Molina Healthcare Provides Update to Fiscal Year 2015 Outlook
June 01 2015 - 6:35AM
Business Wire
Molina Healthcare, Inc. (NYSE:MOH) today announced that it is
updating its outlook for fiscal year 2015 provided on February 12,
2015 to include the impact of improvements in its medical margin,
the recently announced expansion in the State of Michigan, a
proposed offering of common stock, and increased accounting
dilution from its convertible notes due to the Company’s stock
trading price.
The following table presents the Company’s updated outlook for
fiscal year 2015 (all amounts are approximate): (1)
Premium Revenue $13.5 billion Health Insurer Fee
Revenue (2) $260 million Premium Tax Revenue $400 million Service
Revenue $180 million Investment Income and Other Revenue
$17 million
Total Revenue $14.3
billion Total Medical Care Costs $12.1 billion
Medical Care Ratio (3) 89.5% Total Cost of Service Revenue
$145 million
General and Administrative Expenses
$1.1 billion G&A Ratio (4) 7.6% Premium Tax Expenses
$400 million Health Insurer Fee Expenses $165 million Depreciation
and Amortization $105 million Interest and Other Expenses $60
million Income Before Income Tax Expense $300 million
Net Income $132 million EBITDA(5) $485
million Effective Tax Rate 56% Diluted Weighted Average Shares
Outstanding(6) 56 million
Diluted net income per share
$2.35 Adjusted net income per share(5)
$2.90 _____________________ (1) All amounts are
estimates; actual results may differ materially. See our risk
factors as discussed in our Form 10-K and other filings as well as
the cautionary statements below. 2015 outlook assumes the closing
by September 2015 of our recently announced expansion in Michigan.
(2) 2015 outlook assumes full reimbursement of the Health Insurer
Fee and related tax effects for 2015, and includes the recognition
of $18 million in revenue relating to the 2014 HIF. (3) Medical
care ratio represents medical care costs as a percentage of premium
revenue. (4) G&A Ratio represents general and administrative
expenses as a percentage of total revenue. (5) See reconciliation
of non-GAAP financial measures. (6) Estimate of weighted average
shares outstanding for full year 2015 includes impact of existing
convertible notes and the assumed issuance of 5.75 million shares
in June 2015. Estimate assumes an average daily weighted average
share price of $70 for the period June 1, 2015 through December 31,
2015.
Non-GAAP Financial Measures
EBITDA and adjusted net income per diluted share are non-GAAP
financial measures used by management as supplemental metrics in
evaluating financial performance, financing and business decisions,
and in forecasting and planning for future periods. These measures
are not determined in accordance with accounting principles
generally accepted in the United States of America (GAAP) and
should not be viewed as a substitute for the most directly
comparable GAAP measures.
The following table reconciles net income, which the Company
believes to be the most comparable GAAP measure, to EBITDA:
2015Outlook(1)
Net income $ 132 million Adjustments:
Depreciation, and amortization of
intangible assets and capitalized software
125 million Interest expense 60 million Income tax expense 168
million EBITDA $ 485 million
The following table reconciles net income per diluted share,
which the Company believes to be the most comparable GAAP measure,
to adjusted net income per diluted share:
2015Outlook(1)
Net income per diluted share
$ 2.35 Adjustments, net of tax:
Amortization of convertible senior notes
and lease financing obligations
0.35 Amortization of intangible assets 0.20 Adjusted net income per
diluted share
$ 2.90 ______________________
(1) All amounts are estimates and subject to change. Computation
assumes 56 million diluted weighted average shares outstanding.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed
health care services under the Medicaid and Medicare programs and
through the state insurance marketplaces. Through our locally
operated health plans in 11 states across the nation, Molina
currently serves over 3 million members. Dr. C. David Molina
founded our company in 1980 as a provider organization serving
low-income families in Southern California. Today, we continue his
mission of providing high quality and cost-effective health care to
those who need it most.
Cautionary Statement under the Private Securities Litigation
Reform Act of 1995: This earnings release contains
“forward-looking statements” regarding the Company’s plans,
expectations, and anticipated future events. Actual results could
differ materially due to numerous known and unknown risks and
uncertainties, including, without limitation, risk factors related
to the following:
- continuing uncertainties associated
with the implementation of the Affordable Care Act, including the
full grossed up reimbursement by states of the non-deductible ACA
health insurer fee, the Medicaid expansion, the insurance
marketplaces, the effect of various implementing regulations, the
King v. Burwell case now pending before the Supreme Court, and
uncertainties regarding the Medicare-Medicaid dual eligible
demonstration programs in California, Illinois, Michigan, Ohio, and
South Carolina;
- management of our medical costs,
including seasonal flu patterns and rates of utilization that are
consistent with our expectations, and our ability to reduce over
time the high medical costs commonly associated with new patient
populations;
- federal or state medical cost
expenditure floors, administrative cost and profit ceilings, and
profit sharing arrangements;
- the interpretation and implementation
of at-risk premium revenue recognition rules regarding the
achievement of certain quality measures;
- cyber-attacks or other privacy or data
security incidents resulting in an inadvertent unauthorized
disclosure of protected health information;
- the timely closing and successful
integration of our recently announced expansion in Michigan;
- the success of our new health plan in
Puerto Rico, and the ability of ASES, the Puerto Rico Medicaid
agency, to pay our Puerto Rico health plan throughout 2015 under
the terms of its Medicaid contract;
- newly FDA-approved specialty drugs such
as Sovaldi, Olysio, Harvoni, and other specialty drugs or generic
drugs that are exorbitantly priced but not factored into the
calculation of our capitated rates;
- significant budget pressures on state
governments and their potential inability to maintain current
rates, to implement expected rate increases, or to maintain
existing benefit packages or membership eligibility thresholds or
criteria;
- the accurate estimation of incurred but
not paid medical costs across our health plans;
- retroactive adjustments to premium
revenue or accounting estimates which require adjustment based upon
subsequent developments, including Medicaid pharmaceutical rebates
or retroactive premium rate increases;
- efforts by states to recoup previously
paid amounts;
- the success of our efforts to retain
existing government contracts and to obtain new government
contracts in connection with state requests for proposals (RFPs) in
both existing and new states, including the success of the proposal
of Molina Medicaid Solutions in New Jersey;
- the continuation and renewal of the
government contracts of both our health plans and Molina Medicaid
Solutions and the terms under which such contracts are
renewed;
- complications, member confusion, or
enrollment backlogs related to the annual renewal of Medicaid
coverage;
- government audits and reviews, and any
fine, enrollment freeze, or monitoring program that may result
therefrom;
- changes with respect to our provider
contracts and the loss of providers;
- approval by state regulators of
dividends and distributions by our health plan subsidiaries;
- changes in funding under our contracts
as a result of regulatory changes, programmatic adjustments, or
other reforms;
- high dollar claims related to
catastrophic illness;
- the favorable or unfavorable resolution
of litigation, arbitration, or administrative proceedings,
including pending qui tam actions in Florida and California, and
the litigation commenced against us by the state of Louisiana
alleging that Molina Medicaid Solutions and its predecessors used
an incorrect reimbursement formula for the payment of
pharmaceutical claims;
- the relatively small number of states
in which we operate health plans;
- our management of a portion of College
Health Enterprises’ hospital in Long Beach, California;
- the availability of adequate financing
on acceptable terms to fund and capitalize our expansion and
growth, repay our outstanding indebtedness in accordance with its
terms and meet our liquidity needs, including the interest expense
and other costs associated with such financing;
- the failure of a state in which we
operate to renew its federal Medicaid waiver;
- changes generally affecting the managed
care or Medicaid management information systems industries;
- increases in government surcharges,
taxes, and assessments;
- public alarm associated with the Ebola
virus, measles, or any actual widespread epidemic;
- changes in general economic conditions,
including unemployment rates;
- increasing competition and
consolidation in the Medicaid industry;
and numerous other risk factors, including those discussed in
the Company’s periodic reports and filings with the Securities and
Exchange Commission. These reports can be accessed under the
investor relations tab of the Company’s website or on the SEC’s
website at www.sec.gov. Given these
risks and uncertainties, we can give no assurances that the
Company’s forward-looking statements will prove to be accurate, or
that any other results or events projected or contemplated by the
Company’s forward-looking statements will in fact occur, and we
caution investors not to place undue reliance on these statements.
All forward-looking statements in this release represent the
Company’s judgment as of June 1, 2015, and we disclaim any
obligation to update any forward-looking statements to conform the
statement to actual results or changes in the Company’s
expectations.
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Molina Healthcare, Inc.Juan José Orellana, 562-435-3666, ext.
111143Investor Relations
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