Attached files
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| 8-K - MOLINA HEALTHCARE, INC. 8-K - MOLINA HEALTHCARE, INC. | a50450349.htm |
Exhibit 99.1
News Release
Contact:
Juan José Orellana
Investor Relations
562-435-3666, ext. 111143
MOLINA HEALTHCARE REPORTS
THIRD QUARTER 2012 RESULTS
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Earnings per diluted share for third quarter 2012 of $0.07, down from $0.41 in 2011
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Quarterly premium revenues of $1.5 billion, up 31% over 2011
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Aggregate membership up 9% over 2011
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Year to date cash provided by operating activities up $109 million over 2011
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Long Beach, California (October 23, 2012) – Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the third quarter and nine months ended September 30, 2012.
Net income for the quarter was $3.4 million, or $0.07 per diluted share, compared with net income of $19.0 million, or $0.41 per diluted share, for the quarter ended September 30, 2011.
“Our third quarter results demonstrate the tremendous opportunities we have before us,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “The growth in our Washington revenue in the third quarter was more than enough to replace the revenue we lost as a result of the termination of our contract in Missouri. The developments in Washington are an example of the growth that is happening in our industry even without the impetus of federal legislation. I am also pleased with the rapid turnaround at our Texas health plan, where we have made remarkable progress in the last three months.”
Overview of Financial Results
The Company’s financial performance in the third quarter of 2012 improved substantially over the second quarter of 2012 due to a significant improvement in the profitability of its Texas health plan. Revenue was consistent between the second and third quarters of 2012 as a 30% increase in revenue at the Washington health plan offset both the termination of the Company’s Missouri enrollment and the slight decline in Texas enrollment.
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MOH Reports Third Quarter 2012 Results
Page 2
October 23, 2012
Health Plans Segment Results
Premium Revenue
Premium revenue for the third quarter of 2012 increased 31% over the third quarter of 2011, primarily due to an increase in membership, a shift in member mix to populations generating higher premium revenue per member per month (PMPM), and benefit expansions.
Membership at the Texas health plan nearly doubled year over year, while also growing significantly in Ohio and Washington. Growth in the Company’s aged, blind or disabled, or ABD, membership led to higher premium revenue PMPM in 2012. ABD membership, as a percent of total membership, has increased approximately 37% year over year. Premium revenue PMPM also increased in the third quarter of 2012 as a result of the inclusion of revenue from the pharmacy benefit for the Ohio health plan effective October 1, 2011, and as a result of the inclusion of revenue from the inpatient facility and pharmacy benefits across all of the Texas health plan’s membership effective March 1, 2012.
Medical Care Costs
Medical care costs increased in the third quarter of 2012 primarily due to the same shifts in member mix and the benefit expansions that led to increased premium revenue. Medical care costs as a percentage of premium revenue (the medical care ratio) also increased in the third quarter of 2012 when compared with the third quarter of 2011 because increases in premium rates have not kept pace with increases in medical costs.
Individual Health Plan Analysis
The Texas health plan’s financial performance improved dramatically in the third quarter from the second quarter of 2012. The medical care ratio of the Texas health plan was 90% in the third quarter of 2012 compared with 109% in the second quarter of 2012 and 94% in the third quarter of 2011. The medical care ratio for the Texas health plan’s ABD membership declined to 94% in the third quarter of 2012 from 119% in the second quarter. The Company received a blended rate increase in Texas of approximately 4%, or $4.5 million per month, effective September 1, 2012. The loss before taxes at the Texas health plan was approximately $5 million for the third quarter of 2012, compared with approximately $68 million for the second quarter of 2012 (which included a premium deficiency reserve charge of $10 million). The Company has previously discussed at length the steps it is taking to bring the Texas health plan to profitability. The Company confirms its previously disclosed expectation that the Texas health plan will be operating at financial break even on a go forward basis by December of 2012.
The medical care ratio at the California health plan increased to 96% in the third quarter of 2012 from 89% in the third quarter of 2011. The higher medical care ratio was primarily the result of a shift in member mix to include more ABD members. The medical care ratio for the California health plan’s ABD membership was 110% in the third quarter of 2012, 100% for the nine months ended September 30, 2012, and 84% for the third quarter of 2011. The California Department of Health Care Services has recently solicited health plan input as to whether to conduct a review of the adequacy of ABD premium rates in California. The Company’s California health plan, which believes the ABD premium rates to be inadequate, has provided input supporting such a review. During the fourth quarter of 2012, the Company intends to exit an unprofitable service area in California, reducing enrollment by approximately 6,000 members.
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MOH Reports Third Quarter 2012 Results
Page 3
October 23, 2012
The addition of ABD members to the Washington health plan effective July 1, 2012, increased its medical care ratio to 86% in the third quarter of 2012 compared with 83% in the third quarter of 2011. The higher premium revenue PMPM associated with the ABD membership, however, offset the increased medical care ratio, so that income from operations was consistent between the third quarters of 2012 and 2011. The medical care ratio for the Washington health plan’s new ABD membership was 93% in the third quarter of 2012.
Molina Medicaid Solutions Segment Results
Performance of the Molina Medicaid Solutions segment was as follows:
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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(In thousands)
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Service revenue before amortization
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$ | 48,958 | $ | 39,273 | $ | 133,193 | $ | 116,567 | ||||||||
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Amortization recorded as reduction of service revenue
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(536 | ) | (1,545 | ) | (842 | ) | (5,277 | ) | ||||||||
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Service revenue
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48,422 | 37,728 | 132,351 | 111,290 | ||||||||||||
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Cost of service revenue
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37,004 | 34,584 | 98,111 | 105,020 | ||||||||||||
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General and administrative costs
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1,980 | 2,069 | 7,187 | 6,421 | ||||||||||||
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Amortization of customer relationship intangibles recorded as amortization
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1,282 | 1,282 | 3,846 | 3,846 | ||||||||||||
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Operating income (loss)
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$ | 8,156 | $ | (207 | ) | $ | 23,207 | $ | (3,997 | ) | ||||||
Operating income for the Company’s Molina Medicaid Solutions segment improved $8 million and $27 million for the three months and nine months ended September 30, 2012, respectively. This improvement was primarily the result of stabilization of the Company’s newest Medicaid Management Information Systems, or MMIS, in Idaho and Maine. For the quarter ended September 30, 2012, the Molina Medicaid Solutions segment gross profit margin rate was 24%, compared with 12% for the Health Plans segment.
Cash Flow
Cash provided by operating activities was $264 million for the nine months ended September 30, 2012, compared with $155 million for the nine months ended September 30, 2011. Higher medical claims and benefits payable at our Texas health plan was the primary reason for the increase, followed by an increase in deferred revenue. The increases in medical claims and benefits payable and deferred revenue were offset by the decline in year to date net income.
At September 30, 2012, the Company had cash and investments of $1.1 billion, and the parent company had cash and investments of $41 million.
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MOH Reports Third Quarter 2012 Results
Page 4
October 23, 2012
Reconciliation of Non-GAAP (1) to GAAP Financial Measures
EBITDA (2)
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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(In thousands)
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Net income (loss)
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$ | 3,364 | $ | 18,950 | $ | (15,853 | ) | $ | 53,778 | |||||||
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Add back:
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Depreciation and amortization reported
in the consolidated statements of
cash flows
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20,279 | 17,812 | 58,289 | 52,414 | ||||||||||||
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Interest expense
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4,315 | 4,380 | 12,421 | 11,666 | ||||||||||||
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Income tax (benefit) expense
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(492 | ) | 10,236 | (15,228 | ) | 30,832 | ||||||||||
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EBITDA
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$ | 27,466 | $ | 51,378 | $ | 39,629 | $ | 148,690 | ||||||||
____________
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(1)
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GAAP stands for U.S. generally accepted accounting principles.
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(2)
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EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense and the provision for income taxes. This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities, nor should EBITDA be considered in isolation from these GAAP measures of operating performance. Management uses EBITDA as a supplemental metric in evaluating the Company’s financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating the Company’s performance and the performance of other companies in the Company’s industry.
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Conference Call
The Company’s management will host a conference call and webcast to discuss its third quarter results at 5:00 p.m. Eastern time on Tuesday, October 23, 2012. The number to call for the interactive teleconference is (212) 231-2900. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Tuesday, October 23, 2012, through 6:00 p.m. on Wednesday, October 24, 2012, by dialing (800) 633-8284 and entering confirmation number 21602734. A live broadcast of Molina Healthcare’s conference call will be available on the Company’s website, www.molinahealthcare.com, or at www.earnings.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 quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program. The Company’s licensed health plans in California, Florida, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.8 million members, and its subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida.
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MOH Reports Third Quarter 2012 Results
Page 5
October 23, 2012
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company’s plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties, including, without limitation, risk factors related to the following:
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the effectiveness of our medical cost containment initiatives in Texas;
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significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
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uncertainties regarding the implementation of the Patient Protection and Affordable Care Act, including the potential refusal of a state to expand Medicaid eligibility to its uninsured population, issues surrounding state insurance exchanges, the impact of the health insurance industry excise tax, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures;
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management of the Company’s medical costs, including seasonal flu patterns and rates of utilization that are consistent with the Company’s expectations, and the reduction over time of the high medical costs associated with new populations;
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the success of the Company’s efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states, including the pending RFP in New Mexico, and the Company’s ability to grow the Company’s revenues consistent with the Company’s expectations;
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the accurate estimation of incurred but not reported medical costs across the Company’s health plans;
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risks associated with the continued growth in new Medicaid and Medicare enrollees, and the development of actuarially sound rates with respect to such new enrollees, including dually eligible enrollees;
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retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates;
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the continuation and renewal of the government contracts of both the Company’s health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed;
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the timing of receipt and recognition of revenue and the amortization of expense under the state contracts of Molina Medicaid Solutions in Maine or Idaho;
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additional administrative costs and the potential payment of additional amounts to providers and/or the state by Molina Medicaid Solutions as a result of MMIS implementation issues in Maine or Idaho;
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government audits and reviews, and any enrollment freeze or monitoring program that may result therefrom;
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changes with respect to the Company’s provider contracts and the loss of providers;
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the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;
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the interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures;
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approval by state regulators of dividends and distributions by the Company’s health plan subsidiaries;
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changes in funding under the Company’s contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
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high dollar claims related to catastrophic illness;
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the favorable resolution of litigation, arbitration, or administrative proceedings;
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restrictions and covenants in the Company’s credit facility;
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the relatively small number of states in which we operate health plans;
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the availability of financing to fund and capitalize the Company’s acquisitions and start-up activities and to meet the Company’s liquidity needs;
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a state’s failure to renew its federal Medicaid waiver;
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an inadvertent unauthorized disclosure of protected health information;
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changes generally affecting the managed care or Medicaid management information systems industries;
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increases in government surcharges, taxes, and assessments;
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changes in general economic conditions, including unemployment rates;
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increasing consolidation in the Medicaid industry;
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and numerous other risk factors, including those discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission. 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, we can give no assurances that the Company’s forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by the Company’s forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements. All forward‐looking statements in this release represent the Company’s judgment as of October 23, 2012, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.
-MORE-
MOH Reports Third Quarter 2012 Results
Page 6
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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(Amounts in thousands, except
net income (loss) per share)
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Revenue:
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Premium revenue
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$ | 1,488,718 | $ | 1,138,230 | $ | 4,308,439 | $ | 3,348,438 | ||||||||
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Service revenue
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48,422 | 37,728 | 132,351 | 111,290 | ||||||||||||
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Investment income
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1,171 | 764 | 3,996 | 3,804 | ||||||||||||
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Rental income
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1,879 | – | 5,408 | – | ||||||||||||
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Total revenue
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1,540,190 | 1,176,722 | 4,450,194 | 3,463,532 | ||||||||||||
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Expenses:
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Medical care costs
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1,314,571 | 959,158 | 3,823,136 | 2,822,049 | ||||||||||||
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Cost of service revenue
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37,004 | 34,584 | 98,111 | 105,020 | ||||||||||||
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General and administrative expenses
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127,500 | 99,610 | 379,208 | 290,967 | ||||||||||||
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Premium tax expenses
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37,894 | 36,374 | 120,953 | 110,633 | ||||||||||||
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Depreciation and amortization
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16,034 | 13,430 | 47,446 | 38,587 | ||||||||||||
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Total expenses
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1,533,003 | 1,143,156 | 4,468,854 | 3,367,256 | ||||||||||||
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Operating income (loss)
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7,187 | 33,566 | (18,660 | ) | 96,276 | |||||||||||
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Interest expense
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4,315 | 4,380 | 12,421 | 11,666 | ||||||||||||
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Income (loss) before income taxes
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2,872 | 29,186 | (31,081 | ) | 84,610 | |||||||||||
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Income tax (benefit) expense
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(492 | ) | 10,236 | (15,228 | ) | 30,832 | ||||||||||
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Net income (loss)
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$ | 3,364 | $ | 18,950 | $ | (15,853 | ) | $ | 53,778 | |||||||
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Net income (loss) per share:
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Basic
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$ | 0.07 | $ | 0.41 | $ | (0.34 | ) | $ | 1.18 | |||||||
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Diluted
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$ | 0.07 | $ | 0.41 | $ | (0.34 | ) | $ | 1.16 | |||||||
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Weighted average shares outstanding:
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Basic
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46,546 | 45,834 | 46,301 | 45,693 | ||||||||||||
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Diluted
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46,880 | 46,296 | 46,301 | 46,334 | ||||||||||||
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Operating Statistics:
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Ratio of medical care costs paid directly to providers to premium revenue
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86.1 | % | 81.9 | % | 86.5 | % | 82.0 | % | ||||||||
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Ratio of medical care costs not paid directly to providers to premium revenue
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2.2 | 2.4 | 2.2 | 2.3 | ||||||||||||
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Medical care ratio (1)
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88.3 | % | 84.3 | % | 88.7 | % | 84.3 | % | ||||||||
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General and administrative expense ratio (2)
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8.3 | % | 8.5 | % | 8.5 | % | 8.4 | % | ||||||||
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Premium tax ratio (1)
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2.5 | % | 3.2 | % | 2.8 | % | 3.3 | % | ||||||||
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Effective tax rate
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(17.1 | %) | 35.1 | % | 49.0 | % | 36.4 | % | ||||||||
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(1)
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Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium taxes as a percentage of premium revenue.
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(2)
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Computed as a percentage of total operating revenue.
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-MORE-
MOH Reports Third Quarter 2012 Results
Page 7
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
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Sept. 30,
2012
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Dec. 31,
2011
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(Amounts in thousands,
except per share data)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 715,480 | $ | 493,827 | ||||
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Investments
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356,895 | 336,916 | ||||||
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Receivables
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156,909 | 167,898 | ||||||
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Income tax refundable
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33,530 | 11,679 | ||||||
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Deferred income taxes
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21,533 | 18,327 | ||||||
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Prepaid expenses and other current assets
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30,002 | 19,435 | ||||||
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Total current assets
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1,314,349 | 1,048,082 | ||||||
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Property, equipment, and capitalized software, net
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210,972 | 190,934 | ||||||
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Deferred contract costs
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67,516 | 54,582 | ||||||
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Intangible assets, net
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85,033 | 101,796 | ||||||
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Goodwill and indefinite-lived intangible assets
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151,088 | 153,954 | ||||||
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Auction rate securities
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13,523 | 16,134 | ||||||
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Restricted investments
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44,488 | 46,164 | ||||||
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Receivable for ceded life and annuity contracts
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– | 23,401 | ||||||
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Other assets
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20,098 | 17,099 | ||||||
| $ | 1,907,067 | $ | 1,652,146 | |||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Medical claims and benefits payable
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$ | 536,463 | $ | 402,476 | ||||
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Accounts payable and accrued liabilities
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151,029 | 147,214 | ||||||
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Deferred revenue
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143,301 | 50,947 | ||||||
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Current maturities of long-term debt
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1,143 | 1,197 | ||||||
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Total current liabilities
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831,936 | 601,834 | ||||||
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Long-term debt
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260,551 | 216,929 | ||||||
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Deferred income taxes
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37,478 | 33,127 | ||||||
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Liability for ceded life and annuity contracts
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– | 23,401 | ||||||
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Other long-term liabilities
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22,101 | 21,782 | ||||||
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Total liabilities
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1,152,066 | 897,073 | ||||||
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Stockholders’ equity:
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Common stock, $0.001 par value; 80,000 shares authorized;
outstanding: 46,571 shares at September 30, 2012 and 45,815 shares
at December 31, 2011
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46 | 46 | ||||||
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Preferred stock, $0.001 par value; 20,000 shares authorized,
no shares issued and outstanding
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– | – | ||||||
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Additional paid-in capital
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280,728 | 266,022 | ||||||
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Accumulated other comprehensive loss
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(330 | ) | (1,405 | ) | ||||
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Retained earnings
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474,557 | 490,410 | ||||||
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Total stockholders’ equity
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755,001 | 755,073 | ||||||
| $ | 1,907,067 | $ | 1,652,146 | |||||
-MORE-
MOH Reports Third Quarter 2012 Results
Page 8
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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(Amounts in thousands)
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Operating activities:
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Net income (loss)
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$ | 3,364 | $ | 18,950 | $ | (15,853 | ) | $ | 53,778 | |||||||
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Adjustments to reconcile net income (loss) to net cash provided by operating activities:
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Depreciation and amortization
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20,279 | 17,812 | 58,289 | 52,414 | ||||||||||||
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Deferred income taxes
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1,787 | 10,908 | 1,166 | 8,069 | ||||||||||||
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Stock-based compensation
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5,636 | 4,349 | 15,448 | 12,723 | ||||||||||||
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Gain on sale of subsidiary
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– | – | (2,390 | ) | – | |||||||||||
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Non-cash interest on convertible senior notes
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1,499 | 1,384 | 4,414 | 4,095 | ||||||||||||
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Change in fair value of interest rate swap
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184 | – | 1,270 | – | ||||||||||||
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Amortization of premium/discount
on investments
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1,551 | 1,861 | 5,166 | 5,300 | ||||||||||||
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Amortization of deferred financing costs
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310 | 1,444 | 825 | 2,451 | ||||||||||||
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Tax deficiency from employee
stock compensation
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(109 | ) | (158 | ) | (159 | ) | (647 | ) | ||||||||
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Changes in operating assets and liabilities:
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Receivables
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4,098 | (21,588 | ) | 10,989 | 5,411 | |||||||||||
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Prepaid expenses and other current assets
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(222 | ) | 961 | (10,574 | ) | (1,819 | ) | |||||||||
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Medical claims and benefits payable
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10,925 | 19,442 | 133,987 | 6,699 | ||||||||||||
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Accounts payable and accrued liabilities
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13,952 | 8,961 | (9,030 | ) | 246 | |||||||||||
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Deferred revenue
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(33,072 | ) | (12,675 | ) | 92,354 | 25,400 | ||||||||||
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Income taxes
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(2,141 | ) | (11,386 | ) | (21,878 | ) | (18,957 | ) | ||||||||
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Net cash provided by operating activities
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28,041 | 40,265 | 264,024 | 155,163 | ||||||||||||
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Investing activities:
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Purchases of equipment
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(19,247 | ) | (15,055 | ) | (52,548 | ) | (45,921 | ) | ||||||||
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Purchases of investments
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(90,117 | ) | (74,562 | ) | (234,465 | ) | (258,209 | ) | ||||||||
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Sales and maturities of investments
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76,893 | 104,979 | 213,665 | 226,413 | ||||||||||||
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Proceeds from sale of subsidiary,
net of cash surrendered
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– | – | 9,162 | – | ||||||||||||
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Net cash paid in business combinations
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– | – | – | (3,253 | ) | |||||||||||
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Increase in deferred contract costs
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4,256 | (16,360 | ) | (18,799 | ) | (32,765 | ) | |||||||||
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Increase in restricted investments
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(880 | ) | (164 | ) | (3,034 | ) | (8,394 | ) | ||||||||
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Change in other noncurrent assets and liabilities
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(392 | ) | (2,723 | ) | (4,775 | ) | (533 | ) | ||||||||
|
Net cash used in investing activities
|
(29,487 | ) | (3,885 | ) | (90,794 | ) | (122,662 | ) | ||||||||
|
Financing activities:
|
||||||||||||||||
|
Amounts borrowed under credit facility
|
– | – | 60,000 | – | ||||||||||||
|
Repayment of amounts borrowed
under credit facility
|
(10,000 | ) | – | (20,000 | ) | – | ||||||||||
|
Treasury stock purchases
|
– | (7,000 | ) | – | (7,000 | ) | ||||||||||
|
Credit facility fees paid
|
– | (1,125 | ) | – | (1,125 | ) | ||||||||||
|
Principal payments on term loan
|
(273 | ) | – | (846 | ) | – | ||||||||||
|
Proceeds from employee stock plans
|
86 | – | 5,571 | 5,640 | ||||||||||||
|
Excess tax benefits from employee stock compensation
|
21 | 24 | 3,698 | 1,590 | ||||||||||||
|
Net cash (used in) provided by financing activities
|
(10,166 | ) | (8,101 | ) | 48,423 | (895 | ) | |||||||||
|
Net increase in cash and cash equivalents
|
(11,612 | ) | 28,279 | 221,653 | 31,606 | |||||||||||
|
Cash and cash equivalents at beginning of period
|
727,092 | 459,213 | 493,827 | 455,886 | ||||||||||||
|
Cash and cash equivalents at end of period
|
$ | 715,480 | $ | 487,492 | $ | 715,480 | $ | 487,492 | ||||||||
-MORE-
MOH Reports Third Quarter 2012 Results
Page 9
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED DEPRECIATION AND AMORTIZATION DATA
Depreciation and amortization related to the Company’s Health Plans segment is all recorded in “Depreciation and Amortization” in the consolidated statements of operations. Depreciation and amortization related to the Company’s Molina Medicaid Solutions segment is recorded within three different headings in the consolidated statements of operations as follows:
|
|
●
|
Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and Amortization;”
|
|
|
●
|
Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service Revenue;” and
|
|
|
●
|
Depreciation is recorded within the heading “Cost of Service Revenue.”
|
The following table presents all depreciation and amortization recorded in the Company’s consolidated statements of operations, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue.
|
Three Months Ended September 30,
|
||||||||||||||||
|
2012
|
2011
|
|||||||||||||||
|
Amount
|
% of Total
Revenue
|
Amount
|
% of Total
Revenue
|
|||||||||||||
|
(Dollar amounts in thousands)
|
||||||||||||||||
|
Depreciation and amortization of
capitalized software
|
$ | 11,201 | 0.7 | % | $ | 8,234 | 0.7 | % | ||||||||
|
Amortization of intangible assets
|
4,833 | 0.3 | 5,196 | 0.4 | ||||||||||||
|
Depreciation and amortization reported as such in the consolidated statements of operations
|
16,034 | 1.0 | 13,430 | 1.1 | ||||||||||||
|
Amortization recorded as reduction
of service revenue
|
536 | 0.1 | 1,545 | 0.1 | ||||||||||||
|
Amortization of capitalized software recorded as cost of service revenue
|
3,709 | 0.2 | 2,837 | 0.2 | ||||||||||||
|
Total
|
$ | 20,279 | 1.3 | % | $ | 17,812 | 1.4 | % | ||||||||
|
Nine Months Ended September 30,
|
||||||||||||||||
|
2012
|
2011
|
|||||||||||||||
|
Amount
|
% of Total
Revenue
|
Amount
|
% of Total
Revenue
|
|||||||||||||
|
(Dollar amounts in thousands)
|
||||||||||||||||
|
Depreciation, and amortization of
capitalized software
|
$ | 31,524 | 0.7 | % | $ | 22,859 | 0.7 | % | ||||||||
|
Amortization of intangible assets
|
15,922 | 0.4 | 15,728 | 0.5 | ||||||||||||
|
Depreciation and amortization reported as such in the consolidated statements of operations
|
47,446 | 1.1 | 38,587 | 1.2 | ||||||||||||
|
Amortization recorded as reduction
of service revenue
|
842 | – | 5,277 | 0.1 | ||||||||||||
|
Amortization of capitalized software recorded as cost of service revenue
|
10,001 | 0.2 | 8,550 | 0.2 | ||||||||||||
|
Total
|
$ | 58,289 | 1.3 | % | $ | 52,414 | 1.5 | % | ||||||||
-MORE-
MOH Reports Third Quarter 2012 Results
Page 10
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED MEMBERSHIP DATA
|
|
Sept. 30,
2012
|
June 30,
2012
|
Dec. 31,
2011
|
Sept. 30,
2011
|
||||||||||||
|
Total Ending Membership by Health Plan:
|
|
|
|
|
||||||||||||
|
California
|
346,000 | 350,000 | 355,000 | 350,000 | ||||||||||||
|
Florida
|
71,000 | 70,000 | 69,000 | 67,000 | ||||||||||||
|
Michigan
|
219,000 | 220,000 | 222,000 | 217,000 | ||||||||||||
|
Missouri (1)
|
― | 79,000 | 79,000 | 78,000 | ||||||||||||
|
New Mexico
|
90,000 | 89,000 | 88,000 | 89,000 | ||||||||||||
|
Ohio
|
272,000 | 260,000 | 248,000 | 256,000 | ||||||||||||
|
Texas
|
291,000 | 301,000 | 155,000 | 148,000 | ||||||||||||
|
Utah
|
85,000 | 86,000 | 84,000 | 82,000 | ||||||||||||
|
Washington
|
411,000 | 356,000 | 355,000 | 350,000 | ||||||||||||
|
Wisconsin
|
41,000 | 42,000 | 42,000 | 41,000 | ||||||||||||
|
Total
|
1,826,000 | 1,853,000 | 1,697,000 | 1,678,000 | ||||||||||||
|
Total Ending Membership by State for the Medicare Advantage Plans:
|
||||||||||||||||
|
California
|
7,300 | 7,000 | 6,900 | 6,500 | ||||||||||||
|
Florida
|
900 | 900 | 800 | 700 | ||||||||||||
|
Michigan
|
9,300 | 8,900 | 8,200 | 7,600 | ||||||||||||
|
New Mexico
|
900 | 900 | 800 | 800 | ||||||||||||
|
Ohio
|
200 | 200 | 200 | 100 | ||||||||||||
|
Texas
|
1,100 | 800 | 700 | 600 | ||||||||||||
|
Utah
|
8,300 | 8,300 | 8,400 | 7,400 | ||||||||||||
|
Washington
|
6,100 | 5,700 | 5,000 | 4,500 | ||||||||||||
|
Total
|
34,100 | 32,700 | 31,000 | 28,200 | ||||||||||||
|
Total Ending Membership by State for the Aged, Blind or Disabled Population:
|
||||||||||||||||
|
California
|
44,100 | 41,100 | 31,500 | 23,700 | ||||||||||||
|
Florida
|
10,300 | 10,400 | 10,400 | 10,400 | ||||||||||||
|
Michigan
|
40,700 | 40,000 | 37,500 | 31,600 | ||||||||||||
|
New Mexico
|
5,600 | 5,600 | 5,600 | 5,600 | ||||||||||||
|
Ohio
|
29,000 | 29,600 | 29,100 | 29,900 | ||||||||||||
|
Texas
|
101,300 | 111,000 | 63,700 | 61,800 | ||||||||||||
|
Utah
|
8,900 | 8,800 | 8,500 | 8,300 | ||||||||||||
|
Washington
|
23,400 | 4,400 | 4,800 | 4,700 | ||||||||||||
|
Wisconsin
|
1,600 | 1,700 | 1,700 | 1,700 | ||||||||||||
|
Total
|
264,900 | 252,600 | 192,800 | 177,700 | ||||||||||||
____________
|
(1)
|
The Company’s contract with the state of Missouri expired without renewal on June 30, 2012.
|
-MORE-
MOH Reports Third Quarter 2012 Results
Page 11
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)
|
Three Months Ended September 30, 2012
|
||||||||||||||||||||||||||||||||
|
Member
Months (1)
|
Premium Revenue
|
Medical Care Costs
|
Medical
Care Ratio (MCR)
|
Premium Tax
Expense
|
MCR Excluding Premium Tax Expense (4)
|
|||||||||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||||||||||
|
California
|
1,041 | $ | 162,389 | $ | 156.00 | $ | 156,106 | $ | 149.96 | 96.1 | % | $ | ― | 96.1 | % | |||||||||||||||||
|
Florida
|
214 | 57,429 | 268.56 | 48,250 | 225.64 | 84.0 | (5 | ) | 84.0 | |||||||||||||||||||||||
|
Michigan
|
656 | 160,637 | 244.91 | 143,513 | 218.80 | 89.3 | 1,046 | 89.9 | ||||||||||||||||||||||||
|
Missouri (2)
|
― | ― | ― | ― | ― | ― | ― | ― | ||||||||||||||||||||||||
|
New Mexico
|
269 | 84,797 | 315.49 | 73,721 | 274.28 | 86.9 | 1,761 | 88.8 | ||||||||||||||||||||||||
|
Ohio
|
805 | 306,314 | 380.20 | 253,447 | 314.58 | 82.7 | 23,824 | 89.7 | ||||||||||||||||||||||||
|
Texas
|
890 | 350,810 | 394.10 | 316,716 | 355.80 | 90.3 | 6,289 | 91.9 | ||||||||||||||||||||||||
|
Utah
|
256 | 73,484 | 287.21 | 62,630 | 244.79 | 85.2 | ― | 85.2 | ||||||||||||||||||||||||
|
Washington
|
1,217 | 274,079 | 225.29 | 236,928 | 194.76 | 86.4 | 4,888 | 88.0 | ||||||||||||||||||||||||
|
Wisconsin
|
124 | 16,279 | 131.21 | 15,217 | 122.65 | 93.5 | ― | 93.5 | ||||||||||||||||||||||||
|
Other (3)
|
― | 2,500 | ― | 8,043 | ― | ― | 91 | ― | ||||||||||||||||||||||||
|
|
5,472 | $ | 1,488,718 | $ | 272.08 | $ | 1,314,571 | $ | 240.25 | 88.3 | % | $ | 37,894 | 90.6 | % | |||||||||||||||||
|
Three Months Ended September 30, 2011
|
||||||||||||||||||||||||||||||||
|
Member
Months (1)
|
Premium Revenue
|
Medical Care Costs
|
Medical
Care Ratio (MCR)
|
Premium Tax
Expense
|
MCR Excluding Premium Tax Expense (4)
|
|||||||||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||||||||||
|
California
|
1,049 | $ | 144,888 | $ | 138.11 | $ | 128,596 | $ | 122.58 | 88.8 | % | $ | 1,114 | 89.4 | % | |||||||||||||||||
|
Florida
|
199 | 51,569 | 258.96 | 46,009 | 231.04 | 89.2 | (17 | ) | 89.2 | |||||||||||||||||||||||
|
Michigan
|
656 | 165,636 | 252.46 | 135,899 | 207.13 | 82.0 | 9,644 | 87.1 | ||||||||||||||||||||||||
|
Missouri (2)
|
234 | 58,196 | 248.80 | 45,428 | 194.22 | 78.1 | ― | 78.1 | ||||||||||||||||||||||||
|
New Mexico
|
267 | 79,644 | 297.82 | 67,043 | 250.70 | 84.2 | 2,084 | 86.4 | ||||||||||||||||||||||||
|
Ohio
|
745 | 232,616 | 312.55 | 182,363 | 245.02 | 78.4 | 18,072 | 85.0 | ||||||||||||||||||||||||
|
Texas
|
414 | 105,577 | 255.25 | 98,954 | 239.24 | 93.7 | 1,613 | 95.2 | ||||||||||||||||||||||||
|
Utah
|
243 | 69,763 | 286.47 | 55,293 | 227.05 | 79.3 | ― | 79.3 | ||||||||||||||||||||||||
|
Washington
|
1,043 | 211,131 | 202.49 | 174,912 | 167.76 | 82.8 | 3,776 | 84.4 | ||||||||||||||||||||||||
|
Wisconsin
|
123 | 17,269 | 139.95 | 13,656 | 110.67 | 79.1 | ― | 79.1 | ||||||||||||||||||||||||
|
Other (3)
|
― | 1,941 | ― | 11,005 | ― | ― | 88 | ― | ||||||||||||||||||||||||
|
|
4,973 | $ | 1,138,230 | $ | 228.88 | $ | 959,158 | $ | 192.87 | 84.3 | % | $ | 36,374 | 87.0 | % | |||||||||||||||||
____________
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
|
(2)
|
The Company’s contract with the state of Missouri expired without renewal on June 30, 2012. The Missouri health plan’s claims run-out activity subsequent to June 30, 2012, is reported in “Other.”
|
|
(3)
|
“Other” medical care costs also include medically related administrative costs at the parent company.
|
|
(4)
|
The MCR Excluding Premium Tax Expense represents medical costs as a percentage of premium revenues, where premium revenue is reduced by premium tax expense.
|
-MORE-
MOH Reports Third Quarter 2012 Results
Page 12
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)
|
Nine Months Ended September 30, 2012
|
||||||||||||||||||||||||||||||||
|
Member
Months (1)
|
Premium Revenue
|
Medical Care Costs
|
Medical
Care Ratio (MCR)
|
Premium Tax
Expense
|
MCR Excluding Premium Tax Expense (4)
|
|||||||||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||||||||||
|
California
|
3,156 | $ | 491,718 | $ | 155.80 | $ | 446,694 | $ | 141.53 | 90.8 | % | $ | 5,004 | 91.8 | % | |||||||||||||||||
|
Florida
|
632 | 170,922 | 270.47 | 146,261 | 231.44 | 85.6 | (18 | ) | 85.6 | |||||||||||||||||||||||
|
Michigan
|
1,983 | 491,301 | 247.78 | 419,406 | 211.52 | 85.4 | 11,203 | 87.4 | ||||||||||||||||||||||||
|
Missouri (2)
|
483 | 113,818 | 235.63 | 113,101 | 234.15 | 99.4 | ― | 99.4 | ||||||||||||||||||||||||
|
New Mexico
|
801 | 253,418 | 316.56 | 208,668 | 260.66 | 82.3 | 5,971 | 84.3 | ||||||||||||||||||||||||
|
Ohio
|
2,313 | 896,908 | 387.74 | 735,432 | 317.93 | 82.0 | 69,689 | 88.9 | ||||||||||||||||||||||||
|
Texas
|
2,389 | 908,532 | 380.30 | 890,042 | 372.57 | 98.0 | 16,155 | 99.7 | ||||||||||||||||||||||||
|
Utah
|
767 | 225,533 | 293.93 | 183,930 | 239.71 | 81.6 | ― | 81.6 | ||||||||||||||||||||||||
|
Washington
|
3,352 | 697,065 | 207.97 | 592,398 | 176.75 | 85.0 | 12,599 | 86.5 | ||||||||||||||||||||||||
|
Wisconsin
|
374 | 52,209 | 139.46 | 54,861 | 146.54 | 105.1 | ― | 105.1 | ||||||||||||||||||||||||
|
Other (3)
|
― | 7,015 | ― | 32,343 | ― | ― | 350 | ― | ||||||||||||||||||||||||
|
|
16,250 | $ | 4,308,439 | $ | 265.14 | $ | 3,823,136 | $ | 235.27 | 88.7 | % | $ | 120,953 | 91.3 | % | |||||||||||||||||
|
Nine Months Ended September 30, 2011
|
||||||||||||||||||||||||||||||||
|
Member
Months (1)
|
Premium Revenue
|
Medical Care Costs
|
Medical
Care Ratio (MCR)
|
Premium Tax
Expense
|
MCR Excluding Premium Tax Expense (4)
|
|||||||||||||||||||||||||||
|
Total
|
PMPM
|
Total
|
PMPM
|
|||||||||||||||||||||||||||||
|
California
|
3,133 | $ | 418,961 | $ | 133.71 | $ | 359,844 | $ | 114.84 | 85.9 | % | $ | 4,937 | 86.9 | % | |||||||||||||||||
|
Florida
|
588 | 150,561 | 256.13 | 141,872 | 241.35 | 94.2 | 34 | 94.3 | ||||||||||||||||||||||||
|
Michigan
|
2,002 | 495,971 | 247.70 | 399,952 | 199.75 | 80.6 | 29,219 | 85.7 | ||||||||||||||||||||||||
|
Missouri (2)
|
722 | 169,988 | 235.45 | 148,135 | 205.18 | 87.1 | ― | 87.1 | ||||||||||||||||||||||||
|
New Mexico
|
808 | 246,223 | 304.71 | 205,659 | 254.51 | 83.5 | 6,472 | 85.8 | ||||||||||||||||||||||||
|
Ohio
|
2,218 | 693,829 | 312.86 | 533,216 | 240.44 | 76.9 | 53,629 | 83.3 | ||||||||||||||||||||||||
|
Texas
|
1,154 | 290,787 | 252.06 | 271,723 | 235.54 | 93.4 | 5,016 | 95.1 | ||||||||||||||||||||||||
|
Utah
|
723 | 215,205 | 297.62 | 167,605 | 231.79 | 77.9 | ― | 77.9 | ||||||||||||||||||||||||
|
Washington
|
3,104 | 608,998 | 196.25 | 515,769 | 166.20 | 84.7 | 11,099 | 86.3 | ||||||||||||||||||||||||
|
Wisconsin
|
364 | 51,526 | 141.42 | 47,450 | 130.23 | 92.1 | 44 | 92.2 | ||||||||||||||||||||||||
|
Other (3)
|
― | 6,389 | ― | 30,824 | ― | ― | 183 | ― | ||||||||||||||||||||||||
|
|
14,816 | $ | 3,348,438 | $ | 226.01 | $ | 2,822,049 | $ | 190.48 | 84.3 | % | $ | 110,633 | 87.2 | % | |||||||||||||||||
____________
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
|
(2)
|
The Company’s contract with the state of Missouri expired without renewal on June 30, 2012. The Missouri health plan’s claims run-out activity subsequent to June 30, 2012, is reported in “Other.”
|
|
(3)
|
“Other” medical care costs also include medically related administrative costs of the parent company.
|
|
(4)
|
The MCR Excluding Premium Tax Expense represents medical costs as a percentage of premium revenues, where premium revenue is reduced by premium tax expense.
|
-MORE-
MOH Reports Third Quarter 2012 Results
Page 13
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA
(Amounts in thousands except per member per month amounts)
The following tables provide the details of the Company’s medical care costs for the periods indicated:
|
Three Months Ended September 30,
|
||||||||||||||||||||||||
|
2012
|
2011
|
|||||||||||||||||||||||
|
Amount
|
PMPM
|
% of
Total
|
Amount
|
PMPM
|
% of
Total
|
|||||||||||||||||||
|
Fee for service
|
$ | 908,201 | $ | 165.97 | 69.1 | % | $ | 698,995 | $ | 140.55 | 72.9 | % | ||||||||||||
|
Pharmacy
|
219,823 | 40.17 | 16.7 | 89,191 | 17.93 | 9.3 | ||||||||||||||||||
|
Capitation
|
142,714 | 26.08 | 10.9 | 129,315 | 26.00 | 13.5 | ||||||||||||||||||
|
Other
|
43,833 | 8.03 | 3.3 | 41,657 | 8.39 | 4.3 | ||||||||||||||||||
|
Total
|
$ | 1,314,571 | $ | 240.25 | 100.0 | % | $ | 959,158 | $ | 192.87 | 100.0 | % | ||||||||||||
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2012
|
2011
|
|||||||||||||||||||||||
|
Amount
|
PMPM
|
% of
Total
|
Amount
|
PMPM
|
% of
Total
|
|||||||||||||||||||
|
Fee for service
|
$ | 2,666,470 | $ | 164.09 | 69.8 | % | $ | 2,050,430 | $ | 138.40 | 72.7 | % | ||||||||||||
|
Pharmacy
|
606,004 | 37.29 | 15.9 | 268,637 | 18.13 | 9.5 | ||||||||||||||||||
|
Capitation
|
417,643 | 25.70 | 10.9 | 383,955 | 25.92 | 13.6 | ||||||||||||||||||
|
Other
|
133,019 | 8.19 | 3.4 | 119,027 | 8.03 | 4.2 | ||||||||||||||||||
|
Total
|
$ | 3,823,136 | $ | 235.27 | 100.0 | % | $ | 2,822,049 | $ | 190.48 | 100.0 | % | ||||||||||||
The following table provides the details of the Company’s medical claims and benefits payable as of the dates indicated:
|
Sept. 30,
2012
|
Dec. 31,
2011
|
Sept. 30,
2011
|
||||||||||
|
(In thousands)
|
||||||||||||
|
Fee-for-service claims incurred but not paid (IBNP)
|
$ | 414,725 | $ | 301,020 | $ | 283,160 | ||||||
|
Capitation payable
|
55,314 | 53,532 | 49,259 | |||||||||
|
Pharmacy
|
42,681 | 26,178 | 16,615 | |||||||||
|
Other
|
23,743 | 21,746 | 12,021 | |||||||||
|
|
$ | 536,463 | $ | 402,476 | $ | 361,055 | ||||||
-MORE-
MOH Reports Third Quarter 2012 Results
Page 14
October 23, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
The Company’s claims liability includes an allowance for adverse claims development 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 periods” represent the amount by which the Company’s original estimate of claims and benefits payable at the beginning of the period were (more) or less 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 shows the components of the change in medical claims and benefits payable as of the periods indicated:
|
Nine Months Ended
September 30,
|
Three Months Ended
September 30,
|
Year Ended
Dec. 31,
|
||||||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
2011
|
||||||||||||||||
|
(Dollars in thousands, except per-member amounts)
|
||||||||||||||||||||
|
Balances at beginning of period
|
$ | 402,476 | $ | 354,356 | $ | 525,538 | $ | 341,613 | $ | 354,356 | ||||||||||
|
Components of medical care costs related to:
|
||||||||||||||||||||
|
Current period
|
3,860,825 | 2,871,515 | 1,361,539 | 990,449 | 3,911,803 | |||||||||||||||
|
Prior periods
|
(37,689 | ) | (49,466 | ) | (46,968 | ) | (31,291 | ) | (51,809 | ) | ||||||||||
|
Total medical care costs
|
3,823,136 | 2,822,049 | 1,314,571 | 959,158 | 3,859,994 | |||||||||||||||
|
Payments for medical care costs related to:
|
||||||||||||||||||||
|
Current period
|
3,332,896 | 2,522,374 | 875,236 | 670,066 | 3,516,994 | |||||||||||||||
|
Prior periods
|
356,253 | 292,976 | 428,410 | 269,650 | 294,880 | |||||||||||||||
|
Total paid
|
3,689,149 | 2,815,350 | 1,303,646 | 939,716 | 3,811,874 | |||||||||||||||
|
Balances at end of period
|
$ | 536,463 | $ | 361,055 | $ | 536,463 | $ | 361,055 | $ | 402,476 | ||||||||||
|
Benefit from prior period as a percentage of:
|
||||||||||||||||||||
|
Balance at beginning of period
|
9.4 | % | 14.0 | % | 8.9 | % | 9.2 | % | 14.6 | % | ||||||||||
|
Premium revenue
|
0.9 | % | 1.5 | % | 3.2 | % | 2.7 | % | 1.1 | % | ||||||||||
|
Total medical care costs
|
1.0 | % | 1.8 | % | 3.6 | % | 3.3 | % | 1.3 | % | ||||||||||
|
Claims Data:
|
||||||||||||||||||||
|
Days in claims payable,
fee for service
|
45 | 39 | 45 | 39 | 40 | |||||||||||||||
|
Number of members
at end of period
|
1,826,000 | 1,678,000 | 1,826,000 | 1,678,000 | 1,697,000 | |||||||||||||||
|
Number of claims in inventory
at end of period
|
163,600 | 132,200 | 163,600 | 132,200 | 111,100 | |||||||||||||||
|
Billed charges of claims in inventory at end of period
|
$ | 304,600 | $ | 187,000 | $ | 304,600 | $ | 187,000 | $ | 207,600 | ||||||||||
|
Claims in inventory per member
at end of period
|
0.09 | 0.08 | 0.09 | 0.08 | 0.07 | |||||||||||||||
|
Billed charges of claims in inventory per member at end of period
|
$ | 166.81 | $ | 111.44 | $ | 166.81 | $ | 111.44 | $ | 122.33 | ||||||||||
|
Number of claims received
during the period
|
15,455,000 | 12,864,800 | 5,079,200 | 4,149,600 | 17,207,500 | |||||||||||||||
|
Billed charges of claims received during the period
|
$ | 14,339,700 | $ | 10,573,900 | $ | 4,951,000 | $ | 3,610,700 | $ | 14,306,500 | ||||||||||
-END-