What: Shares ofMolina Healthcare , a health insurer with a focus on government assistance programs like Medicaid, jumped more than 12% today after reporting second quarter earnings results that topped wall street expectations.
So what: Molina posted a huge 52% growth in revenue over last years results, which came in at $3.5 billion during the quarter. Thanks to solid expense management efforts, the company was able to improve its margins, causing earnings-per-share to jump to $0.72 for the quarter, much higher than the$0.63 that analysts were expecting. Better yet, after adjusting for one-time events, earnings would have landed even higher at $0.86 during the period. The marketcertainly looked kindly on the news, and bid the stock higher today a result.
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Now what: Its great to see that the company was able to improve margins alongside its huge growth in premiums, allowing the company to keep a higher percentage of its revenue as profit. As the Affordable Care Act, better known as Obamacare, continues to roll out across the nation Molina is in a prime position to continue to grow its membership. Inaddition, the company's strategy to acquire other Medicaid focused healthcare insurer's across the country is proving to be a winning plan, and bodes well for its ability to continue to scale operations.
Today's report should give investors confidence that Molina strategy is working,and I think the market's reaction to bid the stock up today was appropriate. Molina isn't exactly a cheap stock, as it's currently trading at 43 times trailing earnings, but with analysts predicting the company's profits to grow at more than 30% annually over the next 5 years, I think Molina is in a prime position to hopefully continue rewarding long-term investors with market-beating returns.
The article Why Shares of Molina Healthcare Inc Jumped Today originally appeared on Fool.com.
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