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false0001179929 0001179929 2020-02-10 2020-02-10


 
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 10, 2020 (February 10, 2020)
______________
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 Par Value
MOH
New York Stock Exchange
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 February 10, 2020, Molina Healthcare, Inc. (the “Company”) issued a press release reporting its financial results for the fourth quarter and year ended December 31, 2019, and the Company’s full year 2020 earnings guidance. The full text of the press release is included as Exhibit 99.1 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 exhibit 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:






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:
February 10, 2020
By:
/s/ Jeff D. Barlow
 
 
 
Jeff D. Barlow
 
 
 
Chief Legal Officer and Secretary






EXHIBIT INDEX
Exhibit
https://cdn.kscope.io/b727d7bc1b5860832ec9a6f27ba307bb-molinaa03a01a01a17.jpg
News Release
Investor Contact: Julie Trudell, Julie.Trudell@molinahealthcare.com, 562-912-6720
Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588
____________________________________________________________________________


Molina Healthcare Reports Fourth Quarter and Year-End 2019 Financial Results
Introduces Full Year 2020 Earnings Guidance

Long Beach, Calif., February 10, 2020 – Molina Healthcare, Inc. (NYSE: MOH) today reported net income for the fourth quarter of 2019 of $168 million, or $2.67 per diluted share, compared to net income of $201 million, or $3.01 per diluted share, for the fourth quarter of 2018. The Company also reported net income for the year ended December 31, 2019, of $737 million, or $11.47 per diluted share, compared to net income of $707 million, or $10.61 per diluted share, for the year ended December 31, 2018. Financial results for the fourth quarter and full year 2019 are summarized below:
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
 
(In millions, except per share results)
Premium Revenue

$4,123

 

$4,438

 

$16,208

 

$17,612

Total Revenue

$4,274

 

$4,664

 

$16,829

 

$18,890

Pre-Tax Income

$222

 

$256

 

$972

 

$999

Net Income

$168

 

$201

 

$737

 

$707

EPS – Diluted

$2.67

 

$3.01

 

$11.47

 

$10.61

MCR
86.0
%
 
85.1
%
 
85.8
%
 
85.9
%
G&A Ratio
8.0
%
 
7.2
%
 
7.7
%
 
7.1
%
Pre-Tax Margin
5.2
%
 
5.5
%
 
5.8
%
 
5.3
%
Effective Tax Rate
24.3
%
 
21.4
%
 
24.2
%
 
29.2
%
After-Tax Margin
3.9
%
 
4.3
%
 
4.4
%
 
3.7
%

Highlights include:
•
Premium revenue was $4.1 billion for the fourth quarter of 2019, a 7.1% decrease compared to the fourth quarter of 2018.
•
Medical care ratio (MCR) was 86.0% for the fourth quarter of 2019, compared to 85.1% for the fourth quarter of 2018.
•
General and administrative (G&A) expense ratio increased to 8.0% for the fourth quarter of 2019, compared to 7.2% for the fourth quarter of 2018.
•
After-tax margin was 3.9% for the fourth quarter of 2019, compared to 4.3% for the fourth quarter of 2018.
•
Net income for the year ended December 31, 2019, increased to $737 million, compared to $707 million for 2018, and after-tax margin increased to 4.4% for 2019, compared to 3.7% for 2018.
•
In December 2019, the Company’s Board of Directors authorized a share repurchase program of up to $500 million, and through February 7th, the Company repurchased an aggregate of approximately 1.9 million shares for $257 million, at an average cost of $133.23 per share.
•
Operating cash flows for the year ended December 31, 2019, were $427 million.
•
Introduced full year 2020 earnings guidance, including GAAP earnings per diluted share of $11.20 - $11.70.

-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 2
February 10, 2020

•
In October 2019, the Company announced that it entered into a definitive agreement to acquire certain assets of YourCare HealthPlan for approximately $40 million. Molina will assume the rights to serve approximately 46,000 Medicaid members in Western New York. The acquisition is expected to close in the first half of 2020.
•
In January 2020, the Company announced that it entered into a definitive agreement to acquire all of the capital stock of NextLevel Health Partners for approximately $50 million. Molina will assume the rights to serve approximately 50,000 Medicaid and Managed Long-Term Services and Supports members in Illinois’ Cook County. The acquisition is expected to close in the first half of 2020.

Joe Zubretsky, president and CEO, said, “We are pleased with our fourth quarter and full year results. We improved our Medicaid and Medicare margins and achieved exceptional Marketplace margins. Overall, we delivered 4.4 percent after-tax margins and earnings per share growth of 8 percent.” Mr. Zubretsky continued, “Going forward, 2020 represents an important year in our pivot to growth strategy with a return to top-line growth. Each of our three business lines are well positioned to grow in 2020 and beyond.”

Premium Revenue
Premium revenue for the fourth quarter of 2019 decreased 7.1% to $4.1 billion compared to $4.4 billion for the fourth quarter of 2018, which was in line with the Company’s expectations.

For the year ended December 31, 2019, premium revenue decreased 8.0% to $16.2 billion, from $17.6 billion for the comparable period in 2018. For both periods, the lower premium revenue is primarily a result of previously announced losses of Medicaid membership in New Mexico and Florida.

Medical Care Ratio
The consolidated MCR for the fourth quarter of 2019 increased to 86.0%, compared to 85.1% for the fourth quarter of 2018, primarily due to the increased Marketplace MCR. Prior period reserve development in the quarter was not material.
The MCR for the year ended December 31, 2019, improved to 85.8%, compared to 85.9% for the comparable period in 2018, due to a combination of the following:
•
The Medicaid MCR improved to 88.0%, compared to 90.0% for the year ended December 31, 2018, due to improvement in all programs.
•
The Medicare MCR increased to 85.3%, compared to 84.5% for the year ended December 31, 2018, due to fluctuation of medical care costs in certain markets.
•
The Marketplace MCR was 68.2%, compared to 58.9% for the year ended December 31, 2018. The MCR in 2018 was favorably impacted by reduced medical care costs due to Cost Sharing Reduction (CSR) subsidies related to 2017 dates of service, while the current year was impacted by a relatively smaller benefit from prior-year Marketplace risk adjustment compared to 2018.

General and Administrative Expense Ratio
General and administrative expenses were 8.0% of total revenues for the fourth quarter of 2019, compared to 7.2% for the fourth quarter of 2018.
For the year ended December 31, 2019, the G&A ratio was 7.7%, compared to 7.1% for the comparable prior-year period. In both periods, the year-over-year increases are due mainly to the year-over-year decline in total revenues.

-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 3
February 10, 2020


Interest Expense
Interest expense was $20 million for the fourth quarter of 2019, compared to $24 million for the fourth quarter of 2018. The decline was due to the repayment of convertible notes in 2019.

Balance Sheet
Cash and investments at the parent company amounted to $997 million as of December 31, 2019, compared to $796 million as of September 30, 2019.
For the fourth quarter of 2019, the parent company received $305 million of dividends from the regulated health plan subsidiaries.
The Company repaid $240 million of principal on the convertible notes in 2019. The impact of capital deployment actions in 2019 resulted in lower interest expense, a net gain on repayment of the convertible notes and a lower share count.
In early December 2019, the Company's board of directors authorized the purchase of up to $500 million in aggregate of the Company's common stock. Pursuant to a 10b5-1 trading plan, under this authorization the Company purchased approximately 400,000 shares for $54 million through December 31, 2019, and through February 7th, the Company has purchased in total approximately 1.9 million shares for $257 million.

Cash Flow
Operating cash flows for the year ended December 31, 2019, amounted to $427 million and were higher compared to the year ended December 31, 2018, primarily due to the normal fluctuations in timing of premium receipts.



-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 4
February 10, 2020

Outlook
The Company issued its full year 2020 earnings guidance, including GAAP earnings per diluted share of $11.20 - $11.70 and premium revenue growth of 7.4%.
Full year guidance highlights:
•
Medicaid after-tax margins are expected to perform well benefiting from stable rate and cost trend environments.
•
Medicare after-tax margins are expected to be strong despite the impact of the Health Insurer Fee.
•
Marketplace after-tax margins are expected to be lower reflecting pricing actions taken for the year.
Full year guidance reflects the following:
•
The reintroduction of the Health Insurer Fee in 2020 with an impact of approximately $0.30 per diluted share.
•
Steady state in Texas for the full year 2020. The Company is currently exercising its protest rights on the recently announced STAR+PLUS RFP award. The Company believes that the effective date of the new contract would be no earlier than January 1, 2021.
•
The YourCare Health Plan and NextLevel Health Partners acquisitions are not included in guidance as the transactions have not closed. Together they have over $500 million in annualized premium revenue.
Full Year 2020 Guidance (1)
Premium Revenue
 
~$17.4B
Medicaid
 
~$13.3B
Medicare
 
~$2.5B
Marketplace
 
~$1.6B
Premium Tax Revenue
 
~$565M
Health Insurer Fees Reimbursed
 
~$280M
Total Revenue
 
~$18.3B
Interest Expense
 
~$85M
Net Income
 
$674M - $704M
EPS - Diluted
 
$11.20 - $11.70
Diluted Shares
 
~60.2M
 
 
 
Total Membership
 
~3.4M
Medicaid and Medicare
 
~3.1M
Marketplace
 
~310K
 
 
 
Ratios:
 
 
MCR
 
86.2% - 86.4%
G&A Ratio
 
~7.2%
Effective Tax Rate
 
30.8% - 31.1%
After-Tax Margin
 
3.7% - 3.8%
Medicaid
 
3.2% - 3.4%
Medicare
 
5.6% - 5.7%
Marketplace
 
4.7% - 4.9%
___________________________
(1)All amounts are rounded and approximations.
Press Release Format
In an effort to streamline its earnings release, beginning in the first quarter of 2020, the Company will report its financial data by government program as seen on page 9, and schedules on pages 14 - 20 will no longer be published.

-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 5
February 10, 2020


Conference Call
Management will host a conference call and webcast to discuss Molina Healthcare’s fourth quarter and year-end 2019 results at 8:00 a.m. Eastern time on Tuesday, February 11, 2020. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 6197632. A telephonic replay of the conference call will be available through Tuesday, February 18, 2020, by dialing (877) 344-7529 and entering confirmation number 10137536. 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 healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 3.3 million members as of December 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 2020 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,” and the section entitled “Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2018, and our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which are on file with the SEC. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 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 February 10, 2020, 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-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 6
February 10, 2020

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
 
(In millions, except per-share amounts)
Revenue:
 
 
 
 
 
 
 
Premium revenue
$
4,123

 
$
4,438

 
$
16,208

 
$
17,612

Premium tax revenue
122

 
97

 
489

 
417

Health insurer fees reimbursed
—

 
81

 
—

 
329

Service revenue
—

 
16

 
—

 
407

Investment income and other revenue
29

 
32

 
132

 
125

Total revenue
4,274

 
4,664

 
16,829

 
18,890

Operating expenses:
 
 
 
 
 
 
 
Medical care costs
3,545

 
3,775

 
13,905

 
15,137

General and administrative expenses
343

 
335

 
1,296

 
1,333

Premium tax expenses
122

 
97

 
489

 
417

Health insurer fees
—

 
87

 
—

 
348

Depreciation and amortization
21

 
23

 
89

 
99

Restructuring costs
1

 
8

 
6

 
46

Cost of service revenue
—

 
15

 
—

 
364

Total operating expenses
4,032

 
4,340

 
15,785

 
17,744

Loss on sales of subsidiaries, net of gain
—

 
(52
)
 
—

 
(15
)
Operating income
242

 
272

 
1,044

 
1,131

Other expenses, net:
 
 
 
 
 
 
 
Interest expense
20

 
24

 
87

 
115

Other (income) expenses, net
—

 
(8
)
 
(15
)
 
17

Total other expenses, net
20

 
16

 
72

 
132

Income before income tax expense
222

 
256

 
972

 
999

Income tax expense
54

 
55

 
235

 
292

Net income
$
168

 
$
201

 
$
737

 
$
707

 
 
 
 
 
 
 
 
Net income per share, diluted
$
2.67

 
$
3.01

 
$
11.47

 
$
10.61

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
63.0

 
66.6

 
64.2

 
66.6

 
 
 
 
 
 
 
 
Operating Statistics:
 
 
 
 
 
 
 
Medical care ratio
86.0
%
 
85.1
%
 
85.8
%
 
85.9
%
G&A ratio
8.0
%
 
7.2
%
 
7.7
%
 
7.1
%
Premium tax ratio
2.9
%
 
2.2
%
 
2.9
%
 
2.3
%
Effective income tax rate
24.3
%
 
21.4
%
 
24.2
%
 
29.2
%
After-tax margin
3.9
%
 
4.3
%
 
4.4
%
 
3.7
%
Medicaid
3.6
%
 
3.6
%
 
3.2
%
 
2.4
%
Medicare
5.5
%
 
8.0
%
 
6.7
%
 
4.8
%
Marketplace
4.5
%
 
15.4
%
 
10.3
%
 
16.4
%



-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 7
February 10, 2020

CONSOLIDATED BALANCE SHEETS
 
December 31,
 
2019
 
2018
 
Unaudited
 
 
 
(Dollars in millions,
except per-share amounts)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
2,452

 
$
2,826

Investments
1,946

 
1,681

Receivables
1,406

 
1,330

Prepaid expenses and other current assets
134

 
149

Derivative asset
29

 
476

Total current assets
5,967

 
6,462

Property, equipment, and capitalized software, net
385

 
241

Goodwill and intangible assets, net
172

 
190

Restricted investments
79

 
120

Deferred income taxes
79

 
117

Other assets
105

 
24

Total assets
$
6,787

 
$
7,154

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
1,854

 
$
1,961

Amounts due government agencies
664

 
967

Accounts payable and accrued liabilities
455

 
390

Deferred revenue
249

 
211

Current portion of long-term debt
18

 
241

Derivative liability
29

 
476

Total current liabilities
3,269

 
4,246

Long-term debt
1,237

 
1,020

Finance lease liabilities
231

 
197

Other long-term liabilities
90

 
44

Total liabilities
4,827

 
5,507

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

 
—

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

 
—

Additional paid-in capital
175

 
643

Accumulated other comprehensive income (loss)
4

 
(8
)
Retained earnings
1,781

 
1,012

Total stockholders’ equity
1,960

 
1,647

Total liabilities and stockholders' equity
$
6,787

 
$
7,154



-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 8
February 10, 2020

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Year Ended
 
December 31,
 
2019
 
2018
 
(In millions)
Operating activities:
 
 
 
Net income
$
737

 
$
707

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
89

 
127

Deferred income taxes
10

 
(6
)
Share-based compensation
39

 
27

Amortization of convertible senior notes and finance lease liabilities
5

 
22

(Gain) loss on debt repayment
(15
)
 
22

Loss on sales of subsidiaries, net of gain
—

 
15

Non-cash restructuring costs
—

 
17

Other, net
(5
)
 
4

Changes in operating assets and liabilities:
 
 
 
Receivables
(76
)
 
(530
)
Prepaid expenses and other current assets
28

 
6

Medical claims and benefits payable
(107
)
 
(226
)
Amounts due government agencies
(303
)
 
(574
)
Accounts payable and accrued liabilities
2

 
45

Deferred revenue
38

 
(21
)
Income taxes
(15
)
 
51

Net cash provided by (used in) operating activities
427

 
(314
)
Investing activities:
 
 
 
Purchases of investments
(2,536
)
 
(1,444
)
Proceeds from sales and maturities of investments
2,302

 
2,445

Purchases of property, equipment, and capitalized software
(57
)
 
(30
)
Net cash received from sales of subsidiaries
—

 
190

Other, net
(2
)
 
(18
)
Net cash (used in) provided by investing activities
(293
)
 
1,143

Financing activities:
 
 
 
Repayment of principal amount of convertible senior notes
(240
)
 
(362
)
Cash paid for partial settlement of conversion option
(578
)
 
(623
)
Cash received for partial settlement of call option
578

 
623

Cash paid for partial termination of warrants
(514
)
 
(549
)
Proceeds from borrowings under term loan facility
220

 
—

Common stock purchases
(47
)
 
—

Repayment of credit facility
—

 
(300
)
Other, net
29

 
18

Net cash used in financing activities
(552
)
 
(1,193
)
Net decrease in cash, cash equivalents, and restricted cash and cash equivalents
(418
)
 
(364
)
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
$
2,508

 
$
2,926


-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 9
February 10, 2020

HEALTH PLANS SEGMENT MEMBERSHIP
 
As of December 31,
 
2019
 
2018
Ending Membership by Government Program:
 
 
 
Medicaid
2,956,000

 
3,361,000

Medicare
101,000

 
98,000

Marketplace
274,000

 
362,000

 
3,331,000

 
3,821,000

 
 
 
 
Ending Membership by Health Plan:
 
 
 
California
565,000

 
608,000

Florida (1)
132,000

 
313,000

Illinois
224,000

 
224,000

Michigan
362,000

 
383,000

New Mexico (1)
23,000

 
222,000

Ohio
288,000

 
302,000

Puerto Rico
176,000

 
252,000

South Carolina
131,000

 
120,000

Texas
341,000

 
423,000

Washington
832,000

 
781,000

Other (2)
257,000

 
193,000

 
3,331,000

 
3,821,000

__________________
(1)
The Company’s Medicaid contracts in New Mexico and in all but two regions in Florida terminated in late 2018 and early 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.

HEALTH PLANS SEGMENT FINANCIAL DATA — BY GOVERNMENT PROGRAM
(In millions, except percentages)
 
Three Months Ended December 31,
 
2019
 
2018
 
Premium Revenue
 
Medical Care Costs
 
MCR (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (1)
 
 
 
 
 
 
Medicaid
$
3,227

 
$
2,818

 
87.3
%
 
$
3,430

 
$
3,046

 
88.8
%
Medicare
561

 
480

 
85.5

 
527

 
426

 
80.8

Marketplace
335

 
247

 
73.5

 
481

 
303

 
62.9

 
$
4,123

 
$
3,545

 
86.0
%
 
$
4,438

 
$
3,775

 
85.1
%

 
Year Ended December 31,
 
2019
 
2018
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
 
 
 
 
 
Medicaid
$
12,466

 
$
10,969

 
88.0
%
 
$
13,623

 
$
12,258

 
90.0
%
Medicare
2,243

 
1,913

 
85.3

 
2,074

 
1,752

 
84.5

Marketplace
1,499

 
1,023

 
68.2

 
1,915

 
1,127

 
58.9

 
$
16,208

 
$
13,905

 
85.8
%
 
$
17,612

 
$
15,137

 
85.9
%
__________________
(1)
The MCR represents medical costs as a percentage of premium revenue.


-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 10
February 10, 2020

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 the 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:
 
Year Ended December 31,
 
2019
 
2018
Medical claims and benefits payable, beginning balance
$
1,961

 
$
2,192

Components of medical care costs related to:
 
 
 
Current period
14,176

 
15,478

Prior period (1)
(271
)
 
(341
)
Total medical care costs
13,905

 
15,137

Change in non-risk and other provider payables
24

 
13

Payments for medical care costs related to:
 
 
 
Current period
12,554

 
13,671

Prior period
1,482

 
1,710

Total paid
14,036

 
15,381

Medical claims and benefits payable, ending balance
$
1,854

 
$
1,961

 
 
 
 
Days in claims payable, fee for service (2)
50

 
53

______________________
(1)
The December 31, 2018, amounts include 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 $50 million and $43 million, as of December 31, 2019 and 2018, respectively.


-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 11
February 10, 2020

UNAUDITED NON-GAAP FINANCIAL MEASURES
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
 
Year Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
 
(In millions)
Net income
$
168

 
$
201

 
$
737

 
$
707

Adjustments:
 
 
 
 


 


Depreciation, and amortization of intangible assets and capitalized software
21

 
23

 
89

 
118

Interest expense
20

 
24

 
87

 
115

Income tax expense
54

 
55

 
235

 
292

EBITDA
$
263

 
$
303

 
$
1,148

 
$
1,232

Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:
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.

-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 12
February 10, 2020

UNAUDITED NON-GAAP FINANCIAL MEASURES CONTINUED
 
Three Months Ended December 31,
 
Year Ended December 31,
2019
 
2018
 
2019
 
2018
 
 
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
(In millions, except per diluted share amounts)
Net income
$
168

 
$
2.67

 
$
201

 
$
3.01

 
$
737

 
$
11.47

 
$
707

 
$
10.61

Adjustments:
 
 
 
 
 
 
 
 
 
 


 


 


Amortization of intangible assets
4

 
0.06

 
6

 
0.08

 
17

 
0.27

 
22

 
0.32

(Gain) loss on debt repayment
—

 
—

 
(3
)
 
(0.05
)
 
(15
)
 
(0.24
)
 
22

 
0.33

Restructuring costs
1

 
0.02

 
8

 
0.12

 
6

 
0.10

 
46

 
0.68

Loss on sales of subsidiaries, net of gain
—

 
—

 
52

 
0.78

 
—

 
—

 
15

 
0.23

Subtotal, adjustments
5

 
0.08

 
63

 
0.93

 
8

 
0.13

 
105

 
1.56

Income tax effect (1)
(1
)
 
(0.02
)
 
(23
)
 
(0.34
)
 
(2
)
 
(0.03
)
 
(30
)
 
(0.43
)
Adjustments, net of tax effect
4

 
0.06

 
40

 
0.59

 
6

 
0.10

 
75

 
1.13

Adjusted net income
$
172

 
$
2.73

 
$
241

 
$
3.60

 
$
743

 
$
11.57

 
$
782

 
$
11.74

________________________
(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.
Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:
Adjusted net income: Net income on a GAAP basis less amortization of intangible assets, gain or loss on debt repayment, restructuring costs, loss on sales of subsidiaries, and the aggregate 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 and the impact of certain expenses and other items that management believes are not indicative of longer-term business trends and operations.
Adjusted net income per diluted share: Adjusted net income divided by weighted average common shares outstanding on a fully diluted basis.


-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 13
February 10, 2020



















Beginning in the first quarter of 2020, the Company will no longer publish the tables that follow in its earnings announcements, through the last page of this news release.

-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 14
February 10, 2020

HEALTH PLANS SEGMENT MEMBERSHIP
 
As of December 31,
 
2019
 
2018
Ending Membership by Government Program:
 
 
 
TANF and CHIP
1,987,000

 
2,295,000

Medicaid Expansion
605,000

 
660,000

ABD
364,000

 
406,000

Total Medicaid
2,956,000

 
3,361,000

MMP - Integrated
58,000

 
54,000

Medicare Special Needs Plans
43,000

 
44,000

Total Medicare
101,000

 
98,000

Total Medicaid and Medicare
3,057,000

 
3,459,000

Marketplace
274,000

 
362,000

 
3,331,000

 
3,821,000





-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 15
February 10, 2020

UNAUDITED SELECTED FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)
HEALTH PLANS SEGMENT FINANCIAL DATA — BY GOVERNMENT PROGRAM
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended December 31, 2019
TANF and CHIP
6.1

 
$
1,244

 
$
206.74

 
$
1,117

 
$
185.79

 
89.9
%
 
$
127

Medicaid Expansion
1.8

 
720

 
395.37

 
608

 
333.59

 
84.4

 
112

ABD
1.1

 
1,263

 
1,150.24

 
1,093

 
995.29

 
86.5

 
170

Total Medicaid
9.0

 
3,227

 
361.16

 
2,818

 
315.41

 
87.3

 
409

MMP
0.2

 
396

 
2,284.37

 
343

 
1,981.07

 
86.7

 
53

Medicare
0.1

 
165

 
1,264.10

 
137

 
1,044.28

 
82.6

 
28

Total Medicare
0.3

 
561

 
1,846.15

 
480

 
1,578.71

 
85.5

 
81

Total Medicaid and Medicare
9.3

 
3,788

 
409.99

 
3,298

 
356.95

 
87.1

 
490

Marketplace
0.8

 
335

 
404.18

 
247

 
297.17

 
73.5

 
88

 
10.1

 
$
4,123

 
$
409.51

 
$
3,545

 
$
352.03

 
86.0
%
 
$
578

 
Three Months Ended December 31, 2018
TANF and CHIP
7.1

 
$
1,363

 
$
189.86

 
$
1,203

 
$
167.61

 
88.3
%
 
$
160

Medicaid Expansion
2.0

 
700

 
349.05

 
630

 
314.34

 
90.1

 
70

ABD
1.3

 
1,367

 
1,094.14

 
1,213

 
970.49

 
88.7

 
154

Total Medicaid
10.4

 
3,430

 
328.79

 
3,046

 
292.00

 
88.8

 
384

MMP
0.2

 
366

 
2,263.41

 
300

 
1,855.34

 
82.0

 
66

Medicare
0.1

 
161

 
1,206.96

 
126

 
944.65

 
78.3

 
35

Total Medicare
0.3

 
527

 
1,784.58

 
426

 
1,442.57

 
80.8

 
101

Total Medicaid and Medicare
10.7

 
3,957

 
368.93

 
3,472

 
323.72

 
87.7

 
485

Marketplace
1.1

 
481

 
437.79

 
303

 
275.56

 
62.9

 
178

 
11.8

 
$
4,438

 
$
375.33

 
$
3,775

 
$
319.24

 
85.1
%
 
$
663

 
Year Ended December 31, 2019
TANF and CHIP
24.4

 
$
4,838

 
$
198.66

 
$
4,258

 
$
174.88

 
88.0
%
 
$
580

Medicaid Expansion
7.2

 
2,775

 
383.93

 
2,418

 
334.53

 
87.1

 
357

ABD
4.4

 
4,853

 
1,111.09

 
4,293

 
982.83

 
88.5

 
560

Total Medicaid
36.0

 
12,466

 
346.79

 
10,969

 
305.16

 
88.0

 
1,497

MMP
0.7

 
1,589

 
2,346.87

 
1,377

 
2,033.77

 
86.7

 
212

Medicare
0.5

 
654

 
1,268.74

 
536

 
1,039.02

 
81.9

 
118

Total Medicare
1.2

 
2,243

 
1,880.79

 
1,913

 
1,603.73

 
85.3

 
330

Total Medicaid and Medicare
37.2

 
14,709

 
396.05

 
12,882

 
346.87

 
87.6

 
1,827

Marketplace
3.6

 
1,499

 
411.89

 
1,023

 
281.04

 
68.2

 
476

 
40.8

 
$
16,208

 
$
397.47

 
$
13,905

 
$
340.99

 
85.8
%
 
$
2,303

 
Year Ended December 31, 2018
TANF and CHIP
29.4

 
$
5,508

 
$
187.04

 
$
4,908

 
$
166.66

 
89.1
%
 
$
600

Medicaid Expansion
8.1

 
2,884

 
356.81

 
2,587

 
320.11

 
89.7

 
297

ABD
5.0

 
5,231

 
1,049.26

 
4,763

 
955.22

 
91.0

 
468

Total Medicaid
42.5

 
13,623

 
320.43

 
12,258

 
288.31

 
90.0

 
1,365

MMP
0.7

 
1,443

 
2,192.58

 
1,241

 
1,885.59

 
86.0

 
202

Medicare
0.5

 
631

 
1,180.46

 
511

 
955.81

 
81.0

 
120

Total Medicare
1.2

 
2,074

 
1,738.85

 
1,752

 
1,468.77

 
84.5

 
322

Total Medicaid and Medicare
43.7

 
15,697

 
359.14

 
14,010

 
320.53

 
89.2

 
1,687

Marketplace
4.9

 
1,915

 
392.97

 
1,127

 
231.33

 
58.9

 
788

 
48.6

 
$
17,612

 
$
362.54

 
$
15,137

 
$
311.59

 
85.9
%
 
$
2,475

__________________
(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.

-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 16
February 10, 2020

HEALTH PLANS SEGMENT FINANCIAL DATA — MEDICAID AND MEDICARE
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended December 31, 2019
California
1.5

 
$
531

 
$
334.81

 
$
414

 
$
261.66

 
78.2
%
 
$
117

Florida
0.3

 
125

 
426.72

 
109

 
371.79

 
87.1

 
16

Illinois
0.7

 
276

 
412.06

 
240

 
357.32

 
86.7

 
36

Michigan
1.0

 
390

 
362.57

 
321

 
298.90

 
82.4

 
69

Ohio
0.9

 
615

 
691.25

 
562

 
631.53

 
91.4

 
53

Puerto Rico
0.5

 
133

 
254.48

 
119

 
229.44

 
90.2

 
14

South Carolina
0.4

 
156

 
394.94

 
133

 
334.33

 
84.7

 
23

Texas
0.6

 
613

 
952.36

 
561

 
870.16

 
91.4

 
52

Washington
2.5

 
645

 
266.70

 
569

 
235.58

 
88.3

 
76

Other (1) (2)
0.9

 
304

 
406.59

 
270

 
360.51

 
88.7

 
34

 
9.3

 
$
3,788

 
$
409.99

 
$
3,298

 
$
356.95

 
87.1
%
 
$
490

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2018
California
1.8

 
$
485

 
$
282.83

 
$
425

 
$
247.56

 
87.5
%
 
$
60

Florida
1.0

 
370

 
376.80

 
345

 
351.20

 
93.2

 
25

Illinois
0.7

 
242

 
361.29

 
196

 
291.63

 
80.7

 
46

Michigan
1.1

 
389

 
348.47

 
320

 
287.33

 
82.5

 
69

New Mexico (2)
0.6

 
305

 
489.86

 
265

 
425.85

 
86.9

 
40

Ohio
0.9

 
607

 
662.51

 
527

 
575.69

 
86.9

 
80

Puerto Rico
0.8

 
147

 
173.81

 
135

 
158.97

 
91.5

 
12

South Carolina
0.3

 
126

 
352.67

 
106

 
299.17

 
84.8

 
20

Texas
0.6

 
581

 
865.75

 
538

 
801.34

 
92.6

 
43

Washington
2.3

 
512

 
225.52

 
455

 
200.72

 
89.0

 
57

Other (1)
0.6

 
193

 
344.31

 
160

 
283.96

 
82.5

 
33

 
10.7

 
$
3,957

 
$
368.93

 
$
3,472

 
$
323.72

 
87.7
%
 
$
485

 
Year Ended December 31, 2019
California
6.4

 
$
2,039

 
$
313.75

 
$
1,700

 
$
261.74

 
83.4
%
 
$
339

Florida
1.3

 
543

 
414.29

 
483

 
368.81

 
89.0

 
60

Illinois
2.7

 
1,002

 
377.13

 
872

 
328.11

 
87.0

 
130

Michigan
4.3

 
1,589

 
368.73

 
1,311

 
304.22

 
82.5

 
278

Ohio
3.6

 
2,450

 
684.74

 
2,215

 
619.03

 
90.4

 
235

Puerto Rico
2.3

 
474

 
204.88

 
420

 
181.85

 
88.8

 
54

South Carolina
1.6

 
583

 
375.13

 
511

 
328.58

 
87.6

 
72

Texas
2.6

 
2,402

 
920.94

 
2,184

 
837.05

 
90.9

 
218

Washington
9.6

 
2,513

 
263.13

 
2,260

 
236.63

 
89.9

 
253

Other (1) (2)
2.8

 
1,114

 
403.47

 
926

 
335.31

 
83.1

 
188

 
37.2

 
$
14,709

 
$
396.05

 
$
12,882

 
$
346.87

 
87.6
%
 
$
1,827

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2018
California
7.1

 
$
1,931

 
$
273.59

 
$
1,724

 
$
244.21

 
89.3
%
 
$
207

Florida
4.2

 
1,517

 
360.98

 
1,414

 
336.43

 
93.2

 
103

Illinois
2.5

 
793

 
322.87

 
670

 
272.61

 
84.4

 
123

Michigan
4.5

 
1,550

 
344.42

 
1,303

 
289.53

 
84.1

 
247

New Mexico (2)
2.6

 
1,241

 
474.10

 
1,140

 
435.65

 
91.9

 
101

Ohio
3.7

 
2,277

 
608.29

 
2,001

 
534.59

 
87.9

 
276

Puerto Rico
3.7

 
696

 
186.59

 
636

 
170.45

 
91.4

 
60

South Carolina
1.4

 
495

 
351.38

 
429

 
304.85

 
86.8

 
66

Texas
2.7

 
2,296

 
839.70

 
2,092

 
765.12

 
91.1

 
204

Washington
9.1

 
2,178

 
240.42

 
1,999

 
220.72

 
91.8

 
179

Other (1)
2.2

 
723

 
329.06

 
602

 
273.55

 
83.1

 
121

 
43.7

 
$
15,697

 
$
359.14

 
$
14,010

 
$
320.53

 
89.2
%
 
$
1,687

_______________
(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-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 17
February 10, 2020

HEALTH PLANS SEGMENT FINANCIAL DATA — MARKETPLACE
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended December 31, 2019
California
0.2

 
$
53

 
$
365.16

 
$
36

 
$
241.93

 
66.3
%
 
$
17

Florida
0.1

 
39

 
357.79

 
26

 
239.09

 
66.8

 
13

Michigan
0.1

 
8

 
497.43

 
5

 
302.84

 
60.9

 
3

Ohio
—

 
24

 
803.58

 
18

 
599.84

 
74.6

 
6

Texas
0.4

 
132

 
337.02

 
99

 
253.66

 
75.3

 
33

Washington
—

 
39

 
684.31

 
33

 
563.25

 
82.3

 
6

Other (1)
—

 
40

 
492.23

 
30

 
379.25

 
77.0

 
10

 
0.8

 
$
335

 
$
404.18

 
$
247

 
$
297.17

 
73.5
%
 
$
88

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2018
California
—

 
$
48

 
$
322.39

 
$
36

 
$
248.84

 
77.2
%
 
$
12

Florida
0.1

 
62

 
526.44

 
32

 
278.60

 
52.9

 
30

Michigan
0.1

 
11

 
259.20

 
8

 
166.54

 
64.3

 
3

New Mexico
0.1

 
22

 
328.32

 
19

 
302.79

 
92.2

 
3

Ohio
0.1

 
27

 
512.33

 
20

 
366.62

 
71.6

 
7

Texas
0.7

 
269

 
440.81

 
153

 
250.66

 
56.9

 
116

Washington
—

 
44

 
697.31

 
35

 
536.80

 
77.0

 
9

Other (2)
—

 
(2
)
 
NM

 
—

 
NM

 
NM

 
(2
)
 
1.1

 
$
481

 
$
437.79

 
$
303

 
$
275.56

 
62.9
%
 
$
178

 
Year Ended December 31, 2019
California
0.7

 
$
227

 
$
364.82

 
$
137

 
$
218.06

 
59.8
%
 
$
90

Florida
0.5

 
191

 
382.52

 
107

 
214.19

 
56.0

 
84

Michigan
0.1

 
35

 
479.12

 
20

 
273.87

 
57.2

 
15

Ohio
0.1

 
103

 
802.29

 
71

 
556.15

 
69.3

 
32

Texas
1.7

 
589

 
342.57

 
430

 
250.40

 
73.1

 
159

Washington
0.2

 
182

 
730.31

 
130

 
522.15

 
71.5

 
52

Other (1)
0.3

 
172

 
494.05

 
128

 
368.08

 
74.5

 
44

 
3.6

 
$
1,499

 
$
411.89

 
$
1,023

 
$
281.04

 
68.2
%
 
$
476

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2018
California
0.6

 
$
219

 
$
325.84

 
$
125

 
$
187.37

 
57.5
%
 
$
94

Florida
0.6

 
273

 
498.66

 
99

 
181.52

 
36.4

 
174

Michigan
0.2

 
51

 
250.69

 
31

 
150.11

 
59.9

 
20

New Mexico
0.3

 
115

 
403.55

 
74

 
260.29

 
64.5

 
41

Ohio
0.3

 
111

 
477.03

 
78

 
334.32

 
70.1

 
33

Texas
2.7

 
948

 
356.06

 
593

 
222.89

 
62.6

 
355

Washington
0.2

 
183

 
664.48

 
140

 
506.07

 
76.2

 
43

Other (2)
—

 
15

 
NM

 
(13
)
 
NM

 
NM

 
28

 
4.9

 
$
1,915

 
$
392.97

 
$
1,127

 
$
231.33

 
58.9
%
 
$
788

__________________
(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-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 18
February 10, 2020

HEALTH PLANS SEGMENT FINANCIAL DATA — TOTAL
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended December 31, 2019
California
1.7

 
$
584

 
$
337.37

 
$
450

 
$
259.99

 
77.1
%
 
$
134

Florida
0.4

 
164

 
407.98

 
135

 
335.71

 
82.3

 
29

Illinois
0.7

 
276

 
412.06

 
240

 
357.32

 
86.7

 
36

Michigan
1.1

 
398

 
364.51

 
326

 
298.95

 
82.0

 
72

Ohio
0.9

 
639

 
694.87

 
580

 
630.51

 
90.7

 
59

Puerto Rico
0.5

 
133

 
254.48

 
119

 
229.44

 
90.2

 
14

South Carolina
0.4

 
156

 
394.94

 
133

 
334.33

 
84.7

 
23

Texas
1.0

 
745

 
720.66

 
660

 
638.02

 
88.5

 
85

Washington
2.5

 
684

 
276.64

 
602

 
243.37

 
88.0

 
82

Other (1) (2)
0.9

 
344

 
414.93

 
300

 
362.34

 
87.3

 
44

 
10.1

 
$
4,123

 
$
409.51

 
$
3,545

 
$
352.03

 
86.0
%
 
$
578

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2018
California
1.8

 
$
533

 
$
285.98

 
$
461

 
$
247.66

 
86.6
%
 
$
72

Florida
1.1

 
432

 
392.68

 
377

 
343.49

 
87.5

 
55

Illinois
0.7

 
242

 
361.29

 
196

 
291.63

 
80.7

 
46

Michigan
1.2

 
400

 
344.96

 
328

 
282.58

 
81.9

 
72

New Mexico (2)
0.7

 
327

 
474.44

 
284

 
414.10

 
87.3

 
43

Ohio
1.0

 
634

 
654.39

 
547

 
564.37

 
86.2

 
87

Puerto Rico
0.8

 
147

 
173.81

 
135

 
158.97

 
91.5

 
12

South Carolina
0.3

 
126

 
352.67

 
106

 
299.17

 
84.8

 
20

Texas
1.3

 
850

 
663.84

 
691

 
539.68

 
81.3

 
159

Washington
2.3

 
556

 
238.21

 
490

 
209.76

 
88.1

 
66

Other (1)
0.6

 
191

 
344.44

 
160

 
285.37

 
82.9

 
31

 
11.8

 
$
4,438

 
$
375.33

 
$
3,775

 
$
319.24

 
85.1
%
 
$
663

 
Year Ended December 31, 2019
California
7.1

 
$
2,266

 
$
318.22

 
$
1,837

 
$
257.91

 
81.0
%
 
$
429

Florida
1.8

 
734

 
405.52

 
590

 
326.11

 
80.4

 
144

Illinois
2.7

 
1,002

 
377.13

 
872

 
328.11

 
87.0

 
130

Michigan
4.4

 
1,624

 
370.57

 
1,331

 
303.71

 
82.0

 
293

Ohio
3.7

 
2,553

 
688.80

 
2,286

 
616.86

 
89.6

 
267

Puerto Rico
2.3

 
474

 
204.88

 
420

 
181.85

 
88.8

 
54

South Carolina
1.6

 
583

 
375.13

 
511

 
328.58

 
87.6

 
72

Texas
4.3

 
2,991

 
691.31

 
2,614

 
604.14

 
87.4

 
377

Washington
9.8

 
2,695

 
275.05

 
2,390

 
243.91

 
88.7

 
305

Other (1) (2)
3.1

 
1,286

 
413.61

 
1,054

 
338.98

 
82.0

 
232

 
40.8

 
$
16,208

 
$
397.47

 
$
13,905

 
$
340.99

 
85.8
%
 
$
2,303

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2018
California
7.7

 
$
2,150

 
$
278.13

 
$
1,849

 
$
239.28

 
86.0
%
 
$
301

Florida
4.8

 
1,790

 
376.84

 
1,513

 
318.58

 
84.5

 
277

Illinois
2.5

 
793

 
322.87

 
670

 
272.61

 
84.4

 
123

Michigan
4.7

 
1,601

 
340.35

 
1,334

 
283.47

 
83.3

 
267

New Mexico (2)
2.9

 
1,356

 
467.17

 
1,214

 
418.44

 
89.6

 
142

Ohio
4.0

 
2,388

 
600.62

 
2,079

 
522.89

 
87.1

 
309

Puerto Rico
3.7

 
696

 
186.59

 
636

 
170.45

 
91.4

 
60

South Carolina
1.4

 
495

 
351.38

 
429

 
304.85

 
86.8

 
66

Texas
5.4

 
3,244

 
601.23

 
2,685

 
497.75

 
82.8

 
559

Washington
9.3

 
2,361

 
252.92

 
2,139

 
229.13

 
90.6

 
222

Other (1)
2.2

 
738

 
336.86

 
589

 
268.17

 
79.6

 
149

 
48.6

 
$
17,612

 
$
362.54

 
$
15,137

 
$
311.59

 
85.9
%
 
$
2,475

__________________
(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-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 19
February 10, 2020

SELECTED FINANCIAL DATA

The following table provides details of the Company’s medical care costs for the periods indicated:
 
Three Months Ended December 31,
 
2019
 
2018
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
2,660

 
$
264.20

 
75.0
%
 
$
2,807

 
$
237.39

 
74.4
%
Pharmacy
427

 
42.43

 
12.0

 
493

 
41.68

 
13.1

Capitation
293

 
29.06

 
8.3

 
293

 
24.83

 
7.7

Other
165

 
16.34

 
4.7

 
182

 
15.34

 
4.8

 
$
3,545

 
$
352.03

 
100.0
%
 
$
3,775

 
$
319.24

 
100.0
%
 
Year Ended December 31,
 
2019
 
2018
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
10,453

 
$
256.34

 
75.1
%
 
$
11,278

 
$
232.15

 
74.5
%
Pharmacy
1,681

 
41.23

 
12.1

 
2,138

 
44.01

 
14.1

Capitation
1,149

 
28.17

 
8.3

 
1,184

 
24.38

 
7.8

Other
622

 
15.25

 
4.5

 
537

 
11.05

 
3.6

 
$
13,905

 
$
340.99

 
100.0
%
 
$
15,137

 
$
311.59

 
100.0
%

The following table provides details of the Company’s medical claims and benefits payable as of the dates indicated:
 
December 31,
 
2019
 
2018
Fee-for-service claims incurred but not paid (IBNP)
$
1,406

 
$
1,562

Pharmacy payable
126

 
115

Capitation payable
55

 
52

Other (1)
267

 
232

 
$
1,854

 
$
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 December 31, 2019 and 2018, the Company had recorded non-risk provider payables of approximately $132 million and $107 million, respectively.


-MORE-

Molina Healthcare, Inc. Announces Fourth Quarter and Year-End 2019 Results
Page 20
February 10, 2020

SUMMARY OF NON-RUN RATE 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 expenses and other items that management believes are not indicative of longer-term business trends and operations. The individual items presented below increase (decrease) income before income tax expense.
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
Gain (loss) on debt repayment
$
—

 
$
—

 
$
3

 
$
0.04

 
$
15

 
$
0.18

 
$
(22
)
 
$
(0.29
)
Restructuring costs
(1
)
 
(0.01
)
 
(8
)
 
(0.09
)
 
(6
)
 
(0.07
)
 
(46
)
 
(0.54
)
Loss on sales of subsidiaries, net of gain
—

 
—

 
(52
)
 
(0.48
)
 
—

 
—

 
(15
)
 
(0.05
)
 
$
(1
)
 
$
(0.01
)
 
$
(57
)
 
$
(0.53
)
 
$
9

 
$
0.11

 
$
(83
)
 
$
(0.88
)
______________________
(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 2019 and 2018, respectively.

NON-GAAP FINANCIAL MEASURES
 
Three Months Ended December 31,
 
Year Ended December 31,
2019
 
2018
 
2019
 
2018
 
 
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
Net income
$
168

 
$
2.67

 
$
201

 
$
3.01

 
$
737

 
$
11.47

 
$
707

 
$
10.61

Adjustment:
 
 
 
 
 
 
 
 
 
 


 


 


Amortization of intangible assets
4

 
0.06

 
6

 
0.08

 
17

 
0.27

 
22

 
0.32

Income tax effect (1)
(1
)
 
(0.01
)
 
(1
)
 
(0.02
)
 
(4
)
 
(0.06
)
 
(5
)
 
(0.07
)
Adjustment, net of tax effect
3

 
0.05

 
5

 
0.06

 
13

 
0.21

 
17

 
0.25

Adjusted net income
$
171

 
$
2.72

 
$
206

 
$
3.07

 
$
750

 
$
11.68

 
$
724

 
$
10.86

________________________
(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.
Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:
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.


-END-