Healthcare plan provider Molina Healthcare, Inc. MOH is set to report fourth-quarter 2024 results on Feb. 5, 2025, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $5.81 per share on revenues of $10.5 billion. 

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The fourth-quarter earnings estimate remained stable over the past month. The bottom-line projection indicates a year-over-year increase of 32.7%. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 16.1%.

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Molina Healthcare has a robust history of surpassing earnings estimates, beating the consensus estimate in each of the last four quarters, with the average surprise being 2.4%. This is depicted in the figure below.

Q4 Earnings Whispers for MOH

However, our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.

Although MOH has an Earnings ESP of +1.91%, it has a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Shaping MOH’s Q4 Results?

The growing customer base in the Medicaid and Medicare businesses of Molina Healthcare is expected to have contributed to premium growth, the most significant contributor to the top line of a health insurer, in the fourth quarter. The Zacks Consensus Estimate for premiums indicates growth of 17.8% year over year in the fourth quarter, while our model estimate suggests a 17.5% increase. We expect Medicaid premiums to grow nearly 15% year over year in the to-be-reported quarter. The consensus estimate for the Medicare premiums is $1.35 billion, up 28% year over year.

Several contract wins from federal and state authorities and renewal of agreements, as well as buyouts, are likely to have contributed to membership growth in MOH’s Medicaid and Medicare businesses. An aging U.S. population is likely to have sustained the solid demand for its Medicare plans in the fourth quarter. The Medicaid membership growth is likely to have been partially offset by the redetermination process.

Medicaid membership is expected to increase 10.8% year over year, while MOH’s Medicare membership is projected to witness 44.4% growth. Furthermore, the Zacks Consensus Estimate for the Marketplace membership suggests a 52.7% increase from the year-ago period.

Moreover, the consensus mark for medical care ratio (MCR) in Marketplace is pegged at 78.16% in the to-be-reported quarter, down from 79.80% a year ago. The consensus mark for total MCR is pegged at 88.7%, down from 89.1% a year ago, indicating growing margins ahead.

The factors stated above are likely to position the company for year-over-year growth. However, rising costs and lower investment income make an earnings beat uncertain. The Zacks Consensus Estimate for investment income indicates a 5.1% decline year over year. Our model estimate for fourth quarter total operating expenses predicts a more than 11% increase from the year-ago period, due to higher medical care costs and G&A expenses.

Stocks That Warrant a Look

While an earnings beat looks uncertain for Molina Healthcare, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Rhythm Pharmaceuticals, Inc. RYTM has an Earnings ESP of +11.60% and is a Zacks #2 Ranked player.

The Zacks Consensus Estimate for Rhythm Pharmaceuticals’ bottom line for the to-be-reported quarter has witnessed one upward estimate revision in the past 30 days against no opposite movement. The consensus estimate for RYTM’s revenues is pegged at $36.23 million, a 49.5% increase from a year ago.

Tarsus Pharmaceuticals, Inc. TARS has an Earnings ESP of +32.92% and a Zacks Rank of 2.

The Zacks Consensus Estimate for Tarsus Pharmaceuticals’ bottom line for the to-be-reported quarter indicates a 48.1% year-over-year improvement. TARS beat earnings estimates in each of the past four quarters, with an average surprise of 14.7%.

Natera, Inc. NTRA has an Earnings ESP of +61.91% and a Zacks Rank of 2.

The Zacks Consensus Estimate for Natera’s bottom line for the to-be-reported quarter signals a 34.4% improvement from a year ago. NTRA beat earnings estimates in all the past four quarters, with an average surprise of 36.4%.

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Molina Healthcare, Inc (MOH) : Free Stock Analysis Report

Rhythm Pharmaceuticals, Inc. (RYTM) : Free Stock Analysis Report

Natera, Inc. (NTRA) : Free Stock Analysis Report

Tarsus Pharmaceuticals, Inc. (TARS) : Free Stock Analysis Report

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