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Molina Healthcare Reports Third Quarter 2019 Financial Results

Oct 29, 2019

Raises Full Year 2019 Earnings Guidance

LONG BEACH, Calif.--(BUSINESS WIRE)--Oct. 29, 2019-- Molina Healthcare, Inc. (NYSE: MOH) today reported net income for the third quarter of 2019 of $175 million, or $2.75 per diluted share, compared to net income of $197 million, or $2.90 per diluted share, in the third quarter of 2018. Financial results for the third quarter of 2019 are summarized below:

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

 

(In millions, except per share results)

Premium Revenue

$4,084

 

$4,337

 

$12,085

 

$13,174

Total Revenue

$4,243

 

$4,697

 

$12,555

 

$14,226

Pre-Tax Income

$233

 

$259

 

$750

 

$743

Net Income

$175

 

$197

 

$569

 

$506

EPS - Diluted

$2.75

 

$2.90

 

$8.80

 

$7.60

 

 

 

 

 

 

 

 

MCR

86.3%

 

87.4%

 

85.7%

 

86.2%

G&A Ratio

7.6%

 

6.6%

 

7.6%

 

7.0%

Pre-Tax Margin

5.5%

 

5.5%

 

6.0%

 

5.2%

Effective Tax Rate

24.7%

 

24.0%

 

24.1%

 

31.9%

After-Tax Margin

4.1%

 

4.2%

 

4.5%

 

3.6%

Highlights include:

  • Premium revenue was $4.1 billion in the third quarter of 2019, a 5.8% decrease compared to the third quarter of 2018.
  • Medical care ratio (MCR) was 86.3% in the third quarter of 2019 compared to 87.4% for the third quarter of 2018.
  • General and administrative (G&A) expense ratio increased to 7.6% in the third quarter of 2019 compared to 6.6% for the third quarter of 2018.
  • The third quarter results include a charge of $2 million, or a $0.03 net loss per diluted share, for the repayment of convertible notes.
  • After-tax margin was 4.1% for the third quarter of 2019 compared to 4.2% in the third quarter of 2018.
  • Cash and investments at the parent company amounted to $796 million as of September 30, 2019.
  • Operating cash flows for the nine months ended September 30, 2019, were $398 million.
  • Raised full year 2019 earnings guidance to $11.30 - $11.55 from $11.20 - $11.50, which does not include any future prior-period reserve development.
  • On October 10, 2019, the Company entered into a definitive agreement to acquire certain assets of YourCare Health Plan, Inc. Through this transaction, expected to close early next year, the Company will serve approximately 46,000 Medicaid members in seven counties in Western New York.

     

“We are pleased with our performance this quarter as we sustained our margin profile, produced significant excess capital, and increased our full year 2019 guidance,” said Joe Zubretsky, president and CEO. “We have accomplished this in the backdrop of commencing our pivot to growth.”

Premium Revenue

Premium revenue for the third quarter of 2019 decreased 5.8% to $4.1 billion compared to $4.3 billion in the third quarter of 2018, which was in line with the Company’s expectations.

For the nine months ended September 30, 2019, premium revenue decreased 8.3% to $12.1 billion, from $13.2 billion for the comparable period in 2018. In both periods, the lower premium revenue is primarily a result of previously announced losses of Medicaid membership in New Mexico and Florida.

Medical Care Ratio

The consolidated MCR for the third quarter of 2019 was 86.3% compared to 87.4% in the third quarter of 2018. Prior period reserve development in the quarter was negligible.

The MCR for the nine months ended September 30, 2019, improved to 85.7% compared to 86.2% for the comparable period in 2018, due to a combination of the following:

  • The Medicaid MCR improved to 88.2% compared to 90.4% for the nine months ended September 30, 2018, due to improvement in all programs.
  • The Medicare MCR improved to 85.2% compared to 85.7% for the nine months ended September 30, 2018.
  • The Marketplace MCR was 66.7% compared to 57.5% for the nine months ended September 30, 2018. The 2018 period was positively impacted by reduced medical care costs from Cost Sharing Reduction (CSR) subsidies related to 2017 dates of service. 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 7.6% of total revenues in the third quarter of 2019 compared to 6.6% in the third quarter of 2018.

For the nine months ended September 30, 2019, the G&A ratio was 7.6% compared to 7.0% in the comparable prior-year period. In both periods, the year-over-year increases are due mainly to the year-over-year decline in total revenues.

Interest Expense

Interest expense was $22 million in the third quarter of 2019 compared to $26 million in the third quarter of 2018. The decline was due to continued repayment of convertible notes.

Other Expenses

The third quarter results included a $2 million charge on the repayment of convertible notes, resulting in a $0.03 net loss per diluted share.

Balance Sheet

Cash and investments at the parent company amounted to $796 million as of September 30, 2019, compared to $467 million as of June 30, 2019.

During the third quarter of 2019, the parent company received $430 million of dividends from the regulated health plan subsidiaries.

The Company repaid $55 million of principal on the convertible notes during the quarter, and $240 million since the beginning of the year. The impact of capital deployment actions in the quarter resulted in lower interest expense, a slight loss on repayment of the convertible notes, and a lower share count.

Cash Flow

Operating cash flows for the nine months ended September 30, 2019, amounted to $398 million and were higher compared to the nine months ended September 30, 2018, primarily due to the normal fluctuations of working capital.

Outlook

The Company raised its full year 2019 earnings guidance range to $11.30 - $11.55 per diluted share, from previously issued guidance of $11.20 - $11.50.

Guidance is based on the following:

  • Assumes no future restructuring or non-run rate significant items; and
  • Assumes no future prior period development.

 

 

October 29, 2019 (1)

 

July 30, 2019 (1)

 

 

(current)

 

(previous)

Premium revenue

 

$16.1B

 

$16.1B

Medicaid

 

$12.4B

 

$12.3B

Medicare

 

$2.2B

 

$2.2B

Marketplace

 

$1.5B

 

$1.6B

Premium tax revenue

 

$565M

 

$450M

Investment income and other revenue

 

$135M

 

$115M

Total revenue

 

$16.8B

 

$16.7B

Medical care costs

 

$13.8B

 

$13.8B

General and administrative expenses

 

$1.3B

 

$1.3B

Premium tax expenses

 

$565M

 

$450M

EBITDA (2)

 

$1,140M - $1,160M

 

$1,135M - $1,160M

Depreciation and amortization

 

$90M

 

$90M

Interest expense and other expenses, net

 

$90M

 

$90M

Income before income taxes

 

$960M - $980M

 

$955M - $980M

Net income

 

$725M - $740M

 

$725M - $740M

Net income per share

 

$11.30 - $11.55

 

$11.20 - $11.50

Diluted weighted average shares

 

64.2M

 

64.5M

 

 

 

 

 

End-of-year membership:

 

 

 

 

Medicaid and Medicare

 

3.1M

 

3.1M

Marketplace

 

270K

 

270K - 280K

 

 

 

 

 

Operating Statistics:

 

 

 

 

Medical care ratio

 

86%

 

86%

G&A ratio

 

7.7%

 

7.7%

Effective income tax expense rate

 

24.3%

 

24.2%

After-tax margin

 

4.3% - 4.4%

 

4.2% - 4.4%

Medicaid

 

3%

 

3%

Medicare

 

7%

 

7%

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 third quarter 2019 results at 8:00 a.m. Eastern time on Wednesday, October 30, 2019. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 5680857. A telephonic replay of the conference call will be available through Wednesday, November 6, 2019, by dialing (877) 344-7529 and entering confirmation number 10135133. A live audio broadcast of this conference call will be available on Molina Healthcare’s website, molinahealthcare.com. A 30‑day online replay will be available approximately an hour following the conclusion of the live broadcast.

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 3.3 million members as of September 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 September 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 October 29, 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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

 

(In millions, except per-share amounts)

Revenue:

 

 

 

 

 

 

 

Premium revenue

$

4,084

 

 

$

4,337

 

 

$

12,085

 

 

$

13,174

 

Premium tax revenue

119

 

 

110

 

 

367

 

 

320

 

Health insurer fees reimbursed

 

 

83

 

 

 

 

248

 

Service revenue

 

 

130

 

 

 

 

391

 

Investment income and other revenue

40

 

 

37

 

 

103

 

 

93

 

Total revenue

4,243

 

 

4,697

 

 

12,555

 

 

14,226

 

Operating expenses:

 

 

 

 

 

 

 

Medical care costs

3,523

 

 

3,790

 

 

10,360

 

 

11,362

 

General and administrative expenses

323

 

 

311

 

 

953

 

 

998

 

Premium tax expenses

119

 

 

110

 

 

367

 

 

320

 

Health insurer fees

 

 

87

 

 

 

 

261

 

Depreciation and amortization

21

 

 

25

 

 

68

 

 

76

 

Restructuring costs

 

 

5

 

 

5

 

 

38

 

Cost of service revenue

 

 

111

 

 

 

 

349

 

Total operating expenses

3,986

 

 

4,439

 

 

11,753

 

 

13,404

 

Gain on sale of subsidiary

 

 

37

 

 

 

 

37

 

Operating income

257

 

 

295

 

 

802

 

 

859

 

Other expenses, net:

 

 

 

 

 

 

 

Interest expense

22

 

 

26

 

 

67

 

 

91

 

Other expenses (income), net

2

 

 

10

 

 

(15

)

 

25

 

Total other expenses, net

24

 

 

36

 

 

52

 

 

116

 

Income before income tax expense

233

 

 

259

 

 

750

 

 

743

 

Income tax expense

58

 

 

62

 

 

181

 

 

237

 

Net income

$

175

 

 

$

197

 

 

$

569

 

 

$

506

 

 

 

 

 

 

 

 

 

Net income per share, diluted

$

2.75

 

 

$

2.90

 

 

$

8.80

 

 

$

7.60

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

63.6

 

 

67.9

 

 

64.6

 

 

66.6

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

Medical care ratio

86.3

%

 

87.4

%

 

85.7

%

 

86.2

%

G&A ratio

7.6

%

 

6.6

%

 

7.6

%

 

7.0

%

Premium tax ratio

2.8

%

 

2.5

%

 

2.9

%

 

2.4

%

Effective income tax rate

24.7

%

 

24.0

%

 

24.1

%

 

31.9

%

After-tax margin

4.1

%

 

4.2

%

 

4.5

%

 

3.6

%

Medicaid

3.4

%

 

2.8

%

 

3.1

%

 

2.0

%

Medicare

6.4

%

 

1.4

%

 

7.0

%

 

3.7

%

Marketplace

8.1

%

 

15.3

%

 

11.9

%

 

16.7

%

 
 
 
 

CONSOLIDATED BALANCE SHEETS

 

September 30,

 

December 31,

 

2019

 

2018

 

Unaudited

 

 

 

(Dollars in millions,
except per-share amounts)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

2,679

 

 

$

2,826

 

Investments

1,757

 

 

1,681

 

Receivables

1,280

 

 

1,330

 

Prepaid expenses and other current assets

140

 

 

149

 

Derivative asset

21

 

 

476

 

Total current assets

5,877

 

 

6,462

 

Property, equipment, and capitalized software, net

379

 

 

241

 

Goodwill and intangible assets, net

176

 

 

190

 

Restricted investments

79

 

 

120

 

Deferred income taxes

82

 

 

117

 

Other assets

108

 

 

24

 

 

$

6,701

 

 

$

7,154

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Medical claims and benefits payable

$

1,975

 

 

$

1,961

 

Amounts due government agencies

612

 

 

967

 

Accounts payable and accrued liabilities

478

 

 

390

 

Deferred revenue

207

 

 

211

 

Current portion of long-term debt

15

 

 

241

 

Derivative liability

21

 

 

476

 

Total current liabilities

3,308

 

 

4,246

 

Long-term debt

1,239

 

 

1,020

 

Finance lease liabilities

233

 

 

197

 

Other long-term liabilities

90

 

 

44

 

Total liabilities

4,870

 

 

5,507

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value, 150 million shares authorized; outstanding: 63 million shares at September 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

160

 

 

643

 

Accumulated other comprehensive income (loss)

5

 

 

(8

)

Retained earnings

1,666

 

 

1,012

 

Total stockholders’ equity

1,831

 

 

1,647

 

 

$

6,701

 

 

$

7,154

 

 

 
 
 
 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

 

(In millions)

Operating activities:

 

 

 

 

 

 

 

Net income

$

175

 

 

$

197

 

 

$

569

 

 

$

506

 

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

 

 

 

 

 

 

 

Depreciation and amortization

21

 

 

31

 

 

68

 

 

104

 

Deferred income taxes

(12

)

 

(26

)

 

7

 

 

(32

)

Share-based compensation

10

 

 

7

 

 

29

 

 

20

 

Amortization of convertible senior notes and finance lease liabilities

1

 

 

5

 

 

5

 

 

18

 

Loss (gain) on debt repayment

2

 

 

10

 

 

(15

)

 

25

 

Gain on sale of subsidiary

 

 

(37

)

 

 

 

(37

)

Non-cash restructuring costs

 

 

 

 

 

 

17

 

Other, net

(8

)

 

2

 

 

(5

)

 

6

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

(41

)

 

(192

)

 

50

 

 

(507

)

Prepaid expenses and other current assets

(24

)

 

64

 

 

(6

)

 

(117

)

Medical claims and benefits payable

208

 

 

123

 

 

14

 

 

(144

)

Amounts due government agencies

(372

)

 

(716

)

 

(355

)

 

(511

)

Accounts payable and accrued liabilities

98

 

 

49

 

 

37

 

 

398

 

Deferred revenue

177

 

 

(13

)

 

(4

)

 

(55

)

Income taxes

7

 

 

(9

)

 

4

 

 

118

 

Net cash provided by (used in) operating activities

242

 

 

(505

)

 

398

 

 

(191

)

Investing activities:

 

 

 

 

 

 

 

Purchases of investments

(776

)

 

(288

)

 

(1,938

)

 

(1,202

)

Proceeds from sales and maturities of investments

1,099

 

 

735

 

 

1,890

 

 

2,070

 

Purchases of property, equipment, and capitalized software

(10

)

 

(10

)

 

(30

)

 

(24

)

Other, net

 

 

(14

)

 

(2

)

 

(23

)

Net cash provided by (used in) investing activities

313

 

 

423

 

 

(80

)

 

821

 

Financing activities:

 

 

 

 

 

 

 

Repayment of principal amount of 1.125% Convertible Notes

(55

)

 

(140

)

 

(240

)

 

(236

)

Cash paid for partial settlement of 1.125% Conversion Option

(105

)

 

(343

)

 

(578

)

 

(477

)

Cash received for partial termination of 1.125% Call Option

105

 

 

343

 

 

578

 

 

477

 

Cash paid for partial termination of 1.125% Warrants

(90

)

 

(306

)

 

(514

)

 

(419

)

Proceeds from borrowings under Term Loan Facility

 

 

 

 

220

 

 

 

Repayment of Credit Facility

 

 

 

 

 

 

(300

)

Repayment of 1.625% Convertible Notes

 

 

(64

)

 

 

 

(64

)

Other, net

(3

)

 

1

 

 

24

 

 

7

 

Net cash used in financing activities

(148

)

 

(509

)

 

(510

)

 

(1,012

)

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

407

 

 

(591

)

 

(192

)

 

(382

)

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

2,327

 

 

3,499

 

 

2,926

 

 

3,290

 

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

$

2,734

 

 

$

2,908

 

 

$

2,734

 

 

$

2,908

 

 

 
 
 
 

HEALTH PLANS SEGMENT MEMBERSHIP

 

 

September 30,

2019

 

December 31,

2018

 

September 30,

2018

Ending Membership by Government Program:

 

 

 

 

 

TANF and CHIP

1,993,000

 

 

2,295,000

 

 

2,436,000

 

Medicaid Expansion

598,000

 

 

660,000

 

 

664,000

 

ABD

364,000

 

 

406,000

 

 

415,000

 

Total Medicaid

2,955,000

 

 

3,361,000

 

 

3,515,000

 

MMP - Integrated

58,000

 

 

54,000

 

 

55,000

 

Medicare Special Needs Plans

44,000

 

 

44,000

 

 

45,000

 

Total Medicare

102,000

 

 

98,000

 

 

100,000

 

Total Medicaid and Medicare

3,057,000

 

 

3,459,000

 

 

3,615,000

 

Marketplace

289,000

 

 

362,000

 

 

384,000

 

 

3,346,000

 

 

3,821,000

 

 

3,999,000

 

 

 

 

 

 

 

Ending Membership by Health Plan:

 

 

 

 

 

California

580,000

 

 

608,000

 

 

623,000

 

Florida (1)

136,000

 

 

313,000

 

 

395,000

 

Illinois

224,000

 

 

224,000

 

 

223,000

 

Michigan

361,000

 

 

383,000

 

 

394,000

 

New Mexico (1)

24,000

 

 

222,000

 

 

234,000

 

Ohio

292,000

 

 

302,000

 

 

315,000

 

Puerto Rico

186,000

 

 

252,000

 

 

320,000

 

South Carolina

134,000

 

 

120,000

 

 

117,000

 

Texas

350,000

 

 

423,000

 

 

436,000

 

Washington

818,000

 

 

781,000

 

 

770,000

 

Other (2)

241,000

 

 

193,000

 

 

172,000

 

 

3,346,000

 

 

3,821,000

 

 

3,999,000

 

__________________

 (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 September 30, 2019

TANF and CHIP

6.0

 

 

$

1,225

 

 

$

202.46

 

 

$

1,071

 

 

$

176.88

 

 

87.4

%

 

$

154

 

Medicaid Expansion

1.8

 

 

696

 

 

385.63

 

 

622

 

 

345.25

 

 

89.5

 

 

74

 

ABD

1.1

 

 

1,247

 

 

1,136.67

 

 

1,097

 

 

1,000.56

 

 

88.0

 

 

150

 

Total Medicaid

8.9

 

 

3,168

 

 

353.81

 

 

2,790

 

 

311.70

 

 

88.1

 

 

378

 

MMP

0.2

 

 

399

 

 

2,328.70

 

 

345

 

 

2,010.50

 

 

86.3

 

 

54

 

Medicare

0.1

 

 

160

 

 

1,230.01

 

 

134

 

 

1,029.75

 

 

83.7

 

 

26

 

Total Medicare

0.3

 

 

559

 

 

1,854.96

 

 

479

 

 

1,587.61

 

 

85.6

 

 

80

 

Total Medicaid and Medicare

9.2

 

 

3,727

 

 

402.76

 

 

3,269

 

 

353.31

 

 

87.7

 

 

458

 

Marketplace

0.9

 

 

357

 

 

410.23

 

 

254

 

 

292.21

 

 

71.2

 

 

103

 

 

10.1

 

 

$

4,084

 

 

$

403.40

 

 

$

3,523

 

 

$

348.06

 

 

86.3

%

 

$

561

 

 

 

Three Months Ended September 30, 2018

TANF and CHIP

7.4

 

 

$

1,379

 

 

$

187.03

 

 

$

1,228

 

 

$

166.41

 

 

89.0

%

 

$

151

 

Medicaid Expansion

2.0

 

 

671

 

 

333.11

 

 

640

 

 

317.62

 

 

95.3

 

 

31

 

ABD

1.2

 

 

1,322

 

 

1,054.92

 

 

1,186

 

 

946.38

 

 

89.7

 

 

136

 

Total Medicaid

10.6

 

 

3,372

 

 

316.86

 

 

3,054

 

 

286.86

 

 

90.5

 

 

318

 

MMP

0.2

 

 

353

 

 

2,159.72

 

 

323

 

 

1,981.45

 

 

91.7

 

 

30

 

Medicare

0.1

 

 

156

 

 

1,157.71

 

 

121

 

 

895.25

 

 

77.3

 

 

35

 

Total Medicare

0.3

 

 

509

 

 

1,706.95

 

 

444

 

 

1,490.63

 

 

87.3

 

 

65

 

Total Medicaid and Medicare

10.9

 

 

3,881

 

 

354.70

 

 

3,498

 

 

319.63

 

 

90.1

 

 

383

 

Marketplace

1.2

 

 

456

 

 

394.02

 

 

292

 

 

252.61

 

 

64.1

 

 

164

 

 

12.1

 

 

$

4,337

 

 

$

358.46

 

 

$

3,790

 

 

$

313.23

 

 

87.4

%

 

$

547

 

 

 

Nine Months Ended September 30, 2019

TANF and CHIP

18.3

 

 

$

3,594

 

 

$

196.01

 

 

$

3,141

 

 

$

171.30

 

 

87.4

%

 

$

453

 

Medicaid Expansion

5.4

 

 

2,055

 

 

380.08

 

 

1,810

 

 

334.85

 

 

88.1

 

 

245

 

ABD

3.3

 

 

3,590

 

 

1,097.94

 

 

3,200

 

 

978.64

 

 

89.1

 

 

390

 

Total Medicaid

27.0

 

 

9,239

 

 

342.03

 

 

8,151

 

 

301.77

 

 

88.2

 

 

1,088

 

MMP

0.5

 

 

1,193

 

 

2,368.38

 

 

1,034

 

 

2,051.90

 

 

86.6

 

 

159

 

Medicare

0.4

 

 

489

 

 

1,270.32

 

 

399

 

 

1,037.24

 

 

81.7

 

 

90

 

Total Medicare

0.9

 

 

1,682

 

 

1,892.63

 

 

1,433

 

 

1,612.29

 

 

85.2

 

 

249

 

Total Medicaid and Medicare

27.9

 

 

10,921

 

 

391.44

 

 

9,584

 

 

343.53

 

 

87.8

 

 

1,337

 

Marketplace

2.8

 

 

1,164

 

 

414.17

 

 

776

 

 

276.28

 

 

66.7

 

 

388

 

 

30.7

 

 

$

12,085

 

 

$

393.52

 

 

$

10,360

 

 

$

337.37

 

 

85.7

%

 

$

1,725

 

 

 

Nine Months Ended September 30, 2018

TANF and CHIP

22.3

 

 

$

4,145

 

 

$

186.12

 

 

$

3,705

 

 

$

166.35

 

 

89.4

%

 

$

440

 

Medicaid Expansion

6.1

 

 

2,184

 

 

359.37

 

 

1,957

 

 

322.01

 

 

89.6

 

 

227

 

ABD

3.7

 

 

3,864

 

 

1,034.25

 

 

3,550

 

 

950.11

 

 

91.9

 

 

314

 

Total Medicaid

32.1

 

 

10,193

 

 

317.70

 

 

9,212

 

 

287.10

 

 

90.4

 

 

981

 

MMP

0.5

 

 

1,077

 

 

2,173.90

 

 

941

 

 

1,899.26

 

 

87.4

 

 

136

 

Medicare

0.4

 

 

470

 

 

1,171.59

 

 

385

 

 

959.54

 

 

81.9

 

 

85

 

Total Medicare

0.9

 

 

1,547

 

 

1,725.71

 

 

1,326

 

 

1,479.06

 

 

85.7

 

 

221

 

Total Medicaid and Medicare

33.0

 

 

11,740

 

 

355.96

 

 

10,538

 

 

319.50

 

 

89.8

 

 

1,202

 

Marketplace

3.8

 

 

1,434

 

 

379.91

 

 

824

 

 

218.44

 

 

57.5

 

 

610

 

 

36.8

 

 

$

13,174

 

 

$

358.42

 

 

$

11,362

 

 

$

309.12

 

 

86.2

%

 

$

1,812

 

__________________

(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 September 30, 2019

California

1.6

 

 

$

510

 

 

$

315.90

 

 

$

423

 

 

$

261.97

 

 

82.9

%

 

$

87

 

Florida

0.3

 

 

130

 

 

436.99

 

 

127

 

 

427.80

 

 

97.9

 

 

3

 

Illinois

0.7

 

 

257

 

 

383.41

 

 

232

 

 

347.28

 

 

90.6

 

 

25

 

Michigan

1.1

 

 

401

 

 

373.01

 

 

332

 

 

307.97

 

 

82.6

 

 

69

 

Ohio

0.9

 

 

615

 

 

687.38

 

 

563

 

 

628.98

 

 

91.5

 

 

52

 

Puerto Rico

0.6

 

 

117

 

 

209.25

 

 

102

 

 

182.53

 

 

87.2

 

 

15

 

South Carolina

0.4

 

 

151

 

 

379.20

 

 

138

 

 

347.23

 

 

91.6

 

 

13

 

Texas

0.7

 

 

592

 

 

912.76

 

 

540

 

 

833.51

 

 

91.3

 

 

52

 

Washington

2.3

 

 

643

 

 

269.52

 

 

570

 

 

238.55

 

 

88.5

 

 

73

 

Other (1) (2)

0.6

 

 

311

 

 

437.60

 

 

242

 

 

341.29

 

 

78.0

 

 

69

 

 

9.2

 

 

$

3,727

 

 

$

402.76

 

 

$

3,269

 

 

$

353.31

 

 

87.7

%

 

$

458

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

California

1.7

 

 

$

435

 

 

$

249.00

 

 

$

446

 

 

$

255.22

 

 

102.5

%

 

$

(11

)

Florida

1.0

 

 

388

 

 

363.16

 

 

362

 

 

339.33

 

 

93.4

 

 

26

 

Illinois

0.7

 

 

207

 

 

312.72

 

 

182

 

 

274.98

 

 

87.9

 

 

25

 

Michigan

1.1

 

 

397

 

 

350.05

 

 

321

 

 

282.49

 

 

80.7

 

 

76

 

New Mexico (2)

0.6

 

 

304

 

 

471.66

 

 

275

 

 

426.69

 

 

90.5

 

 

29

 

Ohio

0.9

 

 

584

 

 

624.84

 

 

532

 

 

568.93

 

 

91.1

 

 

52

 

Puerto Rico

1.0

 

 

179

 

 

189.65

 

 

162

 

 

171.96

 

 

90.7

 

 

17

 

South Carolina

0.4

 

 

124

 

 

354.53

 

 

112

 

 

318.56

 

 

89.9

 

 

12

 

Texas

0.7

 

 

577

 

 

848.47

 

 

525

 

 

772.14

 

 

91.0

 

 

52

 

Washington

2.3

 

 

511

 

 

226.77

 

 

444

 

 

197.04

 

 

86.9

 

 

67

 

Other (1)

0.5

 

 

175

 

 

334.29

 

 

137

 

 

261.49

 

 

78.2

 

 

38

 

 

10.9

 

 

$

3,881

 

 

$

354.70

 

 

$

3,498

 

 

$

319.63

 

 

90.1

%

 

$

383

 

 

Nine Months Ended September 30, 2019

California

4.9

 

 

$

1,508

 

 

$

306.96

 

 

$

1,286

 

 

$

261.76

 

 

85.3

%

 

$

222

 

Florida

1.0

 

 

418

 

 

410.71

 

 

374

 

 

367.95

 

 

89.6

 

 

44

 

Illinois

2.0

 

 

726

 

 

365.35

 

 

632

 

 

318.26

 

 

87.1

 

 

94

 

Michigan

3.3

 

 

1,199

 

 

370.77

 

 

990

 

 

305.99

 

 

82.5

 

 

209

 

Ohio

2.7

 

 

1,835

 

 

682.59

 

 

1,653

 

 

614.89

 

 

90.1

 

 

182

 

Puerto Rico

1.8

 

 

341

 

 

190.42

 

 

301

 

 

167.98

 

 

88.2

 

 

40

 

South Carolina

1.2

 

 

427

 

 

368.35

 

 

378

 

 

326.61

 

 

88.7

 

 

49

 

Texas

2.0

 

 

1,789

 

 

910.64

 

 

1,623

 

 

826.20

 

 

90.7

 

 

166

 

Washington

7.1

 

 

1,868

 

 

261.92

 

 

1,691

 

 

236.98

 

 

90.5

 

 

177

 

Other (1) (2)

1.9

 

 

810

 

 

402.31

 

 

656

 

 

325.93

 

 

81.0

 

 

154

 

 

27.9

 

 

$

10,921

 

 

$

391.44

 

 

$

9,584

 

 

$

343.53

 

 

87.8

%

 

$

1,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018

California

5.3

 

 

$

1,446

 

 

$

270.63

 

 

$

1,299

 

 

$

243.14

 

 

89.8

%

 

$

147

 

Florida

3.2

 

 

1,147

 

 

356.15

 

 

1,069

 

 

331.93

 

 

93.2

 

 

78

 

Illinois

1.8

 

 

551

 

 

308.45

 

 

474

 

 

265.47

 

 

86.1

 

 

77

 

Michigan

3.4

 

 

1,161

 

 

343.08

 

 

983

 

 

290.26

 

 

84.6

 

 

178

 

New Mexico (2)

2.0

 

 

936

 

 

469.19

 

 

875

 

 

438.70

 

 

93.5

 

 

61

 

Ohio

2.8

 

 

1,670

 

 

590.71

 

 

1,474

 

 

521.26

 

 

88.2

 

 

196

 

Puerto Rico

2.9

 

 

549

 

 

190.34

 

 

501

 

 

173.83

 

 

91.3

 

 

48

 

South Carolina

1.1

 

 

369

 

 

350.94

 

 

323

 

 

306.76

 

 

87.4

 

 

46

 

Texas

2.1

 

 

1,715

 

 

831.21

 

 

1,554

 

 

753.31

 

 

90.6

 

 

161

 

Washington

6.8

 

 

1,666

 

 

245.40

 

 

1,544

 

 

227.41

 

 

92.7

 

 

122

 

Other (1)

1.6

 

 

530

 

 

323.84

 

 

442

 

 

269.98

 

 

83.4

 

 

88

 

 

33.0

 

 

$

11,740

 

 

$

355.96

 

 

$

10,538

 

 

$

319.50

 

 

89.8

%

 

$

1,202

 

_______________

(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 September 30, 2019

California

0.2

 

 

$

57

 

 

$

371.07

 

 

$

33

 

 

$

210.87

 

 

56.8

%

 

$

24

 

Florida

0.1

 

 

41

 

 

349.53

 

 

25

 

 

212.00

 

 

60.7

 

 

16

 

Michigan

 

 

7

 

 

431.41

 

 

4

 

 

289.45

 

 

67.1

 

 

3

 

Ohio

 

 

25

 

 

792.96

 

 

19

 

 

626.30

 

 

79.0

 

 

6

 

Texas

0.4

 

 

142

 

 

351.04

 

 

105

 

 

257.68

 

 

73.4

 

 

37

 

Washington

0.1

 

 

45

 

 

719.67

 

 

33

 

 

548.75

 

 

76.2

 

 

12

 

Other (1)

0.1

 

 

40

 

 

480.41

 

 

35

 

 

408.35

 

 

85.0

 

 

5

 

 

0.9

 

 

$

357

 

 

$

410.23

 

 

$

254

 

 

$

292.21

 

 

71.2

%

 

$

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

California

0.2

 

 

$

49

 

 

$

309.04

 

 

$

37

 

 

$

235.63

 

 

76.2

%

 

$

12

 

Florida

0.2

 

 

66

 

 

548.60

 

 

45

 

 

362.39

 

 

66.1

 

 

21

 

Michigan

 

 

12

 

 

233.51

 

 

7

 

 

145.13

 

 

62.1

 

 

5

 

New Mexico

0.1

 

 

28

 

 

419.20

 

 

18

 

 

249.33

 

 

59.5

 

 

10

 

Ohio

0.1

 

 

27

 

 

485.08

 

 

18

 

 

336.86

 

 

69.4

 

 

9

 

Texas

0.6

 

 

228

 

 

357.54

 

 

134

 

 

209.80

 

 

58.7

 

 

94

 

Washington

 

 

44

 

 

656.70

 

 

34

 

 

518.75

 

 

79.0

 

 

10

 

Other (2)

 

 

2

 

 

NM

 

(1

)

 

NM

 

NM

 

3

 

 

1.2

 

 

$

456

 

 

$

394.02

 

 

$

292

 

 

$

252.61

 

 

64.1

%

 

$

164

 

 

Nine Months Ended September 30, 2019

California

0.5

 

 

$

174

 

 

$

364.72

 

 

$

101

 

 

$

210.76

 

 

57.8

%

 

$

73

 

Florida

0.4

 

 

152

 

 

389.44

 

 

81

 

 

207.22

 

 

53.2

 

 

71

 

Michigan

 

 

27

 

 

474.12

 

 

15

 

 

265.95

 

 

56.1

 

 

12

 

Ohio

0.1

 

 

79

 

 

801.90

 

 

53

 

 

543.00

 

 

67.7

 

 

26

 

Texas

1.3

 

 

457

 

 

344.19

 

 

331

 

 

249.44

 

 

72.5

 

 

126

 

Washington

0.2

 

 

143

 

 

744.47

 

 

97

 

 

509.50

 

 

68.4

 

 

46

 

Other (1)

0.3

 

 

132

 

 

494.59

 

 

98

 

 

364.71

 

 

73.7

 

 

34

 

 

2.8

 

 

$

1,164

 

 

$

414.17

 

 

$

776

 

 

$

276.28

 

 

66.7

%

 

$

388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018

California

0.6

 

 

$

171

 

 

$

326.82

 

 

$

89

 

 

$

169.98

 

 

52.0

%

 

$

82

 

Florida

0.5

 

 

211

 

 

491.13

 

 

67

 

 

155.24

 

 

31.6

 

 

144

 

Michigan

0.1

 

 

40

 

 

248.24

 

 

23

 

 

145.38

 

 

58.6

 

 

17

 

New Mexico

0.2

 

 

93

 

 

426.07

 

 

55

 

 

247.57

 

 

58.1

 

 

38

 

Ohio

0.2

 

 

84

 

 

466.75

 

 

58

 

 

324.91

 

 

69.6

 

 

26

 

Texas

2.0

 

 

679

 

 

330.92

 

 

440

 

 

214.65

 

 

64.9

 

 

239

 

Washington

0.2

 

 

139

 

 

654.78

 

 

105

 

 

497.00

 

 

75.9

 

 

34

 

Other (2)

 

 

17

 

 

NM

 

(13

)

 

NM

 

NM

 

30

 

 

3.8

 

 

$

1,434

 

 

$

379.91

 

 

$

824

 

 

$

218.44

 

 

57.5

%

 

$

610

 

__________________

(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 September 30, 2019

California

1.8

 

 

$

567

 

 

$

320.67

 

 

$

456

 

 

$

257.55

 

 

80.3

%

 

$

111

 

Florida

0.4

 

 

171

 

 

412.29

 

 

152

 

 

366.86

 

 

89.0

 

 

19

 

Illinois

0.7

 

 

257

 

 

383.41

 

 

232

 

 

347.28

 

 

90.6

 

 

25

 

Michigan

1.1

 

 

408

 

 

373.92

 

 

336

 

 

307.68

 

 

82.3

 

 

72

 

Ohio

0.9

 

 

640

 

 

690.88

 

 

582

 

 

628.89

 

 

91.0

 

 

58

 

Puerto Rico

0.6

 

 

117

 

 

209.25

 

 

102

 

 

182.53

 

 

87.2

 

 

15

 

South Carolina

0.4

 

 

151

 

 

379.20

 

 

138

 

 

347.23

 

 

91.6

 

 

13

 

Texas

1.1

 

 

734

 

 

696.46

 

 

645

 

 

611.78

 

 

87.8

 

 

89

 

Washington

2.4

 

 

688

 

 

280.85

 

 

603

 

 

246.36

 

 

87.7

 

 

85

 

Other (1) (2)

0.7

 

 

351

 

 

442.14

 

 

277

 

 

348.40

 

 

78.8

 

 

74

 

 

10.1

 

 

$

4,084

 

 

$

403.40

 

 

$

3,523

 

 

$

348.06

 

 

86.3

%

 

$

561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

California

1.9

 

 

$

484

 

 

$

253.96

 

 

$

483

 

 

$

253.60

 

 

99.9

%

 

$

1

 

Florida

1.2

 

 

454

 

 

382.20

 

 

407

 

 

341.70

 

 

89.4

 

 

47

 

Illinois

0.7

 

 

207

 

 

312.72

 

 

182

 

 

274.98

 

 

87.9

 

 

25

 

Michigan

1.1

 

 

409

 

 

345.28

 

 

328

 

 

276.88

 

 

80.2

 

 

81

 

New Mexico (2)

0.7

 

 

332

 

 

466.63

 

 

293

 

 

409.68

 

 

87.8

 

 

39

 

Ohio

1.0

 

 

611

 

 

616.95

 

 

550

 

 

555.83

 

 

90.1

 

 

61

 

Puerto Rico

1.0

 

 

179

 

 

189.65

 

 

162

 

 

171.96

 

 

90.7

 

 

17

 

South Carolina

0.4

 

 

124

 

 

354.53

 

 

112

 

 

318.56

 

 

89.9

 

 

12

 

Texas

1.3

 

 

805

 

 

611.01

 

 

659

 

 

500.14

 

 

81.9

 

 

146

 

Washington

2.3

 

 

555

 

 

239.25

 

 

478

 

 

206.38

 

 

86.3

 

 

77

 

Other (1)

0.5

 

 

177

 

 

336.18

 

 

136

 

 

260.19

 

 

77.4

 

 

41

 

 

12.1

 

 

$

4,337

 

 

$

358.46

 

 

$

3,790

 

 

$

313.23

 

 

87.4

%

 

$

547

 

 

Nine Months Ended September 30, 2019

California

5.4

 

 

$

1,682

 

 

$

312.08

 

 

$

1,387

 

 

$

257.25

 

 

82.4

%

 

$

295

 

Florida

1.4

 

 

570

 

 

404.81

 

 

455

 

 

323.37

 

 

79.9

 

 

115

 

Illinois

2.0

 

 

726

 

 

365.35

 

 

632

 

 

318.26

 

 

87.1

 

 

94

 

Michigan

3.3

 

 

1,226

 

 

372.58

 

 

1,005

 

 

305.29

 

 

81.9

 

 

221

 

Ohio

2.8

 

 

1,914

 

 

686.80

 

 

1,706

 

 

612.35

 

 

89.2

 

 

208

 

Puerto Rico

1.8

 

 

341

 

 

190.42

 

 

301

 

 

167.98

 

 

88.2

 

 

40

 

South Carolina

1.2

 

 

427

 

 

368.35

 

 

378

 

 

326.61

 

 

88.7

 

 

49

 

Texas

3.3

 

 

2,246

 

 

682.10

 

 

1,954

 

 

593.50

 

 

87.0

 

 

292

 

Washington

7.3

 

 

2,011

 

 

274.52

 

 

1,788

 

 

244.10

 

 

88.9

 

 

223

 

Other (1) (2)

2.2

 

 

942

 

 

413.13

 

 

754

 

 

330.48

 

 

80.0

 

 

188

 

 

30.7

 

 

$

12,085

 

 

$

393.52

 

 

$

10,360

 

 

$

337.37

 

 

85.7

%

 

$

1,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018

California

5.9

 

 

$

1,617

 

 

$

275.64

 

 

$

1,388

 

 

$

236.61

 

 

85.8

%

 

$

229

 

Florida

3.7

 

 

1,358

 

 

372.07

 

 

1,136

 

 

311.09

 

 

83.6

 

 

222

 

Illinois

1.8

 

 

551

 

 

308.45

 

 

474

 

 

265.47

 

 

86.1

 

 

77

 

Michigan

3.5

 

 

1,201

 

 

338.83

 

 

1,006

 

 

283.77

 

 

83.7

 

 

195

 

New Mexico (2)

2.2

 

 

1,029

 

 

464.92

 

 

930

 

 

419.78

 

 

90.3

 

 

99

 

Ohio

3.0

 

 

1,754

 

 

583.29

 

 

1,532

 

 

509.52

 

 

87.4

 

 

222

 

Puerto Rico

2.9

 

 

549

 

 

190.34

 

 

501

 

 

173.83

 

 

91.3

 

 

48

 

South Carolina

1.1

 

 

369

 

 

350.94

 

 

323

 

 

306.76

 

 

87.4

 

 

46

 

Texas

4.1

 

 

2,394

 

 

581.74

 

 

1,994

 

 

484.70

 

 

83.3

 

 

400

 

Washington

7.0

 

 

1,805

 

 

257.82

 

 

1,649

 

 

235.59

 

 

91.4

 

 

156

 

Other (1)

1.6

 

 

547

 

 

334.26

 

 

429

 

 

262.27

 

 

78.5

 

 

118

 

 

36.8

 

 

$

13,174

 

 

$

358.42

 

 

$

11,362

 

 

$

309.12

 

 

86.2

%

 

$

1,812

 

__________________

(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 September 30,

 

2019

 

2018

 

Amount

 

PMPM

 

% of

Total

 

Amount

 

PMPM

 

% of

Total

Fee for service

$

2,685

 

 

$

265.12

 

 

76.2

%

 

$

2,865

 

 

$

236.74

 

 

75.6

%

Pharmacy

412

 

 

40.74

 

 

11.7

 

 

495

 

 

40.90

 

 

13.1

 

Capitation

283

 

 

28.01

 

 

8.0

 

 

297

 

 

24.52

 

 

7.8

 

Other

143

 

 

14.19

 

 

4.1

 

 

133

 

 

11.07

 

 

3.5

 

 

$

3,523

 

 

$

348.06

 

 

100.0

%

 

$

3,790

 

 

$

313.23

 

 

100.0

%

 

 

Nine Months Ended September 30,

 

2019

 

2018

 

Amount

 

PMPM

 

% of

Total

 

Amount

 

PMPM

 

% of

Total

Fee for service

$

7,793

 

 

$

253.77

 

 

75.2

%

 

$

8,471

 

 

$

230.46

 

 

74.6

%

Pharmacy

1,254

 

 

40.83

 

 

12.1

 

 

1,645

 

 

44.76

 

 

14.5

 

Capitation

856

 

 

27.88

 

 

8.3

 

 

891

 

 

24.23

 

 

7.8

 

Other

457

 

 

14.89

 

 

4.4

 

 

355

 

 

9.67

 

 

3.1

 

 

$

10,360

 

 

$

337.37

 

 

100.0

%

 

$

11,362

 

 

$

309.12

 

 

100.0

%

 

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

 

September 30,

 

December 31,

 

2019

 

2018

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

$

1,424

 

 

$

1,562

 

Pharmacy payable

128

 

 

115

 

Capitation payable

57

 

 

52

 

Other (1)

366

 

 

232

 

 

$

1,975

 

 

$

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 September 30, 2019 and December 31, 2018, the Company had recorded non-risk provider payables of approximately $239 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:

 

Nine Months Ended

 

Year Ended

 

September 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

10,613

 

 

11,670

 

 

15,478

 

Prior period (1)

(253

)

 

(308

)

 

(341

)

Total medical care costs

10,360

 

 

11,362

 

 

15,137

 

Change in non-risk and other provider payables

131

 

 

60

 

 

13

 

Payments for medical care costs related to:

 

 

 

 

 

Current period

8,996

 

 

9,866

 

 

13,671

 

Prior period

1,481

 

 

1,706

 

 

1,710

 

Total paid

10,477

 

 

11,572

 

 

15,381

 

Medical claims and benefits payable, ending balance

$

1,975

 

 

$

2,042

 

 

$

1,961

 

 

 

 

 

 

 

Days in claims payable, fee for service (2)

50

 

 

53

 

 

53

 

______________________

(1) The September 30, 2018, and December 31, 2018, amounts include 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 $42 million, $34 million and $43 million, as of September 30, 2019, September 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 September 30,

 

Nine Months Ended September 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)

(Loss) gain on debt repayment

$

(2

)

 

$

(0.03

)

 

$

(10

)

 

$

(0.12

)

 

$

15

 

 

$

0.18

 

 

$

(25

)

 

$

(0.33

)

Restructuring costs

 

 

 

 

(5

)

 

(0.06

)

 

(5

)

 

(0.06

)

 

(38

)

 

(0.45

)

Gain on sale of subsidiary

 

 

 

 

37

 

 

0.42

 

 

 

 

 

 

37

 

 

0.43

 

 

$

(2

)

 

$

(0.03

)

 

$

22

 

 

$

0.24

 

 

$

10

 

 

$

0.12

 

 

$

(26

)

 

$

(0.35

)

______________________

(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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

Net income

$

175

 

 

$

197

 

 

$

569

 

 

$

506

 

Adjustments:

 

 

 

 

 

 

 

Depreciation, and amortization of intangible assets and capitalized software

21

 

 

28

 

 

68

 

 

95

 

Interest expense

22

 

 

26

 

 

67

 

 

91

 

Income tax expense

58

 

 

62

 

 

181

 

 

237

 

EBITDA

$

276

 

 

$

313

 

 

$

885

 

 

$

929

 

 

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.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2019

 

2018

 

2019

 

2018

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

Net income

$

175

 

 

$

2.75

 

 

$

197

 

 

$

2.90

 

 

$

569

 

 

$

8.80

 

 

$

506

 

 

$

7.60

 

Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

4

 

 

0.07

 

 

6

 

 

0.08

 

 

13

 

 

0.21

 

 

16

 

 

0.23

 

Income tax effect (1)

(1

)

 

(0.02

)

 

(2

)

 

(0.01

)

 

(3

)

 

(0.05

)

 

(4

)

 

(0.05

)

Adjustment, net of tax effect

3

 

 

0.05

 

 

4

 

 

0.07

 

 

10

 

 

0.16

 

 

12

 

 

0.18

 

Adjusted net income

$

178

 

 

$

2.80

 

 

$

201

 

 

$

2.97

 

 

$

579

 

 

$

8.96

 

 

$

518

 

 

$

7.78

 

________________________

(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

235

 

 

240

 

EBITDA

$

1,140

 

 

$

1,160

 

 
 
 

 

Source: Molina Healthcare, Inc.

Investor Contact: Julie Trudell, Julie.Trudell@molinahealthcare.com, 562-912-6720

Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588