Increases Full Year 2021 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today
reported first quarter of 2021 GAAP earnings per diluted share of
$3.89 and adjusted earnings per diluted share of $4.44, a 33% and
47% increase, respectively, compared to the first quarter of 2020.
Financial results are summarized below:
Quarter ended March
31,
2021
2020
(In millions, except per-share
results)
Premium Revenue
$6,306
$4,304
Total Revenue
$6,522
$4,549
GAAP:
Net Income
$228
$178
EPS – Diluted
$3.89
$2.92
Medical Care Ratio (MCR)
86.8%
86.3%
G&A Ratio
7.3%
7.0%
After-tax Margin
3.5%
3.9%
Adjusted:
Net Income
$260
$184
EPS – Diluted
$4.44
$3.02
G&A Ratio
7.0%
7.0%
After-tax Margin
4.0%
4.0%
See the Reconciliation of Unaudited
Non-GAAP Financial Measures at the end of this release.
Quarter Highlights
- GAAP net income for the first quarter of 2021 was $3.89 per
diluted share, a 33% increase over the first quarter of 2020.
- Adjusted net income for the first quarter of 2021 was $4.44 per
diluted share, a 47% increase over the first quarter of 2020.
- As of March 31, 2021, the Company served approximately 4.6
million members, an increase of 1.2 million members, or 35%,
compared to March 31, 2020.
- Premium revenue was $6.3 billion for the first quarter of 2021,
an increase of 47% compared to the first quarter of 2020.
- The Company increased its full year 2021 premium revenue
guidance to more than $24.0 billion, from its previous guidance of
more than $23.0 billion.
- The Company increased its full year 2021 adjusted earnings
guidance to no less than $13.00 per diluted share, from its
previous range of $12.50 - $13.00 per diluted share.
“We are very pleased with our first quarter performance as we
continue to demonstrate our ability to produce excellent financial
results while substantially growing top line revenue and managing
through the ongoing impacts of the pandemic,” said Joseph
Zubretsky, president and CEO of Molina Healthcare. “The Ohio
contract award and the acquisition of Cigna’s Texas Medicaid
business are recent examples of the continued execution and success
of our growth plan and strategy.”
Ohio Procurement On April 13, 2021, the Company announced
that its Ohio health plan subsidiary was selected as an awardee in
all three regions across the state pursuant to the Medicaid managed
care RFA issued on September 30, 2020, by the Ohio Department of
Medicaid. This new contract is expected to begin in early 2022.
Texas Acquisition On April 22, 2021, the Company
announced that it has entered into a definitive agreement to
acquire certain assets of Cigna Corporation’s Texas Medicaid and
MMP business. As of December 31, 2020, Cigna served approximately
48,000 members in the Texas ABD program, also known as “STAR+PLUS,”
in the Hidalgo, Tarrant and Northeast service areas, as well as
approximately 2,000 MMP members in the Hidalgo service area, with
full year 2020 premium revenue of approximately $1.0 billion.
Total Revenue Total revenue was $6.5 billion for the
first quarter of 2021, an increase of 43% compared to the first
quarter of 2020. The higher total revenue reflects increased
membership in Medicaid and Marketplace, and includes the impact of
acquisitions that closed in the second half of 2020.
Net Income Net income for the first quarter was $228
million, or $3.89 per diluted share, compared to $178 million, or
$2.92 per diluted share in the first quarter of 2020, a 33%
increase in earnings per diluted share. Adjusted net income for the
first quarter was $260 million, or $4.44 per diluted share,
compared to $184 million, or $3.02 per diluted share in the first
quarter of 2020, a 47% increase in adjusted earnings per diluted
share.
The Company estimates the net effect of COVID had a negligible
impact in the first quarter of 2021, as utilization curtailment was
offset by COVID-related risk corridors and direct COVID medical
costs.
Medical Care Ratio The consolidated MCR for the first
quarter was 86.8%, compared to 86.3% for the first quarter of 2020.
While the net effect of COVID was in line with the Company’s
expectations and negligible to the quarter in total, the impacts
were varied across lines of business.
- Medicaid MCR: Decreased to 87.5%, compared to 88.9% for
the first quarter of 2020. The MCR was positively impacted by the
net effect of COVID. Lower utilization due to COVID curtailment,
severe winter weather in several states, and the absence of a
typical flu season, more than offset the impact of the various
COVID-related risk corridors enacted in several states as
previously disclosed.
- Medicare MCR: Increased to 90.3%, compared to 81.7% for
the first quarter of 2020. The MCR was negatively impacted by the
net effect of COVID and the temporary industry-wide challenge of
risk scores that do not fully reflect the acuity of the
membership.
- Marketplace MCR: Increased to 77.3%, compared to 72.3%
for the first quarter of 2020. The MCR was negatively impacted by
the net effect of COVID compared to the pre-pandemic first quarter
of 2020.
The prior year reserve development in the first quarter of 2021
was modestly favorable, but its impact on earnings was absorbed by
the COVID-related risk corridors.
General and Administrative Expense Ratio The G&A
ratio for the first quarter was 7.3%, compared to 7.0% for the
first quarter of 2020. The adjusted G&A ratio for the first
quarter was 7.0%, which was unchanged compared to the first quarter
of 2020.
Balance Sheet Cash and investments at the parent company
amounted to $436 million as of March 31, 2021, compared to $644
million as of December 31, 2020. The decline was primarily due to
the Company’s share repurchase program and capital contributions to
growing subsidiaries. In the quarter, the Company purchased
approximately 577,000 shares for $122 million, at an average cost
of $211.65 per share.
Cash Flow Operating cash flow for the first quarter of
2021 amounted to $568 million and was higher compared to the first
quarter of 2020, primarily due to growth in operations and the net
impact of timing differences in governmental receivables and
payables.
2021 Guidance The Company now expects its full year 2021
premium revenue to be more than $24.0 billion, compared to the
previous guidance of more than $23.0 billion, an increase of over
30% from the full year 2020. Total revenue guidance is now expected
to be more than $25.0 billion, compared to the previous guidance of
more than $24.0 billion.
The Company increased its full year 2021 adjusted earnings per
share guidance to be no less than $13.00 per share from the
previous range of $12.50 to $13.00 per share.
Revised guidance reflects:
- The impact of the Public Health Emergency period, and the
associated pause on Medicaid membership redeterminations, which is
now expected to continue through the third quarter of 2021;
- Strong membership pickup in the Marketplace open enrollment
coupled with slower membership attrition during the quarter;
and,
- The Company continues to be cautious in forecasting utilization
trends in the remaining nine months of the year due to COVID
pandemic.
The impact of the Affinity and the Cigna Texas membership
acquisitions are not included.
See the Reconciliation of Unaudited 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 first quarter 2021
results at 8:00 a.m. Eastern Time on Thursday, April 29, 2021. The
number to call for the interactive teleconference is (877) 883-0383
and the confirmation number is 1919961. A telephonic replay of the
conference call will be available through Thursday, May 6, 2021, by
dialing (877) 344-7529 and entering confirmation number 10152907. 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 4.6 million members as of March 31,
2021. 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 and the Company’s
accompanying oral remarks contain forward-looking statements
regarding its 2021 guidance, as well as its plans, expectations,
and the Company’s expectations regarding future developments.
Actual results could differ materially due to numerous known and
unknown risks and uncertainties. These risks and uncertainties are
discussed under the headings “Forward-Looking Statements,” and
“Risk Factors,” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2020, which is on file with the SEC, and
also in its Quarterly Report on Form 10-Q for the period ended
March 31, 2021, which the Company expects to file on or about April
29, 2021.
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
developments 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 April 28, 2021, and, except as otherwise required by
law, the Company disclaims any obligation to update any
forward-looking statement to conform the statement to actual
results or changes in its expectations.
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
2021
2020
(In millions, except
per-share amounts)
Revenue:
Premium revenue
$
6,306
$
4,304
Premium tax revenue
187
150
Health insurer fees reimbursed
—
66
Investment income
9
25
Other revenue
20
4
Total revenue
6,522
4,549
Operating expenses:
Medical care costs
5,474
3,716
General and administrative expenses
473
317
Premium tax expenses
187
150
Health insurer fees
—
68
Depreciation and amortization
33
20
Other
20
4
Total operating expenses
6,187
4,275
Operating income
335
274
Other expenses, net:
Interest expense
30
21
Total other expenses, net
30
21
Income before income tax expense
305
253
Income tax expense
77
75
Net income
$
228
$
178
Net income per share – Diluted
$
3.89
$
2.92
Diluted weighted average shares
outstanding
58.6
61.0
Operating Statistics:
Medical care ratio
86.8
%
86.3
%
G&A ratio
7.3
%
7.0
%
Premium tax ratio
2.9
%
3.4
%
Effective income tax rate
25.2
%
29.8
%
After-tax margin
3.5
%
3.9
%
MOLINA HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
March 31,
December 31,
2021
2020
Unaudited
(Dollars in millions,
except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
4,431
$
4,154
Investments
1,938
1,875
Receivables
1,776
1,672
Prepaid expenses and other current
assets
163
175
Total current assets
8,308
7,876
Property, equipment, and capitalized
software, net
378
391
Goodwill and intangible assets, net
923
941
Restricted investments
138
136
Deferred income taxes
66
69
Other assets
137
119
Total assets
$
9,950
$
9,532
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
2,839
$
2,696
Amounts due government agencies
1,718
1,253
Accounts payable, accrued liabilities and
other
695
641
Deferred revenue
71
375
Total current liabilities
5,323
4,965
Long-term debt
2,128
2,127
Finance lease liabilities
223
225
Other long-term liabilities
112
119
Total liabilities
7,786
7,436
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 58 million shares at March
31, 2021, and 59 million shares at December 31, 2020
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
170
199
Accumulated other comprehensive income
26
37
Retained earnings
1,968
1,860
Total stockholders’ equity
2,164
2,096
Total liabilities and stockholders’
equity
$
9,950
$
9,532
MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
2021
2020
(in millions)
Operating activities:
Net income
$
228
$
178
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
33
20
Deferred income taxes
6
14
Share-based compensation
24
12
Other, net
12
(3
)
Changes in operating assets and
liabilities:
Receivables
(98
)
(197
)
Prepaid expenses and other current
assets
(15
)
(229
)
Medical claims and benefits payable
168
127
Amounts due government agencies
432
113
Accounts payable, accrued liabilities and
other
16
254
Deferred revenue
(304
)
(206
)
Income taxes
66
60
Net cash provided by operating
activities
568
143
Investing activities:
Purchases of investments
(388
)
(578
)
Proceeds from sales and maturities of
investments
308
493
Purchases of property, equipment, and
capitalized software
(16
)
(21
)
Other, net
9
3
Net cash used in investing activities
(87
)
(103
)
Financing activities:
Common stock purchases
(128
)
(453
)
Common stock withheld to settle employee
tax obligations
(51
)
(7
)
Contingent consideration liabilities
settled
(20
)
—
Proceeds from borrowings under term loan
facility
—
380
Other, net
(8
)
(45
)
Net cash used in financing activities
(207
)
(125
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash and cash equivalents
274
(85
)
Cash, cash equivalents, and restricted
cash and cash equivalents at beginning of period
4,223
2,508
Cash, cash equivalents, and restricted
cash and cash equivalents at end of period
$
4,497
$
2,423
MOLINA HEALTHCARE, INC.
UNAUDITED SEGMENT DATA (Dollars in millions)
March 31,
December 31,
March 31,
2021 (1)
2020
2020
Ending Membership by Segment:
Medicaid
3,859,000
3,599,000
2,970,000
Medicare
126,000
115,000
105,000
Marketplace
620,000
318,000
329,000
Total
4,605,000
4,032,000
3,404,000
__________________________ (1) Approximately 200,000 members,
from the Magellan Complete Care acquisition that closed on December
31, 2020, are included in the totals as of March 31, 2021, but not
in prior periods.
Three Months Ended March
31,
2021
2020
Premium
Revenue
Medical
Care Costs
MCR (1)
Premium
Revenue
Medical
Care Costs
MCR (1)
Medicaid
$
4,840
$
4,236
87.5
%
$
3,286
$
2,921
88.9
%
Medicare
799
722
90.3
634
517
81.7
Marketplace
667
516
77.3
384
278
72.3
Consolidated
$
6,306
$
5,474
86.8
%
$
4,304
$
3,716
86.3
%
__________________________ (1) The MCR
represents medical costs as a percentage of premium revenue.
MOLINA HEALTHCARE, INC. CHANGE IN MEDICAL
CLAIMS AND BENEFITS PAYABLE (Dollars in millions)
The Company’s claims liabilities include additional reserves to
account for moderately adverse conditions 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 year” represent the amounts by which
the original estimates of claims and benefits payable at the
beginning of the year were more than the actual liabilities based
on information (principally the payment of claims) developed since
those liabilities were first reported. The following table presents
the components of the change in medical claims and benefits payable
for the periods indicated:
Three Months Ended
March 31,
2021
2020
Unaudited
Medical claims and benefits payable,
beginning balance
$
2,696
$
1,854
Components of medical care costs related
to:
Current year
5,668
3,817
Prior year
(194
)
(101
)
Total medical care costs
5,474
3,716
Payments for medical care costs related
to:
Current year
3,513
2,274
Prior year
1,781
1,305
Total paid
5,294
3,579
Change in acquired balances
(25
)
—
Change in non-risk and other provider
payables
(12
)
(10
)
Medical claims and benefits payable,
ending balance
$
2,839
$
1,981
Days in claims payable, fee for service
(1)
48
49
__________________________ (1) Claims
payable includes primarily claims incurred but not paid, or IBNP.
It also includes certain fee-for-service payables reported in
medical claims and benefits payable amounting to $100 million and
$64 million, as of March 31, 2021, and 2020, respectively.
MOLINA HEALTHCARE, INC. RECONCILIATION OF
UNAUDITED NON-GAAP FINANCIAL MEASURES (In millions, except per
diluted share amounts)
The Company believes that certain non-GAAP (generally accepted
accounting principles) financial 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.
The non-GAAP financial measures are also used internally to enable
management to assess the Company’s performance consistently over
time. These non-GAAP financial measures, presented below, should be
considered as supplements to, and not as substitutes for or
superior to, GAAP measures.
Adjustments represent additions and deductions to GAAP
net income as indicated in the table below, which include the
non-cash impact of amortization of acquired intangible assets,
acquisition-related expenses, and the impact of certain expenses
and other items that management believes are not indicative of
longer-term business trends and operations.
Adjusted G&A Ratio represents the GAAP G&A ratio,
recognizing adjustments.
Adjusted net income represents GAAP net income
recognizing the adjustments, net of tax. The Company believes that
adjusted net income is helpful to investors in assessing the
Company’s financial performance.
Adjusted net income per diluted share represents adjusted
net income divided by weighted average common shares outstanding on
a fully diluted basis.
Adjusted after-tax margin represents adjusted net income,
divided by total revenue.
Three Months Ended March
31,
2021
2020
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
Net income
$
228
$
3.89
$
178
$
2.92
Adjustments:
Acquisition-related expenses (1)
21
0.36
—
—
Amortization of intangible assets
12
0.21
4
0.06
Other (2)
9
0.15
4
0.07
Subtotal, adjustments
42
0.72
8
0.13
Income tax effect
(10
)
(0.17
)
(2
)
(0.03
)
Adjustments, net of tax
32
0.55
6
0.10
Adjusted net income
$
260
$
4.44
$
184
$
3.02
__________________________ (1) Beginning
in the third quarter of 2020, reflects non-recurring costs
associated with acquisitions, including various transaction and
integration costs.
(2) The first quarter of 2021 includes
change in premium deficiency reserves, loss on sale of property,
and restructuring costs. The first quarter of 2020 includes
restructuring costs.
MOLINA HEALTHCARE, INC.
RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES (CONTINUED)
2021 GUIDANCE
Net income per diluted share (1)
$
11.45
Adjustments:
Acquisition-related expenses
1.10
Amortization of intangible assets
0.79
Other
0.15
Subtotal, adjustments
2.04
Income tax effect (2)
(0.49
)
Adjustments, net of tax
1.55
Adjusted net income per diluted share
$
13.00
__________________________ (1)
Computations assume approximately 58.5 million diluted weighted
average shares outstanding.
(2) Income tax effect calculated at the
statutory tax rate of 23.9%.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006013/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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