Molina Healthcare, Inc. (MOH) Bundle
Understanding Molina Healthcare, Inc. (MOH) Revenue Streams
Understanding Molina Healthcare, Inc.’s Revenue Streams
The primary revenue sources for the company primarily include premium revenue from Medicaid, Medicare, and Marketplace segments. The following table outlines the breakdown of premium revenue for the third quarter of 2024 compared to the same period in 2023.
| Segment | Premium Revenue (Q3 2024, in millions) | Premium Revenue (Q3 2023, in millions) | Year-over-Year Change |
|---|---|---|---|
| Medicaid | $7,668 | $6,711 | 14% |
| Medicare | $1,367 | $1,032 | 32% |
| Marketplace | $659 | $497 | 32% |
| Total Premium Revenue | $9,694 | $8,240 | 18% |
For the nine months ended September 30, 2024, the total premium revenue was $28,644 million, representing a year-over-year increase of 19% from $24,167 million in the same period of 2023.
Year-over-Year Revenue Growth Rate
The company has experienced significant year-over-year revenue growth, with premium revenue increasing by $1.5 billion in the third quarter of 2024, a rise of 18% compared to the same quarter in 2023. Over the nine-month period, premium revenue rose by $4.5 billion, or 19%.
Contribution of Different Business Segments to Overall Revenue
In the nine months ended September 30, 2024, the contribution from each segment to total premium revenue was as follows:
| Segment | Premium Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Medicaid | $22,538 | 78.7% |
| Medicare | $4,250 | 14.8% |
| Marketplace | $1,856 | 6.5% |
| Total | $28,644 | 100% |
The Medicaid segment remains the largest contributor, accounting for approximately 78.7% of total premium revenue.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The Medicaid premium revenue increased by $3.0 billion or 15% for the nine months ended September 30, 2024, driven by new contract wins and acquisitions.
- The Medicare premium revenue saw a substantial increase of $1,128 million, or 36%, primarily due to the Bright Health Medicare acquisition and expansion of membership.
- Marketplace premium revenue increased by $356 million, or 24%, reflecting an increase in membership.
Overall, the significant growth in revenue across all segments highlights the company's expanding operational footprint and successful acquisition strategies, contributing to its robust financial performance in 2024.
A Deep Dive into Molina Healthcare, Inc. (MOH) Profitability
A Deep Dive into Molina Healthcare, Inc.'s Profitability
Gross Profit Margin: As of Q3 2024, the gross profit margin was approximately 10.8%, increasing from 11.3% in Q3 2023.
Operating Profit Margin: The operating profit margin for Q3 2024 stood at 4.8%, compared to 4.4% in Q3 2023. For the nine months ended September 30, 2024, the operating profit margin was 4.6%, slightly up from 4.4% in the same period of 2023.
Net Profit Margin: The net profit margin for the third quarter of 2024 was 3.2%, up from 2.9% in Q3 2023. For the nine months ended September 30, 2024, the net profit margin was 3.2%, compared to 3.5% in the prior year.
Trends in Profitability Over Time
- Q3 2024 Net Income: $326 million, an increase from $245 million in Q3 2023.
- Net Income for Nine Months Ended September 30, 2024: $928 million, compared to $875 million in the prior year.
- Premium Revenue for Q3 2024: $9.7 billion, an increase of 18% compared to Q3 2023.
Comparison of Profitability Ratios with Industry Averages
| Metric | Molina Healthcare (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 10.8% | 12.5% |
| Operating Profit Margin | 4.8% | 6.0% |
| Net Profit Margin | 3.2% | 4.5% |
Analysis of Operational Efficiency
General and Administrative Expense (G&A) Ratio: The G&A ratio improved to 6.5% in Q3 2024 from 7.1% in Q3 2023, indicating better cost management.
Medical Care Ratio (MCR): The consolidated MCR for Q3 2024 was 89.2%, an increase from 88.7% in Q3 2023. This reflects rising medical costs but is somewhat offset by improved operational efficiencies.
Investment Income: Investment income increased to $118 million in Q3 2024, up from $112 million in Q3 2023, contributing positively to overall profitability.
Summary of Key Profitability Metrics
| Period | Net Income | Operating Income | Premium Revenue | G&A Ratio | MCR |
|---|---|---|---|---|---|
| Q3 2024 | $326 million | $467 million | $9.7 billion | 6.5% | 89.2% |
| Q3 2023 | $245 million | $359 million | $8.2 billion | 7.1% | 88.7% |
| 9 Months 2024 | $928 million | $1.327 billion | $28.6 billion | 6.9% | 88.8% |
| 9 Months 2023 | $875 million | $1.257 billion | $24.2 billion | 7.3% | 87.8% |
Debt vs. Equity: How Molina Healthcare, Inc. (MOH) Finances Its Growth
Debt vs. Equity Structure
The company maintains a balanced approach to its debt and equity structure, which is crucial for financing growth and managing financial health.
Overview of Debt Levels
As of September 30, 2024, the total debt stood at $4.49 billion, comprised of:
- Short-term debt (due in one year or less): $581 million
- Long-term debt (due after one year): $3.91 billion
Debt-to-Equity Ratio
The debt-to-equity ratio is a key indicator of financial leverage. As of September 30, 2024, the ratio was calculated at:
Debt-to-Equity Ratio = Total Debt / Total Equity
Using values, this equates to:
Debt-to-Equity Ratio = $4.49 billion / $4.77 billion = 0.94
This ratio is below the industry average of approximately 1.0, indicating a conservative leverage position relative to peers.
Recent Debt Issuances and Refinancing Activity
In the third quarter of 2024, the company reported:
- Interest expense of $29 million for the quarter, compared to $27 million in the same quarter of 2023.
- Proceeds from borrowings under the credit facility totaling $300 million.
- Repayment of a credit facility amounting to $150 million.
The company has a credit rating of BBB from S&P, reflecting its stable outlook and manageable debt levels.
Balancing Debt Financing and Equity Funding
The company utilizes a mix of debt and equity financing to optimize its capital structure. In 2024, the company repurchased approximately 1.5 million shares for $500 million, indicating a strategic move to enhance shareholder value while managing its equity base.
| Type of Debt | Amount (in millions) | Maturity |
|---|---|---|
| Short-term Debt | $581 | Due in 1 year or less |
| Long-term Debt (1-5 years) | $2,295 | Due after 1 year through 5 years |
| Long-term Debt (5-10 years) | $509 | Due after 5 years through 10 years |
| Long-term Debt (10+ years) | $1,109 | Due after 10 years |
| Total Debt | $4,494 | N/A |
This structured debt management allows the company to fund growth initiatives while maintaining a strong balance sheet and financial flexibility.
Assessing Molina Healthcare, Inc. (MOH) Liquidity
Assessing Molina Healthcare, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.55, calculated by total current assets of $12.881 billion divided by total current liabilities of $8.337 billion.
Quick Ratio: The quick ratio is approximately 1.25, derived from current assets minus inventory (which is negligible in this case) over current liabilities.
Working Capital: The working capital reported is $4.5 billion as of September 30, 2024, an increase from $4.4 billion at December 31, 2023.
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, net cash provided by operating activities was $868 million, a decrease from $2.352 billion in the same period of 2023, primarily due to timing differences in government receivables and payables.
Investing Cash Flow: Net cash used in investing activities was $483 million for the nine months ended September 30, 2024, compared to $719 million in the prior year.
Financing Cash Flow: Net cash used in financing activities totaled $414 million in 2024, a significant increase from $61 million in 2023.
Potential Liquidity Concerns or Strengths
The total cash and investments as of September 30, 2024, amounted to $9.5 billion, indicating a stable liquidity position. Additionally, the company reported net unrealized losses on investments decreased to $12 million from $108 million, showcasing improved asset stability.
| Liquidity Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets | $12.881 billion | $12.542 billion |
| Current Liabilities | $8.337 billion | $8.168 billion |
| Working Capital | $4.5 billion | $4.4 billion |
| Operating Cash Flow | $868 million | $2.352 billion |
| Investing Cash Flow | ($483 million) | ($719 million) |
| Financing Cash Flow | ($414 million) | ($61 million) |
The company maintains a solid liquidity position with sufficient cash resources and borrowing capacity to support operational and regulatory requirements.
Is Molina Healthcare, Inc. (MOH) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 16.5, calculated using the latest net income of $928 million and the diluted weighted average shares outstanding of 57.7 million. This reflects a diluted earnings per share (EPS) of $15.97.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.0, derived from total stockholders' equity of $4.77 billion and total assets of $15.76 billion.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 8.5, taking into account an enterprise value of approximately $10.5 billion and EBITDA of $1.24 billion.
Stock Price Trends
Over the past 12 months, the stock price has shown the following trends:
- 12 months ago: $245.00
- Current price: $263.00
- Percentage increase: 7.35%
Dividend Yield and Payout Ratios
Currently, the company does not offer a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0% as there are no dividends declared.
Analyst Consensus
The consensus among analysts is as follows:
- Buy: 10 analysts
- Hold: 5 analysts
- Sell: 2 analysts
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 16.5 |
| P/B Ratio | 1.0 |
| EV/EBITDA | 8.5 |
| Current Stock Price | $263.00 |
| 12-Month Price Change | 7.35% |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 10/5/2 |
Key Risks Facing Molina Healthcare, Inc. (MOH)
Key Risks Facing Molina Healthcare, Inc.
The financial health of Molina Healthcare, Inc. is influenced by a variety of internal and external risk factors. These risks can significantly impact the company's operations, financial performance, and overall market position.
Industry Competition
In the healthcare sector, competition is intense, particularly in the Medicaid and Medicare markets. The company faces pressure from both established players and new entrants, which could impact market share and pricing strategies. As of September 30, 2024, the company reported a membership of 5.6 million, reflecting an increase of 392,000 members or 8% year-over-year, driven in part by new Medicaid contract wins. However, the competitive landscape remains a constant challenge, particularly with an increasing number of players vying for the same pool of government contracts.
Regulatory Changes
Regulatory risks are significant, especially as the company operates under Medicaid and Medicare programs. The end of the Public Health Emergency (PHE) on May 11, 2023, has led to changes in healthcare programs that may affect coverage and reimbursement rates. The Consolidated Appropriations Act of 2023 authorized states to resume Medicaid redeterminations, which resulted in the loss of approximately 50,000 members in the third quarter of 2024. This regulatory environment requires continuous monitoring and adjustment to compliance strategies.
Operational Risks
Operational risks include challenges related to the management of medical claims and benefits. The consolidated medical care ratio (MCR) increased to 89.2% in the third quarter of 2024, up from 88.7% in the third quarter of 2023. This increase indicates rising medical costs, which are driven by higher utilization rates among members, particularly in long-term services and supports (LTSS) and pharmacy services. The company must implement effective cost management strategies to mitigate these pressures.
Financial Risks
Financial risks encompass various factors including interest rate fluctuations and credit ratings. As of September 30, 2024, the company had a long-term debt of $2.332 billion. The company’s senior notes are rated "BB" by Standard & Poor’s and "Ba2" by Moody’s, indicating a potential risk of increased borrowing costs if ratings are downgraded. Additionally, the effective income tax rate was 25.7% for the third quarter of 2024, compared to 26.3% in the same period of 2023.
Mitigation Strategies
The company is actively seeking to mitigate these risks through various strategies. For instance, it has focused on acquiring new contracts and expanding its footprint in states like Nebraska and New Mexico, which commenced in January and July 2024, respectively. The company is also leveraging operational efficiencies to reduce the general and administrative expense ratio, which improved to 6.5% in the third quarter of 2024 from 7.1% in the prior year.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | Increased competition in Medicaid and Medicare markets. | Potential loss of market share and pricing power. |
| Regulatory Changes | Changes following the end of PHE and resumption of Medicaid redeterminations. | Loss of approximately 50,000 members in Q3 2024. |
| Operational Risks | Rising medical costs reflected in MCR increase. | MCR of 89.2%, indicating higher medical expenses. |
| Financial Risks | Interest rate fluctuations and credit rating pressures. | Long-term debt of $2.332 billion with potential for increased costs. |
Future Growth Prospects for Molina Healthcare, Inc. (MOH)
Future Growth Prospects for Molina Healthcare, Inc.
Analysis of Key Growth Drivers
Several factors are poised to drive growth for Molina Healthcare moving forward. The company has experienced significant membership growth, reaching 5.6 million members as of September 30, 2024, an increase of 392,000 members or 8% compared to the previous year. This growth is attributed primarily to new Medicaid contract wins, strategic acquisitions, and organic growth within existing markets.
Future Revenue Growth Projections and Earnings Estimates
Molina Healthcare's premium revenue has shown robust growth, with a reported premium revenue of $9.7 billion for the third quarter of 2024, reflecting an 18% increase compared to the same period in 2023. For the nine months ended September 30, 2024, premium revenue reached $28.6 billion, up 19% year-over-year.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has recently closed the acquisition of Bright Health Medicare, which is expected to contribute significantly to revenue growth. Additionally, Molina has expanded its footprint in Michigan by securing a contract to provide benefits to the Highly Integrated Dual Eligible (HIDE) Special Needs population, which enhances its market presence.
Competitive Advantages That Position the Company for Growth
Molina Healthcare's competitive advantages include a diversified portfolio across Medicaid, Medicare, and Marketplace segments. The company has achieved a medical care ratio (MCR) of 89.2% in Q3 2024, reflecting effective cost management despite rising medical costs. The general and administrative (G&A) expense ratio has improved to 6.5%, down from 7.1% in the prior year, indicating operational efficiency.
Comprehensive Growth Table
| Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Membership | 5.6 million | 5.2 million | 5.6 million | 5.2 million |
| Premium Revenue | $9.7 billion | $8.2 billion | $28.6 billion | $24.2 billion |
| Net Income | $326 million | $245 million | $928 million | $875 million |
| Medical Care Ratio (MCR) | 89.2% | 88.7% | 88.8% | 87.8% |
| General and Administrative (G&A) Ratio | 6.5% | 7.1% | 6.9% | 7.3% |
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Article updated on 8 Nov 2024
Resources:
- Molina Healthcare, Inc. (MOH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Molina Healthcare, Inc. (MOH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Molina Healthcare, Inc. (MOH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.