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Molina Healthcare Reports Second Quarter 2019 Financial Results

Jul 30, 2019

Raises Full Year 2019 Earnings Guidance

LONG BEACH, Calif.--(BUSINESS WIRE)--Jul. 30, 2019-- Molina Healthcare, Inc. (NYSE: MOH) today reported net income for the second quarter of 2019 of $196 million, or $3.06 per diluted share compared to net income of $202 million, or $3.02 per diluted share, in the second quarter of 2018. Financial results for the second quarter of 2019, are summarized below:

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

 

(In millions, except per share results)

Premium Revenue

$4,049

 

 

$4,514

 

 

$8,001

 

 

$8,837

 

Total Revenue

$4,193

 

 

$4,883

 

 

$8,312

 

 

$9,529

 

Pre-Tax Income

$257

 

 

$305

 

 

$517

 

 

$484

 

Net Income

$196

 

 

$202

 

 

$394

 

 

$309

 

EPS - Diluted

$3.06

 

 

$3.02

 

 

$6.04

 

 

$4.68

 

 

 

 

 

 

 

 

 

MCR

85.6

%

 

85.3

%

 

85.5

%

 

85.7

%

G&A Ratio

7.8

%

 

6.9

%

 

7.6

%

 

7.2

%

Pre-Tax Margin

6.1

%

 

6.2

%

 

6.2

%

 

5.1

%

Effective Tax Rate

24.0

%

 

33.8

%

 

23.9

%

 

36.2

%

After-Tax Margin

4.7

%

4.1

%

4.7

%

3.2

%

Highlights include:

  • Premium revenue was $4.0 billion in the second quarter of 2019, a 10.3% decrease compared with the second quarter of 2018, which was in line with the Company’s expectations.
  • Medical care ratio (MCR) was 85.6% in the second quarter of 2019, and 85.3% for the second quarter of 2018.
  • General and administrative (G&A) expense ratio increased to 7.8% in the second quarter, compared to 6.9% for the second quarter of 2018.
  • The second quarter results benefited from $12 million, or $0.15 per share, net gain for the repayment of convertible notes and restructuring costs.
  • After-tax margin was 4.7% for the second quarter of 2019 compared to 4.1% in the second quarter of 2018. Excluding the net gain, after tax margin would have been 4.4% for the second quarter of 2019.
  • Cash at the parent company amounted to $467 million as of June 30, 2019.
  • Operating cash flows for the six months ended June 30, 2019, was $156 million.
  • Raised full year 2019 earnings guidance to $11.20 - $11.50 from $10.50 - $11.00, which does not include any future prior-period reserve development.

“We are very pleased with our strong start to the year, a year in which we intend to demonstrate that we can sustain our attractive margin profile while pivoting to growth,” said Joe Zubretsky, president and CEO. “The business continues to generate significant excess cash flow and our revenue growth initiatives are well under way. Our quarter and year to date results, and the earnings trajectory of our entire portfolio of businesses leading into the second half of the year, give us the confidence to raise full year guidance.”

Premium Revenue

Premium revenue for the second quarter of 2019 decreased 10.3% to $4.0 billion compared to $4.5 billion in the second quarter of 2018, which was in line with Company expectations.

For the six months ended June 30, 2019, premium revenue decreased 9.5% to $8.0 billion from $8.8 billion for the comparable period in 2018. In both periods, the lower premium revenue is primarily a result of lower Medicaid membership due to the previously announced loss of the New Mexico Medicaid contract, along with the resizing of the Florida Medicaid contract and the related transition out of all but two Florida regions as reported throughout 2018.

Medical Care Ratio

The consolidated MCR for the second quarter of 2019 was 85.6% compared to 85.3% in the second quarter of 2018. Favorable prior period development for the second quarter was $28 million pre-tax.

The MCR for the six months ended June 30, 2019, improved to 85.5% compared to 85.7% for the comparable period in 2018, due to a combination of the following:

  • The Medicaid MCR improved to 88.3% compared to 90.3% for the six months ended June 30, 2018, primarily due to improvement in the TANF and ABD programs, partially offset by an increased MCR in the Medicaid Expansion program, primarily in California.
  • The Medicare MCR was relatively stable at 85.0% compared to 84.9% for the six months ended June 30, 2018.
  • The Marketplace MCR was 64.7% compared to 54.4% for the six months ended June 30, 2018. The prior period was positively impacted by the Cost Sharing Reduction (CSR) reimbursement. In addition, the current year was impacted by a relatively smaller benefit from prior year Marketplace risk adjustment compared to 2018.

General and Administrative Expense Ratio

The general and administrative expenses were 7.8% of total revenues in the second quarter of 2019 compared to 6.9% in the second quarter of 2018.

For the six months ended June 30, 2019, the G&A ratio was 7.6% compared to 7.2% in the comparable prior-year period. In both periods, the year-over-year increases are mainly associated with the decrease in premium revenue.

Interest Expense

The second quarter interest expense was $22 million compared to $32 million in the second quarter of 2018. The decline was due to continued repayment of debt.

Restructuring Costs/Other Income and Expenses

The second quarter results benefited from a $14 million gain on the repayment of convertible notes in the current period, offset somewhat by $2 million in restructuring costs, resulting in a $0.15 net benefit per diluted share.

Balance Sheet

Cash at the parent company amounted to $467 million as of June 30, 2019, compared to $443 million as of March 31, 2019.

During the quarter the Company received $345 million of dividends from the regulated health plan subsidiaries.

The Company made $139 million in principal repayments on the convertible notes during the quarter and $185 million in repayments since the beginning of the year. The impact of capital deployment actions in the quarter resulted in lower interest expense, a gain on repayment of the convertible notes and a lower share count.

Cash Flow

Operating cash flows for the six months ended June 30, 2019, was $156 million and is lower compared to the six months ended June 30, 2018, primarily due to timing of government payments.

Outlook

The Company raised its full year 2019 earnings guidance range to $11.20 to $11.50 per diluted share, with a midpoint of $11.35, from previously issued guidance of $10.50 to $11.00.

Guidance is based on the following:

  • Assumes no future restructuring or one-time significant items; and
  • Assumes no future prior period development.

 

 

July 30, 2019 (1)

 

April 29, 2019 (1)

 

 

(current)

 

(previous)

Premium revenue

 

$16.1B

 

$15.9B

Medicaid

 

$12.3B

 

$12.2B

Medicare

 

$2.2B

 

$2.2B

Marketplace

 

$1.6B

 

$1.5B

Premium tax revenue

 

$450M

 

$425M

Investment income and other revenue

 

$115M

 

$115M

Total revenue

 

$16.7B

 

$16.4B

Medical care costs

 

$13.8B

 

$13.6B

General and administrative expenses

 

$1.3B

 

$1.3B

Premium tax expenses

 

$450M

 

$425M

EBITDA (2)

 

$1,135M - $1,160M

 

$1,080M - $1,120M

Depreciation and amortization

 

$90M

 

$90M

Interest expense and other expenses, net

 

$90M

 

$90M

Income before income taxes

 

$955M - $980M

 

$900M - $940M

Net income

 

$725M - $740M

 

$680M - $710M

Net income per share

 

$11.20 - $11.50

 

$10.50 - $11.00

Diluted weighted average shares

 

64.5M

 

64.7M

 

 

 

 

 

End-of-year membership:

 

 

 

 

Medicaid and Medicare

 

3.1M

 

3.1M

Marketplace

 

270K - 280K

 

270K - 280K

 

 

 

 

 

Operating Statistics:

 

 

 

 

Medical care ratio

 

86%

 

86%

G&A ratio

 

7.7%

 

7.7%

Effective income tax expense rate

 

24.2%

 

24.5%

After-tax margin

 

4.2% - 4.4%

 

4.1% - 4.3%

Medicaid

 

3%

 

3%

Medicare

 

7%

 

6%

Marketplace

 

11%

 

11%

__________________

(1)

All amounts are rounded and approximations.

(2)

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 second quarter 2019 results at 8:00 a.m. Eastern time on Wednesday, July 31, 2019. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 0428160. A telephonic replay of the conference call will be available through Wednesday, August 7, 2019, by dialing (877) 344-7529 and entering confirmation number 10132714. 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 3.4 million members as of June 30, 2019. 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 revised 2019 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 risks and uncertainties are discussed in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and the section entitled “Forward-Looking Statements” in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2019.

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 July 30, 2019, and, except as otherwise required by law, the Company disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

 

(In millions, except per-share amounts)

Revenue:

 

 

 

 

 

 

 

Premium revenue

$

4,049

 

 

$

4,514

 

 

$

8,001

 

 

$

8,837

 

Premium tax revenue

110

 

 

106

 

 

248

 

 

210

 

Health insurer fees reimbursed

 

 

104

 

 

 

 

165

 

Service revenue

 

 

127

 

 

 

 

261

 

Investment income and other revenue

34

 

 

32

 

 

63

 

 

56

 

Total revenue

4,193

 

 

4,883

 

 

8,312

 

 

9,529

 

Operating expenses:

 

 

 

 

 

 

 

Medical care costs

3,466

 

 

3,850

 

 

6,837

 

 

7,572

 

General and administrative expenses

328

 

 

335

 

 

630

 

 

687

 

Premium tax expenses

110

 

 

106

 

 

248

 

 

210

 

Health insurer fees

 

 

99

 

 

 

 

174

 

Depreciation and amortization

22

 

 

25

 

 

47

 

 

51

 

Restructuring costs

2

 

 

8

 

 

5

 

 

33

 

Cost of service revenue

 

 

118

 

 

 

 

238

 

Total operating expenses

3,928

 

 

4,541

 

 

7,767

 

 

8,965

 

Operating income

265

 

 

342

 

 

545

 

 

564

 

Other expenses, net:

 

 

 

 

 

 

 

Interest expense

22

 

 

32

 

 

45

 

 

65

 

Other (income) expenses, net

(14

)

 

5

 

 

(17

)

 

15

 

Total other expenses, net

8

 

 

37

 

 

28

 

 

80

 

Income before income tax expense

257

 

 

305

 

 

517

 

 

484

 

Income tax expense

61

 

 

103

 

 

123

 

 

175

 

Net income

$

196

 

 

$

202

 

 

$

394

 

 

$

309

 

 

 

 

 

 

 

 

 

Net income per share, diluted

$

3.06

 

 

$

3.02

 

 

$

6.04

 

 

$

4.68

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

64.0

 

 

66.7

 

 

65.1

 

 

66.0

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

Medical care ratio

85.6

%

 

85.3

%

 

85.5

%

 

85.7

%

G&A ratio

7.8

%

 

6.9

%

 

7.6

%

 

7.2

%

Premium tax ratio

2.6

%

 

2.3

%

 

3.0

%

 

2.3

%

Effective income tax expense rate

24.0

%

 

33.8

%

 

23.9

%

 

36.2

%

After-tax margin

4.7

%

 

4.1

%

 

4.7

%

 

3.2

%

Medicaid

3.1

%

 

2.3

%

 

3.0

%

 

1.6

%

Medicare

7.1

%

 

5.7

%

 

7.4

%

 

4.9

%

Marketplace

11.2

%

 

16.9

%

 

13.6

%

 

17.4

%

CONSOLIDATED BALANCE SHEETS

 

June 30,

 

Dec. 31,

 

2019

 

2018

 

Unaudited

 

 

 

(Dollars in millions,
except per-share
amounts)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

2,253

 

 

$

2,826

 

Investments

2,070

 

 

1,681

 

Receivables

1,239

 

 

1,330

 

Prepaid expenses and other current assets

132

 

 

149

 

Derivative asset

169

 

 

476

 

Total current assets

5,863

 

 

6,462

 

Property, equipment, and capitalized software, net

373

 

 

241

 

Goodwill and intangible assets, net

180

 

 

190

 

Restricted investments

98

 

 

120

 

Deferred income taxes

70

 

 

117

 

Other assets

106

 

 

24

 

 

$

6,690

 

 

$

7,154

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Medical claims and benefits payable

$

1,767

 

 

$

1,961

 

Amounts due government agencies

984

 

 

967

 

Accounts payable and accrued liabilities

373

 

 

390

 

Deferred revenue

30

 

 

211

 

Current portion of long-term debt

65

 

 

241

 

Derivative liability

169

 

 

476

 

Total current liabilities

3,388

 

 

4,246

 

Long-term debt

1,241

 

 

1,020

 

Finance lease liabilities

232

 

 

197

 

Other long-term liabilities

93

 

 

44

 

Total liabilities

4,954

 

 

5,507

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value, 150 million shares authorized; outstanding: 63 million shares at June 30, 2019 and 62 million shares at December 31, 2018

 

 

 

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

 

 

 

Additional paid-in capital

240

 

 

643

 

Accumulated other comprehensive income (loss)

5

 

 

(8

)

Retained earnings

1,491

 

 

1,012

 

Total stockholders’ equity

1,736

 

 

1,647

 

$

6,690

$

7,154

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

 

(In millions)

Operating activities:

 

 

 

 

 

 

 

Net income

$

196

 

 

$

202

 

 

$

394

 

 

$

309

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

22

 

 

36

 

 

47

 

 

73

 

Deferred income taxes

4

 

 

 

 

19

 

 

(6

)

Share-based compensation

10

 

 

7

 

 

19

 

 

13

 

Amortization of convertible senior notes and finance lease liabilities

1

 

 

6

 

 

4

 

 

13

 

(Gain) loss on debt extinguishment

(14

)

 

5

 

 

(17

)

 

15

 

Non-cash restructuring costs

 

 

 

 

 

 

17

 

Other, net

 

 

2

 

 

3

 

 

4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

120

 

 

(232

)

 

91

 

 

(315

)

Prepaid expenses and other current assets

(2

)

 

58

 

 

18

 

 

(181

)

Medical claims and benefits payable

(228

)

 

(104

)

 

(194

)

 

(267

)

Amounts due government agencies

52

 

 

33

 

 

17

 

 

205

 

Accounts payable and accrued liabilities

(31

)

 

30

 

 

(61

)

 

349

 

Deferred revenue

(177

)

 

(172

)

 

(181

)

 

(42

)

Income taxes

(46

)

 

49

 

 

(3

)

 

127

 

Net cash (used in) provided by operating activities

(93

)

 

(80

)

 

156

 

 

314

 

Investing activities:

 

 

 

 

 

 

 

Purchases of investments

(977

)

 

(525

)

 

(1,162

)

 

(914

)

Proceeds from sales and maturities of investments

425

 

 

792

 

 

791

 

 

1,335

 

Purchases of property, equipment, and capitalized software

(14

)

 

(10

)

 

(20

)

 

(14

)

Other, net

2

 

 

(4

)

 

(2

)

 

(9

)

Net cash (used in) provided by investing activities

(564

)

 

253

 

 

(393

)

 

398

 

Financing activities:

 

 

 

 

 

 

 

Repayment of principal amount of 1.125% Convertible Notes

(139

)

 

(89

)

 

(185

)

 

(89

)

Cash paid for partial settlement of 1.125% Conversion Option

(358

)

 

(134

)

 

(473

)

 

(134

)

Cash received for partial termination of 1.125% Call Option

358

 

 

134

 

 

473

 

 

134

 

Cash paid for partial termination of 1.125% Warrants

(321

)

 

(113

)

 

(424

)

 

(113

)

Proceeds from borrowings under Term Loan Facility

120

 

 

 

 

220

 

 

 

Repayment of Credit Facility

 

 

(300

)

 

 

 

(300

)

Other, net

26

 

 

4

 

 

27

 

 

(1

)

Net cash used in financing activities

(314

)

 

(498

)

 

(362

)

 

(503

)

Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents

(971

)

 

(325

)

 

(599

)

 

209

 

Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period

3,298

 

 

3,824

 

 

2,926

 

 

3,290

 

Cash, cash equivalents, and restricted cash and cash equivalents at end of period

$

2,327

$

3,499

 

$

2,327

 

$

3,499

HEALTH PLANS SEGMENT MEMBERSHIP

 

June 30,
2019

 

Dec. 31,
2018

 

June 30,
2018

Ending Membership by Government Program:

 

 

 

 

 

TANF and CHIP

2,008,000

 

 

2,295,000

 

 

2,464,000

 

Medicaid Expansion

595,000

 

 

660,000

 

 

675,000

 

ABD

359,000

 

 

406,000

 

 

415,000

 

Total Medicaid

2,962,000

 

 

3,361,000

 

 

3,554,000

 

MMP - Integrated

57,000

 

 

54,000

 

 

55,000

 

Medicare Special Needs Plans

43,000

 

 

44,000

 

 

45,000

 

Total Medicare

100,000

 

 

98,000

 

 

100,000

 

Total Medicaid and Medicare

3,062,000

 

 

3,459,000

 

 

3,654,000

 

Marketplace

308,000

 

 

362,000

 

 

409,000

 

 

3,370,000

 

 

3,821,000

 

 

4,063,000

 

 

 

 

 

 

 

Ending Membership by Health Plan:

 

 

 

 

 

California

590,000

 

 

608,000

 

 

639,000

 

Florida (1)

142,000

 

 

313,000

 

 

398,000

 

Illinois

221,000

 

 

224,000

 

 

219,000

 

Michigan

360,000

 

 

383,000

 

 

397,000

 

New Mexico (1)

26,000

 

 

222,000

 

 

241,000

 

Ohio

297,000

 

 

302,000

 

 

320,000

 

Puerto Rico

200,000

 

 

252,000

 

 

326,000

 

South Carolina

130,000

 

 

120,000

 

 

114,000

 

Texas

360,000

 

 

423,000

 

 

450,000

 

Washington

811,000

 

 

781,000

 

 

776,000

 

Other (2)

233,000

 

 

193,000

 

 

183,000

 

 

3,370,000

 

 

3,821,000

 

 

4,063,000

 

__________________

(1)

 

The Company’s Medicaid contracts in New Mexico and in all but two regions in Florida terminated in late 2018 and early 2019. During 2019, the Company continues to serve Medicare and Marketplace members in both Florida and New Mexico, as well as Medicaid members in two regions in Florida.

(2)

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

UNAUDITED SELECTED FINANCIAL DATA

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

HEALTH PLANS SEGMENT FINANCIAL DATA — BY GOVERNMENT PROGRAM

 

Member

Months (1)

 

Premium Revenue

 

Medical Care Costs

 

MCR (2)

 

Medical
Margin

 

 

Total

 

PMPM

 

Total

 

PMPM

 

 

 

Three Months Ended June 30, 2019

TANF and CHIP

6.1

 

 

$

1,196

 

 

$

196.36

 

 

$

1,048

 

 

$

172.13

 

 

87.7

%

 

$

148

 

Medicaid Expansion

1.8

 

 

695

 

 

384.94

 

 

594

 

 

328.85

 

 

85.4

 

 

101

 

ABD

1.1

 

 

1,176

 

 

1,088.48

 

 

1,061

 

 

981.84

 

 

90.2

 

 

115

 

Total Medicaid

9.0

 

 

3,067

 

 

341.72

 

 

2,703

 

 

301.15

 

 

88.1

 

 

364

 

MMP

0.1

 

 

406

 

 

2,421.89

 

 

356

 

 

2,118.95

 

 

87.5

 

 

50

 

Medicare

0.2

 

 

166

 

 

1,296.99

 

 

132

 

 

1,034.43

 

 

79.8

 

 

34

 

Total Medicare

0.3

 

 

572

 

 

1,934.17

 

 

488

 

 

1,648.73

 

 

85.2

 

 

84

 

Total Medicaid and Medicare

9.3

 

 

3,639

 

 

392.52

 

 

3,191

 

 

344.14

 

 

87.7

 

 

448

 

Marketplace

0.9

 

 

410

 

 

440.20

 

 

275

 

 

295.71

 

 

67.2

 

 

135

 

 

10.2

 

 

$

4,049

 

 

$

396.87

 

 

$

3,466

 

 

$

339.72

 

 

85.6

%

 

$

583

 

 

Three Months Ended June 30, 2018

TANF and CHIP

7.5

 

 

$

1,393

 

 

$

186.18

 

 

$

1,205

 

 

$

161.13

 

 

86.5

%

 

$

188

 

Medicaid Expansion

2.1

 

 

761

 

 

372.04

 

 

676

 

 

330.83

 

 

88.9

 

 

85

 

ABD

1.3

 

 

1,288

 

 

1,033.34

 

 

1,209

 

 

969.27

 

 

93.8

 

 

79

 

Total Medicaid

10.9

 

 

3,442

 

 

319.52

 

 

3,090

 

 

286.89

 

 

89.8

 

 

352

 

MMP

0.1

 

 

367

 

 

2,224.30

 

 

313

 

 

1,893.91

 

 

85.1

 

 

54

 

Medicare

0.2

 

 

157

 

 

1,168.40

 

 

133

 

 

989.33

 

 

84.7

 

 

24

 

Total Medicare

0.3

 

 

524

 

 

1,751.49

 

 

446

 

 

1,488.85

 

 

85.0

 

 

78

 

Total Medicaid and Medicare

11.2

 

 

3,966

 

 

358.23

 

 

3,536

 

 

319.37

 

 

89.2

 

 

430

 

Marketplace

1.2

 

 

548

 

 

440.93

 

 

314

 

 

253.04

 

 

57.4

 

 

234

 

 

12.4

 

 

$

4,514

 

 

$

366.57

 

 

$

3,850

 

 

$

312.68

 

 

85.3

%

 

$

664

 

 

Six Months Ended June 30, 2019

TANF and CHIP

12.3

 

 

$

2,369

 

 

$

192.83

 

 

$

2,070

 

 

$

168.56

 

 

87.4

%

 

$

299

 

Medicaid Expansion

3.6

 

 

1,359

 

 

377.30

 

 

1,188

 

 

329.65

 

 

87.4

 

 

171

 

ABD

2.2

 

 

2,343

 

 

1,078.40

 

 

2,103

 

 

967.59

 

 

89.7

 

 

240

 

Total Medicaid

18.1

 

 

6,071

 

 

336.20

 

 

5,361

 

 

296.85

 

 

88.3

 

 

710

 

MMP

0.3

 

 

794

 

 

2,388.88

 

 

689

 

 

2,073.30

 

 

86.8

 

 

105

 

Medicare

0.3

 

 

329

 

 

1,290.88

 

 

265

 

 

1,041.06

 

 

80.6

 

 

64

 

Total Medicare

0.6

 

 

1,123

 

 

1,911.98

 

 

954

 

 

1,624.97

 

 

85.0

 

 

169

 

Total Medicaid and Medicare

18.7

 

 

7,194

 

 

385.82

 

 

6,315

 

 

338.67

 

 

87.8

 

 

879

 

Marketplace

1.9

 

 

807

 

 

415.94

 

 

522

 

 

269.14

 

 

64.7

 

 

285

 

 

20.6

 

 

$

8,001

 

 

$

388.66

 

 

$

6,837

 

 

$

332.11

 

 

85.5

%

 

$

1,164

 

 

Six Months Ended June 30, 2018

TANF and CHIP

14.9

 

 

$

2,766

 

 

$

185.66

 

 

$

2,477

 

 

$

166.32

 

 

89.6

%

 

$

289

 

Medicaid Expansion

4.1

 

 

1,513

 

 

372.39

 

 

1,317

 

 

324.19

 

 

87.1

 

 

196

 

ABD

2.5

 

 

2,542

 

 

1,023.83

 

 

2,364

 

 

951.99

 

 

93.0

 

 

178

 

Total Medicaid

21.5

 

 

6,821

 

 

318.11

 

 

6,158

 

 

287.22

 

 

90.3

 

 

663

 

MMP

0.3

 

 

724

 

 

2,180.86

 

 

618

 

 

1,858.87

 

 

85.2

 

 

106

 

Medicare

0.3

 

 

314

 

 

1,178.58

 

 

264

 

 

992.05

 

 

84.2

 

 

50

 

Total Medicare

0.6

 

 

1,038

 

 

1,735.05

 

 

882

 

 

1,473.30

 

 

84.9

 

 

156

 

Total Medicaid and Medicare

22.1

 

 

7,859

 

 

356.59

 

 

7,040

 

 

319.43

 

 

89.6

 

 

819

 

Marketplace

2.6

 

 

978

 

 

373.67

 

 

532

 

 

203.34

 

 

54.4

 

 

446

 

 

24.7

 

 

$

8,837

 

 

$

358.40

 

 

$

7,572

 

 

$

307.11

 

 

85.7

%

 

$

1,265

 

__________________

(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.

HEALTH PLANS SEGMENT FINANCIAL DATA — MEDICAID AND MEDICARE

 

Member

Months

 

Premium Revenue

 

Medical Care Costs

 

MCR

 

Medical
Margin

 

 

Total

 

PMPM

 

Total

 

PMPM

 

 

 

Three Months Ended June 30, 2019

California

1.6

 

 

$

499

 

 

$

305.40

 

 

$

415

 

 

$

253.85

 

 

83.1

%

 

$

84

 

Florida

0.3

 

 

126

 

 

417.10

 

 

120

 

 

399.22

 

 

95.7

 

 

6

 

Illinois

0.6

 

 

242

 

 

364.15

 

 

215

 

 

323.96

 

 

89.0

 

 

27

 

Michigan

1.1

 

 

403

 

 

376.39

 

 

332

 

 

310.08

 

 

82.4

 

 

71

 

Ohio

0.9

 

 

630

 

 

701.22

 

 

553

 

 

615.59

 

 

87.8

 

 

77

 

Puerto Rico

0.6

 

 

122

 

 

198.95

 

 

109

 

 

177.56

 

 

89.2

 

 

13

 

South Carolina

0.4

 

 

140

 

 

362.24

 

 

125

 

 

322.55

 

 

89.0

 

 

15

 

Texas

0.7

 

 

598

 

 

916.74

 

 

551

 

 

844.02

 

 

92.1

 

 

47

 

Washington

2.4

 

 

611

 

 

257.79

 

 

535

 

 

225.67

 

 

87.5

 

 

76

 

Other (1) (2)

0.7

 

 

268

 

 

394.85

 

 

236

 

 

347.43

 

 

88.0

 

 

32

 

 

9.3

 

 

$

3,639

 

 

$

392.52

 

 

$

3,191

 

 

$

344.14

 

 

87.7

%

 

$

448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

California

1.8

 

 

$

517

 

 

$

289.80

 

 

$

441

 

 

$

247.36

 

 

85.4

%

 

$

76

 

Florida

1.2

 

 

377

 

 

353.81

 

 

362

 

 

339.31

 

 

95.9

 

 

15

 

Illinois

0.6

 

 

203

 

 

311.60

 

 

170

 

 

261.59

 

 

84.0

 

 

33

 

Michigan

1.2

 

 

388

 

 

342.45

 

 

331

 

 

292.20

 

 

85.3

 

 

57

 

New Mexico (2)

0.7

 

 

313

 

 

469.88

 

 

290

 

 

435.36

 

 

92.7

 

 

23

 

Ohio

1.0

 

 

535

 

 

571.08

 

 

482

 

 

514.57

 

 

90.1

 

 

53

 

Puerto Rico

0.9

 

 

184

 

 

188.26

 

 

165

 

 

168.20

 

 

89.3

 

 

19

 

South Carolina

0.4

 

 

123

 

 

350.22

 

 

107

 

 

304.20

 

 

86.9

 

 

16

 

Texas

0.7

 

 

576

 

 

835.66

 

 

510

 

 

740.55

 

 

88.6

 

 

66

 

Washington

2.2

 

 

571

 

 

252.61

 

 

526

 

 

232.49

 

 

92.0

 

 

45

 

Other (1)

0.5

 

 

179

 

 

322.99

 

 

152

 

 

274.59

 

 

85.0

 

 

27

 

 

11.2

 

 

$

3,966

 

 

$

358.23

 

 

$

3,536

 

 

$

319.37

 

 

89.2

%

 

$

430

 

 

 

Six Months Ended June 30, 2019

California

3.3

 

 

$

998

 

 

$

302.59

 

 

$

863

 

 

$

261.66

 

 

86.5

%

 

$

135

 

Florida

0.7

 

 

288

 

 

399.86

 

 

247

 

 

343.24

 

 

85.8

 

 

41

 

Illinois

1.3

 

 

469

 

 

356.16

 

 

400

 

 

303.50

 

 

85.2

 

 

69

 

Michigan

2.2

 

 

798

 

 

369.66

 

 

658

 

 

305.00

 

 

82.5

 

 

140

 

Ohio

1.8

 

 

1,220

 

 

680.20

 

 

1,090

 

 

607.85

 

 

89.4

 

 

130

 

Puerto Rico

1.2

 

 

224

 

 

181.91

 

 

199

 

 

161.40

 

 

88.7

 

 

25

 

South Carolina

0.8

 

 

276

 

 

362.68

 

 

240

 

 

315.84

 

 

87.1

 

 

36

 

Texas

1.3

 

 

1,197

 

 

909.59

 

 

1,083

 

 

822.59

 

 

90.4

 

 

114

 

Washington

4.8

 

 

1,225

 

 

258.10

 

 

1,121

 

 

236.19

 

 

91.5

 

 

104

 

Other (1) (2)

1.3

 

 

499

 

 

383.07

 

 

414

 

 

317.56

 

 

82.9

 

 

85

 

 

18.7

 

 

$

7,194

 

 

$

385.82

 

 

$

6,315

 

 

$

338.67

 

 

87.8

%

 

$

879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

California

3.6

 

 

$

1,011

 

 

$

281.14

 

 

$

853

 

 

$

237.26

 

 

84.4

%

 

$

158

 

Florida

2.2

 

 

759

 

 

352.68

 

 

707

 

 

328.26

 

 

93.1

 

 

52

 

Illinois

1.1

 

 

344

 

 

305.94

 

 

292

 

 

259.87

 

 

84.9

 

 

52

 

Michigan

2.3

 

 

764

 

 

339.56

 

 

662

 

 

294.19

 

 

86.6

 

 

102

 

New Mexico

1.4

 

 

632

 

 

468.00

 

 

600

 

 

444.44

 

 

95.0

 

 

32

 

Ohio

1.9

 

 

1,086

 

 

573.87

 

 

942

 

 

497.75

 

 

86.7

 

 

144

 

Puerto Rico

1.9

 

 

370

 

 

190.68

 

 

339

 

 

174.74

 

 

91.6

 

 

31

 

South Carolina

0.7

 

 

245

 

 

349.15

 

 

211

 

 

300.87

 

 

86.2

 

 

34

 

Texas

1.4

 

 

1,138

 

 

822.72

 

 

1,029

 

 

744.05

 

 

90.4

 

 

109

 

Washington

4.5

 

 

1,155

 

 

254.64

 

 

1,100

 

 

242.48

 

 

95.2

 

 

55

 

Other (1)

1.1

 

 

355

 

 

318.94

 

 

305

 

 

273.97

 

 

85.9

 

 

50

 

 

22.1

 

 

$

7,859

 

 

$

356.59

 

 

$

7,040

 

 

$

319.43

 

 

89.6

%

 

$

819

 

__________________

(1) “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.

(2) In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to the Company’s consolidated operating results.

HEALTH PLANS SEGMENT FINANCIAL DATA — MARKETPLACE

 

Member
Months

 

Premium Revenue

 

Medical Care Costs

 

MCR

 

Medical
Margin

 

 

Total

 

PMPM

 

Total

 

PMPM

 

 

 

Three Months Ended June 30, 2019

California

0.2

 

 

$

61

 

 

$

382.22

 

 

$

35

 

 

$

220.31

 

 

57.6

%

 

$

26

 

Florida

0.1

 

 

50

 

 

390.03

 

 

30

 

 

236.50

 

 

60.6

 

 

20

 

Michigan

 

 

10

 

 

521.67

 

 

6

 

 

308.37

 

 

59.1

 

 

4

 

Ohio

0.1

 

 

24

 

 

754.67

 

 

19

 

 

565.69

 

 

75.0

 

 

5

 

Texas

0.3

 

 

167

 

 

379.29

 

 

117

 

 

267.12

 

 

70.4

 

 

50

 

Washington

0.1

 

 

51

 

 

803.11

 

 

35

 

 

548.48

 

 

68.3

 

 

16

 

Other (1)

0.1

 

 

47

 

 

527.41

 

 

33

 

 

376.04

 

 

71.3

 

 

14

 

 

0.9

 

 

$

410

 

 

$

440.20

 

 

$

275

 

 

$

295.71

 

 

67.2

%

 

$

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

California

0.2

 

 

$

73

 

 

$

426.16

 

 

$

21

 

 

$

117.92

 

 

27.7

%

 

$

52

 

Florida

0.1

 

 

100

 

 

698.31

 

 

38

 

 

269.86

 

 

38.6

 

 

62

 

Michigan

 

 

15

 

 

288.67

 

 

7

 

 

146.97

 

 

50.9

 

 

8

 

New Mexico

 

 

31

 

 

418.82

 

 

18

 

 

247.06

 

 

59.0

 

 

13

 

Ohio

 

 

31

 

 

518.64

 

 

23

 

 

381.46

 

 

73.6

 

 

8

 

Texas

0.7

 

 

222

 

 

330.12

 

 

160

 

 

238.72

 

 

72.3

 

 

62

 

Washington

0.2

 

 

56

 

 

787.80

 

 

41

 

 

572.48

 

 

72.7

 

 

15

 

Other (2)

 

 

20

 

 

 

NM

 

 

6

 

 

 

NM

 

 

NM

 

 

14

 

 

1.2

 

 

$

548

 

 

$

440.93

 

 

$

314

 

 

$

253.04

 

 

57.4

%

 

$

234

 

 

 

Six Months Ended June 30, 2019

California

0.3

 

 

$

117

 

 

$

361.73

 

 

$

68

 

 

$

210.71

 

 

58.2

%

 

$

49

 

Florida

0.3

 

 

111

 

 

406.52

 

 

56

 

 

205.17

 

 

50.5

 

 

55

 

Michigan

 

 

20

 

 

492.23

 

 

11

 

 

255.98

 

 

52.0

 

 

9

 

Ohio

0.1

 

 

54

 

 

805.96

 

 

34

 

 

505.10

 

 

62.7

 

 

20

 

Texas

0.9

 

 

315

 

 

341.18

 

 

226

 

 

245.82

 

 

72.0

 

 

89

 

Washington

0.1

 

 

98

 

 

756.26

 

 

64

 

 

490.84

 

 

64.9

 

 

34

 

Other (1)

0.2

 

 

92

 

 

501.13

 

 

63

 

 

344.61

 

 

68.8

 

 

29

 

 

1.9

 

 

$

807

 

 

$

415.94

 

 

$

522

 

 

$

269.14

 

 

64.7

%

 

$

285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

California

0.4

 

 

$

122

 

 

$

334.47

 

 

$

52

 

 

$

141.73

 

 

42.4

%

 

$

70

 

Florida

0.3

 

 

145

 

 

468.36

 

 

22

 

 

73.13

 

 

15.6

 

 

123

 

Michigan

0.1

 

 

28

 

 

254.69

 

 

16

 

 

145.49

 

 

57.1

 

 

12

 

New Mexico

0.1

 

 

65

 

 

429.19

 

 

37

 

 

246.77

 

 

57.5

 

 

28

 

Ohio

0.1

 

 

57

 

 

458.48

 

 

40

 

 

319.53

 

 

69.7

 

 

17

 

Texas

1.4

 

 

451

 

 

318.93

 

 

306

 

 

216.83

 

 

68.0

 

 

145

 

Washington

0.2

 

 

95

 

 

653.89

 

 

71

 

 

486.90

 

 

74.5

 

 

24

 

Other (2)

 

 

15

 

 

 

NM

 

 

(12

)

 

 

NM

 

 

NM

 

 

27

 

 

2.6

 

 

$

978

 

 

$

373.67

 

 

$

532

 

 

$

203.34

 

 

54.4

%

 

$

446

 

__________________

(1)

“Other” includes the New Mexico, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results in 2019.

(2)

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

HEALTH PLANS SEGMENT FINANCIAL DATA — TOTAL

 

Member

Months

 

Premium Revenue

 

Medical Care Costs

 

MCR

 

Medical Margin

 

 

Total

 

PMPM

 

Total

 

PMPM

 

 

 

Three Months Ended June 30, 2019

California

1.8

 

 

$

560

 

 

$

312.21

 

 

$

450

 

 

$

250.87

 

 

80.4

%

 

$

110

 

Florida

0.4

 

 

176

 

 

408.99

 

 

150

 

 

350.47

 

 

85.7

 

 

26

 

Illinois

0.6

 

 

242

 

 

364.15

 

 

215

 

 

323.96

 

 

89.0

 

 

27

 

Michigan

1.1

 

 

413

 

 

378.86

 

 

338

 

 

310.05

 

 

81.8

 

 

75

 

Ohio

1.0

 

 

654

 

 

703.09

 

 

572

 

 

613.85

 

 

87.3

 

 

82

 

Puerto Rico

0.6

 

 

122

 

 

198.95

 

 

109

 

 

177.56

 

 

89.2

 

 

13

 

South Carolina

0.4

 

 

140

 

 

362.24

 

 

125

 

 

322.55

 

 

89.0

 

 

15

 

Texas

1.0

 

 

765

 

 

700.15

 

 

668

 

 

611.53

 

 

87.3

 

 

97

 

Washington

2.5

 

 

662

 

 

271.96

 

 

570

 

 

234.05

 

 

86.1

 

 

92

 

Other (1) (2)

0.8

 

 

315

 

 

410.27

 

 

269

 

 

350.76

 

 

85.5

 

 

46

 

 

10.2

 

 

$

4,049

 

 

$

396.87

 

 

$

3,466

 

 

$

339.72

 

 

85.6

%

 

$

583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

California

2.0

 

 

$

590

 

 

$

301.73

 

 

$

462

 

 

$

236.04

 

 

78.2

%

 

$

128

 

Florida

1.3

 

 

477

 

 

394.38

 

 

400

 

 

331.13

 

 

84.0

 

 

77

 

Illinois

0.6

 

 

203

 

 

311.60

 

 

170

 

 

261.59

 

 

84.0

 

 

33

 

Michigan

1.2

 

 

403

 

 

340.08

 

 

338

 

 

285.78

 

 

84.0

 

 

65

 

New Mexico (2)

0.7

 

 

344

 

 

464.90

 

 

308

 

 

416.99

 

 

89.7

 

 

36

 

Ohio

1.0

 

 

566

 

 

567.96

 

 

505

 

 

506.66

 

 

89.2

 

 

61

 

Puerto Rico

0.9

 

 

184

 

 

188.26

 

 

165

 

 

168.20

 

 

89.3

 

 

19

 

South Carolina

0.4

 

 

123

 

 

350.22

 

 

107

 

 

304.20

 

 

86.9

 

 

16

 

Texas

1.4

 

 

798

 

 

585.50

 

 

670

 

 

492.23

 

 

84.1

 

 

128

 

Washington

2.4

 

 

627

 

 

268.84

 

 

567

 

 

242.80

 

 

90.3

 

 

60

 

Other (1)

0.5

 

 

199

 

 

360.90

 

 

158

 

 

285.65

 

 

79.1

 

 

41

 

 

12.4

 

 

$

4,514

 

 

$

366.57

 

 

$

3,850

 

 

$

312.68

 

 

85.3

%

 

$

664

 

 

Six Months Ended June 30, 2019

California

3.6

 

 

$

1,115

 

 

$

307.88

 

 

$

931

 

 

$

257.10

 

 

83.5

%

 

$

184

 

Florida

1.0

 

 

399

 

 

401.69

 

 

303

 

 

305.23

 

 

76.0

 

 

96

 

Illinois

1.3

 

 

469

 

 

356.16

 

 

400

 

 

303.50

 

 

85.2

 

 

69

 

Michigan

2.2

 

 

818

 

 

371.91

 

 

669

 

 

304.10

 

 

81.8

 

 

149

 

Ohio

1.9

 

 

1,274

 

 

684.77

 

 

1,124

 

 

604.12

 

 

88.2

 

 

150

 

Puerto Rico

1.2

 

 

224

 

 

181.91

 

 

199

 

 

161.40

 

 

88.7

 

 

25

 

South Carolina

0.8

 

 

276

 

 

362.68

 

 

240

 

 

315.84

 

 

87.1

 

 

36

 

Texas

2.2

 

 

1,512

 

 

675.34

 

 

1,309

 

 

584.90

 

 

86.6

 

 

203

 

Washington

4.9

 

 

1,323

 

 

271.34

 

 

1,185

 

 

242.96

 

 

89.5

 

 

138

 

Other

1.5

 

 

591

 

 

397.61

 

 

477

 

 

320.90

 

 

80.7

 

 

114

 

 

20.6

 

 

$

8,001

 

 

$

388.66

 

 

$

6,837

 

 

$

332.11

 

 

85.5

%

 

$

1,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

California

4.0

 

 

$

1,133

 

 

$

286.07

 

 

$

905

 

 

$

228.44

 

 

79.9

%

 

$

228

 

Florida

2.5

 

 

904

 

 

367.18

 

 

729

 

 

296.29

 

 

80.7

 

 

175

 

Illinois

1.1

 

 

344

 

 

305.94

 

 

292

 

 

259.87

 

 

84.9

 

 

52

 

Michigan

2.4

 

 

792

 

 

335.59

 

 

678

 

 

287.23

 

 

85.6

 

 

114

 

New Mexico

1.5

 

 

697

 

 

464.11

 

 

637

 

 

424.58

 

 

91.5

 

 

60

 

Ohio

2.0

 

 

1,143

 

 

566.77

 

 

982

 

 

486.79

 

 

85.9

 

 

161

 

Puerto Rico

1.9

 

 

370

 

 

190.68

 

 

339

 

 

174.74

 

 

91.6

 

 

31

 

South Carolina

0.7

 

 

245

 

 

349.15

 

 

211

 

 

300.87

 

 

86.2

 

 

34

 

Texas

2.8

 

 

1,589

 

 

567.95

 

 

1,335

 

 

477.43

 

 

84.1

 

 

254

 

Washington

4.7

 

 

1,250

 

 

267.01

 

 

1,171

 

 

250.05

 

 

93.6

 

 

79

 

Other

1.1

 

 

370

 

 

333.35

 

 

293

 

 

263.24

 

 

79.0

 

 

77

 

 

24.7

 

 

$

8,837

 

 

$

358.40

 

 

$

7,572

 

 

$

307.11

 

 

85.7

%

 

$

1,265

 

__________________

(1)

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

(2)

In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to the Company’s consolidated operating results.

SELECTED FINANCIAL DATA

The following table provides details of the Company’s medical care costs for the periods indicated:

 

Three Months Ended June 30,

 

2019

 

2018

 

Amount

 

PMPM

 

% of
Total

 

Amount

 

PMPM

 

% of
Total

Fee for service

$

2,594

 

 

$

254.36

 

 

74.8

%

 

$

2,861

 

 

$

232.40

 

 

74.4

%

Pharmacy

429

 

 

42.06

 

 

12.4

 

 

567

 

 

46.05

 

 

14.7

 

Capitation

288

 

 

28.17

 

 

8.3

 

 

282

 

 

22.89

 

 

7.3

 

Other

155

 

 

15.13

 

 

4.5

 

 

140

 

 

11.34

 

 

3.6

 

 

$

3,466

 

 

$

339.72

 

 

100.0

%

 

$

3,850

 

 

$

312.68

 

 

100.0

%

 

Six Months Ended June 30,

 

2019

 

2018

 

Amount

 

PMPM

 

% of

Total

 

Amount

 

PMPM

 

% of

Total

Fee for service

$

5,108

 

 

$

248.18

 

 

74.7

%

 

$

5,606

 

 

$

227.38

 

 

74.1

%

Pharmacy

842

 

 

40.88

 

 

12.3

 

 

1,150

 

 

46.66

 

 

15.2

 

Capitation

573

 

 

27.81

 

 

8.4

 

 

594

 

 

24.09

 

 

7.8

 

Other

314

 

 

15.24

 

 

4.6

 

 

222

 

 

8.98

 

 

2.9

 

 

$

6,837

 

 

$

332.11

 

 

100.0

%

 

$

7,572

 

 

$

307.11

 

 

100.0

%

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

 

June 30,

 

Dec. 31,

 

2019

 

2018

Fee-for-service claims incurred but not paid (IBNP)

$

1,346

 

 

$

1,562

 

Pharmacy payable

117

 

 

115

 

Capitation payable

63

 

 

52

 

Other (1)

241

 

 

232

 

 

$

1,767

 

 

$

1,961

 

______________________

(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 consolidated statements of income. As of June 30, 2019 and December 31, 2018, the Company had recorded non-risk provider payables of approximately $112 million and $107 million, respectively.

CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in millions)

The Company’s 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. The Company’s 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 the original estimate of claims and benefits payable at the beginning of the period was 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:

 

Six Months Ended

 

Year Ended

 

June 30,

 

Dec. 31,
2018

 

2019

 

2018

 

Medical claims and benefits payable, beginning balance

$

1,961

 

 

$

2,192

 

 

$

2,192

 

Components of medical care costs related to:

 

 

 

 

 

Current period

7,069

 

 

7,870

 

 

15,478

 

Prior period (1)

(232

)

 

(298

)

 

(341

)

Total medical care costs

6,837

 

 

7,572

 

 

15,137

 

Change in non-risk and other provider payables

4

 

 

56

 

 

13

 

Payments for medical care costs related to:

 

 

 

 

 

Current period

5,585

 

 

6,248

 

 

13,671

 

Prior period

1,450

 

 

1,652

 

 

1,710

 

Total paid

7,035

 

 

7,900

 

 

15,381

 

Medical claims and benefits payable, ending balance

$

1,767

 

 

$

1,920

 

 

$

1,961

 

 

 

 

 

 

 

Days in claims payable, fee for service (2)

48

 

 

49

 

 

53

 

(1)

The June 30, 2018, amount includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $76 million. December 31, 2018, 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 $35 million, $33 million and $43 million, as of June 30, 2019, June 30, 2018, and December 31, 2018, respectively.

SUMMARY OF NON-RUN RATE 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 expenses and other items that management believes are not indicative of longer-term business trends and operations. The individual items presented below increase (decrease) income before income tax expense.

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

2019

 

2018

 

Amount

 

Per
Diluted
Share (1)

 

Amount

 

Per
Diluted
Share (1)

 

Amount

 

Per
Diluted
Share (1)

 

Amount

 

Per
Diluted
Share (1)

Restructuring costs

$

(2

)

 

$

(0.02

)

 

$

(8

)

 

$

(0.10

)

 

$

(5

)

 

$

(0.05

)

 

(33

)

 

(0.39

)

Gain (loss) on debt extinguishment

14

 

 

0.17

 

 

(5

)

 

(0.06

)

 

17

 

 

0.21

 

 

(15

)

 

(0.21

)

 

$

12

 

 

$

0.15

 

 

$

(13

)

 

$

(0.16

)

 

$

12

 

 

$

0.16

 

 

$

(48

)

 

$

(0.60

)

 
______________________

(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 22.6% and 22% for 2019 and 2018, respectively.

NON-GAAP FINANCIAL MEASURES

The Company uses non-generally accepted accounting principles, or non-GAAP, financial measures as supplemental metrics in evaluating the Company’s 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 the Company’s 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

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

Net income

$

196

 

 

$

202

 

 

$

394

 

 

$

309

 

Adjustments:

 

 

 

 

 

 

 

Depreciation, and amortization of intangible assets and capitalized software

22

 

 

33

 

 

47

 

 

67

 

Interest expense

22

 

 

32

 

 

45

 

 

65

 

Income tax expense

61

 

 

103

 

 

123

 

 

175

 

EBITDA

$

301

 

 

$

370

 

 

$

609

 

 

$

616

 

Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:

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

NON-GAAP FINANCIAL MEASURES (CONTINUED)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2019

 

2018

 

2019

 

2018

 

 

 

Amount

 

Per
Diluted
Share

 

Amount

 

Per
Diluted
Share

 

Amount

 

Per
Diluted
Share

 

Amount

 

Per
Diluted
Share

Net income

$

196

 

 

$

3.06

 

 

$

202

 

 

$

3.02

 

 

$

394

 

 

$

6.04

 

 

$

309

 

 

$

4.68

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

4

 

 

0.07

 

 

5

 

 

0.08

 

 

9

 

 

0.14

 

 

10

 

 

0.16

 

Income tax effect (1)

(1

)

 

(0.02

)

 

(1

)

 

(0.02

)

 

(2

)

 

(0.03

)

 

(2

)

 

(0.04

)

Amortization of intangible assets, net of tax effect

3

 

 

0.05

 

 

4

 

 

0.06

 

 

7

 

 

0.11

 

 

8

 

 

0.12

 

Adjusted net income

$

199

 

 

$

3.11

 

 

$

206

 

 

$

3.08

 

 

$

401

 

 

$

6.15

 

 

$

317

 

 

$

4.80

 

________________________

(1)

Income tax effect of adjustments calculated at the blended federal and state statutory tax rate of 22.6% and 22% for 2019 and 2018, respectively.

Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:

Adjusted net income: Net income on a GAAP basis less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate. The Company believes that adjusted net income is helpful in assessing the Company’s financial performance exclusive of the non-cash impact of the amortization of purchased intangibles.

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

2019 REVISED GUIDANCE

Reconciliation of Non-GAAP Financial Measures

 

Low End

 

High End

 

(In millions)

Net income

$

725

 

 

$

740

 

Adjustments:

 

 

 

Depreciation, and amortization of intangible assets and capitalized software

90

 

 

90

 

Interest expense

90

 

 

90

 

Income tax expense

230

 

 

240

 

EBITDA

$

1,135

 

 

$

1,160

 

 

Source: Molina Healthcare, Inc.

Investor Contact: Julie Trudell, Julie.Trudell@molinahealthcare.com, 562-912-6720
Media Contact: Laura Murray, Laura.Murray@molinahealthcare.com, 562-506-9208