EPS growth rate in the prior three quarters was 106%, 445% and 460%.
The sector is consolidating, and Molina recently told IBD that if a pending merger of Centene (CNC) and Health Net (HNT) goes through, Molina would be the biggest pure play in Medicaid managed care and other government programs.
The Affordable Care Act has made health care more accessible to patients, driving up costs for insurers as more patients seek treatment. Insurers and managed health care plan providers have had to watch costs as ObamaCare rolls out.
Molina said its medical care costs, as a percentage of premium revenue, improved to 88.7% in Q2 from 89.3% a year ago.
General and administrative expenses as a percentage of total revenue also dropped to 8.1% from 8.4% the year before amid tight cost controls.
"We remain confident that we have the right plans in place for the rest of 2015 and look forward to closing our recently announced Medicaid acquisitions in Florida, Illinois and Michigan later this year," CEO Mario Molina said in a statement.
Meanwhile, Universal Health Services (UHS), an operator of acute care hospitals and behavioral health centers, said that its Q2 EPS climbed 19% to $1.85, beating by 22 cents. Revenue rose 13% to $2.28 billion, better than forecasts for $2.19 billion.
Adjusted hospital admissions on a same-facility basis increased 5.7%. Behavioral health center admissions rose 4.2%.
Universal Health also raised its full-year EPS outlook to $6.75-$7.15, above consensus of $6.57, from a prior forecast of $6.15-$6.55.
