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Molina Healthcare Announces Third Quarter Results

Nov 02, 2017

LONG BEACH, Calif.--(BUSINESS WIRE)--Nov. 2, 2017-- Molina Healthcare, Inc. (NYSE: MOH):

  • Net loss of $1.70 per diluted share for the quarter.
  • Results for the quarter include $3.16 per diluted share in impairment and restructuring costs.
  • Medical care ratio for the quarter of 88.3%.
  • $200 million of annualized run-rate savings to be effective January 1, 2018, achieved in Q3 under restructuring plan.
  • $300 million to $400 million of total annualized run-rate savings expected by end of 2018.
  • Joseph M. Zubretsky appointed President, Chief Executive Officer and Director, effective November 6, 2017.

Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the third quarter of 2017.

“During the third quarter, we made significant progress on our restructuring efforts, bringing us one step closer to becoming a more consistent and profitable company. While there’s still more work ahead, our improved performance and our continued success toward achieving $200 million in annualized run-rate savings as of January 1, 2018, demonstrate that we are on the right track,” said Joseph White, chief financial officer and interim president and chief executive officer of Molina Healthcare, Inc. “Additionally, we are extremely fortunate to have our new CEO, Joseph Zubretsky, starting next Monday. His leadership and operational acumen will significantly augment our efforts and will enable us to continue our mission as a stronger, more profitable company.”

Third Quarter 2017 Compared with Third Quarter 2016

Net loss per diluted share was $1.70 for the third quarter of 2017 compared with net income per diluted share of $0.76 reported for the third quarter of 2016. Loss before income tax benefit for the third quarter of 2017 was $113 million.

  • Medical care costs measured as a percentage of premium revenue (the “medical care ratio”) declined to 88.3% in the third quarter of 2017 from 89.4% in the third quarter of 2016 and from 94.8% in the second quarter of 2017. Improved medical cost performance in the third quarter of 2017 was the result of:
    • Improved sequential performance at our Illinois, New Mexico, Ohio, Puerto Rico, Texas, and Washington health plans, exclusive of the Marketplace program.
    • Improved performance of our Marketplace program, including a reduction to the premium deficiency reserve of $30 million ($0.33 per diluted share, net of tax). The reserve, which was $100 million at June 30, 2017, decreased to $70 million as of September 30, 2017.
  • General and administrative costs, measured as a percentage of total revenue (the “administrative cost ratio”), were 7.6% in the third quarter of 2017, consistent with the third quarter of 2016, and 50 basis points lower than the second quarter of 2017. Excluding Marketplace broker commission and exchange fees, the administrative cost ratio decreased 30 basis points from the third quarter of 2016.

Restructuring costs and the impairment of certain purchased intangible assets increased loss before income tax benefit in the third quarter of 2017 by approximately $247 million. Specifically:

  • We recorded $118 million ($1.39 per diluted share, net of tax) of restructuring costs in the third quarter of 2017. Restructuring costs incurred to date consist primarily of termination benefits, write-offs of capitalized software due to the re-design of our core operating processes, restructuring of our direct delivery operations, and consulting fees.
  • We recorded $129 million ($1.77 per diluted share, net of tax) in non-cash goodwill impairment losses for our Pathways behavioral health subsidiary and our Molina Medicaid Solutions (MMS) segment. In the third quarter of 2017, management determined that neither business will provide future benefits relating to the integration of their operations with the Health Plans segment to the extent previously expected.

The table below summarizes the impact of certain items significant to our financial performance in the periods presented.

Summary of Significant Items Affecting 2017 Financial Results

      Three Months Ended     Nine Months Ended
September 30, 2017 September 30, 2017
(In millions, except per diluted share amounts)
Amount    

Per Diluted

Share (1)

Amount    

Per Diluted

Share (1)

Restructuring and separation costs $ 118 $ 1.39 $ 161 $ 1.92
Impairment losses

129

1.77

201

2.77

Change in Marketplace premium deficiency reserve for 2017 service dates (30 ) (0.33 ) 40 0.45
Termination fee received for terminated Medicare acquisition     (75 ) (0.84 )
$

217

  $

2.83

  $

327

  $

4.30

 

__________________
(1) Except for certain items that are not deductible for tax purposes, per diluted share amounts are generally calculated at our statutory income tax rate of 37%, which is in excess of the effective tax rate recorded in our consolidated statements of operations.



Marketplace Cost Share Reduction (CSR) Update

Our third quarter results do not include any potential impact from the October 12, 2017, direction to Centers for Medicare and Medicaid Services (CMS) from Acting Department of Health and Human Services Secretary Hargan to cease payment of Marketplace CSR subsidies. At September 30, 2017, we had a total of approximately $220 million in excess CSR subsidies, recorded as a payable to CMS. This payable represents the extent to which payments received by us from CMS exceeded our estimate of the actual cost of member subsidies incurred by us through September 30, 2017.

We expect to incur approximately $85 million in unreimbursed expense associated with the cessation of CSR subsidies in the fourth quarter of 2017. It has been the practice of CMS to perform a reconciliation on an annual basis of CSR subsidies paid to all health plans against the actual costs incurred by the health plans. Were such a reconciliation to be performed for the full calendar year of 2017—consistent with past practice—we would be able to offset nearly all of the $85 million expense incurred in the fourth quarter against the excess amounts received prior to September 30, 2017. However, should CMS transition to a nine month reconciliation period ending September 30, 2017—the last month for which CSR subsidies have been paid—the absence of CSR subsidy reimbursement would reduce income before income tax expense by approximately $85 million in the fourth quarter of 2017.

Income Tax (Benefit) Expense

The effective tax benefit for 2017 is less than the statutory tax benefit due to the relatively large amount of our reported expenses that are not deductible for tax purposes, primarily relating to goodwill impairment losses and separation costs.

Restructuring and Profit Improvement Plan Update

As previously disclosed, we estimate that our restructuring plan will reduce annualized run-rate expenses by approximately $300 million to $400 million when completed by the end of 2018. We have already achieved $200 million of these run-rate reductions on an annualized basis, which will take full effect no later than January 1, 2018. Our third quarter results include approximately $10 million of these reductions. All savings targets discussed in regards to the restructuring plan represent annualized run-rate savings that we expect to achieve during the year following the indicated implementation date. We expect one-time costs associated with the restructuring plan to exceed the benefits realized in 2017 due to the upfront payment of implementation costs and the delayed benefit of full savings until the beginning of 2018.

We estimate that total pre-tax costs associated with the restructuring plan will be approximately $70 million to $90 million in the fourth quarter of 2017, with an additional $20 million to $40 million to be incurred in 2018.

Marketplace 2018 Update

We have taken the following steps in regards to our participation in the ACA Marketplace in 2018:

  1. As previously announced, we will exit the Utah and Wisconsin ACA Marketplaces effective December 31, 2017.
  2. In our remaining Marketplace plans, we are increasing 2018 premiums by 55% to take into account the absence of cost sharing reduction (CSR) subsidies and other risks related to ACA Marketplace uncertainties.
  3. We have reduced the scope of our 2018 participation in the state of Washington Marketplace.
  4. We continue to monitor the current political and programmatic developments pertaining to the ACA Marketplace.

Chief Executive Officer Named

On October 10, 2017, Molina announced that Joseph M. Zubretsky had been named as the Company’s new President and Chief Executive Officer, effective November 6, 2017. Mr. Zubretsky, who most recently served as President and Chief Executive Officer for The Hanover Insurance Group and a member of its board of directors, also served almost nine years at Aetna, Inc., one of the nation’s largest healthcare benefits and insurance providers, where he most recently served as Chief Executive Officer of Healthagen Holdings, a group of healthcare services and information technology companies. Prior to that, from 2013 to 2014, he served as Senior Executive Vice President, leading Aetna’s National Businesses, and from 2007 to 2013 served as Aetna’s Chief Financial Officer.

Conference Call

Management will host a conference call and webcast to discuss Molina Healthcare’s third quarter results at 5:00 p.m. Eastern time on Thursday, November 2, 2017. The number to call for the interactive teleconference is (212) 231-2901. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Thursday, November 2, 2017, through 6:00 p.m. Eastern Time on Friday, November 3, 2017, by dialing (800) 633-8284 and entering confirmation number 21859678. A live audio broadcast of Molina Healthcare’s conference call will be available on our 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 our health plans operating in 12 states across the nation and in the Commonwealth of Puerto Rico, Molina currently serves approximately 4.5 million members. Dr. C. David Molina founded our company in 1980 to serve low-income families in Southern California. Today, we continue his mission of providing high quality and cost-effective health care to those who need it most. For more information about Molina Healthcare, please visit our website at molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding our 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 success of our previously announced restructuring plan, including the timing and amounts of the benefits realized;
  • the numerous political and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare,” including any potential repeal and replacement of the law, amendment of the law, or move to state block grants for Medicaid;
  • the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk transfer requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, the adequacy of agreed rates, and potential disruption associated with market withdrawal from Utah, Wisconsin, or other states;
  • 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/risk transfer, risk corridors, and reinsurance;
  • effective management of our medical costs;
  • our 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, including the payment of all amounts due to our Illinois health plan following the resolution of the Illinois budget impasse;
  • the success of our efforts to retain existing government contracts, including those in Florida, New Mexico, Puerto Rico, and Texas, and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states;
  • any adverse impact resulting from the significant changes to our executive leadership team and the rightsizing of our workforce;
  • the impact of our decision to exit the Utah and Wisconsin ACA Marketplace markets effective December 31, 2017;
  • our ability to manage our operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of our care management initiatives;
  • our ability to consummate and realize benefits from acquisitions or divestitures;
  • our 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;
  • our 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;
  • our 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 cost corridors in California, New Mexico, and Washington, 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 our ability to recognize revenue amounts associated therewith;
  • cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
  • the success of our health plan in Puerto Rico, including the resolution of the Puerto Rico debt crisis, payment of all amounts due under our Medicaid contract, the effect of the PROMESA law, the impact of Hurricane Maria and our efforts to better manage the health care costs of our Puerto Rico health plan;
  • the success and renewal of our 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 our health plans;
  • efforts by states to recoup previously paid and recognized premium amounts;
  • complications, member confusion, or enrollment backlogs related to the annual renewal of Medicaid coverage;
  • government audits and reviews, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom, including any potential demand by the state of New Mexico to recover purportedly underpaid premium taxes;
  • changes with respect to our provider contracts and the loss of providers;
  • 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 relatively small number of states in which we operate health plans;
  • the availability of adequate financing on acceptable terms to fund and capitalize our expansion and growth, repay our outstanding indebtedness at maturity and meet our liquidity needs, including the interest expense and other costs associated with such financing;
  • our failure to comply with the financial or other covenants in our credit agreement or the indentures governing our outstanding notes;
  • the sufficiency of our funds on hand to pay the amounts due upon conversion or maturity of our outstanding notes;
  • the failure of a state in which we operate to renew its federal Medicaid waiver;
  • changes generally affecting the managed care or Medicaid management information systems industries;
  • increases in government surcharges, taxes, and assessments, including but not limited to the deductibility of certain compensation costs;
  • newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
  • increasing competition and consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in our periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of our website or on the SEC’s website at sec.gov. Given these risks and uncertainties, we can give no assurances that our forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by our 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 our judgment as of November 2, 2017, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in our expectations.

 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 
     

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2017     2016 2017     2016
(Dollar amounts in millions, except per-share amounts)
Revenue:
Premium revenue $ 4,777 $ 4,191 $ 14,165 $ 12,215
Service revenue 130 133 390 408
Premium tax revenue 106 127 331 345
Health insurer fee revenue 85 251
Investment income and other revenue 18   10   48   29  
Total revenue 5,031   4,546   14,934   13,248  
Operating expenses:
Medical care costs 4,220 3,748 12,822 10,930
Cost of service revenue 123 119 369 362
General and administrative expenses 383 343 1,227 1,034
Premium tax expenses 106 127 331 345
Health insurer fee expenses 55 163
Depreciation and amortization 33 36 109 102
Impairment losses

129

201

Restructuring and separation costs 118     161    
Total operating expenses

5,112

  4,428  

15,220

  12,936  
Operating (loss) income

(81

) 118  

(286

) 312  
Other expenses, net:
Interest expense 32 26 85 76
Other income, net     (75 )  
Total other expenses, net 32   26   10   76  
(Loss) income before income tax (benefit) expense

(113

) 92

(296

) 236
Income tax (benefit) expense

(16

) 50  

(46

) 137  
Net (loss) income $

(97

) $ 42   $

(250

) $ 99  
 
Net (loss) income per diluted share $

(1.70

) $ 0.76   $

(4.44

) $ 1.77  
 
Diluted weighted average shares outstanding 56.5   56.1   56.2   56.2  
 
Operating Statistics:
Medical care ratio (1) 88.3 % 89.4 % 90.5 % 89.5 %
G&A ratio (2) 7.6 % 7.6 % 8.2 % 7.8 %
Premium tax ratio (1) 2.2 % 2.9 % 2.3 % 2.7 %
Effective tax rate

14.6

% 54.0 % 15.5 % 58.0 %
Net profit margin (2)

(1.9

)% 0.9 %

(1.7

)% 0.7 %

__________________
(1) Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue.
(2) G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net (loss) income as a percentage of total revenue.

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS

 
      September 30,     December 31,
2017 2016

(In millions,

except per-share data)

ASSETS
Current assets:
Cash and cash equivalents $ 3,934 $ 2,819
Investments 1,787 1,758
Restricted investments 326
Receivables 1,002 974
Income taxes refundable

60

39
Prepaid expenses and other current assets 174 131
Derivative asset 425   267  
Total current assets

7,708

5,988
Property, equipment, and capitalized software, net 397 454
Deferred contract costs 97 86
Intangible assets, net 101 140
Goodwill

430

620
Restricted investments 117 110
Deferred income taxes

62

10
Other assets 42   41  
$

8,954

  $ 7,449  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable $ 2,478 $ 1,929
Amounts due government agencies 1,324 1,202
Accounts payable and accrued liabilities 485 385
Deferred revenue 468 315
Current portion of long-term debt 782 472
Derivative liability 425   267  
Total current liabilities 5,962 4,570
Long-term debt 1,317 975
Lease financing obligations 198 198
Deferred income taxes 15
Other long-term liabilities 48   42  
Total liabilities 7,525   5,800  
Stockholders’ equity:
Common stock, $0.001 par value; 150 shares authorized; outstanding: 57 shares at September 30, 2017 and December 31, 2016
Preferred stock, $0.001 par value; 20 shares authorized, no shares issued and outstanding
Additional paid-in capital 870 841
Accumulated other comprehensive loss (1 ) (2 )
Retained earnings

560

  810  
Total stockholders’ equity

1,429

  1,649  
$

8,954

  $ 7,449  
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
     

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2017     2016 2017     2016
(In millions)
Operating activities:
Net (loss) income $

(97

) $ 42 $

(250

) $ 99
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 43 46 139 135
Impairment losses

129

201

Deferred income taxes

(27

) (19 )

(68

) 20
Share-based compensation, including accelerated share-based compensation 3 8 38 24
Non-cash restructuring charges 49 49
Amortization of convertible senior notes and lease financing obligations 8 8 24 23
Other, net 6 3 13 14
Changes in operating assets and liabilities:
Receivables 4 (12 ) (28 ) (427 )
Prepaid expenses and other assets (15 ) 27 (53 ) (116 )
Medical claims and benefits payable 401 86 549 168
Amounts due government agencies (520 ) (6 ) 122 503
Accounts payable and accrued liabilities 108 (146 ) 90 1
Deferred revenue 185 276 153 157
Income taxes

8

  42  

(22

) 32  
Net cash provided by operating activities 285   355   957   633  
Investing activities:
Purchases of investments (260 ) (470 ) (1,896 ) (1,444 )
Proceeds from sales and maturities of investments 664 700 1,538 1,512
Purchases of property, equipment, and capitalized software (25 ) (41 ) (85 ) (143 )
(Increase) decrease in restricted investments held-to-maturity (1 ) (10 ) 4
Net cash paid in business combinations (40 ) (48 )
Other, net (8 ) (6 ) (21 ) (12 )
Net cash provided by (used in) investing activities 371   142   (474 ) (131 )
Financing activities:
Proceeds from senior notes offering, net of issuance costs 325
Proceeds from borrowings under credit facility 300 300
Proceeds from employee stock plans 11 10
Other, net (1 )   (4 ) 1  
Net cash provided by financing activities 299     632   11  
Net increase in cash and cash equivalents 955 497 1,115 513
Cash and cash equivalents at beginning of period 2,979   2,345   2,819   2,329  
Cash and cash equivalents at end of period $ 3,934   $ 2,842   $ 3,934   $ 2,842  
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP

 
     

September 30,

2017

   

December 31,

2016

   

September 30,

2016

Ending Membership by Program:
Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP) 2,451,000 2,536,000 2,529,000
Marketplace 877,000 526,000 568,000
Medicaid Expansion 662,000 673,000 658,000
Aged, Blind or Disabled (ABD) 411,000 396,000 395,000
Medicare-Medicaid Plan (MMP) - Integrated 58,000 51,000 51,000
Medicare Special Needs Plans 44,000   45,000   45,000
4,503,000   4,227,000   4,246,000
Ending Membership by Health Plan:
California 751,000 683,000 683,000
Florida 641,000 553,000 563,000
Illinois 163,000 195,000 195,000
Michigan 399,000 391,000 387,000
New Mexico 256,000 254,000 253,000
New York 33,000 35,000 37,000
Ohio 343,000 332,000 339,000
Puerto Rico 306,000 330,000 331,000
South Carolina 113,000 109,000 109,000
Texas 444,000 337,000 352,000
Utah 160,000 146,000 150,000
Washington 770,000 736,000 716,000
Wisconsin 124,000   126,000   131,000
4,503,000   4,227,000   4,246,000
 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)

 
      Three Months Ended September 30, 2017

Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
TANF and CHIP 7.5 $ 1,392 $ 185.95 $ 1,242 $ 165.76 89.1 % $ 150
Medicaid Expansion 2.0 773 385.58 667 332.99 86.4 106
ABD 1.2 1,288 1,038.85 1,259 1,016.06 97.8 29
Total Medicaid 10.7 3,453 321.77 3,168 295.23 91.8 285
MMP 0.2 378 2,263.07 336 2,013.67 89.0 42
Medicare 0.1 163 1,231.61 126 951.01 77.2 37
Total Medicare 0.3 541 1,806.26 462 1,543.05 85.4 79
Excluding Marketplace 11.0 3,994 362.04 3,630 329.08 90.9 364
Marketplace 2.7 783 301.72 590 227.22 75.3 193
13.7 $ 4,777 $ 350.55 $ 4,220 $ 309.68 88.3 % $ 557
 
 
Three Months Ended September 30, 2016

Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
TANF and CHIP 7.6 $ 1,373 $ 180.74 $ 1,246 $ 164.04 90.8 % $ 127
Medicaid Expansion 2.0 763 386.98 642 325.68 84.2 121
ABD 1.1 1,186 1,008.28 1,094 929.93 92.2 92
Total Medicaid 10.7 3,322 309.19 2,982 277.55 89.8 340
MMP 0.2 334 2,165.26 280 1,818.75 84.0 54
Medicare 0.1 136 1,019.19 134 1,003.85 98.5 2
Total Medicare 0.3 470 1,633.62 414 1,440.73 88.2 56
Excluding Marketplace 11.0 3,792 343.68 3,396 307.84 89.6 396
Marketplace 1.7 399 238.86 352 210.38 88.1 47
12.7 $ 4,191 $ 329.88 $ 3,748 $ 295.01 89.4 % $ 443

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

 
      Nine Months Ended September 30, 2017

Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
TANF and CHIP 22.8 $ 4,185 $ 183.69 $ 3,861 $ 169.44 92.2 % $ 324
Medicaid Expansion 6.1 2,376 389.14 2,045 334.93 86.1 331
ABD 3.6 3,769 1,033.45 3,634 996.58 96.4 135
Total Medicaid 32.5 10,330 317.49 9,540 293.21 92.4 790
MMP 0.5 1,083 2,189.96 976 1,974.22 90.1 107
Medicare 0.4 449 1,142.68 369 939.21 82.2 80
Total Medicare 0.9 1,532 1,726.39 1,345 1,516.09 87.8 187
Excluding Marketplace 33.4 11,862 354.88 10,885 325.66 91.8 977
Marketplace 8.4 2,303 276.27 1,937 232.31 84.1 366
41.8 $ 14,165 $ 339.19 $ 12,822 $ 307.03 90.5 % $ 1,343
 
 
Nine Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
TANF and CHIP 22.5 $ 3,999 $ 177.60 $ 3,646 $ 161.93 91.2 % $ 353
Medicaid Expansion 5.8 2,184 376.98 1,850 319.38 84.7 334
ABD 3.5 3,466 987.20 3,173 903.85 91.6 293
Total Medicaid 31.8 9,649 303.23 8,669 272.46 89.9 980
MMP 0.5 989 2,160.14 867 1,894.38 87.7 122
Medicare 0.4 396 1,015.14 385 986.40 97.2 11
Total Medicare 0.9 1,385 1,633.26 1,252 1,476.57 90.4 133
Excluding Marketplace 32.7 11,034 337.76 9,921 303.72 89.9 1,113
Marketplace 5.1 1,181 231.69 1,009 197.77 85.4 172
37.8 $ 12,215 $ 323.44 $ 10,930 $ 289.41 89.5 % $ 1,285

__________________
(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—NON-MARKETPLACE
(In millions, except percentages and per-member per-month amounts)

 
      Three Months Ended September 30, 2017
Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
California 1.9 $ 601 $ 322.97 $ 563 $ 302.67 93.7 % $ 38
Florida 1.0 388 355.59 390 356.83 100.3 (2 )
Illinois 0.5 137 287.69 138 289.36 100.6 (1 )
Michigan 1.2 390 337.17 345 298.83 88.6 45
New Mexico 0.7 304 429.07 277 390.91 91.1 27
New York (3) 0.1 43 435.00 41 413.02 94.9 2
Ohio 0.9 549 560.06 483 492.61 88.0 66
Puerto Rico 1.0 191 202.59 159 168.25 83.1 32
South Carolina 0.3 113 332.48 101 297.74 89.6 12
Texas 0.7 541 778.50 506 728.19 93.5 35
Utah 0.2 89 318.98 71 254.99 79.9 18
Washington 2.3 612 276.73 522 236.11 85.3 90
Wisconsin 0.2 34 175.77 27 141.78 80.7 7
Other (4) 2 7 (5 )
11.0 $ 3,994 $ 362.04 $ 3,630 $ 329.08 90.9 % $ 364  
 
 
Three Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 1.8 $ 575 $ 310.64 $ 493 $ 266.81 85.9 % $ 82
Florida 1.0 335 323.98 317 305.71 94.4 18
Illinois 0.6 163 275.26 145 244.86 89.0 18
Michigan 1.2 385 335.34 335 291.69 87.0 50
New Mexico 0.7 323 451.06 293 409.24 90.7 30
New York (3) 0.1 32 427.40 30 403.71 94.5 2
Ohio 1.0 492 497.08 417 421.95 84.9 75
Puerto Rico 1.0 184 183.46 167 167.44 91.3 17
South Carolina 0.3 102 312.28 94 285.97 91.6 8
Texas 0.7 534 728.84 484 662.79 90.9 50
Utah 0.3 83 288.59 71 242.77 84.1 12
Washington 2.0 546 264.01 500 241.49 91.5 46
Wisconsin 0.3 35 166.82 26 125.86 75.4 9
Other (4) 3 24 (21 )
11.0 $ 3,792 $ 343.68 $ 3,396 $ 307.84 89.6 % $ 396  

__________________
(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.
(3) The New York health plan was acquired on August 1, 2016.
(4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—NON-MARKETPLACE
(In millions, except percentages and per-member per-month amounts)

 
      Nine Months Ended September 30, 2017
Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
California 5.6 $ 1,771 $ 316.83 $ 1,586 $ 283.82 89.6 % $ 185
Florida 3.2 1,132 347.41 1,112 341.15 98.2 20
Illinois 1.6 447 284.18 492 312.54 110.0 (45 )
Michigan 3.5 1,162 332.60 1,035 296.28 89.1 127
New Mexico 2.2 933 431.70 887 410.24 95.0 46
New York (3) 0.3 135 444.77 128 421.58 94.8 7
Ohio 2.9 1,598 541.56 1,434 486.02 89.7 164
Puerto Rico 2.9 553 190.99 513 177.01 92.7 40
South Carolina 1.0 329 325.43 301 298.43 91.7 28
Texas 2.1 1,592 760.76 1,468 701.32 92.2 124
Utah 0.8 267 315.35 219 258.64 82.0 48
Washington 6.7 1,835 275.60 1,603 240.83 87.4 232
Wisconsin 0.6 101 170.64 80 136.04 79.7 21
Other (4) 7 27 (20 )
33.4 $ 11,862 $ 354.88 $ 10,885 $ 325.66 91.8 % $ 977  
 
 
Nine Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 5.5 $ 1,603 $ 291.20 $ 1,411 $ 256.41 88.1 % $ 192
Florida 3.0 974 322.69 892 295.43 91.6 82
Illinois 1.8 466 266.11 414 236.39 88.8 52
Michigan 3.6 1,136 323.08 1,013 288.13 89.2 123
New Mexico 2.1 974 460.71 873 412.92 89.6 101
New York (3) 0.1 32 427.40 30 403.71 94.5 2
Ohio 2.9 1,444 489.63 1,286 435.99 89.0 158
Puerto Rico 3.0 535 176.44 516 170.46 96.6 19
South Carolina 0.9 273 288.93 232 245.13 84.8 41
Texas 2.2 1,650 744.71 1,466 662.01 88.9 184
Utah 0.9 255 293.33 221 253.79 86.5 34
Washington 6.0 1,576 261.23 1,431 237.20 90.8 145
Wisconsin 0.7 107 165.53 78 120.82 73.0 29
Other (4) 9 58 (49 )
32.7 $ 11,034 $ 337.76 $ 9,921 $ 303.72 89.9 % $ 1,113  

__________________
(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.
(3) The New York health plan was acquired on August 1, 2016.
(4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—MARKETPLACE
(In millions, except percentages and per-member per-month amounts)

 
      Three Months Ended September 30, 2017
Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
California 0.3 $ 88 $ 208.19 $ 63 $ 147.87 71.0 % $ 25
Florida 0.9 260 313.36 235 283.13 90.4 25
Michigan 14 212.08 10 150.24 70.8 4
New Mexico 0.1 29 383.58 20 269.28 70.2 9
Ohio 0.1 23 386.09 20 364.31 94.4 3
Texas 0.7 183 291.14 109 172.70 59.3 74
Utah 0.3 49 241.65 31 155.13 64.2 18
Washington 0.1 42 327.40 33 256.52 78.3 9
Wisconsin 0.2 95 527.17 70 385.65 73.2 25
Other (3) (1 ) 1  
2.7 $ 783 $ 301.72 $ 590   $ 227.22 75.3 % $ 193  
 
 
Three Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 0.3 $ 37 $ 185.04 $ 30 $ 140.10 75.7 % $ 7
Florida 0.6 159 253.16 145 231.78 91.6 14
Michigan 2 221.84 2 132.62 59.8
New Mexico 0.1 15 290.63 11 220.32 75.8 4
Ohio 9 307.24 7 215.01 70.0 2
Texas 0.4 63 189.85 41 121.06 63.8 22
Utah 0.1 23 142.10 33 208.48 146.7 (10 )
Washington 0.1 23 307.55 21 300.71 97.8 2
Wisconsin 0.1 68 375.60 64 357.60 95.2 4
Other (3) (2 ) 2  
1.7 $ 399 $ 238.86 $ 352   $ 210.38 88.1 % $ 47  

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

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—MARKETPLACE
(In millions, except percentages and per-member per-month amounts)

 
      Nine Months Ended September 30, 2017
Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
California 1.2 $ 241 $ 193.33 $ 156 $ 124.32 64.3 % $ 85
Florida 2.8 821 296.14 758 273.55 92.4 63
Michigan 0.2 41 187.96 27 126.76 67.4 14
New Mexico 0.2 82 338.18 62 256.05 75.7 20
Ohio 0.2 68 365.35 64 346.93 95.0 4
Texas 2.1 517 252.32 351 171.57 68.0 166
Utah 0.7 135 209.43 135 209.13 99.9
Washington 0.4 123 315.95 128 327.51 103.7 (5 )
Wisconsin 0.6 275 469.44 260 443.41 94.5 15
Other (3) (4 ) 4  
8.4 $ 2,303 $ 276.27 $ 1,937   $ 232.31 84.1 % $ 366  
 
 
Nine Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 0.6 $ 104 $ 177.57 $ 74 $ 124.29 70.0 % $ 30
Florida 2.0 473 237.37 409 205.37 86.5 64
Michigan 7 213.35 5 138.37 64.9 2
New Mexico 0.2 42 264.76 32 201.73 76.2 10
Ohio 0.1 28 322.36 20 232.44 72.1 8
Texas 1.1 202 196.45 133 128.97 65.7 69
Utah 0.4 75 160.33 91 194.78 121.5 (16 )
Washington 0.2 58 281.80 48 235.78 83.7 10
Wisconsin 0.5 192 357.80 200 373.94 104.5 (8 )
Other (3) (3 ) 3  
5.1 $ 1,181 $ 231.69 $ 1,009   $ 197.77 85.4 % $ 172  

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

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—TOTAL
(In millions, except percentages and per-member per-month amounts)

 
      Three Months Ended September 30, 2017
Member

Months (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

Medical

Margin

Total     PMPM Total     PMPM
California 2.2 $ 689 $ 301.64 $ 626 $ 273.90 90.8 % $ 63
Florida 1.9 648 337.40 625 325.09 96.4 23
Illinois 0.5 137 287.69 138 289.36 100.6 (1 )
Michigan 1.2 404 330.27 355 290.63 88.0 49
New Mexico 0.8 333 424.61 297 378.98 89.3 36
New York (3) 0.1 43 435.00 41 413.02 94.9 2
Ohio 1.0 572 550.75 503 485.61 88.2 69
Puerto Rico 1.0 191 202.59 159 168.25 83.1 32
South Carolina 0.3 113 332.48 101 297.74 89.6 12
Texas 1.4 724 546.57 615 463.83 84.9 109
Utah 0.5 138 286.39 102 212.91 74.3 36
Washington 2.4 654 279.52 555 237.23 84.9 99
Wisconsin 0.4 129 345.63 97 259.66 75.1 32
Other (4) 2 6 (4 )
13.7 $ 4,777 $ 350.55 $ 4,220 $ 309.68 88.3 % $ 557  
 
 
Three Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 2.1 $ 612 $ 298.05 $ 523 $ 254.11 85.3 % $ 89
Florida 1.6 494 297.24 462 277.79 93.5 32
Illinois 0.6 163 275.26 145 244.86 89.0 18
Michigan 1.2 387 334.25 337 290.16 86.8 50
New Mexico 0.8 338 440.12 304 396.35 90.1 34
New York (3) 0.1 32 427.40 30 403.71 94.5 2
Ohio 1.0 501 491.51 424 415.87 84.6 77
Puerto Rico 1.0 184 183.46 167 167.44 91.3 17
South Carolina 0.3 102 312.28 94 285.97 91.6 8
Texas 1.1 597 559.98 525 493.07 88.1 72
Utah 0.4 106 236.31 104 230.53 97.6 2
Washington 2.1 569 265.48 521 243.49 91.7 48
Wisconsin 0.4 103 262.32 90 231.86 88.4 13
Other (4) 3 22 (19 )
12.7 $ 4,191 $ 329.88 $ 3,748 $ 295.01 89.4 % $ 443  

__________________
(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.
(3) The New York health plan was acquired on August 1, 2016.
(4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—TOTAL
(In millions, except percentages and per-member per-month amounts)

 
      Nine Months Ended September 30, 2017
Member

Months (1)

  Premium Revenue   Medical Care Costs   MCR (2)  

Medical

Margin

Total   PMPM Total   PMPM
California 6.8 $ 2,012 $ 294.26 $ 1,742 $ 254.67 86.5 % $ 270
Florida 6.0 1,953 323.86 1,870 310.09 95.7 83
Illinois 1.6 447 284.18 492 312.54 110.0 (45 )
Michigan 3.7 1,203 324.12 1,062 286.35 88.3 141
New Mexico 2.4 1,015 422.25 949 394.66 93.5 66
New York (3) 0.3 135 444.77 128 421.58 94.8 7
Ohio 3.1 1,666 531.17 1,498 477.81 90.0 168
Puerto Rico 2.9 553 190.99 513 177.01 92.7 40
South Carolina 1.0 329 325.43 301 298.43 91.7 28
Texas 4.2 2,109 509.09 1,819 439.11 86.3 290
Utah 1.5 402 269.48 354 237.20 88.0 48
Washington 7.1 1,958 277.83 1,731 245.62 88.4 227
Wisconsin 1.2 376 319.57 340 289.24 90.5 36
Other (4) 7 23 (16 )
41.8 $ 14,165 $ 339.19 $ 12,822 $ 307.03 90.5 % $ 1,343  
 
 
Nine Months Ended September 30, 2016
Member

Months (1)

Premium Revenue Medical Care Costs MCR (2)

Medical

Margin

Total PMPM Total PMPM
California 6.1 $ 1,707 $ 280.21 $ 1,485 $ 243.64 86.9 % $ 222
Florida 5.0 1,447 288.74 1,301 259.60 89.9 146
Illinois 1.8 466 266.11 414 236.39 88.8 52
Michigan 3.6 1,143 322.08 1,018 286.77 89.0 125
New Mexico 2.3 1,016 447.07 905 398.22 89.1 111
New York (3) 0.1 32 427.40 30 403.71 94.5 2
Ohio 3.0 1,472 484.82 1,306 430.14 88.7 166
Puerto Rico 3.0 535 176.44 516 170.46 96.6 19
South Carolina 0.9 273 288.93 232 245.13 84.8 41
Texas 3.3 1,852 570.65 1,599 492.79 86.4 253
Utah 1.3 330 246.78 312 233.14 94.5 18
Washington 6.2 1,634 261.91 1,479 237.15 90.5 155
Wisconsin 1.2 299 252.45 278 235.25 93.2 21
Other (4) 9 55 (46 )
37.8 $ 12,215 $ 323.44 $ 10,930 $ 289.41 89.5 % $ 1,285  

__________________
(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.
(3) The New York health plan was acquired on August 1, 2016.
(4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

 
 
 
 
 
 

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT 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 September 30,
2017     2016
Amount     PMPM     % of

Total

Amount     PMPM   % of

Total

Fee for service $ 3,196 $ 234.51 75.8 % $ 2,799 $ 220.29 74.7 %
Pharmacy 638 46.85 15.1 567 44.65 15.1
Capitation 342 25.07 8.1 302 23.83 8.1
Direct delivery 18 1.37 0.4 21 1.66 0.5
Other 26   1.88   0.6   59   4.58   1.6  
$ 4,220   $ 309.68   100.0 % $ 3,748   $ 295.01   100.0 %
 
 
Nine Months Ended September 30,
2017 2016
Amount PMPM % of

Total

Amount PMPM % of

Total

Fee for service $ 9,630 $ 230.58 75.1 % $ 8,156 $ 215.96 74.6 %
Pharmacy 1,904 45.60 14.8 1,621 42.93 14.8
Capitation 1,022 24.47 8.0 901 23.86 8.3
Direct delivery 62 1.50 0.5 55 1.46 0.5
Other 204   4.88   1.6   197   5.20   1.8  
$ 12,822   $ 307.03   100.0 % $ 10,930   $ 289.41   100.0 %
 
 

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

 
    September 30,   December 31,
2017 2016
Fee-for-service claims incurred but not paid (IBNP) $ 1,681 $ 1,352
Pharmacy payable 125 112
Capitation payable 57 37
Other (1) 615   428
$ 2,478   $ 1,929

__________________
(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 September 30, 2017 and December 31, 2016, we had recorded non-risk provider payables of approximately $403 million and $225 million, respectively.








MOLINA HEALTHCARE, INC.
UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in millions, except per-member amounts)

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 were less (more) than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:

      Nine Months Ended September 30,    

Year Ended

December 31,

2016

2017   2016
Medical claims and benefits payable, beginning balance $ 1,929 $ 1,685 $ 1,685
Components of medical care costs related to:
Current period 12,813 11,120 14,966
Prior period 9   (190 ) (192 )
Total medical care costs 12,822   10,930   14,774  
 
Change in non-risk provider payables 172   70   58  
Payments for medical care costs related to:
Current period 10,944 9,536 13,304
Prior period 1,501   1,278   1,284  
Total paid 12,445   10,814   14,588  
Medical claims and benefits payable, ending balance $ 2,478   $ 1,871   $ 1,929  
 
Benefit from prior period as a percentage of:
Balance at beginning of period (0.5 )% 11.3 % 11.4 %
Premium revenue, trailing twelve months % 1.2 % 1.2 %
Medical care costs, trailing twelve months (0.1 )% 1.3 % 1.3 %
 
Days in claims payable, fee for service (1) 50 47 47

__________________
(1) Claims payable includes primarily IBNP. Additionally, it includes certain fee-for-service payables reported in “Other” medical claims and benefits payable amounting to $78 million, $88 million and $94 million, as of September 30, 2017, September 30, 2016, and December 31, 2016, respectively.








MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES

We use 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 (in millions, except per diluted share amounts).

  Three Months Ended September 30,     Nine Months Ended September 30,
2017     2016 2017     2016
 
Net (loss) income $

(97

) $ 42 $

(250

) $ 99
Adjustments:
Depreciation, and amortization of intangible assets and capitalized software 39 42 129 118
Interest expense 32 26 85 76
Income tax (benefit) expense

(16

) 50  

(46

) 137  
EBITDA $

(42

) $ 160   $

(82

) $ 430  
 
 
    Three Months Ended September 30,     Nine Months Ended September 30,
2017     2016 2017     2016
 
Amount    

Per

Diluted

share

Amount    

Per

Diluted

share

Amount    

Per

Diluted

share

Amount    

Per

Diluted

share

Net (loss) income $

(97

) $

(1.70

) $ 42 $ 0.76 $

(250

) $

(4.44

) $ 99 $ 1.77
Adjustment:
Amortization of intangible assets 7 0.13 9 0.15 24 0.43 24 0.42
Income tax effect (1) (3 ) (0.05 ) (4 ) (0.06 ) (9 ) (0.16 ) (9 ) (0.16 )
Amortization of intangible assets, net of tax effect 4   0.08   5   0.09   15   0.27   15   0.26  
Adjusted net (loss) income $

(93

) $

(1.62

) $ 47   $ 0.85   $

(235

) $

(4.17

) $ 114   $ 2.03  

____________________
(1) Income tax effect of adjustment calculated at the blended federal and state statutory tax rate of 37%.



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 (loss) income (GAAP) less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax (benefit) expense. We believe that EBITDA is helpful in assessing our ability to meet the cash demands of our operating units.

Adjusted net (loss) income: Net (loss) income (GAAP) less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate of 37%. We believe that adjusted net (loss) income is helpful in assessing our financial performance exclusive of the non-cash impact of the amortization of purchased intangibles.

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





Source: Molina Healthcare, Inc.

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