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 11, 2009
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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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
February 11, 2009, Molina Healthcare, Inc. issued a press release announcing its
financial results for the fourth quarter and year ended December 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:
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Exhibit
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No.
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Description
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99.1
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Press
release of Molina Healthcare, Inc. issued February 11, 2009, as to
financial results for the fourth quarter and year ended December 31,
2008.
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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 11, 2009
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By: /s/
Mark L. Andrews
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Mark
L. Andrews
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Chief
Legal Officer, General Counsel,
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and Corporate
Secretary
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EXHIBIT
INDEX
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Exhibit
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No.
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Description
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99.1
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Press
release of Molina Healthcare, Inc. issued February 11, 2009, as to
financial results for the fourth quarter and year ended December 31,
2008.
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News
Release
Contact:
Juan José
Orellana
Investor
Relations
562-435-3666,
ext. 111143
MOLINA
HEALTHCARE REPORTS
FOURTH
QUARTER AND 2008 YEAR-END RESULTS
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·
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Earnings
of $2.25 per diluted share, up 10% over
2007;
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·
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EBITDA
of $146.3 million, up 16% over
2007;
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·
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Annual
premium revenues of $3.1 billion, up 26% over
2007;
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·
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Aggregate
membership up 9% over 2007; and
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·
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2009
guidance confirmed at range of $2.20 to $2.40 per diluted
share.
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Long Beach, California (February 11,
2009) – Molina Healthcare, Inc. (NYSE: MOH) today reported its financial
results for the fourth quarter and year ended December 31, 2008.
Net income
for the quarter ended December 31, 2008, was $15.5 million, or $0.58 per diluted
share, compared with net income of $17.9 million, or $0.63 per diluted share,
for the quarter ended December 31, 2007. Net income for the year
ended December 31, 2008, increased to $62.4 million, or $2.25 per diluted share,
compared with net income of $58.3 million, or $2.05 per diluted share, for the
year ended December 31, 2007.
In
commenting on the results, J. Mario Molina, M.D., president and chief executive
officer of Molina Healthcare, said, “Our results in 2008 give us confidence as
we look forward to 2009. For nearly 30 years, Molina Healthcare has
delivered solid financial performance while providing quality care to
financially vulnerable populations in a cost-effective manner. 2008
was no different. Had our 2008 investment income matched 2007, our
earnings would have increased 23% year-over-year. The challenges of
2009 provide us with the opportunity to strengthen our business as we continue
to provide quality care to those who most need it.”
Earnings
Per Share Guidance
The
Company confirms its guidance issued on January 22, 2009, for fiscal year 2009
earnings per diluted share of between $2.20 and $2.40, with revenue of
approximately $3.6 billion, an administrative expense ratio of approximately
10.5%, and net income of between $59 million and $65 million. The
Company expects its effective tax rate to be approximately 41%, and its shares
outstanding, for the purpose of calculating diluted EPS, to be approximately 27
million for the year ended December 31, 2009.
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Page
2
February
11, 2009
Financial Results – Comparison of Quarters Ended December 31, 2008 and 2007
Premium
revenue for the fourth quarter of 2008 was $808.9 million, an increase of
$138.3 million, or 21%, over the $670.6 million of premium revenue for the
fourth quarter of 2007. Medicare premium revenue for the fourth
quarter of 2008 was $22.7 million, compared with $17.2 million in the fourth
quarter of 2007. Consolidated membership increased 9% between
December 31, 2008 and December 31, 2007.
Significant
contributors to the $138.3 million increase in quarterly premium revenue in
2008, compared with 2007 included the following:
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·
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A
$44.2 million increase in Medicaid premium revenue at the Ohio health plan
due to higher enrollment. The higher enrollment in the Ohio
health plan was primarily due to the transfer of approximately 35,000
Covered Families and Children (CFC) members from another health plan in
the Central region effective April 1, 2008. Effective September
1, 2008, the Ohio health plan also added approximately 4,000 Aged, Blind
or Disabled (ABD) members in the Central and West Central regions, which
drove the $6.0 million sequential Medicaid premium revenue
increase.
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·
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A
$29.0 million increase in Medicaid premium revenue as a result of the
acquisition of the Missouri health plan on November 1,
2007.
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·
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A
$13.7 million increase in Medicaid premium revenue at the Washington
health plan, primarily due to higher
enrollment.
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·
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An
$11.0 million increase in Medicaid premium revenue at the California
health plan, primarily due to higher enrollment. Sequentially,
the California health plan’s Medicaid premium revenue increased $6.7
million, primarily due to rate increases in San Diego County (effective
retroactive to July 1, 2008) and San Bernardino and Riverside counties
effective October 1, 2008. These increases were partially
offset by a decrease in premium rates in Los Angeles County effective
October 1, 2008. Rate cuts intended to be implemented by the
state with respect to all of the Company’s California Medicaid contracts
as of July 1, 2008 had no effect on revenue in the fourth quarter as a
result of a court injunction issued on August 18, 2008 that stayed those
rate cuts.
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·
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An
$11.4 million increase in Medicaid premium revenue at the Utah health
plan, primarily due to increases in revenue as a result of higher medical
expenses incurred under the Company’s cost-plus contract in that
state.
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·
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A
$5.5 million increase in Medicare premium revenue across all health plans
serving Medicare members, due to higher enrollment. During the
fourth quarter of 2008, Medicare revenue was reduced by approximately $3.5
million due to accruals for amounts estimated to be owed back to the
Federal government for the 2008 Part D pharmacy
reconciliation.
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Investment
income for the fourth quarter of 2008 decreased $5.4 million to $3.6
million, from $9.0 million earned in the fourth quarter of 2007. This
60% decline was due to declining interest rates in 2008. The
Company’s annualized portfolio yield decreased to 3.1% for 2008, compared with
5.2% for 2007.
-MORE-
MOH Reports Fourth Quarter and 2008 Year-End Results
Page 3
February 11, 2009
Medical care
costs as a percentage of premium revenue (the medical care ratio)
increased to 84.7% in the fourth quarter of 2008, from 83.6% in the fourth
quarter of 2007. Sequentially, the medical care ratio increased from
84.6% for the quarter ended September 30, 2008. Excluding Medicare,
the Company’s medical care ratio was 84.3% in the fourth quarter of 2008, 83.7%
in the fourth quarter of 2007, and 84.9% in the third quarter of
2008.
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·
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The
medical care ratio of the California health plan was 86.7% for the
quarter, up from 82.8% in the fourth quarter of 2007 and down from 89.1%
in the third quarter of 2008. The year-over-year increase in
the plan’s medical care ratio was caused primarily by higher
fee-for-service and capitation
costs.
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·
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The
medical care ratio of the Michigan health plan was 76.4% for the quarter,
down from 84.4% in the fourth quarter of 2007 and 79.7% in the third
quarter of 2008. The year-over-year and sequential decreases in
the plan’s medical care ratio were primarily due to premium increases,
with little change in PMPM medical
costs.
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·
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The
medical care ratio of the Missouri health plan was 75.0% for the quarter,
down from 85.9% in the fourth quarter of 2007 and 80.6% in the third
quarter of 2008.
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·
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The
medical care ratio of the New Mexico health plan was 82.0% for the
quarter, up from 81.0% in the fourth quarter of 2007 and down from 87.4%
in the third quarter of 2008. The sequential decrease was
primarily due to lower PMPM fee-for-service
costs.
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·
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The
medical care ratio of the Ohio health plan, by line of business, was as
follows:
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|
Three
Months Ended
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||||||||||||
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Dec.
31,
2008
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Sept.
30,
2008
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Dec.
31,
2007
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||||||||||
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Covered
Families and Children (CFC)
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89.2 | % | 89.9 | % | 86.3 | % | ||||||
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Aged,
Blind or Disabled (ABD)
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95.1 | 94.6 | 97.0 | |||||||||
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Aggregate
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91.5 | % | 91.5 | % | 90.3 | % | ||||||
Sequentially,
the medical care ratio for the CFC line of business decreased 70 basis points
primarily due to lower capitation costs. The sequential increase in
the medical care ratio for the ABD line of business was primarily due to out of
period psychiatric capitation expense which added 100 basis points to the fourth
quarter 2008 medical care ratio.
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·
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The
medical care ratio of the Texas health plan was 73.6% for the quarter, up
from 54.1% in the fourth quarter of 2007 and down from 79.8% in the third
quarter of 2008. The sequential decrease was primarily due to
lower fee-for-service medical costs. During the fourth quarter
of 2008, the Texas health plan reduced revenue $2.1 million to record
adjustments relating to its profit-sharing agreement with the state of
Texas.
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·
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The
medical care ratio of the Utah health plan was 92.0% for the quarter, down
from 99.7% in the fourth quarter of 2007 and up from 86.0% in the third
quarter of 2008. The sequential increase was primarily due to
Medicare reconciliation adjustments that were recorded during the third
and fourth quarters of 2008. Those adjustments decreased
revenue by approximately $0.9 million in the fourth quarter of 2008 and
increased revenue by approximately $2.7 million in the third quarter of
2008.
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-MORE-
MOH Reports Fourth Quarter and 2008 Year-End Results
Page 4
February 11, 2009
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·
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The
medical care ratio of the Washington health plan was 83.0% for the
quarter, up from 77.9% in the fourth quarter of 2007 and 76.5% in the
third quarter of 2008. The sequential increase was primarily
due to higher fee-for-service specialist and hospital
costs.
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Days in medical
claims and benefits payable were 41 days at December 31, 2008, a 7%
decrease from the 44 days reported at September 30, 2008 and a 21% decrease from
the 52 days reported at December 31, 2007. As of December 31,
2008, medical claims inventory (measured as the total billed charges of all
claims received but not paid as of the reporting date) had decreased
approximately 22% since September 30, 2008 and 46% since December 31,
2007. The Company’s reserving methodology is consistently applied
across all periods presented.
General and
administrative expenses were $91.6 million, or 11.3% of total revenue,
for the fourth quarter of 2008, compared with $80.5 million, or 11.8% of total
revenue, for the fourth quarter of 2007.
Core G&A
expenses (defined as G&A expenses less premium taxes) were 8.1% of
revenue in the fourth quarter of 2008, compared with 8.8% in the fourth quarter
of 2007 and 8.0% in the third quarter of 2008. The decrease in core
G&A compared with the fourth quarter of 2007 was primarily due to lower
administrative payroll as a percentage of revenue, as indicated in the table
below.
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Three
Months Ended December 31,
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||||||||||||||||
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(in
thousands)
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2008
|
2007
|
||||||||||||||
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Amount
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%
of Total
Revenue
|
Amount
|
%
of Total
Revenue
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|||||||||||||
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Medicare-related
administrative costs
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$ | 4,929 | 0.6 | % | $ | 3,760 | 0.5 | % | ||||||||
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Non
Medicare-related administrative costs:
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||||||||||||||||
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Administrative
payroll, including
employee incentive
compensation
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49,162 | 6.1 | 45,193 | 6.7 | ||||||||||||
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Florida
health plan start up expenses
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1,000 | 0.1 | – | – | ||||||||||||
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All
other administrative expense
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10,442 | 1.3 | 10,796 | 1.6 | ||||||||||||
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Core
G&A expenses
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$ | 65,533 | 8.1 | % | $ | 59,749 | 8.8 | % | ||||||||
Income taxes
were recorded at an effective rate of 38.6% in the fourth quarter of
2008, compared with 36.9%
in the fourth quarter of 2007. The net increase in the Company’s
effective tax rate was primarily the result of a change in
Michigan state taxes effective January 1, 2008 that increased
state income taxes, partially offset by net discrete tax benefits recorded
in the fourth quarter of 2008 related primarily to California enterprise zone
credits. Absent the net discrete tax benefits recorded during the fourth
quarter of 2008, our effective tax rate for the fourth quarter of 2008 would
have been approximately 41%.
Financial
Results – Comparison of Years Ended December 31, 2008 and 2007
Premium
revenue for the year ended December 31, 2008 was $3,091.2 million, an
increase of $628.8 million, or 26%, over the $2,462.4 million of premium revenue
for the year ended December 31, 2007. Medicare premium revenue
for 2008 was $95.1 million, compared with $49.3 million for 2007.
-MORE-
MOH Reports Fourth Quarter
and 2008 Year-End Results
Page 5
February 11, 2009
Significant
contributors to the $628.8 million increase in annual premium revenue included
the following:
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·
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A
$194.6 million increase in Medicaid premium revenue at the Missouri health
plan, primarily a result of the Company’s acquisition of this plan on
November 1, 2007.
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|
·
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A
$166.6 million increase in Medicaid premium revenue at the Ohio health
plan due to higher enrollment, particularly in the Covered Families and
Children (CFC) population.
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·
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A
$78.7 million increase in Medicaid premium revenue at the New Mexico
health plan, primarily due to higher
enrollment.
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|
·
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A
$51.4 million increase in Medicaid premium revenue at the Washington
health plan, primarily due to higher
rates.
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·
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A
$45.8 million increase in Medicare premium revenue across all health plans
that serve Medicare enrollees, primarily due to increased
enrollment.
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·
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A
$34.3 million increase in Medicaid premium revenue at the California
health plan, primarily due to increased
enrollment.
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Investment
income for 2008 decreased $9.0 million to $21.1 million, from $30.1
million earned in 2007. This 30% decline was due to declining
interest rates in 2008.
Medical care
costs as a percentage of premium revenue (the medical care ratio)
increased to 84.8% in 2008 from 84.5% in 2007. Excluding Medicare,
the Company’s medical care ratio was 84.8% in 2008, compared with 84.7% in
2007.
|
·
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The
medical care ratio of the California health plan was 87.2% for 2008, up
from 81.9% in 2007. The increase in the plan’s medical care
ratio was caused primarily by increased fee-for-service and pharmacy costs
that proportionally exceeded the increased revenue from premium rate
increases.
|
|
·
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The
medical care ratio of the Michigan health plan was 79.6% for 2008, down
from 84.0% in 2007. This decrease was caused primarily by
premium rate increases that proportionally exceeded the plan’s increased
medical costs.
|
|
·
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The
medical care ratio of the Missouri health plan was 81.8% for 2008, down
from 85.9% in 2007. Premium increases were proportionally
greater than PMPM medical costs due to revised provider contracts and a
fee schedule increase effective July 1,
2008.
|
|
·
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The
medical care ratio of the New Mexico health plan was 82.1% in 2008, down
from 82.6% in 2007. Between July 1, 2008 and December 31, 2008,
the New Mexico health plan received a blended rate decrease of
approximately 3% under the plan’s Medicaid Salud! contract and two
separate contracts serving membership under the state’s coverage
initiative for the uninsured. The impact of this blended rate
decrease was exceeded by the reversal of a $12.9 million accrual
established as of December 31, 2007, pursuant to a minimum medical care
ratio contract provision. In 2007, the New Mexico health plan
had recorded a charge of $6.0 million related to this contract
provision. Absent the impact of the minimum medical care ratio
contract provision, the New Mexico health plan’s MCR would have been 85.2%
in 2008, compared with 80.8% in 2007, due to higher fee-for-service and
capitation costs and lower PMPM premium
revenue.
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-MORE-
MOH Reports Fourth Quarter
and 2008 Year-End Results
Page 6
February 11, 2009
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·
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The
medical care ratio of the Ohio health plan, by line of business, was as
follows:
|
|
Dec.
31,
2008
|
Dec.
31,
2007
|
|||||||
|
Covered
Families and Children (CFC)
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89.7 | % | 88.6 | % | ||||
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Aged,
Blind or Disabled (ABD)
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93.7 | 94.7 | ||||||
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Aggregate
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91.1 | % | 90.4 | % | ||||
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·
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The
medical care ratio of the Texas health plan was 76.5% in 2008, down from
77.1% in 2007. Increased premiums more than offset higher
medical costs.
|
|
·
|
The
medical care ratio of the Utah health plan was 89.1% in 2008, down from
94.0% in 2007. In 2007, the Utah health plan had recorded a
$4.2 million reduction of revenue as a result of a reconciliation of
amounts due the state of Utah under a savings sharing
arrangement. Absent the savings sharing adjustment, the medical
care ratio in 2007 would have been
90.7%.
|
|
·
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The
medical care ratio of the Washington health plan was 81.0% in 2008, up
from 79.6% in 2007, primarily due to higher fee-for-service specialist and
hospital costs.
|
General and
administrative expenses were $344.8 million, or 11.1% of total revenue,
for 2008, compared with $285.3 million, or 11.5% of total revenue, for
2007.
Core G&A
expenses were 8.0% of revenue in 2008, compared with 8.2% in
2007. The decrease in core G&A compared with 2007 was primarily
due to lower administrative payroll as a percentage of revenue, as indicated in
the table below.
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Year
Ended December 31,
|
||||||||||||||||
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(in
thousands)
|
2008
|
2007
|
||||||||||||||
|
Amount
|
%
of Total
Revenue
|
Amount
|
%
of Total
Revenue
|
|||||||||||||
|
Medicare-related
administrative costs
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$ | 18,451 | 0.6 | % | $ | 9,778 | 0.4 | % | ||||||||
|
Non
Medicare-related administrative costs:
|
||||||||||||||||
|
Administrative
payroll, including
employee incentive
compensation
|
190,932 | 6.1 | 163,420 | 6.6 | ||||||||||||
|
Florida
health plan start up expenses
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2,495 | 0.1 | – | – | ||||||||||||
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All
other administrative expense
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37,768 | 1.2 | 31,077 | 1.2 | ||||||||||||
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Core
G&A expenses
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$ | 249,646 | 8.0 | % | $ | 204,275 | 8.2 | % | ||||||||
Income taxes
were recorded at an effective rate of 39.9% for the year ended December
31, 2008, compared with 37.8%
in the prior year. The increase in the Company’s effective tax rate
was primarily the result of an increase in Michigan state taxes effective
January 1, 2008, partially offset by net discrete tax benefits recorded
during the year relating primarily to California enterprise zone credits.
Absent the discrete tax benefits, the Company’s effective tax rate for the year
ended December 31, 2008 would have been approximately 41%.
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Cash Flow
Page 7
February 11, 2009
Cash Flow
Cash
provided by operating activities for the year ended December 31, 2008 was $40.4
million, compared with cash provided by operating activities of $158.6 million
for 2007, a decrease of $118.2 million.
Significant
contributors to this decrease included the following:
|
·
|
Increased
receivables of approximately $32 million, primarily in Ohio and
Missouri;
|
|
·
|
Decreased
medical claims and benefits payable of approximately $26
million;
|
|
·
|
Decreased
deferred revenue of approximately $33 million, primarily due to the timing
of the Ohio health plan’s receipts of premium payments from the state of
Ohio;
|
|
·
|
Decreased
accounts payable and accrued liabilities of approximately $19 million,
primarily due to the 2008 release of the New Mexico health plan accrual
(recorded prior to 2008) to meet a contractually required minimum medical
care ratio; and
|
|
·
|
Increased
income tax accounts of approximately $24 million due to the 2008 increase
in income taxes receivable, combined with the 2007 decrease in income
taxes payable, as a result of the timing of receipts and
payments.
|
At
December 31, 2008, the Company had cash and investments (not including
restricted investments) of approximately $635.2 million, including auction rate
securities with a fair value of $58.2 million that were reclassified as
non-current assets in the first quarter of 2008. At December 31,
2008, the parent company had cash and investments of approximately $68.9
million, including auction rate securities with a fair value of $16.4
million.
EBITDA
(1)
|
(in
thousands)
|
Three
Months Ended
December
31,
|
Year
Ended
December
31,
|
||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Operating
income
|
$ | 27,467 | $ | 30,633 | $ | 112,605 | $ | 98,327 | ||||||||
|
Add
back:
|
||||||||||||||||
|
Depreciation
and amortization expense
|
8,691 | 7,693 | 33,688 | 27,967 | ||||||||||||
|
EBITDA
|
$ | 36,158 | $ | 38,326 | $ | 146,293 | $ | 126,294 | ||||||||
|
(1)
|
The
Company calculates EBITDA by adding back depreciation and amortization
expense to operating income. EBITDA is not prepared in
conformity with GAAP since it excludes depreciation and amortization
expense, as well as interest expense, and the provision for income
taxes. This non-GAAP financial measure should not be considered
as an alternative to net income, operating income, operating margin, or
cash provided by operating activities. Management uses EBITDA
as a supplemental metric in evaluating the Company’s financial
performance, in evaluating financing and business development decisions,
and in forecasting and analyzing future periods. For these
reasons, management believes that EBITDA is a useful supplemental measure
to investors in evaluating the Company’s performance and the performance
of other companies in our industry.
|
Securities
Repurchase Programs
In January
2009, the Company announced that its Board of Directors has authorized the
repurchase of up to $25 million in aggregate of either the Company’s common
stock or its 3.75% convertible senior notes due 2014. The repurchase
program will be funded with working capital, and repurchases may be made from
time to time on the open market or through privately negotiated
transactions. The repurchase program extends through June 30, 2009,
but the Company reserves the right to suspend or discontinue the program at any
time. To date for 2009, the Company has not effected any repurchases
of its securities.
-MORE-
MOH Reports Fourth Quarter
and 2008 Year-End Results
During the fourth quarter of 2008, the Company repurchased approximately 722,000 shares of its common stock for $17.3 million (average cost of approximately $23.92 per share). Shares used for computing diluted earnings per share for the fourth quarters of 2008 and 2007 were 26.8 million and 28.5 million, respectively.
Page 8
February 11, 2009
During the fourth quarter of 2008, the Company repurchased approximately 722,000 shares of its common stock for $17.3 million (average cost of approximately $23.92 per share). Shares used for computing diluted earnings per share for the fourth quarters of 2008 and 2007 were 26.8 million and 28.5 million, respectively.
During
2008, the Company repurchased approximately 1.9 million shares at an aggregate
purchase price of $50 million pursuant to the two share repurchase programs
announced during 2008.
Conference
Call
The
Company’s management will host a conference call and webcast to discuss its
fourth quarter and year-end results at 5:00 p.m. Eastern Time on Wednesday,
February 11, 2009. The telephone number for this interactive
conference call is 212-231-2928, 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 healthcare services to persons eligible for Medicaid, Medicare,
and other government-sponsored programs for low-income families and
individuals. Molina Healthcare’s ten licensed health plan
subsidiaries in California, Florida, Michigan, Missouri, Nevada, New Mexico,
Ohio, Texas, Utah, and Washington currently serve approximately 1.26 million
members. More information about Molina Healthcare 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,”
“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 2009 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: budgetary pressures on
the federal and state governments and their resulting inability to fully fund
Medicaid, Medicare, or SCHIP or to maintain current membership eligibility
thresholds and criteria; the successful management of our medical costs and the
achievement of our projected medical care ratios in all our health plans,
including the reduction of the medical care ratio of our Ohio health plan; the
success of our efforts to leverage our administrative costs to address the needs
associated with increased enrollment; risks related to our limited experience
operating in Florida and attendant claims estimation difficulties; growth in our
Medicaid and Medicare enrollment consistent with our expectations; uncertainties
regarding the impact of federal health care reform efforts and the new
presidential administration; rate increases and the maintenance of existing rate
levels that are consistent with our expectations; our inability to pass on to
our contracted providers any rate cuts under our governmental contracts; the
budget and liquidity crisis in California and the state's inability to make
payment under its contracts with our California health plan; the successful
resolution of pending rate litigation in California; the renewal of the provider
premium tax beyond October 1, 2009; 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,
including the re-selection of our Michigan and Missouri health plans in response
to Medicaid RFPs in 2009; in light of the current turmoil and illiquidity in
credit markets, the availability of financing to fund and capitalize our
acquisitions and start-up activities and to meet our liquidity needs; the
illiquidity of our auction rate securities; the successful and cost-effective
integration of our acquisitions; earnings seasonality; interest rates on
invested balances that are lower than expected; 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 and
programmatic adjustments and reforms; approval by state regulators of dividends
and distributions by our subsidiaries; 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; the favorable resolution of litigation or
arbitration matters; 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 the date of this release. 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 Fourth Quarter and 2008 Year-End Results
Page 9
February 11, 2009
MOLINA
HEALTHCARE, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts
in thousands, except share and per-share data)
|
Three
Months Ended
December
31,
|
Year
Ended
December
31,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Premium
revenue
|
$ | 808,895 | $ | 670,605 | $ | 3,091,240 | $ | 2,462,369 | ||||||||
|
Investment
income
|
3,609 | 9,024 | 21,126 | 30,085 | ||||||||||||
|
Total
operating revenue
|
812,504 | 679,629 | 3,112,366 | 2,492,454 | ||||||||||||
|
Expenses:
|
||||||||||||||||
|
Medical
care costs
|
684,781 | 560,839 | 2,621,312 | 2,080,083 | ||||||||||||
|
General
and administrative expenses
|
91,565 | 80,464 | 344,761 | 285,295 | ||||||||||||
|
Depreciation
and amortization
|
8,691 | 7,693 | 33,688 | 27,967 | ||||||||||||
|
Impairment
charge on purchased software
|
– | – | – | 782 | ||||||||||||
|
Total
expenses
|
785,037 | 648,996 | 2,999,761 | 2,394,127 | ||||||||||||
|
Operating
income
|
27,467 | 30,633 | 112,605 | 98,327 | ||||||||||||
|
Interest
expense
|
(2,155 | ) | (2,251 | ) | (8,714 | ) | (4,631 | ) | ||||||||
|
Income
before income taxes
|
25,312 | 28,382 | 103,891 | 93,696 | ||||||||||||
|
Provision
for income taxes
|
9,771 | 10,471 | 41,493 | 35,366 | ||||||||||||
|
Net
income
|
$ | 15,541 | $ | 17,911 | $ | 62,398 | $ | 58,330 | ||||||||
|
Net
Income Per Share:
|
||||||||||||||||
|
Basic
|
$ | 0.58 | $ | 0.63 | $ | 2.25 | $ | 2.06 | ||||||||
|
Diluted
|
$ | 0.58 | $ | 0.63 | $ | 2.25 | $ | 2.05 | ||||||||
|
Weighted
average number of common shares and
potentially dilutive common shares
outstanding
|
26,813,000 | 28,536,000 | 27,772,000 | 28,419,000 | ||||||||||||
|
Operating
Statistics:
|
||||||||||||||||
|
Ratio
of direct medical care costs to
premium revenue
|
82.2 | % | 81.0 | % | 82.3 | % | 81.8 | % | ||||||||
|
Ratio
of administrative costs included
in medical care costs to
premium revenue
|
2.5 | 2.6 | 2.5 | 2.7 | ||||||||||||
|
Medical
care ratio
(1)
|
84.7 | % | 83.6 | % | 84.8 | % | 84.5 | % | ||||||||
|
General
and administrative expense ratio (2)
excluding premium taxes (core
G&A ratio)
|
8.1 | % | 8.8 | % | 8.0 | % | 8.2 | % | ||||||||
|
Premium
taxes included in general
and administrative
expenses
|
3.2 | 3.0 | 3.1 | 3.3 | ||||||||||||
|
Total
general and administrative expense ratio
|
11.3 | % | 11.8 | % | 11.1 | % | 11.5 | % | ||||||||
|
Depreciation
and amortization expense ratio (2)
|
1.1 | % | 1.1 | % | 1.1 | % | 1.1 | % | ||||||||
|
Effective
tax rate
|
38.6 | % | 36.9 | % | 39.9 | % | 37.8 | % | ||||||||
|
(1)
|
Medical
care ratio represents medical care costs as a percentage of premium
revenue.
|
|
(2)
|
Computed
as a percentage of total revenue.
|
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Page 10
February 11, 2009
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Amounts
in thousands, except per-share data)
|
Dec.
31,
2008
|
Dec.
31,
2007
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 387,162 | $ | 459,064 | ||||
|
Investments
|
189,870 | 242,855 | ||||||
|
Receivables
|
128,562 | 111,537 | ||||||
|
Income
taxes refundable
|
4,019 | − | ||||||
|
Deferred
income taxes
|
4,603 | 8,616 | ||||||
|
Prepaid
expenses and other current assets
|
14,766 | 12,521 | ||||||
|
Total
current assets
|
728,982 | 834,593 | ||||||
|
Property
and equipment, net
|
65,058 | 49,555 | ||||||
|
Goodwill
and intangible assets, net
|
192,599 | 207,223 | ||||||
|
Investments
|
58,169 | − | ||||||
|
Deferred
income taxes
|
4,488 | − | ||||||
|
Restricted
investments
|
38,202 | 29,019 | ||||||
|
Receivable
for ceded life and annuity contracts
|
27,367 | 29,240 | ||||||
|
Other
assets
|
34,321 | 21,675 | ||||||
|
Total
assets
|
$ | 1,149,186 | $ | 1,171,305 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Medical
claims and benefits payable
|
$ | 292,442 | $ | 311,606 | ||||
|
Accounts
payable and accrued liabilities
|
66,247 | 69,266 | ||||||
|
Deferred
revenue
|
29,538 | 40,104 | ||||||
|
Income
taxes payable
|
− | 5,946 | ||||||
|
Total
current liabilities
|
388,227 | 426,922 | ||||||
|
Long-term
debt
|
200,000 | 200,000 | ||||||
|
Deferred
income taxes
|
− | 10,136 | ||||||
|
Liability
for ceded life and annuity contracts
|
27,367 | 29,240 | ||||||
|
Other
long-term liabilities
|
22,928 | 14,529 | ||||||
|
Total
liabilities
|
638,522 | 680,827 | ||||||
|
Stockholders’
equity:
|
||||||||
|
Common
stock, $0.001 par value; 80,000 shares authorized,
outstanding 26,725 shares at
December 31, 2008, and
28,444 shares at December 31,
2007
|
27 | 28 | ||||||
|
Preferred
stock, $0.001 par value; 20,000 shares authorized,
no shares
outstanding
|
− | − | ||||||
|
Additional
paid-in capital
|
146,179 | 185,808 | ||||||
|
Accumulated
other comprehensive (loss) income
|
(2,310 | ) | 272 | |||||
|
Retained
earnings
|
387,158 | 324,760 | ||||||
|
Treasury
stock, at cost; 1,201 shares at December 31, 2008 and 2007
|
(20,390 | ) | (20,390 | ) | ||||
|
Total
stockholders’ equity
|
510,664 | 490,478 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 1,149,186 | $ | 1,171,305 | ||||
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Page 11
February 11, 2009
MOLINA
HEALTHCARE, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
|
Three
Months Ended
December
31,
|
Year
Ended
December
31,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Operating
activities:
|
||||||||||||||||
|
Net
income
|
$ | 15,541 | $ | 17,911 | $ | 62,398 | $ | 58,330 | ||||||||
|
Adjustments
to reconcile net income to
net cash provided by operating
activities:
|
||||||||||||||||
|
Depreciation
and amortization
|
8,691 | 7,693 | 33,688 | 27,967 | ||||||||||||
|
Other-than-temporary
impairment and
unrealized loss on
investment
|
7,565 | − | 7,565 | − | ||||||||||||
|
Gain
on settlement rights agreement
|
(6,907 | ) | − | (6,907 | ) | − | ||||||||||
|
Deferred
income taxes
|
4,447 | (4,918 | ) | (1,688 | ) | (9,057 | ) | |||||||||
|
Stock-based
compensation
|
2,042 | 1,950 | 7,811 | 7,188 | ||||||||||||
|
Amortization
of deferred financing costs
|
407 | 396 | 1,626 | 1,042 | ||||||||||||
|
Loss
on disposal of property and equipment
|
142 | − | 142 | − | ||||||||||||
|
Tax
provision from employee stock
compensation recorded as
additional
paid-in capital
|
(88 | ) | − | (335 | ) | − | ||||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||||||
|
Receivables
|
41,198 | 28,317 | (17,025 | ) | 15,007 | |||||||||||
|
Prepaid
expenses and other current assets
|
(364 | ) | (750 | ) | (2,245 | ) | (2,911 | ) | ||||||||
|
Medical
claims and benefits payable
|
(6,345 | ) | (11,991 | ) | (19,164 | ) | 6,683 | |||||||||
|
Accounts
payable and accrued liabilities
|
(4,238 | ) | 4,417 | (4,904 | ) | 18,700 | ||||||||||
|
Deferred
revenue
|
10,385 | (1,939 | ) | (10,566 | ) | 21,984 | ||||||||||
|
Income
taxes
|
(11,774 | ) | 4,704 | (9,965 | ) | 13,693 | ||||||||||
|
Net
cash provided by operating activities
|
60,702 | 45,790 | 40,431 | 158,626 | ||||||||||||
|
Investing
activities:
|
||||||||||||||||
|
Purchases
of property and equipment
|
(6,376 | ) | (5,785 | ) | (34,690 | ) | (22,299 | ) | ||||||||
|
Purchases
of investments
|
(81,852 | ) | (178,863 | ) | (263,229 | ) | (264,115 | ) | ||||||||
|
Sales
and maturities of investments
|
57,628 | 44,426 | 246,524 | 103,718 | ||||||||||||
|
Cash
paid in business purchase transactions
|
− | (70,172 | ) | (1,000 | ) | (70,172 | ) | |||||||||
|
Increase
in restricted cash
|
(1,692 | ) | (757 | ) | (9,183 | ) | (8,365 | ) | ||||||||
|
Increase
in other assets
|
(8,395 | ) | (1,409 | ) | (8,973 | ) | (4,330 | ) | ||||||||
|
Increase
in other long-term liabilities
|
1,820 | 2,721 | 6,031 | 9,290 | ||||||||||||
|
Net
cash used in investing activities
|
(38,867 | ) | (209,839 | ) | (64,520 | ) | (256,273 | ) | ||||||||
|
Financing
activities:
|
||||||||||||||||
|
Treasury
stock purchases
|
(17,703 | ) | − | (49,940 | ) | − | ||||||||||
|
Proceeds
from issuance of convertible senior notes
|
− | 200,000 | − | 200,000 | ||||||||||||
|
Repayment
of amounts borrowed
under credit
facility
|
− | (20,000 | ) | − | (45,000 | ) | ||||||||||
|
Payment
of convertible senior notes fees
|
− | (6,498 | ) | − | (6,498 | ) | ||||||||||
|
Payment
of credit facility fees
|
− | − | − | (551 | ) | |||||||||||
|
Excess
tax benefits from employee
stock compensation
|
− | 299 | 43 | 853 | ||||||||||||
|
Proceeds
from exercise of stock options
and employee stock plan
purchases
|
594 | 1,718 | 2,084 | 4,257 | ||||||||||||
|
Net
cash (used in) provided by financing activities
|
(17,109 | ) | 175,519 | (47,813 | ) | 153,061 | ||||||||||
|
Net
increase (decrease) in cash and cash equivalents
|
4,726 | 11,470 | (71,902 | ) | 55,414 | |||||||||||
|
Cash
and cash equivalents at beginning of period
|
382,436 | 447,594 | 459,064 | 403,650 | ||||||||||||
|
Cash
and cash equivalents at end of period
|
$ | 387,162 | $ | 459,064 | $ | 387,162 | $ | 459,064 | ||||||||
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Page 12
February 11, 2009
MOLINA
HEALTHCARE, INC.
UNAUDITED
MEMBERSHIP DATA
|
Total
Ending Membership by Health Plan:
|
Dec.
31, 2008
|
Sept.
30, 2008
|
Dec.
31, 2007
|
|||||||||
|
California
|
322,000 | 313,000 | 296,000 | |||||||||
|
Michigan
|
206,000 | 207,000 | 209,000 | |||||||||
|
Missouri
|
77,000 | 77,000 | 68,000 | |||||||||
|
Nevada
(1)
|
– | – | N/A | |||||||||
|
New
Mexico
|
84,000 | 84,000 | 73,000 | |||||||||
|
Ohio
|
176,000 | 179,000 | 136,000 | |||||||||
|
Texas
|
31,000 | 29,000 | 29,000 | |||||||||
|
Utah
|
61,000 | 55,000 | 55,000 | |||||||||
|
Washington
|
299,000 | 295,000 | 283,000 | |||||||||
|
Total
|
1,256,000 | 1,239,000 | 1,149,000 | |||||||||
|
Total
Ending Membership by State
for the Medicare Advantage
Plans:
|
Dec.
31, 2008
|
Sept.
30, 2008
|
Dec.
31, 2007
|
|||||||||
|
California
|
1,500 | 1,600 | 1,100 | |||||||||
|
Michigan
|
1,700 | 1,700 | 1,100 | |||||||||
|
Nevada
|
700 | 600 | 500 | |||||||||
|
New
Mexico
|
300 | 200 | – | |||||||||
|
Texas
|
400 | 400 | – | |||||||||
|
Utah
|
2,400 | 2,200 | 1,900 | |||||||||
|
Washington
|
1,000 | 1,000 | 500 | |||||||||
|
Total
|
8,000 | 7,700 | 5,100 | |||||||||
|
Total
Ending Membership by State
for the Aged, Blind or Disabled
Population:
|
Dec.
31, 2008
|
Sept.
30, 2008
|
Dec.
31, 2007
|
|||||||||
|
California
|
12,700 | 12,500 | 11,800 | |||||||||
|
Michigan
|
30,300 | 30,400 | 31,400 | |||||||||
|
New
Mexico
|
6,300 | 6,500 | 6,800 | |||||||||
|
Ohio
|
19,000 | 19,700 | 14,900 | |||||||||
|
Texas
|
16,200 | 16,200 | 16,000 | |||||||||
|
Utah
|
7,300 | 7,000 | 6,800 | |||||||||
|
Washington
|
3,000 | 3,000 | 2,800 | |||||||||
|
Total
|
94,800 | 95,300 | 90,500 | |||||||||
|
Quarter
Ended
|
Year
Ended
|
|||||||||||||||||||
|
Total
Member Months (2)
by Health
Plan:
|
Dec.
31,
2008
|
Sept.
30,
2008
|
Dec.
31,
2007
|
Dec.
31,
2008
|
Dec.
31,
2007
|
|||||||||||||||
|
California
|
956,000 | 936,000 | 881,000 | 3,721,000 | 3,500,000 | |||||||||||||||
|
Michigan
|
622,000 | 627,000 | 630,000 | 2,526,000 | 2,597,000 | |||||||||||||||
|
Missouri
|
232,000 | 228,000 | 136,000 | 910,000 | 136,000 | |||||||||||||||
|
Nevada
|
1,000 | 2,000 | 1,000 | 7,000 | 1,000 | |||||||||||||||
|
New
Mexico
|
254,000 | 249,000 | 214,000 | 970,000 | 803,000 | |||||||||||||||
|
Ohio
|
533,000 | 530,000 | 412,000 | 1,998,000 | 1,567,000 | |||||||||||||||
|
Texas
|
91,000 | 87,000 | 88,000 | 348,000 | 335,000 | |||||||||||||||
|
Utah
|
177,000 | 161,000 | 155,000 | 659,000 | 593,000 | |||||||||||||||
|
Washington
|
892,000 | 884,000 | 849,000 | 3,514,000 | 3,419,000 | |||||||||||||||
|
Total
|
3,758,000 | 3,704,000 | 3,366,000 | 14,653,000 | 12,951,000 | |||||||||||||||
|
(1)
|
Less
than 1,000 members.
|
|
(2)
|
A
total member month is defined as the aggregate of each month’s ending
membership for the period
presented.
|
-MORE-
MOH Reports Fourth Quarter
and 2008 Year-End Results
Page 13
February 11, 2009
MOLINA
HEALTHCARE, INC.
UNAUDITED
SELECTED FINANCIAL DATA BY HEALTH PLAN
(Dollars
in thousands except PMPM amounts)
|
Three
Months Ended December 31, 2008
|
||||||||||||||||||||||||
|
Premium
Revenue
|
Medical
Care Costs
|
Medical
Care
Ratio
|
Premium
Tax
Expense
|
|||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||
|
California
|
$ | 108,888 | $ | 113.88 | $ | 94,448 | $ | 98.78 | 86.7 | % | $ | 3,308 | ||||||||||||
|
Michigan
|
132,113 | 212.58 | 100,914 | 162.38 | 76.4 | 6,734 | ||||||||||||||||||
|
Missouri
|
59,771 | 258.25 | 44,836 | 193.72 | 75.0 | – | ||||||||||||||||||
|
Nevada
|
1,655 | 882.72 | 2,467 | 1,315.82 | 149.1 | – | ||||||||||||||||||
|
New
Mexico
|
86,262 | 339.44 | 70,762 | 278.45 | 82.0 | 3,190 | ||||||||||||||||||
|
Ohio
|
168,554 | 316.51 | 154,169 | 289.50 | 91.5 | 9,378 | ||||||||||||||||||
|
Texas
|
30,019 | 328.94 | 22,095 | 242.12 | 73.6 | 549 | ||||||||||||||||||
|
Utah
|
41,400 | 234.19 | 38,076 | 215.38 | 92.0 | – | ||||||||||||||||||
|
Washington
|
178,486 | 200.00 | 148,123 | 165.97 | 83.0 | 2,871 | ||||||||||||||||||
|
Other
(1)
|
1,747 | – | 8,891 | – | – | 2 | ||||||||||||||||||
|
Consolidated
|
$ | 808,895 | $ | 215.24 | $ | 684,781 | $ | 182.21 | 84.7 | % | $ | 26,032 | ||||||||||||
|
Three
Months Ended December 31, 2007
|
||||||||||||||||||||||||
|
Premium
Revenue
|
Medical
Care Costs
|
Medical
Care
Ratio
|
Premium
Tax
Expense
|
|||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||
|
California
|
$ | 98,138 | $ | 111.48 | $ | 81,274 | $ | 92.33 | 82.8 | % | $ | 2,724 | ||||||||||||
|
Michigan
|
122,087 | 193.83 | 103,067 | 163.63 | 84.4 | 6,551 | ||||||||||||||||||
|
Missouri
|
30,730 | 226.65 | 26,396 | 194.69 | 85.9 | – | ||||||||||||||||||
|
Nevada
|
2,015 | 1,370.58 | 1,705 | 1,160.11 | 84.6 | – | ||||||||||||||||||
|
New
Mexico
|
77,042 | 360.74 | 62,415 | 292.26 | 81.0 | 2,650 | ||||||||||||||||||
|
Ohio
|
124,385 | 301.65 | 112,287 | 272.31 | 90.3 | 5,598 | ||||||||||||||||||
|
Texas
|
24,047 | 272.35 | 13,010 | 147.35 | 54.1 | 458 | ||||||||||||||||||
|
Utah
|
28,434 | 183.90 | 28,360 | 183.43 | 99.7 | – | ||||||||||||||||||
|
Washington
|
163,716 | 192.78 | 127,562 | 150.21 | 77.9 | 2,727 | ||||||||||||||||||
|
Other
(1)
|
11 | – | 4,763 | – | – | 7 | ||||||||||||||||||
|
Consolidated
|
$ | 670,605 | $ | 199.27 | $ | 560,839 | $ | 166.65 | 83.6 | % | $ | 20,715 | ||||||||||||
|
Year
Ended December 31, 2008
|
||||||||||||||||||||||||
|
Premium
Revenue
|
Medical
Care Costs
|
Medical
Care
Ratio
|
Premium
Tax
Expense
|
|||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||
|
California
|
$ | 417,027 | $ | 112.06 | $ | 363,776 | $ | 97.75 | 87.2 | % | $ | 12,503 | ||||||||||||
|
Michigan
|
509,782 | 201.86 | 405,683 | 160.64 | 79.6 | 26,710 | ||||||||||||||||||
|
Missouri
|
225,280 | 247.62 | 184,298 | 202.58 | 81.8 | – | ||||||||||||||||||
|
Nevada
|
8,037 | 1,106.45 | 9,099 | 1,252.61 | 113.2 | – | ||||||||||||||||||
|
New
Mexico
|
348,576 | 359.45 | 286,004 | 294.92 | 82.1 | 11,713 | ||||||||||||||||||
|
Ohio
|
602,826 | 301.76 | 549,182 | 274.91 | 91.1 | 30,505 | ||||||||||||||||||
|
Texas
|
110,178 | 316.32 | 84,324 | 242.09 | 76.5 | 1,995 | ||||||||||||||||||
|
Utah
|
155,991 | 236.75 | 139,011 | 210.98 | 89.1 | – | ||||||||||||||||||
|
Washington
|
709,943 | 202.02 | 575,085 | 163.64 | 81.0 | 11,668 | ||||||||||||||||||
|
Other
(1)
|
3,600 | – | 24,850 | – | – | 21 | ||||||||||||||||||
|
Consolidated
|
$ | 3,091,240 | $ | 210.97 | $ | 2,621,312 | $ | 178.90 | 84.8 | % | $ | 95,115 | ||||||||||||
|
Year
Ended December 31, 2007
|
||||||||||||||||||||||||
|
Premium
Revenue
|
Medical
Care Costs
|
Medical
Care
Ratio
|
Premium
Tax
Expense
|
|||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||
|
California
|
$ | 378,934 | $ | 108.29 | $ | 310,226 | $ | 88.66 | 81.9 | % | $ | 11,338 | ||||||||||||
|
Michigan
|
487,032 | 187.55 | 409,230 | 157.59 | 84.0 | 28,493 | ||||||||||||||||||
|
Missouri
|
30,730 | 226.65 | 26,396 | 194.69 | 85.9 | – | ||||||||||||||||||
|
Nevada
|
2,438 | 1,440.73 | 2,069 | 1,222.76 | 84.9 | – | ||||||||||||||||||
|
New
Mexico
|
268,115 | 333.94 | 221,567 | 275.97 | 82.6 | 9,088 | ||||||||||||||||||
|
Ohio
|
436,238 | 278.39 | 394,451 | 251.72 | 90.4 | 19,631 | ||||||||||||||||||
|
Texas
|
88,453 | 263.90 | 68,173 | 203.40 | 77.1 | 1,598 | ||||||||||||||||||
|
Utah
|
116,907 | 197.19 | 109,895 | 185.36 | 94.0 | – | ||||||||||||||||||
|
Washington
|
652,970 | 190.96 | 519,763 | 152.00 | 79.6 | 10,844 | ||||||||||||||||||
|
Other
(1)
|
552 | – | 18,313 | – | – | 28 | ||||||||||||||||||
|
Consolidated
|
$ | 2,462,369 | $ | 190.13 | $ | 2,080,083 | $ | 160.62 | 84.5 | % | $ | 81,020 | ||||||||||||
|
(1)
|
“Other”
medical care costs represent primarily medically related administrative
costs at the parent company.
|
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Page 14
February 11, 2009
MOLINA
HEALTHCARE, INC.
SELECTED
FINANCIAL DATA
(Dollars
in thousands except PMPM amounts)
(Unaudited)
The
following tables provide the details of the Company’s medical care costs for the
periods indicated:
|
Three
Months Ended
December
31, 2008
|
Three
Months Ended
December
31, 2007
|
|||||||||||||||||||||||
|
Amount
|
PMPM
|
%
of Total
Medical
Care
Costs
|
Amount
|
PMPM
|
%
of Total
Medical
Care
Costs
|
|||||||||||||||||||
|
Fee-for-service
|
$ | 447,479 | $ | 119.07 | 65.3 | % | $ | 359,536 | $ | 106.84 | 64.0 | % | ||||||||||||
|
Capitation
|
115,022 | 30.61 | 16.8 | 98,464 | 29.26 | 17.6 | ||||||||||||||||||
|
Pharmacy
|
92,812 | 24.70 | 13.6 | 76,009 | 22.59 | 13.6 | ||||||||||||||||||
|
Other
|
29,468 | 7.83 | 4.3 | 26,830 | 7.96 | 4.8 | ||||||||||||||||||
|
Total
|
$ | 684,781 | $ | 182.21 | 100.0 | % | $ | 560,839 | $ | 166.65 | 100.0 | % | ||||||||||||
|
Year
Ended
December
31, 2008
|
Year
Ended
December
31, 2007
|
|||||||||||||||||||||||
|
Amount
|
PMPM
|
%
of Total
Medical
Care
Costs
|
Amount
|
PMPM
|
%
of Total
Medical
Care
Costs
|
|||||||||||||||||||
|
Fee-for-service
|
$ | 1,709,806 | $ | 116.69 | 65.2 | % | $ | 1,343,911 | $ | 103.77 | 64.6 | % | ||||||||||||
|
Capitation
|
450,440 | 30.74 | 17.2 | 375,206 | 28.97 | 18.0 | ||||||||||||||||||
|
Pharmacy
|
356,184 | 24.31 | 13.6 | 270,363 | 20.88 | 13.0 | ||||||||||||||||||
|
Other
|
104,882 | 7.16 | 4.0 | 90,603 | 7.00 | 4.4 | ||||||||||||||||||
|
Total
|
$ | 2,621,312 | $ | 178.90 | 100.0 | % | $ | 2,080,083 | $ | 160.62 | 100.0 | % | ||||||||||||
The
following table provides the details of the Company’s medical claims and
benefits payable as of the dates indicated:
|
Dec.
31,
2008
|
Sept.
30,
2008
|
Dec.
31,
2007
|
||||||||||
|
Fee-for-service
claims incurred but not paid (IBNP)
|
$ | 236,492 | $ | 238,967 | $ | 264,385 | ||||||
|
Capitation
payable
|
28,111 | 33,443 | 27,840 | |||||||||
|
Pharmacy
payable
|
18,837 | 18,136 | 14,676 | |||||||||
|
Other
|
9,002 | 8,241 | 4,705 | |||||||||
|
Total medical claims and
benefits payable
|
$ | 292,442 | $ | 298,787 | $ | 311,606 | ||||||
-MORE-
MOH
Reports Fourth Quarter and 2008 Year-End Results
Page 15
February 11, 2009
MOLINA
HEALTHCARE, INC.
CHANGE
IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars
in thousands, except per-member amounts)
(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 years
ended December 31, 2008 and 2007:
|
Year
Ended
December
31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Balances
at beginning of period
|
$ | 311,606 | $ | 290,048 | ||||
|
Medical
claims and benefits payable from business acquired during the
period
|
− | 14,876 | ||||||
|
Components
of medical care costs related to:
|
||||||||
|
Current
year
|
2,683,399 | 2,136,381 | ||||||
|
Prior
years
|
(62,087 | ) | (56,298 | ) | ||||
|
Total
medical care costs
|
2,621,312 | 2,080,083 | ||||||
|
Payments
for medical care costs related to:
|
||||||||
|
Current
year
|
2,413,128 | 1,851,035 | ||||||
|
Prior
years
|
227,348 | 222,366 | ||||||
|
Total
paid
|
2,640,476 | 2,073,401 | ||||||
|
Balances
at end of period
|
$ | 292,442 | $ | 311,606 | ||||
|
Benefit
from prior period as a percentage of:
|
||||||||
|
Balance
at beginning of period
|
19.9 | % | 19.4 | % | ||||
|
Premium
revenue
|
2.0 | % | 2.3 | % | ||||
|
Total
medical care costs
|
2.4 | % | 2.7 | % | ||||
|
Days
in claims payable
|
41 | 52 | ||||||
|
Number
of members at end of period
|
1,256,000 | 1,149,000 | ||||||
|
Number
of claims in inventory at end of period
|
87,300 | 161,400 | ||||||
|
Billed
charges of claims in inventory at end of period
|
$ | 115,400 | $ | 212,000 | ||||
|
Claims
in inventory per member at end of period
|
0.07 | 0.14 | ||||||
|
Billed
charges of claims in inventory per member at end of period
|
$ | 91.88 | $ | 184.51 | ||||
|
Number
of claims received during the period
|
11,095,100 | 9,578,900 | ||||||
|
Billed
charges of claims received during the period
|
$ | 7,794,900 | $ | 6,190,900 | ||||
-END-