Molina Healthcare, Inc. (NYSE: MOH):
Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the first quarter of 2018 and provided its revised guidance for fiscal year 2018.
“The financial results that we announced today reflect the progress we are making towards our goal of sustainable margin recovery,” said Joe Zubretsky, President and CEO. “First quarter results of $1.64 net income per diluted share are a significant improvement over 2017 and favorable to our expectations. Whether measured by key operating metrics, product line or health plan geography, we met or exceeded our expectations in most areas.”
First Quarter 2018 Highlights |
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Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(In millions, except per-share amounts) | ||||||||
Premium revenue | $ | 4,323 | $ | 4,648 | ||||
Operating income | $ | 222 | $ | 82 | ||||
Net income | $ | 107 | $ | 77 | ||||
Net income per diluted share | $ | 1.64 | $ | 1.37 | ||||
Diluted weighted average shares outstanding | 65.2 | 56.2 | ||||||
Operating Statistics: | ||||||||
Medical care ratio (1) | 86.1 | % | 88.4 | % | ||||
G&A ratio (2) | 7.6 | % | 8.9 | % | ||||
Premium tax ratio (1) | 2.3 | % | 2.3 | % | ||||
Effective income tax expense rate | 40.3 | % | 41.6 | % | ||||
Net profit margin (2) | 2.3 | % | 1.6 | % | ||||
__________________ | ||
(1) | Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue. | |
(2) | G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue. | |
Summary of Significant Items Affecting Comparative First Quarter Financial Results
The table below summarizes the impact of certain items significant to the Company’s financial performance in the periods presented. The individual items presented below increase (decrease) income before income tax expense.
Three Months Ended March 31, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Per |
Per |
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Diluted |
Diluted |
||||||||||||||
Amount |
Share(1) |
Amount |
Share(1) |
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(In millions, except per diluted share amounts) | |||||||||||||||
Reimbursement of Marketplace CSR subsidies, for 2017 dates of service | $ | 70 | $ | 0.83 | $ | — | $ | — | |||||||
Restructuring costs | (25 | ) | (0.30 | ) | — | — | |||||||||
Loss on debt extinguishment | (10 | ) | (0.15 | ) | — | — | |||||||||
Fee received for terminated acquisition | — | — | 75 | 0.84 | |||||||||||
$ | 35 | $ | 0.38 | $ | 75 | $ | 0.84 | ||||||||
__________________ | ||
(1) | Except for certain items that are not deductible for tax purposes, per diluted share amounts are generally calculated at statutory income tax rates of 22% and 37% for the first quarters of 2018 and 2017, respectively. | |
First Quarter of 2018 Compared With First Quarter of 2017
Net income for the first quarter of 2018 was $107 million, compared with net income of $77 million for the first quarter of 2017. Net income per diluted share was $1.64 for the first quarter of 2018 compared with $1.37 reported for the first quarter of 2017. Improved performance in the first quarter of 2018 resulted from improved medical and administrative cost efficiency.
Net income for the first quarter of 2018 included a net benefit of $35 million ($0.38 per diluted share) for items not included in the Company’s preliminary 2018 guidance. Net income for the first quarter of 2017 included a benefit of $75 million ($0.84 per diluted share) for the receipt of an acquisition termination fee.
Premium revenue decreased approximately 7% when compared with the first quarter of 2017. Lower premium revenue was driven by a decrease in Marketplace membership of over 50%, partially offset by Marketplace premium rate increases. As previously disclosed, the Company has increased premium rates and reduced its Marketplace presence effective January 1, 2018, as part of its overall program to improve profitability.
Overall, the medical care ratio decreased to 86.1%, from 88.4% in the first quarter of 2017. Excluding the benefit of the 2017 CSR reimbursement, the consolidated medical care ratio was 87.7% in the first quarter of 2018.
The general and administrative (G&A) expense ratio decreased to 7.6%, from 8.9% in the first quarter of 2017. Excluding the impact of Marketplace broker commissions and exchange fees in both periods, the G&A ratio decreased to 6.8%, from 7.5% in the first quarter of 2017.
The Company recognized a benefit of approximately $70 million ($0.83 per diluted share) in reduced medical expense related to 2017 dates of service as a result of the federal government’s confirmation that the reconciliation of 2017 Marketplace CSR subsidies would be performed on an annual basis. In the fourth quarter of 2017, the Company had assumed a nine-month reconciliation of this item pending confirmation of the time period to which the 2017 reconciliation would be applied.
Approximately $25 million ($0.30 per diluted share) of restructuring costs were recognized in the first quarter, primarily relating to the write-off of prepaid and other assets in connection with the continuing re-design of core processes.
Approximately $10 million ($0.15 per diluted share) loss on debt extinguishment was recognized in the first quarter in connection with the issuance of 1.8 million common shares in exchange for $97 million principal amount of the Company’s 1.625% convertible senior notes.
2018 Revised Guidance
The following table summarizes 2018 Revised Guidance (1):
Revised | Preliminary | ||||
Premium revenue | ~ $17.4B | ~ $17.5B | |||
Service revenue | ~ $525M | ~ $525M | |||
Premium tax revenue | ~ $425M | ~ $410M | |||
Health insurer fees reimbursed | ~ $280M | ~ $295M | |||
Investment income and other revenue | ~ $110M | ~ $85M | |||
Total revenue | ~ $18.7B | ~ $18.8B | |||
Medical care costs | ~$15.4B | ~$15.6B | |||
Medical care ratio (2) | 88% - 89% | ~ 89% | |||
Cost of service revenue | ~ $480M | ~ $480M | |||
General and administrative expenses | ~ $1.4B | ~ $1.4B | |||
G&A ratio (3) | ~ 7.4% | ~ 7.3% | |||
Premium tax expenses | ~$425M | ~$410M | |||
Health insurer fees | ~ $300M | ~ $310M | |||
Depreciation and amortization | ~ $115M | ~ $115M | |||
Restructuring and separation costs | ~ $25M | — | |||
Interest expense and other income, net | ~ $135M | ~ $125M | |||
Income before income taxes | $450M - $495M | $355M - $400M | |||
Net income | $272M - $306M | $202M - $236M | |||
EBITDA (4) | $724M - $768M | $632M - $676M | |||
Effective tax rate | 38% - 40% | 41% - 43% | |||
Net profit margin (3) | 1.5% - 1.6% | 1.1% - 1.3% | |||
Diluted weighted average shares | ~ 68.0M | ~ 67.3M | |||
Net income per share | $4.00 - $4.50 | $3.00 - $3.50 | |||
Adjusted net income per share (4) | $4.24 - $4.74 | $3.23 - $3.73 | |||
End-of-year Marketplace membership | 356,000 | 303,000 | |||
End-of-year Non-Marketplace membership | 3,674,000 | 3,738,000 | |||
__________________ | ||
(1) | All amounts are estimates; actual results may differ materially. See the Company’s risk factors as discussed in its 2017 Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.” | |
(2) | Medical care ratio represents medical care costs as a percentage of premium revenue. | |
(3) | G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue. | |
(4) | 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 first quarter 2018 results at 8:30 a.m. Eastern time on Monday, April 30, 2018. The number to call for the interactive teleconference is (877) 270-2148 and entering confirmation number 7249375. A telephonic replay of the conference call will be available through Friday, May 4, 2018, by dialing (877) 344-7529 and entering confirmation number 10118429. 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 health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 4.1 million members as of March 31, 2018. 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 2018 revised 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 known risks and uncertainties include, but are not limited to, the following:
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 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 April 30, 2018, and the Company disclaims any obligation to update any forward-looking statements 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, | ||||||||
2018 | 2017 | |||||||
(Dollar amounts in millions, except per-share amounts) | ||||||||
Revenue: | ||||||||
Premium revenue | $ | 4,323 | $ | 4,648 | ||||
Service revenue | 134 | 131 | ||||||
Premium tax revenue | 104 | 111 | ||||||
Health insurer fees reimbursed | 61 | — | ||||||
Investment income and other revenue | 24 | 14 | ||||||
Total revenue | 4,646 | 4,904 | ||||||
Operating expenses: | ||||||||
Medical care costs | 3,722 | 4,111 | ||||||
Cost of service revenue | 120 | 122 | ||||||
General and administrative expenses | 352 | 439 | ||||||
Premium tax expenses | 104 | 111 | ||||||
Health insurer fees | 75 | — | ||||||
Depreciation and amortization | 26 | 39 | ||||||
Restructuring and separation costs | 25 | — | ||||||
Total operating expenses | 4,424 | 4,822 | ||||||
Operating income | 222 | 82 | ||||||
Other expenses (income), net: | ||||||||
Interest expense | 33 | 26 | ||||||
Other expense (income), net | 10 | (75 | ) | |||||
Total other expenses (income), net | 43 | (49 | ) | |||||
Income before income tax expense | 179 | 131 | ||||||
Income tax expense | 72 | 54 | ||||||
Net income | $ | 107 | $ | 77 | ||||
Net income per diluted share | $ | 1.64 | $ | 1.37 | ||||
Diluted weighted average shares outstanding | 65.2 | 56.2 | ||||||
Operating Statistics: | ||||||||
Medical care ratio | 86.1 | % | 88.4 | % | ||||
G&A ratio | 7.6 | % | 8.9 | % | ||||
Premium tax ratio | 2.3 | % | 2.3 | % | ||||
Effective income tax expense rate | 40.3 | % | 41.6 | % | ||||
Net profit margin | 2.3 | % | 1.6 | % | ||||
MOLINA HEALTHCARE, INC. | ||||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||
March 31, | December 31, | |||||||
2018 | 2017 | |||||||
(In millions, except per-share data) |
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ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 3,729 | $ | 3,186 | ||||
Investments | 2,444 | 2,524 | ||||||
Restricted investments | 77 | 169 | ||||||
Receivables | 950 | 871 | ||||||
Prepaid expenses and other current assets | 411 | 239 | ||||||
Derivative asset | 585 | 522 | ||||||
Total current assets | 8,196 | 7,511 | ||||||
Property, equipment, and capitalized software, net | 318 | 342 | ||||||
Goodwill and intangible assets, net | 250 | 255 | ||||||
Restricted investments | 120 | 119 | ||||||
Deferred income taxes | 114 | 103 | ||||||
Other assets | 135 | 141 | ||||||
$ | 9,133 | $ | 8,471 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Medical claims and benefits payable | $ | 2,023 | $ | 2,192 | ||||
Amounts due government agencies | 1,714 | 1,542 | ||||||
Accounts payable and accrued liabilities | 713 | 366 | ||||||
Deferred revenue | 404 | 282 | ||||||
Current portion of long-term debt | 566 | 653 | ||||||
Derivative liability | 585 | 522 | ||||||
Total current liabilities | 6,005 | 5,557 | ||||||
Long-term debt | 1,318 | 1,318 | ||||||
Lease financing obligations | 198 | 198 | ||||||
Other long-term liabilities | 59 | 61 | ||||||
Total liabilities | 7,580 | 7,134 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value, 150 shares authorized; outstanding: 62 shares at March 31, 2018 and 60 shares at December 31, 2017 | — | — | ||||||
Preferred stock, $0.001 par value; 20 shares authorized, no shares issued and outstanding | — | — | ||||||
Additional paid-in capital | 1,153 | 1,044 | ||||||
Accumulated other comprehensive loss | (12 | ) | (5 | ) | ||||
Retained earnings | 412 | 298 | ||||||
Total stockholders’ equity | 1,553 | 1,337 | ||||||
$ | 9,133 | $ | 8,471 | |||||
MOLINA HEALTHCARE, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(In millions) | ||||||||
Operating activities: | ||||||||
Net income | $ | 107 | $ | 77 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 37 | 49 | ||||||
Deferred income taxes | (6 | ) | (5 | ) | ||||
Share-based compensation | 6 | 6 | ||||||
Non-cash restructuring charges | 17 | — | ||||||
Amortization of convertible senior notes and lease financing obligations | 7 | 8 | ||||||
Loss on debt extinguishment | 10 | — | ||||||
Other, net | 2 | 3 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (83 | ) | (32 | ) | ||||
Prepaid expenses and other current assets | (239 | ) | (12 | ) | ||||
Medical claims and benefits payable | (163 | ) | (3 | ) | ||||
Amounts due government agencies | 172 | 373 | ||||||
Accounts payable and accrued liabilities | 319 | 50 | ||||||
Deferred revenue | 130 | 146 | ||||||
Income taxes | 78 | 59 | ||||||
Net cash provided by operating activities | 394 | 719 | ||||||
Investing activities: | ||||||||
Purchases of investments | (389 | ) | (733 | ) | ||||
Proceeds from sales and maturities of investments | 543 | 433 | ||||||
Purchases of property, equipment, and capitalized software | (4 | ) | (26 | ) | ||||
Increase in restricted investments held-to-maturity | — | (5 | ) | |||||
Other, net | (5 | ) | (6 | ) | ||||
Net cash provided by (used in) investing activities | 145 | (337 | ) | |||||
Financing activities: | ||||||||
Cash paid for financing transaction fees | (5 | ) | — | |||||
Proceeds from employee stock plans | — | 1 | ||||||
Other, net | — | (2 | ) | |||||
Net cash used in financing activities | (5 | ) | (1 | ) | ||||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents | 534 | 381 | ||||||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period | 3,290 | 2,912 | ||||||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period | $ | 3,824 | $ | 3,293 | ||||
MOLINA HEALTHCARE, INC. | ||||||||
UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP | ||||||||
March 31, | December 31, | March 31, | ||||||
2018 | 2017 | 2017 | ||||||
Ending Membership by Program: | ||||||||
Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP) | 2,435,000 | 2,457,000 | 2,548,000 | |||||
Medicaid Expansion | 662,000 | 668,000 | 684,000 | |||||
Aged, Blind or Disabled (ABD) | 411,000 | 412,000 | 401,000 | |||||
Total Medicaid | 3,508,000 | 3,537,000 | 3,633,000 | |||||
Medicare-Medicaid Plan (MMP) - Integrated | 56,000 | 57,000 | 55,000 | |||||
Medicare Special Needs Plans | 44,000 | 44,000 | 43,000 | |||||
Total Medicare | 100,000 | 101,000 | 98,000 | |||||
Excluding Marketplace | 3,608,000 | 3,638,000 | 3,731,000 | |||||
Marketplace | 453,000 | 815,000 | 1,035,000 | |||||
4,061,000 | 4,453,000 | 4,766,000 | ||||||
Ending Membership by Health Plan: | ||||||||
California | 656,000 | 746,000 | 765,000 | |||||
Florida | 414,000 | 625,000 | 711,000 | |||||
Idaho (1) | 2,000 | — | — | |||||
Illinois | 151,000 | 165,000 | 194,000 | |||||
Michigan | 388,000 | 398,000 | 417,000 | |||||
New Mexico | 250,000 | 253,000 | 270,000 | |||||
New York | 32,000 | 32,000 | 34,000 | |||||
Ohio | 328,000 | 327,000 | 351,000 | |||||
Puerto Rico | 316,000 | 314,000 | 326,000 | |||||
South Carolina | 117,000 | 116,000 | 111,000 | |||||
Texas | 476,000 | 430,000 | 493,000 | |||||
Utah | 90,000 | 152,000 | 172,000 | |||||
Washington | 779,000 | 777,000 | 785,000 | |||||
Wisconsin | 62,000 | 118,000 | 137,000 | |||||
4,061,000 | 4,453,000 | 4,766,000 | ||||||
__________________ | ||
(1) | Idaho operations commenced January 1, 2018. | |
MOLINA HEALTHCARE, INC. | |||||||||||||||||||||||||
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA | |||||||||||||||||||||||||
(In millions, except percentages and per-member per-month amounts) |
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Three Months Ended March 31, 2018 | |||||||||||||||||||||||||
Member Months (1) |
Premium Revenue | Medical Care Costs | MCR (2) |
Medical Margin |
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Total | PMPM | Total | PMPM | ||||||||||||||||||||||
TANF and CHIP | 7.4 | $ | 1,373 | $ | 185.14 | $ | 1,272 | $ | 171.56 | 92.7 | % | $ | 101 | ||||||||||||
Medicaid Expansion | 2.0 | 752 | 372.75 | 641 | 317.46 | 85.2 | 111 | ||||||||||||||||||
ABD | 1.2 | 1,254 | 1,014.23 | 1,155 | 934.55 | 92.1 | 99 | ||||||||||||||||||
Total Medicaid | 10.6 | 3,379 | 316.69 | 3,068 | 287.56 | 90.8 | 311 | ||||||||||||||||||
MMP | 0.2 | 357 | 2,137.88 | 305 | 1,824.21 | 85.3 | 52 | ||||||||||||||||||
Medicare | 0.1 | 157 | 1,188.97 | 131 | 994.81 | 83.7 | 26 | ||||||||||||||||||
Total Medicare | 0.3 | 514 | 1,718.61 | 436 | 1,457.75 | 84.8 | 78 | ||||||||||||||||||
Non-Marketplace | 10.9 | 3,893 | 354.94 | 3,504 | 319.48 | 90.0 | 389 | ||||||||||||||||||
Marketplace | 1.4 | 430 | 312.87 | 218 | 158.40 | 50.6 | 212 | ||||||||||||||||||
12.3 | $ | 4,323 | $ | 350.25 | $ | 3,722 | $ | 301.55 | 86.1 | % | $ | 601 | |||||||||||||
Three Months Ended March 31, 2017 | |||||||||||||||||||||||||
Member Months (1) |
Premium Revenue | Medical Care Costs | MCR (2) |
Medical Margin |
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Total | PMPM | Total | PMPM | ||||||||||||||||||||||
TANF and CHIP | 7.7 | $ | 1,402 | $ | 182.69 | $ | 1,304 | $ | 170.02 | 93.1 | % | $ | 98 | ||||||||||||
Medicaid Expansion | 2.0 | 817 | 398.70 | 689 | 336.51 | 84.4 | 128 | ||||||||||||||||||
ABD | 1.2 | 1,196 | 1,006.84 | 1,130 | 951.32 | 94.5 | 66 | ||||||||||||||||||
Total Medicaid | 10.9 | 3,415 | 312.98 | 3,123 | 286.35 | 91.5 | 292 | ||||||||||||||||||
MMP | 0.2 | 344 | 2,088.96 | 307 | 1,859.41 | 89.0 | 37 | ||||||||||||||||||
Medicare | 0.1 | 138 | 1,068.20 | 117 | 902.67 | 84.5 | 21 | ||||||||||||||||||
Total Medicare | 0.3 | 482 | 1,640.63 | 424 | 1,439.20 | 87.7 | 58 | ||||||||||||||||||
Non-Marketplace | 11.2 | 3,897 | 347.84 | 3,547 | 316.62 | 91.0 | 350 | ||||||||||||||||||
Marketplace | 2.9 | 751 | 262.16 | 564 | 196.72 | 75.0 | 187 | ||||||||||||||||||
14.1 | $ | 4,648 | $ | 330.39 | $ | 4,111 | $ | 292.20 | 88.4 | % | $ | 537 | |||||||||||||
__________________ | ||
(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. | |
MOLINA HEALTHCARE, INC. | ||||||||||||||||||||||||||
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—NON-MARKETPLACE | ||||||||||||||||||||||||||
(In millions, except percentages and per-member per-month amounts) |
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Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||
Member Months |
Premium Revenue | Medical Care Costs | MCR |
Medical Margin |
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Total | PMPM | Total | PMPM | |||||||||||||||||||||||
California | 1.8 | $ | 494 | $ | 272.61 | $ | 412 | $ | 227.31 | 83.4 | % | $ | 82 | |||||||||||||
Florida | 1.0 | 382 | 351.58 | 345 | 317.41 | 90.3 | 37 | |||||||||||||||||||
Idaho (1) | — | 4 | 960.33 | 4 | 977.00 | 101.8 | — | |||||||||||||||||||
Illinois | 0.5 | 141 | 298.17 | 122 | 257.50 | 86.4 | 19 | |||||||||||||||||||
Michigan | 1.1 | 376 | 336.64 | 331 | 296.19 | 88.0 | 45 | |||||||||||||||||||
New Mexico | 0.7 | 319 | 466.17 | 310 | 453.30 | 97.2 | 9 | |||||||||||||||||||
New York | 0.1 | 46 | 468.91 | 39 | 396.76 | 84.6 | 7 | |||||||||||||||||||
Ohio | 0.9 | 551 | 576.60 | 460 | 481.26 | 83.5 | 91 | |||||||||||||||||||
Puerto Rico | 1.0 | 186 | 193.13 | 174 | 181.39 | 93.9 | 12 | |||||||||||||||||||
South Carolina | 0.3 | 122 | 348.08 | 104 | 297.52 | 85.5 | 18 | |||||||||||||||||||
Texas | 0.7 | 562 | 809.90 | 519 | 747.53 | 92.3 | 43 | |||||||||||||||||||
Utah | 0.3 | 92 | 339.71 | 77 | 284.61 | 83.8 | 15 | |||||||||||||||||||
Washington | 2.3 | 584 | 256.66 | 574 | 252.41 | 98.3 | 10 | |||||||||||||||||||
Wisconsin | 0.2 | 34 | 183.97 | 29 | 154.53 | 84.0 | 5 | |||||||||||||||||||
Other (2) | — | — | — | 4 | — | — | (4 | ) | ||||||||||||||||||
10.9 | $ | 3,893 | $ | 354.94 | $ | 3,504 | $ | 319.48 | 90.0 | % | $ | 389 | ||||||||||||||
Three Months Ended March 31, 2017 | ||||||||||||||||||||||||||
Member Months |
Premium Revenue | Medical Care Costs | MCR |
Medical Margin |
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Total | PMPM | Total | PMPM | |||||||||||||||||||||||
California | 1.8 | $ | 572 | $ | 308.57 | $ | 484 | $ | 261.31 | 84.7 | % | $ | 88 | |||||||||||||
Florida | 1.1 | 364 | 339.30 | 352 | 328.45 | 96.8 | 12 | |||||||||||||||||||
Idaho (1) | — | — | — | — | — | — | — | |||||||||||||||||||
Illinois | 0.6 | 161 | 276.58 | 180 | 310.08 | 112.1 | (19 | ) | ||||||||||||||||||
Michigan | 1.2 | 382 | 327.41 | 333 | 284.58 | 86.9 | 49 | |||||||||||||||||||
New Mexico | 0.7 | 308 | 422.87 | 299 | 410.75 | 97.1 | 9 | |||||||||||||||||||
New York | 0.1 | 46 | 441.19 | 42 | 409.63 | 92.8 | 4 | |||||||||||||||||||
Ohio | 1.0 | 520 | 527.79 | 462 | 469.04 | 88.9 | 58 | |||||||||||||||||||
Puerto Rico | 1.0 | 183 | 186.51 | 165 | 168.18 | 90.2 | 18 | |||||||||||||||||||
South Carolina | 0.3 | 105 | 317.07 | 98 | 293.34 | 92.5 | 7 | |||||||||||||||||||
Texas | 0.7 | 527 | 751.86 | 489 | 696.43 | 92.6 | 38 | |||||||||||||||||||
Utah | 0.3 | 89 | 313.20 | 72 | 253.75 | 81.0 | 17 | |||||||||||||||||||
Washington | 2.2 | 605 | 273.18 | 535 | 241.77 | 88.5 | 70 | |||||||||||||||||||
Wisconsin | 0.2 | 33 | 165.40 | 27 | 135.91 | 82.2 | 6 | |||||||||||||||||||
Other (2) | — | 2 | — | 9 | — | — | (7 | ) | ||||||||||||||||||
11.2 | $ | 3,897 | $ | 347.84 | $ | 3,547 | $ | 316.62 | 91.0 | % | $ | 350 | ||||||||||||||
__________________ | ||
(1) | Idaho operations commenced January 1, 2018. | |
(2) | “Other” medical care costs include primarily medically related administrative costs at the parent company. | |
MOLINA HEALTHCARE, INC. | ||||||||||||||||||||||||||
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—MARKETPLACE | ||||||||||||||||||||||||||
(In millions, except percentages and per-member per-month amounts) |
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Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||
Member Months |
Premium Revenue | Medical Care Costs | MCR |
Medical Margin |
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Total | PMPM | Total | PMPM | |||||||||||||||||||||||
California | 0.2 | $ | 49 | $ | 253.93 | $ | 31 | $ | 162.64 | 64.0 | % | $ | 18 | |||||||||||||
Florida | 0.2 | 45 | 271.12 | (16 | ) | (95.60 | ) | (35.3 | ) | 61 | ||||||||||||||||
Michigan | 0.1 | 13 | 224.11 | 9 | 144.16 | 64.3 | 4 | |||||||||||||||||||
New Mexico | 0.1 | 34 | 438.67 | 19 | 246.50 | 56.2 | 15 | |||||||||||||||||||
Ohio | 0.1 | 26 | 403.44 | 17 | 262.87 | 65.2 | 9 | |||||||||||||||||||
Texas | 0.7 | 229 | 308.74 | 146 | 196.89 | 63.8 | 83 | |||||||||||||||||||
Utah (1) | — | (3 | ) | NM | (10 | ) | NM | NM | 7 | |||||||||||||||||
Washington | — | 39 | 526.36 | 30 | 405.40 | 77.0 | 9 | |||||||||||||||||||
Wisconsin (1) | — | (2 | ) | NM | (8 | ) | NM | NM | 6 | |||||||||||||||||
Other | — | — | — | — | — | — | — | |||||||||||||||||||
1.4 | $ | 430 | $ | 312.87 | $ | 218 | $ | 158.40 | 50.6 | % | $ | 212 | ||||||||||||||
Three Months Ended March 31, 2017 | ||||||||||||||||||||||||||
Member Months |
Premium Revenue | Medical Care Costs | MCR |
Medical Margin |
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Total | PMPM | Total | PMPM | |||||||||||||||||||||||
California | 0.4 | $ | 72 | $ | 184.34 | $ | 26 | $ | 65.53 | 35.5 | % | $ | 46 | |||||||||||||
Florida | 1.0 | 292 | 292.80 | 206 | 205.91 | 70.3 | 86 | |||||||||||||||||||
Michigan | 0.1 | 11 | 149.23 | 6 | 95.92 | 64.3 | 5 | |||||||||||||||||||
New Mexico | 0.1 | 22 | 265.06 | 19 | 232.50 | 87.7 | 3 | |||||||||||||||||||
Ohio | 0.1 | 21 | 334.26 | 17 | 273.72 | 81.9 | 4 | |||||||||||||||||||
Texas | 0.7 | 157 | 222.40 | 113 | 161.02 | 72.4 | 44 | |||||||||||||||||||
Utah | 0.2 | 45 | 202.48 | 51 | 228.20 | 112.7 | (6 | ) | ||||||||||||||||||
Washington | 0.1 | 37 | 302.51 | 46 | 365.94 | 121.0 | (9 | ) | ||||||||||||||||||
Wisconsin | 0.2 | 94 | 453.39 | 81 | 389.80 | 86.0 | 13 | |||||||||||||||||||
Other | — | — | — | (1 | ) | — | — | 1 | ||||||||||||||||||
2.9 | $ | 751 | $ | 262.16 | $ | 564 | $ | 196.72 | 75.0 | % | $ | 187 | ||||||||||||||
__________________ |
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(1) | We terminated Marketplace operations at our Utah and Wisconsin health plans effective January 1, 2018, so the ratios for 2018 periods are not meaningful for those health plans. | |
MOLINA HEALTHCARE, INC. | ||||||||||||||||||||||||||
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—TOTAL | ||||||||||||||||||||||||||
(In millions, except percentages and per-member per-month amounts) |
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Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||
Member Months |
Premium Revenue | Medical Care Costs | MCR |
Medical Margin |
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Total | PMPM | Total | PMPM | |||||||||||||||||||||||
California | 2.0 | $ | 543 | $ | 270.80 | $ | 443 | $ | 221.03 | 81.6 | % | $ | 100 | |||||||||||||
Florida | 1.2 | 427 | 340.91 | 329 | 262.65 | 77.0 | 98 | |||||||||||||||||||
Idaho | — | 4 | 960.33 | 4 | 977.00 | 101.8 | — | |||||||||||||||||||
Illinois | 0.5 | 141 | 298.17 | 122 | 257.50 | 86.4 | 19 | |||||||||||||||||||
Michigan | 1.2 | 389 | 331.08 | 340 | 288.68 | 87.2 | 49 | |||||||||||||||||||
New Mexico | 0.8 | 353 | 463.33 | 329 | 431.94 | 93.2 | 24 | |||||||||||||||||||
New York | 0.1 | 46 | 468.91 | 39 | 396.76 | 84.6 | 7 | |||||||||||||||||||
Ohio | 1.0 | 577 | 565.62 | 477 | 467.41 | 82.6 | 100 | |||||||||||||||||||
Puerto Rico | 1.0 | 186 | 193.13 | 174 | 181.39 | 93.9 | 12 | |||||||||||||||||||
South Carolina | 0.3 | 122 | 348.08 | 104 | 297.52 | 85.5 | 18 | |||||||||||||||||||
Texas | 1.4 | 791 | 551.28 | 665 | 463.37 | 84.1 | 126 | |||||||||||||||||||
Utah | 0.3 | 89 | 328.83 | 67 | 246.78 | 75.0 | 22 | |||||||||||||||||||
Washington | 2.3 | 623 | 265.20 | 604 | 257.25 | 97.0 | 19 | |||||||||||||||||||
Wisconsin | 0.2 | 32 | 172.09 | 21 | 110.91 | 64.4 | 11 | |||||||||||||||||||
Other | — | — | — | 4 | — | — | (4 | ) | ||||||||||||||||||
12.3 | $ | 4,323 | $ | 350.25 | $ | 3,722 | $ | 301.55 | 86.1 | % | $ | 601 | ||||||||||||||
Three Months Ended March 31, 2017 | ||||||||||||||||||||||||||
Member Months |
Premium Revenue | Medical Care Costs | MCR |
Medical Margin |
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Total | PMPM | Total | PMPM | |||||||||||||||||||||||
California | 2.2 | $ | 644 | $ | 286.92 | $ | 510 | $ | 227.19 | 79.2 | % | $ | 134 | |||||||||||||
Florida | 2.1 | 656 | 316.86 | 558 | 269.33 | 85.0 | 98 | |||||||||||||||||||
Idaho | — | — | — | — | — | — | — | |||||||||||||||||||
Illinois | 0.6 | 161 | 276.58 | 180 | 310.08 | 112.1 | (19 | ) | ||||||||||||||||||
Michigan | 1.3 | 393 | 316.80 | 339 | 273.36 | 86.3 | 54 | |||||||||||||||||||
New Mexico | 0.8 | 330 | 406.90 | 318 | 392.72 | 96.5 | 12 | |||||||||||||||||||
New York | 0.1 | 46 | 441.19 | 42 | 409.63 | 92.8 | 4 | |||||||||||||||||||
Ohio | 1.1 | 541 | 516.00 | 479 | 457.14 | 88.6 | 62 | |||||||||||||||||||
Puerto Rico | 1.0 | 183 | 186.51 | 165 | 168.18 | 90.2 | 18 | |||||||||||||||||||
South Carolina | 0.3 | 105 | 317.07 | 98 | 293.34 | 92.5 | 7 | |||||||||||||||||||
Texas | 1.4 | 684 | 486.96 | 602 | 428.55 | 88.0 | 82 | |||||||||||||||||||
Utah | 0.5 | 134 | 264.73 | 123 | 242.57 | 91.6 | 11 | |||||||||||||||||||
Washington | 2.3 | 642 | 274.74 | 581 | 248.40 | 90.4 | 61 | |||||||||||||||||||
Wisconsin | 0.4 | 127 | 311.30 | 108 | 264.53 | 85.0 | 19 | |||||||||||||||||||
Other | — | 2 | — | 8 | — | — | (6 | ) | ||||||||||||||||||
14.1 | $ | 4,648 | $ | 330.39 | $ | 4,111 | $ | 292.20 | 88.4 | % | $ | 537 | ||||||||||||||
MOLINA HEALTHCARE, INC. | |||||||||||||||||||||
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA | |||||||||||||||||||||
(In millions, except percentages and per-member per-month amounts) |
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The following tables provide the details of our medical care costs for the periods indicated: |
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Three Months Ended March 31, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
% of | % of | ||||||||||||||||||||
Amount | PMPM | Total | Amount | PMPM | Total | ||||||||||||||||
Fee for service | $ | 2,745 | $ | 222.38 | 73.8 | % | $ | 3,086 | $ | 219.32 | 75.1 | % | |||||||||
Pharmacy | 583 | 47.25 | 15.6 | 616 | 43.76 | 15.0 | |||||||||||||||
Capitation | 312 | 25.28 | 8.4 | 324 | 23.06 | 7.9 | |||||||||||||||
Other | 82 | 6.64 | 2.2 | 85 | 6.06 | 2.0 | |||||||||||||||
$ | 3,722 | $ | 301.55 | 100.0 | % | $ | 4,111 | $ | 292.20 | 100.0 | % | ||||||||||
The following table provides the details of our medical claims and benefits payable as of the dates indicated: |
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March 31, | December 31, | ||||||
2018 | 2017 | ||||||
Fee-for-service claims incurred but not paid (IBNP) | $ | 1,586 | $ | 1,717 | |||
Pharmacy payable | 127 | 112 | |||||
Capitation payable | 62 | 67 | |||||
Other (1) | 248 | 296 | |||||
$ | 2,023 | $ | 2,192 | ||||
__________________ | ||
(1) | “Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. As of March 31, 2018 and December 31, 2017, we had recorded non-risk provider payables of approximately $146 million and $122 million, respectively. | |
MOLINA HEALTHCARE, INC.
UNAUDITED CHANGE IN MEDICAL
CLAIMS AND BENEFITS PAYABLE
(Dollars in millions, except
per-member amounts)
Our 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. Our 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 our original estimate of claims and benefits payable at the beginning of the period was (more) less 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:
Three Months Ended March 31, |
Year Ended December 31, 2017 |
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2018 | 2017 | |||||||||||
Medical claims and benefits payable, beginning balance | $ | 2,192 | $ | 1,929 | $ | 1,929 | ||||||
Components of medical care costs related to: | ||||||||||||
Current period | 3,963 | 4,253 | 17,037 | |||||||||
Prior period | (241 | ) | (142 | ) | 36 | |||||||
Total medical care costs | 3,722 | 4,111 | 17,073 | |||||||||
Change in non-risk provider payables | 45 | (96 | ) | (106 | ) | |||||||
Payments for medical care costs related to: | ||||||||||||
Current period | 2,498 | 2,683 | 15,130 | |||||||||
Prior period | 1,438 | 1,335 | 1,574 | |||||||||
Total paid | 3,936 | 4,018 | 16,704 | |||||||||
Medical claims and benefits payable, ending balance | $ | 2,023 | $ | 1,926 | $ | 2,192 | ||||||
Benefit from prior period as a percentage of: | ||||||||||||
Balance at beginning of period | 11.0 | % | 7.4 | % | (1.9 | )% | ||||||
Premium revenue, trailing twelve months | 1.3 | % | 0.8 | % | (0.2 | )% | ||||||
Medical care costs, trailing twelve months | 1.4 | % | 0.9 | % | (0.2 | )% | ||||||
Days in claims payable, fee for service (1) | 53 | 45 | 54 | |||||||||
__________________ | ||
(1) | Claims payable includes primarily IBNP. Additionally, it includes certain fee-for-service payables reported in “Other” medical claims and benefits payable amounting to $22 million, $119 million and $99 million, as of March 31, 2018, 2017 and December 31, 2017, respectively. | |
MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL
MEASURES
We use non-generally accepted accounting principles, or non-GAAP, financial measures as supplemental metrics in evaluating our 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 our 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 (in millions, except per diluted share amounts).
Three Months Ended March 31, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Net income | $ | 107 | $ | 77 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||
Depreciation, and amortization of intangible assets and capitalized software | 34 | 46 | ||||||||||||||||||||
Interest expense | 33 | 26 | ||||||||||||||||||||
Income tax expense | 72 | 54 | ||||||||||||||||||||
EBITDA | $ | 246 | $ | 203 | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Amount |
Per Diluted share |
Amount |
Per Diluted share |
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Net income | $ | 107 | $ | 1.64 | $ | 77 | $ | 1.37 | ||||||||||||||
Adjustment: | ||||||||||||||||||||||
Amortization of intangible assets | 5 | 0.08 | 9 | 0.16 | ||||||||||||||||||
Income tax effect (1) | (1 | ) | (0.01 | ) | (3 | ) | (0.06 | ) | ||||||||||||||
Amortization of intangible assets, net of tax effect | 4 | 0.07 | 6 | 0.10 | ||||||||||||||||||
Adjusted net income | $ | 111 | $ | 1.71 | $ | 83 | $ | 1.47 | ||||||||||||||
__________________ | ||
(1) | Income tax effect of adjustments calculated at the blended federal and state statutory tax rate of 22% and 37% for the first quarters of 2018 and 2017, respectively. | |
The following are descriptions of the adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release:
Earnings before interest, taxes, depreciation and amortization (EBITDA): Net income (GAAP) less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax expense. We believe that EBITDA is helpful in assessing our ability to meet the cash demands of our operating units.
Adjusted net income: Net income (GAAP) less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate. We believe that adjusted net income is helpful in assessing our 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.
MOLINA HEALTHCARE, INC. | |||||||||||||||||
2018 REVISED GUIDANCE | |||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||
(in millions, except per-share amounts) |
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Low End | High End | ||||||||||||||||
Net income | $ | 272 | $ | 306 | |||||||||||||
Adjustments: | |||||||||||||||||
Depreciation, and amortization of intangible assets and capitalized software | 148 | 148 | |||||||||||||||
Interest expense | 125 | 125 | |||||||||||||||
Income tax expense | 179 | 189 | |||||||||||||||
EBITDA | $ | 724 | $ | 768 | |||||||||||||
Low End | High End | ||||||||||||||||
Amount | Per share (2) | Amount | Per share (2) | ||||||||||||||
Net income | $ | 272 | $ | 4.00 | $ | 306 | $ | 4.50 | |||||||||
Adjustments: | |||||||||||||||||
Amortization of intangible assets | 21 | 0.31 | 21 | 0.31 | |||||||||||||
Income tax effect (1) | (5 | ) | (0.07 | ) | (5 | ) | (0.07 | ) | |||||||||
Amortization of intangible assets, net of tax effect | 16 | 0.24 | 16 | 0.24 | |||||||||||||
Adjusted net income | $ | 288 | $ | 4.24 | $ | 322 | $ | 4.74 | |||||||||
__________________ | ||
(1) | Income tax effect calculated at the statutory tax rate of 22%. | |
(2) | Computation assumes 68.0 million diluted weighted average shares outstanding. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180430005361/en/
Molina Healthcare, Inc.
Ryan Kubota, 562-435-3666, ext. 119057
Investor
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