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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, 2019 (April 29, 2019)
______________
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-31719
13-4204626
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
______________
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
 
¨
 




Item 2.02.    Results of Operations and Financial Condition.
On April 29, 2019, Molina Healthcare, Inc. (the “Company”) issued a press release reporting its financial results for the first quarter ended March 31, 2019, and raising the Company’s full year 2019 earnings guidance. The Company has also posted a slide presentation entitled “2019 1Q Earnings Call Supplement,” dated April 29, 2019, on the Company’s website, www.molinahealthcare.com. The full text of the press release and the slide presentation are included as Exhibit 99.1 and Exhibit 99.2, respectively, to this report. The information contained in the website cited in the press release is not part of this report.
Note: The information in this Form 8-K and the exhibits attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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, as amended, or the Exchange Act, 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, 2019, as to financial results for the first quarter ended March 31, 2019, and raising the Company’s full year 2019 earnings guidance.
99.2
Slide Presentation entitled “2019 1Q Earnings Call Supplement,” dated April 29, 2019.






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, 2019
By:
/s/ Jeff D. Barlow
 
 
 
Jeff D. Barlow
 
 
 
Chief Legal Officer and Secretary






EXHIBIT INDEX
Exhibit No.
Description
Slide Presentation entitled “2019 1Q Earnings Call Supplement,” dated April 29, 2019.




Exhibit

MOH Announces First Quarter 2019 Results
Page 1
April 29, 2019

https://cdn.kscope.io/1ddc590371eb3ced8da48cdca2a57136-molinaa03a01a01a16.jpg

News Release

Contact:
Ryan Kubota
Investor Relations
562-435-3666, ext. 119057

MOLINA HEALTHCARE REPORTS FIRST QUARTER 2019 FINANCIAL RESULTS AND
RAISES FULL YEAR 2019 EARNINGS GUIDANCE
•
Net income per diluted share was $2.99 in the first quarter of 2019 compared with $1.64 in the first quarter of 2018, which included a net benefit of $0.38 per diluted share for non-run-rate items
•
After-tax margin improved to 4.8% in the first quarter of 2019 compared with 2.3% in the first quarter of 2018
•
Medical care ratio was 85.3% in the first quarter, an improvement from 87.7% in the first quarter of 2018, excluding non-run-rate items in the first quarter of 2018
•
Premium revenue was $4.0 billion in the first quarter of 2019, a 9% decrease compared with the first quarter of 2018, which was in line with the Company’s expectations
•
The Company raised full year 2019 earnings guidance to $10.50 - $11.00 from $9.25 - $9.75, which does not include any future prior-period reserve development
Long Beach, California (April 29, 2019) - Molina Healthcare, Inc. (NYSE: MOH) today reported financial results for the first quarter of 2019 and raised full year 2019 guidance.
“These results are a testament to the achievability of the second phase of our strategy, which is to sustain the attractive margin position we had built in 2018,” said Joe Zubretsky, president and CEO. “While certainly not conclusive, our first quarter results validate our position that durable financial and operational improvement can and should allow us to sustain these margins, all while we begin to grow the top line again.”
Consolidated Results
First Quarter of 2019 Compared with First Quarter of 2018
Net income increased to $198 million from $107 million in the first quarter of 2018. Net income per diluted share increased to $2.99 from $1.64 in the first quarter of 2018.
Premium revenue decreased $371 million, or 9%, in the first quarter of 2019 compared with the first quarter of 2018, as expected. The decrease was primarily due to the previously announced loss of the Company’s New Mexico Medicaid contract along with the resizing of the Company’s Florida Medicaid contract and the related transition out of all but two regions.
The medical care ratio (MCR) was 85.3% in the first quarter of 2019, an improvement compared with 86.1% in the first quarter of 2018. Excluding the $70 million benefit of the 2017 Marketplace cost-sharing reduction (CSR) reimbursement recognized in first quarter of 2018, the MCR would have been 87.7% in the first quarter of 2018. The change in the overall MCR was due to:
•
The Medicaid MCR was 88.5% in the first quarter of 2019, an improvement compared with 90.8% in the first quarter of 2018. This was mainly due to improvements in the Temporary Assistance for Needy Families and Aged, Blind or Disabled programs, partially offset by an increased MCR in the Medicaid Expansion program, primarily in California and Ohio.

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MOH Announces First Quarter 2019 Results
Page 2
April 29, 2019

•
The Marketplace MCR was 62.2% in the first quarter of 2019, compared with 50.6% in the first quarter of 2018. The prior year MCR was positively impacted by the benefit of the CSR, without which the Marketplace MCR would have been 66.8% in the first quarter of 2018. The year-over-year improvement primarily reflected increased premium revenue related to rate increases and risk scores that are more commensurate with the acuity of the Company’s Marketplace population.
The general and administrative (G&A) expense ratio was 7.3% in the first quarter of 2019, an improvement compared with 7.6% in the first quarter of 2018 primarily due to lower expenses and the timing of certain expenditures, which were partially offset by the impact associated with lower premium revenue.
Capital Plan Progress
In the first quarter of 2019, the Company repaid $46 million aggregate principal amount of its 1.125% Convertible Notes and entered into privately negotiated termination agreements to terminate the respective portion of the related 1.125% Call Option and 1.125% Warrants.
In April 2019, the Company repaid an additional $128 million aggregate principal amount of its 1.125% Convertible Notes and entered into privately negotiated termination agreements to terminate the respective portion of the related 1.125% Call Option and 1.125% Warrants. Following these transactions, the remaining principal amount outstanding of the Company’s 1.125% Convertible Notes is $78 million. In addition, the Company has received a conversion notice for $7 million principal amount that will be settled in August 2019.



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MOH Announces First Quarter 2019 Results
Page 3
April 29, 2019

2019 Revised Guidance
The following table summarizes 2019 Revised Guidance (1):
 
 
2019 Revised Guidance
 
2019 Initial Guidance
Premium revenue
 
~$15.9B
 
~$15.8B
Premium tax revenue
 
~$425M
 
~$375M
Investment income and other revenue
 
~$115M
 
~$195M
Total revenue
 
~$16.4B
 
~$16.3B
Medical care costs
 
~$13.6B
 
~$13.7B
Medical care ratio (2)
 
~86%
 
86.7% - 87.0%
General and administrative expenses
 
~$1.3B
 
~$1.2B
G&A ratio (3)
 
~7.7%
 
7.5% - 7.7%
Premium tax expenses
 
~$425M
 
~$375M
Depreciation and amortization
 
~$90M
 
~$85M
Interest expense and other expenses, net
 
~$90M
 
~$100M
Income before income taxes
 
$900M - $940M
 
$790M - $840M
Net income
 
$680M - $710M
 
$600M - $630M
EBITDA (4)
 
$1,080M - $1,120M
 
$975M - $1,025M
Effective tax rate
 
~24.5%
 
24.5% - 25.0%
After-tax margin (3)
 
4.1% - 4.3%
 
3.7% - 3.9%
Diluted weighted average shares
 
~64.7M
 
~64.7M
Net income per share
 
$10.50 - $11.00
 
$9.25 - $9.75
End-of-year membership by government program:
 
 
 
 
Medicaid and Medicare
 
~3.1M
 
~3.2M
Marketplace
 
270K - 280K
 
250K - 275K
__________________
(1)
All amounts are estimates and do not include non-recurring significant items. Earnings per diluted share as shown is calculated on a GAAP basis; actual results may differ materially. See the Company’s risk factors as discussed in its 2018 Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.”
(2)
Medical care ratio represents medical care costs as a percentage of premium revenue.
(3)
G&A ratio represents general and administrative expenses as a percentage of total revenue. After-tax margin represents net income as a percentage of total revenue.
(4)
See reconciliation of non-GAAP financial measures at the end of this release.

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MOH Announces First Quarter 2019 Results
Page 4
April 29, 2019

Conference Call
Management will host a conference call and webcast to discuss Molina Healthcare’s first quarter 2019 results at 8:30 a.m. Eastern time on Tuesday, April 30, 2019. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 4093086. A telephonic replay of the conference call will be available through Tuesday, May 7, 2019, by dialing (877) 344-7529 and entering confirmation number 10130214. A live audio broadcast of this conference call will be available on Molina Healthcare’s website, molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 3.4 million members as of March 31, 2019. For more information about Molina Healthcare, please visit molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This earnings release contains forward-looking statements regarding the Company’s revised 2019 guidance, as well as its plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those risks and uncertainties are discussed in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and the section entitled “Forward-Looking Statements” in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2019.
These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at sec.gov. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by its forward-looking statements will in fact occur, and the Company cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of April 29, 2019, and, except as otherwise required by law, the Company disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.



-MORE-

MOH Announces First Quarter 2019 Results
Page 5
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions, except per-share amounts)
Revenue:
 
 
 
Premium revenue
$
3,952

 
$
4,323

Premium tax revenue
138

 
104

Health insurer fees reimbursed
—

 
61

Service revenue
—

 
134

Investment income and other revenue
29

 
24

Total revenue
4,119

 
4,646

Operating expenses:
 
 
 
Medical care costs
3,371

 
3,722

General and administrative expenses
302

 
352

Premium tax expenses
138

 
104

Health insurer fees
—

 
75

Depreciation and amortization
25

 
26

Restructuring costs
3

 
25

Cost of service revenue
—

 
120

Total operating expenses
3,839

 
4,424

Operating income
280

 
222

Other expenses, net:
 
 
 
Interest expense
23

 
33

Other (income) expenses, net
(3
)
 
10

Total other expenses, net
20

 
43

Income before income tax expense
260

 
179

Income tax expense
62

 
72

Net income
$
198

 
$
107

 
 
 
 
Net income per diluted share
$
2.99

 
$
1.64

 
 
 
 
Diluted weighted average shares outstanding
66.2

 
65.2

 
 
 
 
Operating Statistics:
 
 
 
Medical care ratio
85.3
%
 
86.1
%
G&A ratio
7.3
%
 
7.6
%
Premium tax ratio
3.4
%
 
2.3
%
Effective income tax expense rate
23.8
%
 
40.3
%
After-tax margin
4.8
%
 
2.3
%



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MOH Announces First Quarter 2019 Results
Page 6
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
March 31,
 
December 31,
 
2019
 
2018
 
(Dollars in millions,
except per-share amounts)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
3,224

 
$
2,826

Investments
1,508

 
1,681

Receivables
1,359

 
1,330

Prepaid expenses and other current assets
124

 
149

Derivative asset
516

 
476

Total current assets
6,731

 
6,462

Property, equipment, and capitalized software, net
376

 
241

Goodwill and intangible assets, net
185

 
190

Restricted investments
100

 
120

Deferred income taxes
76

 
117

Other assets
111

 
24

 
$
7,579

 
$
7,154

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
1,995

 
$
1,961

Amounts due government agencies
932

 
967

Accounts payable and accrued liabilities
444

 
390

Deferred revenue
207

 
211

Current portion of long-term debt
198

 
241

Derivative liability
516

 
476

Total current liabilities
4,292

 
4,246

Long-term debt
1,121

 
1,020

Finance lease liabilities
234

 
197

Other long-term liabilities
97

 
44

Total liabilities
5,744

 
5,507

Stockholders’ equity:
 
 
 
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 63 million shares at March 31, 2019 and 62 million shares at December 31, 2018
—

 
—

Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding
—

 
—

Additional paid-in capital
543

 
643

Accumulated other comprehensive loss
(3
)
 
(8
)
Retained earnings
1,295

 
1,012

Total stockholders’ equity
1,835

 
1,647

 
$
7,579

 
$
7,154


-MORE-

MOH Announces First Quarter 2019 Results
Page 7
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Operating activities:
 
 
 
Net income
$
198

 
$
107

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
25

 
37

Deferred income taxes
15

 
(6
)
Share-based compensation
9

 
6

Amortization of convertible senior notes and finance lease liabilities
3

 
7

(Gain) loss on debt extinguishment
(3
)
 
10

Non-cash restructuring costs
—

 
17

Other, net
3

 
2

Changes in operating assets and liabilities:
 
 
 
Receivables
(29
)
 
(83
)
Prepaid expenses and other current assets
20

 
(239
)
Medical claims and benefits payable
34

 
(163
)
Amounts due government agencies
(35
)
 
172

Accounts payable and accrued liabilities
(30
)
 
319

Deferred revenue
(4
)
 
130

Income taxes
43

 
78

Net cash provided by operating activities
249

 
394

Investing activities:
 
 
 
Purchases of investments
(185
)
 
(389
)
Proceeds from sales and maturities of investments
366

 
543

Purchases of property, equipment, and capitalized software
(6
)
 
(4
)
Other, net
(4
)
 
(5
)
Net cash provided by investing activities
171

 
145

Financing activities:
 
 
 
Repayment of principal amount of 1.125% Convertible Notes
(46
)
 
—

Cash paid for partial settlement of 1.125% Conversion Option
(115
)
 
—

Cash received for partial termination of 1.125% Call Option
115

 
—

Cash paid for partial termination of 1.125% Warrants
(103
)
 
—

Proceeds from borrowings under Term Loan
100

 
—

Other, net
1

 
(5
)
Net cash used in financing activities
(48
)
 
(5
)
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
372

 
534

Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
2,926

 
3,290

Cash, cash equivalents, and restricted cash and cash equivalents at end of period
$
3,298

 
$
3,824


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MOH Announces First Quarter 2019 Results
Page 8
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP
 
March 31,
2019
 
December 31,
2018

March 31,
2018
Ending Membership by Government Program:
 
 
 
 
 
Temporary Assistance for Needy Families (“TANF”) and Children’s Health Insurance Program (“CHIP”)
2,016,000

 
2,295,000

 
2,435,000

Medicaid Expansion
596,000

 
660,000

 
662,000

Aged, Blind or Disabled (“ABD”)
352,000

 
406,000

 
411,000

Total Medicaid
2,964,000

 
3,361,000

 
3,508,000

Medicare-Medicaid Plan (“MMP”) - Integrated
56,000

 
54,000

 
56,000

Medicare Special Needs Plans
41,000

 
44,000

 
44,000

Total Medicare
97,000

 
98,000

 
100,000

Total Medicaid and Medicare
3,061,000

 
3,459,000

 
3,608,000

Marketplace
332,000

 
362,000

 
453,000

 
3,393,000

 
3,821,000

 
4,061,000

 
 
 
 
 
 
Ending Membership by Health Plan:
 
 
 
 
 
California
600,000

 
608,000

 
656,000

Florida (1)
144,000

 
313,000

 
414,000

Illinois
219,000

 
224,000

 
151,000

Michigan
369,000

 
383,000

 
388,000

New Mexico (1)
27,000

 
222,000

 
250,000

Ohio
295,000

 
302,000

 
328,000

Puerto Rico
207,000

 
252,000

 
316,000

South Carolina
126,000

 
120,000

 
117,000

Texas
377,000

 
423,000

 
476,000

Washington
815,000

 
781,000

 
779,000

Other (2)
214,000

 
193,000

 
186,000

 
3,393,000

 
3,821,000

 
4,061,000

__________________
(1)
As reported throughout 2018, the Company’s Medicaid contracts in New Mexico and in all but two regions in Florida terminated in late 2018 and early 2019. During 2019, the Company continues to serve Medicare and Marketplace members in both Florida and New Mexico, as well as Medicaid members in two regions in Florida.
(2)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.






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MOH Announces First Quarter 2019 Results
Page 9
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
BY GOVERNMENT PROGRAM
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2019
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
6.2

 
$
1,173

 
$
189.36

 
$
1,022

 
$
165.05

 
87.2
%
 
$
151

Medicaid Expansion
1.8

 
664

 
369.62

 
594

 
330.45

 
89.4

 
70

ABD
1.1

 
1,167

 
1,068.43

 
1,042

 
953.48

 
89.2

 
125

Total Medicaid
9.1

 
3,004

 
330.75

 
2,658

 
292.60

 
88.5

 
346

MMP
0.2

 
388

 
2,355.29

 
333

 
2,026.83

 
86.1

 
55

Medicare
0.1

 
163

 
1,284.70

 
133

 
1,047.78

 
81.6

 
30

Total Medicare
0.3

 
551

 
1,889.47

 
466

 
1,600.84

 
84.7

 
85

Total Medicaid and Medicare
9.4

 
3,555

 
379.19

 
3,124

 
333.26

 
87.9

 
431

Marketplace
1.0

 
397

 
393.53

 
247

 
244.61

 
62.2

 
150

 
10.4

 
$
3,952

 
$
380.59

 
$
3,371

 
$
324.65

 
85.3
%
 
$
581


 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
7.4

 
$
1,373

 
$
185.14

 
$
1,272

 
$
171.56

 
92.7
%
 
$
101

Medicaid Expansion
2.0

 
752

 
372.75

 
641

 
317.46

 
85.2

 
111

ABD
1.2

 
1,254

 
1,014.23

 
1,155

 
934.55

 
92.1

 
99

Total Medicaid
10.6

 
3,379

 
316.69

 
3,068

 
287.56

 
90.8

 
311

MMP
0.2

 
357

 
2,137.88

 
305

 
1,824.21

 
85.3

 
52

Medicare
0.1

 
157

 
1,188.97

 
131

 
994.81

 
83.7

 
26

Total Medicare
0.3

 
514

 
1,718.61

 
436

 
1,457.75

 
84.8

 
78

Total Medicaid and Medicare
10.9

 
3,893

 
354.94

 
3,504

 
319.48

 
90.0

 
389

Marketplace
1.4

 
430

 
312.87

 
218

 
158.40

 
50.6

 
212

 
12.3

 
$
4,323

 
$
350.25

 
$
3,722

 
$
301.55

 
86.1
%
 
$
601

__________________
(1)
A member month is defined as the aggregate of each month’s ending membership for the period presented.
(2)
The MCR represents medical costs as a percentage of premium revenue.



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MOH Announces First Quarter 2019 Results
Page 10
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
MEDICAID AND MEDICARE BY HEALTH PLAN
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2019
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.7

 
$
499

 
$
299.83

 
$
448

 
$
269.33

 
89.8
%
 
$
51

Florida
0.4

 
162

 
387.48

 
127

 
303.05

 
78.2

 
35

Illinois
0.7

 
227

 
348.04

 
185

 
282.70

 
81.2

 
42

Michigan
1.1

 
395

 
363.04

 
326

 
299.99

 
82.6

 
69

Ohio
0.9

 
590

 
659.09

 
537

 
600.07

 
91.0

 
53

Puerto Rico
0.6

 
102

 
165.02

 
90

 
145.38

 
88.1

 
12

South Carolina
0.4

 
136

 
363.14

 
115

 
308.87

 
85.1

 
21

Texas
0.6

 
599

 
902.56

 
532

 
801.53

 
88.8

 
67

Washington
2.4

 
614

 
258.41

 
586

 
246.69

 
95.5

 
28

Other (1) (2)
0.6

 
231

 
370.26

 
178

 
285.13

 
77.0

 
53

 
9.4

 
$
3,555

 
$
379.19

 
$
3,124

 
$
333.26

 
87.9
%
 
$
431

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
494

 
$
272.61

 
$
412

 
$
227.31

 
83.4
%
 
$
82

Florida
1.0

 
382

 
351.58

 
345

 
317.41

 
90.3

 
37

Illinois
0.5

 
141

 
298.17

 
122

 
257.50

 
86.4

 
19

Michigan
1.1

 
376

 
336.64

 
331

 
296.19

 
88.0

 
45

New Mexico (2)
0.7

 
319

 
466.17

 
310

 
453.30

 
97.2

 
9

Ohio
0.9

 
551

 
576.60

 
460

 
481.26

 
83.5

 
91

Puerto Rico
1.0

 
186

 
193.13

 
174

 
181.39

 
93.9

 
12

South Carolina
0.3

 
122

 
348.08

 
104

 
297.52

 
85.5

 
18

Texas
0.7

 
562

 
809.90

 
519

 
747.53

 
92.3

 
43

Washington
2.3

 
584

 
256.66

 
574

 
252.41

 
98.3

 
10

Other (1)
0.6

 
176

 
314.93

 
153

 
273.36

 
86.8

 
23

 
10.9

 
$
3,893

 
$
354.94

 
$
3,504

 
$
319.48

 
90.0
%
 
$
389

__________________
(1)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.
(2)
In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to the Company’s consolidated operating results.



-MORE-

MOH Announces First Quarter 2019 Results
Page 11
April 29, 2019


MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
MARKETPLACE BY HEALTH PLAN
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2019
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
0.1

 
$
56

 
$
342.00

 
$
33

 
$
201.46

 
58.9
 %
 
$
23

Florida
0.2

 
61

 
421.17

 
26

 
177.31

 
42.1

 
35

Michigan
—

 
10

 
467.25

 
5

 
211.50

 
45.3

 
5

Ohio
—

 
30

 
853.87

 
15

 
448.51

 
52.5

 
15

Texas
0.6

 
148

 
306.36

 
109

 
226.36

 
73.9

 
39

Washington
—

 
47

 
711.60

 
29

 
435.90

 
61.3

 
18

Other (1)
0.1

 
45

 
476.11

 
30

 
314.70

 
66.1

 
15

 
1.0

 
$
397

 
$
393.53

 
$
247

 
$
244.61

 
62.2
 %
 
$
150

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
0.2

 
$
49

 
$
253.93

 
$
31

 
$
162.64

 
64.0
 %
 
$
18

Florida
0.2

 
45

 
271.12

 
(16
)
 
(95.60
)
 
(35.3
)
 
61

Michigan
0.1

 
13

 
224.11

 
9

 
144.16

 
64.3

 
4

New Mexico
0.1

 
34

 
438.67

 
19

 
246.50

 
56.2

 
15

Ohio
0.1

 
26

 
403.44

 
17

 
262.87

 
65.2

 
9

Texas
0.7

 
229

 
308.74

 
146

 
196.89

 
63.8

 
83

Washington
—

 
39

 
526.36

 
30

 
405.40

 
77.0

 
9

Other (2)
—

 
(5
)
 
NM

 
(18
)
 
NM

 
NM
 
13

 
1.4

 
$
430

 
$
312.87

 
$
218

 
$
158.40

 
50.6
 %
 
$
212

__________________
(1)
“Other” includes the New Mexico, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results in 2019.
(2)
“Other” includes the Utah and Wisconsin health plans, where the Company did not participate in the Marketplace in 2018. Therefore, the ratios for 2018 periods are not meaningful (NM).



-MORE-

MOH Announces First Quarter 2019 Results
Page 12
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
TOTAL BY HEALTH PLAN
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2019
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
555

 
$
303.64

 
$
481

 
$
263.20

 
86.7
%
 
$
74

Florida
0.6

 
223

 
396.13

 
153

 
270.76

 
68.4

 
70

Illinois
0.7

 
227

 
348.04

 
185

 
282.70

 
81.2

 
42

Michigan
1.1

 
405

 
365.09

 
331

 
298.25

 
81.7

 
74

Ohio
0.9

 
620

 
666.41

 
552

 
594.38

 
89.2

 
68

Puerto Rico
0.6

 
102

 
165.02

 
90

 
145.38

 
88.1

 
12

South Carolina
0.4

 
136

 
363.14

 
115

 
308.87

 
85.1

 
21

Texas
1.2

 
747

 
651.67

 
641

 
559.49

 
85.9

 
106

Washington
2.4

 
661

 
270.72

 
615

 
251.83

 
93.0

 
46

Other (1) (2)
0.7

 
276

 
384.08

 
208

 
288.99

 
75.2

 
68

 
10.4

 
$
3,952

 
$
380.59

 
$
3,371

 
$
324.65

 
85.3
%
 
$
581

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
2.0

 
$
543

 
$
270.80

 
$
443

 
$
221.03

 
81.6
%
 
$
100

Florida
1.2

 
427

 
340.91

 
329

 
262.65

 
77.0

 
98

Illinois
0.5

 
141

 
298.17

 
122

 
257.50

 
86.4

 
19

Michigan
1.2

 
389

 
331.08

 
340

 
288.68

 
87.2

 
49

New Mexico (2)
0.8

 
353

 
463.33

 
329

 
431.94

 
93.2

 
24

Ohio
1.0

 
577

 
565.62

 
477

 
467.41

 
82.6

 
100

Puerto Rico
1.0

 
186

 
193.13

 
174

 
181.39

 
93.9

 
12

South Carolina
0.3

 
122

 
348.08

 
104

 
297.52

 
85.5

 
18

Texas
1.4

 
791

 
551.28

 
665

 
463.37

 
84.1

 
126

Washington
2.3

 
623

 
265.20

 
604

 
257.25

 
97.0

 
19

Other (1)
0.6

 
171

 
305.94

 
135

 
240.95

 
78.8

 
36

 
12.3

 
$
4,323

 
$
350.25

 
$
3,722

 
$
301.55

 
86.1
%
 
$
601

__________________
(1)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.
(2)
In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to the Company’s consolidated operating results.



-MORE-

MOH Announces First Quarter 2019 Results
Page 13
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)

The following table provides details of the Company’s medical care costs for the periods indicated:
 
Three Months Ended March 31,
 
2019
 
2018
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
2,514

 
$
242.12

 
74.6
%
 
$
2,745

 
$
222.38

 
73.8
%
Pharmacy
413

 
39.73

 
12.2

 
583

 
47.25

 
15.6

Capitation
285

 
27.46

 
8.5

 
312

 
25.28

 
8.4

Other
159

 
15.34

 
4.7

 
82

 
6.64

 
2.2

 
$
3,371

 
$
324.65

 
100.0
%
 
$
3,722

 
$
301.55

 
100.0
%

The following table provides details of the Company’s medical claims and benefits payable as of the dates indicated:
 
March 31,
 
December 31,
 
2019
 
2018
Fee-for-service claims incurred but not paid (IBNP)
$
1,411

 
$
1,562

Pharmacy payable
114

 
115

Capitation payable
59

 
52

Other (1)
411

 
232

 
$
1,995

 
$
1,961

______________________
(1)
“Other” medical claims and benefits payable include amounts payable to certain providers for which the Company acts as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact the Company’s consolidated statements of income. As of March 31, 2019 and December 31, 2018, the Company had recorded non-risk provider payables of approximately $278 million and $107 million, respectively.


-MORE-

MOH Announces First Quarter 2019 Results
Page 14
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in millions)

The Company’s claims liability includes a provision for adverse claims deviation based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims. The Company’s reserving methodology is consistently applied across all periods presented. The amounts displayed for “Components of medical care costs related to: Prior period” represent the amount by which its original estimate of claims and benefits payable at the beginning of the period was more than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:
 
Three Months Ended March 31,
 
Year Ended December 31, 2018
 
2019
 
2018
 
Medical claims and benefits payable, beginning balance
$
1,961

 
$
2,192

 
$
2,192

Components of medical care costs related to:
 
 
 
 
 
Current period
3,560

 
4,033

 
15,478

Prior period (1)
(189
)
 
(311
)
 
(341
)
Total medical care costs
3,371

 
3,722

 
15,137

 
 
 
 
 
 
Change in non-risk provider payables
171

 
45

 
13

Payments for medical care costs related to:
 
 
 
 
 
Current period
2,197

 
2,498

 
13,671

Prior period
1,311

 
1,438

 
1,710

Total paid
3,508

 
3,936

 
15,381

Medical claims and benefits payable, ending balance
$
1,995

 
$
2,023

 
$
1,961

 
 
 
 
 
 
Days in claims payable, fee for service (2)
52

 
53

 
53

______________________
(1)
March 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $70 million. December 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81 million.
(2)
Claims payable includes primarily IBNP. It also includes certain fee-for-service payables reported in “Other” medical claims and benefits payable amounting to $51 million, $22 million and $43 million, as of March 31, 2019, March 31, 2018, and December 31, 2018, respectively.



-MORE-

MOH Announces First Quarter 2019 Results
Page 15
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SUMMARY OF SIGNIFICANT ITEMS AFFECTING CURRENT QUARTER AND
YEAR-TO-DATE FINANCIAL RESULTS
(In millions, except per diluted share amounts)

The table below summarizes the impact of certain items significant to the Company’s financial performance in the periods presented. The individual items presented below increase (decrease) income before income tax expense.
 
Three Months Ended March 31,
 
2019
 
2018
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
 
 
 
 
 
 
Marketplace CSR subsidies, for 2017 dates of service
$
—

 
$
—

 
$
70

 
$
0.83

Restructuring costs
(3
)
 
(0.03
)
 
(25
)
 
(0.30
)
Gain (loss) on debt extinguishment
3

 
0.03

 
(10
)
 
(0.15
)
 
$
—

 
$
—

 
$
35

 
$
0.38

______________________
(1)
Except for permanent differences between GAAP and tax (such as certain expenses that are not deductible for tax purposes), per diluted share amounts are generally calculated at the statutory income tax rate of 22.6% and 22% for the first quarter of 2019 and 2018, respectively.


-MORE-

MOH Announces First Quarter 2019 Results
Page 16
April 29, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES
(In millions, except per diluted share amounts)
The Company uses non-generally accepted accounting principles, or non-GAAP, financial measures as supplemental metrics in evaluating the Company’s financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing the Company’s performance to the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures. See further information regarding non-GAAP measures below the tables.
 
Three Months Ended March 31,
 
2019
 
2018
 
 
 
 
Net income
$
198

 
$
107

Adjustments:
 
 
 
Depreciation, and amortization of intangible assets and capitalized software
25

 
34

Interest expense
23

 
33

Income tax expense
62

 
72

EBITDA
$
308

 
$
246

 
Three Months Ended March 31,
2019
 
2018
 
 
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
Net income
$
198

 
$
2.99

 
$
107

 
$
1.64

Adjustment:
 
 
 
 
 
 
 
Amortization of intangible assets
5

 
0.07

 
5

 
0.08

Income tax effect (1)
(1
)
 
(0.02
)
 
(1
)
 
(0.01
)
Amortization of intangible assets, net of tax effect
4

 
0.05

 
4

 
0.07

Adjusted net income
$
202

 
$
3.04

 
$
111

 
$
1.71

________________________
(1)
Income tax effect of adjustments calculated at the blended federal and state statutory tax rate of 22.6% and 22% for 2019 and 2018, respectively.
The following are descriptions of the adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release:
Earnings before interest, taxes, depreciation and amortization (“EBITDA”): Net income on a GAAP basis less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax expense. The Company believes that EBITDA is helpful in assessing the Company’s ability to meet the cash demands of its operating units.
Adjusted net income: Net income on a GAAP basis less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate. The Company believes that adjusted net income is helpful in assessing the Company’s financial performance exclusive of the non-cash impact of the amortization of purchased intangibles.
Adjusted net income per diluted share: Adjusted net income divided by weighted average common shares outstanding on a fully diluted basis.

-MORE-

MOH Announces First Quarter 2019 Results
Page 17
April 29, 2019

MOLINA HEALTHCARE, INC.
2019 REVISED GUIDANCE

Reconciliation of Non-GAAP Financial Measures
 
Low End
 
High End
 
(In millions)
Net income
$
680

 
$
710

Adjustments:
 
 
 
Depreciation, and amortization of intangible assets and capitalized software
90

 
90

Interest expense
90

 
90

Income tax expense
220

 
230

EBITDA
$
1,080

 
$
1,120


-END-
a20191qearningsreleasesu
2019 1Q Earnings Call Supplement April 29, 2019

 
Cautionary Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This slide presentation and our accompanying oral remarks contain forward-looking statements regarding, without limitation, our business, operations, turnaround, plans, guidance, projections and longer-term outlook within the meaning of Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Securities Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with such safe harbor provisions. All statements, other than statements of historical facts, included in this presentation may be deemed to be forward-looking statements for purposes of the Securities Act and the Securities Exchange Act. Without limiting the foregoing, we use the word “anticipate(s),”, “believe(s),” “estimate(s),” “guidance,” intend(s),” “may,” “outlook,” “plan(s),” “project(s)” or “projection(s),” “will,” “would,” “could,” “should,” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we will actually achieve the plans, intentions, outlook, or expectations disclosed in our forward-looking statements and, accordingly, you should not place undue reliance on our forward-looking statements. Forward-looking statements are based on current expectations and projections about future events, and are subject to certain risks, assumptions and uncertainties that could cause actual events and results to differ materially from those discussed herein, including the risk factors and cautionary statements found under Item 1A in our Form 10-K annual report, as well as the risk factors and cautionary statements in our quarterly reports and in our other reports and filings with the Securities and Exchange Commission and available for viewing on its website as sec.gov. Except to the extent otherwise required by federal or state securities laws, we caution you that we do not undertake any obligation to update forward-looking statements made by us. 2

 
Reported 1Q 2019 Earnings Call Highlights 1Q 2019 Premium Revenue $4.0B Performance Pre-Tax Income $260M Highlights Net Income $198M Earnings Per Diluted Share $2.99 1Q 2019 Medical Care Ratio 85.3% Key G&A Ratio 7.3% Metrics Pre-Tax Margin 6.3% After-Tax Margin 4.8% 3

 
2019 Guidance Highlights 2019 Guidance (Issued April)1 Premium Revenue ~$15.9B Performance Pre-Tax Income ~$900M - $940M Highlights Net Income ~$680M - $710M Earnings Per Diluted Share ~$10.50 - $11.00 2019 Guidance (Issued April) Medical Care Ratio ~86% Key G&A Ratio ~7.7% Metrics Pre-Tax Margin 5.5% - 5.7% After-Tax Margin 4.1% - 4.3% 1. All amounts are full year estimates and do not include future non-recurring significant items. Earnings per diluted share as shown is calculated on a GAAP basis; actual results may differ materially. See the Company’s risk factors as discussed in its 2018 Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” 4

 
2019 Guidance Comparison Premium revenue and after-tax margins 2019 Guidance 2019 Guidance Revenue (Issued February)1 (Issued April)1 Total Premium ~$15.8B ~$15.9B Medicaid ~$12.3B ~$12.2B Medicare ~$2.2B ~$2.2B Marketplace ~$1.3B ~$1.5B Total Revenue ~$16.3B ~$16.4B 2019 Guidance 2019 Guidance After-Tax Margin (Issued February) (Issued April) Medicaid ~2.8% ~3% Medicare ~5.0% ~6% Marketplace ~10.8% ~11% Consolidated 3.7% - 3.9% 4.1% - 4.3% 1. 2019 Guidance midpoint 5

 
2019 Guidance Assumptions 1 Excludes restructuring or one-time significant items 2 Assumes no future prior period development 3 EPS guidance is on a GAAP basis 6

 
2019 Guidance Bridge: EPS Outperformance ~$0.45 ~$0.15 ~ $0.65 1 $10.75 1 $9.50 2019 Guidance Prior Year Q1 Outperformance Q2-Q4 Raise 2019 Guidance (Issued February) Development in Q1 (Issued April) 1. 2019 Guidance midpoint 7