MOLINA HEALTHCARE, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 15, 2017

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News Release

Contact:
Juan José Orellana
Investor Relations
562-435-3666, ext. 111143


MOLINA HEALTHCARE REPORTS FOURTH QUARTER AND
YEAR-END 2016 RESULTS AND PROVIDES FISCAL YEAR 2017 OUTLOOK AND GUIDANCE

•
2016 net income declines due to continued poor Affordable Care Act (ACA) Marketplace performance
•
Strong enrollment growth generated approximately $16.3 billion of premium revenue
•
General and administrative expenses ratio decreased to 7.9% in 2016
•
2017 guidance of $1.72 net income per diluted share and $2.09 adjusted net income per diluted share

Long Beach, California (February 15, 2017) - Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter of 2016 and announced that it is providing its outlook and guidance for fiscal year 2017.
“While we experienced strong enrollment growth across our business and have made progress on our cost cutting efforts, today’s results highlight the continuing challenges we face in the ACA Marketplace,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “We are clearly disappointed in these results; however, we have identified and are committed to taking decisive steps to stabilize Marketplace performance; enhance our Medicaid profitability across Illinois, Ohio and Washington; and sustain our progress in Puerto Rico. Further, we continue to advocate for measures that the federal government can take to level the Marketplace playing field for insurers, like Molina, that offer effective, affordable health care to those who need it most.”
Analysis of Our Financial Results for the Year Ended December 31, 2016
Net income per diluted share decreased to $0.14 in 2016 compared with $2.58 in 2015. Adjusted net income per diluted share decreased to $0.50 in 2016 compared with $2.78 in 2015. The decrease in net income was primarily the result of the declining profitability of our Marketplace program.
Income before income taxes decreased by $185 million to $137 million in 2016 from $322 million in 2015. The significant disparity in effective tax rates between years makes net income and diluted earnings per share difficult to compare between 2016 and 2015. Accordingly, we believe that loss or income before income taxes is a better comparison of our performance between 2016 and 2015.
Financial Impact of Variances between Actual Results and Our Pricing Model for the Marketplace Exchanges in 2016
We estimate that our loss before income taxes in 2016 from the Marketplace program amounted to approximately $110 million, or $1.21 per diluted share. These results are substantially lower than our expectations based upon our 2016 pricing model. Based upon actual 2016 enrollment, our 2016 Marketplace program was priced to produce income before income tax expense of approximately $60 million for all of

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MOH Reports Fourth Quarter and Year-End 2016 Results
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February 15, 2017

2016. The $170 million difference in income before income tax expense between our reported results and those we would have expected based upon our pricing model was due to the following factors:
•
Risk transfer payments were approximately $325 million higher than anticipated in our pricing. Risk transfer payments amounted to 24% of total premium in 2016, compared with a pricing expectation of 9%.
•
Although medical costs were $120 million lower than anticipated by our pricing model, we nevertheless incurred $325 million in additional risk transfer payments noted above.
•
Other items increased income before income taxes by approximately $35 million compared with pricing expectations.
The difference between our actual results and those anticipated by our pricing model was exacerbated by the federal government’s failure to pay amounts owed to our health plans under the Marketplace risk corridor program. We believe our health plans are owed approximately $90 million in Marketplace risk corridor payments for 2016 dates of service, but have not recorded any amounts associated with this claim.
The following table presents a summary of the variance in Marketplace performance to pricing expectations for 2016 (in millions, except per-share amounts):
 
Year Ended December 31, 2016
 
Amount
 
Per Diluted Share (1)
Risk transfer payments
$
(325
)
 
$
(3.65
)
Lower than anticipated medical costs
120

 
1.32

Other revenue and operating expenses, net
35

 
0.44

Variance in Marketplace actual performance compared with pricing expectations
$
(170
)
 
$
(1.89
)
________________________
(1)
Income tax effect calculated at the statutory tax rate of 37%.

Revenue and Enrollment in 2016
Strong enrollment growth generated approximately $16.3 billion of premium revenue, or 23% more premium revenue in 2016 compared with 2015. Enrollment growth was primarily due to increased Marketplace enrollment and the acquisition of Medicaid managed care membership. Consolidated premium revenue measured on a per-member per-month (PMPM) basis decreased approximately 4% in 2016 when compared with 2015. The decline in PMPM premium revenue was primarily the result of lower PMPM premiums for Medicaid Expansion membership and an increase in the percentage of our premium revenue derived from TANF and Marketplace membership.
Medical Care Costs in 2016
The medical care ratio increased to 90.5% in 2016, from 89.1% in 2015, due to lower Marketplace margins. The medical care ratio of our Marketplace program increased to 93% in 2016 from 74% in 2015.
The medical care ratio of all of our programs excluding Marketplace increased by only 40 basis points between 2015 and 2016, as decreasing margins in Medicaid Expansion (where we saw a 500 basis point increase in our medical care ratio) were offset by improved margins in other programs. Consolidated medical care costs measured on a PMPM basis decreased approximately 3% in 2016 when compared with 2015.
General and Administrative Expense in 2016
General and administrative expenses as a percentage of total revenue (the “general and administrative expense ratio”) decreased to 7.9% in 2016, from 8.1% in 2015.
Analysis of our Financial Results for the Quarter Ended December 31, 2016
Profitability declined in the fourth quarter of 2016. Net loss per diluted share was $1.64, compared with net income per diluted share of $0.52 in the fourth quarter of 2015. Adjusted net loss per diluted share was $1.54, compared with adjusted net income per diluted share of $0.58 in the fourth quarter of 2015.

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MOH Reports Fourth Quarter and Year-End 2016 Results
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February 15, 2017

The following discrete items had an adverse impact on our financial performance in the fourth quarter of 2016:
1.
Difficulties experienced by our Marketplace program, including a $30 million premium deficiency reserve recorded in the fourth quarter of 2016 for anticipated losses in 2017. Including this reserve, our Marketplace program lost $130 million on a pre-tax basis in the fourth quarter of 2016.
2.
Adjustments to premium revenue and medical costs of approximately $25 million at our health plans that related to dates of service in 2015 or 2014.
3.
Adjustments to premium revenue and medical costs of approximately $37 million at our health plans that related to dates of service in the first three quarters of 2016.
4.
Continued rate pressure in Illinois, Ohio and Washington. As discussed below, rate increases effective January 1, 2017, in all three of these states will provide margin relief in 2017.
Financial Impact of the Marketplace and Out-of-Period Items at Our Health Plans on our Fourth Quarter 2016 Results
The poor performance of our Marketplace program was very detrimental to our financial performance for both the quarter and the year ended December 31, 2016. The following table presents the fourth quarter impact of the Marketplace and certain out-of-period items at our Health Plans segment to our fourth quarter consolidated results (in millions, except per-share amounts):
 
Quarter Ended December 31, 2016
 
Amount
 
Per Diluted Share (1)
Marketplace losses before income tax expense
$
(130
)
 
$
(1.47
)
Premium and provider adjustments recorded in the Health Plans segment related to dates of service in 2015 or 2014
(25
)
 
(0.29
)
Premium and provider adjustments recorded in the Health Plans segment related to dates of service in the first three quarters of 2016
(37
)
 
(0.41
)
 
$
(192
)
 
$
(2.17
)
________________________
(1)
Income tax effect calculated at the statutory tax rate of 37%.
Income Taxes in 2016
The health insurer fee that we pay to the federal government is not deductible for purposes of determining our income tax expense. The decrease in income before taxes in 2016 compared with 2015, combined with the relatively large amount of reported expenses that are not deductible for tax purposes, has resulted in an effective tax rate in excess of 90% for the full year 2016, compared with 55.5% for 2015. Because non-deductible expenses for the year are fixed and do not decline relative to income or loss before income tax expense, the substantial change in income before income taxes in the fourth quarter is not matched by a proportional adjustment to income tax expense. Rather, the effective tax rate we reported in the fourth quarter of 2016 represents the cumulative adjustment to our year-to-date effective tax rate.
Molina’s 2017 Plan for Action
We have identified the following areas of focus and related actions to execute in 2017:
1.
Stabilize Marketplace Performance:
We will continue to advocate for the immediate remediation of risk transfer methodologies that penalize comparatively efficient and affordable health plans like ours and, by extension, those individual consumers in need of affordable health insurance. In particular, we are recommending that the planned change to the Marketplace risk transfer methodology, which is currently scheduled to take effect on January 1, 2018, be brought forward in time and implemented immediately in 2017. Had that same planned methodology change been in effect in 2016, we estimate that our pre-tax income in 2016 would have been approximately $70 million higher.

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MOH Reports Fourth Quarter and Year-End 2016 Results
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February 15, 2017

In January 2017, we filed suit on behalf of our health plans seeking recovery from the federal government of approximately $52 million in Marketplace risk corridor payments for calendar year 2015. Based upon current estimates, we believe our health plans are also owed approximately $90 million in Marketplace risk corridor payments from the federal government for calendar year 2016, and a further nominal amount for calendar year 2014. Our lawsuit seeks recovery of all of these unpaid amounts. We have not recognized revenue, nor have we recorded a receivable, for any amount due from the federal government for unpaid Marketplace risk corridor payments as of December 31, 2016. We have fully recognized all liabilities due to the federal government that we have incurred under the Marketplace risk corridor program, and have paid all amounts due to the federal government as required.
2.
Improve Medicaid performance in Illinois, Ohio and Washington:
Inadequate premium rates limited profitability in Illinois, Ohio and Washington in 2016. Effective January 1, 2017, we received blended rate increases of approximately 5% in Illinois, 4% in Ohio and 4% in Washington. We expect improved profitability in all three plans in 2017 as a result of these rate increases and company-wide cost containment measures.
3.
Sustain the improvements achieved in Puerto Rico:
Results at our Puerto Rico health plan have improved in the second half of 2016, primarily as a result of management actions undertaken beginning in the spring of 2016. We expect that the benefit of those actions to continue into 2017.
Conference Call
Management will host a conference call and webcast to discuss Molina Healthcare’s fourth quarter and year-end results at 5:00 p.m. Eastern time on Wednesday, February 15, 2017. The number to call for the interactive teleconference is (212) 231-2922. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Wednesday, February 15, 2017, through 6:00 p.m. Eastern Time on Thursday, February 16, 2016, by dialing (800) 633-8284 and entering confirmation number 21842012. A live audio broadcast of Molina Healthcare’s conference call will be available on our website, molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.
2017 Business Outlook and Investor Meeting
As has been our past practice, we will discuss our 2017 business outlook and strategy at our Investor Day Conference webcast and presentation to be held on February 16, 2017, at the Le Parker Meridien Hotel in New York City from 12:30 p.m. to 4:30 p.m. Eastern Time. The Company will webcast the presentations offered by its management team, which will be followed by question-and-answer sessions. A 30-day online replay of the Investor Day meeting will be available approximately one hour following the conclusion of the live webcast. A link to this webcast can be found on the Company’s website at molinahealthcare.com
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through our locally operated health plans in 12 states across the nation and in the Commonwealth of Puerto Rico, Molina currently serves approximately 4.2 million members. Dr. C. David Molina founded our company in 1980 as a provider organization serving low-income families in Southern California. Today, we continue his mission of providing high quality and cost-effective health care to those who need it most. For more information about Molina Healthcare, please visit our website at molinahealthcare.com.

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MOH Reports Fourth Quarter and Year-End 2016 Results
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February 15, 2017

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding our plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the following:
•
the success of our profit improvement and cost-cutting initiatives;
•
the numerous political and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare,” including any potential repeal and replacement of the law, amendment of the law, or move to state block grants for Medicaid;
•
the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk transfer requirements, the potential for disproportionate enrollment of higher acuity members, the withdrawal of cost sharing subsidies and/or premium tax credits, the adequacy of agreed rates, and potential disruption associated with market withdrawal;
•
subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment/risk transfer, risk corridors, and reinsurance;
•
management of our medical costs, including our ability to reduce over time the high medical costs commonly associated with new patient populations;
•
our ability to predict with a reasonable degree of accuracy utilization rates, including utilization rates in new plans, geographies, and programs where we have less experience with patient and provider populations, and also including utilization rates associated with seasonal flu patterns or other newly emergent diseases;
•
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, including the resolution of the Illinois budget impasse and continued payment of all amounts due to our Illinois health plan;
•
the success of our efforts to retain existing government contracts, including those in Illinois, Washington, Florida, Texas, and New Mexico, and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states;
•
our ability to manage growth, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of our care management initiatives;
•
our ability to consummate and realize benefits from acquisitions, and to integrate acquisitions;
•
our receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
•
our ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
•
the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit sharing arrangements, and risk adjustment provisions;
•
our estimates of amounts owed for such cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions;
•
the Medicaid expansion cost corridors in New Mexico and Washington, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
•
the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and our ability to recognize revenue amounts associated therewith;
•
cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
•
the success of our health plan in Puerto Rico, including the resolution of the Puerto Rico debt crisis, payment of all amounts due under our Medicaid contract, the effect of the PROMESA law, and our efforts to better manage the health care costs of our Puerto Rico health plan;
•
the success and renewal of our duals demonstration programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas;
•
the accurate estimation of incurred but not reported or paid medical costs across our health plans;
•
efforts by states to recoup previously paid and recognized premium amounts;

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MOH Reports Fourth Quarter and Year-End 2016 Results
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February 15, 2017

•
the continuation and renewal of the government contracts of our health plans, Molina Medicaid Solutions, and Pathways, and the terms under which such contracts are renewed;
•
complications, member confusion, or enrollment backlogs related to the annual renewal of Medicaid coverage;
•
government audits and reviews, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
•
changes with respect to our provider contracts and the loss of providers;
•
approval by state regulators of dividends and distributions by our health plan subsidiaries;
•
changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
•
high dollar claims related to catastrophic illness;
•
the favorable resolution of litigation, arbitration, or administrative proceedings;
•
the relatively small number of states in which we operate health plans;
•
the availability of adequate financing on acceptable terms to fund and capitalize our expansion and growth, repay our outstanding indebtedness at maturity and meet our liquidity needs, including the interest expense and other costs associated with such financing;
•
our failure to comply with the financial or other covenants in our credit agreement or the indentures governing our outstanding notes;
•
the sufficiency of our funds on hand to pay the amounts due upon conversion of our outstanding notes;
•
the failure of a state in which we operate to renew its federal Medicaid waiver;
•
changes generally affecting the managed care or Medicaid management information systems industries;
•
increases in government surcharges, taxes, and assessments, including but not limited to the deductibility of certain compensation costs;
•
newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
•
increasing competition and consolidation in the Medicaid industry;
and numerous other risk factors, including those discussed in our periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of our website or on the SEC’s website at sec.gov. Given these risks and uncertainties, we can give no assurances that our forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by our 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 our judgment as of February 15, 2017, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in our expectations.



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MOH Reports Fourth Quarter and Year-End 2016 Results
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February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
2016
 
2015
 
(Dollar amounts in millions, except per-share amounts)
Revenue:
 
 
 
 
 
 
 
Premium revenue
$
4,109

 
$
3,589

 
$
16,324

 
$
13,241

Service revenue
131

 
107

 
539

 
253

Premium tax revenue
120

 
108

 
465

 
397

Health insurer fee revenue
94

 
61

 
345

 
264

Investment income and other revenue
9

 
6

 
38

 
23

Total revenue
4,463

 
3,871

 
17,711

 
14,178

Operating expenses:
 
 
 
 
 
 
 
Medical care costs
3,844

 
3,213

 
14,774

 
11,794

Cost of service revenue
123

 
90

 
485

 
193

General and administrative expenses
359

 
316

 
1,393

 
1,146

Premium tax expenses
120

 
108

 
465

 
397

Health insurer fee expenses
54

 
40

 
217

 
157

Depreciation and amortization
37

 
28

 
139

 
104

Total operating expenses
4,537

 
3,795

 
17,473

 
13,791

Operating (loss) income
(74
)
 
76

 
238

 
387

Other expenses, net:
 
 
 
 
 
 
 
Interest expense
25

 
21

 
101

 
66

Other income, net
—

 
(1
)
 
—

 
(1
)
Total other expenses, net
25

 
20

 
101

 
65

(Loss) income before income tax expense
(99
)
 
56

 
137

 
322

Income tax (benefit) expense
(8
)
 
26

 
129

 
179

Net (loss) income
$
(91
)
 
$
30

 
$
8

 
$
143

 
 
 
 
 
 
 
 
Diluted net (loss) income per share
$
(1.64
)
 
$
0.52

 
$
0.14

 
$
2.58

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
55.6

 
57.7

 
56.3

 
55.6

 
 
 
 
 
 
 
 
Operating Statistics:
 
 
 
 
 
 
 
Medical care ratio (1)
93.6
 %
 
89.5
%
 
90.5
%
 
89.1
%
General and administrative expense ratio (2)
8.0
 %
 
8.2
%
 
7.9
%
 
8.1
%
Premium tax ratio (1)
2.8
 %
 
2.9
%
 
2.8
%
 
2.9
%
Effective tax rate
7.9
 %
 
46.9
%
 
94.1
%
 
55.5
%
Net profit margin (2)
(2.0
)%
 
0.8
%
 
—
%
 
1.0
%
__________________
(1)
Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue.
(2)
General and administrative expense ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net (loss) income as a percentage of total revenue.

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MOH Reports Fourth Quarter and Year-End 2016 Results
Page 8
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
December 31,
 
2016
 
2015
 
(In millions,
except per-share data)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
2,819

 
$
2,329

Investments
1,758

 
1,801

Receivables
974

 
597

Income taxes refundable
63

 
13

Prepaid expenses and other current assets
131

 
192

Derivative asset
267

 
374

Total current assets
6,012

 
5,306

Property, equipment, and capitalized software, net
454

 
393

Deferred contract costs
86

 
81

Intangible assets, net
140

 
122

Goodwill
620

 
519

Restricted investments
110

 
109

Deferred income taxes
10

 
18

Other assets
41

 
28

 
$
7,473

 
$
6,576

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
1,929

 
$
1,685

Amounts due government agencies
1,273

 
729

Accounts payable and accrued liabilities
382

 
362

Deferred revenue
315

 
223

Current portion of long-term debt
472

 
449

Derivative liability
267

 
374

Total current liabilities
4,638

 
3,822

Senior notes
975

 
962

Lease financing obligations
198

 
198

Deferred income taxes
15

 
—

Other long-term liabilities
42

 
37

Total liabilities
5,868

 
5,019

Stockholders’ equity:
 
 
 
Common stock, $0.001 par value; 150 shares authorized; outstanding: 57 shares at December 31, 2016 and 56 shares at December 31, 2015
—

 
—

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

 
—

Additional paid-in capital
841

 
803

Accumulated other comprehensive loss
(2
)
 
(4
)
Retained earnings
766

 
758

Total stockholders’ equity
1,605

 
1,557

 
$
7,473

 
$
6,576



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MOH Reports Fourth Quarter and Year-End 2016 Results
Page 9
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
2016
 
2015
 
(In millions)
Operating activities:
 
 
 
 
 
 
 
Net (loss) income
$
(91
)
 
$
30

 
$
8

 
$
143

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
47

 
33

 
182

 
126

Deferred income taxes
2

 
5

 
22

 
(7
)
Share-based compensation
2

 
7

 
26

 
23

Amortization of convertible senior notes and lease financing obligations
8

 
8

 
31

 
30

Other, net
2

 
6

 
16

 
19

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Receivables
79

 
79

 
(348
)
 
56

Prepaid expenses and other assets
47

 
28

 
(69
)
 
(35
)
Medical claims and benefits payable
58

 
123

 
226

 
482

Amounts due government agencies
41

 
(251
)
 
544

 
202

Accounts payable and accrued liabilities
(8
)
 
50

 
(7
)
 
84

Deferred revenue
(65
)
 
153

 
92

 
24

Income taxes
(82
)
 
(52
)
 
(50
)
 
(22
)
Net cash provided by operating activities
40

 
219

 
673

 
1,125

Investing activities:
 
 
 
 
 
 
 
Purchases of investments
(485
)
 
(612
)
 
(1,929
)
 
(1,923
)
Proceeds from sales and maturities of investments
454

 
263

 
1,966

 
1,126

Purchases of property, equipment, and capitalized software
(33
)
 
(31
)
 
(176
)
 
(132
)
Change in restricted investments
—

 
(1
)
 
4

 
(6
)
Net cash paid in business combinations
—

 
(373
)
 
(48
)
 
(450
)
Other, net
(7
)
 
(1
)
 
(19
)
 
(35
)
Net cash used in investing activities
(71
)
 
(755
)
 
(202
)
 
(1,420
)
Financing activities:
 
 
 
 
 
 
 
Proceeds from senior notes offerings, net of issuance costs
—

 
689

 
—

 
689

Proceeds from common stock offering, net of issuance costs
—

 
—

 
—

 
373

Proceeds from employee stock plans
8

 
10

 
18

 
18

Other, net
—

 
2

 
1

 
5

Net cash provided by financing activities
8

 
701

 
19

 
1,085

Net (decrease) increase in cash and cash equivalents
(23
)
 
165

 
490

 
790

Cash and cash equivalents at beginning of period
2,842

 
2,164

 
2,329

 
1,539

Cash and cash equivalents at end of period
$
2,819

 
$
2,329

 
$
2,819

 
$
2,329


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MOH Reports Fourth Quarter and Year-End 2016 Results
Page 10
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP
 
As of December 31,
 
2016
 
2015
 
2014
Ending Membership by Health Plan:
 
 
 
 
 
California
683,000

 
620,000

 
531,000

Florida
553,000

 
440,000

 
164,000

Illinois
195,000

 
98,000

 
100,000

Michigan
391,000

 
328,000

 
242,000

New Mexico
254,000

 
231,000

 
212,000

New York (1)
35,000

 
—

 
—

Ohio
332,000

 
327,000

 
347,000

Puerto Rico (2)
330,000

 
348,000

 
—

South Carolina
109,000

 
99,000

 
118,000

Texas
337,000

 
260,000

 
245,000

Utah
146,000

 
102,000

 
83,000

Washington
736,000

 
582,000

 
497,000

Wisconsin
126,000

 
98,000

 
84,000

 
4,227,000

 
3,533,000

 
2,623,000

Ending Membership by Program:
 
 
 
 
 
Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP)
2,536,000

 
2,312,000

 
1,809,000

Medicaid Expansion
673,000

 
557,000

 
385,000

Marketplace
526,000

 
205,000

 
15,000

Aged, Blind or Disabled (ABD)
396,000

 
366,000

 
347,000

Medicare-Medicaid Plan (MMP) - Integrated
51,000

 
51,000

 
18,000

Medicare Special Needs Plans
45,000

 
42,000

 
49,000

 
4,227,000

 
3,533,000

 
2,623,000

_______________________
(1)
The New York health plan was acquired on August 1, 2016.
(2)
The Puerto Rico health plan began serving members effective April 1, 2015.





-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 11
February 15, 2017


MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended December 31, 2016
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
2.1

 
$
595

 
$
287.80

 
$
544

 
$
263.64

 
91.6
%
 
$
51

Florida
1.7

 
479

 
288.69

 
464

 
279.69

 
96.9

 
15

Illinois
0.5

 
135

 
233.43

 
154

 
265.84

 
113.9

 
(19
)
Michigan
1.1

 
377

 
321.47

 
327

 
278.89

 
86.8

 
50

New Mexico
0.7

 
288

 
378.29

 
304

 
399.29

 
105.5

 
(16
)
New York (3)
0.1

 
50

 
460.08

 
49

 
451.09

 
98.0

 
1

Ohio
1.0

 
489

 
486.36

 
441

 
439.09

 
90.3

 
48

Puerto Rico
1.0

 
191

 
193.54

 
178

 
179.02

 
92.5

 
13

South Carolina
0.4

 
105

 
318.27

 
88

 
267.65

 
84.1

 
17

Texas
1.0

 
602

 
588.83

 
511

 
499.56

 
84.8

 
91

Utah
0.5

 
114

 
257.97

 
111

 
252.85

 
98.0

 
3

Washington
2.2

 
584

 
267.50

 
536

 
245.11

 
91.6

 
48

Wisconsin
0.4

 
96

 
254.50

 
110

 
288.94

 
113.5

 
(14
)
Other (4)
—

 
4

 
—

 
27

 
—

 
—

 
(23
)
 
12.7

 
$
4,109

 
$
323.54

 
$
3,844

 
$
302.68

 
93.6
%
 
$
265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2015
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
662

 
$
363.57

 
$
577

 
$
316.97

 
87.2
%
 
$
85

Florida
1.2

 
331

 
279.37

 
318

 
268.98

 
96.3

 
13

Illinois
0.3

 
85

 
287.88

 
79

 
266.91

 
92.7

 
6

Michigan
1.0

 
329

 
334.44

 
282

 
287.00

 
85.8

 
47

New Mexico
0.7

 
304

 
438.82

 
263

 
379.10

 
86.4

 
41

New York (3)
—

 
—

 
—

 
—

 
—

 
—

 
—

Ohio
1.0

 
500

 
501.11

 
437

 
436.77

 
87.2

 
63

Puerto Rico
1.1

 
192

 
184.79

 
159

 
153.04

 
82.8

 
33

South Carolina
0.3

 
78

 
261.07

 
69

 
229.48

 
87.9

 
9

Texas
0.7

 
543

 
693.55

 
496

 
633.77

 
91.4

 
47

Utah
0.4

 
89

 
290.05

 
77

 
251.55

 
86.7

 
12

Washington
1.7

 
416

 
241.28

 
376

 
217.77

 
90.3

 
40

Wisconsin
0.3

 
55

 
186.57

 
53

 
182.41

 
97.8

 
2

Other (4)
—

 
5

 
—

 
27

 
—

 
—

 
(22
)
 
10.5

 
$
3,589

 
$
344.32

 
$
3,213

 
$
308.31

 
89.5
%
 
$
376

__________________
(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.
(3)
The New York health plan was acquired on August 1, 2016.
(4)
“Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.



-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 12
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)
 
Year Ended December 31, 2016
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
8.2

 
$
2,302

 
$
282.14

 
$
2,029

 
$
248.70

 
88.1
%
 
$
273

Florida
6.7

 
1,926

 
288.73

 
1,765

 
264.60

 
91.6

 
161

Illinois
2.3

 
601

 
257.99

 
568

 
243.71

 
94.5

 
33

Michigan
4.7

 
1,520

 
321.93

 
1,345

 
284.82

 
88.5

 
175

New Mexico
3.0

 
1,304

 
429.81

 
1,209

 
398.49

 
92.7

 
95

New York (3)
0.2

 
82

 
446.72

 
79

 
431.73

 
96.6

 
3

Ohio
4.0

 
1,961

 
485.20

 
1,747

 
432.36

 
89.1

 
214

Puerto Rico
4.0

 
726

 
180.65

 
694

 
172.57

 
95.5

 
32

South Carolina
1.3

 
378

 
296.54

 
320

 
250.97

 
84.6

 
58

Texas
4.3

 
2,454

 
575.01

 
2,110

 
494.41

 
86.0

 
344

Utah
1.8

 
444

 
249.56

 
423

 
238.03

 
95.4

 
21

Washington
8.4

 
2,218

 
263.36

 
2,015

 
239.21

 
90.8

 
203

Wisconsin
1.6

 
395

 
252.94

 
388

 
248.28

 
98.2

 
7

Other (4)
—

 
13

 
—

 
82

 
—

 
—

 
(69
)
 
50.5

 
$
16,324

 
$
323.46

 
$
14,774

 
$
292.75

 
90.5
%
 
$
1,550

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
7.1

 
$
2,200

 
$
310.89

 
$
1,926

 
$
272.22

 
87.6
%
 
$
274

Florida
4.1

 
1,199

 
289.85

 
1,081

 
261.49

 
90.2

 
118

Illinois
1.2

 
397

 
328.93

 
367

 
303.72

 
92.3

 
30

Michigan
3.4

 
1,067

 
317.15

 
903

 
268.27

 
84.6

 
164

New Mexico
2.8

 
1,237

 
446.27

 
1,106

 
398.98

 
89.4

 
131

New York (3)
—

 
—

 
—

 
—

 
—

 
—

 
—

Ohio
4.1

 
2,034

 
499.34

 
1,718

 
421.61

 
84.4

 
316

Puerto Rico
3.2

 
567

 
178.31

 
505

 
158.80

 
89.1

 
62

South Carolina
1.3

 
348

 
267.25

 
278

 
213.30

 
79.8

 
70

Texas
3.1

 
1,961

 
621.37

 
1,809

 
573.32

 
92.3

 
152

Utah
1.2

 
331

 
286.22

 
300

 
259.32

 
90.6

 
31

Washington
6.6

 
1,602

 
242.36

 
1,470

 
222.36

 
91.7

 
132

Wisconsin
1.2

 
261

 
213.48

 
215

 
176.01

 
82.4

 
46

Other (4)
—

 
37

 
—

 
116

 
—

 
—

 
(79
)
 
39.3

 
$
13,241

 
$
337.28

 
$
11,794

 
$
300.43

 
89.1
%
 
$
1,447

__________________
(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.
(3)
The New York health plan was acquired on August 1, 2016.
(4)
“Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.

-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 13
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended December 31, 2016
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
7.7

 
$
1,404

 
$
183.96

 
$
1,304

 
$
170.83

 
92.9
%
 
$
100

Medicaid Expansion
2.0

 
700

 
349.12

 
625

 
311.57

 
89.2

 
75

Marketplace
1.6

 
344

 
217.94

 
407

 
258.71

 
118.7

 
(63
)
ABD
1.2

 
1,200

 
1,003.09

 
1,104

 
921.69

 
91.9

 
96

MMP
0.1

 
314

 
2,047.88

 
274

 
1,785.00

 
87.2

 
40

Medicare
0.1

 
147

 
1,085.22

 
130

 
966.81

 
89.1

 
17

 
12.7

 
$
4,109

 
$
323.54

 
$
3,844

 
$
302.68

 
93.6
%
 
$
265

 
Three Months Ended December 31, 2015
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
6.9

 
$
1,203

 
$
175.96

 
$
1,092

 
$
159.83

 
90.8
%
 
$
111

Medicaid Expansion
1.7

 
735

 
446.24

 
606

 
367.76

 
82.4

 
129

Marketplace
0.6

 
127

 
223.57

 
111

 
194.80

 
87.1

 
16

ABD
1.1

 
1,061

 
969.51

 
995

 
910.11

 
93.9

 
66

MMP
0.1

 
330

 
2,163.47

 
290

 
1,905.00

 
88.1

 
40

Medicare
0.1

 
133

 
1,076.00

 
119

 
954.40

 
88.7

 
14

 
10.5

 
$
3,589

 
$
344.32

 
$
3,213

 
$
308.31

 
89.5
%
 
$
376

 
Year Ended December 31, 2016
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
30.2

 
$
5,403

 
$
179.21

 
$
4,950

 
$
164.18

 
91.6
%
 
$
453

Medicaid Expansion
7.8

 
2,884

 
369.82

 
2,475

 
317.37

 
85.8

 
409

Marketplace
6.7

 
1,525

 
228.44

 
1,416

 
212.17

 
92.9

 
109

ABD
4.7

 
4,666

 
991.24

 
4,277

 
908.39

 
91.6

 
389

MMP
0.6

 
1,303

 
2,131.97

 
1,141

 
1,866.93

 
87.6

 
162

Medicare
0.5

 
543

 
1,033.15

 
515

 
981.36

 
95.0

 
28

 
50.5

 
$
16,324

 
$
323.46

 
$
14,774

 
$
292.75

 
90.5
%
 
$
1,550

 
Year Ended December 31, 2015
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
25.5

 
$
4,483

 
$
175.64

 
$
4,122

 
$
161.50

 
92.0
%
 
$
361

Medicaid Expansion
5.9

 
2,389

 
408.51

 
1,931

 
330.18

 
80.8

 
458

Marketplace
2.6

 
652

 
251.96

 
481

 
185.85

 
73.8

 
171

ABD
4.3

 
4,124

 
966.83

 
3,784

 
887.27

 
91.8

 
340

MMP
0.5

 
1,063

 
2,034.51

 
974

 
1,863.93

 
91.6

 
89

Medicare
0.5

 
530

 
1,038.15

 
502

 
982.50

 
94.6

 
28

 
39.3

 
$
13,241

 
$
337.28

 
$
11,794

 
$
300.43

 
89.1
%
 
$
1,447

______________________
(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-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 14
February 15, 2017

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

The following tables provide the details of our medical care costs for the periods indicated:
 
Three Months Ended December 31,
 
2016
 
2015
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
2,837

 
$
223.43

 
73.8
%
 
$
2,297

 
$
220.34

 
71.5
%
Pharmacy
592

 
46.57

 
15.4

 
449

 
43.08

 
14.0

Capitation
317

 
24.93

 
8.2

 
257

 
24.69

 
8.0

Direct delivery
23

 
1.80

 
0.6

 
43

 
4.14

 
1.3

Other
75

 
5.95

 
2.0

 
167

 
16.06

 
5.2

 
$
3,844

 
$
302.68

 
100.0
%
 
$
3,213

 
$
308.31

 
100.0
%
 
Year Ended December 31,
 
2016
 
2015
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
10,993

 
$
217.84

 
74.4
%
 
$
8,572

 
$
218.35

 
72.7
%
Pharmacy
2,213

 
43.84

 
15.0

 
1,610

 
41.01

 
13.7

Capitation
1,218

 
24.13

 
8.2

 
982

 
25.02

 
8.3

Direct delivery
78

 
1.55

 
0.5

 
128

 
3.26

 
1.1

Other
272

 
5.39

 
1.9

 
502

 
12.79

 
4.2

 
$
14,774

 
$
292.75

 
100.0
%
 
$
11,794

 
$
300.43

 
100.0
%

The following table provides the details of our medical claims and benefits payable as of the dates indicated:
 
December 31,
 
2016
 
2015
Fee-for-service claims incurred but not paid (IBNP)
$
1,352

 
$
1,191

Pharmacy payable
112

 
88

Capitation payable
37

 
140

Other (1)
428

 
266

 
$
1,929

 
$
1,685

______________________
(1)
“Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. As of December 31, 2016 and 2015, we had recorded non-risk provider payables of approximately $225 million and $167 million, respectively.

-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 15
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in millions, except per-member amounts)

Our 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. Our 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 our original estimate of claims and benefits payable at the beginning of the period were 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,
 
2016
 
2015
Medical claims and benefits payable, beginning balance
$
1,685

 
$
1,201

Components of medical care costs related to:
 
 
 
Current period
14,966

 
11,935

Prior period
(192
)
 
(141
)
Total medical care costs
14,774

 
11,794

 
 
 
 
Change in non-risk provider payables
58

 
48

Payments for medical care costs related to:
 
 
 
Current period
13,296

 
10,448

Prior period
1,292

 
910

Total paid
14,588

 
11,358

Medical claims and benefits payable, ending balance
$
1,929

 
$
1,685

 
 
 
 
Benefit from prior period as a percentage of:
 
 
 
Balance at beginning of period
11.4
%
 
11.8
%
Premium revenue, trailing twelve months
1.2
%
 
1.1
%
Medical care costs, trailing twelve months
1.3
%
 
1.2
%
 
 
 
 
Fee-For-Service Claims Data: (1)
 
 
 
Days in claims payable, fee for service (2)
47

 
48

Number of members at end of year
4,227,000

 
3,533,000

Number of claims in inventory at end of year
554,700

 
380,800

Billed charges of claims in inventory at end of year
$
1,307

 
$
816

Claims in inventory per member at end of year
0.13

 
0.11

Billed charges of claims in inventory per member at end of year
$
309.09

 
$
230.91

Number of claims received during the year
53,360,600

 
40,173,300

Billed charges of claims received during the year
$
64,388

 
$
46,211

______________________
(1)
Claims data includes inpatient and outpatient claims only. Pharmacy and other claims are not included.
(2)
Claims payable at December 31, 2016 includes IBNP and $94 million of fee-for-service payables included in “Other” medical claims and benefits payable.



-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 16
February 15, 2017

MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES
We use non-GAAP financial measures as supplemental metrics in evaluating our 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 our 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 December 31,
 
Year Ended December 31,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
(In millions)
Net (loss) income
$
(91
)
 
$
30

 
$
8

 
$
143

Adjustments:
 
 
 
 
 
 
 
Depreciation, and amortization of intangible assets and capitalized software
43

 
33

 
161

 
120

Interest expense
25

 
21

 
101

 
66

Income tax (benefit) expense
(8
)
 
26

 
129

 
179

EBITDA
$
(31
)
 
$
110

 
$
399

 
$
508

 
Three Months Ended December 31,
 
Year Ended December 31,
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
(In millions, except per diluted share amounts)
 
Amount
 
Per share
 
Amount
 
Per share
 
Amount
 
Per share
 
Amount
 
Per share
Net (loss) income
$
(91
)
 
$
(1.64
)
 
$
30

 
$
0.52

 
$
8

 
$
0.14

 
$
143

 
$
2.58

Adjustment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets
8

 
0.16

 
5

 
0.09

 
32

 
0.57

 
18

 
0.32

Income tax effect (1)
(3
)
 
(0.06
)
 
(2
)
 
(0.03
)
 
(12
)
 
(0.21
)
 
(7
)
 
(0.12
)
Amortization of intangible assets, net of tax effect
5

 
0.10

 
3

 
0.06

 
20

 
0.36

 
11

 
0.20

Adjusted net (loss) income
$
(86
)
 
$
(1.54
)
 
$
33

 
$
0.58

 
$
28

 
$
0.50

 
$
154

 
$
2.78

________________________
(1)
Income tax effect of adjustments calculated at the statutory tax rate of 37%.
The following are descriptions of the adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release:
Earnings before interest, taxes, depreciation and amortization (EBITDA): Net income (GAAP) less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax expense. We believe that EBITDA is particularly helpful in assessing our ability to meet the cash demands of our operating units.
Adjusted net (loss) income: Net income (GAAP) less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate of 37%. We believe that adjusted net income is very helpful in assessing our financial performance exclusive of the non-cash impact of the amortization of purchased intangibles.
Adjusted net (loss) income per diluted share: Adjusted net income divided by weighted average common shares outstanding on a fully diluted basis.

-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 17
February 15, 2017

MOLINA HEALTHCARE, INC.
2017 OUTLOOK AND GUIDANCE

The following table presents the Company’s outlook for fiscal year 2017: (1) 
Premium revenue
 
$18.4B

Premium tax revenue
 
$460M

Service revenue
 
$570M

Investment income and other revenue
 
$40M

Total revenue
 
$19.5B

Medical care costs
 
$16.3B

Medical care ratio (2)
 
88.5%

Cost of service revenue
 
$520M

General and administrative expenses
 
$1.8B

G&A ratio (3)
 
9.0%

Premium tax expenses
 
$460M

Depreciation and amortization
 
$160M

Interest expense and other income
 
$100M

Income before income taxes
 
$175M

Net income
 
$100M

EBITDA (4)
 
$465M

Effective tax rate
 
44.0%

Net profit margin (3)
 
0.5%

Diluted weighted average shares
 
58.2M

Net income per share
 

$1.72

Adjusted net income per share (4)
 

$2.09

__________________
(1)
All amounts are estimates; actual results may differ materially. Does not include Aetna/Humana Medicare transaction break-up fee. See our risk factors as discussed in our Form 10-K and other filings.
(2)
Medical care ratio represents medical care costs as a percentage of premium revenue.
(3)
G&A expense ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue.
(4)
See below for a reconciliation of non-GAAP financial measures.

-MORE-

MOH Reports Fourth Quarter and Year-End 2016 Results
Page 18
February 15, 2017

Reconciliation of Non-GAAP Financial Measures – 2017 Outlook (in millions, except per-share amounts)
Net income
$
100

Adjustments:
 
Depreciation, and amortization of intangible assets and capitalized software
190

Interest expense
100

Income tax expense
75

EBITDA
$
465

 
Amount
 
Per share (2)
Net income
$
100

 
$
1.72

Adjustments:
 
 
 
Amortization of intangible assets
34

 
0.59

Income tax effect (1)
(12
)
 
(0.22
)
Amortization of intangible assets, net of tax effect
22

 
0.37

Adjusted net income
$
122

 
$
2.09

________________________
(1)
Income tax effect calculated at the statutory tax rate of 37%.
(2)
Computation assumes 58.2 million diluted weighted average shares outstanding.



-END-

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MOLINA HEALTHCARE, INC. Reports