Molina Healthcare, Inc. (NYSE: MOH):
- Net loss of $4.59 per diluted share for
the quarter.
- Medical care ratio excluding
Marketplace declines to 88.8% from 90.9% in the third quarter of
2017.
- General and administrative expense
ratio declines to 7.4% from 7.6% in the third quarter of 2017.
- Fourth quarter results include $356
million of impairment losses, restructuring and separation costs,
and loss on debt extinguishment.
- Fourth quarter results include $53
million increased medical care costs for termination of cost
sharing reduction (CSR) subsidy payments effective October 1,
2017, and other Marketplace reserve adjustments.
- 2018 preliminary guidance of $3.00 -
$3.50 net income per diluted share and $3.23 - $3.73 adjusted net
income per diluted share. Preliminary guidance has been developed
with conservative views of medical cost trends, Marketplace pricing
adequacy, and the ultimate outcome of numerous profit improvement
initiatives. Preliminary guidance will be updated once the Company
has the benefit of first quarter earnings and further insight into
the execution of these profit improvement initiatives.
Molina Healthcare, Inc. (NYSE: MOH) today reported its financial
results for the fourth quarter and year ended December 31, 2017,
and provided its preliminary guidance for fiscal year 2018.
“Our fourth quarter results are emblematic of the significant
transition Molina is undertaking,” said Joe Zubretsky, president
and CEO. “The disappointment of contract losses and related
goodwill charges, continued restructuring costs, and catch up
adjustments to unacceptable Marketplace results are legacies of the
past. Looking forward, the core business results showed improvement
quarter over quarter, and we took steps to strengthen the quality
of the balance sheet, all of which serve as a solid platform to
achieve our margin recovery and sustainability plan we outlined for
investors last month. Medical cost control, administrative cost
discipline, and capital strength remain at the fore of our
plan.”
Fourth Quarter 2017 and Full Year Highlights
Three Months Ended December 31,
Year Ended December 31, 2017
2016 2017 2016 (Dollar
amounts in millions, except per-share amounts) Premium revenue
$ 4,689 $ 4,190 $ 18,854 $ 16,445 Operating (loss) income $ (269 )
$ (6 ) $ (555 ) $ 306 Net (loss) income $ (262 ) $ (47 ) $ (512 ) $
52 Net (loss) income per diluted share $ (4.59 ) $ (0.85 ) $ (9.07
) $ 0.92 Diluted weighted average shares outstanding 57.1
55.6 56.5 56.3
Operating Statistics: Medical care
ratio (1) 90.7 % 91.7 % 90.6 % 89.8 % G&A ratio (2) 7.4 % 7.9 %
8.0 % 7.8 % Premium tax ratio (1) 2.2 % 2.9 % 2.3 % 2.8 % Effective
income tax (benefit) expense rate (17.2 )% 54.5 % (16.4 )% 74.8 %
Net (loss) profit margin (2) (5.3 )% (1.0 )% (2.6 )% 0.3 %
__________________ (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 (loss) profit margin represents net (loss) income as a
percentage of total revenue.
Summary of Significant Items Affecting 2017 Financial
Results
Three Months Ended December 31,
Year Ended December 31, (In millions, except per diluted
share amounts) Amount
Per DilutedShare
(1)
Amount
Per DilutedShare
(1)
Termination of CSR subsidy payments for the fourth quarter of 2017
$ 73 $ 0.81 $ 73 $ 0.82 Marketplace adjustments for CSR subsidies,
risk adjustment and medical loss ratio (MLR) floor liabilities for
January through September 2017 dates of service 50 0.55 N/A N/A
Marketplace adjustments related to risk adjustment, CSR subsidies,
and other items for 2016 dates of service — — 47 0.52 Change in
Marketplace premium deficiency reserve for 2017 dates of service
(70 ) (0.77 ) (30 ) (0.33 ) Impairment losses 269 3.22 470 6.01
Restructuring and separation costs 73 0.81 234 2.86 Loss on debt
extinguishment 14 0.24 14 0.24 Fee received for terminated Medicare
acquisition — — (75 )
(0.84 ) $ 409 $ 4.86 $ 733 $ 9.28
__________________ (1) Amounts shown are before
considering revaluation of related deferred tax assets as a result
of the Tax Cuts and Jobs Act of 2017, as applicable, and which is
described further below. Except for certain items that are not
deductible for tax purposes, per diluted share amounts are
generally calculated at a statutory income tax rate of 37%, which
is in excess of the effective tax rate recorded in our consolidated
statements of operations.
Fourth Quarter 2017 Compared With Third Quarter 2017
Developments in our business during 2017 limit the value of
comparisons to 2016 performance. The Company believes that the
comparison of 2017 fourth quarter performance with 2017 third
quarter performance provides the most meaningful context for fourth
quarter results.
Loss before income tax benefit for the fourth quarter of 2017
was $316 million, compared with a loss before income tax benefit of
$113 million for the third quarter of 2017. Net loss per diluted
share was $4.59 for the fourth quarter of 2017 compared with net
loss per diluted share of $1.70 reported for the third quarter of
2017.
Despite the loss reported for the quarter, the performance of
core operations and overall administrative cost efficiency improved
in the fourth quarter when compared with the third quarter of
2017.
Marketplace performance deteriorated due to normal seasonality
and other matters discussed below. The Company has increased
premium rates and reduced its Marketplace presence effective
January 1, 2018 as part of its overall program to improve
profitability.
Among the key developments affecting fourth quarter 2017 results
were:
- The medical care ratio for the
Company’s Medicaid and Medicare programs combined (“core
operations”) declined to 88.8% in the fourth quarter of 2017, from
90.9% in the third quarter of 2017.
- The general and administrative expense
ratio declined to 7.4% in the fourth quarter of 2017 from 7.6% in
the third quarter of 2017.
- The decision by the federal government
to cease payment of Marketplace CSR subsidies in the fourth quarter
of 2017 increased loss before income tax benefit for the quarter by
approximately $73 million ($0.81 per diluted share). Despite its
decision to record a charge in the fourth quarter for this item,
the Company believes that it is legally entitled to these federal
payments and will pursue all available means to collect them.
- Increases to Marketplace risk transfer
and CSR liabilities related to the first three quarters of 2017
increased loss before income tax benefit by approximately $50
million ($0.55 per diluted share) in the fourth quarter.
- The reduction of the
Marketplace-related premium deficiency reserve to zero as of
December 31, 2017 reduced loss before income tax benefit by $70
million ($0.77 per diluted share) in the fourth quarter.
- Non-cash goodwill and intangible asset
impairment charges of $269 million ($3.22 per diluted share) were
incurred at the Florida, Illinois, and New Mexico health plans in
the fourth quarter.
- Approximately $73 million ($0.81 per
diluted share) of restructuring costs were recognized in the fourth
quarter.
- Approximately $14 million ($0.24 per
diluted share) of non-cash costs were recognized in the fourth
quarter in connection with the issuance of our common shares in
exchange for $141 million face value of our 1.625% convertible
senior notes.
Income Tax (Benefit) Expense
The revaluation of deferred tax assets in connection with the
Tax Cuts and Jobs Act of 2017 resulted in $54 million additional
income tax expense in the fourth quarter and year ended December
31, 2017 ($0.94 per diluted share and $0.95 per diluted share,
respectively). In addition, the effective tax benefit for 2017 is
less than the statutory tax benefit due to the relatively large
amount of reported expenses that are not deductible for tax
purposes, primarily relating to goodwill impairment losses and
separation costs.
2018 Preliminary Guidance
The Company has offered guidance on a preliminary basis because
of the inherent uncertainty around achievement and the timing of
its numerous profit improvement initiatives. While those
initiatives extend across the various dimensions of managed care
fundamentals, many are in the early stages of development and
implementation.
Therefore, the Company’s guidance should be viewed as a
preliminary estimate of what it expects to achieve until the profit
improvement initiatives manifest themselves in the earnings stream.
Once it has the benefit of first quarter earnings and further
insight into the execution of the profit improvement initiatives,
the Company will be able to provide a firmer view of 2018
guidance.
To provide for an appropriate amount of execution risk, the
Company’s preliminary guidance has been developed with
appropriately conservative views of:
- Medical cost baseline in 2017;
- Medical cost trend for 2018;
- Potential rate increases and retained
amounts of revenue at risk; and
- The turnaround of the Marketplace
business until the achievement of the margins implicit in 2018
pricing is observed.
The following table summarizes 2018 Preliminary Guidance
(1):
Premium revenue ~ $17.5B Service
revenue ~ $525M Premium tax revenue ~ $410M Health insurer fees
reimbursed ~ $295M Investment income and other revenue
~ $85M
Total revenue ~
$18.8B Medical care costs ~ $15.6B Medical
care ratio (2) ~ 89% Cost of service revenue ~ $480M
General and
administrative expenses ~ $1.4B G&A ratio (3) ~ 7.3%
Premium tax expenses ~ $410M Health insurer fees ~ $310M
Depreciation and amortization ~ $115M Interest expense and other
income ~ $125M Income before income taxes $355M - $400M
Net
income $202M - $236M EBITDA (4) $632M -
$676M Effective tax rate 41% - 43% Net profit margin (3) 1.1% -
1.3% Diluted weighted average shares ~ 67.3M Net income per share
$3.00 - $3.50 Adjusted net income per share (4) $3.23 - $3.73
End-of-year Marketplace membership 303,000 End-of-year
Non-Marketplace membership 3,738,000 __________________ (1)
All amounts are estimates; actual results may differ
materially. See our risk factors as discussed in our 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
expense 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 fourth quarter and year-end 2017 results at
8:30 a.m. Eastern time on Tuesday, February 13, 2018. The number to
call for the interactive teleconference is (888) 317-6003 and
entering confirmation number 5278774. A telephonic replay of the
conference call will be available through Tuesday, February 20,
2018, by dialing (877) 344-7529 and entering confirmation number
10116226. A live audio broadcast of Molina Healthcare’s conference
call will be available on our 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 our health plans
operating in 13 states across the nation and in the Commonwealth of
Puerto Rico, Molina serves approximately 4.5 million members. For
more information about Molina Healthcare, please visit our website
at molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This earnings release contains
“forward-looking statements” regarding our 2018 preliminary
guidance, as well as our 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:
- the success of our profit improvement
and maintenance initiatives, including the timing and amounts of
the benefits realized, and administrative savings achieved;
- the numerous political and market-based
uncertainties associated with the Affordable Care Act (the “ACA”)
or “Obamacare;”
- the market dynamics surrounding the ACA
Marketplaces, including but not limited to uncertainties associated
with risk transfer requirements, the potential for disproportionate
enrollment of higher acuity members, the discontinuation of premium
tax credits, the adequacy of agreed rates, and potential disruption
associated with market withdrawal from Utah, Wisconsin, or other
states;
- subsequent adjustments to reported
premium revenue based upon subsequent developments or new
information, including changes to estimated amounts payable or
receivable related to Marketplace risk adjustment/risk transfer,
risk corridors, and reinsurance;
- effective management of our medical
costs;
- our ability to predict with a
reasonable degree of accuracy utilization rates, including
utilization rates associated with seasonal flu patterns or other
newly emergent diseases;
- significant budget pressures on state
governments and their potential inability to maintain current
rates, to implement expected rate increases, or to maintain
existing benefit packages or membership eligibility thresholds or
criteria;
- the full reimbursement of the ACA
health insurer fee, or HIF;
- the success of our efforts to retain
existing government contracts, including those in Florida, New
Mexico, Puerto Rico, Texas, and Washington, including the success
of any protest filings;
- our ability to manage our operations,
including maintaining and creating adequate internal systems and
controls relating to authorizations, approvals, provider payments,
and the overall success of our care management initiatives;
- our ability to consummate and realize
benefits from acquisitions or divestitures;
- our receipt of adequate premium rates
to support increasing pharmacy costs, including costs associated
with specialty drugs and costs resulting from formulary changes
that allow the option of higher-priced non-generic drugs;
- our ability to operate profitably in an
environment where the trend in premium rate increases lags behind
the trend in increasing medical costs;
- the interpretation and implementation
of federal or state medical cost expenditure floors, administrative
cost and profit ceilings, premium stabilization programs, profit
sharing arrangements, and risk adjustment provisions and
requirements;
- our estimates of amounts owed for such
cost expenditure floors, administrative cost and profit ceilings,
premium stabilization programs, profit-sharing arrangements, and
risk adjustment provisions;
- the Medicaid expansion cost corridors
in California, New Mexico, and Washington, and any other
retroactive adjustment to revenue where methodologies and
procedures are subject to interpretation or dependent upon
information about the health status of participants other than
Molina members;
- the interpretation and implementation
of at-risk premium rules and state contract performance
requirements regarding the achievement of certain quality measures,
and our ability to recognize revenue amounts associated
therewith;
- cyber-attacks or other privacy or data
security incidents resulting in an inadvertent unauthorized
disclosure of protected health information;
- the success of our health plan in
Puerto Rico, including the resolution of the Puerto Rico debt
crisis, payment of all amounts due under our Medicaid contract, the
effect of the PROMESA law, the impact of Hurricane Maria and our
efforts to better manage the health care costs of our Puerto Rico
health plan;
- the success and renewal of our duals
demonstration programs in California, Illinois, Michigan, Ohio,
South Carolina, and Texas;
- the accurate estimation of incurred but
not reported or paid medical costs across our health plans;
- efforts by states to recoup previously
paid and recognized premium amounts;
- complications, member confusion, or
enrollment backlogs related to the annual renewal of Medicaid
coverage;
- government audits and reviews, or
potential investigations, and any fine, sanction, enrollment
freeze, monitoring program, or premium recovery that may result
therefrom;
- changes with respect to our provider
contracts and the loss of providers;
- approval by state regulators of
dividends and distributions by our health plan subsidiaries;
- changes in funding under our contracts
as a result of regulatory changes, programmatic adjustments, or
other reforms;
- high dollar claims related to
catastrophic illness;
- the favorable resolution of litigation,
arbitration, or administrative proceedings;
- the relatively small number of states
in which we operate health plans, including the greater scale and
revenues of our California, Ohio, Texas, and Washington health
plans;
- the availability of adequate financing
on acceptable terms to fund and capitalize our expansion and
growth, repay our outstanding indebtedness at maturity and meet our
liquidity needs, including the interest expense and other costs
associated with such financing;
- our failure to comply with the
financial or other covenants in our credit agreement or the
indentures governing our outstanding notes;
- the sufficiency of our funds on hand to
pay the amounts due upon conversion or maturity of our outstanding
notes;
- the failure of a state in which we
operate to renew its federal Medicaid waiver;
- changes generally affecting the managed
care or Medicaid management information systems industries;
- increases in government surcharges,
taxes, and assessments, including but not limited to the
deductibility of certain compensation costs;
- newly emergent viruses or widespread
epidemics, public catastrophes or terrorist attacks, and associated
public alarm;
- increasing competition and
consolidation in the Medicaid industry;
and numerous other risk factors, including those discussed in
our periodic reports and filings with the Securities and Exchange
Commission. These reports can be accessed under the investor
relations tab of our website or on the SEC’s website at sec.gov.
Given these risks and uncertainties, we can give no assurances that
our forward-looking statements will prove to be accurate, or that
any other results or events projected or contemplated by our
forward-looking statements will in fact occur, and we caution
investors not to place undue reliance on these statements. All
forward-looking statements in this release represent our judgment
as of February 12, 2018, and we disclaim any obligation to update
any forward-looking statements to conform the statement to actual
results or changes in our expectations.
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months Ended December 31,
Year Ended December 31, 2017
2016 2017 2016 (Dollar
amounts in millions, except per-share amounts) Revenue: Premium
revenue (1) $ 4,689 $ 4,190 $ 18,854 $ 16,445 Service revenue 131
131 521 539 Premium tax revenue 107 123 438 468 Health insurer fees
reimbursed (1) — 81 — 292 Investment income and other revenue
22 9 70 38
Total revenue 4,949 4,534 19,883
17,782 Operating expenses: Medical care costs
4,251 3,844 17,073 14,774 Cost of service revenue 123 123 492 485
General and administrative expenses 367 359 1,594 1,393 Premium tax
expenses 107 123 438 468 Health insurer fees — 54 — 217
Depreciation and amortization 28 37 137 139 Impairment losses 269 —
470 — Restructuring and separation costs 73 —
234 — Total operating expenses
5,218 4,540 20,438
17,476 Operating (loss) income (269 ) (6 )
(555 ) 306 Other expenses, net: Interest
expense 33 25 118 101 Other expense (income), net 14
— (61 ) — Total other expenses,
net 47 25 57 101
(Loss) income before income tax (benefit)
expense
(316 ) (31 ) (612 ) 205 Income tax (benefit) expense (54 )
16 (100 ) 153 Net (loss) income
$ (262 ) $ (47 ) $ (512 ) $ 52 Net (loss) income per
diluted share $ (4.59 ) $ (0.85 ) $ (9.07 ) $ 0.92
Diluted weighted average shares outstanding 57.1
55.6 56.5 56.3
Operating Statistics: Medical care ratio 90.7 % 91.7 % 90.6
% 89.8 % G&A ratio 7.4 % 7.9 % 8.0 % 7.8 % Premium tax ratio
2.2 % 2.9 % 2.3 % 2.8 % Effective income tax (benefit) expense rate
(17.2 )% 54.5 % (16.4 )% 74.8 % Net (loss) profit margin (5.3 )%
(1.0 )% (2.6 )% 0.3 % __________________ (1) The
Centers for Medicare and Medicaid Services (CMS) incorporates the
Health Insurer Fee in our Medicare and Marketplace premium rates.
We have therefore reclassified such amounts to premium revenue,
from health insurer fees reimbursed, for all applicable periods
presented.
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE
SHEETS
December 31, 2017
2016
(In millions, except per-share
data)
ASSETS Current assets: Cash and cash equivalents $ 3,186 $
2,819 Investments 2,524 1,758 Restricted investments 169 —
Receivables 871 974 Income taxes refundable 54 39 Prepaid expenses
and other current assets 185 131 Derivative asset 522
267 Total current assets 7,511 5,988 Property,
equipment, and capitalized software, net 342 454 Deferred contract
costs 101 86 Intangible assets, net 69 140 Goodwill 186 620
Restricted investments 119 110 Deferred income taxes 103 10 Other
assets 40 41 $ 8,471 $ 7,449
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Medical claims and benefits payable $ 2,192 $ 1,929
Amounts due government agencies 1,542 1,202 Accounts payable and
accrued liabilities 366 385 Deferred revenue 282 315 Current
portion of long-term debt 653 472 Derivative liability 522
267 Total current liabilities 5,557 4,570
Long-term debt 1,318 975 Lease financing obligations 198 198
Deferred income taxes — 15 Other long-term liabilities 61
42 Total liabilities 7,134
5,800 Stockholders’ equity: Common stock, $0.001 par
value; 150 shares authorized; outstanding: 60 at December 31, 2017
and 57 shares at December 31, 2016 — — Preferred stock, $0.001 par
value; 20 shares authorized, no shares issued and outstanding — —
Additional paid-in capital 1,044 841 Accumulated other
comprehensive loss (5 ) (2 ) Retained earnings 298
810 Total stockholders’ equity 1,337
1,649 $ 8,471 $ 7,449
MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three Months Ended December 31,
Year Ended December 31, 2017
2016 2017 2016 (In
millions) Operating activities: Net (loss) income $ (262 ) $
(47 ) $ (512 ) $ 52 Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating activities: Depreciation
and amortization 39 47 178 182 Impairment losses 269 — 470 —
Deferred income taxes (26 ) 2 (94 ) 22 Share-based compensation,
including accelerated share-based compensation 8 2 46 26 Non-cash
restructuring charges 11 — 60 — Amortization of convertible senior
notes and lease financing obligations 8 8 32 31 Loss on debt
extinguishment 14 — 14 — Other, net 8 2 21 16 Changes in operating
assets and liabilities: Receivables 131 79 103 (348 ) Prepaid
expenses and other assets (3 ) 47 (56 ) (69 ) Medical claims and
benefits payable (286 ) 58 263 226 Amounts due government agencies
219 (30 ) 341 473 Accounts payable and accrued liabilities (102 )
(5 ) (12 ) (4 ) Deferred revenue (187 ) (65 ) (34 ) 92 Income taxes
6 (58 ) (16 ) (26 ) Net cash
(used in) provided by operating activities (153 ) 40
804 673 Investing activities:
Purchases of investments (822 ) (485 ) (2,718 ) (1,929 ) Proceeds
from sales and maturities of investments 233 454 1,771 1,966
Purchases of property, equipment, and capitalized software (1 ) (33
) (86 ) (176 ) (Increase) decrease in restricted investments
held-to-maturity (2 ) — (12 ) 4 Net cash paid in business
combinations — — — (48 ) Other, net (7 ) (7 )
(28 ) (19 ) Net cash used in investing activities
(599 ) (71 ) (1,073 ) (202 ) Financing
activities: Proceeds from senior notes offering, net of issuance
costs — — 325 — Proceeds from borrowings under credit facility — —
300 — Proceeds from employee stock plans 8 8 19 18 Cash paid for
financing transaction fees (7 ) — (7 ) — Other, net 3
— (1 ) 1 Net cash provided by
financing activities 4 8 636
19 Net (decrease) increase in cash and cash
equivalents (748 ) (23 ) 367 490 Cash and cash equivalents at
beginning of period 3,934 2,842
2,819 2,329 Cash and cash equivalents at end
of period $ 3,186 $ 2,819 $ 3,186 $ 2,819
MOLINA HEALTHCARE, INC.
UNAUDITED HEALTH PLANS SEGMENT
MEMBERSHIP
As of December 31, 2017
2016 2015 Ending Membership
by Program: Temporary Assistance for Needy Families (TANF) and
Children’s Health Insurance Program (CHIP) 2,457,000 2,536,000
2,312,000 Marketplace 815,000 526,000 205,000 Medicaid Expansion
668,000 673,000 557,000 Aged, Blind or Disabled (ABD) 412,000
396,000 366,000 Medicare-Medicaid Plan (MMP) - Integrated 57,000
51,000 51,000 Medicare Special Needs Plans 44,000 45,000 42,000
4,453,000 4,227,000 3,533,000
Ending Membership by Health
Plan: California 746,000 683,000 620,000 Florida 625,000
553,000 440,000 Illinois 165,000 195,000 98,000 Michigan 398,000
391,000 328,000 New Mexico 253,000 254,000 231,000 New York 32,000
35,000 — Ohio 327,000 332,000 327,000 Puerto Rico 314,000 330,000
348,000 South Carolina 116,000 109,000 99,000 Texas 430,000 337,000
260,000 Utah 152,000 146,000 102,000 Washington 777,000 736,000
582,000 Wisconsin 118,000 126,000 98,000 4,453,000 4,227,000
3,533,000
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA
(In millions, except percentages and
per-member per-month amounts)
Three Months Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM TANF and CHIP 7.4 $ 1,369 $ 183.95 $ 1,250 $ 168.00
91.3 % $ 119 Medicaid Expansion 2.0 774 386.22 629 313.89 81.3 145
ABD 1.3 1,366 1,100.22 1,229 989.56 89.9 137
Total Medicaid 10.7 3,509 328.28 3,108 290.76
88.6 401 MMP 0.2 363 2,142.07 341 2,006.07 93.7 22
Medicare 0.1 152 1,155.15 124 948.16 82.1 28
Total Medicare 0.3 515 1,710.94 465 1,543.93
90.2 50 Excluding Marketplace 11.0 4,024 366.18 3,573
325.12 88.8 451 Marketplace 2.4 665 268.39 678 273.92
102.1 (13 ) 13.4 $ 4,689 $ 348.20 $ 4,251 $ 315.70 90.7 % $
438
Three Months Ended December 31,
2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM TANF and CHIP 7.7
$ 1,404 $ 183.96 $ 1,304 $ 170.83 92.9 % $ 100 Medicaid Expansion
2.0 768 383.19 625 311.57 81.3 143 ABD 1.2 1,200 1,003.09
1,104 921.69 91.9 96 Total Medicaid 10.9
3,372 311.31 3,033 279.82 89.9 339 MMP
0.1 319 2,076.73 274 1,785.00 86.0 45 Medicare 0.1 150
1,114.69 130 966.81 86.7 20 Total Medicare 0.2
469 1,626.50 404 1,402.09 86.2 65
Excluding Marketplace 11.1 3,841 345.40 3,437 308.91 89.4 404
Marketplace 1.6 349 221.05 407 258.71 117.0
(58 ) 12.7 $ 4,190 $ 329.96 $ 3,844 $ 302.68 91.7 % $ 346
__________________ (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
(In millions, except percentages and
per-member per-month amounts)
Year Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM TANF and CHIP 30.2 $ 5,554 $ 183.75 $ 5,111 $ 169.09
92.0 % $ 443 Medicaid Expansion 8.1 3,150 388.42 2,674 329.73 84.9
476 ABD 4.9 5,135 1,050.41 4,863 994.80 94.7
272 Total Medicaid 43.2 13,839 320.16 12,648 292.61
91.4 1,191 MMP 0.7 1,446 2,177.72 1,317 1,982.36 91.0 129
Medicare 0.5 601 1,143.63 493 939.67 82.2 108
Total Medicare 1.2 2,047 1,722.47 1,810 1,523.15 88.4
237 Excluding Marketplace 44.4 15,886 357.68 14,458 325.53
91.0 1,428 Marketplace 10.8 2,968 274.47 2,615 241.84
88.1 353 55.2 $ 18,854 $ 341.39 $ 17,073 $ 309.14 90.6 % $
1,781
Year Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM TANF and CHIP
30.2 $ 5,403 $ 179.21 $ 4,950 $ 164.18 91.6 % $ 453 Medicaid
Expansion 7.8 2,952 378.58 2,475 317.37 83.8 477 ABD 4.7
4,666 991.24 4,277 908.39 91.6 389 Total Medicaid
42.7 13,021 305.28 11,702 274.33 89.9 1,319
MMP 0.6 1,321 2,160.94 1,141 1,866.93 86.4 180 Medicare 0.5
558 1,063.44 515 981.36 92.3 43 Total Medicare 1.1
1,879 1,653.73 1,656 1,457.67 88.1 223
Excluding Marketplace 43.8 14,900 340.28 13,358 305.03 89.6 1,542
Marketplace 6.7 1,545 231.38 1,416 212.17 91.7
129 50.5 $ 16,445 $ 325.87 $ 14,774 $ 292.75 89.8 % $ 1,671
__________________ (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)
Three Months Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM California 1.8 $ 621 $ 335.46 $ 531 $ 286.70 85.5 % $
90 Florida 1.1 390 358.34 349 320.47 89.4 41 Illinois 0.5 146
294.68 146 295.25 100.2 — Michigan 1.1 383 339.23 325 287.60 84.8
58 New Mexico 0.7 325 465.52 279 400.84 86.1 46 New York (3) 0.1 46
465.75 42 432.25 92.8 4 Ohio 1.0 532 555.50 460 480.48 86.5 72
Puerto Rico 0.9 179 187.49 178 187.68 100.1 1 South Carolina 0.4
116 337.14 111 320.47 95.1 5 Texas 0.7 558 796.86 510 728.72 91.4
48 Utah 0.3 88 319.80 71 259.95 81.3 17 Washington 2.2 610 275.76
540 243.70 88.4 70 Wisconsin 0.2 30 162.36 27 139.38 85.9 3 Other
(4) — — — 4 — — (4 ) 11.0 $ 4,024 $ 366.18 $
3,573 $ 325.12 88.8 % $ 451
Three Months
Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM California 1.9 $
639 $ 342.41 $ 489 $ 261.60 76.4 % $ 150 Florida 1.1 374 348.59 335
312.59 89.7 39 Illinois 0.5 136 234.17 154 265.84 113.5 (18 )
Michigan 1.1 376 323.24 326 279.55 86.5 50 New Mexico 0.7 270
380.36 289 406.50 106.9 (19 ) New York (3) 0.1 50 460.08 49 451.09
98.0 1 Ohio 1.0 479 489.73 432 442.31 90.3 47 Puerto Rico 1.0 191
193.54 178 179.02 92.5 13 South Carolina 0.4 105 318.31 88 267.65
84.1 17 Texas 0.7 528 738.53 460 643.05 87.1 68 Utah 0.2 87 302.48
75 263.94 87.3 12 Washington 2.1 568 268.88 505 238.99 88.9 63
Wisconsin 0.3 34 166.56 28 131.60 79.0 6 Other (4) — 4 —
29 — — (25 ) 11.1 $ 3,841 $ 345.40 $ 3,437 $ 308.91
89.4 % $ 404 __________________ (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. (3) The New York health plan was
acquired on August 1, 2016. (4) “Other” medical care costs include
primarily medically related administrative costs at the parent
company, and direct delivery costs.
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA—NON-MARKETPLACE
(In millions, except percentages and
per-member per-month amounts)
Year Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM California 7.4 $ 2,392 $ 321.46 $ 2,117 $ 284.53 88.5 %
$ 275 Florida 4.3 1,522 350.15 1,461 335.97 96.0 61 Illinois 2.1
593 286.69 638 308.41 107.6 (45 ) Michigan 4.6 1,545 334.22 1,360
294.15 88.0 185 New Mexico 2.9 1,258 439.95 1,166 407.94 92.7 92
New York (3) 0.4 181 449.85 170 424.17 94.3 11 Ohio 3.9 2,130
544.98 1,894 484.66 88.9 236 Puerto Rico 3.8 732 190.13 691 179.65
94.5 41 South Carolina 1.4 445 328.41 412 304.04 92.6 33 Texas 2.8
2,150 769.82 1,978 708.20 92.0 172 Utah 1.1 355 316.44 290 258.96
81.8 65 Washington 8.9 2,445 275.64 2,143 241.55 87.6 302 Wisconsin
0.8 131 168.64 107 136.84 81.1 24 Other (4) — 7 — 31
— — (24 ) 44.4 $ 15,886 $ 357.68 $ 14,458 $ 325.53 91.0 % $
1,428
Year Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM California 7.4 $
2,247 $ 304.83 $ 1,900 $ 257.72 84.5 % $ 347 Florida 4.1 1,348
329.58 1,227 299.94 91.0 121 Illinois 2.3 603 258.72 568 243.71
94.2 35 Michigan 4.7 1,517 324.18 1,339 286.00 88.2 178 New Mexico
2.8 1,245 440.63 1,162 411.30 93.3 83 New York (3) 0.2 82 446.72 79
431.73 96.6 3 Ohio 3.9 1,927 490.71 1,718 437.56 89.2 209 Puerto
Rico 4.0 726 180.65 694 172.57 95.5 32 South Carolina 1.3 378
296.58 320 250.97 84.6 58 Texas 2.9 2,182 744.65 1,926 657.38 88.3
256 Utah 1.1 344 297.68 296 256.31 86.1 48 Washington 8.1 2,146
263.50 1,936 237.66 90.2 210 Wisconsin 1.0 142 165.95 106 123.44
74.4 36 Other (4) — 13 — 87 — — (74 ) 43.8 $
14,900 $ 340.28 $ 13,358 $ 305.03 89.6 % $ 1,542
__________________ (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. (3) The New York health plan was acquired on
August 1, 2016. (4) “Other” medical care costs include primarily
medically related administrative costs at the parent company, and
direct delivery costs.
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA—MARKETPLACE
(In millions, except percentages and
per-member per-month amounts)
Three Months Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM California 0.5 $ 68 $ 163.41 $ 75 $ 181.70 111.2 % $ (7
) Florida 0.8 225 283.63 251 316.67 111.6 (26 ) Michigan 0.1 10
153.52 11 166.49 108.5 (1 ) New Mexico 0.1 28 387.65 22 291.42 75.2
6 Ohio — 18 355.81 17 317.65 89.3 1 Texas 0.5 146 242.38 166 276.16
113.9 (20 ) Utah 0.2 45 238.32 43 227.77 95.6 2 Washington 0.1 40
321.91 28 233.26 72.5 12 Wisconsin 0.1 85 505.67 67 401.16 79.3 18
Other (3) — — — (2 ) — — 2 2.4 $ 665 $
268.39 $ 678 $ 273.92 102.1 % $ (13 )
Three
Months Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM California 0.2 $
26 $ 127.99 $ 55 $ 282.83 221.0 % $ (29 ) Florida 0.6 108 183.99
129 219.31 119.2 (21 ) Michigan — 3 285.50 1 204.16 71.6 2 New
Mexico — 18 353.63 15 294.95 83.3 3 Ohio — 11 420.48 9 325.28 77.2
2 Texas 0.3 76 245.20 51 164.54 67.1 25 Utah 0.3 27 181.65 36
232.38 127.9 (9 ) Washington 0.1 18 239.89 31 424.83 177.0 (13 )
Wisconsin 0.1 62 366.22 82 479.24 130.9 (20 ) Other (3) — —
— (2 ) — — 2 1.6 $ 349 $ 221.05 $ 407 $
258.71 117.0 % $ (58 ) __________________ (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. (3) “Other” medical care
costs include primarily medically related administrative costs at
the parent company, and direct delivery costs.
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA—MARKETPLACE
(In millions, except percentages and
per-member per-month amounts)
Year Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM California 1.7 $ 309 $ 185.88 $ 231 $ 138.61 74.6 % $
78 Florida 3.6 1,046 293.35 1,009 283.17 96.5 37 Michigan 0.3 51
180.26 38 135.64 75.2 13 New Mexico 0.3 110 349.50 84 264.14 75.6
26 Ohio 0.2 86 363.24 81 340.44 93.7 5 Texas 2.6 663 250.08 517
195.20 78.1 146 Utah 0.9 180 215.93 178 213.33 98.8 2 Washington
0.5 163 317.39 156 304.74 96.0 7 Wisconsin 0.7 360 477.53 327
433.98 90.9 33 Other (3) — — — (6 ) — — 6
10.8 $ 2,968 $ 274.47 $ 2,615 $ 241.84 88.1 % $ 353
Year Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM California 0.8 $
131 $ 166.01 $ 129 $ 164.35 99.0 % $ 2 Florida 2.6 590 228.65 538
208.53 91.2 52 Michigan — 10 232.88 6 154.32 66.3 4 New Mexico 0.2
60 287.37 47 223.85 77.9 13 Ohio 0.1 40 348.06 29 254.78 73.2 11
Texas 1.4 279 208.48 184 137.13 65.8 95 Utah 0.7 103 166.21 127
204.14 122.8 (24 ) Washington 0.3 76 272.48 79 284.87 104.5 (3 )
Wisconsin 0.6 256 363.54 282 399.51 109.9 (26 ) Other (3) —
— — (5 ) — — 5 6.7 $ 1,545 $ 231.38 $ 1,416
$ 212.17 91.7 % $ 129 __________________ (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. (3) “Other”
medical care costs include primarily medically related
administrative costs at the parent company, and direct delivery
costs.
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA—TOTAL
(In millions, except percentages and
per-member per-month amounts)
Three Months Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM California 2.3 $ 689 $ 303.98 $ 606 $ 267.49 88.0 % $
83 Florida 1.9 615 326.80 600 318.86 97.6 15 Illinois 0.5 146
294.68 146 295.25 100.2 — Michigan 1.2 393 329.50 336 281.26 85.4
57 New Mexico 0.8 353 458.22 301 390.58 85.2 52 New York (3) 0.1 46
465.75 42 432.25 92.8 4 Ohio 1.0 550 545.09 477 471.99 86.6 73
Puerto Rico 0.9 179 187.49 178 187.68 100.1 1 South Carolina 0.4
116 337.14 111 320.47 95.1 5 Texas 1.2 704 541.55 676 520.34 96.1
28 Utah 0.5 133 286.70 114 246.88 86.1 19 Washington 2.3 650 278.21
568 243.15 87.4 82 Wisconsin 0.3 115 324.48 94 263.00 81.1 21 Other
(4) — — — 2 — — (2 ) 13.4 $ 4,689 $ 348.20 $
4,251 $ 315.70 90.7 % $ 438
Three Months
Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM California 2.1 $
665 $ 321.74 $ 544 $ 263.64 81.9 % $ 121 Florida 1.7 482 290.53 464
279.69 96.3 18 Illinois 0.5 136 234.17 154 265.84 113.5 (18 )
Michigan 1.1 379 322.91 327 278.89 86.4 52 New Mexico 0.7 288
378.63 304 399.29 105.5 (16 ) New York (3) 0.1 50 460.08 49 451.09
98.0 1 Ohio 1.0 490 487.83 441 439.09 90.0 49 Puerto Rico 1.0 191
193.54 178 179.02 92.5 13 South Carolina 0.4 105 318.31 88 267.65
84.1 17 Texas 1.0 604 590.59 511 499.56 84.6 93 Utah 0.5 114 260.05
111 252.85 97.2 3 Washington 2.2 586 267.92 536 245.11 91.5 50
Wisconsin 0.4 96 256.93 110 288.94 112.5 (14 ) Other (4) — 4
— 27 — — (23 ) 12.7 $ 4,190 $ 329.96 $ 3,844 $ 302.68
91.7 % $ 346 __________________ (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. (3) The New York health plan was
acquired on August 1, 2016. (4) “Other” medical care costs include
primarily medically related administrative costs at the parent
company, and direct delivery costs.
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA—TOTAL
(In millions, except percentages and
per-member per-month amounts)
Year Ended December 31, 2017
MemberMonths (1)
Premium Revenue Medical Care
Costs MCR (2)
MedicalMargin
Total PMPM Total
PMPM California 9.1 $ 2,701 $ 296.68 $ 2,348 $ 257.86 86.9 %
$ 353 Florida 7.9 2,568 324.56 2,470 312.18 96.2 98 Illinois 2.1
593 286.69 638 308.41 107.6 (45 ) Michigan 4.9 1,596 325.43 1,398
285.11 87.6 198 New Mexico 3.2 1,368 430.97 1,250 393.67 91.3 118
New York (3) 0.4 181 449.85 170 424.17 94.3 11 Ohio 4.1 2,216
534.56 1,975 476.39 89.1 241 Puerto Rico 3.8 732 190.13 691 179.65
94.5 41 South Carolina 1.4 445 328.41 412 304.04 92.6 33 Texas 5.4
2,813 516.84 2,495 458.50 88.7 318 Utah 2.0 535 273.55 468 239.49
87.5 67 Washington 9.4 2,608 277.93 2,299 245.01 88.2 309 Wisconsin
1.5 491 320.71 434 283.14 88.3 57 Other (4) — 7 — 25
— — (18 ) 55.2 $ 18,854 $ 341.39 $ 17,073 $ 309.14 90.6 % $
1,781
Year Ended December 31, 2016
MemberMonths (1)
Premium Revenue Medical Care Costs MCR
(2)
MedicalMargin
Total PMPM Total PMPM California 8.2 $
2,378 $ 291.41 $ 2,029 $ 248.70 85.3 % $ 349 Florida 6.7 1,938
290.56 1,765 264.60 91.1 173 Illinois 2.3 603 258.72 568 243.71
94.2 35 Michigan 4.7 1,527 323.36 1,345 284.82 88.1 182 New Mexico
3.0 1,305 430.15 1,209 398.49 92.6 96 New York (3) 0.2 82 446.72 79
431.73 96.6 3 Ohio 4.0 1,967 486.66 1,747 432.36 88.8 220 Puerto
Rico 4.0 726 180.65 694 172.57 95.5 32 South Carolina 1.3 378
296.58 320 250.97 84.6 58 Texas 4.3 2,461 576.69 2,110 494.41 85.7
351 Utah 1.8 447 251.63 423 238.03 94.6 24 Washington 8.4 2,222
263.80 2,015 239.21 90.7 207 Wisconsin 1.6 398 255.30 388 248.28
97.2 10 Other (4) — 13 — 82 — — (69 ) 50.5 $
16,445 $ 325.87 $ 14,774 $ 292.75 89.8 % $ 1,671
__________________ (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. (3) The New York health plan was acquired on
August 1, 2016. (4) “Other” medical care costs include primarily
medically related administrative costs at the parent company, and
direct delivery costs.
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT
FINANCIAL DATA
(In millions, except percentages and
per-member per-month amounts)
The following tables provide the details
of our medical care costs for the periods indicated:
Three Months Ended December 31,
2017 2016 Amount
PMPM
% ofTotal
Amount PMPM
% ofTotal
Fee for service $ 3,052 $ 226.66 71.8 % $ 2,837 $ 223.43 73.8 %
Pharmacy 659 48.88 15.4 592 46.57 15.4 Capitation 338 25.13 8.0 317
24.93 8.2 Direct delivery 11 0.80 0.3 23 1.80 0.6 Other 191
14.23 4.5 75 5.95 2.0 $ 4,251 $
315.70 100.0 % $ 3,844 $ 302.68 100.0 %
Year Ended
December 31, 2017 2016 Amount PMPM
% ofTotal
Amount PMPM
% ofTotal
Fee for service $ 12,682 $ 229.63 74.3 % $ 10,993 $ 217.84 74.4 %
Pharmacy 2,563 46.40 15.0 2,213 43.84 15.0 Capitation 1,360 24.63
8.0 1,218 24.13 8.2 Direct delivery 73 1.33 0.4 78 1.55 0.5 Other
395 7.15 2.3 272 5.39 1.9
$ 17,073 $ 309.14 100.0 % $ 14,774 $ 292.75 100.0 %
The following table provides the details
of our medical claims and benefits payable as of the dates
indicated:
December 31, 2017
2016 Fee-for-service claims incurred but not paid (IBNP) $
1,717 $ 1,352 Pharmacy payable 112 112 Capitation payable 67 37
Other (1) 296 428 $ 2,192 $ 1,929 __________________
(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 operations. As of December 31, 2017 and
2016, we had recorded non-risk provider payables of approximately
$122 million and $225 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 less
(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:
Year Ended December 31, 2017
2016 Medical claims and benefits payable, beginning
balance $ 1,929 $ 1,685 Components of medical care costs related
to: Current period 17,037 14,966 Prior period 36
(192 ) Total medical care costs 17,073
14,774 Change in non-risk provider payables
(106 ) 58 Payments for medical care costs related to:
Current period 15,130 13,304 Prior period 1,574
1,284 Total paid 16,704 14,588
Medical claims and benefits payable, ending balance $ 2,192
$ 1,929 Benefit from prior period as a
percentage of: Balance at beginning of period (1.9 )% 11.4 %
Premium revenue, trailing twelve months (0.2 )% 1.2 % Medical care
costs, trailing twelve months (0.2 )% 1.3 % Days in claims
payable, fee for service (1) 54 47 __________________ (1)
Claims payable includes primarily IBNP. Additionally, it
includes certain fee-for-service payables reported in “Other”
medical claims and benefits payable amounting to $99 million and
$94 million, as of December 31, 2017 and 2016, respectively.
MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL
MEASURES
We use 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 December 31,
Year Ended December 31, 2017
2016 2017 2016 Net (loss)
income $(262 ) $(47 ) $(512 ) $52 Adjustments: Depreciation, and
amortization of intangible assets and capitalized software 36 43
165 161 Interest expense 33 25 118 101 Income tax (benefit) expense
(54 ) 16 (100 ) 153 EBITDA $(247 ) $37 $(329 )
$467
Three Months Ended December 31,
Year Ended December 31, 2017 2016 2017
2016
Amount
PerDilutedshare
Amount
PerDilutedshare
Amount
PerDilutedshare
Amount
PerDilutedshare
Net (loss) income $ (262 ) $ (4.59 ) $ (47 ) $ (0.85 ) $ (512 ) $
(9.07 )
$
52
$ 0.92 Adjustment:
Amortization of intangible assets
6
0.11
8
0.16
30
0.55
32
0.57
Income tax effect (1)
(2
)
(0.04
)
(3
)
(0.06
)
(11
)
(0.20
)
(12
)
(0.21
)
Amortization of intangible assets, net of
tax effect
4
0.07
5
0.10
19
0.35
20
0.36 Adjusted net (loss) income $ (258 ) $
(4.52 ) $ (42 ) $ (0.75 ) $ (493 ) $ (8.72 )
$
72
$ 1.28 __________________ (1) Income
tax effect of adjustment calculated at the blended federal and
state statutory tax rate of 37%.
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 (loss) income (GAAP) less
depreciation, and amortization of intangible assets and capitalized
software, interest expense and income tax (benefit) expense. We
believe that EBITDA is helpful in assessing our ability to meet the
cash demands of our operating units.
Adjusted net (loss) income: Net (loss) income (GAAP) less
amortization of intangible assets, net of income tax effect
calculated at the statutory tax rate of 37%. We believe that
adjusted net (loss) income is helpful in assessing our financial
performance exclusive of the non-cash impact of the amortization of
purchased intangibles.
Adjusted net (loss) income per diluted share: Adjusted
net (loss) income divided by weighted average common shares
outstanding on a fully diluted basis.
MOLINA HEALTHCARE, INC.
2018 PRELIMINARY GUIDANCE
Reconciliation of Non-GAAP Financial
Measures(in millions, except per-share amounts)
Low End High End
Net income $ 202 $ 236 Adjustments: Depreciation, and amortization
of intangible assets and capitalized software 150 150 Interest
expense 125 125 Income tax expense 155 165
EBITDA $ 632 $ 676
Low
End High End Amount Per
share (2) Amount Per share (2) Net
income $ 202 $ 3.00 $ 236 $ 3.50 Adjustments: Amortization of
intangible assets 20 0.30 20 0.30 Income tax effect (1) (5 )
(0.07 ) (5 ) (0.07 ) Amortization of
intangible assets, net of tax effect 15 0.23
15 0.23 Adjusted net income $
217 $ 3.23 $ 251 $ 3.73
__________________ (1) Income tax effect calculated
at the statutory tax rate of 22.5%. (2) Computation assumes 67.3
million diluted weighted average shares outstanding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180212006254/en/
Molina Healthcare, Inc.Ryan Kubota, 562-435-3666, ext.
119057Investor Relations
Molina Healthcare (NYSE:MOH)
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