Molina Healthcare, Inc. (NYSE: MOH):
- Adjusted net income per diluted share, continuing operations,1 of $0.71.
- Net income per diluted share, continuing operations, of $0.16.
- Aggregate membership grew by 22% compared with second quarter of 2013.
- Total revenue of $2.3 billion, up 12% compared with first quarter of 2014; and up 44% compared with second quarter of 2013.
- General and administrative expense ratio declined sequentially to 8.4% in the second quarter of 2014, from 9.1% in the first quarter of 2014.
- Began serving members under fully integrated dual eligible pilot programs in California, Illinois and Ohio during the second quarter of 2014.
Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the second quarter of 2014.
“We are pleased that 2014 is unfolding as we anticipated,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “As we have stated in the past, the three key elements that remain critical to our success during the remainder of 2014 have not changed. These include revenue growth from new programs such as Medicaid expansion and the dual eligible Medicare Medicaid plans; the delivery of cost effective care to our chronically ill members, including the dual eligible; and the realization of administrative cost efficiencies. So far, 2014 has been a success in all three areas. Of course, we have much work left to do in 2014. Many factors outside of our direct control, such as the reimbursement of the Affordable Care Act’s Health Insurer Fee, are still not resolved. But we remain confident in the prospects for our company and take satisfaction from our progress this year.”
Overview of Financial Results, Continuing Operations
The Company previously reported that its first quarter results were adversely affected by delays in securing agreements for the reimbursement (including reimbursement for tax effect) of the Affordable Care Act’s Health Insurer Fee (ACA HIF) and delays in the recognition of quality related revenue. Those circumstances continued through the end of the second quarter of 2014.
Net income reported for the second quarter of 2014 and the six months ended June 30, 2014, would have been higher except for:
- ACA HIF not reimbursed by the Company’s state partners reduced earnings approximately $16 million, or $0.14 per diluted share, for the second quarter and $32 million, or $0.29 per diluted share, for the six months ended June 30, 2014 (per-share amounts for both periods on a GAAP and adjusted basis). The Company remains guardedly optimistic that it will secure reimbursement agreements with all of its state partners prior to the close of 2014.
- The Company’s non-recognition of a portion of the Texas health plan’s quality incentive program reduced earnings approximately $7 million, or $0.06 per diluted share, for the second quarter and $13 million, or $0.12 per diluted share, for the six months ended June 30, 2014 (per-share amounts for both periods on a GAAP and adjusted basis). The Company remains guardedly optimistic that it will be able to recognize most of its quality revenue in Texas prior to the close of 2014.
Second Quarter of 2014 Compared with the Second Quarter of 2013
The Company believes that the following items are of significance when comparing financial results from continuing operations for the second quarter of 2014 with the second quarter of 2013:
- Thus far in 2014, certain of the Company’s state partners have failed to reimburse it for the ACA HIF reduced revenue, representing approximately $16 million in the second quarter of 2014;
- Approximately $7 million of quality revenue was not recognized by the Company’s Texas health plan in the second quarter of 2014;
- The non-deductibility of ACA HIF resulted in a much higher effective tax rate in the second quarter of 2014 than in the second quarter of 2013; and
- A non-cash charge of approximately $4 million was recorded in the second quarter of 2013 in connection with the Company’s convertible senior notes offering in February 2013.
Net Income Per Share Guidance
The Company’s guidance for fiscal year 2014 remains unchanged and is as follows:
Low End | High End | |||||||||
Net income per diluted share, continuing operations | $ | 1.65 | $ | 2.15 | ||||||
Adjusted net income per diluted share, continuing operations | $ | 4.00 | $ | 4.50 | ||||||
As previously stated, the underlying assumptions for fiscal year 2014 guidance include full reimbursement of ACA HIF and receipt of the Texas Health plan’s quality incentive program revenue, and exclude the effect of hepatitis C drugs such as Sovaldi.
Conference Call
The Company’s management will host a conference call and webcast to discuss its second quarter results at 5:00 p.m. Eastern time on Wednesday, July 30, 2014. The number to call for the interactive teleconference is (212) 231-2936. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Wednesday, July 30, 2014, through 6:00 p.m. on Thursday, July 31, 2014, by dialing (800) 633-8284 and entering confirmation number 21721183. A live broadcast of Molina Healthcare’s conference call will be available on the Company’s website, www.molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through our locally operated health plans in 11 states across the nation, Molina currently serves approximately 2.3 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 www.molinahealthcare.com.
Notes:
- Adjusted net income per diluted share, continuing operations, is a non-GAAP financial measure used by management as a supplemental metric in evaluating its financial performance, its financing and business decisions, and in forecasting and planning for future periods. This measure is not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measure, which is diluted net income per share, continuing operations. See below for reconciliations of the Company’s non-GAAP measures to the most directly comparable GAAP measures.
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. Those known risks and uncertainties include, but are not limited to, the following:
- uncertainties associated with the implementation of the Affordable Care Act, including the full grossed up reimbursement by states of the non-deductible health insurer fee, the expansion of Medicaid eligibility in the states that participate to previously uninsured populations unfamiliar with managed care, the implementation of state insurance marketplaces, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures, including the dual eligibles demonstration programs in California, Illinois, Michigan, Ohio, and South Carolina;
- newly FDA-approved drugs such as Sovaldi, Olysio, and other drugs for hepatitis C or other medical conditions that are exorbitantly priced but not factored into the calculation of our capitated rates for 2014;
- 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;
- management of our medical costs, including seasonal flu patterns and rates of utilization that are consistent with our expectations, and our ability to reduce over time the high medical costs commonly associated with new patient populations;
- the accurate estimation of incurred but not paid medical costs across our health plans;
- retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates or retroactive premium rate increases;
- efforts by states to recoup previously paid amounts, including claims by the Washington Health Care Authority (HCA) that it overpaid our Washington health plan for certain claims related to psychotropic drugs and the Washington Community Options Program Entry System (COPES);
- the success of our 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 success of the proposal of Molina Medicaid Solutions in New Jersey;
- the continuation and renewal of the government contracts of both our health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed, including the extension of the Louisiana contract of Molina Medicaid Solutions through 2015;
- government audits and reviews, and any fine, enrollment freeze, or monitoring program that may result therefrom;
- changes with respect to our provider contracts and the loss of providers;
- federal or state medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;
- the interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures, including 2014 at-risk premium rules in the state of Texas;
- 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 or unfavorable resolution of litigation, arbitration, or administrative proceedings, including the litigation commenced against us by the state of Louisiana alleging that Molina Medicaid Solutions and its predecessors used an incorrect reimbursement formula for the payment of pharmaceutical claims;
- the relatively small number of states in which we operate health plans;
- our management of a portion of College Health Enterprises’ hospital in Long Beach, California;
- 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;
- the failure of a state in which we operate to renew its federal Medicaid waiver;
- an inadvertent unauthorized disclosure of protected health information;
- changes generally affecting the managed care or Medicaid management information systems industries;
- increases in government surcharges, taxes, and assessments;
- changes in general economic conditions, including unemployment rates;
-
increasing consolidation in the Medicaid industry;
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 July 30, 2014, 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.
MOLINA HEALTHCARE, INC. | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Amounts in thousands, except net income per share) | ||||||||||||||||
Revenue: | ||||||||||||||||
Premium revenue | $ | 2,167,142 | $ | 1,501,729 | $ | 4,107,479 | $ | 2,999,162 | ||||||||
Service revenue | 50,232 | 49,672 | 103,862 | 99,428 | ||||||||||||
Premium tax revenue | 70,120 | 46,883 | 121,813 | 83,883 | ||||||||||||
Health insurer fee revenue (1) | 19,662 | – | 38,358 | – | ||||||||||||
Investment income | 1,945 | 1,628 | 3,574 | 3,144 | ||||||||||||
Other revenue | 2,938 | 5,922 | 6,196 | 10,616 | ||||||||||||
Total revenue | 2,312,039 | 1,605,834 | 4,381,282 | 3,196,233 | ||||||||||||
Operating expenses: | ||||||||||||||||
Medical care costs | 1,934,299 | 1,294,706 | 3,655,957 | 2,582,621 | ||||||||||||
Cost of service revenue | 37,107 | 39,305 | 77,764 | 79,075 | ||||||||||||
General and administrative expenses | 193,239 | 161,479 | 381,326 | 302,757 | ||||||||||||
Premium tax expenses | 70,120 | 46,883 | 121,813 | 83,883 | ||||||||||||
Health insurer fee expenses (1) | 21,945 | – | 44,135 | – | ||||||||||||
Depreciation and amortization | 22,902 | 17,015 | 43,593 | 33,578 | ||||||||||||
Total operating expenses | 2,279,612 | 1,559,388 | 4,324,588 | 3,081,914 | ||||||||||||
Operating income | 32,427 | 46,446 | 56,694 | 114,319 | ||||||||||||
Other expenses, net: | ||||||||||||||||
Interest expense | 13,993 | 11,667 | 27,815 | 24,704 | ||||||||||||
Other (income) expense, net | (9 | ) | 3,502 | (53 | ) | 3,371 | ||||||||||
Total other expenses, net | 13,984 | 15,169 | 27,762 | 28,075 | ||||||||||||
Income from continuing operations before income tax expense | 18,443 | 31,277 | 28,932 | 86,244 | ||||||||||||
Income tax expense | 10,702 | 15,481 | 16,357 | 39,926 | ||||||||||||
Income from continuing operations | 7,741 | 15,796 | 12,575 | 46,318 | ||||||||||||
Income (loss) from discontinued operations, net of tax | 70 | 8,775 | (266 | ) | 8,168 | |||||||||||
Net income | $ | 7,811 | $ | 24,571 | $ | 12,309 | $ | 54,486 | ||||||||
Diluted net income per share: | ||||||||||||||||
Continuing operations | $ | 0.16 | $ | 0.34 | $ | 0.26 | $ | 1.00 | ||||||||
Discontinued operations | – | 0.19 | – | 0.17 | ||||||||||||
Diluted net income per share | $ | 0.16 | $ | 0.53 | $ | 0.26 | $ | 1.17 | ||||||||
Diluted weighted average shares outstanding | 48,003 | 46,507 | 47,824 | 46,506 | ||||||||||||
Operating Statistics, Continuing Operations: | ||||||||||||||||
Medical care ratio (2) | 89.3 | % | 86.2 | % | 89.0 | % | 86.1 | % | ||||||||
Service revenue ratio (3) | 73.9 | % | 79.1 | % | 74.9 | % | 79.5 | % | ||||||||
General and administrative expense ratio (4) | 8.4 | % | 10.1 | % | 8.7 | % | 9.5 | % | ||||||||
Premium tax ratio (2) | 3.1 | % | 3.0 | % | 2.9 | % | 2.7 | % | ||||||||
Effective tax rate | 58.0 | % | 49.5 | % | 56.5 | % | 46.3 | % | ||||||||
____________ (1) Health insurer fee expenses represent insurer fees levied by the federal government under the Affordable Care Act, which are not tax deductible. Associated revenues represent state and federal reimbursement of such fees (including the related income tax effect) for Medicaid and Medicare insurers. | ||||||||||||||||
(2) 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. | ||||||||||||||||
(3) Service revenue ratio represents cost of service revenue as a percentage of service revenue. | ||||||||||||||||
(4) Computed as a percentage of total revenue. |
MOLINA HEALTHCARE, INC. | |||||||
(Unaudited) | |||||||
June 30, 2014 | Dec. 31, 2013 | ||||||
(Amounts in thousands, except per-share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,027,351 | $ | 935,895 | |||
Investments | 740,874 | 703,052 | |||||
Receivables | 473,514 | 298,935 | |||||
Income taxes refundable | 16,726 | 32,742 | |||||
Deferred income taxes | 19,518 | 26,556 | |||||
Prepaid expenses and other current assets | 93,862 | 42,484 | |||||
Total current assets | 2,371,845 | 2,039,664 | |||||
Property, equipment, and capitalized software, net | 317,630 | 292,083 | |||||
Deferred contract costs | 47,969 | 45,675 | |||||
Intangible assets, net | 88,493 | 98,871 | |||||
Goodwill | 230,738 | 230,738 | |||||
Restricted investments | 84,440 | 63,093 | |||||
Auction rate securities | 11,025 | 10,898 | |||||
Deferred income taxes | 4,075 | – | |||||
Derivative asset | 250,160 | 186,351 | |||||
Other assets | 45,654 | 35,564 | |||||
$ | 3,452,029 | $ | 3,002,937 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Medical claims and benefits payable | $ | 924,182 | $ | 669,787 | |||
Accounts payable and accrued liabilities | 475,358 | 319,965 | |||||
Deferred revenue | 45,945 | 122,216 | |||||
Current maturities of long-term debt | 185,451 | 182,008 | |||||
Total current liabilities | 1,630,936 | 1,293,976 | |||||
Convertible senior notes | 425,709 | 416,368 | |||||
Lease financing obligations | 160,121 | 159,394 | |||||
Lease financing obligations – related party | 39,436 | 27,092 | |||||
Deferred income taxes | – | 580 | |||||
Derivative liability | 250,038 | 186,239 | |||||
Other long-term liabilities | 28,719 | 26,351 | |||||
Total liabilities | 2,534,959 | 2,110,000 | |||||
Stockholders’ equity: | |||||||
Common stock, $0.001 par value; 150,000 shares authorized; outstanding: 46,494 shares at June 30, 2014 and 45,871 shares at December 31, 2013 | 46 | 46 | |||||
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding | – | – | |||||
Additional paid-in capital | 351,546 | 340,848 | |||||
Accumulated other comprehensive income (loss) | 40 | (1,086 | ) | ||||
Retained earnings | 565,438 | 553,129 | |||||
Total stockholders’ equity | 917,070 | 892,937 | |||||
$ | 3,452,029 | $ | 3,002,937 |
MOLINA HEALTHCARE, INC. | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
Operating activities: | ||||||||||||||||
Net income | $ | 7,811 | $ | 24,571 | $ | 12,309 | $ | 54,486 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 32,660 | 22,108 | 65,654 | 43,907 | ||||||||||||
Deferred income taxes | 2,362 | (22,139 | ) | 1,692 | (22,155 | ) | ||||||||||
Stock-based compensation | 4,860 | 7,729 | 10,456 | 12,150 | ||||||||||||
Amortization of convertible senior notes and lease financing obligations | 6,781 | 5,965 | 13,455 | 9,688 | ||||||||||||
Other, net | 3,271 | 7,421 | 1,723 | 10,010 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Receivables | (135,282 | ) | (63,525 | ) | (174,579 | ) | (64,094 | ) | ||||||||
Prepaid expenses and other assets | 11,136 | (11,292 | ) | (66,887 | ) | (22,856 | ) | |||||||||
Medical claims and benefits payable | 104,641 | (25,658 | ) | 254,395 | (29,043 | ) | ||||||||||
Accounts payable and accrued liabilities | 75,280 | 14,879 | 177,497 | (16,968 | ) | |||||||||||
Deferred revenue | (100,331 | ) | (89,855 | ) | (76,271 | ) | (95,849 | ) | ||||||||
Income taxes | 11,374 | 552 | 16,016 | 8,976 | ||||||||||||
Net cash provided by (used in) operating activities | 24,563 | (129,244 | ) | 235,460 | (111,748 | ) | ||||||||||
Investing activities: | ||||||||||||||||
Purchases of investments | (226,159 | ) | (456,139 | ) | (368,304 | ) | (532,151 | ) | ||||||||
Sales and maturities of investments | 179,278 | 73,773 | 326,648 | 149,420 | ||||||||||||
Purchases of equipment | (19,882 | ) | (24,062 | ) | (37,670 | ) | (35,229 | ) | ||||||||
Increase in restricted investments | (1,241 | ) | (1,818 | ) | (15,622 | ) | (12,834 | ) | ||||||||
Other, net | (6,841 | ) | (4,974 | ) | (7,388 | ) | (1,018 | ) | ||||||||
Net cash used in investing activities | (74,845 | ) | (413,220 | ) | (102,336 | ) | (431,812 | ) | ||||||||
Financing activities: | ||||||||||||||||
Proceeds from issuance of 1.125% Notes, net of deferred financing costs | – | – | – | 537,973 | ||||||||||||
Proceeds from sale-leaseback transactions | – | 158,694 | – | 158,694 | ||||||||||||
Purchase of 1.125% Notes call option | – | – | – | (149,331 | ) | |||||||||||
Proceeds from issuance of warrants | – | – | – | 75,074 | ||||||||||||
Treasury stock purchases | – | – | – | (50,000 | ) | |||||||||||
Principal payments on term loan | – | (47,180 | ) | – | (47,471 | ) | ||||||||||
Repayment of amounts borrowed under credit facility | – | – | – | (40,000 | ) | |||||||||||
Contingent consideration liabilities settled | (12,230 | ) | – | (50,349 | ) | – | ||||||||||
Other, net | 6,494 | 4,109 | 8,681 | 5,521 | ||||||||||||
Net cash (used in) provided by financing activities | (5,736 | ) | 115,623 | (41,668 | ) | 490,460 | ||||||||||
Net (decrease) increase in cash and cash equivalents | (56,018 | ) | (426,841 | ) | 91,456 | (53,100 | ) | |||||||||
Cash and cash equivalents at beginning of period | 1,083,369 | 1,169,511 | 935,895 | 795,770 | ||||||||||||
Cash and cash equivalents at end of period | $ | 1,027,351 | $ | 742,670 | $ | 1,027,351 | $ | 742,670 |
MOLINA HEALTHCARE, INC. | |||||||||||||
The Company uses two non-GAAP financial measures as supplemental metrics in evaluating its financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing the Company’s performance to the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures. | |||||||||||||
The first of these non-GAAP measures is earnings before interest, taxes, depreciation and amortization (EBITDA). The following table reconciles net income, which the Company believes to be the most comparable GAAP measure, to EBITDA. | |||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
(Amounts in thousands) | |||||||||||||
Net income | $ | 7,811 | $ | 24,571 | $ | 12,309 | $ | 54,486 | |||||
Adjustments: | |||||||||||||
Depreciation, and amortization of intangible assets and capitalized software | 28,292 | 22,108 | 54,206 | 43,907 | |||||||||
Interest expense | 13,993 | 11,667 | 27,815 | 24,704 | |||||||||
Income tax expense | 10,760 | 5,513 | 15,997 | 29,783 | |||||||||
EBITDA | $ | 60,856 | $ | 63,859 | $ | 110,327 | $ | 152,880 | |||||
The second of these non-GAAP measures is adjusted net income, continuing operations (including adjusted net income per diluted share). The following table reconciles net income from continuing operations, which the Company believes to be the most comparable GAAP measure, to adjusted net income, continuing operations. | |||||||||||||
Three Months Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(In thousands, except per diluted share amounts) | |||||||||||||
Net income, continuing operations | $ | 7,741 | $ | 0.16 | $ | 15,796 | $ | 0.34 | |||||
Adjustments, net of tax: | |||||||||||||
Depreciation, and amortization of capitalized software | 14,614 | 0.30 | 10,875 | 0.23 | |||||||||
Stock-based compensation | 4,322 | 0.09 | 5,890 | 0.13 | |||||||||
Amortization of convertible senior notes and lease financing obligations | 4,272 | 0.09 | 3,758 | 0.08 | |||||||||
Amortization of intangible assets | 3,209 | 0.07 | 3,053 | 0.07 | |||||||||
Change in fair value of derivatives, net | (5 | ) | – | 3,658 | 0.08 | ||||||||
Adjusted net income, continuing operations | $ | 34,153 | $ | 0.71 | $ | 43,030 | $ | 0.93 | |||||
Six Months Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(In thousands, except per diluted share amounts) | |||||||||||||
Net income, continuing operations | $ | 12,575 | $ | 0.26 | $ | 46,318 | $ | 1.00 | |||||
Adjustments, net of tax: | |||||||||||||
Depreciation, and amortization of capitalized software | 27,612 | 0.58 | 21,554 | 0.46 | |||||||||
Stock-based compensation | 9,221 | 0.19 | 9,490 | 0.20 | |||||||||
Amortization of convertible senior notes and lease financing obligations | 8,477 | 0.18 | 6,103 | 0.13 | |||||||||
Amortization of intangible assets | 6,538 | 0.14 | 6,107 | 0.13 | |||||||||
Change in fair value of derivatives, net | (6 | ) | – | 3,583 | 0.08 | ||||||||
Adjusted net income, continuing operations | $ | 64,417 | $ | 1.35 | $ | 93,155 | $ | 2.00 |
MOLINA HEALTHCARE, INC. | ||||||||
June 30, 2014 | March 31, 2014 | Dec. 31, 2013 | June 30, 2013 | |||||
Ending Membership by Health Plan: | ||||||||
California | 455,000 | 418,000 | 368,000 | 355,000 | ||||
Florida (1) | 58,000 | 91,000 | 89,000 | 81,000 | ||||
Illinois | 6,000 | 5,000 | 4,000 | – | ||||
Michigan | 244,000 | 218,000 | 213,000 | 215,000 | ||||
New Mexico | 195,000 | 183,000 | 168,000 | 92,000 | ||||
Ohio | 302,000 | 260,000 | 255,000 | 240,000 | ||||
South Carolina (2) | 119,000 | 126,000 | – | – | ||||
Texas | 247,000 | 246,000 | 252,000 | 266,000 | ||||
Utah | 83,000 | 80,000 | 86,000 | 87,000 | ||||
Washington | 461,000 | 434,000 | 403,000 | 413,000 | ||||
Wisconsin | 85,000 | 90,000 | 93,000 | 98,000 | ||||
2,255,000 | 2,151,000 | 1,931,000 | 1,847,000 | |||||
Ending Membership by Program: | ||||||||
Temporary Assistance for Needy Families (TANF) | 1,564,500 | 1,575,300 | 1,503,800 | 1,435,400 | ||||
Aged, Blind or Disabled (ABD) | 305,300 | 309,900 | 288,600 | 270,300 | ||||
Medicaid Expansion (3) | 232,300 | 133,000 | – | – | ||||
Children’s Health Insurance Program (CHIP) | 77,000 | 83,700 | 99,200 | 105,000 | ||||
Medicare Special Needs Plans | 44,000 | 41,400 | 39,400 | 36,300 | ||||
Health Insurance Marketplaces (3) | 18,300 | 7,700 | – | – | ||||
Medicare-Medicaid Plan (MMP) - Integrated (4) | 5,200 | – | – | – | ||||
MMP - Medicare Opt Out (5) | 8,400 | – | – | – | ||||
2,255,000 | 2,151,000 | 1,931,000 | 1,847,000 | |||||
____________ (1) Enrollment at the Florida health plan declined between the first and second quarters of 2014 due to a reassignment of membership as part of the implementation of Florida’s Managed Medical Assistance program. The Company believes that enrollment at its Florida health plan will grow later in the year. | ||||||||
(2) The South Carolina health plan began serving members under the state of South Carolina’s new full-risk Medicaid managed care program effective January 1, 2014. | ||||||||
(3) Medicaid Expansion membership phased in, and Health Insurance Marketplaces became available for consumers to access coverage, beginning January 1, 2014. | ||||||||
(4) Medicare-Medicaid Plans (MMP) serve members who are dually eligible for Medicare and Medicaid. The Company’s MMP implementations in California and Illinois offered coverage beginning in April 2014 and Ohio beginning in June 2014. | ||||||||
(5) Medicare-Medicaid members who have elected to “opt out” of Medicare coverage and receive Medicaid only. |
MOLINA HEALTHCARE, INC. | ||||||||||||||||||||||
Three Months Ended June 30, 2014 | ||||||||||||||||||||||
Member Months (1) | Premium Revenue | Medical Care Costs | MCR (2) | Medical Margin | ||||||||||||||||||
Total | PMPM | Total | PMPM | |||||||||||||||||||
California | 1,335 | $ | 398,071 | $ | 298.11 | $ | 324,923 | $ | 243.33 | 81.6 | % | $ | 73,148 | |||||||||
Florida | 229 | 101,423 | 443.05 | 92,865 | 405.67 | 91.6 | 8,558 | |||||||||||||||
Illinois (3) | 17 | 19,263 | 1,136.20 | 20,472 | 1,207.48 | 106.3 | (1,209 | ) | ||||||||||||||
Michigan | 702 | 185,337 | 264.18 | 163,392 | 232.89 | 88.2 | 21,945 | |||||||||||||||
New Mexico | 617 | 267,994 | 434.57 | 240,151 | 389.42 | 89.6 | 27,843 | |||||||||||||||
Ohio | 849 | 328,630 | 386.79 | 276,716 | 325.69 | 84.2 | 51,914 | |||||||||||||||
South Carolina | 360 | 96,453 | 268.38 | 84,686 | 235.64 | 87.8 | 11,767 | |||||||||||||||
Texas | 742 | 320,966 | 432.46 | 297,899 | 401.38 | 92.8 | 23,067 | |||||||||||||||
Utah | 249 | 76,574 | 307.47 | 73,094 | 293.49 | 95.5 | 3,480 | |||||||||||||||
Washington | 1,364 | 336,959 | 247.03 | 305,098 | 223.67 | 90.5 | 31,861 | |||||||||||||||
Wisconsin | 256 | 36,925 | 144.42 | 33,143 | 129.63 | 89.8 | 3,782 | |||||||||||||||
Other (4) | – | (1,453 | ) | – | 21,860 | – | – | (23,313 | ) | |||||||||||||
6,720 | $ | 2,167,142 | $ | 322.52 | $ | 1,934,299 | $ | 287.87 | 89.3 | % | $ | 232,843 | ||||||||||
Three Months Ended June 30, 2013 | ||||||||||||||||||||||
Member Months (1) | Premium Revenue | Medical Care Costs | MCR (2) | Medical Margin | ||||||||||||||||||
Total | PMPM | Total | PMPM | |||||||||||||||||||
California | 1,055 | $ | 180,927 | $ | 171.58 | $ | 170,777 | $ | 161.96 | 94.4 | % | $ | 10,150 | |||||||||
Florida | 238 | 61,837 | 260.61 | 51,915 | 218.80 | 84.0 | 9,922 | |||||||||||||||
Illinois | – | – | – | – | – | – | – | |||||||||||||||
Michigan | 648 | 167,485 | 258.40 | 141,859 | 218.86 | 84.7 | 25,626 | |||||||||||||||
New Mexico | 275 | 84,449 | 307.20 | 68,253 | 248.28 | 80.8 | 16,196 | |||||||||||||||
Ohio | 722 | 270,107 | 373.78 | 215,664 | 298.44 | 79.8 | 54,443 | |||||||||||||||
South Carolina | – | – | – | – | – | – | – | |||||||||||||||
Texas | 805 | 318,955 | 396.05 | 275,959 | 342.66 | 86.5 | 42,996 | |||||||||||||||
Utah | 261 | 77,511 | 296.69 | 61,677 | 236.08 | 79.6 | 15,834 | |||||||||||||||
Washington | 1,238 | 299,533 | 241.89 | 263,512 | 212.80 | 88.0 | 36,021 | |||||||||||||||
Wisconsin | 293 | 37,740 | 128.79 | 31,185 | 106.43 | 82.6 | 6,555 | |||||||||||||||
Other (3)(4) | – | 3,185 | – | 13,905 | – | – | (10,720 | ) | ||||||||||||||
5,535 | $ | 1,501,729 | $ | 271.30 | $ | 1,294,706 | $ | 233.91 | 86.2 | % | $ | 207,023 | ||||||||||
____________ (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 Illinois health plan’s results prior to October 1, 2013, were insignificant and reported in “Other.” | ||||||||||||||||||||||
(4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs. |
MOLINA HEALTHCARE, INC. | |||||||||||||||||||||
Six Months Ended June 30, 2014 | |||||||||||||||||||||
Member Months (1) | Premium Revenue | Medical Care Costs | MCR (2) | Medical Margin | |||||||||||||||||
Total | PMPM | Total | PMPM | ||||||||||||||||||
California | 2,589 | $ | 675,713 | $ | 260.97 | $ | 562,267 | $ | 217.16 | 83.2 | % | $ | 113,446 | ||||||||
Florida | 499 | 206,589 | 414.17 | 186,326 | 373.55 | 90.2 | 20,263 | ||||||||||||||
Illinois (3) | 31 | 34,434 | 1,109.99 | 34,966 | 1,127.12 | 101.5 | (532 | ) | |||||||||||||
Michigan | 1,350 | 358,833 | 265.81 | 298,712 | 221.27 | 83.2 | 60,121 | ||||||||||||||
New Mexico | 1,166 | 493,062 | 423.00 | 436,560 | 374.53 | 88.5 | 56,502 | ||||||||||||||
Ohio | 1,621 | 606,925 | 374.33 | 514,044 | 317.04 | 84.7 | 92,881 | ||||||||||||||
South Carolina | 754 | 192,473 | 255.31 | 174,948 | 232.07 | 90.9 | 17,525 | ||||||||||||||
Texas | 1,491 | 641,062 | 429.85 | 590,857 | 396.19 | 92.2 | 50,205 | ||||||||||||||
Utah | 495 | 155,228 | 313.67 | 140,294 | 283.49 | 90.4 | 14,934 | ||||||||||||||
Washington | 2,640 | 660,420 | 250.15 | 603,205 | 228.48 | 91.3 | 57,215 | ||||||||||||||
Wisconsin | 530 | 75,453 | 142.48 | 61,952 | 116.99 | 82.1 | 13,501 | ||||||||||||||
Other (4) | – | 7,287 | – | 51,826 | – | – | (44,539 | ) | |||||||||||||
13,166 | $ | 4,107,479 | $ | 311.98 | $ | 3,655,957 | $ | 277.69 | 89.0 | % | $ | 451,522 | |||||||||
Six Months Ended June 30, 2013 | |||||||||||||||||||||
Member Months (1) | Premium Revenue | Medical Care Costs | MCR (2) | Medical Margin | |||||||||||||||||
Total | PMPM | Total | PMPM | ||||||||||||||||||
California | 2,056 | $ | 368,715 | $ | 179.36 | $ | 330,540 | $ | 160.79 | 89.6 | % | $ | 38,175 | ||||||||
Florida | 461 | 120,001 | 260.38 | 101,319 | 219.84 | 84.4 | 18,682 | ||||||||||||||
Illinois | – | – | – | – | – | – | – | ||||||||||||||
Michigan | 1,300 | 334,042 | 256.96 | 288,607 | 222.01 | 86.4 | 45,435 | ||||||||||||||
New Mexico | 549 | 168,449 | 307.08 | 140,402 | 255.95 | 83.3 | 28,047 | ||||||||||||||
Ohio | 1,448 | 538,915 | 372.10 | 443,118 | 305.96 | 82.2 | 95,797 | ||||||||||||||
South Carolina | – | – | – | – | – | – | – | ||||||||||||||
Texas | 1,637 | 648,406 | 396.01 | 542,408 | 331.27 | 83.7 | 105,998 | ||||||||||||||
Utah | 520 | 152,467 | 293.16 | 126,706 | 243.63 | 83.1 | 25,761 | ||||||||||||||
Washington | 2,488 | 597,819 | 240.29 | 524,909 | 210.98 | 87.8 | 72,910 | ||||||||||||||
Wisconsin | 493 | 64,864 | 131.53 | 54,849 | 111.22 | 84.6 | 10,015 | ||||||||||||||
Other (3)(4) | – | 5,484 | – | 29,763 | – | – | (24,279 | ) | |||||||||||||
10,952 | $ | 2,999,162 | $ | 273.85 | $ | 2,582,621 | $ | 235.81 | 86.1 | % | $ | 416,541 | |||||||||
____________ (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 Illinois health plan’s results prior to October 1, 2013, were insignificant and reported in “Other.” | |||||||||||||||||||||
(4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs. |
MOLINA HEALTHCARE, INC. | |||||||||||||||||||
The following tables provide the details of the Company’s medical care costs from continuing operations for the periods indicated: | |||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Amount | PMPM | % of Total | Amount | PMPM | % of Total | ||||||||||||||
Fee for service | $ | 1,378,037 | $ | 205.08 | 71.2 | % | $ | 879,865 | $ | 158.96 | 68.0 | % | |||||||
Pharmacy | 295,596 | 43.99 | 15.3 | 222,992 | 40.29 | 17.2 | |||||||||||||
Capitation | 176,817 | 26.31 | 9.1 | 138,409 | 25.00 | 10.7 | |||||||||||||
Direct delivery | 23,063 | 3.43 | 1.2 | 9,443 | 1.71 | 0.7 | |||||||||||||
Other | 60,786 | 9.06 | 3.2 | 43,997 | 7.95 | 3.4 | |||||||||||||
$ | 1,934,299 | $ | 287.87 | 100.0 | % | $ | 1,294,706 | $ | 233.91 | 100.0 | % | ||||||||
Six Months Ended June 30, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Amount | PMPM |
% of Total | Amount | PMPM |
% of Total | ||||||||||||||
Fee for service | $ | 2,559,098 | $ | 194.38 | 70.0 | % | $ | 1,746,620 | $ | 159.48 | 67.6 | % | |||||||
Pharmacy | 582,224 | 44.22 | 15.9 | 454,830 | 41.53 | 17.6 | |||||||||||||
Capitation | 346,256 | 26.30 | 9.5 | 278,733 | 25.45 | 10.8 | |||||||||||||
Direct delivery | 45,084 | 3.42 | 1.2 | 18,127 | 1.66 | 0.7 | |||||||||||||
Other | 123,295 | 9.37 | 3.4 | 84,311 | 7.69 | 3.3 | |||||||||||||
$ | 3,655,957 | $ | 277.69 | 100.0 | % | $ | 2,582,621 | $ | 235.81 | 100.0 | % | ||||||||
The following table provides the details of the Company’s medical claims and benefits payable as of the dates indicated: | |||||||||||||||||||
June 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||
Fee-for-service claims incurred but not paid (IBNP) | $ | 697,038 | $ | 424,173 | |||||||||||||||
Pharmacy payable | 54,935 | 45,037 | |||||||||||||||||
Capitation payable | 29,560 | 20,267 | |||||||||||||||||
Other | 142,649 | 180,310 | |||||||||||||||||
$ | 924,182 | $ | 669,787 |
MOLINA HEALTHCARE, INC. | ||||||||||||
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 period” represent the amount by which the Company’s 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 shows the components of the change in medical claims and benefits payable from continuing and discontinued operations as of the periods indicated: | ||||||||||||
Six Months Ended June 30, | Year Ended Dec. 31, 2013 | |||||||||||
2014 | 2013 | |||||||||||
(Dollars in thousands, except per-member amounts) | ||||||||||||
Balances at beginning of period | $ | 669,787 | $ | 494,530 | $ | 494,530 | ||||||
Components of medical care costs related to: | ||||||||||||
Current period | 3,693,730 | 2,647,083 | 5,434,443 | |||||||||
Prior period | (37,131 | ) | (62,757 | ) | (52,779 | ) | ||||||
Total medical care costs | 3,656,599 | 2,584,326 | 5,381,664 | |||||||||
Change in non-risk provider payables | (83,044 | ) | (10,888 | ) | 111,267 | |||||||
Payments for medical care costs related to: | ||||||||||||
Current period | 2,891,174 | 2,235,617 | 4,932,195 | |||||||||
Prior period | 427,986 | 366,864 | 385,479 | |||||||||
Total paid | 3,319,160 | 2,602,481 | 5,317,674 | |||||||||
Balances at end of period | $ | 924,182 | $ | 465,487 | $ | 669,787 | ||||||
Benefit from prior period as a percentage of: | ||||||||||||
Balance at beginning of period | 5.5 | % | 12.7 | % | 10.7 | % | ||||||
Premium revenue, trailing twelve months | 0.5 | % | 1.1 | % | 0.9 | % | ||||||
Medical care costs, trailing twelve months | 0.6 | % | 1.2 | % | 1.0 | % | ||||||
Claims Data: | ||||||||||||
Days in claims payable, fee for service | 46 | 38 | 43 | |||||||||
Number of members at end of period | 2,255,000 | 1,847,000 | 1,931,000 | |||||||||
Number of claims in inventory at end of period | 180,600 | 109,900 | 145,800 | |||||||||
Billed charges of claims in inventory at end of period | $ | 400,000 | $ | 200,400 | $ | 276,500 | ||||||
Claims in inventory per member at end of period | 0.08 | 0.06 | 0.08 | |||||||||
Billed charges of claims in inventory per member at end of period | $ | 177.38 | $ | 108.50 | $ | 143.19 | ||||||
Number of claims received during the period | 12,641,300 | 10,524,500 | 21,317,500 | |||||||||
Billed charges of claims received during the period | $ | 13,609,000 | $ | 10,477,900 | $ | 21,414,600 | ||||||