Molina Healthcare (NYSE: MOH) reported Q4 EPS of $2.67, $0.02 better than the analyst estimate of $2.65. Revenue for the quarter came in at $4.27 billion versus the consensus estimate of $4.28 billion.

Highlights include:

• Premium revenue was $4.1 billion for the fourth quarter of 2019, a 7.1% decrease compared to the fourth quarter of 2018.
• Medical care ratio (MCR) was 86.0% for the fourth quarter of 2019, compared to 85.1% for the fourth quarter of 2018.
• General and administrative (G&A) expense ratio increased to 8.0% for the fourth quarter of 2019, compared to 7.2% for the fourth quarter of 2018.
• After-tax margin was 3.9% for the fourth quarter of 2019, compared to 4.3% for the fourth quarter of 2018.
• Net income for the year ended December 31, 2019, increased to $737 million, compared to $707 million for 2018, and after-tax margin increased to 4.4% for 2019, compared to 3.7% for 2018.
• In December 2019, the Company’s Board of Directors authorized a share repurchase program of up to $500 million, and through February 7th, the Company repurchased an aggregate of approximately 1.9 million shares for $257 million, at an average cost of $133.23 per share.
• Operating cash flows for the year ended December 31, 2019, were $427 million.
• Introduced full year 2020 earnings guidance, including GAAP earnings per diluted share of $11.20 - $11.70.
• In October 2019, the Company announced that it entered into a definitive agreement to acquire certain assets of YourCare HealthPlan for approximately $40 million. Molina will assume the rights to serve approximately 46,000 Medicaid members in Western New York. The acquisition is expected to close in the first half of 2020.
• In January 2020, the Company announced that it entered into a definitive agreement to acquire all of the capital stock of NextLevel Health Partners for approximately $50 million. Molina will assume the rights to serve approximately 50,000 Medicaid and Managed Long-Term Services and Supports members in Illinois’ Cook County. The acquisition is expected to close in the first half of 2020.

Joe Zubretsky, president and CEO, said, “We are pleased with our fourth quarter and full year results. We improved our Medicaid and Medicare margins and achieved exceptional Marketplace margins. Overall, we delivered 4.4 percent after-tax margins and earnings per share growth of 8 percent.” Mr. Zubretsky continued, “Going forward, 2020 represents an important year in our pivot to growth strategy with a return to top-line growth. Each of our three business lines are well positioned to grow in 2020 and beyond.”

GUIDANCE:

Molina Healthcare sees FY2020 EPS of $11.20-$11.70, versus the consensus of $11.82. Molina Healthcare sees FY2020 revenue of $18.3 billion, versus the consensus of $17.95 billion.

The Company issued its full year 2020 earnings guidance, including GAAP earnings per diluted share of $11.20 - $11.70 and premium revenue growth of 7.4%.

Full year guidance highlights:

• Medicaid after-tax margins are expected to perform well benefiting from stable rate and cost trend environments.
• Medicare after-tax margins are expected to be strong despite the impact of the Health Insurer Fee.
• Marketplace after-tax margins are expected to be lower reflecting pricing actions taken for the year.

Full year guidance reflects the following:

• The reintroduction of the Health Insurer Fee in 2020 with an impact of approximately $0.30 per diluted share.
• Steady state in Texas for the full year 2020. The Company is currently exercising its protest rights on the recently announced STAR+PLUS RFP award. The Company believes that the effective date of the new contract would be no earlier than January 1, 2021.
• The YourCare Health Plan and NextLevel Health Partners acquisitions are not included in guidance as the transactions have not closed. Together they have over $500 million in annualized premium revenue.

For earnings history and earnings-related data on Molina Healthcare (MOH) click here.