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Press release from Business Wire

Molina Healthcare Reports Third Quarter 2013 Results

Wednesday, October 30, 2013

Molina Healthcare Reports Third Quarter 2013 Results

16:00 EDT Wednesday, October 30, 2013

LONG BEACH, Calif. (Business Wire) -- Molina Healthcare, Inc. (NYSE:MOH):

  • Net income per diluted share from continuing operations improved to $0.16 compared with a net loss of $0.01 per diluted share from continuing operations for the third quarter of 2012.
  • Quarterly premium revenue rose to $1.6 billion, a 9% increase compared with the third quarter of 2012.
  • Consolidated medical care ratio declined 380 basis points year over year to 87.3%.
  • Nine of the Company's health plans selected by state and federal agencies to offer certified Qualified Health Plans in the Health Insurance Marketplaces.
  • Guidance revised to approximately $1.15 per diluted share from continuing operations for all of 2013.

Molina Healthcare, Inc. (NYSE:MOH) today reported its financial results for the third quarter and nine months ended September 30, 2013. Net income per diluted share from continuing operations was $0.16, an increase of $0.17 per diluted share from continuing operations over the third quarter of 2012. Net income for the third quarter of 2013 rose to $7.6 million, or $0.16 per diluted share, versus $3.4 million, or $0.07 per diluted share, for the third quarter of 2012.

“I am pleased with the third quarter results, particularly because medical margins increased at all but one of our health plans,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “We closed on our acquisitions in New Mexico and South Carolina, welcomed our first members in Illinois and launched qualified health plans for the health insurance marketplace in nine states. While our results were tempered by the cleanup of old claims in Texas and continued administrative investments associated with future growth, I remain optimistic about our future long-term prospects.”

Overview of Financial Results

Net income from continuing operations for the third quarter of 2013 increased when compared with the third quarter of 2012 as a result of higher medical margins. Those medical margins were partially offset by increased administrative expense related to the Company's preparations for significant membership growth expected in 2014.

Premium revenue for the third quarter of 2013 increased 9% over the third quarter of 2012, due to a 5% increase in enrollment and a 4% increase in revenue per member per month (PMPM).

The Company's consolidated medical care ratio decreased to 87.3% in the third quarter of 2013 from 91.1% in the third quarter of 2012. The decline in the consolidated medical care ratio was the result of improved operating results at all but one of the Company's health plans. Medical care ratios decreased in eight of the Company's nine health plans, while medical margin (measured as the excess of premium revenue over medical care costs) increased in the same eight of nine health plans.

General and administrative expenses increased to 10.4% of revenue in the third quarter of 2013 from 8.2% in the third quarter of 2012, primarily due to higher costs incurred as a result of the Company's preparations for significant membership growth in 2014 in connection with the Affordable Care Act. Increased administrative expense related to the anticipated membership growth represented approximately 1.8% of premium revenue, or $30 million, during the third quarter of 2013.

Third Quarter of 2013 Compared with the Second Quarter of 2013

Net income from continuing operations for the third quarter of 2013 decreased from the second quarter of 2013, primarily as a result of approximately $14 million in unfavorable prior period claims development at the Texas health plan. The expense related to issues with system configuration and the adjudication of claims from a number of hospital providers extending back to 2012 and the first half of 2013. The Company believes that it has substantially resolved all of the issues.

Premium revenue increased approximately 6% between the second and third quarters of 2013, primarily due to the contract acquired in New Mexico. Absent the Texas provider settlements noted above, the consolidated medical care ratio reported in the third quarter of 2013 of 87.3% would have been 86.4%. The consolidated medical care ratio reported in the second quarter of 2013 was 86.2%. General and administrative expenses increased to 10.4% of revenue in the third quarter of 2013 from 10.1% in the second quarter of 2013, due to increased expenses incurred in anticipation of 2014 enrollment growth.

Adjusted Net Income Per Diluted Share, Continuing Operations

At its Investor Day on September 19, 2013, the Company announced that it would begin presenting “Adjusted Net Income Per Diluted Share, Continuing Operations,” a non-GAAP financial measure used by management as a supplemental metric to evaluate the Company's performance. Adjusted net income per diluted share, continuing operations increased to $0.71 per share for the third quarter of 2013 compared with $0.37 for the third quarter of 2012. The table found below on page 7 reconciles net income (loss) per diluted share to adjusted net income per diluted share, continuing operations.

Net Income Per Share Guidance

The Company announced that it expects earnings per share from continuing operations to be approximately $1.15 per diluted share for the year ended December 31, 2013. The Company expects fourth quarter results will be at approximately break-even. The Company believes that its anticipated continued strong operating performance in the fourth quarter will be offset by the following factors:

  • The costs of the continuing build out of administrative infrastructure such as provider networks, call centers, and web interfaces.
  • The cost of the build out of enhanced care coordination and medical management capabilities for members with more complex needs.
  • Increased advertising, marketing and outreach activities directed at potential members who may be discouraged from enrolling in our health plans as a result of difficulties encountered in the roll out of the marketplace exchanges.
  • Further delays in the startup of the revenue streams that will fund our increased G&A expense.

Adjusted Net Income Per Diluted Share, Continuing Operations Guidance

The Company also announced that it expects adjusted net income per diluted share, continuing operations to be approximately $3.20 for the year ended December 31, 2013.

Conference Call

The Company's management will host a conference call and webcast to discuss its third quarter results at 5:00 p.m. Eastern time on Wednesday, October 30, 2013. The number to call for the interactive teleconference is (212) 231-2920. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Wednesday, October 30, 2013, through 6:00 p.m. on Thursday October 31, 2013, by dialing (800) 633-8284 and entering confirmation number 21673454. A live broadcast of Molina Healthcare's conference call will be available on the Company's website, www.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 quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program. The Company's licensed health plans in California, Florida, Illinois, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.9 million members, and its subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company's plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those risks and uncertainties include, but are not limited to, the following:

  • uncertainties associated with the implementation of the Affordable Care Act, including the impact of, and state rate development associated with, the health insurance industry excise tax, the expansion of Medicaid eligibility in participating states to previously uninsured populations unfamiliar with managed care, the implementation of insurance exchanges or marketplaces and related technical problems, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures, including the duals demonstration programs in California, Illinois, and Ohio;
  • the success of our medical cost containment initiatives in Texas;
  • 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;
  • management of our medical costs, including seasonal flu patterns and rates of utilization that are consistent with our expectations and our accruals for incurred but not reported medical costs;
  • the success of our efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states, and our ability to increase our revenues consistent with our expectations;
  • accurate estimation of incurred but not reported medical costs across our health plans;
  • risks associated with the continued growth in new Medicaid and Medicare enrollees, and the development of actuarially sound rates with respect to such new enrollees, including duals;
  • retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates;
  • continuation and renewal of the government contracts of both our health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed;
  • government audits and reviews, and any enrollment freeze or monitoring program that may result therefrom;
  • changes with respect to our provider contracts and the loss of providers;
  • the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;
  • interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures;
  • approval by state regulators of dividends and distributions by our health plan subsidiaries;
  • changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
  • high dollar claims related to catastrophic illness;
  • the favorable resolution of litigation, arbitration, or administrative proceedings;
  • the Company's management of a portion of College Health Enterprises' hospital in Long Beach, California;
  • the relatively small number of states in which we operate health plans;
  • the availability of adequate financing to fund and capitalize our expansion and growth activities and to meet our liquidity needs, including the interest expense and other costs associated with such financing;
  • a state's failure to renew its federal Medicaid waiver;
  • inadvertent unauthorized disclosure of protected health information;
  • changes generally affecting the managed care or Medicaid management information systems industries;
  • increases in government surcharges, taxes, and assessments;
  • changes in general economic conditions, including unemployment rates;
  • increasing 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 www.sec.gov . Given these risks and uncertainties, we can give no assurances that the Company's forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by the Company's forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company's judgment as of October 30, 2013, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in the Company's expectations.

       

MOLINA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2013   2012 2013   2012
(Amounts in thousands, except net income (loss) per share)
Revenue:
Premium revenue $ 1,584,656 $ 1,448,600 $ 4,583,818 $ 4,066,737
Premium tax receipts 43,723 37,894 127,606 120,953
Service revenue 51,100 48,422 150,528 132,351
Investment income 1,740 1,155 4,884 3,893
Rental and other income   5,860     4,079     16,476     12,315  
Total revenue   1,687,079     1,540,150     4,883,312     4,336,249  
Expenses:
Medical care costs 1,383,213 1,319,991 3,965,834 3,715,455
Cost of service revenue 40,113 37,004 119,188 98,111
General and administrative expenses 176,233 127,035 478,990 365,564
Premium tax expenses 43,723 37,894 127,606 120,953
Depreciation and amortization   18,871     15,858     52,449     46,916  
Total expenses   1,662,153     1,537,782     4,744,067     4,346,999  
Income (loss) from operations   24,926     2,368     139,245     (10,750 )
Other expenses:
Interest expense 13,532 4,315 38,236 12,421
Other (income) expense   (24 )   184     3,347     1,270  
Total other expenses   13,508     4,499     41,583     13,691  
Income (loss) from continuing operations

before income taxes

11,418 (2,131 ) 97,662 (24,441 )
Income tax expense (benefit)   3,865     (1,966 )   43,791     (11,113 )
Income (loss) from continuing operations 7,553 (165 ) 53,871 (13,328 )
Income (loss) from discontinued operations (1)   16     3,529     8,184     (2,525 )
Net income (loss) $ 7,569   $ 3,364   $ 62,055   $ (15,853 )
 
Basic income (loss) per share:
Income (loss) from continuing operations $ 0.17 $ (0.01 ) $ 1.18 $ (0.29 )
Income (loss) from discontinued operations       0.08     0.18     (0.05 )
Basic net income (loss) per share $ 0.17   $ 0.07   $ 1.36   $ (0.34 )
 
Diluted income (loss) per share:
Income (loss) from continuing operations $ 0.16 $ (0.01 ) $ 1.15 $ (0.29 )
Income (loss) from discontinued operations       0.08     0.18     (0.05 )
Diluted net income (loss) per share $ 0.16   $ 0.07   $ 1.33   $ (0.34 )
 
Weighted average shares outstanding:
Basic   45,699     46,546     45,708     46,301  
Diluted   47,062     46,880     46,767     46,301  
 
Operating Statistics, Continuing Operations:
Medical care ratio (2) 87.3 % 91.1 % 86.5 % 91.4 %
Service revenue ratio (3) 78.5 % 76.4 % 79.2 % 74.1 %
General and administrative expense ratio (4) 10.4 % 8.2 % 9.8 % 8.4 %
Premium tax ratio (2) 2.7 % 2.5 % 2.7 % 2.9 %
Effective tax rate 33.9 % (92.3 %) 44.8 % (45.5 %)

(1)Net of income tax expense (benefit) of $97, $1,474, $(10,046), and $(4,115), respectively.

(2) Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium taxes as a percentage of premium revenue plus premium tax receipts.

(3) Service revenue ratio represents cost of service revenue as a percentage of service revenue.

(4) Computed as a percentage of total revenue.

 

     

 

MOLINA HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

 
(Unaudited)
Sept. 30,
2013
Dec. 31,
2012
(Amounts in thousands,

except per share data)

ASSETS
Current assets:
Cash and cash equivalents $ 856,556 $ 795,770
Investments 735,151 342,845
Receivables 293,967 149,682
Deferred income taxes 30,480 32,443
Prepaid expenses and other current assets   50,061     28,386  
Total current assets 1,966,215 1,349,126
Property, equipment, and capitalized software, net 267,277 221,443
Deferred contract costs 48,768 58,313
Intangible assets, net 104,635 77,711
Goodwill and indefinite-lived intangible assets 230,783 151,088
Derivative asset 191,663
Restricted investments 65,225 44,101
Auction rate securities 11,674 13,419
Deferred income taxes 3,090
Other assets   35,736     19,621  
$ 2,925,066   $ 1,934,822  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims and benefits payable $ 632,706 $ 494,530
Accounts payable and accrued liabilities 282,727 184,034
Deferred revenue 124,388 141,798
Income taxes payable 5,508 6,520
Current maturities of long-term debt   109     1,155  
Total current liabilities 1,045,438 828,037
Convertible senior notes 591,884 175,468
Lease financing obligations 178,188
Other long-term debt 86,316
Derivative liability 191,556 1,307
Deferred income taxes 37,900
Other long-term liabilities   25,152     23,480  
Total liabilities   2,032,218     1,152,508  
Stockholders' equity:

Common stock, $0.001 par value; 150,000 shares authorized; outstanding: 45,757 shares at September 30, 2013 and 46,762 shares at December 31, 2012

46 47

Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding

Additional paid-in capital 331,958 285,524
Accumulated other comprehensive loss (1,411 ) (457 )
Treasury stock, at cost; 111 shares at December 31, 2012 (3,000 )
Retained earnings   562,255     500,200  
Total stockholders' equity   892,848     782,314  
$ 2,925,066   $ 1,934,822  

       

MOLINA HEALTHCARE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2013   2012 2013   2012
(Amounts in thousands)
Operating activities:
Net income (loss) $ 7,569 $ 3,364 $ 62,055 $ (15,853 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 24,128 20,279 68,035 58,289
Deferred income taxes (16,287 ) 1,787 (38,442 ) 523
Stock-based compensation 8,504 5,636 20,654 15,448
Gain on sale of subsidiary (1,747 )
Amortization of convertible senior notes and lease financing obligations 6,440 1,499 16,128 4,414
Change in fair value of derivatives (1 ) 184 3,383 1,270
Amortization of premium/discount on investments 3,755 1,551 8,053 5,166
Amortization of deferred financing costs 676 310 3,042 825
Tax deficiency from employee stock compensation (34 ) (109 ) (72 ) (159 )
Changes in operating assets and liabilities:
Receivables (80,191 ) 4,098 (144,285 ) 10,989
Prepaid expenses and other current assets (4,696 ) (222 ) (27,552 ) (10,574 )
Medical claims and benefits payable 167,219 10,925 138,176 133,987
Accounts payable and accrued liabilities 37,959 13,952 20,991 (9,030 )
Deferred revenue 78,439 (33,072 ) (17,410 ) 92,354
Income taxes   (9,988 )   (2,141 )   (1,012 )   (21,878 )
Net cash provided by operating activities   223,492     28,041     111,744     264,024  
 
Investing activities:
Purchases of equipment (29,197 ) (19,247 ) (64,426 ) (52,548 )
Purchases of investments (95,802 ) (90,117 ) (627,953 ) (234,465 )
Sales and maturities of investments 78,380 76,893 227,800 213,665

Proceeds from sale of subsidiary, net of cash surrendered

9,162
Net cash paid in business combinations (57,684 ) (57,684 )
Change in deferred contract costs 2,551 4,256 9,545 (18,799 )
Increase in restricted investments (8,290 ) (880 ) (21,124 ) (3,034 )

Change in other noncurrent assets and liabilities

  438     (392 )   (7,574 )   (4,775 )
Net cash used in investing activities   (109,604 )   (29,487 )   (541,416 )   (90,794 )
 
Financing activities:

Proceeds from issuance of 1.125% Notes, net of deferred financing costs

537,973
Proceeds from sale-leaseback transactions 158,694
Purchase of 1.125% Notes call option (149,331 )
Proceeds from issuance of warrants 75,074
Treasury stock purchases (50,000 )

Repayment of amounts borrowed under credit facility

(10,000 ) (40,000 ) (20,000 )
Amount borrowed under credit facility 60,000
Principal payments on term loan (273 ) (47,471 ) (846 )
Settlement of interest rate swap (875 )
Proceeds from employee stock plans 304 86 5,156 5,571
Excess tax benefits from employee stock compensation   (306 )   21     1,238     3,698  

Net cash (used in) provided by financing activities

  (2 )   (10,166 )   490,458     48,423  
Net increase (decrease) in cash and cash equivalents 113,886 (11,612 ) 60,786 221,653
Cash and cash equivalents at beginning of period   742,670     727,092     795,770     493,827  
Cash and cash equivalents at end of period $ 856,556   $ 715,480   $ 856,556   $ 715,480  
 

MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES

The Company uses two non-GAAP1 financial measures as supplemental metrics in evaluating its financial performance, making financing and business decisions, and forecasting and planning for future periods. Management believes such measures are useful supplemental measures to investors in evaluating the Company's performance, and when comparing the Company's performance with 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.

The first of these non-GAAP measures is earnings before interest, taxes, depreciation and amortization, or EBITDA. The following table reconciles net income (loss), which the Company believes to be the most comparable GAAP measure, to EBITDA.

     
Three Months Ended

September 30,

Nine Months Ended

September 30,

2013   2012 2013   2012
(In thousands)
Net income (loss) $ 7,569 $ 3,364 $ 62,055 $ (15,853 )
Adjustments:
Depreciation and amortization reported in the consolidated statements of cash flows 24,128 20,279 68,035 58,289
Interest expense 13,532 4,315 38,236 12,421
Income tax expense (benefit)   3,962   (492 )   33,745   (15,228 )
EBITDA $ 49,191 $ 27,466   $ 202,071 $ 39,629  
 

 

The second of these non-GAAP measures is adjusted net income per diluted share, continuing operations. The following table reconciles net income (loss) per diluted share, which the Company believes to be the most comparable GAAP measure, to adjusted net income per diluted share, continuing operations.

 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2013 2012 2013 2012
(In thousands)

Net income (loss) per diluted share, continuing operations

$ 0.16 $ (0.01 ) $ 1.15 $ (0.29 )
Adjustments, net of tax:
Depreciation and amortization of capitalized software 0.25 0.20 0.71 0.56
Stock-based compensation 0.15 0.09 0.36 0.24
Amortization of intangible assets 0.07 0.07 0.20 0.22

Amortization of convertible senior notes and lease financing obligations

0.08 0.02 0.21 0.06
Change in fair value of derivatives         0.08   0.02  

Adjusted net income per diluted share, continuing operations

$ 0.71 $ 0.37   $ 2.71 $ 0.81  
 

1GAAP stands for Generally Accepted Accounting Principles.

 

MOLINA HEALTHCARE, INC.
UNAUDITED DEPRECIATION AND AMORTIZATION DATA

Depreciation and amortization related to the Company's Health Plans segment is all recorded in “Depreciation and amortization” in the consolidated statements of operations. Depreciation and amortization related to the Company's Molina Medicaid Solutions segment is recorded within three different headings in the consolidated statements of operations as follows:

Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and amortization;”

Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service revenue;” and

Depreciation is recorded within the heading “Cost of service revenue.”

The following table presents all depreciation and amortization recorded in the Company's consolidated statements of operations, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue.

   
Three Months Ended September 30,
2013     2012  
Amount   % of Total

Revenue

Amount   % of Total

Revenue

(Dollar amounts in thousands)
Depreciation, and amortization of capitalized software, continuing operations $ 14,237 0.8 % $ 11,352 0.7 %
Amortization of intangible assets, continuing operations   4,634 0.3     4,506 0.3  
Depreciation and amortization, continuing operations 18,871 1.1 15,858 1.0
Depreciation and amortization, discontinued operations 176
Amortization recorded as reduction of service revenue 729 536 0.1
Amortization of capitalized software recorded as cost of service revenue   4,528 0.3     3,709 0.2  
Depreciation and amortization reported in the consolidated statements of cash flows $ 24,128 1.4 % $ 20,279 1.3 %
 
Nine Months Ended September 30,
2013   2012  
Amount % of Total

Revenue

Amount % of Total

Revenue

(Dollar amounts in thousands)
Depreciation, and amortization of capitalized software, continuing operations $ 39,578 0.8 % $ 31,321 0.7 %
Amortization of intangible assets, continuing operations   12,871 0.3     15,595 0.4  
Depreciation and amortization, continuing operations 52,449 1.1 46,916 1.1
Depreciation and amortization, discontinued operations 2 530
Amortization recorded as reduction of service revenue 2,186 842
Amortization of capitalized software recorded as cost of service revenue   13,398 0.3     10,001 0.2  
Depreciation and amortization reported in the consolidated statements of cash flows $ 68,035 1.4 % $ 58,289 1.3 %

         

MOLINA HEALTHCARE, INC.

UNAUDITED MEMBERSHIP DATA, CONTINUING OPERATIONS

 

Sept. 30,

2013

June 30,

2013

Dec. 31,

2012

Sept. 30,

2012

Total Ending Membership by Health Plan:
California 363,000 355,000 336,000 346,000
Florida 84,000 81,000 73,000 71,000
Michigan 213,000 215,000 220,000 219,000
New Mexico 172,000 92,000 91,000 90,000
Ohio 261,000 240,000 244,000 272,000
Texas 258,000 266,000 282,000 291,000
Utah 87,000 87,000 87,000 85,000
Washington 409,000 413,000 418,000 411,000
Wisconsin 95,000 98,000 46,000 41,000
1,942,000 1,847,000 1,797,000 1,826,000
 

Total Ending Membership by State for the Medicare Advantage Plans:

California 8,600 8,100 7,700 7,300
Florida 600 600 900 900
Michigan 10,000 9,500 9,700 9,300
New Mexico 900 900 900 900
Ohio 400 400 300 200
Texas 2,500 2,300 1,500 1,100
Utah 8,200 7,800 8,200 8,300
Washington 6,900 6,600 6,500 6,100
38,100 36,200 35,700 34,100

 

Total Ending Membership by State for the Aged, Blind or Disabled Population:

California 46,300 45,400 44,700 44,100
Florida 12,200 11,200 10,300 10,300
Michigan 45,400 45,000 41,900 40,700
New Mexico 11,400 6,000 5,700 5,600
Ohio 33,000 28,000 28,200 29,000
Texas 90,800 92,000 95,900 101,300
Utah 9,500 9,400 9,000 8,900
Washington 33,000 31,700 30,000 23,400
Wisconsin 1,700 1,600 1,700 1,600
283,300 270,300 267,400 264,900

   

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN,

CONTINUING OPERATIONS

(Amounts in thousands, except per member per month amounts)

 
Three Months Ended September 30, 2013
Member

Months (1)

  Premium Revenue   Medical Care Costs  

MCR (2)

 

Medical

Margin

Total   PMPM Total   PMPM
California 1,076 $ 184,235 $ 171.16 $ 166,774 $ 154.93 90.5 % $ 17,461
Florida 251 67,688 269.58 60,127 239.46 88.8 7,561
Michigan 641 174,706 272.65 143,498 223.95 82.1 31,208
New Mexico 435 130,318 299.19 111,599 256.21 85.6 18,719
Ohio 786 280,964 357.66 245,148 312.07 87.3 35,816
Texas 780 320,657 411.17 287,446 368.59 89.6 33,211
Utah 261 84,525 323.83 66,555 254.98 78.7 17,970
Washington 1,234 294,808 238.96 254,430 206.23 86.3 40,378
Wisconsin 287 39,676 138.36 27,694 96.58 69.8 11,982
Other (3)   7,079   19,942   (12,863 )
5,751 $ 1,584,656 $ 275.55 $ 1,383,213 $ 240.52 87.3 % $ 201,443  
 
Three Months Ended September 30, 2012
Member

Months (1)

Premium Revenue Medical Care Costs

MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 1,041 $ 162,389 $ 156.00 $ 156,106 $ 149.96 96.1 % $ 6,283
Florida 214 57,433 268.58 48,250 225.64 84.0 9,183
Michigan 656 159,591 243.32 143,513 218.80 89.9 16,078
New Mexico 269 80,846 300.79 73,721 274.28 91.2 7,125
Ohio 805 282,489 350.63 253,447 314.58 89.7 29,042
Texas 890 344,522 387.03 316,716 355.80 91.9 27,806
Utah 256 73,484 287.21 62,630 244.79 85.2 10,854
Washington 1,217 269,191 221.28 236,928 194.76 88.0 32,263
Wisconsin 124 16,279 131.21 15,217 122.65 93.5 1,062

Other (3)

  2,376   13,463   (11,087 )
5,472 $ 1,448,600 $ 264.74 $ 1,319,991 $ 241.23 91.1 % $ 128,609  
 

(1) A member month is defined as the aggregate of each month's ending membership for the period presented.

(2) “MCR” represents medical costs as a percentage of premium revenue.

(3) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

 

               

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN,

CONTINUING OPERATIONS

(Amounts in thousands, except per member per month amounts)

 
Nine Months Ended September 30, 2013
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 3,132 $ 552,950 $ 176.54 $ 497,314 $ 158.78 89.9 % $ 55,636
Florida 712 187,689 263.62 161,446 226.76 86.0 26,243
Michigan 1,941 508,748 262.14 432,105 222.65 84.9 76,643
New Mexico 984 298,767 303.59 252,001 256.07 84.3 46,766
Ohio 2,234 819,879 367.03 688,266 308.11 83.9 131,613
Texas 2,417 969,063 400.90 829,854 343.31 85.6 139,209
Utah 781 236,992 303.41 193,261 247.42 81.5 43,731
Washington 3,722 892,627 239.85 779,339 209.41 87.3 113,288
Wisconsin 780 104,540 134.04 82,543 105.84 79.0 21,997
Other (3)   12,563   49,705   (37,142 )
16,703 $ 4,583,818 $ 274.43 $ 3,965,834 $ 237.43 86.5 % $ 617,984  
 
Nine Months Ended September 30, 2012
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 3,156 $ 486,714 $ 154.21 $ 446,694 $ 141.53 91.8 % $ 40,020
Florida 632 170,940 270.50 146,261 231.44 85.6 24,679
Michigan 1,983 480,098 242.13 419,406 211.52 87.4 60,692
New Mexico 801 240,568 300.51 208,668 260.66 86.7 31,900
Ohio 2,313 827,219 357.61 735,432 317.93 88.9 91,787
Texas 2,389 892,377 373.54 890,042 372.57 99.7 2,335
Utah 767 225,533 293.93 183,930 239.71 81.6 41,603
Washington 3,352 684,466 204.22 592,398 176.75 86.5 92,068
Wisconsin 374 52,209 139.46 54,861 146.54 105.1 (2,652 )
Other (3)   6,613   37,763   (31,150 )
15,767 $ 4,066,737 $ 257.93 $ 3,715,455 $ 235.65 91.4 % $ 351,282  
 
 

(1) A member month is defined as the aggregate of each month's ending membership for the period presented.

(2) “MCR” represents medical costs as a percentage of premium revenue.

(3) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

 

   
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA
(Amounts in thousands, except per member per month amounts)
 

The following tables provide the details of the Company's medical care costs from continuing operations for the periods indicated:

 
 
Three Months Ended September 30,
2013     2012  
Amount   PMPM   % of

Total

Amount   PMPM   % of

Total

Fee for service $ 928,165 $ 161.39 67.1 % $ 913,137 $ 166.88 69.2 %
Pharmacy 237,073 41.22 17.1 219,823 40.17 16.7
Capitation 162,554 28.27 11.8 142,724 26.08 10.8
Other   55,421   9.64 4.0     44,307   8.10 3.3  
$ 1,383,213 $ 240.52 100.0 % $ 1,319,991 $ 241.23 100.0 %
 
Nine Months Ended September 30,
2013   2012  
Amount PMPM % of

Total

Amount PMPM % of

Total

Fee for service $ 2,674,785 $ 160.14 67.5 % $ 2,566,161 $ 162.76 69.1 %
Pharmacy 691,903 41.42 17.4 606,004 38.44 16.3
Capitation 441,287 26.42 11.1 412,692 26.17 11.1
Other   157,859   9.45 4.0     130,598   8.28 3.5  
$ 3,965,834 $ 237.43 100.0 % $ 3,715,455 $ 235.65 100.0 %
     

 

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

 

Sept. 30,

2013

Dec. 31,

2012

Sept. 30,

2012

Fee-for-service claims incurred but not paid (IBNP) $ 393,318 $ 377,614 $ 414,725
Capitation payable 77,051 49,066 55,314
Pharmacy 45,451 38,992 42,681
Other (1)   116,886   28,858   23,743
$ 632,706 $ 494,530 $ 536,463
 

(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 unaudited consolidated statements of operations. As of September 30, 2013, the Company had recorded provider payables of approximately $64.1 million for new intermediary arrangements that began in the third quarter of 2013.

 

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

The Company's claims liability includes an allowance for adverse claims development 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 periods” represent the amount by which the Company's original estimate of claims and benefits payable at the beginning of the period were (more) or 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 shows the components of the change in medical claims and benefits payable from continuing and discontinued operations as of the periods indicated:

       

Nine Months Ended

Sept. 30,

Three Months Ended

Sept. 30,

Year Ended

Dec. 31, 2012

2013   2012 2013   2012
(Dollars in thousands, except per-member amounts)
Balances at beginning of period $ 494,530 $ 402,476 $ 465,487 $ 525,538 $ 402,476
Components of medical care costs related to:
Current period 4,021,461 3,860,825 1,415,670 1,361,539 5,136,055
Prior periods   (54,040 )   (37,689 )   (32,575 )   (46,968 )   (39,295 )
Total medical care costs   3,967,421     3,823,136     1,383,095     1,314,571     5,096,760  
Payments for medical care costs related to:
Current period 3,410,689 3,332,896 851,025 875,236 4,649,363
Prior periods   418,556     356,253     364,851     428,410     355,343  
Total paid   3,829,245     3,689,149     1,215,876     1,303,646     5,004,706  
Balances at end of period $ 632,706   $ 536,463   $ 632,706   $ 536,463   $ 494,530  
Benefit from prior period as a percentage of:
Balance at beginning of period 10.9 % 9.0 % 7.0 % 8.9 % 9.8 %
Premium revenue, trailing twelve months 0.9 % 0.7 % 0.5 % 0.8 % 0.7 %
Medical care costs, trailing twelve months 1.0 % 0.8 % 0.6 % 1.0 % 0.8 %
 
Claims Data:
Days in claims payable, fee for service 41 45 41 45 40
Number of members at end of period 1,942,000 1,826,000 1,942,000 1,826,000 1,797,000
Number of claims in inventory

at end of period

137,100 163,600 137,100 163,600 122,700
Billed charges of claims in inventory

at end of period

$ 257,600 $ 304,600 $ 257,600 $ 304,600 $ 255,200
Claims in inventory per member

at end of period

0.07 0.09 0.07 0.09 0.07
Billed charges of claims in inventory

per member at end of period

$ 132.65 $ 166.81 $ 132.65 $ 166.81 $ 142.01
Number of claims received

during the period

15,751,500 15,455,000 5,227,000 5,079,200 20,842,400
Billed charges of claims received

during the period

$ 15,848,900 $ 14,339,700 $ 5,371,100 $ 4,951,000 $ 19,429,300

Molina Healthcare, Inc.
Investor Relations:
Juan José Orellana, 562-435-3666, ext. 111143

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