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): April 29, 2008
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)
|
200
Oceangate, Suite 100, 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
April 29, 2008, Molina Healthcare, Inc. issued a press release announcing its
financial results for the first quarter ended March 31, 2008. 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 Exchange 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 Exchange 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 April 29, 2008, as to financial
results for the first quarter ended March 31,
2008.
|
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:
April 29, 2008
|
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 April 29, 2008, as to financial
results for the first quarter ended March 31,
2008.
|
News
Release
Contact:
Juan José
Orellana
Investor
Relations
562-435-3666,
ext. 111143
MOLINA
HEALTHCARE REPORTS FIRST QUARTER 2008 RESULTS
Updates
2008 EPS Guidance Range
|
|
·
|
Diluted
earnings of $0.46 per share, up 35% over the first quarter of
2007.
|
|
|
·
|
Quarterly
revenues of $737.0 million, up 31%.
|
|
|
·
|
Aggregate
membership increased to 1.2 million members, up 10% over the first quarter
of 2007 and up 3% sequentially.
|
|
|
·
|
$30
million share repurchase program
announced.
|
Long Beach, California (April 29,
2008) – Molina Healthcare, Inc. (NYSE: MOH) today reported net income for
the first quarter of 2008 of $13.2 million, or $0.46 per diluted share, compared
with net income of $9.6 million, or $0.34 per diluted share, for the first
quarter of 2007.
In
commenting on the first quarter, J. Mario Molina, M.D, president and chief
executive officer of Molina Healthcare, said, “We are pleased with our first
quarter results. Furthermore, we believe we are well positioned for
continued solid performance for the remainder of the year, given our
diversification success, enrollment growth and cost management initiatives,
which we expect to mitigate the potential impact of reduced interest income and
the California budget situation. Also, we believe our stock
repurchase program will add shareholder value and further enhance our
performance in 2008.”
2008
Earnings Per Share Guidance Updated
The
Company revised the range of its full year 2008 guidance to $2.10 to $2.40 per
diluted share. The Company had previously issued guidance for 2008 of
$2.25 to $2.45. The Company believes the following factors
contributed most significantly to its revision of guidance:
|
|
·
|
Declining
interest rates, which the Company expects will reduce its previously
anticipated 2008 earnings per share by approximately $0.16. The
Company’s revised guidance assumes that the Federal Reserve will implement
two rate cuts of one quarter percent each on April 30, 2008 and June 30,
2008. The revised guidance assumes that the Company’s return on
invested cash for all of 2008 will be approximately 3.1% rather than the
4.0% included in the original 2008
guidance.
|
|
|
·
|
The
expected July 1st
reduction to the California health plan’s premium rates, which the Company
expects will reduce its previously anticipated 2008 earnings per share by
approximately $0.10.
|
|
|
·
|
Higher
than anticipated state taxes in Michigan, which the Company expects will
reduce its previously anticipated 2008 earnings per share by approximately
$0.08.
|
-MORE-
MOH
Reports First Quarter 2008 Results
Page
2
April 29,
2008
|
|
·
|
The
addition of approximately 35,000 CFC (TANF) members to the Ohio health
plan effective April 2008, which the Company expects will increase its
previously anticipated 2008 earnings per share by approximately
$0.10.
|
|
|
·
|
A
$30 million share repurchase program, which, if completed, the Company
expects will increase its previously anticipated 2008 earnings per share
by between $0.02 and $0.04.
|
|
|
·
|
Net
improvements in other operations, which the Company expects will increase
its previously anticipated 2008 earnings per share by approximately
$0.11.
|
The
Company is expanding the range of its 2008 guidance to allow for the uncertainty
surrounding a number of issues that have developed since it first issued
guidance on January 22, 2008. The Company will update its guidance
for 2008 as future developments warrant, including the Company’s obtaining
additional clarity regarding issues such as the following:
|
|
·
|
Interest
rates and investment income levels.
|
|
|
·
|
Potential
premium rate decreases in California and the Company’s ability to mitigate
the financial impact of such
decreases.
|
|
|
·
|
The
final rates and terms under the Company’s new Salud! contract with the
state of New Mexico commencing on July 1, 2008, which has been awarded
pursuant to the New Mexico health plan's successful responsive bid to that
state's RFP.
|
|
|
·
|
The
development of medical costs at the Company’s newly acquired Missouri
health plan.
|
|
|
·
|
The
success of the Company’s efforts to mitigate the impact of the higher than
anticipated state taxes in Michigan, as noted
above.
|
The
revised guidance assumes an effective tax rate of 40.6% and weighted average
diluted shares outstanding of 28.7 million (excluding the impact of share
repurchases).
Financial
Results – Comparison of Quarters Ended March 31, 2008 and 2007
Premium
revenue for the first quarter of 2008 was $729.6 million, an increase of
$173.4 million, or 31%, over the $556.2 million of premium revenue for the first
quarter of 2007. Medicare premium revenue for the first quarter of
2008 was $21.3 million compared with $9.0 million in the first quarter of
2007.
Significant
contributions to the $173.4 million increase in quarterly premium revenues
included the following:
|
|
·
|
A
$52.0 million increase as a result of the acquisition of Mercy CarePlus in
Missouri on November 1, 2007.
|
|
|
·
|
A
$49.7 million increase at the Ohio health plan due to higher enrollment,
particularly among the aged, blind or disabled (ABD)
population.
|
|
|
·
|
A
$31.5 million increase at the New Mexico health plan due to higher
enrollment, higher premium rates, and a $6.8 million increase to revenue
associated with a minimum medical care ratio contract
provision.
|
|
|
·
|
A
$13.2 million increase at the Washington health plan due to higher premium
rates and slightly higher
membership.
|
-MORE-
MOH
Reports First Quarter 2008 Results
Page
3
April
29, 2008
Medical care
costs as a percentage of premium revenue (the medical care ratio)
increased slightly to 85.8% in the first quarter of 2008 from 85.7% in the first
quarter of 2007. Sequentially, the medical care ratio increased from
83.6% for the quarter ended December 31, 2007, a change of 220 basis
points. Excluding Medicare, the Company’s medical care ratio was
85.8% in the first quarter of 2008, 86.0% in the first quarter of 2007 and 83.7%
in the fourth quarter of 2007. The Company traditionally experiences
its highest medical care ratio (on a consolidated basis) during the first
quarter of the year.
|
|
·
|
The
medical care ratio of the California health plan increased as a result of
an increase in PMPM medical costs of approximately 15%, chiefly in
pharmacy and hospital and specialty fee-for-service costs. The
California medical care ratio rose to 88.2% in the first quarter of 2008
from 82.1% in the first quarter of 2007. Preliminary data
indicates that increased respiratory illnesses in the first quarter of
2008 impacted the Company’s California and Missouri health plans more
severely than our other health
plans.
|
|
|
·
|
The
medical care ratio of the Michigan health plan decreased 200 basis points
to 82.5% in the first quarter of 2008, from 84.5% in the first quarter of
2007. This improvement was due primarily to lower hospital
fee-for-service costs.
|
|
|
·
|
The
medical care ratio of the Missouri health plan was 89.7% for the
quarter. As noted above, preliminary data indicates that
increased respiratory illnesses in the first quarter of 2008 impacted the
Company’s California and Missouri health plans more severely than our
other health plans. Additionally, medical costs increased in
the first quarter of 2008 due to an increase in the number of premature
infants among the plan’s
membership.
|
|
|
·
|
The
medical care ratio of the New Mexico health plan decreased 500 basis
points to 81.1% in the first quarter of 2008, from 86.1% in the first
quarter of 2007. This improvement was due to higher premium
rates and included a $6.8 million increase in revenue associated with a
minimum medical care ratio contract provision, which combined to offset
higher medical costs. Absent the adjustments made to premium
revenue in the first quarter of 2008 and 2007, the medical care ratio in
New Mexico would have been 87.8% in the first quarter of 2008 and 79.8% in
the first quarter of 2007.
|
|
|
·
|
The
medical care ratios of the Ohio health plan, by line of business, were as
follows:
|
|
Three
Months Ended
|
||||||||||||
|
March
31, 2008
|
Dec.
31, 2007
|
March
31, 2007
|
||||||||||
|
Covered
Families and Children (CFC)
|
88.9 | % | 86.3 | % | 92.4 | % | ||||||
|
Aged,
Blind or Disabled (ABD)
|
92.7 | 97.0 | n/a | |||||||||
|
Aggregate
|
90.3 | % | 90.3 | % | 92.4 | % | ||||||
In total,
the medical care ratio decreased 210 basis points year over year and was flat
sequentially.
The
medical care ratio for the CFC population decreased 350 basis points year over
year and increased 260 basis points sequentially. The Company
traditionally experiences a seasonal peak in medical care costs during the first
quarter.
The
medical care ratio for the ABD population decreased 430 basis points
sequentially during the first quarter of 2008. The Ohio health plan’s
small number of ABD members during the first quarter of 2007 makes comparison of
the ABD medical care ratio between the first quarters of 2008 and 2007
meaningless.
-MORE-
MOH
Reports First Quarter 2008 Results
Page
4
April
29, 2008
The
Company’s revised guidance anticipates no change from the 88% medical care ratio
(combined for both CFC and ABD) in Ohio for all of 2008 that was incorporated
into its original 2008 guidance.
|
|
·
|
The
medical care ratio of the Texas health plan decreased primarily due to
very low medical costs for the Star Plus membership. During the
first quarter of 2008, the Texas health plan reduced revenue by $4.5
million to record amounts due back to the state under a profit-sharing
agreement.
|
|
|
·
|
The
medical care ratio of the Utah health plan decreased 370 basis points to
88.3% in the first quarter of 2008, from 92.0% in the first quarter of
2007. This decrease was the result of improved medical care
ratios in the Utah health plan’s SCHIP and Medicare lines of
business. The Utah health plan serves the majority of its
Medicaid membership under a cost-plus contract with the state of
Utah. The Utah health plan’s SCHIP and Medicare lines of
business are at risk.
|
|
|
·
|
The
medical care ratio reported at the Washington health plan increased to
82.5% in the first quarter of 2008 from 81.0% in the first quarter of
2007. Fee-for-service hospital and specialist costs as a
percentage of premium revenue were higher in the first quarter of 2008
than in the first quarter of 2007. Higher fee-for-service
hospital costs were driven by increases to the Medicaid in-patient fee
schedule that took effect on August 1,
2007.
|
Days in medical
claims and benefits payable were 50 days at March 31, 2008, 52 days at
December 31, 2007, and 54 days at March 31, 2007. The Company’s
reserving methodology is consistently applied across all periods
presented.
General and
administrative expenses were $78.1 million, or 10.6% of total revenue,
for the first quarter of 2008 compared with $63.4 million, or 11.3% of total
revenue, for the first quarter of 2007. A decline in premium taxes
contributed 60 basis points to this improvement due primarily to a reduction in
premium taxes in Michigan from 6.0% to 5.5% of revenue effective January 1,
2008, and increased credits taken against premium taxes in New Mexico during the
first quarter of 2008.
Core G&A
expenses (defined as G&A expenses less premium taxes) decreased to
7.8% of revenue in the first quarter of 2008 compared with 7.9% in the first
quarter of 2007 and 8.8% in the fourth quarter of 2007.
The
improvement in core G&A compared with the first quarter of 2007 was
primarily due to the leveraging of the Company’s administrative infrastructure
over increased premium revenue. The Company continues to invest in
the administrative infrastructure necessary to support its Medicare product line
as detailed in the table below.
|
Three
Months Ended March 31,
|
||||||||||||||||
|
(in
thousands)
|
2008
|
2007
|
||||||||||||||
|
Amount
|
%
of Total
Revenue
|
Amount
|
%
of Total
Revenue
|
|||||||||||||
|
Medicare-related
administrative costs
|
$ | 5,292 | 0.7 | % | $ | 1,636 | 0.3 | % | ||||||||
|
Non
Medicare-related administrative costs:
|
||||||||||||||||
|
Administrative
payroll, including employee incentive compensation
|
47,126 | 6.4 | 38,093 | 6.8 | ||||||||||||
|
All
other administrative expense
|
5,322 | 0.7 | 4,558 | 0.8 | ||||||||||||
|
Core
G&A expenses
|
$ | 57,740 | 7.8 | % | $ | 44,287 | 7.9 | % | ||||||||
-MORE-
MOH
Reports First Quarter 2008 Results
Page
5
April
29, 2008
Income taxes
were recorded at an effective rate of 40.7% in the first quarter of 2008
compared with 38.0%
in the first quarter of 2007. The increase in the Company’s effective
tax rate was primarily the result of a change in Michigan state taxes effective
January 1, 2008. Prior to January 1, 2008, Michigan state taxes were
calculated as a percentage of net income at a rate
of 1.9%. As of January 1, 2008, the state income tax was
changed to comprise three components on a combined filing basis: a gross
receipts tax calculated at 0.8% of modified gross receipts; an income tax
calculated at 4.95% of income before taxes; and a surtax of 21.99% of the total
of the previous two items.
Cash
Flow
Cash used
in operating activities for the quarter ended March 31, 2008, was $23.4 million
compared with cash provided by operating activities totaling $35.9 million for
the same period in 2007, a decrease of $59.3 million. The decline was
due primarily to the timing of the receipt of premiums recorded as deferred
revenue at the Company’s Ohio health plan. Previously, the state of
Ohio has paid premiums to the Ohio health plan for any given month at the end of
the prior month. Premium revenue for April of 2008 (amounting to
$50.9 million), however, was not received until April 3,
2008. Excluding the impact of deferred revenue, cash provided by
operating activities was $27.5 million.
At March
31, 2008, the Company had cash and investments (not including restricted
investments) of approximately $665.8 million, including auction rate securities
with a fair value of $69.5 million that were classified to non-current assets in
the first quarter of 2008. While these securities are collateralized
by student loan portfolios guaranteed by the U.S. government, the Company
believes that the market for these may take in excess of 12 months to fully
recover. The parent company had cash and investments of approximately
$84.4 million, including auction rate securities with a fair value of $21.1
million.
Share
Repurchase Program
The
Company’s Board of Directors has authorized the repurchase of up to $30 million
of the Company’s common stock from time to time on the open market or through
privately negotiated transactions. The repurchase program will be
funded using Molina’s working capital. The timing and amount of any
shares repurchased will be determined based on Molina’s evaluation of market
conditions and other factors. The repurchase program extends through
December 31, 2008, but the Company reserves the right to suspend or discontinue
the program at any time.
Conference
Call
The
Company’s management will host a conference call and webcast to discuss its
first quarter results at 5:00 p.m. Eastern Time on Tuesday, April 29,
2008. The telephone number for this interactive conference call is
212-231-2900, and the live webcast of the call can be accessed on the Company’s
website at www.molinahealthcare.com,
or at www.earnings.com. An
online replay will be available beginning approximately one hour following the
conclusion of the call and webcast.
Molina
Healthcare, Inc. is a multi-state managed care organization that arranges for
the delivery of health care services to persons eligible for Medicaid, Medicare,
and other government-sponsored programs for low-income families and
individuals. Molina Healthcare’s nine licensed health plan
subsidiaries in California, Michigan, Missouri, Nevada, New Mexico, Ohio, Texas,
Utah, and Washington currently serve approximately 1.2 million
members. More information about Molina Healthcare can be obtained at
www.molinahealthcare.com.
-MORE-
MOH
Reports First Quarter 2008 Results
Page
6
April
29, 2008
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,”
“should,” “believes,” “expects” or ”expectations,” “anticipates,” “plans,”
“projects,” “estimates,” “intends,” and similar words and
expressions. In addition, any statements that explicitly or
implicitly 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 our current expectations and assumptions
which 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 successful management
of our medical costs and the achievement of our projected medical care ratios in
all health plans in 2008, including the continuing reduction of the medical care
ratio of our Ohio health plan; the achievement of projected growth in both
Medicaid and Medicare enrollment; increased administrative costs in support of
the Company's efforts to expand its Medicare membership; risks related to our
more limited experience with Ohio, Texas, and dual eligible members and
attendant claims estimation difficulties; funding decreases in the Medicaid,
Medicare, or SCHIP programs or the failure to fully fund the SCHIP program; the
budget crisis in California and the pressure to reduce provider rates in that
state, including current PMPM rates under our existing contracts; the final
implementation of the Rogers Amendment to the Federal Deficit Reduction Act
regarding the rates to be paid to non-contracting hospitals by our California
health plan; the securing of projected premium rate increases for 2008 that are
consistent with our expectations, in particular in the states of Michigan,
Missouri, and Texas; our ability to accurately estimate incurred but not
reported medical costs across all health plans; the successful renewal and
continuation of the government contracts of all of our health plans; the
realization of projected income from invested cash balances; the successful and
cost-effective integration of our acquisitions; earnings seasonality consistent
with our expectations; the availability of adequate financing to fund and/or
capitalize our acquisitions and start-up activities; high profile qui tam
matters and negative publicity regarding Medicaid managed care and Medicare
Advantage; changes in funding under our contracts as a result of regulatory or
programmatic adjustments and reforms; approval by state regulators of dividends
and distributions by our subsidiaries; the imposition of fines or assessments by
state or federal regulators for perceived operating deficiencies; 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 litigation or arbitration; competition; 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 website
at www.sec.gov. All forward-looking statements in this release
represent our judgment as of April 29, 2008. We disclaim any
obligation to update any forward-looking statement to conform the statement to
actual results or changes in our expectations.
-MORE-
MOH
Reports First Quarter 2008 Results
Page
7
April
29, 2008
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(dollars
in thousands, except for per share data)
(unaudited)
|
Three
Months Ended
March
31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Revenue:
|
||||||||
|
Premium
revenue
|
$ | 729,638 | $ | 556,235 | ||||
|
Investment
income
|
7,404 | 6,668 | ||||||
|
Total operating
revenue
|
737,042 | 562,903 | ||||||
|
Expenses:
|
||||||||
|
Medical
care costs
|
626,347 | 476,477 | ||||||
|
General
and administrative expenses
|
78,092 | 63,388 | ||||||
|
Depreciation
and amortization
|
8,152 | 6,443 | ||||||
|
Total expenses
|
712,591 | 546,308 | ||||||
|
Operating
income
|
24,451 | 16,595 | ||||||
|
Interest
expense
|
(2,272 | ) | (1,125 | ) | ||||
|
Income
before income taxes
|
22,179 | 15,470 | ||||||
|
Income
tax expense
|
9,024 | 5,878 | ||||||
|
Net
income
|
$ | 13,155 | $ | 9,592 | ||||
|
Net
income per share:
|
||||||||
|
Basic
|
$ | 0.46 | $ | 0.34 | ||||
|
Diluted
|
$ | 0.46 | $ | 0.34 | ||||
|
Weighted
average number of common shares and
potentially dilutive common
shares outstanding
|
28,576,000 | 28,275,000 | ||||||
|
Operating
Statistics:
|
||||||||
|
Medical
care ratio
(1)
|
85.8 | % | 85.7 | % | ||||
|
General
and administrative expense ratio (2),
excluding premium taxes
|
7.8 | % | 7.9 | % | ||||
|
Premium
taxes included in salary, general and administrative
expenses
|
2.8 | 3.4 | ||||||
|
Total general and
administrative expense ratio
|
10.6 | % | 11.3 | % | ||||
|
Depreciation
and amortization expense ratio (3)
|
1.1 | % | 1.1 | % | ||||
|
Effective
tax rate
|
40.7 | % | 38.0 | % | ||||
|
(1)
|
Medical
care ratio represents medical care costs as a percentage of premium
revenue.
|
|
(2)
|
General
and administrative expense ratio represents such expenses as a percentage
of total revenue.
|
|
(3)
|
Depreciation
and amortization expense ratio represents such expenses as a percentage of
total revenue.
|
-MORE-
MOH
Reports First Quarter 2008 Results
Page
8
April 29,
2008
|
|
MOLINA
HEALTHCARE, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
(dollars in thousands,
except per share data)
|
March
31, 2008
|
Dec.
31, 2007
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 412,153 | $ | 459,064 | ||||
|
Investments
|
184,129 | 242,855 | ||||||
|
Receivables
|
117,553 | 111,537 | ||||||
|
Deferred
income taxes
|
4,582 | 8,616 | ||||||
|
Prepaid
expenses and other current assets
|
17,905 | 12,521 | ||||||
|
Total current
assets
|
736,322 | 834,593 | ||||||
|
Property
and equipment, net
|
53,962 | 49,555 | ||||||
|
Goodwill
and intangible assets, net
|
204,962 | 207,223 | ||||||
|
Investments
|
69,485 | − | ||||||
|
Restricted
investments
|
29,806 | 29,019 | ||||||
|
Receivable
for ceded life and annuity contracts
|
28,446 | 29,240 | ||||||
|
Other
assets
|
22,435 | 21,675 | ||||||
|
Total assets
|
$ | 1,145,418 | $ | 1,171,305 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Medical
claims and benefits payable
|
$ | 311,776 | $ | 311,606 | ||||
|
Accounts
payable and accrued liabilities
|
66,949 | 69,266 | ||||||
|
Deferred
revenue
|
2,042 | 40,104 | ||||||
|
Income
taxes payable
|
13,080 | 5,946 | ||||||
|
Total current
liabilities
|
393,847 | 426,922 | ||||||
|
Long-term
debt
|
200,000 | 200,000 | ||||||
|
Deferred
income taxes
|
5,419 | 10,136 | ||||||
|
Liability
for ceded life and annuity contracts
|
28,446 | 29,240 | ||||||
|
Other
long-term liabilities
|
14,892 | 14,529 | ||||||
|
Total
liabilities
|
642,604 | 680,827 | ||||||
|
Stockholders’
equity:
|
||||||||
|
Common
stock, $0.001 par value; 80,000,000 shares authorized; issued and
outstanding: 28,479,000 shares at March 31, 2008, and 28,444,000 shares at
December 31, 2007
|
28 | 28 | ||||||
|
Preferred
stock, $0.001 par value; 20,000,000 shares authorized, no shares issued
and outstanding
|
− | − | ||||||
|
Additional
paid-in capital
|
187,144 | 185,808 | ||||||
|
Accumulated
other comprehensive (loss) gain
|
(1,883 | ) | 272 | |||||
|
Retained
earnings
|
337,915 | 324,760 | ||||||
|
Treasury
stock (1,201,174 shares, at cost)
|
(20,390 | ) | (20,390 | ) | ||||
|
Total stockholders’
equity
|
502,814 | 490,478 | ||||||
|
Total liabilities and
stockholders’ equity
|
$ | 1,145,418 | $ | 1,171,305 | ||||
-MORE-
MOH
Reports First Quarter 2008 Results
Page
9
April
29, 2008
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars
in thousands)
(unaudited)
|
Three
Months Ended
March
31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Operating
activities:
|
||||||||
|
Net
income
|
$ | 13,155 | $ | 9,592 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Depreciation and
amortization
|
8,152 | 6,443 | ||||||
|
Amortization of capitalized
long-term debt fees
|
406 | 251 | ||||||
|
Deferred income
taxes
|
(231 | ) | (2,999 | ) | ||||
|
Stock-based
compensation
|
1,511 | 1,867 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(6,016 | ) | 2,842 | |||||
|
Prepaid
expenses and other current assets
|
(5,384 | ) | (2,249 | ) | ||||
|
Medical
claims and benefits payable
|
170 | (9,860 | ) | |||||
|
Accounts
payable and accrued liabilities
|
(4,277 | ) | 8,452 | |||||
|
Deferred
revenue
|
(38,062 | ) | 17,219 | |||||
|
Income
taxes
|
7,134 | 4,346 | ||||||
|
Net
cash (used in) provided by operating activities
|
(23,442 | ) | 35,904 | |||||
|
Investing
activities:
|
||||||||
|
Purchases
of property and equipment
|
(8,177 | ) | (3,645 | ) | ||||
|
Purchases
of investments
|
(95,817 | ) | (12,825 | ) | ||||
|
Sales
and maturities of investments
|
82,353 | 11,402 | ||||||
|
Increase
in restricted cash
|
(787 | ) | (3,200 | ) | ||||
|
Increase
in other long-term liabilities
|
363 | 3,177 | ||||||
|
Increase
in other assets
|
(1,562 | ) | (314 | ) | ||||
|
Net
cash used in investing activities
|
(23,627 | ) | (5,405 | ) | ||||
|
Financing
activities:
|
||||||||
|
Repayment
of amounts borrowed under credit facility
|
− | (15,000 | ) | |||||
|
Tax
(expense) benefit from exercise of employee stock options recorded
as
additional paid-in
capital
|
(14 | ) | 428 | |||||
|
Proceeds
from exercise of stock options and employee stock
purchases
|
172 | 390 | ||||||
|
Net
cash provided by (used in) financing activities
|
158 | (14,182 | ) | |||||
|
Net
(decrease) increase in cash and cash equivalents
|
(46,911 | ) | 16,317 | |||||
|
Cash
and cash equivalents at beginning of period
|
459,064 | 403,650 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 412,153 | $ | 419,967 | ||||
-MORE-
MOH
Reports First Quarter 2008 Results
Page
10
April 29,
2008
MOLINA
HEALTHCARE, INC.
MEMBERSHIP
DATA
(unaudited)
|
Total
Ending Membership by Health Plan:
|
March
31, 2008
|
Dec.
31, 2007
|
March
31, 2007
|
|||||||||
|
California
|
303,000 | 296,000 | 294,000 | |||||||||
|
Michigan
|
216,000 | 209,000 | 221,000 | |||||||||
|
Missouri
(1)
|
76,000 | 68,000 | – | |||||||||
|
Nevada
(2)
|
– | – | – | |||||||||
|
New
Mexico
|
78,000 | 73,000 | 65,000 | |||||||||
|
Ohio
|
140,000 | 136,000 | 127,000 | |||||||||
|
Texas
|
28,000 | 29,000 | 31,000 | |||||||||
|
Utah
|
55,000 | 55,000 | 49,000 | |||||||||
|
Washington
|
289,000 | 283,000 | 287,000 | |||||||||
|
Total
|
1,185,000 | 1,149,000 | 1,074,000 | |||||||||
|
Total
Ending Membership by State for the Company’s Medicare Advantage
Plans:
|
||||||||||||
|
California
|
1,223 | 1,115 | 623 | |||||||||
|
Michigan
|
1,359 | 1,090 | 183 | |||||||||
|
Nevada
|
525 | 520 | – | |||||||||
|
Texas
|
363 | – | – | |||||||||
|
Utah
|
2,003 | 1,860 | 1,533 | |||||||||
|
Washington
|
856 | 507 | 298 | |||||||||
|
Total
|
6,329 | 5,092 | 2,637 | |||||||||
|
Total
Ending Membership by State for the Company’s Aged, Blind or Disabled
Population:
|
||||||||||||
|
California
|
11,709 | 11,837 | 11,033 | |||||||||
|
Michigan
|
31,801 | 31,399 | 32,261 | |||||||||
|
New
Mexico
|
6,827 | 6,792 | 6,725 | |||||||||
|
Ohio
|
14,729 | 14,887 | 3,866 | |||||||||
|
Texas
|
16,069 | 16,018 | 17,136 | |||||||||
|
Utah
|
6,826 | 6,795 | 6,731 | |||||||||
|
Washington
|
3,005 | 2,814 | 2,670 | |||||||||
|
Total
|
90,966 | 90,542 | 80,422 | |||||||||
|
(1)
|
The
Company’s Missouri health plan was acquired effective November 1,
2007.
|
|
(2)
|
Less
than 1,000 members.
|
|
Total
Member Months (1)
by Health Plan:
|
March
31,
2008
|
Dec.
31,
2007
|
March
31, 2007
|
|||||||||
|
California
|
908,000 | 881,000 | 886,000 | |||||||||
|
Michigan
|
638,000 | 630,000 | 669,000 | |||||||||
|
Missouri
(2)
|
223,000 | 136,000 | – | |||||||||
|
Nevada
|
2,000 | 1,000 | – | |||||||||
|
New
Mexico
|
228,000 | 214,000 | 192,000 | |||||||||
|
Ohio
|
413,000 | 412,000 | 340,000 | |||||||||
|
Texas
|
85,000 | 88,000 | 66,000 | |||||||||
|
Utah
|
157,000 | 155,000 | 151,000 | |||||||||
|
Washington
|
859,000 | 849,000 | 856,000 | |||||||||
|
Total
|
3,513,000 | 3,366,000 | 3,160,000 | |||||||||
|
(1)
|
Total
member months is defined as the aggregate of each month’s ending
membership for the period.
|
|
(2)
|
The
Company’s Missouri health plan was acquired effective November 1,
2007.
|
-MORE-
MOH
Reports First Quarter 2008 Results
Page
11
April
29, 2008
MOLINA
HEALTHCARE, INC.
SELECTED
FINANCIAL DATA BY HEALTH PLAN
(dollars
in thousands except PMPM amounts)
(unaudited)
|
Three
Months Ended March 31, 2008
|
||||||||||||||||||||||||
|
Premium
Revenue
|
Medical
Care Costs
|
Medical
Care Ratio
|
Premium
Tax Expense
|
|||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||
|
California
|
$ | 101,621 | $ | 111.97 | $ | 89,654 | $ | 98.79 | 88.2 | % | $ | 2,958 | ||||||||||||
|
Michigan
|
124,753 | 195.42 | 102,900 | 161.19 | 82.5 | 6,939 | ||||||||||||||||||
|
Missouri
|
52,036 | 233.69 | 46,681 | 209.64 | 89.7 | – | ||||||||||||||||||
|
Nevada
|
1,944 | 1,228.10 | 1,626 | 1,027.36 | 83.7 | – | ||||||||||||||||||
|
New
Mexico
|
88,649 | 388.63 | 71,925 | 315.31 | 81.1 | 1,502 | ||||||||||||||||||
|
Ohio
|
124,605 | 301.68 | 112,538 | 272.46 | 90.3 | 5,605 | ||||||||||||||||||
|
Texas
|
23,432 | 274.60 | 17,830 | 208.95 | 76.1 | 476 | ||||||||||||||||||
|
Utah
|
37,346 | 238.51 | 32,991 | 210.69 | 88.3 | – | ||||||||||||||||||
|
Washington
|
175,199 | 203.84 | 144,513 | 168.14 | 82.5 | 2,845 | ||||||||||||||||||
|
Other
(1)
|
53 | – | 5,689 | – | – | 27 | ||||||||||||||||||
|
Consolidated
|
$ | 729,638 | $ | 207.71 | $ | 626,347 | $ | 178.31 | 85.8 | % | $ | 20,352 | ||||||||||||
|
Three
Months Ended March 31, 2007
|
||||||||||||||||||||||||
|
Premium
Revenue
|
Medical
Care Costs
|
Medical
Care Ratio
|
Premium
Tax Expense
|
|||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||
|
California
|
$ | 92,932 | $ | 104.89 | $ | 76,324 | $ | 86.14 | 82.1 | % | $ | 3,030 | ||||||||||||
|
Michigan
|
123,766 | 185.06 | 104,601 | 156.40 | 84.5 | 7,509 | ||||||||||||||||||
|
New
Mexico
|
57,193 | 297.61 | 49,219 | 256.12 | 86.1 | 2,216 | ||||||||||||||||||
|
Ohio
|
74,944 | 220.37 | 69,262 | 203.66 | 92.4 | 3,372 | ||||||||||||||||||
|
Texas
|
14,456 | 218.47 | 13,348 | 201.73 | 92.3 | 257 | ||||||||||||||||||
|
Utah
|
30,927 | 205.63 | 28,466 | 189.27 | 92.0 | – | ||||||||||||||||||
|
Washington
|
161,982 | 189.20 | 131,259 | 153.32 | 81.0 | 2,684 | ||||||||||||||||||
|
Other
(1)
|
35 | – | 3,998 | – | – | 33 | ||||||||||||||||||
|
Consolidated
|
$ | 556,235 | $ | 176.04 | $ | 476,477 | $ | 150.80 | 85.7 | % | $ | 19,101 | ||||||||||||
|
(1)
|
Other
medical care costs represent medically related administrative costs at the
parent company.
|
The
following table provides the details of the Company’s medical care
costs:
|
Three
Months Ended March 31, 2008
|
Three
Months Ended March 31, 2007
|
|||||||||||||||||||||||
|
Amount
|
PMPM
|
%
of Total Medical Care Costs
|
Amount
|
PMPM
|
%
of Total Medical Care Costs
|
|||||||||||||||||||
|
Fee-for-service
|
$ | 412,009 | $ | 117.29 | 65.8 | % | $ | 307,880 | $ | 97.44 | 64.6 | % | ||||||||||||
|
Capitation
|
103,791 | 29.55 | 16.6 | 87,933 | 27.83 | 18.5 | ||||||||||||||||||
|
Pharmacy
|
86,282 | 24.56 | 13.8 | 60,579 | 19.17 | 12.7 | ||||||||||||||||||
|
Other
|
24,265 | 6.91 | 3.8 | 20,085 | 6.36 | 4.2 | ||||||||||||||||||
|
Total
|
$ | 626,347 | $ | 178.31 | 100.0 | % | $ | 476,477 | $ | 150.80 | 100.0 | % | ||||||||||||
-MORE-
MOH
Reports First Quarter 2008 Results
Page
12
April 29,
2008
MOLINA
HEALTHCARE, INC.
CHANGE
IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(dollars
in thousands)
(unaudited)
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. The
negative amounts displayed for “Components of medical care costs
related to: Prior years” represent the amount by which our original
estimate of claims and benefits payable at the beginning of the period exceeded
the actual amount of the liability based on information (principally the payment
of claims) developed since that liability was first reported. The
benefit of this prior period development may be offset by the addition of a
reserve for adverse claims development when estimating the liability at the end
of the period (captured in “Components of medical care costs
related to: Current year”). The following table shows the
components of the change in medical claims and benefits payable for the three
months ended March 31, 2008 and 2007.
|
Three
Months Ended
March
31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Balances
at beginning of period
|
$ | 311,606 | $ | 290,048 | ||||
|
Components
of medical care costs related to:
|
||||||||
|
Current year
|
668,968 | 511,279 | ||||||
|
Prior years
|
(42,621 | ) | (34,802 | ) | ||||
|
Total
medical care costs
|
626,347 | 476,477 | ||||||
|
Payments
for medical care costs related to:
|
||||||||
|
Current year
|
423,107 | 293,106 | ||||||
|
Prior years
|
203,070 | 193,231 | ||||||
|
Total
paid
|
626,177 | 486,337 | ||||||
|
Balances
at end of period
|
$ | 311,776 | $ | 280,188 | ||||
|
Benefit
from prior period as a percentage of premium revenue
|
5.8 | % | 6.3 | % | ||||
|
Benefit
from prior period as a percentage of balance at beginning of
period
|
13.7 | % | 12.0 | % | ||||
|
Benefit
from prior period as a percentage of total medical care
costs
|
6.8 | % | 7.3 | % | ||||
|
Number
of members at end of period
|
1,185,000 | 1,074,000 | ||||||
|
Number
of claims in inventory at end of period
|
185,000 | 271,000 | ||||||
|
Billed
charges of claims in inventory at end of period (in
thousands)
|
$ | 217,000 | $ | 263,000 | ||||
|
Claims
in inventory per member at end of period
|
0.16 | 0.25 | ||||||
-END-