Increases Full Year 2021 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today
reported second quarter of 2021 GAAP earnings per diluted share of
$3.16 and adjusted earnings per diluted share of $3.40. Financial
results are summarized below:
Quarter ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
(In millions, except per-share
results)
Premium Revenue
$6,583
$4,372
$12,889
$8,676
Total Revenue
$6,800
$4,618
$13,322
$9,167
GAAP:
Net Income
$185
$276
$413
$454
EPS – Diluted
$3.16
$4.65
$7.05
$7.54
Medical Care Ratio (MCR)
88.4%
82.3%
87.6%
84.3%
G&A Ratio
7.1%
7.5%
7.2%
7.2%
After-tax Margin
2.7%
6.0%
3.1%
5.0%
Adjusted:
Net Income
$199
$285
$459
$469
EPS – Diluted
$3.40
$4.79
$7.83
$7.79
G&A Ratio
6.9%
7.5%
7.0%
7.2%
After-tax Margin
2.9%
6.2%
3.4%
5.1%
See the Reconciliation of Unaudited
Non-GAAP Financial Measures at the end of this release.
Quarter Highlights
- GAAP net income for the second quarter of 2021 was $185
million, or $3.16 per diluted share.
- Adjusted net income for the second quarter of 2021 was $199
million, or $3.40 per diluted share.
- As of June 30, 2021, the Company served approximately 4.7
million members, an increase of 1.1 million members, or 32%,
compared to June 30, 2020.
- Premium revenue was approximately $6.6 billion for the second
quarter of 2021, an increase of 51% compared to the second quarter
of 2020.
- The net effect of COVID decreased net income by approximately
$1.00 per diluted share in the second quarter of 2021.
- The Company increased its full year 2021 premium revenue
guidance to more than $25.0 billion, from its previous guidance of
more than $24.0 billion.
- The Company increased its full year 2021 adjusted earnings
guidance to no less than $13.25 per diluted share, from its
previous guidance of no less than $13.00 per diluted share.
“We are pleased with our second quarter and year to date results
as we continue to produce solid margin performance despite the
challenges created by the pandemic,” said Joseph Zubretsky,
president and CEO of Molina Healthcare. “We accomplished this while
generating approximately 50% year-over-year premium revenue growth
and successfully integrating businesses representing approximately
$5 billion in annual revenue.”
Premium Revenue Premium revenue was approximately $6.6
billion for the second quarter of 2021, an increase of 51% compared
to the second quarter of 2020. The higher premium revenue reflects
increased organic membership in Medicaid, Medicare, and
Marketplace, along with the impact of acquisitions that closed in
the second half of 2020.
Net Income Net income for the second quarter was $185
million, or $3.16 per diluted share, compared to $276 million, or
$4.65 per diluted share in the second quarter of 2020. Adjusted net
income for the second quarter was $199 million, or $3.40 per
diluted share, compared to $285 million, or $4.79 per diluted share
in the second quarter of 2020.
The year over year comparison reflects the negative impact from
the net effect of COVID in the second quarter of 2021 while, in
contrast, the prior year quarter was positively impacted by the net
effect of COVID.
Net income for the six months ended June 30, 2021 was $413
million, or $7.05 per diluted share, compared to $454 million, or
$7.54 per diluted share in the six months ended June 30, 2020.
Adjusted net income for the six months ended June 30, 2021 was $459
million, or $7.83 per diluted share, compared to $469 million, or
$7.79 per diluted share in the six months ended June 30, 2020.
Medical Care Ratio The consolidated MCR for the second
quarter was 88.4%, compared to 82.3% in the second quarter of 2020.
The net effect of COVID increased the consolidated MCR by 110 basis
points and impacted all three lines of business. In the prior year,
the net effect of COVID decreased the consolidated MCR by
approximately 350 basis points.
A year-over-year comparison is less meaningful than it would be
in a typical year. The second quarter of 2020 was the first full
quarter of the COVID pandemic, and was distorted by the significant
positive net effect of COVID that characterized that early phase of
the crisis. In contrast, the current quarter was negatively
impacted by the net effect of COVID. Therefore, a sequential MCR
comparison is more relevant.
On a sequential basis, the consolidated MCR for the second
quarter was 88.4%, compared to 86.8% in the first quarter of 2021.
The net effect of COVID increased the consolidated MCR by 110 basis
points in the second quarter of 2021 and was negligible the first
quarter.
- Medicaid MCR: Increased to 89.0% compared to 87.5% for
the first quarter of 2021. The increase in the MCR was primarily
due to the net effect of COVID.
- Medicare MCR: Decreased to 87.6% compared to 90.3% in
the first quarter of 2021. The decrease in the MCR was primarily
due to the lower negative net effect of COVID and improved
underlying performance compared to the first quarter.
- Marketplace MCR: Increased to 84.8% compared to 77.3%
for the first quarter of 2021. The impact from the net effect of
COVID in the second quarter was approximately 500 basis points,
consistent with the first quarter, due to continued COVID
utilization pressure in many geographies. The sequential increase
in the MCR primarily reflects normal seasonality.
General and Administrative Expense Ratio The G&A
ratio for the second quarter was 7.1%, compared to 7.5% for the
second quarter of 2020. The adjusted G&A ratio for the second
quarter was 6.9%, compared to 7.5% for the second quarter of 2020
reflecting disciplined cost management and the benefits of fixed
cost leverage produced by substantial revenue growth.
Balance Sheet Cash and investments at the parent company
amounted to $564 million as of June 30, 2021, compared to $644
million as of December 31, 2020. The decline was primarily due to
the Company’s share repurchase program.
Cash Flow Operating cash flow for the six months ended
June 30, 2021 amounted to $1,061 million and was higher compared to
the six months ended June 30, 2020, primarily due to growth in
operations and the net impact of timing differences in governmental
receivables and payables.
2021 Guidance The Company now expects its full year 2021
total revenue to be more than $26.0 billion, compared to the
previous guidance of more than $25.0 billion, an increase of
approximately 34% from the full year 2020.
Premium revenue guidance is now expected to be more than $25.0
billion, compared to the previous guidance of more than $24.0
billion, an increase of approximately 37% from the full year
2020.
The Company increased its full year 2021 adjusted earnings per
share guidance to be no less than $13.25 per share, compared to the
previous guidance of no less than $13.00.
Revised guidance reflects:
- Updated assumptions for the Public Health Emergency period, and
the associated pause on Medicaid membership redeterminations, which
is now expected to continue through the fourth quarter of
2021;
- Retention of pharmacy related premium in California, New York,
and Kentucky;
- Underlying outperformance;
- Offset by an increase in the estimated net effect of COVID by
$1.00 per share which is now expected to be approximately $2.50 per
share for the full year; and
- Continued caution in forecasting utilization trends in the
remaining six months of the year due to the COVID pandemic.
The impact of the Affinity and the Cigna Texas membership
acquisitions are not included.
See the Reconciliation of Unaudited Non-GAAP Financial Measures
at the end of this release.
Conference Call Management will host a conference call
and webcast to discuss Molina Healthcare’s second quarter 2021
results at 8:00 a.m. Eastern Time on Thursday, July 29, 2021. The
number to call for the interactive teleconference is (877) 883-0383
and the confirmation number is 5686734. A telephonic replay of the
conference call will be available through Thursday, August 12,
2021, by dialing (877) 344-7529 and entering confirmation number
10157375. A live audio broadcast of this conference call will be
available on Molina Healthcare’s website, molinahealthcare.com. A 30-day online replay will
be available approximately an hour following the conclusion of the
live broadcast.
About Molina Healthcare Molina Healthcare, Inc., a
FORTUNE 500 company, provides managed healthcare services under the
Medicaid and Medicare programs and through the state insurance
marketplaces. Through its locally operated health plans, Molina
Healthcare served approximately 4.7 million members as of June 30,
2021. For more information about Molina Healthcare, please visit
molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 This earnings release and the Company’s
accompanying oral remarks contain forward-looking statements
regarding its 2021 guidance, as well as its plans, expectations,
and the Company’s expectations regarding future developments.
Actual results could differ materially due to numerous known and
unknown risks and uncertainties. These risks and uncertainties are
discussed under the headings “Forward-Looking Statements,” and
“Risk Factors,” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2020, which is on file with the SEC, and
also in its Quarterly Report on Form 10-Q for the period ended June
30, 2021, which the Company expects to file on or about July 29,
2021.
These reports can be accessed under the investor relations tab
of the Company’s website or on the SEC’s website at sec.gov. Given these risks and uncertainties, the
Company can give no assurances that its forward-looking statements
will prove to be accurate, or that any other results or
developments projected or contemplated by its forward-looking
statements will in fact occur, and the Company cautions investors
not to place undue reliance on these statements. All
forward-looking statements in this release represent the Company’s
judgment as of July 28, 2021, and, except as otherwise required by
law, the Company disclaims any obligation to update any
forward-looking statement to conform the statement to actual
results or changes in its expectations.
MOLINA HEALTHCARE,
INC.
UNAUDITED CONSOLIDATED
STATEMENTS OF INCOME
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
6,583
$
4,372
$
12,889
$
8,676
Premium tax revenue
185
157
372
307
Health insurer fees reimbursed
—
71
—
137
Investment income
10
13
19
38
Other revenue
22
5
42
9
Total revenue
6,800
4,618
13,322
9,167
Operating expenses:
Medical care costs
5,819
3,598
11,293
7,314
General and administrative expenses
484
345
957
662
Premium tax expenses
185
157
372
307
Health insurer fees
—
71
—
139
Depreciation and amortization
31
21
64
41
Other
8
2
28
6
Total operating expenses
6,527
4,194
12,714
8,469
Operating income
273
424
608
698
Other expenses, net:
Interest expense
30
24
60
45
Other expense, net
—
5
—
5
Total other expenses, net
30
29
60
50
Income before income tax expense
243
395
548
648
Income tax expense
58
119
135
194
Net income
$
185
$
276
$
413
$
454
Net income per share – Diluted
$
3.16
$
4.65
$
7.05
$
7.54
Diluted weighted average shares
outstanding
58.4
59.4
58.5
60.2
Operating Statistics:
Medical care ratio
88.4
%
82.3
%
87.6
%
84.3
%
G&A ratio
7.1
%
7.5
%
7.2
%
7.2
%
Premium tax ratio
2.7
%
3.5
%
2.8
%
3.4
%
Effective income tax rate
24.2
%
30.0
%
24.7
%
29.9
%
After-tax margin
2.7
%
6.0
%
3.1
%
5.0
%
MOLINA HEALTHCARE,
INC.
CONSOLIDATED BALANCE
SHEETS
June 30,
December 31,
2021
2020
Unaudited
(Dollars in millions,
except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
4,608
$
4,154
Investments
2,241
1,875
Receivables
1,857
1,672
Prepaid expenses and other current
assets
168
175
Total current assets
8,874
7,876
Property, equipment, and capitalized
software, net
383
391
Goodwill and intangible assets, net
929
941
Restricted investments
145
136
Deferred income taxes
65
69
Other assets
134
119
Total assets
$
10,530
$
9,532
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
2,942
$
2,696
Amounts due government agencies
2,072
1,253
Accounts payable, accrued liabilities and
other
651
641
Deferred revenue
42
375
Total current liabilities
5,707
4,965
Long-term debt
2,129
2,127
Finance lease liabilities
223
225
Other long-term liabilities
101
119
Total liabilities
8,160
7,436
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 58 million shares at June
30, 2021, and 59 million shares at December 31, 2020
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
191
199
Accumulated other comprehensive income
26
37
Retained earnings
2,153
1,860
Total stockholders’ equity
2,370
2,096
Total liabilities and stockholders’
equity
$
10,530
$
9,532
MOLINA HEALTHCARE,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2021
2020
(in millions)
Operating activities:
Net income
$
413
$
454
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
64
41
Deferred income taxes
7
6
Share-based compensation
35
28
Loss on debt repayment
—
5
Other, net
10
(1)
Changes in operating assets and
liabilities:
Receivables
(192)
(174)
Prepaid expenses and other current
assets
(6)
(157)
Medical claims and benefits payable
272
106
Amounts due government agencies
792
201
Accounts payable, accrued liabilities and
other
(15)
259
Deferred revenue
(333)
(195)
Income taxes
14
184
Net cash provided by operating
activities
1,061
757
Investing activities:
Purchases of investments
(1,006)
(670)
Proceeds from sales and maturities of
investments
622
750
Purchases of property, equipment, and
capitalized software
(29)
(45)
Other, net
5
3
Net cash (used in) provided by investing
activities
(408)
38
Financing activities:
Common stock purchases
(128)
(453)
Common stock withheld to settle employee
tax obligations
(52)
(8)
Contingent consideration liabilities
settled
(20)
—
Proceeds from senior notes offering, net
of issuance costs
—
789
Repayment of term loan facility
—
(600)
Proceeds from borrowings under term loan
facility
—
380
Other, net
—
(45)
Net cash (used in) provided by financing
activities
(200)
63
Net increase in cash, cash equivalents,
and restricted cash and cash equivalents
453
858
Cash, cash equivalents, and restricted
cash and cash equivalents at beginning of period
4,223
2,508
Cash, cash equivalents, and restricted
cash and cash equivalents at end of period
$
4,676
$
3,366
MOLINA HEALTHCARE,
INC.
UNAUDITED SEGMENT DATA
(Dollars in millions)
June 30,
December 31,
June 30,
2021 (1)
2020
2020
Ending Membership by Segment:
Medicaid
3,928,000
3,599,000
3,122,000
Medicare
130,000
115,000
108,000
Marketplace
638,000
318,000
325,000
Total
4,696,000
4,032,000
3,555,000
(1) Approximately 200,000 members, from the Magellan Complete
Care acquisition that closed on December 31, 2020, are included in
the totals as of June 30, 2021, but not in prior periods.
Three Months Ended March
31,
2021
2020
Premium Revenue
Medical
Margin
MCR (1)
Premium Revenue
Medical
Margin
MCR (1)
Medicaid
$
4,840
$
604
87.5
%
$
3,286
$
365
88.9
%
Medicare
799
77
90.3
634
117
81.7
Marketplace
667
151
77.3
384
106
72.3
Consolidated
$
6,306
$
832
86.8
%
$
4,304
$
588
86.3
%
Three Months Ended June
30,
2021
2020
Premium Revenue
Medical
Margin
MCR (1)
Premium Revenue
Medical
Margin
MCR (1)
Medicaid
$
5,034
$
551
89.0
%
$
3,375
$
553
83.6
%
Medicare
814
101
87.6
630
125
80.0
Marketplace
735
112
84.8
367
96
74.0
Consolidated
$
6,583
$
764
88.4
%
$
4,372
$
774
82.3
%
Six Months Ended June
30,
2021
2020
Premium Revenue
Medical
Margin
MCR (1)
Premium Revenue
Medical
Margin
MCR (1)
Medicaid
$
9,874
$
1,155
88.3
%
$
6,661
$
918
86.2
%
Medicare
1,613
178
89.0
1,264
242
80.8
Marketplace
1,402
263
81.2
751
202
73.1
Consolidated
$
12,889
$
1,596
87.6
%
$
8,676
$
1,362
84.3
%
(1) The MCR represents medical costs as a percentage of premium
revenue.
MOLINA HEALTHCARE, INC. CHANGE IN MEDICAL
CLAIMS AND BENEFITS PAYABLE (Dollars in millions)
The Company’s claims liabilities include additional reserves to
account for moderately adverse conditions based on historical
experience and other factors including, but not limited to,
variations in claims payment patterns, changes in utilization and
cost trends, known outbreaks of disease, and large claims. The
Company’s reserving methodology is consistently applied across all
periods presented. The amounts displayed for “Components of medical
care costs related to: Prior year” represent the amounts by which
the original estimates of claims and benefits payable at the
beginning of the year were more than the actual liabilities based
on information (principally the payment of claims) developed since
those liabilities were first reported. The following table presents
the components of the change in medical claims and benefits payable
for the periods indicated:
Six Months Ended
June 30,
2021
2020
Unaudited
Medical claims and benefits payable,
beginning balance
$
2,696
$
1,854
Components of medical care costs related
to:
Current year
11,486
7,372
Prior year
(193)
(58)
Total medical care costs
11,293
7,314
Payments for medical care costs related
to:
Current year
9,023
5,688
Prior year
1,949
1,486
Total paid
10,972
7,174
Change in acquired balances
(26)
—
Change in non-risk and other provider
payables
(49)
(34)
Medical claims and benefits payable,
ending balance
$
2,942
$
1,960
Days in claims payable, fee for service
(1)
48
52
__________________
(1) Claims payable includes primarily claims incurred but not
paid, or IBNP. It also includes certain fee-for-service payables
reported in medical claims and benefits payable amounting to $110
million and $71 million, as of June 30, 2021, and 2020,
respectively.
MOLINA HEALTHCARE, INC. RECONCILIATION OF
UNAUDITED NON-GAAP FINANCIAL MEASURES (In millions, except per
diluted share amounts)
The Company believes that certain non-GAAP (generally accepted
accounting principles) financial measures are useful supplemental
measures to investors in comparing the Company’s performance to the
performance of other public companies in the health care industry.
The non-GAAP financial measures are also used internally to enable
management to assess the Company’s performance consistently over
time. These non-GAAP financial measures, presented below, should be
considered as supplements to, and not as substitutes for or
superior to, GAAP measures.
Adjustments represent additions and deductions to GAAP
net income as indicated in the table below, which include the
non-cash impact of amortization of acquired intangible assets,
acquisition-related expenses, and the impact of certain expenses
and other items that management believes are not indicative of
longer-term business trends and operations.
Adjusted G&A Ratio represents the GAAP G&A ratio,
recognizing adjustments.
Adjusted net income represents GAAP net income
recognizing the adjustments, net of tax. The Company believes that
adjusted net income is helpful to investors in assessing the
Company’s financial performance.
Adjusted net income per diluted share represents adjusted
net income divided by weighted average common shares outstanding on
a fully diluted basis.
Adjusted after-tax margin represents adjusted net income,
divided by total revenue.
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Net income
$
185
$
3.16
$
276
$
4.65
$
413
$
7.05
$
454
$
7.54
Adjustments:
Acquisition-related expenses (1)
6
0.11
—
—
27
0.46
—
—
Amortization of intangible assets
12
0.20
4
0.06
24
0.40
8
0.13
Loss on debt repayment
—
—
5
0.08
—
—
5
0.08
Other (2)
—
—
2
0.04
9
0.16
6
0.11
Subtotal, adjustments
18
0.31
11
0.18
60
1.02
19
0.32
Income tax effect
(4)
(0.07)
(2)
(0.04)
(14)
(0.24)
(4)
(0.07)
Adjustments, net of tax
14
0.24
9
0.14
46
0.78
15
0.25
Adjusted net income
$
199
$
3.40
$
285
$
4.79
$
459
$
7.83
$
469
$
7.79
__________________
(1) Beginning in the third quarter of 2020, reflects
non-recurring costs associated with acquisitions, including various
transaction and integration costs. (2) The first half of 2021
includes change in premium deficiency reserves, loss on sale of
property, and restructuring costs. The first half of 2020 includes
restructuring costs.
MOLINA HEALTHCARE,
INC.
RECONCILIATION OF UNAUDITED
NON-GAAP FINANCIAL MEASURES (CONTINUED)
2021 GUIDANCE
Net income per diluted share (1)
$
11.65
Adjustments:
Acquisition-related expenses
1.13
Amortization of intangible assets
0.81
Other
0.16
Subtotal, adjustments
2.10
Income tax effect (2)
(0.50)
Adjustments, net of tax
1.60
Adjusted net income per diluted share
$
13.25
__________________
(1) Computations assume approximately 58.6 million
diluted weighted average shares outstanding. (2) Income tax
effect calculated at the statutory tax rate of 23.8%.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728005899/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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