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     385  0 Kommentare Molina Healthcare Announces Fourth Quarter and Year-End 2018 Results and Provides Fiscal Year 2019 Guidance

    Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter and year ended December 31, 2018, and provided its guidance for fiscal year 2019.

    “We have accomplished much over the last year as we executed the first phase of our margin recovery and sustainability plan,” said Joe Zubretsky, president and CEO. “Our full year results are a capstone to a very successful beginning of this margin turnaround and growth story.

    “Our guidance for 2019 reflects continued strength as we sustain our margins while beginning to execute the growth phase of our strategy.”

    Consolidated Results

    Fourth Quarter of 2018 Compared With Third Quarter of 2018

    Net income increased to $201 million, from $197 million in the third quarter of 2018. Net income per diluted share increased to $3.01, from $2.90 in the third quarter of 2018.

    Premium revenue increased $101 million, or 2%, in the fourth quarter of 2018 compared with the third quarter of 2018. The sequential increase was mainly in Medicaid and was attributed to a lower non-run rate reduction in revenues for retroactive California Medicaid Expansion risk corridor adjustments and favorable rate changes in other programs that include retroactivity back to earlier periods in 2018.

    Overall, the medical care ratio (“MCR”) decreased to 85.1%, from 87.4% in the third quarter of 2018. Excluding the $24 million retroactive California Medicaid Expansion risk corridor adjustment, related mainly to the 2017-18 state fiscal period, the MCR would have been 84.6% in the fourth quarter of 2018. Excluding the $57 million retroactive California Medicaid Expansion risk corridor adjustment related to the 2016-17 state fiscal period and a small benefit from the 2017 Marketplace cost sharing reduction (“CSR”), the MCR would have been 86.4% in the third quarter of 2018. The sequential improvement in the overall underlying MCR was due to decreases in the Medicaid, Medicare and Marketplace MCRs as follows:

    • The Medicaid MCR decreased slightly to 88.8%, from 90.5% in the third quarter of 2018. Excluding the $24 million retroactive California Medicaid Expansion risk corridor adjustment related mainly to the 2017-18 state fiscal period, the Medicaid MCR would have been 88.2% in the fourth quarter of 2018. Excluding the $57 million retroactive California Medicaid Expansion risk corridor adjustment related to the 2016-17 state fiscal period, the MCR would have been 89.0% in the third quarter of 2018. The sequential decrease was mainly due to improved performance in the Aged, Blind or Disabled (“ABD”) and Temporary Assistance for Needy Families (“TANF”) programs.
    • The Medicare MCR decreased to 80.8%, from 87.3% in the third quarter of 2018, mainly due to improved performance in our Medicare-Medicaid Integrated plans (“MMPs”).
    • The Marketplace MCR decreased to 62.9%, from 64.1% in the third quarter of 2018. Excluding the benefit of the 2017 CSR, the Marketplace MCR would have been 65.3% in the third quarter of 2018. The sequential decrease is mainly attributable to an increase in premium revenue.

    The general and administrative (“G&A”) expense ratio increased to 7.2%, from 6.6% in the third quarter of 2018, due to seasonally higher spending, including sales and marketing initiatives related to the open enrollment period for the Marketplace and Medicare programs.

    Fourth Quarter of 2018 Compared With Fourth Quarter of 2017

    Net income for the fourth quarter of 2018 was $201 million, compared with a net loss of $262 million for the fourth quarter of 2017. Net income per diluted share was $3.01 for the fourth quarter of 2018 compared with a net loss per diluted share of $4.59 reported for the fourth quarter of 2017. In the fourth quarter of 2017, we recorded impairment losses and restructuring costs of $342 million, or $4.03 net loss per diluted share.

    Capital Plan Progress

    In the fourth quarter of 2018, we repaid $62 million aggregate principal amount of our 1.125% Notes and entered into privately negotiated termination agreements to terminate the respective portion of the related 1.125% Call Option and 1.125% Warrants. Year to date, we have reduced the principal amount of outstanding debt by $759 million.

    Sale of Pathways Behavioral Health Subsidiary

    We closed on the sale of the Pathways behavioral health subsidiary in October 2018. As a result of this transaction, we recorded a net loss of $32 million, or $0.48 per diluted share.

    2019 Guidance

    The following table summarizes 2019 Guidance (1):

     
    Premium revenue ~$15.8B
    Premium tax revenue ~$375M
    Investment income and other revenue   ~$195M
    Total revenue ~$16.3B
    Medical care costs ~$13.7B
    Medical care ratio (2) 86.7% - 87.0%
    General and administrative expenses ~$1.2B
    G&A ratio (3) 7.5% - 7.7%
    Premium tax expenses ~$375M
    Depreciation and amortization ~$85M
    Interest expense and other expenses, net ~$100M
    Income before income taxes $790M - $840M
    Net income $600M - $630M
    EBITDA (4)

    $975M - $1,025M

    Effective tax rate 24.5% - 25.0%
    After-tax margin (3) 3.7% - 3.9%
    Diluted weighted average shares ~64.7M
    Net income per share $9.25 - $9.75
    End-of-year by membership by government program:
    Medicaid and Medicare 3.2M
    Marketplace 250K - 275K
     

    __________________

    (1)

    All amounts are estimates and do not include non-recurring significant items. Earnings per diluted share as shown is calculated on a GAAP basis; actual results may differ materially. See the Company’s risk factors as discussed in its 2018 Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.”

    (2)

    Medical care ratio represents medical care costs as a percentage of premium revenue.

    (3)

    G&A ratio represents general and administrative expenses as a percentage of total revenue. After-tax 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 2018 results at 8:30 a.m. Eastern time on Tuesday, February 12, 2019. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 2698825. A telephonic replay of the conference call will be available through Tuesday, February 19, 2019, by dialing (877) 344-7529 and entering confirmation number 10127491. A live audio broadcast of this conference call will be available on Molina Healthcare’s website, molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.

    About Molina Healthcare

    Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 3.8 million members as of December 31, 2018. For more information about Molina Healthcare, please visit molinahealthcare.com.

    Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

    This earnings release contains “forward-looking statements” regarding the Company’s 2018 revised guidance, as well as its plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the following:

    • the numerous political, judicial and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare,” including the ultimate outcome on appeal of the Texas et al. v. U.S. et al. matter;
    • the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk adjustment requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, and the adequacy of agreed rates;
    • 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;
    • effective management of the Company’s medical costs;
    • the Company’s 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 the Company’s efforts to retain existing or awarded government contracts, including the success of any requests for proposal protest filings or defenses;
    • the success of the Company’s profit improvement and maintenance initiatives, including the timing and amounts of the benefits realized, and administrative and medical cost savings achieved;
    • the Company’s ability to manage its operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of its care management initiatives;
    • the Company’s 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;
    • the Company’s 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;
    • the Company’s 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 medical cost corridor, 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 the Company’s ability to recognize revenue amounts associated therewith;
    • the Company’s ability to successfully recognize the intended cost savings and other intended benefits of outsourcing certain services and functions to third parties, and its ability to manage the risk that such third parties may not perform contracted functions and services in a timely, satisfactory and compliant manner;
    • cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
    • the success of the Company’s health plan in Puerto Rico, including the resolution of the debt crisis and the effect of the PROMESA law, and the impact of any future significant weather events;
    • the success and renewal of the Company’s 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 the Company’s health plans;
    • efforts by states to recoup previously paid and recognized premium amounts;
    • complications, member confusion, eligibility redeterminations, or enrollment backlogs related to the annual renewal of Medicaid coverage;
    • government audits, reviews, comment letters, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
    • changes with respect to the Company’s provider contracts and the loss of providers;
    • approval by state regulators of dividends and distributions by the Company’s health plan subsidiaries;
    • changes in funding under the Company’s 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, including litigation involving the ACA to which we ourselves are not a direct party;
    • the relatively small number of states in which we operate health plans, including the greater scale and revenues of the Company’s California, Ohio, Texas, and Washington health plans;
    • the availability of adequate financing on acceptable terms to fund and capitalize the Company’s expansion and growth, repay the Company’s outstanding indebtedness at maturity and meet its liquidity needs, including the interest expense and other costs associated with such financing;
    • the Company’s failure to comply with the financial or other covenants in its credit agreement or the indentures governing its outstanding notes;
    • the sufficiency of the Company’s funds on hand to pay the amounts due upon conversion or maturity of its outstanding notes;
    • the failure of a state in which we operate to renew its federal Medicaid waiver;
    • the loss of services of a key executive;
    • changes generally affecting the managed care industry;
    • increases in government surcharges, taxes, and assessments;
    • newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
    • the unexpected loss of the leadership of one or more of our senior executives;
    • increasing competition and consolidation in the Medicaid industry;

    and numerous other risk factors, including those discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at sec.gov. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by its forward-looking statements will in fact occur, and the Company cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of February 11, 2019, and the Company disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.

       
    MOLINA HEALTHCARE, INC.
    UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
     

    Three Months Ended

    December 31,

    Year Ended

    December 31,

    2018   2017 2018   2017

    (In millions, except per-share amounts)

    Revenue:
    Premium revenue $ 4,438 $ 4,689 $ 17,612 $ 18,854
    Service revenue 16 131 407 521
    Premium tax revenue 97 107 417 438
    Health insurer fees reimbursed 81 329
    Investment income and other revenue 32   22   125   70  
    Total revenue 4,664   4,949   18,890   19,883  
    Operating expenses:
    Medical care costs 3,775 4,251 15,137 17,073
    Cost of service revenue 15 123 364 492
    General and administrative expenses 335 367 1,333 1,594
    Premium tax expenses 97 107 417 438
    Health insurer fees 87 348
    Depreciation and amortization 23 28 99 137
    Restructuring and separation costs 8 73 46 234
    Impairment losses   269     470  

    Total operating expenses

    4,340   5,218   17,744   20,438  
    Loss on sales of subsidiaries, net of gain (52 )   (15 )  
    Operating income (loss) 272   (269 ) 1,131   (555 )
    Other expenses, net:
    Interest expense 24 33 115 118

    Other (income) expenses, net

    (8 ) 14   17   (61 )
    Total other expenses, net 16   47   132   57  
    Income (loss) before income tax expense (benefit) 256 (316 ) 999 (612 )
    Income tax expense (benefit) 55   (54 ) 292   (100 )
    Net income (loss) $ 201   $ (262 ) $ 707   $ (512 )
     
    Net income (loss) per diluted share $ 3.01   $ (4.59 ) $ 10.61   $ (9.07 )
     
    Diluted weighted average shares outstanding 66.6   57.1   66.6   56.4  
     
    Operating Statistics:
    Medical care ratio 85.1 % 90.7 % 85.9 % 90.6 %
    G&A ratio 7.2 % 7.4 % 7.1 % 8.0 %
    Premium tax ratio 2.2 % 2.2 % 2.3 % 2.3 %
    Effective income tax expense (benefit) rate 21.4 % (17.2 )% 29.2 % (16.4 )%
    After-tax margin 4.3 % (5.3 )% 3.7 % (2.6 )%
     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED CONSOLIDATED BALANCE SHEETS
     
    December 31,
    2018   2017
    (In millions,
    except share data)
    ASSETS
    Current assets:
    Cash and cash equivalents $ 2,826 $ 3,186
    Investments 1,681 2,524
    Restricted investments 169
    Receivables 1,330 871
    Prepaid expenses and other current assets 149 239
    Derivative asset 476   522  
    Total current assets 6,462 7,511
    Property, equipment, and capitalized software, net 241 342
    Goodwill and intangible assets, net 190 255
    Restricted investments 120 119
    Deferred income taxes 117 103
    Other assets 24   141  
    $ 7,154   $ 8,471  
     
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities:
    Medical claims and benefits payable $ 1,961 $ 2,192
    Amounts due government agencies 967 1,542
    Accounts payable and accrued liabilities 390 366
    Deferred revenue 211 282
    Current portion of long-term debt 241 653
    Derivative liability 476   522  
    Total current liabilities 4,246 5,557
    Long-term debt 1,020 1,318
    Lease financing obligations 197 198
    Other long-term liabilities 44   61  
    Total liabilities 5,507   7,134  
    Stockholders’ equity:
    Common stock, $0.001 par value, 150 million shares authorized; outstanding: 62 million shares at December 31, 2018 and 60 million shares at December 31, 2017
    Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding
    Additional paid-in capital 643 1,044
    Accumulated other comprehensive loss (8 ) (5 )
    Retained earnings 1,012   298  
    Total stockholders’ equity 1,647   1,337  
    $ 7,154   $ 8,471  
     
       
    MOLINA HEALTHCARE, INC.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
     
    Three Months Ended Year Ended
    December 31, December 31,
    2018   2017 2018   2017
    (In millions)
    Operating activities:
    Net income (loss) $ 201 $ (262 ) $ 707 $ (512 )
    Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
    Depreciation and amortization 23 39 127 178
    Deferred income taxes 26 (26 ) (6 ) (94 )
    Share-based compensation 7 8 27 46
    Non-cash restructuring costs 11 17 60
    Amortization of convertible senior notes and lease financing obligations 4 8 22 32
    Loss on sales of subsidiaries, net of gain 52 15
    Loss on debt extinguishment (3 ) 14 22 14
    Impairment losses 269 470
    Other, net (2 ) 8 4 21
    Changes in operating assets and liabilities:
    Receivables (23 ) 131 (530 ) 103
    Prepaid expenses and other current assets 123 (3 ) 6 (56 )
    Medical claims and benefits payable (82 ) (286 ) (226 ) 263
    Amounts due government agencies (63 ) 219 (574 ) 341
    Accounts payable and accrued liabilities (353 ) (102 ) 45 (12 )
    Deferred revenue 34 (187 ) (21 ) (34 )
    Income taxes (67 ) 6   51   (16 )
    Net cash (used in) provided by operating activities (123 ) (153 ) (314 ) 804  
    Investing activities:
    Purchases of investments (242 ) (803 ) (1,444 ) (2,697 )
    Proceeds from sales and maturities of investments 375 223 2,445 1,759
    Net cash received from sales of subsidiaries 190 190
    Purchases of property, equipment, and capitalized software (6 ) (1 ) (30 ) (86 )
    Other, net 5   (5 ) (18 ) (38 )
    Net cash provided by (used in) investing activities 322   (586 ) 1,143   (1,062 )
    Financing activities:
    Repayment of credit facility (300 )
    Repayment of principal amount of 1.125% Convertible Notes (62 ) (298 )
    Cash paid for partial settlement of 1.125% Conversion Option (146 ) (623 )
    Cash received for partial termination of 1.125% Call Option 146 623
    Cash paid for partial termination of 1.125% Warrants (130 ) (549 )
    Repayment of principal amount of 1.625% Convertible Notes (64 )
    Proceeds from senior notes offerings, net of issuance costs 325
    Proceeds from borrowings under credit facility 300
    Other, net 11   4   18   11  
    Net cash (used in) provided by financing activities (181 ) 4   (1,193 ) 636  
    Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents 18 (735 ) (364 ) 378
    Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period 2,908   4,025   3,290   2,912  
    Cash, cash equivalents, and restricted cash and cash equivalents at end of period $ 2,926   $ 3,290   $ 2,926   $ 3,290  
     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP
     
    As of December 31,
    2018   2017   2016
    Ending Membership by Government Program:
    Temporary Assistance for Needy Families (“TANF”) and Children’s Health Insurance Program (“CHIP”) 2,295,000 2,457,000 2,536,000
    Medicaid Expansion 660,000 668,000 673,000
    Aged, Blind or Disabled (“ABD”) 406,000   412,000   396,000
    Total Medicaid 3,361,000   3,537,000   3,605,000
    Medicare-Medicaid Plan (“MMP”) - Integrated 54,000 57,000 51,000
    Medicare Special Needs Plans 44,000   44,000   45,000
    Total Medicare 98,000   101,000   96,000
    Total Medicaid and Medicare 3,459,000   3,638,000   3,701,000
    Marketplace 362,000   815,000   526,000
    3,821,000   4,453,000   4,227,000
     
    Ending Membership by Health Plan:
    California 608,000 746,000 683,000
    Florida 313,000 625,000 553,000
    Illinois 224,000 165,000 195,000
    Michigan 383,000 398,000 391,000
    New Mexico 222,000 253,000 254,000
    Ohio 302,000 327,000 332,000
    Puerto Rico 252,000 314,000 330,000
    South Carolina 120,000 116,000 109,000
    Texas 423,000 430,000 337,000
    Washington 781,000 777,000 736,000
    Other (1) 193,000   302,000   307,000
    3,821,000   4,453,000   4,227,000
     

    __________________

    (1)

    “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.

     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

    BY GOVERNMENT PROGRAM

    (In millions, except percentages and per-member per-month amounts)

     
    Three Months Ended December 31, 2018
    Member

    Months (1)

      Premium Revenue   Medical Care Costs   MCR (2)  

    Medical

    Margin

    Total   PMPM Total   PMPM
    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  
     
    Three Months Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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  
    Total Medicaid and Medicare 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  
     

    __________________

    (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—

    BY GOVERNMENT PROGRAM

    (In millions, except percentages and per-member per-month amounts)

     
    Year Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR  

    Medical

    Margin

    Total   PMPM Total   PMPM
    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
     
    Year Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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
    Total Medicaid and Medicare 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
     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
    MEDICAID AND MEDICARE BY HEALTH PLAN

    (In millions, except percentages and per-member per-month amounts)

     
    Three Months Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR  

    Medical

    Margin

    Total   PMPM Total   PMPM
    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 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
     
    Three Months Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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
    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
    Washington 2.2 610 275.76 540 243.70 88.4 70
    Other 0.6   164   292.88 144   256.26 87.5 20
    11.0   $ 4,024   $ 366.18 $ 3,573   $ 325.12 88.8 % $ 451
     

    __________________

    (1)

    “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.

     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
    MEDICAID AND MEDICARE BY HEALTH PLAN

    (In millions, except percentages and per-member per-month amounts)

     
    Year Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR  

    Medical

    Margin

    Total   PMPM Total   PMPM
    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 2.6 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 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  
     
    Year Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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
    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
    Washington 8.9 2,445 275.64 2,143 241.55 87.6 302
    Other 2.3   674   292.92 598   259.85 88.7 76  
    44.4   $ 15,886   $ 357.68 $ 14,458   $ 325.53 91.0 % $ 1,428  
     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
    MARKETPLACE BY HEALTH PLAN

    (In millions, except percentages and per-member per-month amounts)

     
    Three Months Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR

     

     

    Medical

    Margin

    Total   PMPM Total   PMPM  
    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 (1)   (2 ) NM   NM NM (2 )
    1.1   $ 481   $ 437.79 $ 303   $ 275.56 62.9 % $ 178  
     
    Three Months Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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 )
    Washington 0.1 40 321.91 28 233.26 72.5 12
    Other 0.3   130   364.63 108   305.05 83.7 22  
    2.4   $ 665   $ 268.39 $ 678   $ 273.92 102.1 % $ (13 )
     

    __________________

    (1)

    “Other” includes the Utah and Wisconsin health plans, where we did not participate in the Marketplace in 2018. Therefore, the ratios for 2018 periods are not meaningful (NM).

     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
    MARKETPLACE BY HEALTH PLAN

    (In millions, except percentages and per-member per-month amounts)

     
    Year Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR  

    Medical

    Margin

    Total   PMPM Total   PMPM  
    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   15   NM (13 ) NM NM 28
    4.9   $ 1,915   $ 392.97 $ 1,127   $ 231.33 58.9 % $ 788
     
    Year Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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
    Washington 0.5 163 317.39 156 304.74 96.0 7
    Other 1.6   540   340.13 499   314.21 92.4 41
    10.8   $ 2,968   $ 274.47 $ 2,615   $ 241.84 88.1 % $ 353
     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
    TOTAL BY HEALTH PLAN

    (In millions, except percentages and per-member per-month amounts)

     
    Three Months Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR  

    Medical

    Margin

    Total   PMPM Total   PMPM
    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 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
     
    Three Months Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs

    MCR

    Medical

    Margin

    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
    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
    Washington 2.3 650 278.21 568 243.15 87.4 82
    Other 0.9   294   320.77 252   275.23 85.8 42
    13.4   $ 4,689   $ 348.20 $ 4,251   $ 315.70 90.7 % $ 438
     

    __________________

    (1)

    “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.

     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
    TOTAL BY HEALTH PLAN

    (In millions, except percentages and per-member per-month amounts)

     
    Year Ended December 31, 2018
    Member

    Months

      Premium Revenue   Medical Care Costs   MCR  

    Medical

    Margin

    Total   PMPM Total   PMPM
    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 2.9 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 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  
     
    Year Ended December 31, 2017
    Member

    Months

    Premium Revenue Medical Care Costs MCR

    Medical

    Margin

    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
    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
    Washington 9.4 2,608 277.93 2,299 245.01 88.2 309
    Other 3.9   1,214   312.20 1,097   282.06 90.3 117  
    55.2   $ 18,854   $ 341.39 $ 17,073   $ 309.14 90.6 % $ 1,781  
     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED SELECTED 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,
    2018   2017
    Amount   PMPM   % of

    Total

    Amount   PMPM   % of

    Total

    Fee for service $ 2,807 $ 237.39 74.4 % $ 3,052 $ 226.66 71.8 %
    Pharmacy 493 41.68 13.1 659 48.88 15.4
    Capitation 293 24.83 7.7 338 25.13 8.0
    Other   182   15.34 4.8     202   15.03 4.8  
    $ 3,775 $ 319.24 100.0 % $ 4,251 $ 315.70 100.0 %
     
    Year Ended December 31,
    2018 2017
    Amount PMPM % of

    Total

    Amount PMPM % of

    Total

    Fee for service $ 11,278 $ 232.15 74.5 % $ 12,682 $ 229.63 74.3 %
    Pharmacy 2,138 44.01 14.1 2,563 46.40 15.0
    Capitation 1,184 24.38 7.8 1,360 24.63 8.0
    Other   537   11.05 3.6     468   8.48 2.7  
    $ 15,137 $ 311.59 100.0 % $ 17,073 $ 309.14 100.0 %
     
     

    The following table provides the details of our medical claims and benefits payable as of the dates indicated:

     
    December 31,
    2018   2017
    Fee-for-service claims incurred but not paid (IBNP) $ 1,562 $ 1,717
    Pharmacy payable 115 112
    Capitation payable 52 67
    Other (1) 232   296
    $ 1,961   $ 2,192

    ______________________

    (1)

    “Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of operations. As of December 31, 2018 and 2017, we had recorded non-risk provider payables of approximately $107 million and $122 million, respectively.

     
     
    MOLINA HEALTHCARE, INC.
    UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE

    (Dollars in millions)

     

    Our claims liability includes a provision for adverse claims deviation based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims. Our reserving methodology is consistently applied across all periods presented. The amounts displayed for “Components of medical care costs related to: Prior period” represent the amount by which our original estimate of claims and benefits payable at the beginning of the period was (more) less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:

     
    Year Ended December 31,
    2018   2017
    Medical claims and benefits payable, beginning balance $ 2,192 $ 1,929
    Components of medical care costs related to:
    Current period 15,478 17,037
    Prior period (1) (341 ) 36  
    Total medical care costs 15,137   17,073  
     
    Change in non-risk provider payables 13   (106 )
    Payments for medical care costs related to:
    Current period 13,671 15,130
    Prior period 1,710   1,574  
    Total paid 15,381   16,704  
    Medical claims and benefits payable, ending balance $ 1,961   $ 2,192  
     
    Days in claims payable, fee for service (2) 53 54
     

    ______________________

    (1)

    Includes 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 $43 million and $99 million, as of December 31, 2018 and 2017, respectively.

     
       
    MOLINA HEALTHCARE, INC.
    UNAUDITED SUMMARY OF SIGNIFICANT 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 items significant to our financial performance in the periods presented. The individual items presented below increase (decrease) income before income tax expense.

     

    Three Months Ended
    December 31, 2018

    Year Ended
    December 31, 2018

    Amount  

    Per
    Diluted
    Share (1)

    Amount  

    Per
    Diluted
    Share (1)

     
    Retroactive California Medicaid Expansion risk corridor $ (24 ) $ (0.28 ) $ (81 ) $ (0.95 )
    Marketplace risk adjustment, for 2017 dates of service 56 0.66
    Marketplace CSR subsidies, for 2017 dates of service 81 0.95
    Loss on sales of subsidiaries, net of gain (52 ) (0.48 ) (15 ) (0.05 )
    Restructuring costs (8 ) (0.09 ) (46 ) (0.54 )
    Gain (loss) on debt extinguishment 3   0.04   (22 ) (0.29 )
    $ (81 ) $ (0.81 ) $ (27 ) $ (0.22 )
     

    (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%.

     
       
    MOLINA HEALTHCARE, INC.
    UNAUDITED NON-GAAP FINANCIAL MEASURES

    (In millions, except per diluted share amounts)

     

    We use non-generally accepted accounting principles, or non-GAAP, financial measures as supplemental metrics in evaluating our financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing our performance to the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures. See further information regarding non-GAAP measures below the tables.

     

    Three Months Ended
    December 31,

    Year Ended
    December 31,
    2018   2017 2018   2017
     
    Net income (loss) $ 201 $ (262 ) $ 707 $ (512 )
    Adjustments:
    Depreciation, and amortization of intangible assets and capitalized software 23 36 118 165
    Interest expense 24 33 115 118
    Income tax expense (benefit) 55   (54 ) 292   (100 )
    EBITDA $ 303   $ (247 ) $ 1,232   $ (329 )
     
       
    Three Months Ended December 31, Year Ended December 31,
    2018   2017 2018   2017
     
    Amount  

    Per

    Diluted

    Share

    Amount  

    Per

    Diluted

    Share

    Amount  

    Per

    Diluted

    Share

    Amount  

    Per

    Diluted

    Share

    Net income (loss) $ 201 $ 3.01 $ (262 ) $ (4.59 ) $ 707 $ 10.61 $ (512 ) $ (9.07 )
    Adjustment:
    Amortization of intangible assets 6 0.08 6 0.11 22 0.32 30 0.55
    Income tax effect (1) (1 ) (0.02 ) (2 ) (0.04 ) (5 ) (0.07 ) (11 ) (0.20 )
    Amortization of intangible assets, net of tax effect 5   0.06   4   0.07   17   0.25   19   0.35  
    Adjusted net income (loss) $ 206   $ 3.07   $ (258 ) $ (4.52 ) $ 724   $ 10.86   $ (493 ) $ (8.72 )
     

    ________________________

    (1)

    Income tax effect of adjustments calculated at the blended federal and state statutory tax rate of 22% and 37% for 2018 and 2017, respectively.

     

    The following are descriptions of the adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release:

    Earnings before interest, taxes, depreciation and amortization (“EBITDA”): Net income (loss) on a GAAP basis less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax expense. We believe that EBITDA is helpful in assessing our ability to meet the cash demands of our operating units.

    Adjusted net income: Net income (loss) on a GAAP basis less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate. We believe that adjusted net income (loss) is helpful in assessing our financial performance exclusive of the non-cash impact of the amortization of purchased intangibles.

    Adjusted net income per diluted share: Adjusted net income (loss) divided by weighted average common shares outstanding on a fully diluted basis.

       
    MOLINA HEALTHCARE, INC.
    2019 GUIDANCE
     

    Reconciliation of Non-GAAP Financial Measures

     
    Low End High End
    (In millions)
    Net income $ 600 $ 630
    Adjustments:
    Depreciation, and amortization of intangible assets and capitalized software 85 85
    Interest expense 100 100
    Income tax expense 190   210
    EBITDA $ 975   $ 1,025




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    Molina Healthcare Announces Fourth Quarter and Year-End 2018 Results and Provides Fiscal Year 2019 Guidance Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter and year ended December 31, 2018, and provided its guidance for fiscal year 2019. “We have accomplished much over the last …