Introduces Full Year 2020 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) today reported net income
for the fourth quarter of 2019 of $168 million, or $2.67 per
diluted share, compared to net income of $201 million, or $3.01 per
diluted share, for the fourth quarter of 2018. The Company also
reported net income for the year ended December 31, 2019, of $737
million, or $11.47 per diluted share, compared to net income of
$707 million, or $10.61 per diluted share, for the year ended
December 31, 2018. Financial results for the fourth quarter and
full year 2019 are summarized below:
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
(In millions, except per share
results)
Premium Revenue
$
4,123
$
4,438
$
16,208
$
17,612
Total Revenue
$
4,274
$
4,664
$
16,829
$
18,890
Pre-Tax Income
$
222
$
256
$
972
$
999
Net Income
$
168
$
201
$
737
$
707
EPS – Diluted
$
2.67
$
3.01
$
11.47
$
10.61
MCR
86.0
%
85.1
%
85.8
%
85.9
%
G&A Ratio
8.0
%
7.2
%
7.7
%
7.1
%
Pre-Tax Margin
5.2
%
5.5
%
5.8
%
5.3
%
Effective Tax Rate
24.3
%
21.4
%
24.2
%
29.2
%
After-Tax Margin
3.9
%
4.3
%
4.4
%
3.7
%
Highlights include:
- Premium revenue was $4.1 billion for the fourth quarter of
2019, a 7.1% decrease compared to the fourth quarter of 2018.
- Medical care ratio (MCR) was 86.0% for the fourth quarter of
2019, compared to 85.1% for the fourth quarter of 2018.
- General and administrative (G&A) expense ratio increased to
8.0% for the fourth quarter of 2019, compared to 7.2% for the
fourth quarter of 2018.
- After-tax margin was 3.9% for the fourth quarter of 2019,
compared to 4.3% for the fourth quarter of 2018.
- Net income for the year ended December 31, 2019, increased to
$737 million, compared to $707 million for 2018, and after-tax
margin increased to 4.4% for 2019, compared to 3.7% for 2018.
- In December 2019, the Company’s Board of Directors authorized a
share repurchase program of up to $500 million, and through
February 7th, the Company repurchased an aggregate of approximately
1.9 million shares for $257 million, at an average cost of $133.23
per share.
- Operating cash flows for the year ended December 31, 2019, were
$427 million.
- Introduced full year 2020 earnings guidance, including GAAP
earnings per diluted share of $11.20 - $11.70.
- In October 2019, the Company announced that it entered into a
definitive agreement to acquire certain assets of YourCare
HealthPlan for approximately $40 million. Molina will assume the
rights to serve approximately 46,000 Medicaid members in Western
New York. The acquisition is expected to close in the first half of
2020.
- In January 2020, the Company announced that it entered into a
definitive agreement to acquire all of the capital stock of
NextLevel Health Partners for approximately $50 million. Molina
will assume the rights to serve approximately 50,000 Medicaid and
Managed Long-Term Services and Supports members in Illinois’ Cook
County. The acquisition is expected to close in the first half of
2020.
Joe Zubretsky, president and CEO, said, “We are pleased with our
fourth quarter and full year results. We improved our Medicaid and
Medicare margins and achieved exceptional Marketplace margins.
Overall, we delivered 4.4 percent after-tax margins and earnings
per share growth of 8 percent.” Mr. Zubretsky continued, “Going
forward, 2020 represents an important year in our pivot to growth
strategy with a return to top-line growth. Each of our three
business lines are well positioned to grow in 2020 and beyond.”
Premium Revenue
Premium revenue for the fourth quarter of 2019 decreased 7.1% to
$4.1 billion compared to $4.4 billion for the fourth quarter of
2018, which was in line with the Company’s expectations.
For the year ended December 31, 2019, premium revenue decreased
8.0% to $16.2 billion, from $17.6 billion for the comparable period
in 2018. For both periods, the lower premium revenue is primarily a
result of previously announced losses of Medicaid membership in New
Mexico and Florida.
Medical Care Ratio
The consolidated MCR for the fourth quarter of 2019 increased to
86.0%, compared to 85.1% for the fourth quarter of 2018, primarily
due to the increased Marketplace MCR. Prior period reserve
development in the quarter was not material.
The MCR for the year ended December 31, 2019, improved to 85.8%,
compared to 85.9% for the comparable period in 2018, due to a
combination of the following:
- The Medicaid MCR improved to 88.0%, compared to 90.0%
for the year ended December 31, 2018, due to improvement in all
programs.
- The Medicare MCR increased to 85.3%, compared to 84.5%
for the year ended December 31, 2018, due to fluctuation of medical
care costs in certain markets.
- The Marketplace MCR was 68.2%, compared to 58.9% for the
year ended December 31, 2018. The MCR in 2018 was favorably
impacted by reduced medical care costs due to Cost Sharing
Reduction (CSR) subsidies related to 2017 dates of service, while
the current year was impacted by a relatively smaller benefit from
prior-year Marketplace risk adjustment compared to 2018.
General and Administrative Expense Ratio
General and administrative expenses were 8.0% of total revenues
for the fourth quarter of 2019, compared to 7.2% for the fourth
quarter of 2018.
For the year ended December 31, 2019, the G&A ratio was
7.7%, compared to 7.1% for the comparable prior-year period. In
both periods, the year-over-year increases are due mainly to the
year-over-year decline in total revenues.
Interest Expense
Interest expense was $20 million for the fourth quarter of 2019,
compared to $24 million for the fourth quarter of 2018. The decline
was due to the repayment of convertible notes in 2019.
Balance Sheet
Cash and investments at the parent company amounted to $997
million as of December 31, 2019, compared to $796 million as of
September 30, 2019.
For the fourth quarter of 2019, the parent company received $305
million of dividends from the regulated health plan
subsidiaries.
The Company repaid $240 million of principal on the convertible
notes in 2019. The impact of capital deployment actions in 2019
resulted in lower interest expense, a net gain on repayment of the
convertible notes and a lower share count.
In early December 2019, the Company's board of directors
authorized the purchase of up to $500 million in aggregate of the
Company's common stock. Pursuant to a 10b5-1 trading plan, under
this authorization the Company purchased approximately 400,000
shares for $54 million through December 31, 2019, and through
February 7th, the Company has purchased in total approximately 1.9
million shares for $257 million.
Cash Flow
Operating cash flows for the year ended December 31, 2019,
amounted to $427 million and were higher compared to the year ended
December 31, 2018, primarily due to the normal fluctuations in
timing of premium receipts.
Outlook
The Company issued its full year 2020 earnings guidance,
including GAAP earnings per diluted share of $11.20 - $11.70 and
premium revenue growth of 7.4%.
Full year guidance highlights:
- Medicaid after-tax margins are expected to perform well
benefiting from stable rate and cost trend environments.
- Medicare after-tax margins are expected to be strong despite
the impact of the Health Insurer Fee.
- Marketplace after-tax margins are expected to be lower
reflecting pricing actions taken for the year.
Full year guidance reflects the following:
- The reintroduction of the Health Insurer Fee in 2020 with an
impact of approximately $0.30 per diluted share.
- Steady state in Texas for the full year 2020. The Company is
currently exercising its protest rights on the recently announced
STAR+PLUS RFP award. The Company believes that the effective date
of the new contract would be no earlier than January 1, 2021.
- The YourCare Health Plan and NextLevel Health Partners
acquisitions are not included in guidance as the transactions have
not closed. Together they have over $500 million in annualized
premium revenue.
Full Year 2020 Guidance
(1)
Premium Revenue
~$17.4B
Medicaid
~$13.3B
Medicare
~$2.5B
Marketplace
~$1.6B
Premium Tax Revenue
~$565M
Health Insurer Fees Reimbursed
~$280M
Total Revenue
~$18.3B
Interest Expense
~$85M
Net Income
$674M - $704M
EPS - Diluted
$11.20 - $11.70
Diluted Shares
~60.2M
Total Membership
~3.4M
Medicaid and Medicare
~3.1M
Marketplace
~310K
Ratios:
MCR
86.2% - 86.4%
G&A Ratio
~7.2%
Effective Tax Rate
30.8% - 31.1%
After-Tax Margin
3.7% - 3.8%
Medicaid
3.2% - 3.4%
Medicare
5.6% - 5.7%
Marketplace
4.7% - 4.9%
___________________________
(1) All amounts are rounded and
approximations.
Press Release Format
In an effort to streamline its earnings release, beginning in
the first quarter of 2020, the Company will report its financial
data by government program as seen on page 9, and schedules on
pages 14 - 20 will no longer be published.
Conference Call
Management will host a conference call and webcast to discuss
Molina Healthcare’s fourth quarter and year-end 2019 results at
8:00 a.m. Eastern time on Tuesday, February 11, 2020. The number to
call for the interactive teleconference is (877) 883-0383 and the
confirmation number is 6197632. A telephonic replay of the
conference call will be available through Tuesday, February 18,
2020, by dialing (877) 344-7529 and entering confirmation number
10137536. A live audio broadcast of this conference call will be
available on Molina Healthcare’s website, molinahealthcare.com. A
30-day online replay will be available approximately an hour
following the conclusion of the live broadcast.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed
healthcare services under the Medicaid and Medicare programs and
through the state insurance marketplaces. Through its locally
operated health plans, Molina Healthcare served approximately 3.3
million members as of December 31, 2019. For more information about
Molina Healthcare, please visit molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This earnings release contains forward-looking statements
regarding the Company’s 2020 guidance, as well as its plans,
expectations, and anticipated future events. Actual results could
differ materially due to numerous known and unknown risks and
uncertainties. Those risks and uncertainties are discussed in the
section entitled “Risk Factors,” and the section entitled
“Forward-Looking Statements” in our Annual Report on Form 10-K for
the year ended December 31, 2018, and our most recent Quarterly
Report on Form 10-Q for the quarter ended September 30, 2019, which
are on file with the SEC. Additional information will also be set
forth in our Annual Report on Form 10-K for the year ended December
31, 2019.
These reports can be accessed under the investor relations tab
of the Company’s website or on the SEC’s website at sec.gov. Given
these risks and uncertainties, the Company can give no assurances
that its forward-looking statements will prove to be accurate, or
that any other results or events projected or contemplated by its
forward-looking statements will in fact occur, and the Company
cautions investors not to place undue reliance on these statements.
All forward-looking statements in this release represent the
Company’s judgment as of February 10, 2020, and, except as
otherwise required by law, the Company disclaims any obligation to
update any forward-looking statements to conform the statement to
actual results or changes in its expectations.
UNAUDITED CONSOLIDATED
STATEMENTS OF INCOME
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
4,123
$
4,438
$
16,208
$
17,612
Premium tax revenue
122
97
489
417
Health insurer fees reimbursed
—
81
—
329
Service revenue
—
16
—
407
Investment income and other revenue
29
32
132
125
Total revenue
4,274
4,664
16,829
18,890
Operating expenses:
Medical care costs
3,545
3,775
13,905
15,137
General and administrative expenses
343
335
1,296
1,333
Premium tax expenses
122
97
489
417
Health insurer fees
—
87
—
348
Depreciation and amortization
21
23
89
99
Restructuring costs
1
8
6
46
Cost of service revenue
—
15
—
364
Total operating expenses
4,032
4,340
15,785
17,744
Loss on sales of subsidiaries, net of
gain
—
(52
)
—
(15
)
Operating income
242
272
1,044
1,131
Other expenses, net:
Interest expense
20
24
87
115
Other (income) expenses, net
—
(8
)
(15
)
17
Total other expenses, net
20
16
72
132
Income before income tax expense
222
256
972
999
Income tax expense
54
55
235
292
Net income
$
168
$
201
$
737
$
707
Net income per share, diluted
$
2.67
$
3.01
$
11.47
$
10.61
Diluted weighted average shares
outstanding
63.0
66.6
64.2
66.6
Operating Statistics:
Medical care ratio
86.0
%
85.1
%
85.8
%
85.9
%
G&A ratio
8.0
%
7.2
%
7.7
%
7.1
%
Premium tax ratio
2.9
%
2.2
%
2.9
%
2.3
%
Effective income tax rate
24.3
%
21.4
%
24.2
%
29.2
%
After-tax margin
3.9
%
4.3
%
4.4
%
3.7
%
Medicaid
3.6
%
3.6
%
3.2
%
2.4
%
Medicare
5.5
%
8.0
%
6.7
%
4.8
%
Marketplace
4.5
%
15.4
%
10.3
%
16.4
%
CONSOLIDATED BALANCE
SHEETS
December 31,
2019
2018
Unaudited
(Dollars in millions, except
per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
2,452
$
2,826
Investments
1,946
1,681
Receivables
1,406
1,330
Prepaid expenses and other current
assets
134
149
Derivative asset
29
476
Total current assets
5,967
6,462
Property, equipment, and capitalized
software, net
385
241
Goodwill and intangible assets, net
172
190
Restricted investments
79
120
Deferred income taxes
79
117
Other assets
105
24
Total assets
$
6,787
$
7,154
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
1,854
$
1,961
Amounts due government agencies
664
967
Accounts payable and accrued
liabilities
455
390
Deferred revenue
249
211
Current portion of long-term debt
18
241
Derivative liability
29
476
Total current liabilities
3,269
4,246
Long-term debt
1,237
1,020
Finance lease liabilities
231
197
Other long-term liabilities
90
44
Total liabilities
4,827
5,507
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 62 million shares at each
of December 31, 2019, and December 31, 2018
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
175
643
Accumulated other comprehensive income
(loss)
4
(8
)
Retained earnings
1,781
1,012
Total stockholders’ equity
1,960
1,647
Total liabilities and stockholders'
equity
$
6,787
$
7,154
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
December 31,
2019
2018
(In millions)
Operating activities:
Net income
$
737
$
707
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
89
127
Deferred income taxes
10
(6
)
Share-based compensation
39
27
Amortization of convertible senior notes
and finance lease liabilities
5
22
(Gain) loss on debt repayment
(15
)
22
Loss on sales of subsidiaries, net of
gain
—
15
Non-cash restructuring costs
—
17
Other, net
(5
)
4
Changes in operating assets and
liabilities:
Receivables
(76
)
(530
)
Prepaid expenses and other current
assets
28
6
Medical claims and benefits payable
(107
)
(226
)
Amounts due government agencies
(303
)
(574
)
Accounts payable and accrued
liabilities
2
45
Deferred revenue
38
(21
)
Income taxes
(15
)
51
Net cash provided by (used in) operating
activities
427
(314
)
Investing activities:
Purchases of investments
(2,536
)
(1,444
)
Proceeds from sales and maturities of
investments
2,302
2,445
Purchases of property, equipment, and
capitalized software
(57
)
(30
)
Net cash received from sales of
subsidiaries
—
190
Other, net
(2
)
(18
)
Net cash (used in) provided by investing
activities
(293
)
1,143
Financing activities:
Repayment of principal amount of
convertible senior notes
(240
)
(362
)
Cash paid for partial settlement of
conversion option
(578
)
(623
)
Cash received for partial settlement of
call option
578
623
Cash paid for partial termination of
warrants
(514
)
(549
)
Proceeds from borrowings under term loan
facility
220
—
Common stock purchases
(47
)
—
Repayment of credit facility
—
(300
)
Other, net
29
18
Net cash used in financing activities
(552
)
(1,193
)
Net decrease in cash, cash equivalents,
and restricted cash and cash equivalents
(418
)
(364
)
Cash, cash equivalents, and restricted
cash and cash equivalents at beginning of period
2,926
3,290
Cash, cash equivalents, and restricted
cash and cash equivalents at end of period
$
2,508
$
2,926
HEALTH PLANS SEGMENT
MEMBERSHIP
As of December 31,
2019
2018
Ending Membership by Government
Program:
Medicaid
2,956,000
3,361,000
Medicare
101,000
98,000
Marketplace
274,000
362,000
3,331,000
3,821,000
Ending Membership by Health
Plan:
California
565,000
608,000
Florida (1)
132,000
313,000
Illinois
224,000
224,000
Michigan
362,000
383,000
New Mexico (1)
23,000
222,000
Ohio
288,000
302,000
Puerto Rico
176,000
252,000
South Carolina
131,000
120,000
Texas
341,000
423,000
Washington
832,000
781,000
Other (2)
257,000
193,000
3,331,000
3,821,000
__________________
(1) The Company’s Medicaid contracts in
New Mexico and in all but two regions in Florida terminated in late
2018 and early 2019. The Company continues to serve Medicare and
Marketplace members in both Florida and New Mexico, as well as
Medicaid members in two regions in Florida.
(2) “Other” includes the Idaho,
Mississippi, New York, Utah and Wisconsin health plans, which are
not individually significant to the Company’s consolidated
operating results.
HEALTH PLANS SEGMENT FINANCIAL
DATA — BY GOVERNMENT PROGRAM
(In millions, except
percentages)
Three Months Ended December
31,
2019
2018
Premium Revenue
Medical Care Costs
MCR (1)
Premium Revenue
Medical Care Costs
MCR (1)
Medicaid
$
3,227
$
2,818
87.3
%
$
3,430
$
3,046
88.8
%
Medicare
561
480
85.5
527
426
80.8
Marketplace
335
247
73.5
481
303
62.9
$
4,123
$
3,545
86.0
%
$
4,438
$
3,775
85.1
%
Year Ended December
31,
2019
2018
Premium Revenue
Medical Care Costs
MCR
Premium Revenue
Medical Care Costs
MCR
Medicaid
$
12,466
$
10,969
88.0
%
$
13,623
$
12,258
90.0
%
Medicare
2,243
1,913
85.3
2,074
1,752
84.5
Marketplace
1,499
1,023
68.2
1,915
1,127
58.9
$
16,208
$
13,905
85.8
%
$
17,612
$
15,137
85.9
%
__________________
(1) The MCR represents medical costs as a
percentage of premium revenue.
CHANGE IN MEDICAL CLAIMS AND BENEFITS
PAYABLE (Dollars in millions)
The Company’s claims liability includes a provision for adverse
claims deviation based on historical experience and other factors
including, but not limited to, variations in claims payment
patterns, changes in utilization and cost trends, known outbreaks
of disease, and large claims. The Company’s reserving methodology
is consistently applied across all periods presented. The amounts
displayed for “Components of medical care costs related to: Prior
period” represent the amount by which the original estimate of
claims and benefits payable at the beginning of the period was more
than the actual amount of the liability based on information
(principally the payment of claims) developed since that liability
was first reported. The following table presents the components of
the change in medical claims and benefits payable for the periods
indicated:
Year Ended December
31,
2019
2018
Medical claims and benefits payable,
beginning balance
$
1,961
$
2,192
Components of medical care costs related
to:
Current period
14,176
15,478
Prior period (1)
(271
)
(341
)
Total medical care costs
13,905
15,137
Change in non-risk and other provider
payables
24
13
Payments for medical care costs related
to:
Current period
12,554
13,671
Prior period
1,482
1,710
Total paid
14,036
15,381
Medical claims and benefits payable,
ending balance
$
1,854
$
1,961
Days in claims payable, fee for service
(2)
50
53
______________________
(1) The December 31, 2018, amounts include
the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81
million.
(2) Claims payable includes primarily
IBNP. It also includes certain fee-for-service payables reported in
“Other” medical claims and benefits payable amounting to $50
million and $43 million, as of December 31, 2019 and 2018,
respectively.
UNAUDITED NON-GAAP FINANCIAL
MEASURES
The Company uses non-generally accepted accounting principles,
or non-GAAP, financial measures as supplemental metrics in
evaluating the Company’s financial performance, making financing
and business decisions, and forecasting and planning for future
periods. For these reasons, management believes such measures are
useful supplemental measures to investors in comparing the
Company’s performance to the performance of other public companies
in the health care industry. These non-GAAP financial measures
should be considered as supplements to, and not as substitutes for
or superior to, GAAP measures. See further information regarding
non-GAAP measures below the tables.
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
(In millions)
Net income
$
168
$
201
$
737
$
707
Adjustments:
Depreciation, and amortization of
intangible assets and capitalized software
21
23
89
118
Interest expense
20
24
87
115
Income tax expense
54
55
235
292
EBITDA
$
263
$
303
$
1,148
$
1,232
Adjustments made to GAAP measures used to calculate the non-GAAP
measures used in this news release follow:
Earnings before interest, taxes, depreciation and
amortization (“EBITDA”): Net income on a GAAP basis less
depreciation, and amortization of intangible assets and capitalized
software, interest expense and income tax expense. The Company
believes that EBITDA is helpful in assessing the Company’s ability
to meet the cash demands of its operating units.
UNAUDITED NON-GAAP FINANCIAL
MEASURES CONTINUED
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
(In millions, except per diluted
share amounts)
Net income
$
168
$
2.67
$
201
$
3.01
$
737
$
11.47
$
707
$
10.61
Adjustments:
Amortization of intangible assets
4
0.06
6
0.08
17
0.27
22
0.32
(Gain) loss on debt repayment
—
—
(3
)
(0.05
)
(15
)
(0.24
)
22
0.33
Restructuring costs
1
0.02
8
0.12
6
0.10
46
0.68
Loss on sales of subsidiaries, net of
gain
—
—
52
0.78
—
—
15
0.23
Subtotal, adjustments
5
0.08
63
0.93
8
0.13
105
1.56
Income tax effect (1)
(1
)
(0.02
)
(23
)
(0.34
)
(2
)
(0.03
)
(30
)
(0.43
)
Adjustments, net of tax effect
4
0.06
40
0.59
6
0.10
75
1.13
Adjusted net income
$
172
$
2.73
$
241
$
3.60
$
743
$
11.57
$
782
$
11.74
________________________
(1) Income tax effect of adjustments
calculated at the blended federal and state statutory tax rate of
22.6% and 22% for 2019 and 2018, respectively.
Adjustments made to GAAP measures used to calculate the non-GAAP
measures used in this news release follow:
Adjusted net income: Net income on a GAAP basis less
amortization of intangible assets, gain or loss on debt repayment,
restructuring costs, loss on sales of subsidiaries, and the
aggregate income tax effect calculated at the statutory tax rate.
The Company believes that adjusted net income is helpful in
assessing the Company’s financial performance exclusive of the
non-cash impact of the amortization of purchased intangibles and
the impact of certain expenses and other items that management
believes are not indicative of longer-term business trends and
operations.
Adjusted net income per diluted share: Adjusted net
income divided by weighted average common shares outstanding on a
fully diluted basis.
Beginning in the first quarter of 2020, the Company will no
longer publish the tables that follow in its earnings
announcements, through the last page of this news release.
HEALTH PLANS SEGMENT
MEMBERSHIP
As of December 31,
2019
2018
Ending Membership by Government
Program:
TANF and CHIP
1,987,000
2,295,000
Medicaid Expansion
605,000
660,000
ABD
364,000
406,000
Total Medicaid
2,956,000
3,361,000
MMP - Integrated
58,000
54,000
Medicare Special Needs Plans
43,000
44,000
Total Medicare
101,000
98,000
Total Medicaid and Medicare
3,057,000
3,459,000
Marketplace
274,000
362,000
3,331,000
3,821,000
UNAUDITED SELECTED FINANCIAL
DATA
(In millions, except
percentages and per-member per-month amounts)
HEALTH PLANS SEGMENT FINANCIAL
DATA — BY GOVERNMENT PROGRAM
Member Months (1)
Premium Revenue
Medical Care Costs
MCR (2)
Medical Margin
Total
PMPM
Total
PMPM
Three Months Ended December
31, 2019
TANF and CHIP
6.1
$
1,244
$
206.74
$
1,117
$
185.79
89.9
%
$
127
Medicaid Expansion
1.8
720
395.37
608
333.59
84.4
112
ABD
1.1
1,263
1,150.24
1,093
995.29
86.5
170
Total Medicaid
9.0
3,227
361.16
2,818
315.41
87.3
409
MMP
0.2
396
2,284.37
343
1,981.07
86.7
53
Medicare
0.1
165
1,264.10
137
1,044.28
82.6
28
Total Medicare
0.3
561
1,846.15
480
1,578.71
85.5
81
Total Medicaid and Medicare
9.3
3,788
409.99
3,298
356.95
87.1
490
Marketplace
0.8
335
404.18
247
297.17
73.5
88
10.1
$
4,123
$
409.51
$
3,545
$
352.03
86.0
%
$
578
Three Months Ended December
31, 2018
TANF and CHIP
7.1
$
1,363
$
189.86
$
1,203
$
167.61
88.3
%
$
160
Medicaid Expansion
2.0
700
349.05
630
314.34
90.1
70
ABD
1.3
1,367
1,094.14
1,213
970.49
88.7
154
Total Medicaid
10.4
3,430
328.79
3,046
292.00
88.8
384
MMP
0.2
366
2,263.41
300
1,855.34
82.0
66
Medicare
0.1
161
1,206.96
126
944.65
78.3
35
Total Medicare
0.3
527
1,784.58
426
1,442.57
80.8
101
Total Medicaid and Medicare
10.7
3,957
368.93
3,472
323.72
87.7
485
Marketplace
1.1
481
437.79
303
275.56
62.9
178
11.8
$
4,438
$
375.33
$
3,775
$
319.24
85.1
%
$
663
Year Ended December 31,
2019
TANF and CHIP
24.4
$
4,838
$
198.66
$
4,258
$
174.88
88.0
%
$
580
Medicaid Expansion
7.2
2,775
383.93
2,418
334.53
87.1
357
ABD
4.4
4,853
1,111.09
4,293
982.83
88.5
560
Total Medicaid
36.0
12,466
346.79
10,969
305.16
88.0
1,497
MMP
0.7
1,589
2,346.87
1,377
2,033.77
86.7
212
Medicare
0.5
654
1,268.74
536
1,039.02
81.9
118
Total Medicare
1.2
2,243
1,880.79
1,913
1,603.73
85.3
330
Total Medicaid and Medicare
37.2
14,709
396.05
12,882
346.87
87.6
1,827
Marketplace
3.6
1,499
411.89
1,023
281.04
68.2
476
40.8
$
16,208
$
397.47
$
13,905
$
340.99
85.8
%
$
2,303
Year Ended December 31,
2018
TANF and CHIP
29.4
$
5,508
$
187.04
$
4,908
$
166.66
89.1
%
$
600
Medicaid Expansion
8.1
2,884
356.81
2,587
320.11
89.7
297
ABD
5.0
5,231
1,049.26
4,763
955.22
91.0
468
Total Medicaid
42.5
13,623
320.43
12,258
288.31
90.0
1,365
MMP
0.7
1,443
2,192.58
1,241
1,885.59
86.0
202
Medicare
0.5
631
1,180.46
511
955.81
81.0
120
Total Medicare
1.2
2,074
1,738.85
1,752
1,468.77
84.5
322
Total Medicaid and Medicare
43.7
15,697
359.14
14,010
320.53
89.2
1,687
Marketplace
4.9
1,915
392.97
1,127
231.33
58.9
788
48.6
$
17,612
$
362.54
$
15,137
$
311.59
85.9
%
$
2,475
__________________
(1) A member month is defined as the
aggregate of each month’s ending membership for the period
presented.
(2) The MCR represents medical costs as a
percentage of premium revenue.
HEALTH PLANS SEGMENT FINANCIAL
DATA — MEDICAID AND MEDICARE
Member Months
Premium Revenue
Medical Care Costs
MCR
Medical Margin
Total
PMPM
Total
PMPM
Three Months Ended December
31, 2019
California
1.5
$
531
$
334.81
$
414
$
261.66
78.2
%
$
117
Florida
0.3
125
426.72
109
371.79
87.1
16
Illinois
0.7
276
412.06
240
357.32
86.7
36
Michigan
1.0
390
362.57
321
298.90
82.4
69
Ohio
0.9
615
691.25
562
631.53
91.4
53
Puerto Rico
0.5
133
254.48
119
229.44
90.2
14
South Carolina
0.4
156
394.94
133
334.33
84.7
23
Texas
0.6
613
952.36
561
870.16
91.4
52
Washington
2.5
645
266.70
569
235.58
88.3
76
Other (1) (2)
0.9
304
406.59
270
360.51
88.7
34
9.3
$
3,788
$
409.99
$
3,298
$
356.95
87.1
%
$
490
Three Months Ended December
31, 2018
California
1.8
$
485
$
282.83
$
425
$
247.56
87.5
%
$
60
Florida
1.0
370
376.80
345
351.20
93.2
25
Illinois
0.7
242
361.29
196
291.63
80.7
46
Michigan
1.1
389
348.47
320
287.33
82.5
69
New Mexico (2)
0.6
305
489.86
265
425.85
86.9
40
Ohio
0.9
607
662.51
527
575.69
86.9
80
Puerto Rico
0.8
147
173.81
135
158.97
91.5
12
South Carolina
0.3
126
352.67
106
299.17
84.8
20
Texas
0.6
581
865.75
538
801.34
92.6
43
Washington
2.3
512
225.52
455
200.72
89.0
57
Other (1)
0.6
193
344.31
160
283.96
82.5
33
10.7
$
3,957
$
368.93
$
3,472
$
323.72
87.7
%
$
485
Year Ended December 31,
2019
California
6.4
$
2,039
$
313.75
$
1,700
$
261.74
83.4
%
$
339
Florida
1.3
543
414.29
483
368.81
89.0
60
Illinois
2.7
1,002
377.13
872
328.11
87.0
130
Michigan
4.3
1,589
368.73
1,311
304.22
82.5
278
Ohio
3.6
2,450
684.74
2,215
619.03
90.4
235
Puerto Rico
2.3
474
204.88
420
181.85
88.8
54
South Carolina
1.6
583
375.13
511
328.58
87.6
72
Texas
2.6
2,402
920.94
2,184
837.05
90.9
218
Washington
9.6
2,513
263.13
2,260
236.63
89.9
253
Other (1) (2)
2.8
1,114
403.47
926
335.31
83.1
188
37.2
$
14,709
$
396.05
$
12,882
$
346.87
87.6
%
$
1,827
Year Ended December 31,
2018
California
7.1
$
1,931
$
273.59
$
1,724
$
244.21
89.3
%
$
207
Florida
4.2
1,517
360.98
1,414
336.43
93.2
103
Illinois
2.5
793
322.87
670
272.61
84.4
123
Michigan
4.5
1,550
344.42
1,303
289.53
84.1
247
New Mexico (2)
2.6
1,241
474.10
1,140
435.65
91.9
101
Ohio
3.7
2,277
608.29
2,001
534.59
87.9
276
Puerto Rico
3.7
696
186.59
636
170.45
91.4
60
South Carolina
1.4
495
351.38
429
304.85
86.8
66
Texas
2.7
2,296
839.70
2,092
765.12
91.1
204
Washington
9.1
2,178
240.42
1,999
220.72
91.8
179
Other (1)
2.2
723
329.06
602
273.55
83.1
121
43.7
$
15,697
$
359.14
$
14,010
$
320.53
89.2
%
$
1,687
_______________
(1) “Other” includes the Idaho,
Mississippi, New York, Utah and Wisconsin health plans, which are
not individually significant to the Company’s consolidated
operating results.
(2) In 2019, “Other” includes the New
Mexico health plan. The New Mexico health plan’s Medicaid contract
terminated on December 31, 2018, and therefore its 2019 results are
not individually significant to the Company’s consolidated
operating results.
HEALTH PLANS SEGMENT FINANCIAL
DATA — MARKETPLACE
Member Months
Premium Revenue
Medical Care Costs
MCR
Medical Margin
Total
PMPM
Total
PMPM
Three Months Ended December
31, 2019
California
0.2
$
53
$
365.16
$
36
$
241.93
66.3
%
$
17
Florida
0.1
39
357.79
26
239.09
66.8
13
Michigan
0.1
8
497.43
5
302.84
60.9
3
Ohio
—
24
803.58
18
599.84
74.6
6
Texas
0.4
132
337.02
99
253.66
75.3
33
Washington
—
39
684.31
33
563.25
82.3
6
Other (1)
—
40
492.23
30
379.25
77.0
10
0.8
$
335
$
404.18
$
247
$
297.17
73.5
%
$
88
Three Months Ended December
31, 2018
California
—
$
48
$
322.39
$
36
$
248.84
77.2
%
$
12
Florida
0.1
62
526.44
32
278.60
52.9
30
Michigan
0.1
11
259.20
8
166.54
64.3
3
New Mexico
0.1
22
328.32
19
302.79
92.2
3
Ohio
0.1
27
512.33
20
366.62
71.6
7
Texas
0.7
269
440.81
153
250.66
56.9
116
Washington
—
44
697.31
35
536.80
77.0
9
Other (2)
—
(2
)
NM
—
NM
NM
(2
)
1.1
$
481
$
437.79
$
303
$
275.56
62.9
%
$
178
Year Ended December 31,
2019
California
0.7
$
227
$
364.82
$
137
$
218.06
59.8
%
$
90
Florida
0.5
191
382.52
107
214.19
56.0
84
Michigan
0.1
35
479.12
20
273.87
57.2
15
Ohio
0.1
103
802.29
71
556.15
69.3
32
Texas
1.7
589
342.57
430
250.40
73.1
159
Washington
0.2
182
730.31
130
522.15
71.5
52
Other (1)
0.3
172
494.05
128
368.08
74.5
44
3.6
$
1,499
$
411.89
$
1,023
$
281.04
68.2
%
$
476
Year Ended December 31,
2018
California
0.6
$
219
$
325.84
$
125
$
187.37
57.5
%
$
94
Florida
0.6
273
498.66
99
181.52
36.4
174
Michigan
0.2
51
250.69
31
150.11
59.9
20
New Mexico
0.3
115
403.55
74
260.29
64.5
41
Ohio
0.3
111
477.03
78
334.32
70.1
33
Texas
2.7
948
356.06
593
222.89
62.6
355
Washington
0.2
183
664.48
140
506.07
76.2
43
Other (2)
—
15
NM
(13
)
NM
NM
28
4.9
$
1,915
$
392.97
$
1,127
$
231.33
58.9
%
$
788
__________________
(1) “Other” includes the New Mexico, Utah
and Wisconsin health plans, which are not individually significant
to the Company’s consolidated operating results in 2019.
(2) “Other” includes the Utah and
Wisconsin health plans, where the Company did not participate in
the Marketplace in 2018. Therefore, the ratios for 2018 periods are
not meaningful (NM).
HEALTH PLANS SEGMENT FINANCIAL
DATA — TOTAL
Member Months
Premium Revenue
Medical Care Costs
MCR
Medical Margin
Total
PMPM
Total
PMPM
Three Months Ended December
31, 2019
California
1.7
$
584
$
337.37
$
450
$
259.99
77.1
%
$
134
Florida
0.4
164
407.98
135
335.71
82.3
29
Illinois
0.7
276
412.06
240
357.32
86.7
36
Michigan
1.1
398
364.51
326
298.95
82.0
72
Ohio
0.9
639
694.87
580
630.51
90.7
59
Puerto Rico
0.5
133
254.48
119
229.44
90.2
14
South Carolina
0.4
156
394.94
133
334.33
84.7
23
Texas
1.0
745
720.66
660
638.02
88.5
85
Washington
2.5
684
276.64
602
243.37
88.0
82
Other (1) (2)
0.9
344
414.93
300
362.34
87.3
44
10.1
$
4,123
$
409.51
$
3,545
$
352.03
86.0
%
$
578
Three Months Ended December
31, 2018
California
1.8
$
533
$
285.98
$
461
$
247.66
86.6
%
$
72
Florida
1.1
432
392.68
377
343.49
87.5
55
Illinois
0.7
242
361.29
196
291.63
80.7
46
Michigan
1.2
400
344.96
328
282.58
81.9
72
New Mexico (2)
0.7
327
474.44
284
414.10
87.3
43
Ohio
1.0
634
654.39
547
564.37
86.2
87
Puerto Rico
0.8
147
173.81
135
158.97
91.5
12
South Carolina
0.3
126
352.67
106
299.17
84.8
20
Texas
1.3
850
663.84
691
539.68
81.3
159
Washington
2.3
556
238.21
490
209.76
88.1
66
Other (1)
0.6
191
344.44
160
285.37
82.9
31
11.8
$
4,438
$
375.33
$
3,775
$
319.24
85.1
%
$
663
Year Ended December 31,
2019
California
7.1
$
2,266
$
318.22
$
1,837
$
257.91
81.0
%
$
429
Florida
1.8
734
405.52
590
326.11
80.4
144
Illinois
2.7
1,002
377.13
872
328.11
87.0
130
Michigan
4.4
1,624
370.57
1,331
303.71
82.0
293
Ohio
3.7
2,553
688.80
2,286
616.86
89.6
267
Puerto Rico
2.3
474
204.88
420
181.85
88.8
54
South Carolina
1.6
583
375.13
511
328.58
87.6
72
Texas
4.3
2,991
691.31
2,614
604.14
87.4
377
Washington
9.8
2,695
275.05
2,390
243.91
88.7
305
Other (1) (2)
3.1
1,286
413.61
1,054
338.98
82.0
232
40.8
$
16,208
$
397.47
$
13,905
$
340.99
85.8
%
$
2,303
Year Ended December 31,
2018
California
7.7
$
2,150
$
278.13
$
1,849
$
239.28
86.0
%
$
301
Florida
4.8
1,790
376.84
1,513
318.58
84.5
277
Illinois
2.5
793
322.87
670
272.61
84.4
123
Michigan
4.7
1,601
340.35
1,334
283.47
83.3
267
New Mexico (2)
2.9
1,356
467.17
1,214
418.44
89.6
142
Ohio
4.0
2,388
600.62
2,079
522.89
87.1
309
Puerto Rico
3.7
696
186.59
636
170.45
91.4
60
South Carolina
1.4
495
351.38
429
304.85
86.8
66
Texas
5.4
3,244
601.23
2,685
497.75
82.8
559
Washington
9.3
2,361
252.92
2,139
229.13
90.6
222
Other (1)
2.2
738
336.86
589
268.17
79.6
149
48.6
$
17,612
$
362.54
$
15,137
$
311.59
85.9
%
$
2,475
__________________
(1) “Other” includes the Idaho,
Mississippi, New York, Utah and Wisconsin health plans, which are
not individually significant to the Company’s consolidated
operating results.
(2) In 2019, “Other” includes the New
Mexico health plan. The New Mexico health plan’s Medicaid contract
terminated on December 31, 2018, and therefore its 2019 results are
not individually significant to the Company’s consolidated
operating results.
SELECTED FINANCIAL
DATA
The following table provides details of
the Company’s medical care costs for the periods indicated:
Three Months Ended December
31,
2019
2018
Amount
PMPM
% of Total
Amount
PMPM
% of Total
Fee for service
$
2,660
$
264.20
75.0
%
$
2,807
$
237.39
74.4
%
Pharmacy
427
42.43
12.0
493
41.68
13.1
Capitation
293
29.06
8.3
293
24.83
7.7
Other
165
16.34
4.7
182
15.34
4.8
$
3,545
$
352.03
100.0
%
$
3,775
$
319.24
100.0
%
Year Ended December
31,
2019
2018
Amount
PMPM
% of Total
Amount
PMPM
% of Total
Fee for service
$
10,453
$
256.34
75.1
%
$
11,278
$
232.15
74.5
%
Pharmacy
1,681
41.23
12.1
2,138
44.01
14.1
Capitation
1,149
28.17
8.3
1,184
24.38
7.8
Other
622
15.25
4.5
537
11.05
3.6
$
13,905
$
340.99
100.0
%
$
15,137
$
311.59
100.0
%
The following table provides details of
the Company’s medical claims and benefits payable as of the dates
indicated:
December 31,
2019
2018
Fee-for-service claims incurred but not
paid (IBNP)
$
1,406
$
1,562
Pharmacy payable
126
115
Capitation payable
55
52
Other (1)
267
232
$
1,854
$
1,961
______________________
(1) “Other” medical claims and benefits
payable include amounts payable to certain providers for which the
Company acts as an intermediary on behalf of various state agencies
without assuming financial risk. Such receipts and payments do not
impact the Company’s consolidated statements of income. As of
December 31, 2019 and 2018, the Company had recorded non-risk
provider payables of approximately $132 million and $107 million,
respectively.
SUMMARY OF NON-RUN RATE ITEMS
AFFECTING CURRENT QUARTER AND YEAR-TO-DATE FINANCIAL
RESULTS
(In millions, except per
diluted share amounts)
The table below summarizes the impact of
certain expenses and other items that management believes are not
indicative of longer-term business trends and operations. The
individual items presented below increase (decrease) income before
income tax expense.
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Amount
Per Diluted Share (1)
Amount
Per Diluted Share (1)
Amount
Per Diluted Share (1)
Amount
Per Diluted Share (1)
Gain (loss) on debt repayment
$
—
$
—
$
3
$
0.04
$
15
$
0.18
$
(22
)
$
(0.29
)
Restructuring costs
(1
)
(0.01
)
(8
)
(0.09
)
(6
)
(0.07
)
(46
)
(0.54
)
Loss on sales of subsidiaries, net of
gain
—
—
(52
)
(0.48
)
—
—
(15
)
(0.05
)
$
(1
)
$
(0.01
)
$
(57
)
$
(0.53
)
$
9
$
0.11
$
(83
)
$
(0.88
)
______________________
(1) Except for permanent differences
between GAAP and tax (such as certain expenses that are not
deductible for tax purposes), per diluted share amounts are
generally calculated at the statutory income tax rate of 22.6% and
22% for 2019 and 2018, respectively.
NON-GAAP FINANCIAL
MEASURES
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Net income
$
168
$
2.67
$
201
$
3.01
$
737
$
11.47
$
707
$
10.61
Adjustment:
Amortization of intangible assets
4
0.06
6
0.08
17
0.27
22
0.32
Income tax effect (1)
(1
)
(0.01
)
(1
)
(0.02
)
(4
)
(0.06
)
(5
)
(0.07
)
Adjustment, net of tax effect
3
0.05
5
0.06
13
0.21
17
0.25
Adjusted net income
$
171
$
2.72
$
206
$
3.07
$
750
$
11.68
$
724
$
10.86
________________________
(1) Income tax effect of adjustments
calculated at the blended federal and state statutory tax rate of
22.6% and 22% for 2019 and 2018, respectively.
Adjustments made to GAAP measures used to calculate the non-GAAP
measures used in this news release follow:
Adjusted net income: Net income on a GAAP basis less
amortization of intangible assets, net of income tax effect
calculated at the statutory tax rate. The Company believes that
adjusted net income is helpful in assessing the Company’s financial
performance exclusive of the non-cash impact of the amortization of
purchased intangibles.
Adjusted net income per diluted share: Adjusted net
income divided by weighted average common shares outstanding on a
fully diluted basis.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200210005765/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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