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 18, 2005
MOLINA HEALTHCARE, INC.
(Exact name of
registrant as specified in its charter)
| Delaware | 1-31719 | 13-4204626 | |||
| (State of incorporation) | (Commission File Number) | (I.R.S. Employer Identification | |||
| Number) | |||||
One Golden Shore
Drive, 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))
Attached as Exhibit 99.1 to this
report is a copy of the presentation made by Molina Healthcare, Inc. and broadcast live at the UBS Global
Healthcare Services Conference in New York City on February 14, 2005. A replay of the live broadcast
is available on Molina Healthcare's website at www.molinahealthcare.com. (c) Exhibits: 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.
Item 8.01 Other Events.
Item 9.01 Financial
Statements and Exhibits.
Exhibit
No.
Description
99.1
Presentation to the UBS Global Healthcare Services Conference.
SIGNATURE
Date: February 18, 2005
MOLINA HEALTHCARE, INC.
By: /s/ Mark L. Andrews
——————————————
Mark L. Andrews
Executive Vice President,
General Counsel, and Corporate Secretary
EXHIBIT INDEX
Exhibit
No.
Description
99.1
Presentation by Molina Healthcare at UBS Global Healthcare Services Conference in New York City on February 14, 2005.
UBS Global Healthcare Services Conference
February 14-16
New York City
John C. Molina
EVP & Chief Financial Officer
Molina Healthcare, Inc.
Safe Harbor
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995:
This slide presentation contains forward-looking statements that are subject to
numerous risks and uncertainties. Actual results could differ materially because
of factors such as: the Company's
ability to accurately predict and effectively
manage health benefits and other operating expenses, changes in health care
practices, changes in federal or state laws or regulations or the interpretation
thereof, the implementation of announced rate
increases, reduction in provider
payments by governmental payors, the Company's ability to successfully integrate
its acquisitions or expand to new states, the Company’s ability to obtain the
requisite governmental approvals for its pending
acquisitions, the Company's
third-party contracts, competition, disasters, and other risks and uncertainties as
detailed in the Company's reports and filings with the Securities and Exchange
Commission. All forward-looking statements
in this presentation represent the
Company's judgment as of the date of this presentation. The Company disclaims
any intent or obligation to update any forward-looking statement to conform the
statement to actual results or changes in the Company's
expectations.
2
Company Profile
Multi-state managed care firm
Focused on Medicaid and other government programs
Approximately 720,000 members (9/30/04)
Membership currently expands across 5 states
~73,000 members added in Michigan in Q4 2004
from Wellness Plan
Indiana subsidiary will become active in Q2 2005
Projected revenues in 2005: $1.57 Billion
In business for 25 years
3
Medicaid’s Evolving Role
Coverage of needy populations
Safety net for millions of low-income children
Improves access to care and reduces disparities
Pays for nearly 1 in 5 health care dollars
Managed Care Opportunity
A cost containment solution for state governments
Opportunity for expansion with 42 million uninsured
Improvements to access and quality of care
Growing enrollment and spending
2004E total Medicaid spending of $305 billion
Approximately 50M covered
4
Jointly Funded Program
Medicaid Spending
Projected Growth Rates
Federal and State agencies continue to face fiscal challenges
resulting from rising Medicaid expenditures
4.8%
State Spending
Growth
12.9%
11.7%
1.3%
Federal Spending
Growth
2004
Source: Kaiser Family Foundation 2004
2005
2004
2005
5
Delivering Savings
Medicaid managed care can reduce costs, provide spending
predictability and improve access to care.
Source: The Lewin Group – Medicaid Managed Care Costs Savings, July 2004 (Data 2002)
2001
2002
2003
2004
$160
$170
$180
$190
$200
$210
$150
$140
$220
SAVINGS
FFS
Medicaid
MCO
PMPM
Medicaid Savings
Michigan Medicaid Per Member Per Month Costs
6
Our Markets
Molina arranges for the delivery
of healthcare services to persons
eligible for Medicaid and other
programs for low-income families
and individuals
Michigan
Washington
Utah
Indiana
California
264,000
Contract
serving the
aged, blind
& disabled
starting Q1
‘05
New Mexico
65,000
---
53,000
89,000
Nearly
doubled size
of health
plan with
Wellness Plan
acquisition in
Q4
249,000
2 acquisitions
pending
that would
add approx.
87,000
Members
Molina’s
latest
start-up
market; live
Q2 ‘05
Health plan
integration &
contribution
0n target
Undergoing
NCQA
quality
accreditation
Notes:
1. Enrollment figures as of 9/30/04
2. Michigan enrollment excludes approximately 73,000 members from The Wellness Plan transaction which closed in Q4 2004
1
2
7
Growth Strategy
new
populations
organic
growth
Focused Growth
Alternatives
new
counties
& states
Broaden access and member
services
Contract expansion in existing
markets
Targeted acquisitions & start up
opportunities
Offer services to new populations
(aged, blind & disabled)
Continued focus on the poor and
uninsured
Today
8
Growth Summary
2005
Acquired membership
From Premera Blue
Cross, Washington
6/04
Acquired Health Care
Horizons
New Mexico, 7/04
Sold Commercial
Membership to Lovelace
New Mexico, 8/04
Acquired Wellness Plan
Membership in
Michigan, 10/04
Proven ability to identify and execute transactions as well as
other expansion opportunities
Announced transaction
involving Sharp Health
Plan Membership in
California, 11/04
Announced transaction
involving Universal
Care Health Plan
Membership in
California, 12/04
Licensed and awarded
contract in Indiana
1/05
2004
9
Managing Our Growth
405
489
564
788
2001
2002
2003
2004
+383
Projected
Commitment to Quality
Local healthcare delivery
Expanded management
team and staff
Selective centralization
IS build-out
Adequate financing
Membership
(in thousands)
Since 2001
10
Recent Expansions: Start-Up
Molina awarded HMO license and contract in Indiana
Population
6.2M
Medicaid Enrollment
700K
Managed Care Enrollment
503K
Office of Medicaid Policy and
Planning seeks to increase access
and choice
2 year contract covers 13
mandatory managed care counties
First start-up market since Utah
Enrollment and revenue impact in
Q2 2005
Source: CMS 2004
11
Recent Expansions: Selective Acquisitions
Notes:
* Includes the membership of two pending transactions.
** Medicaid & SCHIP members. Source: California Department of Health Services Medical Care Statistics 7/2004; California
Managed Risk Medical Insurance Board
Announced the intent to acquire contracts and membership in
San Diego County
Managed Care Opportunity:
~229,000**
Molina*
38%
Community
Health Group
40%
Blue
Cross
10%
Health Net
6%
Kaiser
Foundation
5%
Existing Molina Markets:
Los Angeles, Riverside, Sacramento, San Bernardino, Yolo
Contracts acquired under
similar terms:
Sharp Health Plan $25M
Universal Care $6.2M
Would add ~ 87,000
new members to
California Health Plan
Expected to close 2Q 2005
San Diego Market Share
Anticipated Upon Approval of Pending Transactions
12
Continued Diversification
California
42%
3 Other States
58%
Q4 2002
California
~20%
4 Other States
~80%
Q4 2004
California transactions will also contribute to our contract
and revenue diversification strategy
13
Serving New Populations
Aged, Blind or
Disabled
Medicaid expenditures are almost 6 times greater for the aged,
blind and disabled than for families
Families
$14,156
$2,408
Medicaid Spending per enrollee ($)
All Enrollees
$5,525
Source: Urban Institute estimates based on data from the Medicaid Statistical Information System (MSIS)
and Health Management Associates 2004. (2003 Data)
14
Washington Medicaid Integration Project
Molina Healthcare of Washington to coordinate four key
services under a managed care model in Snohomish County
3,100 currently enrolled
Immediate benefit: access to a
primary care provider in a county
where access has been a challenge
Full implementation anticipated
Q4 2005
Medical
Care
Mental
Health
Substance
Abuse
Long Term
Care
15
Financial
Highlights
16
Financial Highlights
Revenues
$504M
$644M
$794M
$1.1B
$1.57B
Per
Member
Per Month
$112
$118
$125
$144
$164
*Note: 2002 results exclude one-time charges of $7.8MM during the fourth quarter.
2001
2002*
2003
2005
Projected
2004
Projected
17
Managing Medical Costs
Medical Care Costs
$91.09
81.5%
2001
2002
2003
$97.27
82.5%
$103.99
83.1%
$121.63
84.3%
$138.41
84.4%
2005
Projected
Per
Member
Per Month
2004
Projected
18
Managing Medical Costs
80.0%
81.0%
82.0%
83.0%
84.0%
85.0%
86.0%
Medical Care Ratio
Seasonality and Trends
Quarterly MCR
Average MCR
19
Controlling Administrative Costs
Core General & Administrative: Costs related to day to day
operations
Premium Taxes: State controlled tax levied on premium revenues
Administrative Costs:
0.7%
7.8%
8.5%
2001
2002*
2003
2005
Projected
0.8%
7.5%
8.3%
1.2%
6.6%
7.8%
1.9%
6.0%
7.9%
2.7%
5.7%
8.4%
*Note: 2002 results exclude one-time charges of $7.8MM during the fourth quarter.
2004
Projected
20
Financial Highlights
Operating
Income
$50M
$57M
$68M
$87M
$110M
Per
Member
Per Month
2001
2002*
2003
$11.20
$10.39
$10.71
$10.73
$11.40
2005
Projected
2004
Projected
*Note: 2002 results exclude one-time charges of $7.8MM during the fourth quarter.
21
Rate Expectations
California
Indiana
Michigan
New Mexico
Utah
Washington
flat
n/a
15%
4.5%
flat
4.5%
2005
Rate Expectations
22
Available Cash
Balance Sheet Highlights (9/30/2004)
$90M
$75M
~ 35%
~ 41%
~ 24%
9/30/2004
cash at
the parent +
unrestricted
cash at
subsidiaries +
untapped
credit
Facility =
total
free cash
on hand
$218M
$53M
23
Cash & Equivalents
$219M
Debt
--
Equity
$313M
Fourth Quarter Results
Revenue
Medical Care Ratio
G&A Ratio
Net Income
EPS
Shares Outstanding
Feb. 23
Q4/2004
$209M
83.0%
7.1%
$12M
$0.46
25.7M
Q4/2003
(Unaudited)
24
Outlook
Revenue
Medical Care Ratio
G&A Ratio
Net Income
EPS
Tax Rate
$1.57B
84.2%
8.2%
$67M
$2.40
2005
$1.59B
84.4%
8.4%
$69M
$2.45
37.5%
to
to
to
to
to
*Note: Does not include future acquisitions or expansion, all estimates assume weighted average diluted shares of 28.2M, tax rate does not take into account any favorable state tax
credits the Company might
receive from prior periods during 2005, estimates do not include potential impact, if any, changes in the Company’s methodology for recording stock based
employee compensation expense.
25
Investment Considerations
Medicaid managed care is a solution to state budget pressures
Demonstrated expertise in medical management
Experience in acquisitions and integration
Well-capitalized subsidiary health plans
Strong management team
In business for 25 years
26
Q&A
27