Molina Healthcare has reported strong Q3 earnings, exceeding analyst expectations and leading to a surge in its stock price.
The company's adjusted earnings per diluted share were $6.01, surpassing forecasts by 20 cents. Total revenue for the quarter reached $10.34 billion, well above the anticipated $9.91 billion. Despite a year-to-date decrease in stock price, Molina Healthcare's shares have increased by over 20% following this impressive performance.
The company's president and CEO, Joseph Zubretsky, expressed satisfaction with the quarterly results, highlighting the firm's ability to maintain operational discipline in challenging market conditions. Molina Healthcare has consistently exceeded earnings expectations throughout the year, reinforcing its position in the healthcare market.
Membership growth has been a focus for Molina Healthcare, with a current membership of 5.6 million, an 8% increase compared to the same period last year. The company is projecting an additional $350 million in revenue for the latter half of 2024, primarily due to payment increases from most states. This growth in membership and revenue demonstrates Molina's strategic focus on expanding its presence in the healthcare sector.
However, the company's medical care ratio has seen a slight increase to 88.8% for 2024, just one percentage point higher than in 2023. In the third quarter, the medical care ratio for Molina's Medicaid business was reported at 90.5%. Zubretsky explained that this included a premium rate reduction in California, which was retroactive to the beginning of the year. The company is working with state officials to clarify the methodology and actuarial support for this adjustment.
Molina Healthcare has faced challenges related to medical costs, including higher-than-expected costs for long-term services and supports, pharmacy costs for GLP-1 medications and behavioral health services, and the impacts of redeterminations. Despite these challenges, the company reported a net income of $347 million for the quarter, a 15% increase compared to the previous year.
Zubretsky emphasized the importance of securing contract awards in key states such as Florida, Massachusetts, and Michigan, and expressed optimism about receiving favorable news from Georgia soon.
In a strategic move, Molina Healthcare has decided not to offer Medicare Advantage Prescription Drug (MAPD) plans in 13 states for the upcoming year, allowing the company to focus on its dual-eligible populations and its low-income MAPD population in California. This decision accounts for $200 billion in annual premiums. By narrowing its focus, Molina aims to enhance operational efficiency and improve outcomes for its members, positioning itself for long-term success in a competitive market.
Molina Healthcare's recent performance highlights its resilience and adaptability in a challenging environment. The company's focus on operational discipline, strategic growth, and member satisfaction will be crucial as it continues to navigate the complexities of the healthcare sector.