Molina Healthcare (MOH) FY16 EPS, Revenue Outlook Outpace Views
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Revenue Growth %: +15.8%
Financial Fact:
Depreciation and amortization: 36M
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Molina Healthcare, Inc. (NYSE: MOH) announced that it is providing its outlook and guidance for fiscal year 2016.
The following table presents the Company’s outlook for fiscal year 2016: (1)
Premium Revenue | $15.7B | ||
Health Insurer Fee Revenue (2) | $335M | ||
Premium Tax Revenue | $450M | ||
Service Revenue | $550M | ||
Investment and Other Income | $40M | ||
Total Revenue | $17.0B | ||
Total Medical Care Costs | $13.8B | ||
Medical Care Ratio (3) | 88.2% | ||
Total Cost of Service Revenue | $490M | ||
General & Administrative Expenses | $1.4B | ||
G&A Ratio (4) | 8.0% | ||
Premium Tax Expense | $450M | ||
Health Insurer Fee Expense | $220M | ||
Depreciation & Amortization | $140M | ||
Interest and Other Expense | $100M | ||
Income Before Income Taxes | $460M | ||
EBITDA(5) | $720M | ||
Effective Tax Rate | 56% | ||
After Tax Margin | 1.2% | ||
Diluted Shares | 58M | ||
Diluted EPS | $3.50 | ||
Adjusted net income per share(5) | $3.86 | ||
*** NOTE: The Street sees FY16 revenue of $16.8 billion and EPS of $3.60. |
_____________________
(1) All amounts are estimates; actual results may differ materially. See our risk factors as discussed in our Form 10-K and other filings.(2) Outlook assumes full reimbursement of the Health Insurer Fee and related tax effects in 2016.(3) Medical Care Ratio represents Medical Care Costs as a percentage of Premium Revenue.(4) G&A Ratio computed as a percentage of Total Revenue.(5) See reconciliation of non-GAAP financial measure on next page.
The Company uses two non-GAAP financial measures as supplemental metrics in evaluating its financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing the Company's performance to the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures.
The first of these non-GAAP measures is earnings before interest, taxes, depreciation and amortization (EBITDA). The following table reconciles net income, which the Company believes to be the most comparable GAAP measure, to EBITDA:(1)
2016Outlook | |||
Net income | $202M | ||
Adjustments: | |||
Depreciation, and amortization of intangible assets and capitalized software | $161M | ||
Interest expense | $100M | ||
Income tax expense | $257M | ||
EBITDA | $720M | ||
The second of these non-GAAP measures is adjusted net income (including adjusted net income per diluted share). The Company believes that this non-GAAP financial measure helps investors better understand the impact that acquisitions have on our earnings, exclusive of non-cash charges. Effective as of January 1, 2016, the Company will no longer exclude amortization of convertible notes and lease financing obligations from its presentation of adjusted net income (and adjusted net income per share). The Company made this change because various capital transactions that it completed in 2015 reduced the Company’s relative reliance on convertible notes and lease financing as sources of capital. The Company believes that this change will enhance the comparability of this non-GAAP measure with the corresponding non-GAAP measure used by the Company’s competitors. The following table reconciles net income, which the Company believes to be the most comparable GAAP measure, to adjusted net income:(1) (2)
2016 Outlook | ||||||
Dollars | Per Share | |||||
Net income | $202M | $3.50 | ||||
Adjustments, net of tax: | ||||||
Amortization of intangible assets | 21M | 0.36 | ||||
Adjusted net income | $223M | $3.86 | ||||
______________________
(1) All amounts are estimates and subject to change.(2) Computation assumes 58 million diluted weighted average shares outstanding.
2016 Business Outlook and Investor Meeting
As has been the Company’s past practice, it will discuss its 2016 business outlook and strategy at its Investor Day Conference webcast and presentation to be held on February 11, 2016, at the Le Parker Meridien Hotel in New York City from 12:30 p.m. to 4:30 p.m. Eastern Time. The Company will webcast the presentations offered by its management team, which will be followed by question-and-answer sessions. A 30-day online replay of the Investor Day meeting will be available approximately one hour following the conclusion of the live webcast. A link to this webcast can be found on the Company’s website at molinahealthcare.com.
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