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): May 1, 2007
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
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
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|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
2.02. Results
of Operations and Financial Condition.
On
May 1,
2007, Molina Healthcare, Inc. issued a press release announcing its financial
results for the first quarter ended March 31, 2007. 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 Exchange 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 Exchange Act of 1934, except as expressly set forth by specific
reference in such a filing.
Item
9.01. Financial
Statements and Exhibits.
(d)
Exhibits:
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Exhibit
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No.
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Description
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99.1
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Press
release of Molina Healthcare, Inc. issued May 1, 2007, as to financial
results for the first quarter ended March 31,
2007.
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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:
May 1, 2007
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By: /s/
Mark L. Andrews
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|||
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Mark
L. Andrews
Chief
Legal Officer, General Counsel,
and
Corporate Secretary
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EXHIBIT
INDEX
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Exhibit
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|
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No.
|
Description
|
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99.1
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Press
release of Molina Healthcare, Inc. issued May 1, 2007, as to financial
results for the first quarter ended March 31,
2007.
|
Exhibit
99.1
News Release
Contact:
Juan
José
Orellana
Investor
Relations
Molina
Healthcare, Inc.
562-435-3666,
ext. 111143
MOLINA
HEALTHCARE REPORTS
FIRST
QUARTER 2007 RESULTS
Long
Beach, California (May 1, 2007) - Molina Healthcare, Inc. (NYSE: MOH) today
announced its financial results for the quarter ended March 31,
2007.
Net
income
for the quarter increased to $9.6 million, or $0.34 per diluted share, compared
with net income of $8.6 million, or $0.31 per diluted share, for the quarter
ended March 31, 2006. The impact of the Company’s Indiana operations, where all
members were transferred to other health plans effective January 1, 2007, was
immaterial on first quarter results for both 2007 and 2006.
Commenting
on the results, J. Mario Molina, M.D., president and chief executive officer
of
Molina Healthcare, Inc., said, “The year is proceeding as we expected. We
believe we are off to a good start. Excluding Indiana, our overall enrollment
increased during the quarter, and our initiatives to improve the California
health plan’s performance are gaining traction. While the medical costs in our
Ohio and Texas start-up operations are high as anticipated, we are pleased
by the strong results of our Washington health plan in the
quarter.”
Guidance
The
Company confirms the guidance it had issued on January 18, 2007, for earnings
per diluted share for fiscal year 2007 in the range of $1.75 to
$1.90.
-more-
MOH
Announces First Quarter Results
Page
2
May
1,
2007
Financial
Results - Comparison of Quarters Ended March 31, 2007 and
2006
Premium
revenue
for the
first quarter of 2007 was $556.2 million, an increase of $106.9 million, or
23.8%, over premium revenue for the first quarter of 2006 of $449.3 million.
The
increase in premium revenue in the first quarter of 2007 was driven by increased
membership in the Company’s Ohio and Texas start-up health plans and by the
acquisition of Cape Health Plan in Michigan effective May 15, 2006. The Ohio
health plan contributed $74.9 million in premium revenue in the first quarter
of
2007, an increase of $64.8 million from a year ago. The Texas health plan,
which
commenced operations in September 2006, contributed $14.5 million in premium
revenue in the first quarter of 2007. The premium revenue from the Company’s
Michigan health plan increased $46.1 million due primarily to the acquisition
of
Cape Health Plan. The Indiana health plan, where the Company ceased serving
members effective January 1, 2007, contributed no premium revenue in the first
quarter of 2007 and $13.6 million in premium revenue in the first quarter of
2006.
Medical
care costs
as a
percentage of premium revenue (the medical care ratio) increased to 85.7% in
the
first quarter of 2007 from 85.3% in the first quarter of 2006. Sequentially,
the
Company’s overall medical care ratio increased from 85.1% in the fourth quarter
of 2006, an increase that was consistent with both the Company’s previously
disclosed expectations and the seasonal fluctuations in medical costs it has
experienced in the past.
The
Company has previously stated its expectation that the medical care ratios
of
its Ohio and Texas start-up health plans would be substantially higher than
those historically experienced by the Company as a whole. The medical care
ratios reported by the Ohio and Texas health plans for the first quarter of
2007
were 92.4% and 92.3%, respectively. Medical care ratios for both Ohio and Texas
in the first quarter of 2007 were consistent with the Company’s expectations.
The Company continues to believe that the medical care ratio for the Ohio health
plan will decrease as a result of growth in membership in lower cost regions
of
that state and that the medical care ratio in Texas will improve as members
are
more fully transitioned into a managed care environment.
Excluding
the Company’s Ohio, Texas, and Indiana health plans, the Company’s medical care
ratio of 84.4% during the first quarter of 2007 represents a decrease from
the
medical care ratio of 85.1% in the first quarter of 2006, and a slight increase
from the sequential medical care ratio of 84.1% in the fourth quarter of
2006.
The
Company’s health plans in California and Washington reported lower medical care
ratios in the first quarter of 2007 when compared with the same period in 2006,
while the Company’s Michigan health plan reported an increase in its medical
care ratio.
The
California health plan’s medical care ratio declined to 82.1% in the first
quarter of 2007 compared with 83.5% in the first quarter of 2006 and 89.3%
in
the fourth quarter of 2006. The California health plan benefited from a modest
rates increase of approximately 2.5% between the fourth quarter of 2006 and
the
first quarter of 2007, and lower medical costs resulting from efforts to
renegotiate provider contracts that were undertaken in the second half of 2006.
The Company had previously reported its expectation that per member per month
revenues in California would increase by approximately 1.75% in
2007.
The
Washington health plan reported a decrease in its medical care ratio to 81.0%
in
the first quarter of 2007 compared with 85.3% in the first quarter of 2006,
principally due to lower hospital and specialty costs. The Washington health
plan’s medical care ratio increased from 79.5% in the fourth quarter of 2006, a
pattern consistent with past seasonal fluctuations.
The
Michigan health plan reported an increase in its medical care ratio to 84.5%
for
the first quarter of 2007 compared with 77.1% for the first quarter of 2006
and
78.7% for the fourth quarter of 2006. The higher medical care ratio is due
to
the inclusion of Cape Health Plan membership in the first quarter results and
higher primary care capitation rates.
-more-
MOH
Announces First Quarter Results
Page
3
May
1,
2007
The Company’s days in claims payable were 54 days at March 31, 2007, 57 days at December 31, 2006, and 57 days at March 31, 2006. The Company had previously disclosed its expectation that days in claims payable would decline as it began paying claims associated with the Ohio and Texas start-up health plans that previously had been reported as part of the Company’s incurred but not reported claims liability. Additionally, the run out of the Indiana health plan’s claims liability and a shift to capitation contracts (which constituted 18.5% of medical costs in the first quarter of 2007 and 14.6% of medical costs in the first quarter of 2006) also lowered days in claim payable.
General
and administrative expenses
were
$63.4 million for the first quarter of 2007 as compared with $51.2 million
for
the first quarter of 2006, representing 11.3% of total revenue for both
periods.
Core
G&A expenses
(defined
as G&A expenses less premium taxes) increased $5.9 million year-over-year,
but decreased as a percentage of revenue to 7.9% from 8.5% in the first quarter
of 2006. The decline in Core G&A as a percentage of total revenue is
consistent with the Company’s previously stated expectation that Core G&A
would be flat in 2007 on a per member per month basis but would decline as
a
percentage of revenue.
Depreciation
and amortization expense
increased
by $1.7 million compared with the first quarter of 2006. Depreciation expense
increased by $0.7 million in the first quarter of 2007 due to investments in
infrastructure. Amortization expense increased by $1.0 million in the first
quarter of 2007, primarily due to the Cape Health Plan acquisition in
Michigan.
Investment
income during
the
first quarter of 2007 totaled $6.7 million as compared with $4.1 million in
the
first quarter of 2006, an increase of $2.6 million as a result of higher
invested balances and higher rates of return.
Income
taxes were
recognized in the first quarter of 2007 based upon an effective tax rate of
38.0% as compared with an effective tax rate of 37.5% in the first quarter
of
2006.
The
increase in the effective tax rate in the first quarter of 2007 was due to
an
increase in that portion of the Company’s net income earned by subsidiaries that
are subject to state income tax, coupled with the dilution of economic
development credits in California due to a larger pretax income in the first
quarter of 2007.
Cash
Flow
Cash
provided by operating activities for the quarter ended March 31, 2007, was
$35.9
million. For the same period in 2006, cash provided by operating activities
was
$41.0 million.
Net
income, increased deferred revenue at the Company’s Ohio health plan, and the
timing of payments for accrued liabilities were the primary sources of cash
provided by operating activities. Medical claims liabilities of the Indiana
health plan, which had no membership effective January 1, 2007, declined by
$15.9 million between December 31, 2006 and March 31, 2007. Absent the Indiana
claims run-out, medical claims liabilities increased by $6.1 million during
the
quarter.
During
the
first quarter of 2007, the Company repaid $15.0 million owed under its $180
million credit facility. At March 31, 2007, the Company owed $30.0 million
under
the facility.
-more-
MOH
Announces First Quarter Results
Page
4
May
1,
2007
On
a
consolidated basis, at March 31, 2007, the Company had cash and investments
of
approximately $503.1 million. The parent company had cash and investments of
approximately $21.0 million.
Membership
The
following table details the Company’s ending membership by health plan at March
31, 2007, December 31, 2006, and March 31, 2006:
|
March
31,
|
|
Dec.
31,
|
|
March
31,
|
|
|||||
|
|
|
2007
|
|
2006
|
|
2006
|
||||
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California
|
294,000
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300,000
|
312,000
|
|||||||
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Michigan
|
221,000
|
228,000
|
143,000
|
|||||||
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New
Mexico
|
65,000
|
65,000
|
59,000
|
|||||||
|
Ohio
|
127,000
|
76,000
|
27,000
|
|||||||
|
Texas
|
31,000
|
19,000
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N/A
|
(2)
|
||||||
|
Utah
|
49,000
|
52,000
|
61,000
|
|||||||
|
Washington
|
287,000
|
281,000
|
288,000
|
|||||||
|
Subtotal
|
1,074,000
|
1,021,000
|
890,000
|
|||||||
|
Indiana
|
N/A
|
(1)
|
56,000
|
28,000
|
||||||
|
Total
|
1,074,000
|
1,077,000
|
918,000
|
|||||||
| (1) |
The
Company’s Indiana health plan ceased serving members effective January 1,
2007.
|
| (2) |
The
Company’s Texas health 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
|
||||||||||
|
March
31,
|
|
Dec.
31,
|
|
March
31,
|
|
|||||
|
|
|
2007
|
|
2006
|
|
2006
|
||||
|
California
|
886,000
|
909,000
|
947,000
|
|||||||
|
Michigan
|
669,000
|
688,000
|
431,000
|
|||||||
|
New
Mexico
|
192,000
|
191,000
|
178,000
|
|||||||
|
Ohio
|
340,000
|
213,000
|
48,000
|
|||||||
|
Texas
|
66,000
|
31,000
|
N/A
|
(2)
|
||||||
|
Utah
|
151,000
|
162,000
|
181,000
|
|||||||
|
Washington
|
856,000
|
838,000
|
868,000
|
|||||||
|
Subtotal
|
3,160,000
|
3,032,000
|
2,653,000
|
|||||||
|
Indiana
|
N/A
|
(1)
|
171,000
|
79,000
|
||||||
|
Total
|
3,160,000
|
3,203,000
|
2,732,000
|
|||||||
| (1) |
The
Company’s Indiana health plan ceased serving members effective January 1,
2007.
|
| (2) |
The
Company’s Texas health plan commenced operations in September
2006.
|
-more-
MOH
Announces First Quarter Results
Page
5
May
1,
2007
Conference
Call
The
Company’s management will host a conference call and webcast to discuss its
first quarter results at 5:00 p.m. Eastern Time on Tuesday, May 1, 2007. The
telephone number for this interactive conference call is 212-676-5392, and
the
live webcast of the call can be accessed on the Company’s website at
www.molinahealthcare.com,
or at
www.earnings.com.
A 30-day
online replay will be available beginning approximately one hour following
the
conclusion of the call and webcast.
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, 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”or”expectations,” “believes,” “anticipates,” “plans,”
“projects,” “estimates,” “intends,” and similar words and expressions. In
addition, any statements that explicitly or impliedly refer to earnings
guidance, expectations, projections, or their underlying assumptions, or other
characterizations of future events or circumstances, are forward-looking
statements. All of our 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 achievement of a decrease in the medical care ratio of our start-up health
plans in Ohio and Texas; the achievement of projected savings from a decrease
in
the medical care ratio of our California health plan; an increase in enrollment
in our Ohio and Texas health plans and in our dual eligible population
consistent with our expectations; our ability to reduce administrative costs
in
the event enrollment or revenue is lower than expected; higher than expected
costs associated with the addition of new members in Ohio or Texas or dual
eligible members and risks related to our lack of experience with such members;
our ability to accurately estimate incurred but not reported medical costs;
the
securing of premium rate increases consistent with our expectations; costs
associated with the non-renewal and run-out of the Medicaid contract of our
Indiana health plan; the successful renewal and continuation of the government
contracts of our health plans; the availability of adequate financing to fund
and/or capitalize our acquisitions and start-up activities; membership
eligibility processes and methodologies; unexpected changes in member
utilization patterns, healthcare practices, or healthcare technologies;
high
dollar claims related to catastrophic illness; changes
in federal or state laws or regulations or in their interpretation; failure
to
maintain effective and efficient information systems and claims processing
technology; the favorable resolution of pending litigation or arbitration;
funding decreases in the Medicaid or Medicare programs; competition; epidemics
such as the avian flu; and other risks and uncertainties as detailed in our
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 our judgment as of
May 1, 2007. We disclaim any obligation to update any forward-looking
statement to conform the statement to actual results or changes in our
expectations.
-more-
MOH
Announces First Quarter Results
Page
6
May
1,
2007
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Dollars
in thousands, except for per share data)
(Unaudited)
|
Three
Months Ended
|
||||||||||
|
March
31,
|
||||||||||
|
2007
|
|
2006
|
||||||||
|
Revenue:
|
||||||||||
|
Premium
revenue
|
$
|
556,235
|
$
|
449,294
|
||||||
|
Investment
income
|
6,668
|
4,082
|
||||||||
|
Total
operating revenue
|
562,903
|
453,376
|
||||||||
|
Expenses:
|
||||||||||
|
Medical
care costs:
|
||||||||||
|
Medical
services
|
110,891
|
74,858
|
||||||||
|
Hospital
and specialty services
|
308,142
|
262,870
|
||||||||
|
Pharmacy
|
57,444
|
45,519
|
||||||||
|
Total
medical care costs
|
476,477
|
383,247
|
||||||||
|
General
and administrative expenses
|
63,388
|
51,213
|
||||||||
|
Depreciation
and amortization
|
6,443
|
4,762
|
||||||||
|
Total
expenses
|
546,308
|
439,222
|
||||||||
|
Operating
income
|
16,595
|
14,154
|
||||||||
|
Other
expense:
|
||||||||||
|
Interest
expense
|
(1,125
|
)
|
(414
|
)
|
||||||
|
Total
other expense
|
(1,125
|
)
|
(414
|
)
|
||||||
|
Income
before income taxes
|
15,470
|
13,740
|
||||||||
|
Income
tax expense
|
5,878
|
5,150
|
||||||||
|
Net
income
|
$
|
9,592
|
$
|
8,590
|
||||||
|
Net
income per share:
|
||||||||||
|
Basic
|
$
|
0.34
|
$
|
0.31
|
||||||
|
Diluted
|
$
|
0.34
|
$
|
0.31
|
||||||
|
Weighted
average number of common shares and
|
||||||||||
|
potentially
dilutive common shares outstanding
|
28,275,000
|
28,141,000
|
||||||||
|
Operating
Statistics:
|
||||||||||
|
Medical
care ratio (1)
|
85.7
|
%
|
85.3
|
%
|
||||||
|
Salary,
general and administrative expense ratio (2),
excluding premium taxes
|
7.9
|
%
|
8.5
|
%
|
||||||
|
Premium
taxes included in salary, general and administrative
expenses
|
3.4
|
%
|
2.8
|
%
|
||||||
|
Total
salary, general and administrative expense ratio
|
11.3
|
%
|
11.3
|
%
|
||||||
|
(1)
|
Medical
care ratio represents medical care costs as a percentage of premium
revenue.
|
|
(2)
|
General
and administrative expense ratio represents such expenses as a
percentage
of total operating revenue
|
-more-
MOH
Announces First Quarter Results
Page
7
May
1,
2007
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Dollars
in thousands, except per share data)
|
March
31,
|
|
Dec.
31,
|
|
||||
|
|
|
2007
|
|
2006
|
|
||
|
|
|
(Unaudited)
|
|||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
419,967
|
$
|
403,650
|
|||
|
Investments
|
83,090
|
81,481
|
|||||
|
Receivables
|
107,993
|
110,835
|
|||||
|
Income
tax receivable
|
3,400
|
7,960
|
|||||
|
Deferred
income taxes
|
720
|
313
|
|||||
|
Prepaid
expenses and other current assets
|
11,512
|
9,263
|
|||||
|
Total
current assets
|
626,682
|
613,502
|
|||||
|
Property
and equipment, net
|
42,465
|
41,903
|
|||||
|
Goodwill
and intangible assets, net
|
139,877
|
143,139
|
|||||
|
Restricted
investments
|
23,354
|
20,154
|
|||||
|
Receivable
for ceded life and annuity contracts
|
32,138
|
32,923
|
|||||
|
Other
assets
|
12,521
|
12,854
|
|||||
|
Total
assets
|
$
|
877,037
|
$
|
864,475
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Medical
claims and benefits payable
|
$
|
280,188
|
$
|
290,048
|
|||
|
Deferred
revenue
|
35,339
|
18,120
|
|||||
|
Accounts
payable and accrued liabilities
|
55,538
|
46,725
|
|||||
|
Total
current liabilities
|
371,065
|
354,893
|
|||||
|
Long-term
debt
|
30,000
|
45,000
|
|||||
|
Deferred
income taxes
|
3,303
|
6,700
|
|||||
|
Liability
for ceded life and annuity contracts
|
32,138
|
32,923
|
|||||
|
Other
long-term liabilities
|
8,416
|
4,793
|
|||||
|
Total
liabilities
|
444,922
|
444,309
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Common
stock, $0.001 par value; 80,000,000 shares authorized;
|
|||||||
|
issued
and outstanding: 28,198,876 shares at March 31, 2007,
|
|||||||
|
and
28,119,026 shares at December 31, 2006
|
28
|
28
|
|||||
|
Preferred
stock, $0.001 par value; 20,000,000 shares authorized,
|
|||||||
|
no
shares issued and outstanding
|
—
|
—
|
|||||
|
Additional
paid-in capital
|
176,675
|
173,990
|
|||||
|
Accumulated
other comprehensive loss
|
(219
|
)
|
(337
|
)
|
|||
|
Retained
earnings
|
276,021
|
266,875
|
|||||
|
Treasury
stock (1,201,174 shares, at cost)
|
(20,390
|
)
|
(20,390
|
)
|
|||
|
Total
stockholders’ equity
|
432,115
|
420,166
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
877,037
|
$
|
864,475
|
|||
-more-
MOH
Announces First Quarter Results
Page
8
May
1,
2007
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars
in thousands)
(Unaudited)
|
Three
Months Ended
|
|||||||
|
March
31,
|
|||||||
|
2007
|
|
2006
|
|||||
|
Operating
activities:
|
|||||||
|
Net
income
|
$
|
9,592
|
$
|
8,590
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
6,443
|
4,762
|
|||||
|
Amortization
of capitalized credit facility fees
|
251
|
211
|
|||||
|
Deferred
income taxes
|
(2,999
|
)
|
(1,835
|
)
|
|||
|
Stock-based
compensation
|
1,867
|
1,227
|
|||||
|
Changes
in operating assets and liabilities:
|
|||||||
|
Receivables
|
2,842
|
(3,352
|
)
|
||||
|
Prepaid
expenses and other current assets
|
(2,249
|
)
|
706
|
||||
|
Medical
claims and benefits payable
|
(9,860
|
)
|
18,225
|
||||
|
Deferred
revenue
|
17,219
|
5,445
|
|||||
|
Accounts
payable and accrued liabilities
|
8,452
|
391
|
|||||
|
Income
taxes
|
4,346
|
6,602
|
|||||
|
Net
cash provided by operating activities
|
35,904
|
40,972
|
|||||
|
Investing
activities:
|
|||||||
|
Purchases
of property and equipment
|
(3,645
|
)
|
(3,663
|
)
|
|||
|
Purchases
of investments
|
(12,825
|
)
|
(34,015
|
)
|
|||
|
Sales
and maturities of investments
|
11,402
|
35,739
|
|||||
|
(Increase)
decrease in restricted cash
|
(3,200
|
)
|
37
|
||||
|
Increase
(decrease) in other long-term liabilities
|
3,177
|
(66
|
)
|
||||
|
Increase
in other assets
|
(314
|
)
|
(997
|
)
|
|||
|
Net
cash used in investing activities
|
(5,405
|
)
|
(2,965
|
)
|
|||
|
Financing
activities:
|
|||||||
|
Repayment
of amounts borrowed under credit facility
|
(15,000
|
)
|
—
|
||||
|
Tax
benefit from exercise of employee stock options
|
|||||||
|
recorded
as additional paid-in capital
|
428
|
467
|
|||||
|
Proceeds
from exercise of stock options and employee stock purchases
|
390
|
670
|
|||||
|
Net
cash (used in) provided by financing activities
|
(14,182
|
)
|
1,137
|
||||
|
Net
increase in cash and cash equivalents
|
16,317
|
39,144
|
|||||
|
Cash
and cash equivalents at beginning of period
|
403,650
|
249,203
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
419,967
|
$
|
288,347
|
|||
-more-
MOH
Announces First Quarter Results
Page
9
May
1,
2007
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 three months ended March 31, 2007 and
2006:
|
Three
Months Ended
|
|||||||
|
March
31,
|
|||||||
|
2007
|
|
2006
|
|||||
|
Balances
at beginning of period
|
$
|
290,048
|
$
|
217,354
|
|||
|
Components
of medical care costs related to:
|
|||||||
|
Current
year
|
511,279
|
407,847
|
|||||
|
Prior
years
|
(34,802
|
)
|
(24,600
|
)
|
|||
|
Total
medical care costs
|
476,477
|
383,247
|
|||||
|
Payments
for medical care costs related to:
|
|||||||
|
Current
year
|
293,106
|
218,890
|
|||||
|
Prior
years
|
193,231
|
146,132
|
|||||
|
Total
paid
|
486,337
|
365,022
|
|||||
|
Balances
at end of period
|
$
|
280,188
|
$
|
235,579
|
|||
|
Days
in claims payable
|
54
|
57
|
|||||
|
Number
of members at end of period
|
1,074,000
|
918,000
|
|||||
|
Number
of claims in inventory at end of period
|
271,000
|
288,000
|
|||||
|
Billed
charges of claims in inventory at end of period
|
$
|
263,000
|
$
|
276,000
|
|||
|
Claims
in inventory per member at end of period
|
0.25
|
0.31
|
|||||
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-