Shares of managed healthcare services provider Molina Healthcare, Inc. (MOH) have climbed 43.2% over the past 12 months. Molina’s recent robust fourth-quarter performance came in ahead of expectations on both its top-line and bottom-line fronts.
Revenue surged 41.5% year-over-year to $7.41 billion, outperforming estimates by $218.7 million. Earnings per share at $2.88, beat the Street’s expectations by $0.12.
The company’s Premium revenue increased to $7.16 billion from $4.85 billion a year ago. Further, Molina catered to a total of 5.2 million members at the end of December, an increase of 29% over the prior year. Amid COVID-19, the Medical Care ratio of the company increased to 88.3% from 86.5% a year ago.
Furthermore, from March 2, Molina will be a constituent of the S&P 500 index replacing IHS Markit.
With these developments in mind, let us take a look at the changes in Molina’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Molina’s top risk category is Legal & Regulatory, contributing 11 of the total 35 risks identified for the stock. In its recent report, the company has added one key risk factor under the Legal & Regulatory risk category.
Molina highlighted that there can be uncertainty around the amount of revenue it should recognize due to factors such as the complexity of some of its Medicaid contract provisions, imprecise contract language, the intention of state Medicaid agencies to retroactively adjust for the acuity of medical needs of Molina’s members, and state delays in processing rate changes.
As a consequence, the company’s Medicaid premium revenues and its financial condition could see an adverse impact. Meanwhile, compared to a sector average of 15 Finance & Corporate risk factors, Molina has 5.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in Molina by 448.8 thousand shares in the last quarter, indicating a very negative hedge fund confidence signal in the stock based on activities of 9 hedge funds. Notably, Jennifer Wallace’s Summit Street Capital Management has a holding worth $6.6 million in Molina.
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