Molina Healthcare Provides Fiscal Year 2016 Outlook and Guidance
February 11 2016 - 8:30AM
Business Wire
Molina Healthcare, Inc. (NYSE:MOH) today announced that it is
providing its outlook and guidance for fiscal year 2016.
The following table presents the Company’s outlook for fiscal
year 2016: (1)
Premium Revenue $15.7B Health Insurer Fee Revenue (2)
$335M Premium Tax Revenue $450M Service Revenue $550M Investment
and Other Income $40M
Total Revenue
$17.0B Total Medical Care Costs $13.8B
Medical Care Ratio (3) 88.2% Total Cost of Service Revenue
$490M
General & Administrative Expenses
$1.4B G&A Ratio (4) 8.0% Premium Tax Expense $450M
Health Insurer Fee Expense $220M Depreciation & Amortization
$140M Interest and Other Expense $100M Income Before Income Taxes
$460M
EBITDA(5)
$720M
Effective Tax Rate
56% After Tax Margin 1.2% Diluted Shares 58M
Diluted EPS
$3.50 Adjusted net income per share(5)
$3.86
_____________________
(1) All amounts are estimates; actual results may differ
materially. See our risk factors as discussed in our Form 10-K and
other filings.(2) Outlook assumes full reimbursement of the Health
Insurer Fee and related tax effects in 2016.(3) Medical Care Ratio
represents Medical Care Costs as a percentage of Premium
Revenue.(4) G&A Ratio computed as a percentage of Total
Revenue.(5) See reconciliation of non-GAAP financial measure on
next page.
The Company uses two non-GAAP financial measures as supplemental
metrics in evaluating its financial performance, making financing
and business decisions, and forecasting and planning for future
periods. For these reasons, management believes such measures are
useful supplemental measures to investors in comparing the
Company's performance to the performance of other public companies
in the health care industry. These non-GAAP financial measures
should be considered as supplements to, and not as substitutes for
or superior to, GAAP measures.
The first of these non-GAAP measures is earnings before
interest, taxes, depreciation and amortization (EBITDA). The
following table reconciles net income, which the Company believes
to be the most comparable GAAP measure, to EBITDA:(1)
2016Outlook
Net income $202M Adjustments:
Depreciation, and amortization of
intangible assets and capitalized software
$161M Interest expense $100M
Income tax expense
$257M EBITDA $720M
The second of these non-GAAP measures is adjusted net income
(including adjusted net income per diluted share). The Company
believes that this non-GAAP financial measure helps investors
better understand the impact that acquisitions have on our
earnings, exclusive of non-cash charges. Effective as of January 1,
2016, the Company will no longer exclude amortization of
convertible notes and lease financing obligations from its
presentation of adjusted net income (and adjusted net income per
share). The Company made this change because various capital
transactions that it completed in 2015 reduced the Company’s
relative reliance on convertible notes and lease financing as
sources of capital. The Company believes that this change will
enhance the comparability of this non-GAAP measure with the
corresponding non-GAAP measure used by the Company’s competitors.
The following table reconciles net income, which the Company
believes to be the most comparable GAAP measure, to adjusted net
income:(1) (2)
2016 Outlook Dollars
Per Share Net income $202M $3.50 Adjustments, net of tax:
Amortization of intangible assets 21M 0.36 Adjusted net income
$223M $3.86
______________________
(1) All amounts are estimates and subject to change.(2)
Computation assumes 58 million diluted weighted average shares
outstanding.
2016 Business Outlook and Investor Meeting
As has been the Company’s past practice, it will discuss its
2016 business outlook and strategy at its Investor Day Conference
webcast and presentation to be held on February 11, 2016, at the Le
Parker Meridien Hotel in New York City from 12:30 p.m. to 4:30 p.m.
Eastern Time. The Company will webcast the presentations offered by
its management team, which will be followed by question-and-answer
sessions. A 30-day online replay of the Investor Day meeting will
be available approximately one hour following the conclusion of the
live webcast. A link to this webcast can be found on the Company’s
website at molinahealthcare.com.
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 and in the
Commonwealth of Puerto Rico, Molina currently serves approximately
3.5 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. For more information about Molina Healthcare, please visit
our website at molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This earnings release contains
"forward-looking statements" regarding the Company’s outlook and
financial guidance for fiscal year 2016. Actual results could
differ materially from the 2016 financial guidance due to numerous
known and unknown risks and uncertainties. Those known risks and
uncertainties include, but are not limited, to the following:
- uncertainties and evolving market and
provider economics associated with the implementation of the
Affordable Care Act, the Medicaid expansion, the insurance
marketplaces, the effect of various implementing regulations, and
uncertainties regarding the Medicare-Medicaid dual eligible
demonstration programs in California, Illinois, Michigan, Ohio,
South Carolina, and Texas;
- 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,
premium stabilization programs, profit sharing arrangements, and
conflicting interpretations thereof;
- the interpretation and implementation
of at-risk premium 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 success of our new health plan in
Puerto Rico, including the successful resolution of the Puerto Rico
debt crisis and the payment of all amounts due under our Medicaid
contract;
- 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 the rate increases we expect and project for
2016, or to maintain existing benefit packages or membership
eligibility thresholds or criteria, including the resolution of the
Illinois budget impasse and continued payment of our Illinois
health plan;
- the accurate estimation of incurred but
not reported or paid medical costs across our health plans;
- retroactive adjustments to premium
revenue or accounting estimates which require adjustment based upon
subsequent developments;
- 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;
- 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 resolution of litigation,
arbitration, or administrative proceedings;
- the relatively small number of states
in which we operate health plans;
- the effect on our Los Angeles County
subcontract of Centene’s acquisition of Health Net;
- the availability of adequate financing
on acceptable terms to fund and capitalize our expansion and
growth, repay our outstanding indebtedness at maturity 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;
- newly emergent viruses or widespread
epidemics, including the Zika virus, and associated public
alarm;
- changes in general economic conditions,
including unemployment rates;
- the sufficiency of our funds, on hand
to pay the amounts due upon conversion of our outstanding
notes;
- increasing competition and
consolidation in the Medicaid industry;
and numerous other risks, including those discussed under Item
1A in the Company’s annual report on Form 10-K, as well as the risk
factors and cautionary statements in the Company’s other 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 sec.gov. Given these risks and uncertainties, we
can give no assurances that the Company’s 2016 projections or other
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 February 11, 2016, 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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version on businesswire.com: http://www.businesswire.com/news/home/20160211005687/en/
Molina Healthcare, Inc.Juan José Orellana, 562-435-3666, ext.
111143Investor Relations
Molina Healthcare (NYSE:MOH)
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