Raises Full Year 2019 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) today reported net income
for the third quarter of 2019 of $175 million, or $2.75 per diluted
share, compared to net income of $197 million, or $2.90 per diluted
share, in the third quarter of 2018. Financial results for the
third quarter of 2019 are summarized below:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
(In millions, except per share
results)
Premium Revenue
$4,084
$4,337
$12,085
$13,174
Total Revenue
$4,243
$4,697
$12,555
$14,226
Pre-Tax Income
$233
$259
$750
$743
Net Income
$175
$197
$569
$506
EPS - Diluted
$2.75
$2.90
$8.80
$7.60
MCR
86.3%
87.4%
85.7%
86.2%
G&A Ratio
7.6%
6.6%
7.6%
7.0%
Pre-Tax Margin
5.5%
5.5%
6.0%
5.2%
Effective Tax Rate
24.7%
24.0%
24.1%
31.9%
After-Tax Margin
4.1%
4.2%
4.5%
3.6%
Highlights include:
- Premium revenue was $4.1 billion in the third quarter of 2019,
a 5.8% decrease compared to the third quarter of 2018.
- Medical care ratio (MCR) was 86.3% in the third quarter of 2019
compared to 87.4% for the third quarter of 2018.
- General and administrative (G&A) expense ratio increased to
7.6% in the third quarter of 2019 compared to 6.6% for the third
quarter of 2018.
- The third quarter results include a charge of $2 million, or a
$0.03 net loss per diluted share, for the repayment of convertible
notes.
- After-tax margin was 4.1% for the third quarter of 2019
compared to 4.2% in the third quarter of 2018.
- Cash and investments at the parent company amounted to $796
million as of September 30, 2019.
- Operating cash flows for the nine months ended September 30,
2019, were $398 million.
- Raised full year 2019 earnings guidance to $11.30 - $11.55 from
$11.20 - $11.50, which does not include any future prior-period
reserve development.
- On October 10, 2019, the Company entered into a definitive
agreement to acquire certain assets of YourCare Health Plan, Inc.
Through this transaction, expected to close early next year, the
Company will serve approximately 46,000 Medicaid members in seven
counties in Western New York.
“We are pleased with our performance this quarter as we
sustained our margin profile, produced significant excess capital,
and increased our full year 2019 guidance,” said Joe Zubretsky,
president and CEO. “We have accomplished this in the backdrop of
commencing our pivot to growth.”
Premium Revenue
Premium revenue for the third quarter of 2019 decreased 5.8% to
$4.1 billion compared to $4.3 billion in the third quarter of 2018,
which was in line with the Company’s expectations.
For the nine months ended September 30, 2019, premium revenue
decreased 8.3% to $12.1 billion, from $13.2 billion for the
comparable period in 2018. In both periods, the lower premium
revenue is primarily a result of previously announced losses of
Medicaid membership in New Mexico and Florida.
Medical Care Ratio
The consolidated MCR for the third quarter of 2019 was 86.3%
compared to 87.4% in the third quarter of 2018. Prior period
reserve development in the quarter was negligible.
The MCR for the nine months ended September 30, 2019, improved
to 85.7% compared to 86.2% for the comparable period in 2018, due
to a combination of the following:
- The Medicaid MCR improved to 88.2% compared to 90.4% for
the nine months ended September 30, 2018, due to improvement in all
programs.
- The Medicare MCR improved to 85.2% compared to 85.7% for
the nine months ended September 30, 2018.
- The Marketplace MCR was 66.7% compared to 57.5% for the
nine months ended September 30, 2018. The 2018 period was
positively impacted by reduced medical care costs from Cost Sharing
Reduction (CSR) subsidies related to 2017 dates of service. In
addition, the current year was impacted by a relatively smaller
benefit from prior-year Marketplace risk adjustment compared to
2018.
General and Administrative Expense Ratio
The general and administrative expenses were 7.6% of total
revenues in the third quarter of 2019 compared to 6.6% in the third
quarter of 2018.
For the nine months ended September 30, 2019, the G&A ratio
was 7.6% compared to 7.0% in the comparable prior-year period. In
both periods, the year-over-year increases are due mainly to the
year-over-year decline in total revenues.
Interest Expense
Interest expense was $22 million in the third quarter of 2019
compared to $26 million in the third quarter of 2018. The decline
was due to continued repayment of convertible notes.
Other Expenses
The third quarter results included a $2 million charge on the
repayment of convertible notes, resulting in a $0.03 net loss per
diluted share.
Balance Sheet
Cash and investments at the parent company amounted to $796
million as of September 30, 2019, compared to $467 million as of
June 30, 2019.
During the third quarter of 2019, the parent company received
$430 million of dividends from the regulated health plan
subsidiaries.
The Company repaid $55 million of principal on the convertible
notes during the quarter, and $240 million since the beginning of
the year. The impact of capital deployment actions in the quarter
resulted in lower interest expense, a slight loss on repayment of
the convertible notes, and a lower share count.
Cash Flow
Operating cash flows for the nine months ended September 30,
2019, amounted to $398 million and were higher compared to the nine
months ended September 30, 2018, primarily due to the normal
fluctuations of working capital.
Outlook
The Company raised its full year 2019 earnings guidance range to
$11.30 - $11.55 per diluted share, from previously issued guidance
of $11.20 - $11.50.
Guidance is based on the following:
- Assumes no future restructuring or non-run rate significant
items; and
- Assumes no future prior period development.
October 29, 2019 (1)
July 30, 2019 (1)
(current)
(previous)
Premium revenue
$16.1B
$16.1B
Medicaid
$12.4B
$12.3B
Medicare
$2.2B
$2.2B
Marketplace
$1.5B
$1.6B
Premium tax revenue
$565M
$450M
Investment income and other revenue
$135M
$115M
Total revenue
$16.8B
$16.7B
Medical care costs
$13.8B
$13.8B
General and administrative expenses
$1.3B
$1.3B
Premium tax expenses
$565M
$450M
EBITDA (2)
$1,140M - $1,160M
$1,135M - $1,160M
Depreciation and amortization
$90M
$90M
Interest expense and other expenses,
net
$90M
$90M
Income before income taxes
$960M - $980M
$955M - $980M
Net income
$725M - $740M
$725M - $740M
Net income per share
$11.30 - $11.55
$11.20 - $11.50
Diluted weighted average shares
64.2M
64.5M
End-of-year membership:
Medicaid and Medicare
3.1M
3.1M
Marketplace
270K
270K - 280K
Operating Statistics:
Medical care ratio
86%
86%
G&A ratio
7.7%
7.7%
Effective income tax expense rate
24.3%
24.2%
After-tax margin
4.3% - 4.4%
4.2% - 4.4%
Medicaid
3%
3%
Medicare
7%
7%
Marketplace
11%
11%
__________________
(1) All amounts are rounded and approximations. (2) See
reconciliation of non-GAAP financial measures at the end of this
release.
Conference Call
Management will host a conference call and webcast to discuss
Molina Healthcare’s third quarter 2019 results at 8:00 a.m. Eastern
time on Wednesday, October 30, 2019. The number to call for the
interactive teleconference is (877) 883-0383 and the confirmation
number is 5680857. A telephonic replay of the conference call will
be available through Wednesday, November 6, 2019, by dialing (877)
344-7529 and entering confirmation number 10135133. A live audio
broadcast of this conference call will be available on Molina
Healthcare’s website, molinahealthcare.com. A 30‑day online replay
will be available approximately an hour following the conclusion of
the live broadcast.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed
healthcare services under the Medicaid and Medicare programs and
through the state insurance marketplaces. Through its locally
operated health plans, Molina Healthcare served approximately 3.3
million members as of September 30, 2019. For more information
about Molina Healthcare, please visit 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 revised 2019 guidance, as well as its
plans, expectations, and anticipated future events. Actual results
could differ materially due to numerous known and unknown risks and
uncertainties. Those risks and uncertainties are discussed in the
section entitled “Risk Factors” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018, and the section
entitled “Forward-Looking Statements” in the Company’s Quarterly
Report on Form 10-Q for the period ended September 30, 2019.
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, the Company can give no assurances
that its forward-looking statements will prove to be accurate, or
that any other results or events projected or contemplated by its
forward-looking statements will in fact occur, and the Company
cautions investors not to place undue reliance on these statements.
All forward-looking statements in this release represent the
Company’s judgment as of October 29, 2019, and, except as otherwise
required by law, the Company disclaims any obligation to update any
forward-looking statements to conform the statement to actual
results or changes in its expectations.
UNAUDITED CONSOLIDATED
STATEMENTS OF INCOME
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
4,084
$
4,337
$
12,085
$
13,174
Premium tax revenue
119
110
367
320
Health insurer fees reimbursed
—
83
—
248
Service revenue
—
130
—
391
Investment income and other revenue
40
37
103
93
Total revenue
4,243
4,697
12,555
14,226
Operating expenses:
Medical care costs
3,523
3,790
10,360
11,362
General and administrative expenses
323
311
953
998
Premium tax expenses
119
110
367
320
Health insurer fees
—
87
—
261
Depreciation and amortization
21
25
68
76
Restructuring costs
—
5
5
38
Cost of service revenue
—
111
—
349
Total operating expenses
3,986
4,439
11,753
13,404
Gain on sale of subsidiary
—
37
—
37
Operating income
257
295
802
859
Other expenses, net:
Interest expense
22
26
67
91
Other expenses (income), net
2
10
(15
)
25
Total other expenses, net
24
36
52
116
Income before income tax expense
233
259
750
743
Income tax expense
58
62
181
237
Net income
$
175
$
197
$
569
$
506
Net income per share, diluted
$
2.75
$
2.90
$
8.80
$
7.60
Diluted weighted average shares
outstanding
63.6
67.9
64.6
66.6
Operating Statistics:
Medical care ratio
86.3
%
87.4
%
85.7
%
86.2
%
G&A ratio
7.6
%
6.6
%
7.6
%
7.0
%
Premium tax ratio
2.8
%
2.5
%
2.9
%
2.4
%
Effective income tax rate
24.7
%
24.0
%
24.1
%
31.9
%
After-tax margin
4.1
%
4.2
%
4.5
%
3.6
%
Medicaid
3.4
%
2.8
%
3.1
%
2.0
%
Medicare
6.4
%
1.4
%
7.0
%
3.7
%
Marketplace
8.1
%
15.3
%
11.9
%
16.7
%
CONSOLIDATED BALANCE
SHEETS
September 30,
December 31,
2019
2018
Unaudited
(Dollars in millions, except
per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
2,679
$
2,826
Investments
1,757
1,681
Receivables
1,280
1,330
Prepaid expenses and other current
assets
140
149
Derivative asset
21
476
Total current assets
5,877
6,462
Property, equipment, and capitalized
software, net
379
241
Goodwill and intangible assets, net
176
190
Restricted investments
79
120
Deferred income taxes
82
117
Other assets
108
24
$
6,701
$
7,154
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
1,975
$
1,961
Amounts due government agencies
612
967
Accounts payable and accrued
liabilities
478
390
Deferred revenue
207
211
Current portion of long-term debt
15
241
Derivative liability
21
476
Total current liabilities
3,308
4,246
Long-term debt
1,239
1,020
Finance lease liabilities
233
197
Other long-term liabilities
90
44
Total liabilities
4,870
5,507
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 63 million shares at
September 30, 2019 and 62 million shares at December 31, 2018
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
160
643
Accumulated other comprehensive income
(loss)
5
(8
)
Retained earnings
1,666
1,012
Total stockholders’ equity
1,831
1,647
$
6,701
$
7,154
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
(In millions)
Operating activities:
Net income
$
175
$
197
$
569
$
506
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
21
31
68
104
Deferred income taxes
(12
)
(26
)
7
(32
)
Share-based compensation
10
7
29
20
Amortization of convertible senior notes
and finance lease liabilities
1
5
5
18
Loss (gain) on debt repayment
2
10
(15
)
25
Gain on sale of subsidiary
—
(37
)
—
(37
)
Non-cash restructuring costs
—
—
—
17
Other, net
(8
)
2
(5
)
6
Changes in operating assets and
liabilities:
Receivables
(41
)
(192
)
50
(507
)
Prepaid expenses and other current
assets
(24
)
64
(6
)
(117
)
Medical claims and benefits payable
208
123
14
(144
)
Amounts due government agencies
(372
)
(716
)
(355
)
(511
)
Accounts payable and accrued
liabilities
98
49
37
398
Deferred revenue
177
(13
)
(4
)
(55
)
Income taxes
7
(9
)
4
118
Net cash provided by (used in) operating
activities
242
(505
)
398
(191
)
Investing activities:
Purchases of investments
(776
)
(288
)
(1,938
)
(1,202
)
Proceeds from sales and maturities of
investments
1,099
735
1,890
2,070
Purchases of property, equipment, and
capitalized software
(10
)
(10
)
(30
)
(24
)
Other, net
—
(14
)
(2
)
(23
)
Net cash provided by (used in) investing
activities
313
423
(80
)
821
Financing activities:
Repayment of principal amount of 1.125%
Convertible Notes
(55
)
(140
)
(240
)
(236
)
Cash paid for partial settlement of 1.125%
Conversion Option
(105
)
(343
)
(578
)
(477
)
Cash received for partial termination of
1.125% Call Option
105
343
578
477
Cash paid for partial termination of
1.125% Warrants
(90
)
(306
)
(514
)
(419
)
Proceeds from borrowings under Term Loan
Facility
—
—
220
—
Repayment of Credit Facility
—
—
—
(300
)
Repayment of 1.625% Convertible Notes
—
(64
)
—
(64
)
Other, net
(3
)
1
24
7
Net cash used in financing activities
(148
)
(509
)
(510
)
(1,012
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash and cash equivalents
407
(591
)
(192
)
(382
)
Cash, cash equivalents, and restricted
cash and cash equivalents at beginning of period
2,327
3,499
2,926
3,290
Cash, cash equivalents, and restricted
cash and cash equivalents at end of period
$
2,734
$
2,908
$
2,734
$
2,908
HEALTH PLANS SEGMENT
MEMBERSHIP
September 30,
2019
December 31,
2018
September 30,
2018
Ending Membership by Government
Program:
TANF and CHIP
1,993,000
2,295,000
2,436,000
Medicaid Expansion
598,000
660,000
664,000
ABD
364,000
406,000
415,000
Total Medicaid
2,955,000
3,361,000
3,515,000
MMP - Integrated
58,000
54,000
55,000
Medicare Special Needs Plans
44,000
44,000
45,000
Total Medicare
102,000
98,000
100,000
Total Medicaid and Medicare
3,057,000
3,459,000
3,615,000
Marketplace
289,000
362,000
384,000
3,346,000
3,821,000
3,999,000
Ending Membership by Health
Plan:
California
580,000
608,000
623,000
Florida (1)
136,000
313,000
395,000
Illinois
224,000
224,000
223,000
Michigan
361,000
383,000
394,000
New Mexico (1)
24,000
222,000
234,000
Ohio
292,000
302,000
315,000
Puerto Rico
186,000
252,000
320,000
South Carolina
134,000
120,000
117,000
Texas
350,000
423,000
436,000
Washington
818,000
781,000
770,000
Other (2)
241,000
193,000
172,000
3,346,000
3,821,000
3,999,000
__________________
(1) The Company’s Medicaid contracts in New Mexico and in all
but two regions in Florida terminated in late 2018 and early 2019.
During 2019, the Company continues to serve Medicare and
Marketplace members in both Florida and New Mexico, as well as
Medicaid members in two regions in Florida. (2) “Other”
includes the Idaho, Mississippi, New York, Utah and Wisconsin
health plans, which are not individually significant to the
Company’s consolidated operating results.
UNAUDITED SELECTED FINANCIAL
DATA (In millions, except percentages and per-member per-month
amounts) HEALTH PLANS SEGMENT FINANCIAL DATA — BY GOVERNMENT
PROGRAM
Member
Months (1)
Premium Revenue
Medical Care Costs
MCR (2)
Medical
Margin
Total
PMPM
Total
PMPM
Three Months Ended September
30, 2019
TANF and CHIP
6.0
$
1,225
$
202.46
$
1,071
$
176.88
87.4
%
$
154
Medicaid Expansion
1.8
696
385.63
622
345.25
89.5
74
ABD
1.1
1,247
1,136.67
1,097
1,000.56
88.0
150
Total Medicaid
8.9
3,168
353.81
2,790
311.70
88.1
378
MMP
0.2
399
2,328.70
345
2,010.50
86.3
54
Medicare
0.1
160
1,230.01
134
1,029.75
83.7
26
Total Medicare
0.3
559
1,854.96
479
1,587.61
85.6
80
Total Medicaid and Medicare
9.2
3,727
402.76
3,269
353.31
87.7
458
Marketplace
0.9
357
410.23
254
292.21
71.2
103
10.1
$
4,084
$
403.40
$
3,523
$
348.06
86.3
%
$
561
Three Months Ended September
30, 2018
TANF and CHIP
7.4
$
1,379
$
187.03
$
1,228
$
166.41
89.0
%
$
151
Medicaid Expansion
2.0
671
333.11
640
317.62
95.3
31
ABD
1.2
1,322
1,054.92
1,186
946.38
89.7
136
Total Medicaid
10.6
3,372
316.86
3,054
286.86
90.5
318
MMP
0.2
353
2,159.72
323
1,981.45
91.7
30
Medicare
0.1
156
1,157.71
121
895.25
77.3
35
Total Medicare
0.3
509
1,706.95
444
1,490.63
87.3
65
Total Medicaid and Medicare
10.9
3,881
354.70
3,498
319.63
90.1
383
Marketplace
1.2
456
394.02
292
252.61
64.1
164
12.1
$
4,337
$
358.46
$
3,790
$
313.23
87.4
%
$
547
Nine Months Ended September
30, 2019
TANF and CHIP
18.3
$
3,594
$
196.01
$
3,141
$
171.30
87.4
%
$
453
Medicaid Expansion
5.4
2,055
380.08
1,810
334.85
88.1
245
ABD
3.3
3,590
1,097.94
3,200
978.64
89.1
390
Total Medicaid
27.0
9,239
342.03
8,151
301.77
88.2
1,088
MMP
0.5
1,193
2,368.38
1,034
2,051.90
86.6
159
Medicare
0.4
489
1,270.32
399
1,037.24
81.7
90
Total Medicare
0.9
1,682
1,892.63
1,433
1,612.29
85.2
249
Total Medicaid and Medicare
27.9
10,921
391.44
9,584
343.53
87.8
1,337
Marketplace
2.8
1,164
414.17
776
276.28
66.7
388
30.7
$
12,085
$
393.52
$
10,360
$
337.37
85.7
%
$
1,725
Nine Months Ended September
30, 2018
TANF and CHIP
22.3
$
4,145
$
186.12
$
3,705
$
166.35
89.4
%
$
440
Medicaid Expansion
6.1
2,184
359.37
1,957
322.01
89.6
227
ABD
3.7
3,864
1,034.25
3,550
950.11
91.9
314
Total Medicaid
32.1
10,193
317.70
9,212
287.10
90.4
981
MMP
0.5
1,077
2,173.90
941
1,899.26
87.4
136
Medicare
0.4
470
1,171.59
385
959.54
81.9
85
Total Medicare
0.9
1,547
1,725.71
1,326
1,479.06
85.7
221
Total Medicaid and Medicare
33.0
11,740
355.96
10,538
319.50
89.8
1,202
Marketplace
3.8
1,434
379.91
824
218.44
57.5
610
36.8
$
13,174
$
358.42
$
11,362
$
309.12
86.2
%
$
1,812
__________________
(1) A member month is defined as the aggregate of each month’s
ending membership for the period presented. (2) The MCR represents
medical costs as a percentage of premium revenue.
HEALTH PLANS SEGMENT FINANCIAL
DATA — MEDICAID AND MEDICARE
Member
Months
Premium Revenue
Medical Care Costs
MCR
Medical
Margin
Total
PMPM
Total
PMPM
Three Months Ended September
30, 2019
California
1.6
$
510
$
315.90
$
423
$
261.97
82.9
%
$
87
Florida
0.3
130
436.99
127
427.80
97.9
3
Illinois
0.7
257
383.41
232
347.28
90.6
25
Michigan
1.1
401
373.01
332
307.97
82.6
69
Ohio
0.9
615
687.38
563
628.98
91.5
52
Puerto Rico
0.6
117
209.25
102
182.53
87.2
15
South Carolina
0.4
151
379.20
138
347.23
91.6
13
Texas
0.7
592
912.76
540
833.51
91.3
52
Washington
2.3
643
269.52
570
238.55
88.5
73
Other (1) (2)
0.6
311
437.60
242
341.29
78.0
69
9.2
$
3,727
$
402.76
$
3,269
$
353.31
87.7
%
$
458
Three Months Ended September
30, 2018
California
1.7
$
435
$
249.00
$
446
$
255.22
102.5
%
$
(11
)
Florida
1.0
388
363.16
362
339.33
93.4
26
Illinois
0.7
207
312.72
182
274.98
87.9
25
Michigan
1.1
397
350.05
321
282.49
80.7
76
New Mexico (2)
0.6
304
471.66
275
426.69
90.5
29
Ohio
0.9
584
624.84
532
568.93
91.1
52
Puerto Rico
1.0
179
189.65
162
171.96
90.7
17
South Carolina
0.4
124
354.53
112
318.56
89.9
12
Texas
0.7
577
848.47
525
772.14
91.0
52
Washington
2.3
511
226.77
444
197.04
86.9
67
Other (1)
0.5
175
334.29
137
261.49
78.2
38
10.9
$
3,881
$
354.70
$
3,498
$
319.63
90.1
%
$
383
Nine Months Ended September
30, 2019
California
4.9
$
1,508
$
306.96
$
1,286
$
261.76
85.3
%
$
222
Florida
1.0
418
410.71
374
367.95
89.6
44
Illinois
2.0
726
365.35
632
318.26
87.1
94
Michigan
3.3
1,199
370.77
990
305.99
82.5
209
Ohio
2.7
1,835
682.59
1,653
614.89
90.1
182
Puerto Rico
1.8
341
190.42
301
167.98
88.2
40
South Carolina
1.2
427
368.35
378
326.61
88.7
49
Texas
2.0
1,789
910.64
1,623
826.20
90.7
166
Washington
7.1
1,868
261.92
1,691
236.98
90.5
177
Other (1) (2)
1.9
810
402.31
656
325.93
81.0
154
27.9
$
10,921
$
391.44
$
9,584
$
343.53
87.8
%
$
1,337
Nine Months Ended September
30, 2018
California
5.3
$
1,446
$
270.63
$
1,299
$
243.14
89.8
%
$
147
Florida
3.2
1,147
356.15
1,069
331.93
93.2
78
Illinois
1.8
551
308.45
474
265.47
86.1
77
Michigan
3.4
1,161
343.08
983
290.26
84.6
178
New Mexico (2)
2.0
936
469.19
875
438.70
93.5
61
Ohio
2.8
1,670
590.71
1,474
521.26
88.2
196
Puerto Rico
2.9
549
190.34
501
173.83
91.3
48
South Carolina
1.1
369
350.94
323
306.76
87.4
46
Texas
2.1
1,715
831.21
1,554
753.31
90.6
161
Washington
6.8
1,666
245.40
1,544
227.41
92.7
122
Other (1)
1.6
530
323.84
442
269.98
83.4
88
33.0
$
11,740
$
355.96
$
10,538
$
319.50
89.8
%
$
1,202
_______________
(1) “Other” includes the Idaho, Mississippi, New York, Utah and
Wisconsin health plans, which are not individually significant to
the Company’s consolidated operating results. (2) In 2019, “Other”
includes the New Mexico health plan. The New Mexico health plan’s
Medicaid contract terminated on December 31, 2018, and therefore
its 2019 results are not individually significant to the Company’s
consolidated operating results.
HEALTH PLANS SEGMENT FINANCIAL
DATA — MARKETPLACE
Member
Months
Premium Revenue
Medical Care Costs
MCR
Medical
Margin
Total
PMPM
Total
PMPM
Three Months Ended September
30, 2019
California
0.2
$
57
$
371.07
$
33
$
210.87
56.8
%
$
24
Florida
0.1
41
349.53
25
212.00
60.7
16
Michigan
—
7
431.41
4
289.45
67.1
3
Ohio
—
25
792.96
19
626.30
79.0
6
Texas
0.4
142
351.04
105
257.68
73.4
37
Washington
0.1
45
719.67
33
548.75
76.2
12
Other (1)
0.1
40
480.41
35
408.35
85.0
5
0.9
$
357
$
410.23
$
254
$
292.21
71.2
%
$
103
Three Months Ended September
30, 2018
California
0.2
$
49
$
309.04
$
37
$
235.63
76.2
%
$
12
Florida
0.2
66
548.60
45
362.39
66.1
21
Michigan
—
12
233.51
7
145.13
62.1
5
New Mexico
0.1
28
419.20
18
249.33
59.5
10
Ohio
0.1
27
485.08
18
336.86
69.4
9
Texas
0.6
228
357.54
134
209.80
58.7
94
Washington
—
44
656.70
34
518.75
79.0
10
Other (2)
—
2
NM
(1
)
NM
NM
3
1.2
$
456
$
394.02
$
292
$
252.61
64.1
%
$
164
Nine Months Ended September
30, 2019
California
0.5
$
174
$
364.72
$
101
$
210.76
57.8
%
$
73
Florida
0.4
152
389.44
81
207.22
53.2
71
Michigan
—
27
474.12
15
265.95
56.1
12
Ohio
0.1
79
801.90
53
543.00
67.7
26
Texas
1.3
457
344.19
331
249.44
72.5
126
Washington
0.2
143
744.47
97
509.50
68.4
46
Other (1)
0.3
132
494.59
98
364.71
73.7
34
2.8
$
1,164
$
414.17
$
776
$
276.28
66.7
%
$
388
Nine Months Ended September
30, 2018
California
0.6
$
171
$
326.82
$
89
$
169.98
52.0
%
$
82
Florida
0.5
211
491.13
67
155.24
31.6
144
Michigan
0.1
40
248.24
23
145.38
58.6
17
New Mexico
0.2
93
426.07
55
247.57
58.1
38
Ohio
0.2
84
466.75
58
324.91
69.6
26
Texas
2.0
679
330.92
440
214.65
64.9
239
Washington
0.2
139
654.78
105
497.00
75.9
34
Other (2)
—
17
NM
(13
)
NM
NM
30
3.8
$
1,434
$
379.91
$
824
$
218.44
57.5
%
$
610
__________________
(1) “Other” includes the New Mexico, Utah and Wisconsin health
plans, which are not individually significant to the Company’s
consolidated operating results in 2019.
(2) “Other” includes the Utah and
Wisconsin health plans, where the Company did not participate in
the Marketplace in 2018. Therefore, the ratios for 2018 periods are
not meaningful (NM).
HEALTH PLANS SEGMENT FINANCIAL
DATA — TOTAL
Member
Months
Premium Revenue
Medical Care Costs
MCR
Medical
Margin
Total
PMPM
Total
PMPM
Three Months Ended September
30, 2019
California
1.8
$
567
$
320.67
$
456
$
257.55
80.3
%
$
111
Florida
0.4
171
412.29
152
366.86
89.0
19
Illinois
0.7
257
383.41
232
347.28
90.6
25
Michigan
1.1
408
373.92
336
307.68
82.3
72
Ohio
0.9
640
690.88
582
628.89
91.0
58
Puerto Rico
0.6
117
209.25
102
182.53
87.2
15
South Carolina
0.4
151
379.20
138
347.23
91.6
13
Texas
1.1
734
696.46
645
611.78
87.8
89
Washington
2.4
688
280.85
603
246.36
87.7
85
Other (1) (2)
0.7
351
442.14
277
348.40
78.8
74
10.1
$
4,084
$
403.40
$
3,523
$
348.06
86.3
%
$
561
Three Months Ended September
30, 2018
California
1.9
$
484
$
253.96
$
483
$
253.60
99.9
%
$
1
Florida
1.2
454
382.20
407
341.70
89.4
47
Illinois
0.7
207
312.72
182
274.98
87.9
25
Michigan
1.1
409
345.28
328
276.88
80.2
81
New Mexico (2)
0.7
332
466.63
293
409.68
87.8
39
Ohio
1.0
611
616.95
550
555.83
90.1
61
Puerto Rico
1.0
179
189.65
162
171.96
90.7
17
South Carolina
0.4
124
354.53
112
318.56
89.9
12
Texas
1.3
805
611.01
659
500.14
81.9
146
Washington
2.3
555
239.25
478
206.38
86.3
77
Other (1)
0.5
177
336.18
136
260.19
77.4
41
12.1
$
4,337
$
358.46
$
3,790
$
313.23
87.4
%
$
547
Nine Months Ended September
30, 2019
California
5.4
$
1,682
$
312.08
$
1,387
$
257.25
82.4
%
$
295
Florida
1.4
570
404.81
455
323.37
79.9
115
Illinois
2.0
726
365.35
632
318.26
87.1
94
Michigan
3.3
1,226
372.58
1,005
305.29
81.9
221
Ohio
2.8
1,914
686.80
1,706
612.35
89.2
208
Puerto Rico
1.8
341
190.42
301
167.98
88.2
40
South Carolina
1.2
427
368.35
378
326.61
88.7
49
Texas
3.3
2,246
682.10
1,954
593.50
87.0
292
Washington
7.3
2,011
274.52
1,788
244.10
88.9
223
Other (1) (2)
2.2
942
413.13
754
330.48
80.0
188
30.7
$
12,085
$
393.52
$
10,360
$
337.37
85.7
%
$
1,725
Nine Months Ended September
30, 2018
California
5.9
$
1,617
$
275.64
$
1,388
$
236.61
85.8
%
$
229
Florida
3.7
1,358
372.07
1,136
311.09
83.6
222
Illinois
1.8
551
308.45
474
265.47
86.1
77
Michigan
3.5
1,201
338.83
1,006
283.77
83.7
195
New Mexico (2)
2.2
1,029
464.92
930
419.78
90.3
99
Ohio
3.0
1,754
583.29
1,532
509.52
87.4
222
Puerto Rico
2.9
549
190.34
501
173.83
91.3
48
South Carolina
1.1
369
350.94
323
306.76
87.4
46
Texas
4.1
2,394
581.74
1,994
484.70
83.3
400
Washington
7.0
1,805
257.82
1,649
235.59
91.4
156
Other (1)
1.6
547
334.26
429
262.27
78.5
118
36.8
$
13,174
$
358.42
$
11,362
$
309.12
86.2
%
$
1,812
__________________
(1) “Other” includes the Idaho,
Mississippi, New York, Utah and Wisconsin health plans, which are
not individually significant to the Company’s consolidated
operating results.
(2) In 2019, “Other” includes the New Mexico health plan. The New
Mexico health plan’s Medicaid contract terminated on December 31,
2018, and therefore its 2019 results are not individually
significant to the Company’s consolidated operating results.
SELECTED FINANCIAL
DATA
The following table provides
details of the Company’s medical care costs for the periods
indicated:
Three Months Ended September
30,
2019
2018
Amount
PMPM
% of
Total
Amount
PMPM
% of
Total
Fee for service
$
2,685
$
265.12
76.2
%
$
2,865
$
236.74
75.6
%
Pharmacy
412
40.74
11.7
495
40.90
13.1
Capitation
283
28.01
8.0
297
24.52
7.8
Other
143
14.19
4.1
133
11.07
3.5
$
3,523
$
348.06
100.0
%
$
3,790
$
313.23
100.0
%
Nine Months Ended September
30,
2019
2018
Amount
PMPM
% of
Total
Amount
PMPM
% of
Total
Fee for service
$
7,793
$
253.77
75.2
%
$
8,471
$
230.46
74.6
%
Pharmacy
1,254
40.83
12.1
1,645
44.76
14.5
Capitation
856
27.88
8.3
891
24.23
7.8
Other
457
14.89
4.4
355
9.67
3.1
$
10,360
$
337.37
100.0
%
$
11,362
$
309.12
100.0
%
The following table provides details of
the Company’s medical claims and benefits payable as of the dates
indicated:
September 30,
December 31,
2019
2018
Fee-for-service claims incurred but not
paid (IBNP)
$
1,424
$
1,562
Pharmacy payable
128
115
Capitation payable
57
52
Other (1)
366
232
$
1,975
$
1,961
______________________
(1) “Other” medical claims and benefits payable include amounts
payable to certain providers for which the Company acts as an
intermediary on behalf of various state agencies without assuming
financial risk. Such receipts and payments do not impact the
Company’s consolidated statements of income. As of September 30,
2019 and December 31, 2018, the Company had recorded non-risk
provider payables of approximately $239 million and $107 million,
respectively.
CHANGE IN MEDICAL CLAIMS AND BENEFITS
PAYABLE (Dollars in millions)
The Company’s claims liability includes a provision for adverse
claims deviation based on historical experience and other factors
including, but not limited to, variations in claims payment
patterns, changes in utilization and cost trends, known outbreaks
of disease, and large claims. The Company’s reserving methodology
is consistently applied across all periods presented. The amounts
displayed for “Components of medical care costs related to: Prior
period” represent the amount by which the original estimate of
claims and benefits payable at the beginning of the period was more
than the actual amount of the liability based on information
(principally the payment of claims) developed since that liability
was first reported. The following table presents the components of
the change in medical claims and benefits payable for the periods
indicated:
Nine Months Ended
Year Ended
September 30,
Dec. 31,
2018
2019
2018
Medical claims and benefits payable,
beginning balance
$
1,961
$
2,192
$
2,192
Components of medical care costs related
to:
Current period
10,613
11,670
15,478
Prior period (1)
(253
)
(308
)
(341
)
Total medical care costs
10,360
11,362
15,137
Change in non-risk and other provider
payables
131
60
13
Payments for medical care costs related
to:
Current period
8,996
9,866
13,671
Prior period
1,481
1,706
1,710
Total paid
10,477
11,572
15,381
Medical claims and benefits payable,
ending balance
$
1,975
$
2,042
$
1,961
Days in claims payable, fee for service
(2)
50
53
53
______________________
(1) The September 30, 2018, and December
31, 2018, amounts include the 2018 benefit of the 2017 Marketplace
CSR reimbursement of $81 million.
(2) Claims payable includes primarily IBNP. It also includes
certain fee-for-service payables reported in “Other” medical claims
and benefits payable amounting to $42 million, $34 million and $43
million, as of September 30, 2019, September 30, 2018, and December
31, 2018, respectively.
SUMMARY OF NON-RUN RATE ITEMS AFFECTING
CURRENT QUARTER AND YEAR-TO-DATE FINANCIAL RESULTS (In millions,
except per diluted share amounts)
The table below summarizes the impact of certain expenses and
other items that management believes are not indicative of
longer-term business trends and operations. The individual items
presented below increase (decrease) income before income tax
expense.
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Amount
Per
Diluted
Share (1)
Amount
Per
Diluted
Share (1)
Amount
Per
Diluted
Share (1)
Amount
Per
Diluted
Share (1)
(Loss) gain on debt repayment
$
(2
)
$
(0.03
)
$
(10
)
$
(0.12
)
$
15
$
0.18
$
(25
)
$
(0.33
)
Restructuring costs
—
—
(5
)
(0.06
)
(5
)
(0.06
)
(38
)
(0.45
)
Gain on sale of subsidiary
—
—
37
0.42
—
—
37
0.43
$
(2
)
$
(0.03
)
$
22
$
0.24
$
10
$
0.12
$
(26
)
$
(0.35
)
______________________
(1) Except for permanent differences
between GAAP and tax (such as certain expenses that are not
deductible for tax purposes), per diluted share amounts are
generally calculated at the statutory income tax rate of 22.6% and
22% for 2019 and 2018, respectively.
NON-GAAP FINANCIAL MEASURES
The Company uses non-generally accepted accounting principles,
or non-GAAP, financial measures as supplemental metrics in
evaluating the Company’s 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. See further information regarding
non-GAAP measures below the tables.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Net income
$
175
$
197
$
569
$
506
Adjustments:
Depreciation, and amortization of
intangible assets and capitalized software
21
28
68
95
Interest expense
22
26
67
91
Income tax expense
58
62
181
237
EBITDA
$
276
$
313
$
885
$
929
Adjustments made to GAAP measures used to calculate the non-GAAP
measures used in this news release follow:
Earnings before interest, taxes, depreciation and
amortization (“EBITDA”): Net income on a GAAP basis less
depreciation, and amortization of intangible assets and capitalized
software, interest expense and income tax expense. The Company
believes that EBITDA is helpful in assessing the Company’s ability
to meet the cash demands of its operating units.
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
Net income
$
175
$
2.75
$
197
$
2.90
$
569
$
8.80
$
506
$
7.60
Adjustment:
Amortization of intangible assets
4
0.07
6
0.08
13
0.21
16
0.23
Income tax effect (1)
(1
)
(0.02
)
(2
)
(0.01
)
(3
)
(0.05
)
(4
)
(0.05
)
Adjustment, net of tax effect
3
0.05
4
0.07
10
0.16
12
0.18
Adjusted net income
$
178
$
2.80
$
201
$
2.97
$
579
$
8.96
$
518
$
7.78
________________________
(1) Income tax effect of adjustments
calculated at the blended federal and state statutory tax rate of
22.6% and 22% for 2019 and 2018, respectively.
Adjustments made to GAAP measures used to calculate the non-GAAP
measures used in this news release follow:
Adjusted net income: Net income on a GAAP basis less
amortization of intangible assets, net of income tax effect
calculated at the statutory tax rate. The Company believes that
adjusted net income is helpful in assessing the Company’s financial
performance exclusive of the non-cash impact of the amortization of
purchased intangibles.
Adjusted net income per diluted share: Adjusted net
income divided by weighted average common shares outstanding on a
fully diluted basis.
2019 REVISED GUIDANCE
Reconciliation of
Non-GAAP Financial Measures
Low End
High End
(In millions)
Net income
$
725
$
740
Adjustments:
Depreciation, and amortization of
intangible assets and capitalized software
90
90
Interest expense
90
90
Income tax expense
235
240
EBITDA
$
1,140
$
1,160
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191029005966/en/
Investor Contact: Julie Trudell,
Julie.Trudell@molinahealthcare.com, 562-912-6720
Media Contact: Caroline Zubieta,
Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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