UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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Current Report
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 30, 2019 (May 30, 2019)
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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 or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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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
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 Par Value
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MOH
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New York Stock Exchange
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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))
Indicate 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).
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Emerging growth company
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☐
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| 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. |
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Item 7.01. Regulation FD Disclosure.
On May 30, 2019, the Company presented and webcast certain slides as part of the Company’s presentation at its Investor Day
Conference held in New York City. The slide presentation contains statements regarding, among other things, the Company’s 2019 guidance, its business plans, expectations, growth prospects and aspirations, and longer-term outlook for the future.
The Company cannot guarantee that it will actually achieve the plans, outlook, or expectations described in such statements. A copy of the Company’s complete slide presentation is included as Exhibit 99.1 to this report.
An audio and slide replay of the live webcast of the Company’s Investor Day presentation will be available for 30
days from the date of the presentation at the Company’s website, www.molinahealthcare.com. The information contained in such websites is not part of this current report.
Note: The information furnished herewith pursuant to Item 7.01 of this current report on Form 8-K shall not be
deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration
statement or other document filed by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
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Exhibit No.
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Description
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99.1
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Slide presentation given at the Investor Day Conference of Molina Healthcare, Inc. on May 30, 2019.
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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:
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May 30, 2019
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By:
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/s/ Jeff D. Barlow
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Jeff D. Barlow
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Chief Legal Officer and Secretary
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EXHIBIT INDEX
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Exhibit No.
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Description
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Exhibit 99.1
Molina Healthcare, Inc.Investor Day 2019 May 30, 2019 WIFI: Molina Healthcare Password: #MOH2019
Agenda 9:30 am Welcome and Overview Julie Trudell Pivot to Growth: Who We Are Joe
Zubretsky A Strong Foundation Margin Sustainability Disciplined and Steady Growth Financial Outlook 11:15 am Break 11:30 am Panel Discussion: Margin Sustainability Jim Woys Growth Prospects Pam
Sedmak Financial Profile Tom Tran Management Team Q&A 1:00 pm Lunch
Cautionary Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:This
presentation and the accompanying oral remarks include forward-looking statements regarding, without limitation, the Company’s 2019 guidance, its business plans, expectations, and longer-term outlook for the future. The Company intends 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. The Company cannot guarantee that it will actually achieve the plans,
outlook, or expectations disclosed in its forward-looking statements and, accordingly, you should not place undue reliance on the Company’s forward-looking statements. Those risks and uncertainties are discussed under Item 1A in the section
entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and also in the Company’s quarterly reports and other reports and filings with the Securities and Exchange Commission, or SEC. These reports
can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at www.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 the results or events projected or contemplated by its forward-looking statements will in fact occur. All forward-looking statements in this presentation represent management’s judgment as of May 30, 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.
Pivot to Growth Joe ZubretskyPresident & Chief Executive Officer
Pivoting to Growth Margin recovery complete, sustainability well under way, pivot to growth has
begun Margin Recovery Margin Sustainability Growth
Investment Thesis Focused on sustainable industry leading margins and double digit growth Double
digit revenue growth Lowest cost / highest margins in the business Low capital requirements and significant excess cash flow Return to shareholders in an accretive way Accomplished management team Pure play government business
Outlook: Total Company Long-Term Growth 3 to 5 Years Long-term, compound annual growth rates - average
over time Premium Revenue Growth 10% - 12% After-Tax Margin 3.8% - 4.2% Net Income Growth 9% - 11% EPS Growth 12% - 15% Additional upside could be provided through capital deployment
Who We Are Joe ZubretskyPresident & Chief Executive Officer
Franchise High-quality healthcare through government programs for disadvantaged
people 168Ranking $16.4BRevenue2019E 3.4MMembers1Q19 15Markets
Mission Commitment to providing high-quality care while delivering value to all stakeholders Molina
provides the disadvantaged with access to high-quality healthcare The mission is equally balanced among all those we serve Members Government Agencies Employees Shareholders
Footprint Geographically diverse and national in scope Approximate Premium Revenue by
State: $2.5B $1.5B $ 0.8B ≤$ 0.4B Puerto Rico Strong incumbency status, resilient state relationshipsand growth opportunities Geographically diversified with no state greater than 19% of premium revenue Presence in many of
the nation’s largest managed care
markets
Transforming Molina Transformation addressed each major component of the enterprise Accountability and
ownershipTransparency and trustReliability and commitment The Molina brand Culture Operating Model Self-contained health plan and product line P&L’sClear decision rightsRigorous performance management Talent Entirely new at senior
executive levelsMiddle management enhancementSeasoned managed care veterans
Management Team Team of industry-leading executives with over 20 decades of experience President &
CEOJoe Zubretsky Chief of StaffRon Kurtz Health PlansPam Sedmak Health Plan ServicesJim Woys Strategy and M&AMark Keim CFOTom Tran Human ResourcesLarry Anderson General CounselJeff Barlow Policy and Govt. AffairsCarolyn Ingram
A Strong Foundation
Full Year 2019 Guidance Strong financial performance in a high-growth industry All amounts are estimates
and do not include non-recurring significant items. Medical care ratio represents medical costs as a percentage of premium revenueG&A ratio represents general and administrative expenses as a percentage of total revenueSee reconciliation of
non-GAAP financial measures at the end of this presentationAfter-tax margin represents net income as a percentage of total revenue Total Revenue ~ $16.4B Medical Care Ratio %(2) ~ 86% G&A %(3) ~7.7% EBITDA(4) $1,080M -
$1,120M Net Income $680M - $710M After-Tax Margin(5) 4.1% - 4.3% EPS $10.50 - $11.00 As of 1Q19(1)
Strong, Sustainable Margins Best in class margins produce significant free cash flow Full Year 2019
Guidance After-Tax Margins ~3%Medicaid ~11%Marketplace ~6%Medicare 4.1 – 4.3%Total Company
Best in Class ROE Drives EPS Significant cash generation creates flexibility for
deployment Acquisitions Share Repurchases Organic Growth Significant EPS Growth and AccretionPotential Excess Cash Flow Illustration 1 ~4% After-Tax Margins Capital 10% of Revenue 2 40% Unlevered ROE 3 50% Debt to
Capital Ratio 4 ~75% Levered ROE 5
A Strong and Stable Balance Sheet to Support Growth In one year, restored a challenging balance sheet, now
a strength 1Q19 Credit Stats Reserve Strength Liquidity Capital Levels 1Q19 Parent Company Cash 1Q19 ~$440M Remaining Subsidiary Dividends 2019E ~$500M Debt Capacity as of May 2019 ~$900M Total Deployable Capital ~$1.8B Reserves
at 3/31/19 $2.0B PYD 2018 ~$135M PYD 2019 YTD ~$55M Debt to EBITDA Ratio 1.0x Interest Coverage Ratio 14.7x Debt / Capitalization ~45% Debt Ratings S&P: BB- Moody’s:
B2 ~460%of
RBC
Excess Cash Flow Will be Invested Prudently Will deploy capital to achieve stable, consistent growth and
accretion Accretive bolt-on membership acquisitions Expert acquisition team in placeRobust pipeline, disciplined approachStrategic fit, operational synergies and EPS accretion Organic growth is the highest priorityMost efficient use of capital
to growAll lines of business are high growth Re-invest in business Return to Shareholders Balanced approach to returning capital to shareholdersRetire convertible debtShare repurchase
Margin Sustainability
Guidance Increases Focusing on managed care fundamentals has yielded continued margin improvement
Midpoint of Guidance $11.00
High-Performing Health Plan Portfolio Focus on underperforming business has improved portfolio
margins FY 2017 FY 2018
The Rate Environment and Outlook Rational and actuarially sound Medicaid rate environment with premium
tracking to medical cost trend 3 Carved-in / Carved-out benefits Risk adjustment 4 Acuity levels and mix 2 1 Medical cost trend The typical rating dynamics:
The Profit Improvement Inventory An actionable inventory of initiatives to improve operating and financial
performance Medical Costs At-Risk Revenue Corporate G&A Areas of Margin Recovery 2020E and Beyond $450M Original 2018Midpoint $500M + - May 2019 Addition $100M Recognized2019E $200M January 2019
Midpoint $550M
Utilization Control Ensuring members receive the right service, in the right setting, at the right
cost PROFIT IMPROVEMENT Standardizing business processesEnhancing medical economics engine High-acuity focus; NICU, OUD, BH, LTSS Refining clinical policiesDetailed management of:Inpatient admissionsER utilizationInpatient average length of
stayPharmacy utilization trend Actions: Right Service Right Setting Right Cost Analytics MLTSS Technology Network Pharmacy Best in Class Partners Quality Models Continuous Process Improvement
Payment Integrity Building “best in class” payment integrity capabilities to improve performance PROFIT
IMPROVEMENT Coordination of Benefits Pre-Pay Post-Pay Fraud, Waste and Abuse Subrogation Capabilities Vendor Partners Improvement Opportunity P P Significant Opportunity P Opportunity
G&A Cost Scalability and Leverage Continued cost actions and positive operating leverage fund
investments while reducing G&A ratio PROFIT IMPROVEMENT Cost Actions OutsourcingSpans of controlLower cost labor poolsIntroducing automation, process redesign, and digitization Funding Investments New business developmentTechnology
licensingOutsourcingRent-to-own vendor focusMarketing and media Leveraging the Base Variable Fixed + -
Quality Scores and Risk Adjustment Consistent quality gap closure and risk score data capture will retain
at-risk revenue PROFIT IMPROVEMENT Products: Medicaid, Medicare, Marketplace Enhance: Data collection and analyticsProspective interventionsRetrospective capabilitiesData submission accuracy and completeness Capabilities Complete,
Accurate and Timely: Measurement of health status Data capture Impactful interventions Objectives Enhance: Organizational capabilitiesAnalytical tools and techniquesVendor / partner support Actions
Optimal Operating Model Fully integrated proprietary and rent-to-own operating model provides winning
combination PROFIT IMPROVEMENT Outsourced/Co-Source Internal Capabilities Front Line and Pharmacy Utilization Provider Contracting / Network Claims Payment Member / Provider Services IT Infrastructure: Payment
Integrity: PBM: Risk Adjustment:
Disciplined and Steady Growth
Addressable Markets High growth and synergistic portfolio Source: NHE, Medicaid Actuarial, Medicaid.gov,
Medicare Trustees, CMS, CBO Government Sector Managed Care Spending Growth (2016 - 2021 CAGR) 5% - 8% Underlying segment growthIncrease in managed care, high-acuity populations 8% - 12% Elderly population continues to growIncreasing
managed care penetrationMedicare-Medicaid integration 3% - 5% Stabilized enrollmentGovernment subsidies Marketplace Medicaid Medicare Duals
Pivot to Growth Ongoing growth-oriented investments will drive top-line growth while sustaining
margins Rebuilt team Significant managed care deal experienceExpertise in identifying and executing transactionsJoint ventures, member migrationsGrowing pipeline of acquisition targets New Business Development RFP Process Corporate
Development Rebuilt teamRedesigned RFP process Engaged executive team Recent successes: WA, PR, and MS CHIPPending awards: TX Rebuilt team Focus on high probability targetsPre-RFP boots on the groundRevamped Government Affairs organization
Medicaid Market Share Opportunity Current national and local market shares present significant upside
opportunity Duals Marketplace #5 Nationally #6 Nationally #8 Nationally Average State Market Share National Market Share Molina Top Competitors Average 15% - 20% 9% 8% 10% - 30% 6% 10% -
30% ~ ~ ~ ~ ~ ~ ~5% ~3% ~3%
Molina’s Growth Strategy
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Win NewTerritories Long-term Annual Growth Inorganic Opportunities Bolt-on Membership Opportunities Opportunistic Capital Deployment Leverage the Existing
Portfolio Actionability Geography Product Predictable Annual Growth Rates Create proprietary target listRespond to banker auctions Strategic fitExecute Addressable marketCustomer controls timing Prioritizing opportunitiesDisciplined
approach Winning capabilitiesTable stakes and innovation Medicaid Market shareAdjacent Medicaid geographiesMedicaid carve-insMarket share and penetration of other products Extensive actionability in existing statesDrive local health plan
execution MedicaidMedicareMarketplaceDualsLTSS Customer controls timing Addressable Market Winning Capabilities Table stakes and innovation Prioritizing Opportunities Disciplined approach
Leverage the Existing Portfolio
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates Win NewTerritories Long-term Annual Growth Inorganic Opportunities Bolt-on Membership
Opportunities Opportunistic Capital Deployment Addressable Market Winning Capabilities Prioritizing Opportunities
Growth Lens One: Actionability…The “How” Execute on highly actionable opportunity sets LEVERAGE THE
EXISTING PORTFOLIO > ACTIONABILITY Opportunity Set: 1 2 3 Increase Medicaid market share 4 Add adjacent Medicaid geographies Pursue Medicaid benefit carve-ins Increase market share and penetration of other products in existing
Medicaid footprint
Opportunity Set One: Increase Medicaid Market Share Capture Medicaid market share through tactical
operating changes LEVERAGE THE EXISTING PORTFOLIO > ACTIONABILITY > MEDICAID MARKET SHARE Opportunity Actions National market share: 5%In-state market share ~9%; half of market share leaders Service area market share: 16%#2 - #4 player
in most existing service areas Capture eligibility re-determinationsDeliver quality score improvement to capture more auto assignmentEnhance voluntary selection through community involvementLocal branding and marketingEnhance provider
relationships 1%Service Area Market Share = $750MRevenue
Opportunity Set Two: Add Adjacent Medicaid Geographies Achieve adjacent Medicaid geography growth
through successful procurements in existing markets LEVERAGE THE EXISTING PORTFOLIO > ACTIONABILITY > ADJACENT GEOGRAPHIES Opportunity Actions Service area market share ~16% In-state market share is ~9%Ability to leverage fixed costs
New potential regions in several states including TX Enhance business development and RFP capabilitiesActively evaluate every RFP expansion opportunityFoster relationships with community based organizations Continue to maintain strong standing
within the state
Opportunity Set Three: Increase Medicaid Benefit Carve-Ins Drive Medicaid benefit carve-ins with state
partners and capture with capabilities LEVERAGE THE EXISTING PORTFOLIO > ACTIONABILITY > MANAGED CARE / CARVE-INS Opportunity Actions Work with states to drive mandatory managed care movement legislativelyLeverage the $2B MLTSS
platformLeverage BH integration capabilities in WAWork with states to ensure carve-ins are attached to existing Medicaid contractsRecent “wins” in OH and WA behavioral Managing MLTSS benefits for 225K+ members$40B+ of LTSS spend in Molina
service areasCarve-in opportunities: MLTSS and BHMinimal MLTSS penetration in 6 Molina statesNear-term opportunities for MLTSS in: IL, MI, SC, WINear-term opportunity for BH in MI
Opportunity Set Four: Penetration of Medicare Products in Medicaid Footprint Achieve growth in existing
and additional counties through enhanced offering LEVERAGE THE EXISTING PORTFOLIO > ACTIONABILITY > PRODUCT PENETRATION Opportunity Actions Increase market share in existing markets Offer DSNP in 400+ Medicaid-only countiesLeverage
Medicaid operational infrastructure File DSNP in 150 new counties in 2019Develop products with competitive features and supplemental benefitsPrice competitively, balance margin and membershipLeverage broker relationships and footprint
Opportunity Set Four: Penetration of Marketplace Products in Medicaid Footprint Drive Marketplace growth
in existing and additional counties with focused products and pricing LEVERAGE THE EXISTING PORTFOLIO > ACTIONABILITY > PRODUCT PENETRATION Opportunity Actions Unique Marketplace product serving working poorExtension of, and priced off,
Medicaid network Specialized broker channel specific to the Company’s populationRoom to grow: Marketplace revenue previously $4 billion gross in 2017 Tailor network unit cost to match pricingRefresh product suiteRe-focus on high value metallic
tiersRenew focus on outstanding broker relationshipsIntense analysis of pricing strategy vs. competitor position
Full Year 2019Guidance Market Share Gain Margin Optimization Opportunity Set Four: Marketplace Profit
Pool Illustration There are many possible paths to growing the profit pool longer-term LEVERAGE THE EXISTING PORTFOLIO > ACTIONABILITY > PRODUCT PENETRATION Scenario 1: Scenario 2: Premium Revenue (Net of Risk Adjustment) ~$1.5B ~
$2.4B ~ 3.8B After-Tax Income ~$165M ~ $216M ~ $235M After-Tax Margin % ~11% ~ 9% ~ 6% Illustration
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates Win NewTerritories Long-term Annual Growth Inorganic Opportunities Bolt-on Membership
Opportunities Opportunistic Capital Deployment Addressable Market Winning Capabilities Prioritizing Opportunities
Growth Lens Two: Geography…The “Where” Geographic growth presents multiple opportunity sets LEVERAGE THE
EXISTING PORTFOLIO > GEOGRAPHY Opportunity Set: 1 2 3 Across all forms of actionability, the growth prospects in existing states are robust 4 Each local health plan has a growth mandate and action plan Centralized product
expertise and capability executed locally is a winning model Scaled but still underpenetrated, even in major geographies
Growth Lens Two: Geography…The “Where” (cont’d) Each local health plan has a growth mandate and the
opportunities are compelling LEVERAGE THE EXISTING PORTFOLIO > GEOGRAPHY > ALL FORMS OF ACTIONABILITY IN EXISTING STATES Actionable Opportunities = Small Membership Size = Large Membership Size = Medium Membership Size =
Significant Opportunity 1 Medicaid market share 2 Adjacent Medicaid geographies 3 Medicaid benefit carve-Ins 4 Market share and penetration in existing Medicaid
footprint
Growth Lens Two: Geography… Case Studies Washington and Illinois case studies are instructive LEVERAGE
THE EXISTING PORTFOLIO > GEOGRAPHY > ALL FORMS OF ACTIONABILITY IN EXISTING STATES Washington Illinois Case Study Washington: Won re-procurement Increased Medicaid market share Carved-in benefits Offered DSNP and
Marketplace products Illinois: Won Re-procurement expanded footprint Increased market share – bonus auto-assigns Carved-in benefits Expanding MMP
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates Win NewTerritories Long-term Annual Growth Inorganic Opportunities Bolt-on Membership
Opportunities Opportunistic Capital Deployment Addressable Market Winning Capabilities Prioritizing Opportunities
Growth Lens Three: Growth Trajectory by Product Offering…The “What” Even without new RFP wins, long-term
growth trajectories by line of business are strong LEVERAGE THE EXISTING PORTFOLIO > GEOGRAPHY > ALL FORMS OF ACTIONABILITY IN EXISTING STATES 14% - 16% 14% - 16% 7% - 8% Marketplace Medicare Medicaid Growth without RFPs Long
Term Premium Revenue Growth Rates(1) Long-term premium revenue growth rates represent 3 - 5 year CAGR off 2019E Guidance
Win New Territories
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates WIN NEW TERRITORIES Win NewTerritories Long-term Annual Growth Inorganic
Opportunities Bolt-on Membership Opportunities Opportunistic Capital Deployment Addressable marketCustomer controls timing Prioritizing opportunitiesDisciplined approach Winning capabilitiesTable stakes and innovation Addressable
Market Winning Capabilities Prioritizing Opportunities
Win New Territories: 2020 Addressable Market WIN NEW TERRITORIES > ADDRESSABLE MARKET Remain
selective in choosing new states to
pursue ~$33B 2020 Minnesota Pennsylvania Kentucky Louisiana Hawaii
Win New Territories: 2021 - 2022 Addressable Market WIN NEW TERRITORIES > ADDRESSABLE MARKET Remain
selective in choosing new states to pursue ~$17B 2021 -
2022 Georgia Tennessee Missouri West
Virginia Indiana
Win New Territories: 2023 Addressable Market WIN NEW TERRITORIES > ADDRESSABLE MARKET Remain
selective in choosing new states to
pursue ~$10B 2023 District
of Columbia Delaware Iowa Nevada
Win New Territories: Foreseeable Addressable Market is ~$60 Billion WIN NEW TERRITORIES > ADDRESSABLE
MARKET Will target opportunities based on probabilities of success 2023 ~$10 Billion 2021 - 2022 ~$17 Billion 2020 ~$33 Billion Minnesota Louisiana Pennsylvania Hawaii Kentucky Georgia Tennessee Missouri Indiana West
Virginia DC Delaware Iowa Nevada
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates WIN NEW TERRITORIES Win NewTerritories Long-term Annual Growth Inorganic
Opportunities Bolt-on Membership Opportunities Opportunistic Capital Deployment Addressable marketCustomer controls timing Prioritizing opportunitiesDisciplined approach Winning capabilitiesTable stakes and innovation Addressable
Market Winning Capabilities Prioritizing Opportunities
Disciplined approach to selecting opportunities based on probability of success Win New Territories:
Prioritizing Opportunities WIN NEW TERRITORIES > PRIORITIZING OPPORTUNITIES 1 Size and duration of contract 5 Rational rate environment 2 Strength of incumbents 6 Future organic growth prospects 3 Number of
awardees 7 Local, political, and regulatory relationships 4 Ability to build high quality low cost network Key Criteria
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates WIN NEW TERRITORIES Win NewTerritories Long-term Annual Growth Inorganic
Opportunities Bolt-on Membership Opportunities Opportunistic Capital Deployment Addressable marketCustomer controls timing Prioritizing opportunitiesDisciplined approach Winning capabilitiesTable stakes and innovation Addressable
Market Winning Capabilities Prioritizing Opportunities
Procurement is a technical sale; Molina has proven capabilities and solutions to win Win New
Territories: Winning Capabilities InnovationLong-term services and supports (LTSS)Complex care managementPBM and Rx transparencyBehavioral integrationSocial determinants of health Opioid use disorder Table Stake CapabilitiesMember
experienceProvider experienceCompliance excellenceLow frictionHigh quality and access to healthcareManaging high acuity members WIN NEW TERRITORIES > WINNING CAPABILITIES
Molina’s Value Proposition Partner of choice by delivering cost effective, reliable and seamless
service WIN NEW TERRITORIES > WINNING CAPABILITIES Partner of Choice Low Cost Effective, High Quality, and Appropriate Access to Care Reliable Service and Seamless Experience
Win New Territories: Reprocurement Pipeline WIN NEW TERRITORIES > WINNING CAPABILITIES A
conservative view of RFP success still drives incremental long-term revenue growth 2020 2021 -
2022 2023 Major
RFP opportunities ~$60B Pursue subset of opportunities ~40% Projected competitive win rate ~40% Projected market share 15% - 20% Incremental Medicaid revenue from RFPs in 2023 $1.5B - $2B
Inorganic Growth Opportunities
Molina’s Multi-Dimensional Growth Strategy Framework A disciplined and steady approach to
growth Dimensions Characteristics Lenses Leverage the Existing Portfolio Actionability Geography Product Predictable Annual Growth Rates INORGANIC OPPORTUNITIES Win NewTerritories Long-term Annual Growth Inorganic
Opportunities Bolt-on Membership Opportunities Opportunistic Capital Deployment Addressable marketCustomer controls timing Prioritizing opportunitiesDisciplined approach Winning capabilitiesTable stakes and innovation Addressable
Market Winning Capabilities Prioritizing Opportunities
Well-Positioned for Responsible Capital Deployment INORGANIC OPPORTUNITIES > BOLT-ON
MEMBERSHIP OPPORTUNITIES 1 Molina’s margins are highest in industry 2 Medicaid capital requirements are low relative to healthcare industry 4 EPS accretion can be higher under multiple deployment scenarios Significant cash generation
creates flexibility for deployment 3 Excess capital at the parent is substantial 1 Organic growth opportunities 2 Targeted and focused acquisitions 3 Return to investors Uses of Cash Sources of Cash
Capital Requirements and Capacity for Growth INORGANIC OPPORTUNITIES > BOLT-ON MEMBERSHIP
OPPORTUNITIES Molina’s strong cash flow make acquisitions actionable Net income Full-Year 2019E ~$700M Statutory Capital Required for 10% Growth ~$(150)M Remaining Deployable Capital ~$550M Leverage ~2x Levered Deployable
Capital ~$1.1B Incremental Annual Revenue Potential at 0.5x Multiple ~$2.0B Annual Capital Deployment Illustration
Inorganic Growth Opportunities INORGANIC OPPORTUNITIES > BOLT-ON MEMBERSHIP
OPPORTUNITIES 1 Attractive bolt-on membership opportunities in current states 4 Competitor divestitures present new opportunities 2 More than 200 provider owned plans across the country 5 Opportunities pursued will lead to
incremental EPS accretion 3 Turning around under-performing plans Focus on strategic fit, operational synergies and EPS accretion 6 Will not pursue capability plays
Financial Outlook
Outlook: 2020 Premium Revenue Guidance Growth Ranges Business model provides good revenue visibility into
2020 Premium Revenue $17.0B - $17.3B % Growth 7% - 9% Assumptions Growth in all three lines of business Does not include new RFP wins Assumes steady state in Texas Premium yield ~2% Volume and mix ~6% Health insurer fees
not included
Outlook: Total Company Long-Term Growth 3 to 5 Years Long-term, compound annual growth rates - average
over time Premium Revenue Growth 10% - 12% After-Tax Margin 3.8% - 4.2% Net Income Growth 9% - 11% EPS Growth 12% - 15% Additional upside could be provided through capital deployment
Outlook: Premium Revenue Growth by Line of Business Remain disciplined, as the opportunity is
significant even without inorganic growth Long-Term Growth 3 - 5 Years Total 7% - 8% 14% - 16% 14% - 16% $1.5B - 2.0B 9% – 11% Medicare Marketplace 10% - 12% Medicaid Growth Without RFPs Medicaid Growth From RFPs Total
Medicaid Growth
Strategic initiatives that drive long-term growth in Medicaid Outlook: Drivers of Long-Term
Growth ~ ~ ~ Medicaid Premium Revenue(Long Term Growth 9% - 11%) Strategic Initiatives: 1 Increase Medicaid market share 2 Add adjacent Medicaid geographies 3 Pursue Medicaid benefit carve-ins 4 Win Medicaid RFPs in new
states ~
Strategic initiatives that drive long-term growth in Medicare Outlook: Drivers of Long-Term
Growth ~ ~ ~ Medicare Premium Revenue(Long Term Growth 14% - 16%) Strategic Initiatives: ~ 1 Increase market share 2 Increase penetration in existing Medicaid footprint
Strategic initiatives that drive long-term growth in Marketplace Outlook: Drivers of Long-Term
Growth ~ ~ Marketplace Premium Revenue(Long Term Growth 14% - 16%) Strategic Initiatives: 1 Increase market share 2 Increase penetration in existing Medicaid footprint ~
Outlook: Long-Term After-Tax Margin Ranges Long-term after-tax margins are expected to be
attractive Assumptions After-Tax Margin 2019 Guidance 3 - 5 Year Target Medicaid ~3% 2.8% - 3.2% Medicare ~6% 5.0% - 5.5% Marketplace ~11% 8.5% - 9.5% Total Company 4.1% - 4.3% 3.8% - 4.2% 1 2 3 Good revenue visibility
into 2020 and beyond Rate environment: rational and actuarially sound Margin improvement opportunities remain abundant G&A leverage continues as top-line revenue grows 4
Outlook: Total Company Long-Term EPS Growth 3 to 5 Years Excess cash at the parent of ~$45 per share
provides upside to outlook Growth Ranges (Assumes no Acquisitions) Included in EPS Growth of 12% - 15% Outlook generates ~$4B of cash Outlook assumes ~35% of cash for share repurchase or ~300 bps of EPS accretion Excess cash at the
parent of ~$45 per share provides potential for additional EPS accretion Upside to EPS Growth of 12% - 15% Debt to capitalization ratio maintained at ~45% Net Income Growth 9% - 11% EPS Growth 12% - 15%
Pivoting to Growth With margin recovery complete, sustainability well under way, pivot to growth has
already begun Margin Recovery Margin Sustainability Growth
Panel Discussion
Jim WoysMargin Sustainability
Payment Integrity
Risk and Quality
Utilization Management
IT Capabilities
Pam SedmakGrowth Prospects
RFP Pipeline and Evaluation Process
Approach to Medicaid RFPs
Reprocurement
Why Molina?
Market Share
Tom TranFinancial Profile
ROE Model
Long-Term Capital Deployment
Marketplace
Outlook
Executive Q&A
Investment Thesis Focused on sustainable industry leading margins and double digit growth Double
digit revenue growth Lowest cost / highest margins in the business Low capital requirements and significant excess cash flow Return to shareholders in an accretive way Accomplished management team Pure play government business
Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2019 revised guidance as of 1Q19 Net
Income $680M $710M Adjustments: Depreciation, and Amortization of Intangible Assets and Capitalized Software $90M $90M Interest Expense $90M $90M Income Tax Expense $220M $230M EBITDA $1,080 $1,120 Low End High End