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 22, 2006
MOLINA
HEALTHCARE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-31719
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13-4204626
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(State
of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification
Number)
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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 22, 2006, Molina Healthcare, Inc. issued a press release announcing
its
financial results for the fourth quarter and year ended December 31, 2005.
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:
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Exhibit
No.
|
Description |
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99.1
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Press
release of Molina Healthcare, Inc. issued February 22, 2006, as to
financial results for the fourth quarter and year ended December
31,
2005.
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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.
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MOLINA
HEALTHCARE, INC.
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Date:
February 22, 2006
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By: /s/
Mark L. Andrews
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Mark
L. Andrews
Chief
Legal Officer, General Counsel
and
Corporate Secretary
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EXHIBIT
INDEX
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Exhibit
No.
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Description |
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99.1
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Press
release of Molina Healthcare, Inc. issued February 22, 2006, as
to
financial results for the fourth quarter and year ended December
31,
2005.
|
News
Release
Contact:
Juan
José
Orellana
Investor
Relations
Molina
Healthcare, Inc.
562-435-3666
ext. 111143
MOLINA
HEALTHCARE REPORTS
FOURTH
QUARTER AND YEAR-END RESULTS
Long
Beach, California (February 22, 2006) — Molina Healthcare, Inc. (NYSE: MOH)
today announced its financial results for the fourth quarter and year ended
December 31, 2005.
Net
income
for the fourth quarter ended December 31, 2005, was $10.7 million, or $0.38
per
diluted share, compared with net income of $16.3 million, or $0.58 per
diluted
share, for the quarter ended December 31, 2004. Net income for the year
ended December 31, 2005, was $27.6 million, or $0.98 per diluted share,
compared
with net income of $55.8 million, or $2.04 per diluted share, for the year
ended
December 31, 2004.
The
Company’s fourth quarter results include expense of approximately $3.7 million
($0.08 per diluted share) recognized in connection with certain provider
disputes and a benefit (reduced expense) of approximately $4.5 million
($0.10
per diluted share) related to a reduction in the Company’s estimated claims
liability at June 30, 2005.
The
downward revision of the estimated claims liability at June 30, 2005, is
consistent with the Company’s reserve methodology, which seeks to maintain a
constant margin for adverse development in all of its claims liability
estimates. The Company continues to believe that claims reserves as of
June 30,
2005, and December 31, 2005, are adequate.
Sequentially,
the Company’s days in claims payable increased to 55 days at December 31, 2005,
from 52 days at September 30, 2005, 50 days at June 30, 2005, and 54 days
at
December 31, 2004.
Commenting
on the results, J. Mario Molina, M.D., president and chief executive officer
of
Molina Healthcare, Inc., said, “As reflected in our improved results, we are
making progress on our previously announced operational objectives. We
believe
our initiatives to control costs and utilization are producing meaningful
results. We are pleased with this improvement in the level of our performance,
but are far from satisfied. We expect to further benefit from our cost
control
initiatives as they more fully take effect in 2006.”
Update
on Medical Care Cost Issues
In
its
2005 second quarter earnings release, the Company identified four issues
that
were adversely affecting medical care costs. An update on these issues
follows:
| · |
Increased
hospital costs. An
analysis of the Company’s medical cost and utilization trends conducted at
year-end confirms that hospital costs were more favorable in
the second
half of 2005 than in the first half. The more favorable cost
trends in the
second half of the year appear to be the result of improvements
in both
utilization and unit costs.
|
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
2
February
22, 2006
| · |
Increased
costs from catastrophic cases. Catastrophic
cases declined during the second half of 2005 when compared with
the first
half of the year.
|
| · |
Increased
maternity costs in Michigan and Washington.
The Company continues to believe that the revenue it receives
for
providing maternity services in Washington and Michigan is not
commensurate with the costs of providing such
services.
|
| · |
Increased
outpatient costs.
The
Company’s analysis of claims and utilization trends confirms that
outpatient costs were more favorable in the second half of 2005
than in
the first half of the year.
|
In
response to these issues, the Company has implemented a number of initiatives
to
better control medical costs. The Company believes that those initiatives
already implemented have modestly contributed to the improved results in
the
second half of 2005. In particular, the Company believes that the following
actions have contributed to lowered medical cost trends in the second half
of
2005:
| · |
Utilization
of more cost-effective hospitals where such facilities are
available;
|
| · |
Enhanced
monitoring of utilization at hospitals where more cost-effective
alternatives are not available;
|
| · |
Increased
investment in medical and utilization management
resources;
|
| · |
Implementation
of risk sharing arrangements with the Company’s state
payors;
|
| · |
Adjustment
of premium rates to reflect the increased cost of providing care
to
specific member populations; and
|
| · |
Increased
oversight of the Company’s claims payment
process.
|
Nevertheless,
the Company can give no assurances that the improved performance is not
at least
partially the result of factors beyond the Company’s control, nor can it give
any assurances that the improved medical cost trends will continue.
Financial
Results - Comparison of Quarters Ended December 31, 2005 and
2004
Premium
revenue
for the
fourth quarter of 2005 was $418.7 million, representing an increase of
$45.9
million, or 12.3%, over 2004 premium revenue of $372.8 million. Membership
growth (attributable to acquisitions in California, which closed on June
1,
2005, the start-up of the Company’s Indiana HMO in 2005 and increased membership
in Washington) was the primary driver of the increase in premium
revenue.
Medical
care costs
as a
percentage of premium and other operating revenue (the medical care ratio)
increased to 84.7% in the fourth quarter of 2005 from 84.2% in the fourth
quarter of 2004. Medical care costs increased in absolute terms to $355.7
million in the fourth quarter of 2005 from $314.9 million in the fourth
quarter
of 2004. Increased hospital and specialty costs were the primary reason
for
deterioration in medical costs.
Salary,
general and administrative expenses
were
$45.7 million for the fourth quarter of 2005, representing 10.8% of total
revenue, as compared with $31.2 million, or 8.3% of total revenue, for
the
fourth quarter of 2004. Core SG&A (defined as SG&A expenses less premium
taxes) increased to 8.3% of total revenue in the fourth quarter of 2005
as
compared with 5.6% in the fourth quarter of 2004. The increase in core
SG&A
was due to investments in infrastructure, administrative expenses associated
with the Company’s development of its Medicare Advantage Special Needs Plans and
administrative costs associated with the Company’s Indiana, Ohio and Texas
start-ups.
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
3
February
22, 2006
Depreciation
and amortization expense
increased
by $1.3 million when compared with the fourth quarter of 2004. Increased
amortization expense due to the Company’s acquisitions in California (which
closed on June 1, 2005) contributed $0.6 million to the increase in deprecation
and amortization. Depreciation increased as a result of investment in
infrastructure, principally at the Company’s corporate offices.
Investment
income increased
by $2.0 million, or 146%, in the fourth quarter of 2005 as compared with
2004 as
a result of higher invested balances and higher rates of return.
Income
taxes were
recognized in the fourth quarter of 2005 based upon an effective tax rate
of
38.1% as compared with an effective tax rate of 37.5% in the fourth quarter
of
2004.
Financial
Results - Comparison of Years Ended December 31, 2005 and
2004
Premium
revenue
for the
year ended December 31, 2005, was $1,636.0 million, representing an increase
of
$469.1 million, or 40.2%, over premium revenue for the year ended December
31,
2004, of $1,166.9 million. Membership
growth, principally due to acquisitions, is the primary source of the increase
in premium revenue for the year ended December 31, 2005.
Medical
care costs
as a
percentage of premium and other operating revenue increased to 86.9% in
the year
ended December 31, 2005, from 84.1% in the year ended December 31, 2004.
Medical
care costs increased in absolute terms to $1,424.9 million in the year
ended
December 31, 2005, from $984.7 million in the year ended December 31, 2004.
Increased hospital and specialty costs were the primary reason for deterioration
in medical costs.
Salary,
general and administrative expenses
were
$163.3 million for the year ended December 31, 2005, representing 9.9%
of total
revenue, as compared with $94.2 million, or 8.0% of total revenue, for
the year
ended December 31, 2004. Core SG&A increased to 7.1% of total revenue in the
year ended December 31, 2005, as compared with 5.9% in the prior
year.
Depreciation
and amortization expense
increased
by $6.3 million for the year ended December 31, 2005, as compared with
2004.
Amortization expense increased by $3.4 million as a result of acquisitions.
Depreciation increased as a result of investment in infrastructure, principally
at the Company’s corporate offices.
Investment
income increased
by $5.9 million, or 141%, in the year ended December 31, 2005, as compared
with
2004 as a result of higher invested balances and higher rates of
return.
Income
taxes were
recognized for the year ended December 31, 2005, based upon an effective
tax
rate of 37.1% as compared with an effective tax rate of 36.4% for the year
ended
December 31, 2004.
Cash
Flow
Operating
activities provided $34.6 million and $97.3 million in cash for the quarter
and
year ended December 31, 2005, respectively. While net cash provided by
operating
activities fluctuates principally due to the timing of premium receipts
and
claims payments, the Company believes that over time net cash provided
by
operating activities is approximately equal to the sum of net income and
depreciation and amortization. Increases in claims payable contributed
$18.0 and
$57.1 million to net cash provided by operating activities for the quarter
and
year ended December 31, 2005, respectively.
At
December 31, 2005, the Company had consolidated cash and investments of
approximately $352.6 million.
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
4
February
22, 2006
Membership
The
following table details the Company’s membership by state at December 31, 2005,
September 30, 2005, and December 31, 2004:
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Dec.
31,
2005
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Sept.
30,
2005
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Dec.
31,
2004
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||||||||
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California
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321,000
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333,000
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253,000
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|||||||
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Indiana
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24,000
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21,000
|
-
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|||||||
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Michigan
|
144,000
|
145,000
|
158,000
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|||||||
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New
Mexico
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60,000
|
62,000
|
65,000
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|||||||
|
Ohio
|
N/A1
|
-
|
-
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|||||||
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Utah
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59,000
|
56,000
|
49,000
|
|||||||
|
Washington
|
285,000
|
287,000
|
263,000
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|||||||
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Total
|
893,000
|
904,000
|
788,000
|
1
Enrollment
in the Company’s Ohio HMO at December 31, 2005, was less than 250
members.
The
following table details member months (defined as the aggregation of each
month’s membership for the period) by state for the periods
indicated:
|
Quarter
Ended
|
Year
Ended
|
|||||||||||||||
|
Dec.
31,
|
Sept.
30,
|
Dec.
31,
|
Dec.
31,
|
Dec.
31,
|
||||||||||||
|
2005
|
2005
|
2004
|
2005
|
2004
|
||||||||||||
|
California
|
971,000
|
1,006,000
|
747,000
|
3,569,000
|
2,989,000
|
|||||||||||
|
Indiana
|
70,000
|
59,000
|
-
|
149,000
|
-
|
|||||||||||
|
Michigan
|
436,000
|
441,000
|
479,000
|
1,811,000
|
1,272,000
|
|||||||||||
|
New
Mexico
|
181,000
|
183,000
|
195,000
|
734,000
|
391,000
|
|||||||||||
|
Ohio
|
N/A1
|
-
|
-
|
-
|
-
|
|||||||||||
|
Utah
|
176,000
|
164,000
|
148,000
|
668,000
|
576,000
|
|||||||||||
|
Washington
|
862,000
|
856,000
|
788,000
|
3,383,000
|
2,851,000
|
|||||||||||
|
Total
|
2,696,000
|
2,709,000
|
2,357,000
|
10,314,000
|
8,079,000
|
|||||||||||
1
Enrollment in the Company’s Ohio HMO at December 31, 2005, was less than 250
members.
Conference
Call
The
live broadcast of Molina Healthcare’s conference call will begin at 5:00 p.m.
Eastern Time, February 22. The number to call for this interactive
conference call is 212-676-5262. A 30-day online replay will be available
beginning approximately one hour following the conclusion of the live broadcast.
A link to these events can be found on the Company’s website at www.molinahealthcare.com
or at www.earnings.com.
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
programs for low-income families and individuals. Molina Healthcare, Inc.
currently operates health plans in California, Indiana, Michigan, New Mexico,
Ohio, Utah, and Washington. More information about Molina Healthcare, Inc.
can
be obtained at www.molinahealthcare.com.
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
5
February
22, 2006
“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,” “expect(s),” “believe(s),” “anticipate(s),” “plan(s),”
“project(s),” “estimate(s),” “intend(s),” “assume(s),” 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 the Company’s 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
Company’s ability to identify and address medical care cost issues and to
address them successfully through its medical care cost control initiatives;
the
Company’s ability to accurately estimate incurred but not reported medical
costs; high dollar claims related to catastrophic illness; potential
reductions in funding for Medicaid and other government-sponsored healthcare
programs; entering into a final one-year extension of the Medi-Cal contract
of
Molina Healthcare of California for Riverside and San Bernardino Counties
and
receiving the award upon remand of the long-term contracts for Riverside
and/or
San Bernardino Counties; the successful renewal and continuation of the
government contracts of the Company’s health plans; the favorable resolution or
settlement of pending litigation or arbitration; the implementation of
announced
rate increases; the Company’s ability to obtain regulatory approvals for
acquisitions or to successfully integrate its completed acquisitions, including
new members and providers; the ability to enter into more favorable hospital
or
provider contracts; the availability of financing to fund the Company’s
acquisitions; membership eligibility processes and methodologies; changes
in
healthcare practices, technologies, or utilization patterns; changes in
federal
or state laws or regulations or the interpretation thereof; risks associated
with the Company’s start-up operations in new states; disasters or epidemics;
and other risks and uncertainties as detailed in the
Company’s reports and filings with the Securities and Exchange Commission and
available on its website at www.sec.gov.
All forward-looking statements in this release represent the Company’s judgment
as of the date of February 22, 2006. The Company disclaims any obligation
to update any forward-looking statement to conform the statement to actual
results or changes in the Company’s expectations.
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
6
February
22, 2006
|
Three
Months Ended
|
Year
Ended
|
||||||||||||
|
December 31,
|
December 31,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Revenue:
|
|||||||||||||
|
Premium
revenue
|
$
|
418,656
|
$
|
372,766
|
$
|
1,636,006
|
$
|
1,166,870
|
|||||
|
Other
operating revenue
|
1,183
|
1,236
|
3,878
|
4,168
|
|||||||||
|
Total
premium and other operating revenue
|
419,839
|
374,002
|
1,639,884
|
1,171,038
|
|||||||||
|
Investment
income
|
3,382
|
1,375
|
10,174
|
4,230
|
|||||||||
|
Total
revenue
|
423,221
|
375,377
|
1,650,058
|
1,175,268
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Medical
care costs:
|
|||||||||||||
|
Medical
services
|
69,821
|
62,505
|
271,769
|
222,168
|
|||||||||
|
Hospital
and specialty services
|
239,163
|
213,985
|
977,781
|
643,074
|
|||||||||
|
Pharmacy
|
42,990
|
38,413
|
169,590
|
119,444
|
|||||||||
|
Provider
settlements
|
3,682
|
-
|
5,732
|
-
|
|||||||||
|
Total
medical care costs
|
355,656
|
314,903
|
1,424,872
|
984,686
|
|||||||||
|
Salary,
general and administrative expenses
|
45,731
|
31,208
|
163,342
|
94,150
|
|||||||||
|
Loss
contract charge (1)
|
-
|
-
|
939
|
-
|
|||||||||
|
Depreciation
and amortization
|
4,256
|
2,978
|
15,125
|
8,869
|
|||||||||
|
Total
expenses
|
405,643
|
349,089
|
1,604,278
|
1,087,705
|
|||||||||
|
Operating
income
|
17,578
|
26,288
|
45,780
|
87,563
|
|||||||||
|
Other
income (expense):
|
|||||||||||||
|
Interest
expense
|
(241
|
)
|
(256
|
)
|
(1,529
|
)
|
(1,049
|
)
|
|||||
|
Other,
net (2)
|
-
|
27
|
(400
|
)
|
1,171
|
||||||||
|
Total
other income (expense)
|
(241
|
)
|
(229
|
)
|
(1,929
|
)
|
122
|
||||||
|
Income
before income taxes
|
17,337
|
26,059
|
43,851
|
87,685
|
|||||||||
|
Income
tax expense
|
6,605
|
9,773
|
16,255
|
31,912
|
|||||||||
|
Net
income
|
$ | 10,732 |
$
|
16,286
|
$ | 27,596 |
$
|
55,773
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Basic
|
$ |
0.39
|
$
|
0.59
|
$ | 1.00 |
$
|
2.07
|
|||||
|
Diluted
|
$ |
0.38
|
$
|
0.58
|
$ | 0.98 |
$
|
0.94
|
|||||
|
Weighted
average number of common shares and
|
|||||||||||||
|
potentially
dilutive common shares outstanding
|
28,062,000
|
27,897,000
|
28,023,000
|
27,342,000
|
|||||||||
|
Operating
Statistics:
|
|||||||||||||
|
Medical
care ratio (3)
|
84.7
|
%
|
84.2
|
%
|
86.9
|
%
|
84.1
|
%
|
|||||
|
Salary,
general and administrative expense
|
|||||||||||||
|
ratio
(4),
excluding premium taxes
|
8.3
|
%
|
5.6
|
%
|
7.1
|
%
|
5.9
|
%
|
|||||
|
Premium
taxes included in salary,
|
|||||||||||||
|
general
and administrative expenses
|
2.5
|
%
|
2.7
|
%
|
2.8
|
%
|
2.1
|
%
|
|||||
|
Total
salary, general and
|
|||||||||||||
|
administrative
expense ratio
|
10.8
|
%
|
8.3
|
%
|
9.9
|
%
|
8.0
|
%
|
|||||
|
Members
(5)
|
893,000
|
788,000
|
|||||||||||
|
Days
in claims payable
|
55
|
54
|
|||||||||||
|
(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)
|
For
the year ended December 31, 2005, includes 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. For the year ended December
31,
2004, includes $1.162 million in income arising from the termination
of a
split dollar life insurance arrangement between the Company and
a related
party.
|
| (3) |
Medical
care ratio represents medical care costs as a percentage of premium
and
other operating 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 Year-End Results
Page
7
February
22, 2006
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED
BALANCE SHEETS
(Dollars
in thousands, except per share data)
|
Dec.
31,
|
Dec.
31,
|
||||||
|
2005
|
2004
|
||||||
|
(Unaudited)
|
|||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
249,203
|
$
|
228,071
|
|||
|
Investments
|
103,437
|
88,530
|
|||||
|
Receivables
|
70,532
|
65,430
|
|||||
|
Income
tax receivable
|
3,014
|
-
|
|||||
|
Deferred
income taxes
|
2,339
|
3,981
|
|||||
|
Prepaid
and other current assets
|
10,321
|
8,306
|
|||||
|
Total
current assets
|
438,846
|
394,318
|
|||||
|
Property
and equipment, net
|
31,794
|
25,826
|
|||||
|
Goodwill
and intangible assets, net
|
124,914
|
98,727
|
|||||
|
Restricted
investments
|
18,242
|
10,847
|
|||||
|
Other
assets
|
8,018
|
4,141
|
|||||
|
Total
assets
|
$
|
621,814
|
$
|
533,859
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Medical
claims and benefits payable
|
$
|
217,354
|
$
|
160,210
|
|||
|
Accounts
payable and accrued liabilities
|
32,060
|
22,966
|
|||||
|
Net
liability for commercial membership sale
|
200
|
1,676
|
|||||
|
Income
taxes payable
|
-
|
7,110
|
|||||
|
Current
maturities of long-term debt
|
-
|
171
|
|||||
|
Total
current liabilities
|
249,614
|
192,133
|
|||||
|
Long-term
debt, less current maturities
|
-
|
1,723
|
|||||
|
Deferred
income taxes
|
4,796
|
5,315
|
|||||
|
Other
long-term liabilities
|
4,554
|
4,066
|
|||||
|
Total
liabilities
|
258,964
|
203,237
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Common
stock, $0.001 par value; 80,000,000 shares authorized;
|
|||||||
|
issued
and outstanding: 27,792,360 shares at December 31, 2005,
|
|||||||
|
and
27,602,443 shares at December 31, 2004
|
28
|
28
|
|||||
|
Preferred
stock, $0.001 par value; 20,000,000 shares authorized,
|
|||||||
|
no
shares issued and outstanding
|
-
|
-
|
|||||
|
Additional
paid-in capital
|
162,693
|
157,666
|
|||||
|
Accumulated
other comprehensive income (loss)
|
(629
|
)
|
(234
|
)
|
|||
|
Retained
earnings
|
221,148
|
193,552
|
|||||
|
Treasury
stock (1,201,174 shares, at cost)
|
(20,390
|
)
|
(20,390
|
)
|
|||
|
Total
stockholders’ equity
|
362,850
|
330,622
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
621,814
|
$
|
533,859
|
|||
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
8
February
22, 2006
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars
in thousands)
(Unaudited)
|
Year
Ended
|
|||||||
|
December
31,
|
|||||||
|
2005
|
2004
|
||||||
|
Operating
activities:
|
|||||||
|
Net
income
|
$
|
27,596
|
$
|
55,773
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
15,125
|
8,869
|
|||||
|
Loss
on disposal of assets
|
297
|
-
|
|||||
|
Amortization
of capitalized credit facility fees
|
718
|
628
|
|||||
|
Deferred
income taxes
|
1,705
|
2,175
|
|||||
|
Tax
benefit from exercise of employee stock options
|
|||||||
|
recorded
as additional paid-in capital
|
1,872
|
3,854
|
|||||
|
Stock-based
compensation
|
1,283
|
179
|
|||||
|
Changes
in operating assets and liabilities:
|
|||||||
|
Receivables
|
(5,102
|
)
|
(3,641
|
)
|
|||
|
Prepaid
and other current assets
|
(1,866
|
)
|
(2,049
|
)
|
|||
|
Medical
claims and benefits payable
|
57,144
|
23,121
|
|||||
|
Deferred
revenue
|
803
|
(687
|
)
|
||||
|
Accounts
payable and accrued liabilities
|
6,665
|
5,196
|
|||||
|
Income
taxes payable or receivable
|
(8,982
|
)
|
(2,369
|
)
|
|||
|
Net
cash provided by operating activities
|
97,258
|
91,049
|
|||||
|
Investing
activities:
|
|||||||
|
Purchases
of equipment
|
(13,960
|
)
|
(10,765
|
)
|
|||
|
Purchases
of investments
|
(63,774
|
)
|
(440,208
|
)
|
|||
|
Sales
and maturities of investments
|
48,227
|
450,039
|
|||||
|
Net
cash paid in purchase transactions
|
(40,866
|
)
|
(51,766
|
)
|
|||
|
Increase
in restricted cash
|
(1,706
|
)
|
(1,062
|
)
|
|||
|
Other
long-term liabilities
|
488
|
644
|
|||||
|
Advances
to related parties and other assets
|
(4,513
|
)
|
3,099
|
||||
|
Net
cash used in investing activities
|
(76,104
|
)
|
(50,019
|
)
|
|||
|
Financing
activities:
|
|||||||
|
Borrowing
under credit facility
|
3,100
|
-
|
|||||
|
Repayment
of borrowing under credit facility
|
(3,100
|
)
|
|||||
|
Issuance
of common stock
|
-
|
47,282
|
|||||
|
Repayments
of debt acquired in acquisition
|
-
|
(5,819
|
)
|
||||
|
Issuance
(repayment) of mortgage note
|
(1,302
|
)
|
1,302
|
||||
|
Principal
payments on capital lease obligations and mortgage note
|
(592
|
)
|
(74
|
)
|
|||
|
Proceeds
from exercise of stock options and employee stock purchases
|
1,872
|
2,500
|
|||||
|
Net
cash provided by financing activities
|
(22
|
)
|
45,191
|
||||
|
Net
(decrease) increase in cash and cash equivalents
|
21,132
|
86,221
|
|||||
|
Cash
and cash equivalents at beginning of period
|
228,071
|
141,850
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
249,203
|
$
|
228,071
|
|||
-MORE-
MOH
Announces Fourth Quarter and Year-End Results
Page
9
February
22, 2006
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, 2005 and
2004:
|
Year
Ended
December
31,
|
|||||||
|
2005
|
2004
|
||||||
|
Balances
at beginning of period
|
$
|
160,210
|
$
|
105,540
|
|||
|
Components
of medical care costs related to:
|
|||||||
|
Current
year
|
1,424,406
|
990,007
|
|||||
|
Prior
years
|
466
|
(5,321
|
)
|
||||
|
Total
medical care costs
|
1,424,872
|
984,686
|
|||||
|
Payments
for medical care costs related to:
|
|||||||
|
Current
year
|
1,216,593
|
839,663
|
|||||
|
Prior
years
|
151,135
|
90,353
|
|||||
|
Total
paid
|
1,367,728
|
930,016
|
|||||
|
Balances
at end of period
|
$
|
217,354
|
$
|
160,210
|
|||
-END-