Increases Full-Year 2022 Revenue and Earnings
Guidance
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today
reported first quarter 2022 GAAP earnings per diluted share of
$4.39 and adjusted earnings per diluted share of $4.90. Financial
results are summarized below:
Quarter ended
March 31,
2022
2021
(In millions, except per-share
results)
Premium Revenue
$7,531
$6,306
Total Revenue
$7,770
$6,522
GAAP:
Net Income
$258
$228
EPS – Diluted
$4.39
$3.89
Medical Care Ratio (MCR)
87.1%
86.8%
G&A Ratio
7.4%
7.3%
After-tax Margin
3.3%
3.5%
Adjusted:
Net Income
$288
$260
EPS – Diluted
$4.90
$4.44
G&A Ratio
7.1%
7.0%
After-tax Margin
3.7%
4.0%
See the Reconciliation of Unaudited
Non-GAAP Financial Measures at the end of this release.
Quarter Highlights
- As of March 31, 2022, the Company served approximately 5.1
million members, an increase of 480,000 members or 10% compared to
March 31, 2021.
- Premium revenue was approximately $7.5 billion for the first
quarter of 2022, an increase of 19% compared to the first quarter
of 2021.
- GAAP earnings were $4.39 per diluted share.
- Adjusted earnings were $4.90 per diluted share.
- The net effect of COVID decreased net income by approximately
$0.57 per diluted share in the first quarter of 2022.
- The Company increased its full year 2022 premium revenue
guidance to approximately $29.25 billion, compared to its previous
guidance of approximately $28.5 billion.
- The Company increased its full year 2022 adjusted earnings
guidance to no less than $17.10 per diluted share, compared to its
previous guidance of no less than $17.00 per diluted share.
“We are very pleased with our first quarter results,” said
Joseph Zubretsky, President and Chief Executive Officer. “We are
maintaining strong momentum across each dimension of our strategy
by delivering high quality health care for members, achieving
meaningful top line growth, and producing attractive margins. The
Company’s performance continues to validate our long-term strategy
and its value creation potential.”
Premium Revenue
Premium revenue was approximately $7.5 billion for the first
quarter of 2022, an increase of 19% compared to the first quarter
of 2021. The higher premium revenue reflects increased organic
membership in the Medicaid and Medicare lines of business and the
impact of acquisitions.
Net Income
Net income for the first quarter of 2022 was $4.39 per diluted
share, compared to $3.89 per diluted share in the first quarter of
2021. Adjusted net income for the first quarter of 2022 was $4.90
per diluted share, compared to $4.44 per diluted share in the first
quarter of 2021. The net effect of COVID decreased the first
quarter of 2022 GAAP and adjusted EPS by $0.57 per diluted share,
compared to a negligible impact in the first quarter of 2021.
Medical Care Ratio
The consolidated MCR for the first quarter of 2022 was 87.1%,
compared to 86.8% for first quarter of 2021. The net effect of
COVID added approximately 50 basis points to the consolidated MCR.
In the prior year, the net effect of COVID was negligible. In both
periods, the impact varied by line of business.
- The Medicaid MCR of 88.1% was in line with the Company’s
long-term target. The net effect of COVID added approximately 10
basis points in the quarter.
- The Medicare MCR of 86.5% was favorable to the Company’s
long-term target. The net effect of COVID added approximately 190
basis points in the quarter.
- The Marketplace MCR of 78.6% was in line with the Company’s
long-term target and reflects the successful execution of the
Company’s product repositioning strategy. The net effect of COVID
added approximately 270 basis points in the quarter.
General and Administrative Expense Ratio
The G&A ratio for the first quarter of 2022 was 7.4%,
compared to 7.3% for the first quarter of 2021. The adjusted
G&A ratio was 7.1% for the first quarter, compared to 7.0% for
the first quarter of 2021 reflecting temporary labor challenges and
one-time items.
Balance Sheet
Cash and investments at the parent company were $250 million as
of March 31, 2022, compared to $348 million as of December 31,
2021.
Cash Flow
Operating cash flow for the first quarter of 2022 was $363
million and was lower compared to the first quarter of 2021,
primarily due to the net impact of timing differences in government
receivables and payables and partially offset by an increase in net
earnings.
2022 Guidance
Premium revenue for full year 2022 is now expected to be
approximately $29.25 billion, compared to the previous guidance of
approximately $28.5 billion. The guidance increase of approximately
$750 million includes the extension of the Public Health Emergency
from April to July, higher Marketplace membership, and pass through
revenue payments.
The Company increased its full year 2022 adjusted earnings
guidance to no less than $17.10 per diluted share, compared to the
previous guidance of no less than $17.00 per diluted share,
reflecting:
- Strong first quarter 2022 performance and expected underlying
business strength in the rest of the year; and,
- Margin associated with the increase in premium revenue
guidance; partially offset by,
- A $0.50 per diluted share increase in projected net effect of
COVID.
See the Reconciliation of Unaudited Non-GAAP Financial Measures
at the end of this release.
Conference Call
Management is hosting a conference call and webcast to discuss
Molina Healthcare’s first quarter 2022 results at 8:00 a.m. Eastern
Time on Thursday, April 28, 2022. The number to call for the
interactive teleconference is (877) 883-0383 and the confirmation
number is 6168107. A telephonic replay of the conference call will
be available through Thursday, May 12, 2022, by dialing (877)
344-7529 and entering confirmation number 3378643. 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 (currently ranked
155), provides managed healthcare services under the Medicaid and
Medicare programs and through the state insurance marketplaces.
Molina Healthcare served approximately 5.1 million members as of
March 31, 2022, located across 19 states. For more information
about Molina Healthcare, please visit molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This earnings release and the Company’s accompanying oral
remarks contain forward-looking statements regarding its 2022
guidance, as well as its plans and expectations regarding future
developments. Actual results could differ materially due to
numerous known and unknown risks and uncertainties. These risks and
uncertainties are discussed under the headings “Forward-Looking
Statements,” and “Risk Factors,” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2021, which is on file
with the SEC, and also in its Quarterly Report on Form 10-Q for the
three months ended March 31, 2022, which the Company expects to
file on or about April 28, 2022.
These reports can be accessed under the investor relations tab
of the Company’s website or on the SEC’s website at sec.gov. Given
these risks and uncertainties, the Company can give no assurances
that its forward-looking statements will prove to be accurate, or
that any other results or developments projected or contemplated by
its forward-looking statements will in fact occur, and the Company
cautions investors not to place undue reliance on these statements.
All forward-looking statements in this release represent the
Company’s judgment as of April 27, 2022, and, except as otherwise
required by law, the Company disclaims any obligation to update any
forward-looking statement to conform the statement to actual
results or changes in its expectations.
MOLINA HEALTHCARE,
INC.
UNAUDITED CONSOLIDATED
STATEMENTS OF INCOME
Three Months Ended
March 31,
2022
2021
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
7,531
$
6,306
Premium tax revenue
208
187
Investment income
11
9
Other revenue
20
20
Total revenue
7,770
6,522
Operating expenses:
Medical care costs
6,563
5,474
General and administrative expenses
571
473
Premium tax expenses
208
187
Depreciation and amortization
40
33
Other
16
20
Total operating expenses
7,398
6,187
Operating income
372
335
Other expenses, net:
Interest expense
28
30
Total other expenses, net
28
30
Income before income tax expense
344
305
Income tax expense
86
77
Net income
$
258
$
228
Net income per share – Diluted
$
4.39
$
3.89
Diluted weighted average shares
outstanding
58.7
58.6
Operating Statistics:
Medical care ratio
87.1
%
86.8
%
G&A ratio
7.4
%
7.3
%
Premium tax ratio
2.7
%
2.9
%
Effective income tax rate
25.0
%
25.2
%
After-tax margin
3.3
%
3.5
%
MOLINA HEALTHCARE,
INC.
CONSOLIDATED BALANCE
SHEETS
March 31,
December 31,
2022
2021
Unaudited
(Dollars in millions, except
per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
4,804
$
4,438
Investments
2,988
3,202
Receivables
2,156
2,177
Prepaid expenses and other current
assets
198
247
Total current assets
10,146
10,064
Property, equipment, and capitalized
software, net
393
396
Goodwill and intangible assets, net
1,305
1,252
Restricted investments
221
212
Deferred income taxes
114
106
Other assets
181
179
Total assets
$
12,360
$
12,209
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
3,601
$
3,363
Amounts due government agencies
2,613
2,472
Accounts payable, accrued liabilities and
other
809
842
Deferred revenue
18
370
Total current liabilities
7,041
7,047
Long-term debt
2,174
2,173
Finance lease liabilities
217
219
Other long-term liabilities
134
140
Total liabilities
9,566
9,579
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 59 million shares at March
31, 2022, and 58 million shares at December 31, 2021
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
218
236
Accumulated other comprehensive loss
(81
)
(5
)
Retained earnings
2,657
2,399
Total stockholders’ equity
2,794
2,630
Total liabilities and stockholders’
equity
$
12,360
$
12,209
MOLINA HEALTHCARE,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
2022
2021
(In millions)
Operating activities:
Net income
$
258
$
228
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
40
33
Deferred income taxes
16
6
Share-based compensation
34
24
Other, net
(8
)
12
Changes in operating assets and
liabilities:
Receivables
21
(98
)
Prepaid expenses and other current
assets
(32
)
(15
)
Medical claims and benefits payable
263
168
Amounts due government agencies
137
432
Accounts payable, accrued liabilities and
other
(81
)
16
Deferred revenue
(352
)
(304
)
Income taxes
67
66
Net cash provided by operating
activities
363
568
Investing activities:
Purchases of investments
(403
)
(388
)
Proceeds from sales and maturities of
investments
513
308
Purchases of property, equipment, and
capitalized software
(23
)
(16
)
Other, net
(13
)
9
Net cash provided by (used in) investing
activities
74
(87
)
Financing activities:
Common stock withheld to settle employee
tax obligations
(52
)
(51
)
Contingent consideration liabilities
settled
(20
)
(20
)
Common stock purchases
—
(128
)
Other, net
(5
)
(8
)
Net cash used in financing activities
(77
)
(207
)
Net increase in cash, cash equivalents,
and restricted cash and cash equivalents
360
274
Cash, cash equivalents, and restricted
cash and cash equivalents at beginning of period
4,506
4,223
Cash, cash equivalents, and restricted
cash and cash equivalents at end of period
$
4,866
$
4,497
MOLINA HEALTHCARE,
INC.
UNAUDITED SEGMENT DATA
(Dollars in millions)
March 31,
December 31,
March 31,
2022
2021
2021
Ending Membership by Segment:
Medicaid
4,566,000
4,329,000
3,859,000
Medicare
148,000
142,000
126,000
Marketplace
371,000
728,000
620,000
Total
5,085,000
5,199,000
4,605,000
Three Months Ended March
31,
2022
2021
Premium Revenue
Medical Margin
MCR (1)
Premium Revenue
Medical Margin
MCR (1)
Medicaid
$
5,980
$
710
88.1
%
$
4,840
$
604
87.5
%
Medicare
943
128
86.5
799
77
90.3
Marketplace
608
130
78.6
667
151
77.3
Consolidated
$
7,531
$
968
87.1
%
$
6,306
$
832
86.8
%
______________________________
(1) The MCR represents medical costs as a percentage of premium
revenue.
MOLINA HEALTHCARE,
INC.
CHANGE IN MEDICAL CLAIMS AND
BENEFITS PAYABLE
(Dollars in millions)
The Company’s claims liabilities include
additional reserves to account for moderately adverse conditions
based on historical experience and other factors including, but not
limited to, variations in claims payment patterns, changes in
utilization and cost trends, known outbreaks of disease, and large
claims. The Company’s reserving methodology is consistently applied
across all periods presented. The amounts displayed for “Components
of medical care costs related to: Prior year” represent the amounts
by which the original estimates of claims and benefits payable at
the beginning of the year were more than the actual liabilities
based on information (principally the payment of claims) developed
since those liabilities were first reported. The following table
presents the components of the change in medical claims and
benefits payable for the periods indicated:
Three Months Ended
March 31,
2022
2021
Unaudited
Medical claims and benefits payable,
beginning balance
$
3,363
$
2,696
Components of medical care costs related
to:
Current year
6,769
5,668
Prior year
(206
)
(194
)
Total medical care costs
6,563
5,474
Payments for medical care costs related
to:
Current year
4,197
3,513
Prior year
2,199
1,781
Total paid
6,396
5,294
Acquired balances, net of post-acquisition
adjustments
(25
)
(25
)
Change in non-risk and other provider
payables
96
(12
)
Medical claims and benefits payable,
ending balance
$
3,601
$
2,839
Days in Claims Payable (1)
51
48
______________________________
(1) The Company calculates Days in Claims
Payable using claims incurred but not paid, or IBNP, and other
fee-for-service payables included in medical claims and benefits
payable, and quarterly fee-for-service related costs included in
medical care costs within the Company’s consolidated financial
statements.
MOLINA HEALTHCARE,
INC.
RECONCILIATION OF UNAUDITED
NON-GAAP FINANCIAL MEASURES
(In millions, except per
diluted share amounts)
The Company believes that certain non-GAAP
(generally accepted accounting principles) financial measures are
useful supplemental measures to investors in comparing the
Company’s performance to the performance of other public companies
in the health care industry. The non-GAAP financial measures are
also used internally to enable management to assess the Company’s
performance consistently over time. These non-GAAP financial
measures, presented below, should be considered as supplements to,
and not as substitutes for or superior to, GAAP measures.
Adjustments represent additions and
deductions to GAAP net income as indicated in the table below,
which include the non-cash impact of amortization of acquired
intangible assets, acquisition-related expenses, and the impact of
certain expenses and other items that management believes are not
indicative of longer-term business trends and operations.
Adjusted G&A Ratio represents
the GAAP G&A ratio, recognizing adjustments.
Adjusted net income represents GAAP
net income recognizing the adjustments, net of tax. The Company
believes that adjusted net income is helpful to investors in
assessing the Company’s financial performance.
Adjusted net income per diluted
share represents adjusted net income divided by weighted
average common shares outstanding on a fully diluted basis.
Adjusted after-tax margin
represents adjusted net income, divided by total revenue.
Three Months Ended March
31,
2022
2021
Amount
Per Diluted Share
Amount
Per Diluted Share
Net income
$
258
$
4.39
$
228
$
3.89
Adjustments:
Acquisition-related expenses (1)
19
0.33
21
0.36
Amortization of intangible assets
18
0.30
12
0.21
Other (2)
3
0.04
9
0.15
Subtotal, adjustments
40
0.67
42
0.72
Income tax effect
(10
)
(0.16
)
(10
)
(0.17
)
Adjustments, net of tax
30
0.51
32
0.55
Adjusted net income
$
288
$
4.90
$
260
$
4.44
______________________________
(1) Reflects non-recurring costs
associated with acquisitions, including various transaction and
integration costs.
(2) The three months ended March 31, 2022
includes certain non-recurring costs associated with disposal of
fixed assets. The three months ended March 31, 2021 includes change
in premium deficiency reserves, loss on sale of property, and
restructuring costs.
MOLINA HEALTHCARE,
INC.
RECONCILIATION OF UNAUDITED
NON-GAAP FINANCIAL MEASURES (CONTINUED)
2022 GUIDANCE
Amount
Per Diluted Share (2)
Net income
$
911
$
15.60
Adjustments:
Acquisition-related expenses
47
0.80
Amortization of intangible assets
66
1.13
Other
3
0.04
Subtotal, adjustments
116
1.97
Income tax effect (1)
(28
)
(0.47
)
Adjustments, net of tax
88
1.50
Adjusted net income per diluted share
$
999
$
17.10
______________________________
(1) Income tax effect calculated at the
statutory tax rate of approximately 23.9%.
(2) Computations assume approximately 58.4
million diluted weighted average shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427005789/en/
Investor Contact: Joseph Krocheski,
Joseph.Krocheski@molinahealthcare.com, 562-951-8382 Media
Contact: Caroline Zubieta,
Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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