UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 7, 2006
MOLINA
HEALTHCARE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-31719
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13-4204626
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(State
of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification
Number)
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One Golden Shore Drive, Long Beach, California 90802
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (562) 435-3666
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02. Results
of Operations and Financial Condition.
On
November 7, 2006, Molina Healthcare, Inc. issued a press release announcing
its
financial results for the third quarter and nine months ended September 30,
2006. The full text of the press release is included as Exhibit 99.1 to this
report. The information contained in the websites cited in the press release
is
not part of this report.
The
information in this Form 8-K and the exhibit attached hereto shall not be
deemed
to be “filed” for purposes of Section 18 of the Securities Act of 1934 or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933
or the
Securities Act of 1934, except as expressly set forth by specific reference
in
such a filing.
Item
9.01. Financial
Statements and Exhibits.
(d)
Exhibits:
Exhibit
No.
Description
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99.1
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Press
release of Molina Healthcare, Inc. issued November 7, 2006, as
to
financial results for the third quarter and nine months ended September
30, 2006.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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MOLINA
HEALTHCARE, INC.
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Date:
November 7, 2006
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By: /s/
Mark L. Andrews
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Mark
L. Andrews
Chief
Legal Officer, General Counsel
and
Corporate Secretary
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EXHIBIT
INDEX
Exhibit
No.
Description
|
99.1
|
Press
release of Molina Healthcare, Inc. issued November 7, 2006, as
to
financial results for the third quarter and nine months ended September
30, 2006.
|
 |
News
Release
Contact:
Juan
José
Orellana
Investor
Relations
Molina
Healthcare, Inc.
562-435-3666,
ext. 111143
MOLINA
HEALTHCARE REPORTS
THIRD
QUARTER RESULTS
Long
Beach, California (November 7, 2006) — Molina Healthcare, Inc. (NYSE: MOH) today
announced its financial results for the third quarter and nine months ended
September 30, 2006.
Net
income
for the quarter ended September 30, 2006, increased 80% to $12.3 million,
or
$0.44 per diluted share, compared with $6.8 million, or $0.24 per diluted
share,
for the quarter ended September 30, 2005. Net income for the nine months
ended September 30, 2006, increased 100% to $34.1 million, or $1.21 per diluted
share, compared with $16.9 million, or $0.60 per diluted share, for the same
period in 2005.
Commenting
on the results, J. Mario Molina, M.D., president and chief executive officer
of
Molina Healthcare, Inc., said, “Our results for the third quarter reflect our
continued focus on the medical management initiatives we undertook in order
to
control medical costs without sacrificing the quality of health care provided
to
our members. Our Michigan, New Mexico, and Washington health plans delivered
strong financial performance in the quarter, while our California health
plan
continues to face challenges such as higher unit costs and limited premium
rates.”
Guidance
The
Company is maintaining the fiscal year 2006 guidance it had issued on August
1,
2006, for earnings per diluted share in the range of $1.60 - $1.65.
Financial
Results - Comparison of Quarters Ended September 30, 2006 and
2005
Premium
revenue
for the
third quarter of 2006 was $512.1 million, an increase of $86.2 million, or
20.2%, over premium revenue for the third quarter of 2005 of $425.9 million.
The
acquisition of CAPE Health Plan in Michigan (May 15, 2006) and start-up
operations in Indiana and Ohio were the primary drivers of the increase in
premium revenue. Membership growth was partially offset by declines in
membership in California and Michigan (excluding the CAPE
acquisition).
-MORE-
MOH
Announces Third Quarter Results
Page
2
November
7, 2006
Medical
care costs
as a
percentage of premium revenue (the medical care ratio) decreased to 84.1%
in the
third quarter of 2006 from 86.1% in the third quarter of 2005. Sequentially,
the
Company’s overall medical care ratio increased from 83.7% in the second quarter
of 2006. The year-over-year improvement in the Company’s medical care ratio was
the result of improved medical care ratios in Michigan, New Mexico, and
Washington, partially offset by higher medical care ratios in California
and
Indiana and the start-up of the Company’s Ohio health plan.
A
reduction in medical care costs was the primary driver of the stronger financial
performance in the Company’s Michigan, New Mexico, and Washington health plans.
All three of these health plans reported lower medical care ratios in both
the
quarter and the nine months ended September 30, 2006, when compared with
the
comparable periods in 2005. The Company believes that the improvement at
these
health plans is principally the result of recontracting efforts and improved
monitoring and management of medical utilization.
The
Company believes that the decline in the California health plan’s profitability
is the result of limited premium increases compounded by higher hospital
costs.
Utilization of medical services does not appear to be a significant contributor
to difficulties in the California market. The Company has taken a number
of
actions to improve performance in California, including the addition of new
senior staff and the renegotiation of certain provider contracts. The Company
is
also exploring ways to increase premium rates from the state.
The
medical care ratios in Ohio and Indiana were substantially higher than that
experienced historically by the Company as a whole. The Company believes
that
the higher medical care ratios in Ohio and Indiana are due to following
factors:
| · |
The
transition of members from fee-for-service to a managed care environment
requires that both members and providers be educated in the appropriate
practices of managed care, such as relying on primary care physicians
rather than on emergency rooms. Such broad-based educational efforts
require time for assimilation before they can result in changed patterns
of behavior and treatment.
|
| · |
The
transition of members into managed care may result in the identification
of previously unmet health care needs, which can create a temporary
spike
in health care costs.
|
| · |
The
Company’s Indiana plan, and to a lesser degree its Ohio plan, has
experienced higher than average pharmacy
costs.
|
Membership
at the Company’s Ohio health plan has grown dramatically since September 30,
2006, increasing to approximately 77,000 members at November 1, 2006. The
Company anticipates substantial additional growth in Ohio during 2007.
-MORE-
MOH
Announces Third Quarter Results
Page
3
November
7, 2006
As
previously disclosed, the Medicaid contract of the Company’s Indiana health plan
will expire on December 31, 2006. The Indiana plan has appealed the state’s
decision not to renew the contract. The Company does not believe the
discontinuation of this contract, in the event the appeal is unsuccessful,
will
have a material impact on its cash flows or results of operations.
The
Company’s days in claims payable were 54 days at both September 30, 2006 and
June 30, 2006. The Company’s days in claims payable at September 30, 2005,
were 52 days.
Salary,
general and administrative expenses
were
$60.5 million for the third quarter of 2006, representing 11.7% of total
revenue, as compared with $47.0 million, or 11.0% of total revenue, for the
third quarter of 2005.
Core
G&A (defined as SG&A expenses less premium taxes) increased to 8.6% of
total revenue in the third quarter of 2006 compared with 7.4% in the third
quarter of 2005. The increase in Core G&A was due to investments in
infrastructure to support the Company’s medical care cost control initiatives
and also its information technology initiatives, its expansion into Ohio
and
Texas, and the launch of its Medicare Advantage Special Needs Plans. The
Company’s adoption of SFAS No. 123R, Share-Based Payment,
effective
January 1, 2006, reduced earnings per diluted share by approximately $0.02
in
the third quarter of 2006.
Depreciation
and amortization expense
increased
by $1.5 million compared with the third quarter of 2005. Depreciation expense
increased by $0.8 million in the third quarter of 2006 due to investments
in
infrastructure. Amortization expense increased by $0.7 million in the third
quarter of 2006 due to the CAPE acquisition in Michigan.
Investment
income during
the
quarter totaled $5.4 million as compared with $2.7 million in the third quarter
of 2005, an increase of $2.7 million as a result of higher invested balances
and
higher rates of return.
Income
taxes were
recognized in the third quarter of 2006 based upon an effective tax rate
of
37.7% as compared with an effective tax rate of 33.9% in the third quarter
of
2005. The effective tax rate for the third quarter of 2005 was less than
the
38.0% effective rate anticipated by the Company due to an increase in that
portion of the Company’s net income earned by subsidiaries that are not subject
to state income tax, coupled with larger than anticipated economic development
credits in California.
Financial
Results - Comparison of Nine Months Ended September 30, 2006 and
2005
Premium
revenue
for the
nine months ended September 30, 2006, was $1,441.2 million, an increase of
$221.2 million, or 18.1%, over premium revenue for the nine months ended
September 30, 2005, of $1,220.0 million. Acquisitions in California (June
1,
2005) and Michigan (May 15, 2006) and the start-ups in Indiana and Ohio were
the
primary drivers of the increase in premium revenue. Membership growth was
partially offset by declines in membership in California and Michigan (excluding
acquisitions).
-MORE-
MOH
Announces Third Quarter Results
Page
4
November
7, 2006
The
medical care ratio decreased
to 84.4% in the nine months ended September 30, 2006, from 87.6% in the same
nine-month period in 2005, principally due to the factors discussed above.
Salary,
general and administrative expenses
were
$168.0 million for the nine months ended September 30, 2006, representing
11.5% of total revenue, as compared with $117.6 million, or 9.6% of total
revenue, for the nine months ended September 30, 2005.
Core
G&A increased to 8.5% of total revenue for the nine months ended September
30, 2006, compared with 6.7% in the same nine-month period of 2005. The increase
in Core G&A was due to the infrastructure improvements and product and
market expansions discussed above. The Company’s adoption of SFAS No. 123R,
Share-Based Payment,
effective
January 1, 2006, reduced earnings per diluted share by approximately $0.06
for
the nine months ended September 30, 2006.
Depreciation
and amortization expense
increased
by $4.4 million for the nine months ended September 30, 2006, compared with
the same period of 2005. Depreciation expense increased by $2.9 million in
2006
due to investments in infrastructure, principally at the Company’s corporate
offices. Amortization expense increased by $1.5 million in 2006 due to
acquisitions in California and Michigan.
Investment
income for
the
nine months ended September 30, 2006, was $14.3 million as compared with
$6.8
million for the same period in 2005, an increase of $7.5 million as a result
of
higher invested balances and higher rates of return.
Income
taxes were
recognized for the nine months ended September 30, 2006, based upon an effective
tax rate of 37.7% as compared with an effective tax rate of 36.4% for the
nine
months ended September 30, 2005.
Cash
Flow
Cash
provided by operating activities for the nine months ended September 30,
2006,
was $67.2 million. Net income and the timing of payments for medical claims
and
benefits payable were the primary sources of cash provided by operating
activities. Partially offsetting these increases was an increase in receivables
at the Company’s Utah plan. Cash provided by operating activities for the same
period in 2005 was $61.0 million.
At
September 30, 2006, the Company was not in compliance with a covenant in
its
credit agreement with Bank of America regarding its fixed charge coverage
ratio.
Effective as of November 6, 2006, the Company has entered into a second
amendment and waiver with respect to the credit agreement pursuant to which
the
Company’s non-compliance with the covenant at September 30, 2006, has been
waived, and the required ratio under the covenant has been amended on a
going-forward basis. At September 30, 2006, the Company owed $15.0 million
under
its $180 million credit facility.
-MORE-
MOH
Announces Third Quarter Results
Page
5
November
7, 2006
At
September 30, 2006, the Company had, on a consolidated basis, cash and
investments of approximately $428.7 million, and the ultimate parent had
cash
and investments of approximately $28.3 million.
Membership
The
following table details the Company’s ending membership by health plan at
September 30, 2006, June 30, 2006, and September 30, 2005:
|
Sept.
30,
|
June
30,
|
Sept.
30,
|
||||||||
|
2006
|
2006
|
2005
|
||||||||
|
California
|
302,000
|
307,000
|
333,000
|
|||||||
|
Indiana
|
54,000
|
37,000
|
21,000
|
|||||||
|
Michigan
|
227,000
|
232,000
|
145,000
|
|||||||
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New
Mexico
|
62,000
|
59,000
|
62,000
|
|||||||
|
Ohio
|
33,000
|
30,000
|
N/A(1)
|
|
||||||
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Texas
|
3,000
|
N/A(2)
|
|
N/A(2)
|
|
|||||
|
Utah
|
54,000
|
57,000
|
56,000
|
|||||||
|
Washington
|
280,000
|
286,000
|
287,000
|
|||||||
|
Total
|
1,015,000
|
1,008,000
|
904,000
|
|||||||
(1)
The
Company’s Ohio plan commenced operations in December 2005.
(2)
The
Company’s Texas plan commenced operations in September 2006.
The
following table details member months (defined as the aggregation of each
month’s ending membership for the period) by health plan for the periods
indicated:
|
Quarter
Ended
|
Nine
Months Ended
|
|||||||||||||||
|
Sept.
30,
|
June
30,
|
Sept.
30,
|
Sept.
30,
|
Sept.
30,
|
||||||||||||
|
2006
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
|
California
|
911,000
|
927,000
|
1,006,000
|
2,785,000
|
2,598,000
|
|||||||||||
|
Indiana
|
150,000
|
99,000
|
59,000
|
328,000
|
79,000
|
|||||||||||
|
Michigan
|
681,000
|
565,000
|
441,000
|
1,677,000
|
1,375,000
|
|||||||||||
|
New
Mexico
|
181,000
|
176,000
|
183,000
|
535,000
|
553,000
|
|||||||||||
|
Ohio
|
95,000
|
86,000
|
N/A(1)
|
|
229,000
|
N/A(1)
|
|
|||||||||
|
Texas
|
3,000
|
N/A(2)
|
|
N/A(2)
|
|
3,000
|
N/A(2)
|
|
||||||||
|
Utah
|
167,000
|
179,000
|
164,000
|
527,000
|
492,000
|
|||||||||||
|
Washington
|
846,000
|
858,000
|
856,000
|
2,572,000
|
2,521,000
|
|||||||||||
|
Total
|
3,034,000
|
2,890,000
|
2,709,000
|
8,656,000
|
7,618,000
|
|||||||||||
(1)
The
Company’s Ohio plan commenced operations in December 2005.
(2)
The
Company’s Texas plan commenced operations in September 2006.
-MORE-
MOH
Announces Third Quarter Results
Page
6
November
7, 2006
Conference
Call
The
live
broadcast of Molina Healthcare’s earnings conference call will begin at 5:00
p.m. Eastern Time, November 7, 2006. The telephone number for this interactive
conference call is 212-346-6560. A 30-day online replay will be available
beginning approximately one hour following the conclusion of the live broadcast.
A link to the call can be found on the Company’s website at www.molinahealthcare.com
or at
www.earnings.com.
Molina
Healthcare, Inc. is a multi-state managed care organization that arranges
for
the delivery of healthcare services to persons eligible for Medicaid and other
government-sponsored programs for low-income families and individuals. Molina
Healthcare, Inc. currently operates health plans in California, Indiana,
Michigan, New Mexico, Ohio, Texas, Utah, and Washington. More information
about
Molina Healthcare, Inc. can be obtained at www.molinahealthcare.com.
Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995:
This press release contains “forward-looking statements” identified by words
such as “will,” “expects,” “believes,” “anticipates,” “plans,” “projects,”
“estimates,” “intends,” and similar words and expressions. In addition, any
statements that refer to earnings guidance, expectations, projections, or
their
underlying assumptions, or other characterizations of future events or
circumstances, are forward-looking statements. All of the Company’s
forward-looking statements are based on current expectations and assumptions
that are subject to numerous known and unknown risks, uncertainties, and
other
factors that could cause actual results to differ materially. Such factors
include, without limitation, risks related to: the continuation of the
improvement in the Company’s medical care cost trends; the
Company’s ability to accurately identify medical care cost issues and to address
them through its medical care cost control initiatives; the Company’s ability to
accurately estimate incurred but not reported medical costs; high dollar
claims
related to catastrophic illness; slower growth in enrollment than projected
in
the Company’s Ohio health plan, its failure to be re-selected as a provider for
Ohio’s Central or Southwest regions or to enter into new Medicaid ABD contracts,
or its inability to reduce its medical care ratio within a reasonable period;
potential
reductions in funding for Medicaid and other government-sponsored healthcare
programs; costs associated with the non-renewal of the Medicaid contract
of the
Company’s Indiana health plan; the successful renewal and continuation of the
government contracts of the Company’s health plans; the favorable resolution of
pending litigation or arbitration; the adequacy of contractual rates and
premiums paid to the Company’s health plans and the implementation of
appropriate rate increases; the ability to enter into more favorable hospital
or
provider contracts; the Company’s ability to successfully integrate its
completed acquisitions; the availability of adequate financing to fund and/or
capitalize the Company’s acquisitions and start-up activities; membership
eligibility processes and methodologies, including citizenship recertification,
and the successful maintenance of member enrollment levels; unexpected changes
in member utilization patterns, healthcare practices, or healthcare
technologies; changes in federal or state laws or regulations or in their
interpretation; failure to maintain effective and efficient information systems
and claims processing technology; epidemics; and other risks and uncertainties
as detailed in the
Company’s reports and filings with the Securities and Exchange Commission and
available on its website at www.sec.gov.
All
forward-looking statements in this release represent the Company’s judgment as
of November 7, 2006. The Company disclaims any obligation to update any
forward-looking statement to conform the statement to actual results or changes
in the Company’s expectations.
-MORE-
MOH
Announces Third Quarter Results
Page
7
November
7, 2006
|
MOLINA
HEALTHCARE, INC.
|
|||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|||||||||||||
|
(Dollars
in thousands, except for per share data)
|
|||||||||||||
|
(Unaudited)
|
|||||||||||||
|
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||
|
|
September
30,
|
September
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenue:
|
|||||||||||||
|
Premium
revenue
|
$
|
512,080
|
$
|
425,943
|
$
|
1,441,197
|
$
|
1,220,045
|
|||||
|
Investment
income
|
5,385
|
2,668
|
14,278
|
6,792
|
|||||||||
|
Total
revenue
|
517,465
|
428,611
|
1,455,475
|
1,226,837
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Medical
care costs:
|
|||||||||||||
|
Medical
services
|
95,961
|
70,677
|
256,839
|
201,948
|
|||||||||
|
Hospital
and specialty services
|
284,728
|
255,120
|
815,287
|
740,668
|
|||||||||
|
Pharmacy
|
50,181
|
40,815
|
143,706
|
126,600
|
|||||||||
|
Total
medical care costs
|
430,870
|
366,612
|
1,215,832
|
1,069,216
|
|||||||||
|
Salary,
general and administrative expenses
|
60,504
|
47,005
|
168,025
|
117,611
|
|||||||||
|
Loss
contract charge (1)
|
—
|
—
|
—
|
939
|
|||||||||
|
Depreciation
and amortization
|
5,633
|
4,113
|
15,265
|
10,869
|
|||||||||
|
Total
expenses
|
497,007
|
417,730
|
1,399,122
|
1,198,635
|
|||||||||
|
Operating
income
|
20,458
|
10,881
|
56,353
|
28,202
|
|||||||||
|
Other
expense:
|
|||||||||||||
|
Interest
expense
|
(645
|
)
|
(581
|
)
|
(1,636
|
)
|
(1,288
|
)
|
|||||
|
Other,
net (2)
|
—
|
—
|
—
|
(400
|
)
|
||||||||
|
Total
other expense
|
(645
|
)
|
(581
|
)
|
(1,636
|
)
|
(1,688
|
)
|
|||||
|
Income
before income taxes
|
19,813
|
10,300
|
54,717
|
26,514
|
|||||||||
|
Income
tax expense
|
7,472
|
3,489
|
20,634
|
9,650
|
|||||||||
|
Net
income
|
$
|
12,341
|
$
|
6,811
|
$
|
34,083
|
$
|
16,864
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Basic
|
$
|
0.44
|
$
|
0.25
|
$
|
1.22
|
$
|
0.61
|
|||||
|
Diluted
|
$
|
0.44
|
$
|
0.24
|
$
|
1.21
|
$
|
0.60
|
|||||
|
Weighted
average number of common shares and potential dilutive common shares
outstanding
|
28,346,000
|
28,067,000
|
28,253,000
|
28,010,000
|
|||||||||
|
Operating
Statistics:
|
|||||||||||||
|
Medical
care ratio (3)
|
84.1
|
%
|
86.1
|
%
|
84.4
|
%
|
87.6
|
%
|
|||||
|
Salary,
general and administrative expense ratio (4), excluding premium
taxes
|
8.6
|
%
|
7.4
|
%
|
8.5
|
%
|
6.7
|
%
|
|||||
|
Premium
taxes included in salary, general and administrative
expenses
|
3.1
|
%
|
3.6
|
%
|
3.0
|
%
|
2.9
|
%
|
|||||
|
Total
salary, general and administrative expense ratio
|
11.7
|
%
|
11.0
|
%
|
11.5
|
%
|
9.6
|
%
|
|||||
|
Members
(5)
|
1,015,000
|
904,000
|
|||||||||||
|
Days
in claims payable
|
54
|
52
|
|||||||||||
(1) Represents
a charge related to a transition services agreement entered into in connection
with the transfer of certain commercial members to another health plan
in August
2004.
(2) Represents
a charge of $0.4 million related to the write-off of costs associated with
a
registration statement filed during the second quarter of 2005.
(3) Medical
care ratio represents medical care costs as a percentage of premium revenue.
(4) Salary,
general and administrative expense ratio represents such expenses as a
percentage of total revenue.
(5) Number
of
members at end of period.
-MORE-
MOH
Announces Third Quarter Results
Page
8
November
7, 2006
|
MOLINA
HEALTHCARE, INC.
|
|||||||
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||||
|
(Dollars
in thousands, except per share data)
|
|||||||
|
Sept.
30,
|
|
|
Dec.
31,
|
|
|||
|
|
|
|
2006
|
|
|
2005
|
|
|
(Unaudited)
|
|||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
337,084
|
$
|
249,203
|
|||
|
Investments
|
91,659
|
103,437
|
|||||
|
Receivables
|
84,540
|
70,532
|
|||||
|
Income
tax receivable
|
6,037
|
3,014
|
|||||
|
Deferred
income taxes
|
2,073
|
2,339
|
|||||
|
Prepaid
expenses and other current assets
|
8,564
|
10,321
|
|||||
|
Total
current assets
|
529,957
|
438,846
|
|||||
|
Property
and equipment, net
|
37,158
|
31,794
|
|||||
|
Goodwill
and intangible assets, net
|
146,953
|
124,914
|
|||||
|
Restricted
investments
|
19,980
|
18,242
|
|||||
|
Receivable
for ceded life and annuity contracts
|
34,987
|
38,113
|
|||||
|
Other
assets
|
8,539
|
8,018
|
|||||
|
Total
assets
|
$
|
777,574
|
$
|
659,927
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Medical
claims and benefits payable
|
$
|
256,927
|
$
|
217,354
|
|||
|
Deferred
revenue
|
12,472
|
803
|
|||||
|
Accounts
payable and accrued liabilities
|
40,297
|
31,457
|
|||||
|
Total
current liabilities
|
309,696
|
249,614
|
|||||
|
Long-term
debt
|
15,000
|
—
|
|||||
|
Deferred
income taxes
|
6,705
|
4,796
|
|||||
|
Liability
for ceded life and annuity contracts
|
34,987
|
38,113
|
|||||
|
Other
long-term liabilities
|
4,596
|
4,554
|
|||||
|
Total
liabilities
|
370,984
|
297,077
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Common
stock, $0.001 par value; 80,000,000 shares authorized; issued
and
outstanding: 28,070,646 shares at September 30, 2006, and 27,792,360
shares at December 31, 2005
|
28
|
28
|
|||||
|
Preferred
stock, $0.001 par value; 20,000,000 shares authorized, no shares
issued
and outstanding
|
—
|
—
|
|||||
|
Additional
paid-in capital
|
172,112
|
162,693
|
|||||
|
Accumulated
other comprehensive loss
|
(391
|
)
|
(629
|
) | |||
|
Retained
earnings
|
255,231
|
221,148
|
|||||
|
Treasury
stock (1,201,174 shares, at cost)
|
(20,390
|
)
|
(20,390
|
) | |||
|
Total
stockholders’ equity
|
406,590
|
362,850
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
777,574
|
$
|
659,927
|
|||
-MORE-
MOH
Announces Third Quarter Results
Page
9
November
7, 2006
|
MOLINA
HEALTHCARE, INC.
|
|||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
|
(Dollars
in thousands)
|
|||||||
|
(Unaudited)
|
|||||||
|
Nine
Months Ended
|
|||||||
|
September
30,
|
|||||||
|
2006
|
2005
|
||||||
|
Operating
activities:
|
|||||||
|
Net
income
|
$
|
34,083
|
$
|
16,864
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
15,265
|
10,869
|
|||||
|
Amortization
of capitalized credit facility fees
|
646
|
519
|
|||||
|
Deferred
income taxes
|
(2,510
|
)
|
(645
|
)
|
|||
|
Stock-based
compensation
|
4,331
|
875
|
|||||
|
Changes
in operating assets and liabilities:
|
|||||||
|
Receivables
|
(13,099
|
)
|
1,885
|
||||
|
Prepaid
expenses and other current assets
|
2,068
|
(1,361
|
)
|
||||
|
Medical
claims and benefits payable
|
17,036
|
39,104
|
|||||
|
Accounts
payable and accrued liabilities
|
7,411
|
6,385
|
|||||
|
Income
taxes
|
1,955
|
(13,499
|
)
|
||||
|
Net
cash provided by operating activities
|
67,186
|
60,996
|
|||||
|
Investing
activities:
|
|||||||
|
Purchases
of equipment
|
(13,285
|
)
|
(9,808
|
)
|
|||
|
Purchases
of investments
|
(103,702
|
)
|
(55,273
|
)
|
|||
|
Sales
and maturities of investments
|
115,866
|
33,720
|
|||||
|
Net
cash acquired (paid) in purchase transactions
|
5,820
|
(32,288
|
)
|
||||
|
Increase
in restricted cash
|
(738
|
)
|
(539
|
)
|
|||
|
Increase
in other long-term liabilities
|
42
|
496
|
|||||
|
Increase
in other assets
|
(1,218
|
)
|
(4,843
|
)
|
|||
|
Net
cash provided by (used in) investing activities
|
2,785
|
(68,535
|
)
|
||||
|
Financing
activities:
|
|||||||
|
Borrowing
under credit facility
|
20,000
|
3,100
|
|||||
|
Principal
payments on credit facility, capital lease obligations
and mortgage
note
|
(5,000
|
)
|
(3,227
|
)
|
|||
|
Tax
benefit from exercise of employee stock options recorded
as additional
paid-in capital
|
1,094
|
1,674
|
|||||
|
Proceeds
from exercise of stock options and employee stock
purchases
|
1,816
|
1,414
|
|||||
|
Net
cash provided by financing activities
|
17,910
|
2,961
|
|||||
|
Net
increase (decrease) in cash and cash equivalents
|
87,881
|
(4,578
|
)
|
||||
|
Cash
and cash equivalents at beginning of period
|
249,203
|
228,071
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
337,084
|
$
|
223,493
|
|||
-MORE-
MOH
Announces Third Quarter Results
Page
10
November
7, 2006
|
MOLINA
HEALTHCARE, INC.
|
|||||||
|
CHANGE
IN MEDICAL CLAIMS AND BENEFITS PAYABLE
|
|||||||
|
(Dollars
in thousands)
|
|||||||
|
(Unaudited)
|
|||||||
|
The
following table shows the components of the change
in medical claims and
benefits payable for the nine months ended September
30, 2006 and
2005:
|
|||||||
|
Nine
Months Ended
|
|||||||
|
September
30,
|
|||||||
|
2006
|
2005
|
||||||
|
Balances
at beginning of period
|
$
|
217,354
|
$
|
160,210
|
|||
|
Medical
claims and benefits payable from business acquired
during the
period
|
22,536
|
-
|
|||||
|
Components
of medical care costs related to:
|
|||||||
|
Current
year
|
1,254,174
|
1,071,500
|
|||||
|
Prior
years
|
(38,342
|
)
|
(2,284
|
)
|
|||
|
Total
medical care costs
|
1,215,832
|
1,069,216
|
|||||
|
Payments
for medical care costs related to:
|
|||||||
|
Current
year
|
1,017,923
|
880,713
|
|||||
|
Prior
years
|
180,872
|
149,399
|
|||||
|
Total
paid
|
1,198,795
|
1,030,112
|
|||||
|
Balances
at end of period
|
$
|
256,927
|
$
|
199,314
|
|||
The
Company’s claims liability includes an allowance for adverse claims
development
based on historical experience and other factors including,
but not limited to,
variation 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. Accordingly,
any benefit
recognized in medical care costs resulting from favorable
development of an
estimated liability at the start of the period (captured
as a component of
“medical
care costs related to prior years”)
may be
offset by the addition of an allowance for adverse claims
development when
estimating the liability at the end of the period (captured
as a component of
“medical
care costs related to current year”).
-END-