Wednesday after the bell, Molina Healthcare, Inc. (MOH) reported a sharp decline in profit for the third quarter compared to a year-ago due to losses from its California health plan and higher operating expenses. In after market trading, Molina's stock was $17.00, down 9.62% to $1.81, after the company withdrew its guidance for the full year 2009.
Molina's profit decreased 48% to $8.56 million from $16.48 million in the year-ago period. On a per share basis, net income declined 45% to $0.33 from $0.60.
On an average, 11 analysts polled by Thomson Reuters expected earnings of $0.51 for the quarter. Analysts' estimates typically exclude one-time items.
Impacting the net income, California health plan lost approximately $4.8 million or $0.19 per share in the third quarter.
The company's total operating revenue grew 16% to $916.51 million from $796.32 million last year. Analysts expected revenue of $918.41 million.
Premium revenue increased 16% to $914.80 million from $791.55 million last year, while investment income dropped 64% to $1.70 million from $4.77 million due to lower interest rates. The company said that the 14% increase in membership in Florida, California, Washington, and Ohio contributed 87% to the growth in premium revenue.
Total expenses shot up to $900.23 million from $765.90 million with more reported cases of H1N1 influenza. Medical care costs increased 5% to $792.77 million from $669.35 million, general and administrative expenses went up to $97.63 million from $88.03 million, while depreciation and amortization charges increased to $9.83 million from $8.51 million in the prior-year period.
Physician and outpatient costs increased 9% as did pharmacy costs by 4% and capitated costs by 9%. However, inpatient facility costs decreased approximately 5% compared to the year-ago period, said the company. Pharmacy utilization increased approximately 5% year-over-year, while unit costs, excluding rebates, decreased approximately 1%.
For the nine-month period, net income decreased 21% to $35.3 million or $1.36 per share from $44.8 million or $1.59 per share in the year-earlier quarter. The California health plan lost approximately $15.2 million or $0.58 per share in the nine-month period.
Premium revenue increased 18% to $2.69 billion from $2.28 billion, while investment income declined 58% to $7.33 million from $17.51 million in the year-ago period. Total revenue increased to $2.70 billion from $2.30 billion a year earlier.
The company currently believes that it will not achieve its previously announced fiscal year 2009 earnings guidance of $2.15 per share due to 2009 H1N1 flu pandemic, higher utilization associated with new members and state budgetary shortfalls. However, the company's 2009 guidance remains unchanged with respect to its premium revenue, investment income, core G&A, administrative expense as a percentage of total revenue, depreciation and amortization, interest expense, total membership, diluted shares outstanding, and effective tax rate.
MOH closed Wednesday's regular trading session at $18.81, down $0.22, on the NYSE. During after market hours, stock was $17.00, down 9.62% or $1.81.
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