UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): February 13, 2007
MOLINA
HEALTHCARE, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
|
1-31719
|
|
13-4204626
|
|
(State
of incorporation)
|
|
(Commission
File Number)
|
|
(I.R.S.
Employer Identification
Number)
|
One
Golden Shore Drive, Long Beach, California 90802
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (562) 435-3666
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
2.02.
|
Results
of Operations and Financial
Condition.
|
On
February 13, 2007, Molina Healthcare, Inc. issued a press release announcing
its
financial results for the fourth quarter and year ended December 31, 2006.
The
full text of the press release is included as Exhibit 99.1 to this report.
The
information contained in the websites cited in the press release is not part
of
this report.
The
information in this Form 8-K and the exhibit attached hereto shall not be deemed
to be “filed” for purposes of Section 18 of the Securities Act of 1934 or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or
the
Securities Act of 1934, except as expressly set forth by specific reference
in
such a filing.
|
Item
9.01.
|
Financial
Statements and Exhibits.
|
|
|
|
|
(d)
|
Exhibits:
|
|
Exhibit
|
|
|
No.
|
Description
|
|
99.1
|
Press
release of Molina Healthcare, Inc. issued February 13, 2007, as to
financial results for the fourth quarter and year ended December
31,
2006
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
|
|
MOLINA
HEALTHCARE, INC.
|
|
Date:
February 13, 2007
|
|
By: /s/
Mark L. Andrews
|
||
|
|
|
Mark
L. Andrews
Chief
Legal Officer, General Counsel
and
Corporate Secretary
|
||
EXHIBIT
INDEX
|
Exhibit
|
|
|
No.
|
Description
|
|
99.1
|
Press
release of Molina Healthcare, Inc. issued February 13, 2007, as to
financial results for the fourth quarter and year ended December
31,
2006.
|
Exhibit
99.1
News
Release
Contact:
Juan
José
Orellana
Investor
Relations
Molina
Healthcare, Inc.
562-435-3666,
ext. 111143
MOLINA
HEALTHCARE REPORTS
FOURTH
QUARTER AND 2006 YEAR-END RESULTS
Long
Beach, California (February 13, 2007) - Molina Healthcare, Inc. (NYSE:MOH)
today
announced its financial results for the fourth quarter and year ended December
31, 2006.
Net
income
for the quarter ended December 31, 2006, increased to $11.6 million, or $0.41
per diluted share, compared with net income of $10.7 million, or $0.38 per
diluted share, for the quarter ended December 31, 2005.
Net
income
for the year ended December 31, 2006, increased 66% to $45.7 million, or
$1.62
per diluted share, compared with net income of $27.6 million, or $0.98 per
diluted share, for the same period in 2005.
Commenting
on the results, J. Mario Molina, M.D., president and chief executive officer
of
Molina Healthcare, Inc., said, “During 2006, our continued focus on improving
our medical care costs and leveraging technology to improve our operations
produced positive results. In addition, our Michigan health plan successfully
integrated Cape Health Plan, and the Company’s start-up health plan in Ohio is
well-positioned to serve the enrollment growth expected in that state during
2007. While we regret that we have had to leave the Indiana market, it is
worth
noting that our operations in that state contributed a net loss of approximately
$0.09 per diluted share for the year ended December 31, 2006.”
Guidance
The
Company confirms the guidance it had issued on January 18, 2007,
for earnings per diluted share for fiscal year 2007 in the range of
$1.75
to $1.90.
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
2
February
13, 2007
Financial
Results - Comparison of Quarters Ended December 31, 2006 and
2005
Premium
revenue
for the
fourth quarter of 2006 was $543.9 million, an increase of $124.1 million,
or
30%, over premium revenue for the fourth quarter of 2005 of $419.8 million.
The
acquisition of Cape Health Plan in Michigan (effective May 15, 2006) contributed
$46.8 million to fourth quarter revenue. The Ohio health plan (which had
less
than $50,000 of premium revenue in the fourth quarter of 2005) contributed
$45.2
million to premium revenue in the fourth quarter of 2006. Premium revenue
in
Indiana, where the Company terminated operations on December 31, 2006, increased
by $16.6 million to $28.1 million in the fourth quarter of 2006 when compared
with the fourth quarter of 2005. The Company’s Texas start-up operations
contributed $4.2 million in premium revenue in the fourth quarter of 2006.
The
Company’s consolidated Medicare revenue for the fourth quarter of 2006 was $8.2
million, of which $5.0 million came from the Utah health plan. The Company
had
no Medicare operations in 2005.
Medical
care costs
as a
percentage of premium revenue (the medical care ratio) increased to 85.1%
in the
fourth quarter of 2006 from 84.7% in the fourth quarter of 2005. Sequentially,
the Company’s overall medical care ratio increased from 84.1% in the third
quarter of 2006. Excluding the Company’s Ohio, Texas and Indiana health plans,
the medical care ratio decreased to 84.1% from 84.3%
year-over-year.
The
Company anticipates significant growth in enrollment in the Ohio health plan
in
2007 (enrollment in Ohio as of February 1, 2007, was approximately 124,000)
and
projects a lower Ohio health plan medical care ratio as a result of
re-contracting and lower costs in new regions of that state. As previously
disclosed, the Medicaid contract of the Company’s Indiana health plan expired on
December 31, 2006. The Company does not believe the run-off operations in
Indiana will have a material impact on its future operating results. The
Texas
health plan did not have significant enrollment until December of 2006, and
revenue and medical costs generated from the Texas health plan did not have
a
material impact on our fourth quarter results.
The
Company’s health plans in New Mexico and Washington experienced improved medical
care ratios in the fourth quarter of 2006 when compared with the same period
in
2005, while the Company’s Michigan health plan reported an increase in its
medical care ratio due partly to the acquisition of Cape Health Plan. The
California health plan’s medical care ratio of 89.3% for the fourth quarter of
2006 was higher than for the fourth quarter of 2005, but less than the 91.1%
medical care ratio for the third quarter of 2006. The Company will continue
to
monitor closely the California health plan’s medical care costs, with special
focus on San Diego County, where provider re-contracting efforts during the
second half of 2006 have had some success.
The
Company’s days in claims payable were 57 days at December 31, 2006, 54 days at
both September 30, 2006 and June 30, 2006, and 55 days at December 31, 2005.
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
3
February
13, 2007
Salary,
general and administrative expenses
were
$61.0 million for the fourth quarter of 2006, representing 11.1% of total
revenue, as compared with $45.7 million, or 10.8% of total revenue, for the
fourth quarter of 2005.
Core
G&A expenses
(defined
as SG&A expenses less premium taxes) increased $8.5 million year-over-year.
The increase was primarily due to continued investments in infrastructure
to
support the Company’s medical care cost control initiatives, enhancements to
information technology, the expansion into Ohio and Texas, and the launch
of the
Company’s Medicare Advantage Special Needs Plans. Despite the year-over-year
increase in Core G&A expense, Core G&A decreased to 7.9% of total
revenue in the fourth quarter of 2006 compared with 8.3% in the fourth quarter
of 2005 due to increased revenue year-over-year. The Company’s adoption of SFAS
No. 123R, Share-Based Payment,
effective
January 1, 2006, reduced earnings per diluted share by approximately $0.01
in
the fourth quarter of 2006.
Depreciation
and amortization expense
increased
by $1.9 million compared with the fourth quarter of 2005. Depreciation expense
increased by $1.3 million in the fourth quarter of 2006 due to investments
in
infrastructure. Amortization expense increased by $0.6 million in the fourth
quarter of 2006 due to the Cape Health Plan acquisition in Michigan.
Investment
income during
the
quarter totaled $5.6 million as compared with $3.4 million in the fourth
quarter
of 2005, an increase of $2.2 million as a result of higher invested balances
and
higher rates of return.
Income
taxes were
recognized in the fourth quarter of 2006 based upon an effective tax rate
of
37.9% as compared with an effective tax rate of 38.1% in the fourth quarter
of
2005.
Financial
Results - Comparison of Year Ended December 31, 2006 and
2005
Premium
revenue
for the
year ended December 31, 2006, was $1,985.1 million, an increase of $345.2
million, or 21%, over premium revenue for the year ended December 31, 2005,
of
$1,639.9 million. Acquisitions in California (effective June 1, 2005) and
Michigan (effective May 15, 2006) and the start-up operations in Ohio were
the
primary drivers of the increase in premium revenue.
The
acquisition of Cape Health Plan in Michigan effective May 15, 2005, added
$114.4
million in premium revenue in 2006. The Ohio health plan (which had less
than
$50,000 of premium revenue in 2005) contributed $94.8 million to premium
revenue
in 2006. Premium revenue in the now-terminated Indiana health plan increased
by
$59.6 million in 2006. Medicare revenue for all of 2006 was $27.2 million,
of
which $20.2 million came from the Company’s Utah health plan.
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
4
February
13, 2007
The
medical care ratio decreased
to 84.6% for the year ended December 31, 2006, from 86.9% in 2005, principally
due to the factors discussed above. Excluding the Company’s Ohio, Texas and
Indiana health plans, the medical care ratio decreased to 83.7% for the year
ended December 31, 2006, as compared with 86.7% a year ago.
Salary,
general and administrative expenses
were
$229.1 million for the year ended December 31, 2006, representing 11.4% of
total revenue, as compared with $163.3 million, or 9.9% of total revenue,
for
the year ended December 31, 2005.
Core
G&A
increased
to 8.4% of total revenue for the year ended December 31, 2006, compared with
7.1% in 2005. The increase in Core G&A was due to the infrastructure
additions and product and market expansions discussed above. The Company’s
adoption of SFAS No. 123R, Share-Based Payment,
effective
January 1, 2006, reduced earnings per diluted share by approximately $0.07
for
the year ended December 31, 2006.
Depreciation
and amortization expense
increased
by $6.4 million for the year ended December 31, 2006, compared with the
same period of 2005. Depreciation expense increased by $4.3 million in 2006
due
to investments in infrastructure, principally at the Company’s corporate
offices. Amortization expense increased by $2.1 million in 2006 due to
acquisitions in California and Michigan.
Investment
income for
the
year ended December 31, 2006, was $19.9 million as compared with $10.2 million
for the same period in 2005, an increase of $9.7 million as a result of higher
invested balances and higher rates of return.
Income
taxes were
recognized for the year ended December 31, 2006, based upon an effective
tax
rate of 37.8% as compared with an effective tax rate of 37.1% for the year
ended
December 31, 2005.
Cash
Flow
Cash
provided by operating activities for the year ended December 31, 2006, was
$105.6 million. Net income, the timing of payments for medical costs, and
the
timing of premium receipts were the primary sources of cash provided by
operating activities. Receivables increased in the Company’s Utah, California
and Ohio health plans. Cash provided by operating activities for the same
period
in 2005 was $95.4 million.
At
December 31, 2006, the Company owed $45.0 million under its $180 million
credit
facility. The borrowings were used to fund capital infusions into the Company’s
Ohio, Indiana, California and Texas health plans.
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
5
February
13, 2007
On
a
consolidated basis, at December 31, 2006, the Company had cash and investments
of approximately $485.1 million. The parent company had cash and investments
of
approximately $34.6 million.
Membership
The
following table details the Company’s ending membership by health plan at
December 31, 2006, September 30, 2006, and December 31, 2005:
|
Dec.
31,
|
Sept.
30,
|
Dec.
31,
|
||||||||
|
2006
|
2006
|
2005
|
||||||||
|
California
|
300,000
|
302,000
|
321,000
|
|||||||
|
Indiana
|
56,000
|
54,000
|
24,000
|
|||||||
|
Michigan
|
228,000
|
227,000
|
144,000
|
|||||||
|
New
Mexico
|
65,000
|
62,000
|
60,000
|
|||||||
|
Ohio
|
76,000
|
33,000
|
N/A(1
|
)
|
||||||
|
Texas
|
19,000
|
3,000
|
N/A(2
|
)
|
||||||
|
Utah
|
52,000
|
54,000
|
59,000
|
|||||||
|
Washington
|
281,000
|
280,000
|
285,000
|
|||||||
|
Total
|
1,077,000
|
1,015,000
|
893,000
|
|||||||
(1)
The Company’s Ohio health plan commenced operations in December 2005,
serving less than 250 members as of December 31, 2005.
(2)
The Company’s Texas health plan commenced operations in September
2006.
The
following table details member months (defined as the aggregation of each
month’s ending membership for the period) by health plan for the periods
indicated:
|
Quarter
Ended
|
Year
Ended
|
|||||||||||||||
|
Dec.
31,
|
Sept.
30,
|
Dec.
31,
|
Dec.
31,
|
Dec.
31,
|
||||||||||||
|
2006
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
|
California
|
909,000
|
911,000
|
971,000
|
3,694,000
|
3,569,000
|
|||||||||||
|
Indiana
|
171,000
|
150,000
|
70,000
|
499,000
|
149,000
|
|||||||||||
|
Michigan
|
688,000
|
681,000
|
436,000
|
2,365,000
|
1,811,000
|
|||||||||||
|
New
Mexico
|
191,000
|
181,000
|
181,000
|
726,000
|
734,000
|
|||||||||||
|
Ohio
|
213,000
|
95,000
|
N/A(1
|
)
|
442,000
|
N/A(1
|
)
|
|||||||||
|
Texas
|
31,000
|
3,000
|
N/A(2
|
)
|
34,000
|
N/A(2
|
)
|
|||||||||
|
Utah
|
162,000
|
167,000
|
176,000
|
689,000
|
668,000
|
|||||||||||
|
Washington
|
838,000
|
846,000
|
862,000
|
3,410,000
|
3,383,000
|
|||||||||||
|
Total
|
3,203,000
|
3,034,000
|
2,696,000
|
11,859,000
|
10,314,000
|
|||||||||||
(1)
The
Company’s Ohio health plan commenced operations in December 2005 serving less
than 250 members as of December 31, 2005.
(2)
The
Company’s Texas health plan commenced operations in September 2006.
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
6
February
13, 2007
Conference
Call
The
Company’s management will host a conference call and webcast to discuss its
fourth quarter and 2006 year end results at 5:00 p.m. Eastern Time on Tuesday,
February 13, 2007. The telephone number for this interactive conference call
is
212-748-2799, and the webcast can be accessed on the Company’s Web site at
www.molinahealthcare.com,
or at
www.earnings.com.
A 30-day
online replay will be available beginning approximately one hour following
the
conclusion of the live broadcast.
Molina
Healthcare, Inc. is a multi-state managed care organization that arranges
for
the delivery of healthcare services to persons eligible for Medicaid and
other
government-sponsored programs for low-income families and individuals. Molina
Healthcare, Inc. currently operates health plans in California, Michigan,
New
Mexico, Ohio, Texas, Utah, and Washington. More information about Molina
Healthcare, Inc. can be obtained at www.molinahealthcare.com.
Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995: This
press release contains “forward-looking statements” identified by words such as
“will,” “expects,” “believes,” “anticipates,” “plans,” “projects,” “estimates,”
“intends,” and similar words and expressions. In addition, any statements that
refer to earnings guidance, expectations, projections, or their underlying
assumptions, or other characterizations of future events or circumstances,
are
forward-looking statements. All of our forward-looking statements are based
on
current expectations and assumptions that are subject to numerous known and
unknown risks, uncertainties, and other factors that could cause actual results
to differ materially. Such factors include, without limitation, risks related
to: the achievement of a decrease in the medical care ratio of our start-up
health plans in Ohio and Texas; the achievement of projected savings from
a
decrease in the medical care ratio of our California health plan; an increase
in
enrollment in our Ohio and Texas health plans and in our dual eligible
population consistent with our expectations; our ability to reduce
administrative costs in the event enrollment or revenue is lower than expected;
higher than expected costs associated with the addition of new members in
Ohio
or Texas or dual eligible members and risks related to our lack of experience
with such members; our ability to accurately estimate incurred but not reported
medical costs; the securing of premium rate increases consistent with our
expectations; costs associated with the non-renewal and run-out of the Medicaid
contract of our Indiana health plan; the successful renewal and continuation
of
the government contracts of our health plans; the availability of adequate
financing to fund and/or capitalize our acquisitions and start-up activities;
membership eligibility processes and methodologies; unexpected changes in
member
utilization patterns, healthcare practices, or healthcare technologies;
high
dollar claims related to catastrophic illness; changes
in federal or state laws or regulations or in their interpretation; failure
to
maintain effective and efficient information systems and claims processing
technology; the favorable resolution of pending litigation or arbitration;
funding decreases in the Medicaid or Medicare programs; epidemics such as
the
avian flu; and other risks and uncertainties as detailed in our reports and
filings with the Securities and Exchange Commission and available on its
Web
site at www.sec.gov.
All
forward-looking statements in this release represent our judgment as of February
13, 2007. We disclaim any obligation to update any forward-looking statement
to
conform the statement to actual results or changes in our
expectations.
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
7
February
13, 2007
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Dollars
in thousands, except for per share data)
(Unaudited)
|
Three
Months Ended
|
Year
Ended
|
||||||||||||
|
December
31,
|
December
31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenue:
|
|||||||||||||
|
Premium
revenue
|
$
|
543,912
|
$
|
419,839
|
$
|
1,985,109
|
$
|
1,639,884
|
|||||
|
Investment
income
|
5,608
|
3,382
|
19,886
|
10,174
|
|||||||||
|
Total
revenue
|
549,520
|
423,221
|
2,004,995
|
1,650,058
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Medical
care costs:
|
|||||||||||||
|
Medical
services
|
94,183
|
69,821
|
351,022
|
271,769
|
|||||||||
|
Hospital
and specialty services
|
310,313
|
239,163
|
1,125,600
|
977,781
|
|||||||||
|
Pharmacy
|
58,324
|
42,990
|
202,030
|
169,590
|
|||||||||
|
Provider
settlements
|
- |
3,682
|
- |
5,732
|
|||||||||
|
Total
medical care costs
|
462,820
|
355,656
|
1,678,652
|
1,424,872
|
|||||||||
|
Salary,
general and administrative expenses
|
61,032
|
45,731
|
229,057
|
163,342
|
|||||||||
|
Loss
contract charge (1)
|
-
|
-
|
-
|
939
|
|||||||||
|
Depreciation
and amortization
|
6,210
|
4,256
|
21,475
|
15,125
|
|||||||||
|
Total
expenses
|
530,062
|
405,643
|
1,929,184
|
1,604,278
|
|||||||||
|
Operating
income
|
19,458
|
17,578
|
75,811
|
45,780
|
|||||||||
|
Other
expense:
|
|||||||||||||
|
Interest
expense
|
(717
|
) |
(241
|
) |
(2,353
|
) |
(1,529
|
) | |||||
|
Other,
net (2)
|
-
|
-
|
-
|
(400
|
) | ||||||||
|
Total
other expense
|
(717
|
) |
(241
|
) |
(2,353
|
) |
(1,929
|
) | |||||
|
Income
before income taxes
|
18,741
|
17,337
|
73,458
|
43,851
|
|||||||||
|
Income
tax expense
|
7,097
|
6,605
|
27,731
|
16,255
|
|||||||||
|
Net
income
|
$
|
11,644
|
$
|
10,732
|
$
|
45,727
|
$
|
27,596
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Basic
|
$
|
0.41
|
$
|
0.39
|
$
|
1.64
|
$
|
1.00
|
|||||
|
Diluted
|
$
|
0.41
|
$
|
0.38
|
$
|
1.62
|
$
|
0.98
|
|||||
|
Weighted
average number of common shares and
|
|||||||||||||
|
potential
dilutive common shares outstanding
|
28,259,000
|
28,062,000
|
28,164,000
|
28,023,000
|
|||||||||
|
Operating
Statistics:
|
|||||||||||||
|
Medical
care ratio (3)
|
85.10
|
%
|
84.70
|
%
|
84.60
|
%
|
86.90
|
%
|
|||||
|
Salary,
general and administrative expense
|
|||||||||||||
|
ratio
(4),
excluding premium taxes
|
7.90
|
%
|
8.30
|
%
|
8.40
|
%
|
7.10
|
%
|
|||||
|
Premium
taxes included in salary,
|
|||||||||||||
|
general
and administrative expenses
|
3.20
|
%
|
2.50
|
%
|
3.00
|
%
|
2.80
|
%
|
|||||
|
Total
salary, general and
|
|||||||||||||
|
administrative
expense ratio
|
11.10
|
%
|
10.80
|
%
|
11.40
|
%
|
9.90
|
%
|
|||||
|
Members
(5)
|
1,077,000
|
893,000
|
|||||||||||
|
Days
in claims payable
|
57
|
55
|
|||||||||||
|
(1)
|
Represents
a charge related to a transition services agreement entered into
in
connection with the transfer of certain commercial members to another
health plan in August 2004.
|
|
(2)
|
Represents
a charge of $0.4 million related to the write-off of costs associated
with
a registration statement filed during the second quarter of
2005.
|
| (3) |
Medical
care ratio represents medical care costs as a percentage of premium
revenue.
|
| (4) |
Salary,
general and administrative expense ratio represents such expenses
as a
percentage of total revenue.
|
| (5) |
Number
of members at end of
period.
|
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
8
February
13, 2007
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Dollars
in thousands, except per share data)
|
|
Dec.
31,
|
Dec.
31,
|
|||||
|
2006
|
2005
|
||||||
|
|
(Unaudited)
|
||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
394,751
|
$
|
249,203
|
|||
|
Investments
|
90,380
|
103,437
|
|||||
|
Receivables
|
110,835
|
70,532
|
|||||
|
Income
tax receivable
|
7,960
|
3,014
|
|||||
|
Deferred
income taxes
|
313
|
2,339
|
|||||
|
Prepaid
expenses and other current assets
|
9,263
|
10,321
|
|||||
|
Total
current assets
|
613,502
|
438,846
|
|||||
|
Property
and equipment, net
|
46,257
|
31,794
|
|||||
|
Goodwill
and intangible assets, net
|
143,139
|
124,914
|
|||||
|
Restricted
investments
|
20,154
|
18,242
|
|||||
|
Receivable
for ceded life and annuity contracts
|
32,923
|
38,113
|
|||||
|
Other
assets
|
8,500
|
8,018
|
|||||
|
Total
assets
|
$
|
864,475
|
$
|
659,927
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Medical
claims and benefits payable
|
$
|
290,048
|
$
|
217,354
|
|||
|
Deferred
revenue
|
18,120
|
803
|
|||||
|
Accounts
payable and accrued liabilities
|
46,725
|
31,457
|
|||||
|
Total
current liabilities
|
354,893 |
249,614
|
|||||
|
Long-term
debt
|
45,000
|
—
|
|||||
|
Deferred
income taxes
|
6,700
|
4,796
|
|||||
|
Liability
for ceded life and annuity contracts
|
32,923
|
38,113
|
|||||
|
Other
long-term liabilities
|
4,793
|
4,554
|
|||||
|
Total
liabilities
|
444,309
|
297,077
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Common
stock, $0.001 par value; 80,000,000 shares authorized;
|
|
||||||
|
issued
and outstanding: 28,119,026 shares at December 31, 2006,
|
|
||||||
|
and
27,792,360 shares at December 31, 2005
|
28
|
28
|
|||||
|
Preferred
stock, $0.001 par value; 20,000,000 shares authorized,
|
|||||||
|
no
shares issued and outstanding
|
—
|
—
|
|||||
|
Additional
paid-in capital
|
173,990
|
162,693
|
|||||
|
Accumulated
other comprehensive loss
|
(337
|
)
|
(629
|
)
|
|||
|
Retained
earnings
|
266,875
|
221,148
|
|||||
|
Treasury
stock (1,201,174 shares, at cost)
|
(20,390
|
)
|
(20,390
|
)
|
|||
|
Total
stockholders’ equity
|
420,166
|
362,850
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
864,475
|
$
|
659,927
|
|||
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
9
February
13, 2007
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars
in thousands)
(Unaudited)
|
Year
Ended
|
|||||||
|
December
31,
|
|||||||
|
2006
|
2005
|
||||||
|
Operating
activities:
|
|||||||
|
Net
income
|
$
|
45,727
|
$
|
27,596
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
||||||
|
Depreciation
and amortization
|
21,475
|
15,125
|
|||||
|
Loss
on disposal of assets
|
-
|
297
|
|||||
|
Amortization
of capitalized credit facility fees
|
885
|
718
|
|||||
|
Deferred
income taxes
|
(399
|
) |
1,705
|
||||
|
Stock-based
compensation
|
5,505
|
1,283
|
|||||
|
Changes
in operating assets and liabilities:
|
|
||||||
|
Receivables
|
(38,847
|
)
|
(5,102
|
)
|
|||
|
Prepaid
expenses and other current assets
|
1,369
|
(1,866
|
)
|
||||
|
Medical
claims and benefits payable
|
51,550
|
57,144
|
|||||
|
Deferred
revenue
|
10,443
|
803
|
|||||
|
Accounts
payable and accrued liabilities
|
8,508
|
6,665
|
|||||
|
Income
taxes
|
(579
|
)
|
(8,982
|
)
|
|||
|
Net
cash provided by operating activities
|
105,637
|
95,386
|
|||||
|
Investing
activities:
|
|||||||
|
Purchases
of property and equipment
|
(25,992
|
)
|
(13,960
|
)
|
|||
|
Purchases
of investments
|
(157,565
|
)
|
(63,774
|
)
|
|||
|
Sales
and maturities of investments
|
171,096
|
48,227
|
|||||
|
Net
cash acquired (paid) in purchase transactions
|
5,820
|
(40,866
|
)
|
||||
|
Increase
in restricted cash
|
(912
|
)
|
(1,706
|
)
|
|||
|
Increase
in other long-term liabilities
|
239
|
488
|
|||||
|
Increases
in other assets
|
(959
|
)
|
(983
|
)
|
|||
|
Net
cash used in investing activities
|
(8,273
|
)
|
(72,574
|
)
|
|||
|
Financing
activities:
|
|||||||
|
Payment
of credit facility fees
|
(459
|
)
|
(3,530
|
)
|
|||
|
Borrowing
under credit facility
|
50,000
|
3,100
|
|||||
|
Repayment
of amounts borrowed under credit facility
|
(5,000
|
)
|
(3,100
|
)
|
|||
|
Repayment
of mortgage note
|
-
|
(1,302
|
)
|
||||
|
Principal
payments on capital lease obligations
|
-
|
(592
|
)
|
||||
|
Tax
benefit from exercise of employee stock options
|
|||||||
|
recorded
as additional paid-in capital
|
1,227
|
1,872
|
|||||
|
Proceeds
from exercise of stock options and employee stock
purchases
|
2,416
|
1,872
|
|||||
|
Net
cash provided by (used in) financing activities
|
48,184
|
(1,680
|
)
|
||||
|
Net
increase in cash and cash equivalents
|
145,548
|
21,132
|
|||||
|
Cash
and cash equivalents at beginning of period
|
249,203
|
228,071
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
394,751
|
$
|
249,203
|
|||
-MORE-
MOH
Announces Fourth Quarter and 2006 Year-End Results
Page
10
February
13, 2007
MOLINA
HEALTHCARE, INC.
CHANGE
IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars
in thousands)
(Unaudited)
The
following table shows the components of the change in medical claims and
benefits payable for the year ended December 31, 2006 and 2005:
|
Year
Ended
|
|||||||
|
December
31,
|
|||||||
|
2006
|
2005
|
||||||
|
Balances
at beginning of period
|
$
|
217,354
|
$
|
160,210
|
|||
|
Medical
claims and benefits payable from business acquired during the
period
|
21,144
|
-
|
|||||
|
Components
of medical care costs related to:
|
|||||||
|
Current
year
|
1,716,256
|
1,424,406
|
|||||
|
Prior
years
|
(37,604
|
)
|
466
|
||||
|
Total
medical care costs
|
1,678,652
|
1,424,872
|
|||||
|
Payments
for medical care costs related to:
|
|||||||
|
Current
year
|
1,443,843
|
1,216,593
|
|||||
|
Prior
years
|
183,259
|
151,135
|
|||||
|
Total
paid
|
1,627,102
|
1,367,728
|
|||||
|
Balances
at end of period
|
$
|
290,048
|
$
|
217,354
|
|||
The
Company’s claims liability includes an allowance for adverse claims development
based on historical experience and other factors including, but not limited
to,
variation 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. Accordingly, any benefit
recognized in medical care costs resulting from favorable development of an
estimated liability at the start of the period (captured as a component of
“medical
care costs related to prior years”)
may be
offset by the addition of an allowance for adverse claims development when
estimating the liability at the end of the period (captured as a component
of
“medical
care costs related to current year”).
-END-