California-based Molina Healthcare is seeing its stock rise dramatically after the company easily beat third quarter earnings expectations Oct. 24.
The company recorded $6.01 adjusted earnings per diluted share, surpassing analyst expectations by 20 cents. Total revenue came in at $10.34 billion and above previous expectations of $9.91 billion.
Molina’s stock is up more than 20%, and the company has beat earnings every quarter this year. Its stock is still down nearly 10% year-to-date.
“We are pleased with our performance in the quarter and, in a challenging environment, continued to execute on the fundamentals of the business,” said Joseph Zubretsky, president and CEO, in a news release. “Our results reflect continued operating discipline despite the unprecedented short-term dynamics caused by redeterminations.”
The insurer, which is reaffirming its full-year guidance, is now serving 5.6 million members, an increase of 8% compared to this time last year. The company will earn $350 million in revenue during the back half of 2024 due to most states raising payments.
Molina’s medical care ratio increased to 88.8% for 2024, just one percentage point higher than in 2023. Medical care ratio was 90.5% in the third quarter for Molina’s Medicaid business.
“This result included a premium rate reduction in our California business that was retroactive to the beginning of the year,” Zubretsky said during the call. “We are working with the state to understand this methodology and actuarial support for this adjustment, both of which remain unclear.”
Chief Financial Officer Mark Kine called the state’s decision “highly unusual.”
Medical costs were greater than expected, largely due to impacts from redeterminations and increased utilization for long-term services and supports, pharmacy drugs including GLP-1s and behavioral health services.
The company posted a net income of $347 million this quarter, a 15% year-over-year increase.
Zubretsky also highlighted the importance of winning contract awards in Florida, Massachusetts and Michigan. The company is hoping to hear good news from Georgia soon.
Molina will not offer Medicare Advantage Prescription Drug (MAPD) plans in 13 states next year, accounting for $200 billion in annual premiums.
“This adjustment allows us to strategically focus on our dual-eligible populations, where we increased our accounting footprint by 23% and on our low-income MAPD population in California."