Hot healthcare stock to watch: Molina Healthcare, Inc. (NYSE: MOH)

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Molina Healthcare, Inc. (NYSE: MOH) stock rose over 8.2% on 11th Feb, 2020 (as of 10:10 am GMT-5; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19. The company has reported net income for the fourth quarter of 2019 of $168 million, compared to net income of $201 million, for the fourth quarter of 2018. The company has generated the Operating cash flows for the year ended December 31, 2019, of $427 million, and were higher compared to the year ended December 31, 2018, mainly due to the normal fluctuations in timing of premium receipts. Cash and investments at the parent company amounted to $997 million at the end of December, 2019, compared to $796 million as of September 30, 2019.

MOH in the fourth quarter of FY 19 has reported the adjusted earnings per share of $2.73, beating the analysts’ estimates for the adjusted earnings per share of $2.62, according to Zacks Investment Research. The company had reported the adjusted revenue of $4.27 billion in the fourth quarter of FY 19, which is inline with the analysts’ estimates for revenue of $4.27 billion. The company posted premium revenue of $4.1 billion for the fourth quarter of 2019, which reflects a 7.1% decline compared to the fourth quarter of 2018.

Additionally, for the fourth quarter of 2019, the parent company had received $305 million in the form of dividends from the regulated health plan subsidiaries. The Company has repaid $240 million of principal on the convertible notes in 2019. The impact of capital deployment actions in 2019 resulted in lower interest expense, which reflects a net gain on repayment of the convertible notes and a lower share count.

In early December 2019, the Company’s board of directors authorized the purchase of up to $500 million in aggregate of the Company’s common stock. Pursuant to a 10b5-1 trading plan, under this authorization the Company purchased approximately 400,000 shares for $54 million through December 31, 2019, and through February 7th, the Company has purchased in total approximately 1.9 million shares for $257 million.

For fiscal 2020, the company expects GAAP earnings per diluted share to be in the range of $11.20 – $11.70 and premium revenue growth to be of 7.4%. In FY 2020, Medicaid after-tax margins are anticipated to perform well benefiting from stable rate and cost trend environments. Medicare after-tax margins are anticipated to be strong despite the impact of the Health Insurer Fee. Marketplace after-tax margins are anticipated to be lower reflecting pricing actions taken for the year.

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