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Key Takeaways
- Shares of Molina Healthcare surged on Thursday after the health insurer reported strong results for the third quarter of 2024.
- Molina reported a year-over-year increase in premium revenue, despite issues related to Medicaid redeterminations.
- The company said new contract wins, footprint expansion and acquisitions contributed to revenue growth.
Molina Healthcare (MOH)Â shares skyrocketed 18%, scoring one of the top performances among S&P 500 stocks on Thursday, after the health insurer reported better-than-expected results. Increased premium revenue from government-backed Medicaid plans helped drive the strong results.
Overcoming Redeterminations Pressure
Health insurers with exposure to Medicaid have been under pressure in recent months as industry executives and analysts express concerns about a potential drawdown in the number of people receiving benefits from the program. The possible drop in enrollment stems from shifts in the so-called “redeterminations” process, which establishes the eligibility of Medicaid recipients.
However, Molina’s strong third-quarter performance suggests the insurer has been successful in navigating redeterminations-related headwinds. One key metric that demonstrates this success is Molina’s premium revenue, which jumped 18% year-over-year to reach $9.7 billion. Molina also managed to increase the number of members served by its Medicaid plans to approximately 4.9 million, up nearly 4% from the year-ago period.
“Our results reflect continued operating discipline despite the unprecedented short-term dynamics caused by redeterminations,” said Joseph Zubretsky, Molina’s chief executive officer. “We believe all of our businesses are well positioned for sustainable profitable growth.”
The company noted that winning new contracts, increasing its existing footprint and completing strategic acquisitions helped offset the continued negative impact of Medicaid redeterminations. In July, Molina announced an agreement to acquire Connecticut-based health plan ConnectiCare.
Volatile Performance for Stock in 2024
Molina Healthcare stock has had its ups and downs so far this year. Shares tumbled following the insurer’s first-quarter earnings release in May but notched solid gains after Molina beat second-quarter profit estimates with its July report.
Following Thursday’s post-earnings rise, Molina shares remain down around 10% year-to-date.
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