Document


 
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): April 30, 2018 (April 30, 2018)
______________
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-31719
13-4204626
(State of incorporation)
(Commission File Number)
(I.R.S. Employer Identification Number)
______________
200 Oceangate, Suite 100, 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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
 
¨
 





Item 2.02.    Results of Operations and Financial Condition.
On April 30, 2018, Molina Healthcare, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2018, and increases to the Company’s fiscal year 2018 guidance. The full text of the press release is included as Exhibit 99.1 to this report. The information contained in the website 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, as amended (the “Exchange Act”), 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, as amended, or the Exchange Act, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01.    Financial Statements and Exhibits.
(d)     Exhibits:
Exhibit No.
Description
99.1
Press release of Molina Healthcare, Inc., issued April 30, 2018, as to financial results for the first quarter ended March 31, 2018, and increases to the Company’s fiscal year 2018 guidance.







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.
 
 
MOLINA HEALTHCARE, INC.
 
 
 
Date:
April 30, 2018
By:
/s/ Jeff D. Barlow
 
 
 
Jeff D. Barlow
 
 
 
Chief Legal Officer and Secretary







EXHIBIT INDEX
Exhibit No.
Description
99.1




Exhibit

MOH Reports First Quarter 2018 Results
Page 1
April 30, 2018

https://cdn.kscope.io/323653ac0b94aefde13a1b80be1142e1-molinaa03a01a01a16.jpg


News Release

Contact:
Ryan Kubota
Investor Relations
562-435-3666, ext. 119057

MOLINA HEALTHCARE ANNOUNCES FIRST QUARTER 2018 RESULTS AND
INCREASES FISCAL YEAR 2018 GUIDANCE
Net income increases to $1.64 per diluted share from $1.37 in the first quarter of 2017.
First quarter results include a net benefit of $0.38 per diluted share for the net impact of the reconciliation of 2017 Marketplace cost sharing reduction (CSR) subsidies and other items not included in the Company’s preliminary 2018 guidance. First quarter 2017 results had included a benefit of $0.84 per diluted share from the termination fee for a proposed acquisition.
Premium revenue decreases 7.0% compared with the first quarter of 2017, as expected with the Company’s repositioning of Marketplace operations.
Medical care ratio decreases to 86.1% from 88.4% in the first quarter of 2017.
General and administrative expense ratio decreases to 7.6% from 8.9% in the first quarter of 2017.
2018 guidance increased by $1.00 per diluted share to a range of $4.00$4.50 net income per diluted share and $4.24$4.74 adjusted net income per diluted share.
Revised 2018 guidance includes the net benefit of $0.38 per diluted share for items noted above that were not included in the Company’s preliminary 2018 guidance and $0.62 per diluted share in improved performance against the Company’s original internal estimates for the full year of 2018.
Long Beach, California (April 30, 2018) - Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the first quarter of 2018 and provided its revised guidance for fiscal year 2018.
The financial results that we announced today reflect the progress we are making towards our goal of sustainable margin recovery,” said Joe Zubretsky, President and CEO. “First quarter results of $1.64 net income per diluted share are a significant improvement over 2017 and favorable to our expectations. Whether measured by key operating metrics, product line or health plan geography, we met or exceeded our expectations in most areas.”

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MOH Reports First Quarter 2018 Results
Page 2
April 30, 2018

First Quarter 2018 Highlights
 
Three Months Ended March 31,
 
2018
 
2017
 
(In millions, except per-share amounts)
Premium revenue
$
4,323

 
$
4,648

Operating income
$
222

 
$
82

Net income
$
107

 
$
77

Net income per diluted share
$
1.64

 
$
1.37

 
 
 
 
Diluted weighted average shares outstanding
65.2

 
56.2

 
 
 
 
Operating Statistics:
 
 
 
Medical care ratio (1)
86.1
%
 
88.4
%
G&A ratio (2)
7.6
%
 
8.9
%
Premium tax ratio (1)
2.3
%
 
2.3
%
Effective income tax expense rate
40.3
%
 
41.6
%
Net profit margin (2)
2.3
%
 
1.6
%
__________________
(1)
Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue.
(2)
G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue.
Summary of Significant Items Affecting Comparative First Quarter Financial Results
The table below summarizes the impact of certain items significant to the Company’s financial performance in the periods presented. The individual items presented below increase (decrease) income before income tax expense.
 
Three Months Ended March 31,
 
2018
 
2017
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
 
(In millions, except per diluted share amounts)
Reimbursement of Marketplace CSR subsidies, for 2017 dates of service
$
70

 
$
0.83

 
$

 
$

Restructuring costs
(25
)
 
(0.30
)
 

 

Loss on debt extinguishment
(10
)
 
(0.15
)
 

 

Fee received for terminated acquisition

 

 
75

 
0.84

 
$
35

 
$
0.38

 
$
75

 
$
0.84

________________________
(1)
Except for certain items that are not deductible for tax purposes, per diluted share amounts are generally calculated at statutory income tax rates of 22% and 37% for the first quarters of 2018 and 2017, respectively.


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MOH Reports First Quarter 2018 Results
Page 3
April 30, 2018

First Quarter of 2018 Compared With First Quarter of 2017
Net income for the first quarter of 2018 was $107 million, compared with net income of $77 million for the first quarter of 2017. Net income per diluted share was $1.64 for the first quarter of 2018 compared with $1.37 reported for the first quarter of 2017. Improved performance in the first quarter of 2018 resulted from improved medical and administrative cost efficiency.
Net income for the first quarter of 2018 included a net benefit of $35 million ($0.38 per diluted share) for items not included in the Company’s preliminary 2018 guidance. Net income for the first quarter of 2017 included a benefit of $75 million ($0.84 per diluted share) for the receipt of an acquisition termination fee.
Premium revenue decreased approximately 7% when compared with the first quarter of 2017. Lower premium revenue was driven by a decrease in Marketplace membership of over 50%, partially offset by Marketplace premium rate increases. As previously disclosed, the Company has increased premium rates and reduced its Marketplace presence effective January 1, 2018, as part of its overall program to improve profitability.
Overall, the medical care ratio decreased to 86.1%, from 88.4% in the first quarter of 2017. Excluding the benefit of the 2017 CSR reimbursement, the consolidated medical care ratio was 87.7% in the first quarter of 2018.
The medical care ratio for the Medicaid and Medicare programs combined decreased to 90.0%, from 91.0% in the first quarter of 2017. Improved performance at the Florida, Illinois, Ohio and South Carolina health plans, partially offset by a decline in performance at the Washington health plan, drove the decrease in the consolidated medical care ratio for Medicaid and Medicare combined. The 2017 CSR reimbursement had no impact on the medical care ratio for the Company’s Medicaid and Medicare programs.
The medical care ratio for the Company’s Marketplace operations was 50.6% for the first quarter of 2018. Excluding the impact of the 2017 Marketplace CSR adjustment noted below, the medical care ratio for Marketplace operations decreased to approximately 67%, from 75% in the first quarter of 2017. Improved profitability in Marketplace operations is primarily the result of premium increases implemented effective January 1, 2018.
The general and administrative (G&A) expense ratio decreased to 7.6%, from 8.9% in the first quarter of 2017. Excluding the impact of Marketplace broker commissions and exchange fees in both periods, the G&A ratio decreased to 6.8%, from 7.5% in the first quarter of 2017.
The Company recognized a benefit of approximately $70 million ($0.83 per diluted share) in reduced medical expense related to 2017 dates of service as a result of the federal government’s confirmation that the reconciliation of 2017 Marketplace CSR subsidies would be performed on an annual basis. In the fourth quarter of 2017, the Company had assumed a nine-month reconciliation of this item pending confirmation of the time period to which the 2017 reconciliation would be applied.
Approximately $25 million ($0.30 per diluted share) of restructuring costs were recognized in the first quarter, primarily relating to the write-off of prepaid and other assets in connection with the continuing re-design of core processes.
Approximately $10 million ($0.15 per diluted share) loss on debt extinguishment was recognized in the first quarter in connection with the issuance of 1.8 million common shares in exchange for $97 million principal amount of the Company’s 1.625% convertible senior notes.


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MOH Reports First Quarter 2018 Results
Page 4
April 30, 2018

2018 Revised Guidance
The following table summarizes 2018 Revised Guidance (1):
 
 
Revised
 
Preliminary
Premium revenue
 
~ $17.4B

 
~ $17.5B

Service revenue
 
~ $525M

 
~ $525M

Premium tax revenue
 
~ $425M

 
~ $410M

Health insurer fees reimbursed
 
~ $280M

 
~ $295M

Investment income and other revenue
 
~ $110M

 
~ $85M

Total revenue
 
~ $18.7B

 
~ $18.8B

Medical care costs
 
~$15.4B

 
~$15.6B

Medical care ratio (2)
 
88% - 89%

 
~ 89%

Cost of service revenue
 
~ $480M

 
~ $480M

General and administrative expenses
 
~ $1.4B

 
~ $1.4B

G&A ratio (3)
 
~ 7.4%

 
 ~ 7.3%

Premium tax expenses
 
~$425M

 
~$410M

Health insurer fees
 
~ $300M

 
~ $310M

Depreciation and amortization
 
~ $115M

 
~ $115M

Restructuring and separation costs
 
~ $25M

 

Interest expense and other income, net
 
~ $135M

 
~ $125M

Income before income taxes
 
$450M - $495M

 
$355M - $400M

Net income
 
$272M - $306M

 
$202M - $236M

EBITDA (4)
 
$724M - $768M

 
$632M - $676M

Effective tax rate
 
38% - 40%

 
41% - 43%

Net profit margin (3)
 
1.5% - 1.6%

 
1.1% - 1.3%

Diluted weighted average shares
 
~ 68.0M

 
~ 67.3M

Net income per share
 
$4.00 - $4.50

 
$3.00 - $3.50

Adjusted net income per share (4)
 
$4.24 - $4.74

 
$3.23 - $3.73

End-of-year Marketplace membership
 
356,000

 
303,000

End-of-year Non-Marketplace membership
 
3,674,000

 
3,738,000

__________________
(1)
All amounts are estimates; actual results may differ materially. See the Company’s risk factors as discussed in its 2017 Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.”
(2)
Medical care ratio represents medical care costs as a percentage of premium revenue.
(3)
G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue.
(4)
See reconciliation of non-GAAP financial measures at the end of this release.

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MOH Reports First Quarter 2018 Results
Page 5
April 30, 2018

Conference Call
Management will host a conference call and webcast to discuss Molina Healthcare’s first quarter 2018 results at 8:30 a.m. Eastern time on Monday, April 30, 2018. The number to call for the interactive teleconference is (877) 270-2148 and entering confirmation number 7249375. A telephonic replay of the conference call will be available through Friday, May 4, 2018, by dialing (877) 344-7529 and entering confirmation number 10118429. A live audio broadcast of this conference call will be available on Molina Healthcare’s website, 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 its locally operated health plans, Molina Healthcare served approximately 4.1 million members as of March 31, 2018. For more information about Molina Healthcare, please visit molinahealthcare.com.

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MOH Reports First Quarter 2018 Results
Page 6
April 30, 2018

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company’s 2018 revised guidance, as well as its plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the following:
the success of the Company’s profit improvement and maintenance initiatives, including the timing and amounts of the benefits realized, and administrative savings achieved;
the numerous political and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare;”
the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk transfer requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, and the adequacy of agreed rates;
subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment/risk transfer;
effective management of the Company’s medical costs;
the Company’s ability to predict with a reasonable degree of accuracy utilization rates, including utilization rates associated with seasonal flu patterns or other newly emergent diseases;
significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
the full reimbursement of the ACA health insurer fee, or HIF;
the success of the Company’s efforts to retain existing government contracts, including those in Florida, New Mexico, Puerto Rico, Texas, and Washington, including the success of any protest filings;
the Company’s ability to manage its operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of its care management initiatives;
the Company’s ability to consummate and realize benefits from acquisitions or divestitures;
the Company’s receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
the Company’s ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit sharing arrangements, and risk adjustment provisions and requirements;
the Company’s estimates of amounts owed for such cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions;
the Medicaid expansion cost corridors in California, New Mexico, and Washington, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and the Company’s ability to recognize revenue amounts associated therewith;
cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
the success of the Company’s health plan in Puerto Rico, including the resolution of the Puerto Rico debt crisis, payment of all amounts due under the Company’s Medicaid contract, the effect of the PROMESA law, the impact of Hurricane Maria and the Company’s efforts to better manage the health care costs of its Puerto Rico health plan;
the success and renewal of the Company’s duals demonstration programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas;
the accurate estimation of incurred but not reported or paid medical costs across the Company’s health plans;

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MOH Reports First Quarter 2018 Results
Page 7
April 30, 2018

efforts by states to recoup previously paid and recognized premium amounts;
complications, member confusion, or enrollment backlogs related to the annual renewal of Medicaid coverage;
government audits and reviews, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
changes with respect to the Company’s provider contracts and the loss of providers;
approval by state regulators of dividends and distributions by the Company’s health plan subsidiaries;
changes in funding under the Company’s contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
high dollar claims related to catastrophic illness;
the favorable resolution of litigation, arbitration, or administrative proceedings;
the relatively small number of states in which we operate health plans, including the greater scale and revenues of the Company’s California, Ohio, Texas, and Washington health plans;
the availability of adequate financing on acceptable terms to fund and capitalize the Company’s expansion and growth, repay the Company’s outstanding indebtedness at maturity and meet its liquidity needs, including the interest expense and other costs associated with such financing;
the Company’s failure to comply with the financial or other covenants in its credit agreements or the indentures governing its outstanding notes;
the sufficiency of the Company’s funds on hand to pay the amounts due upon conversion or maturity of its outstanding notes;
the failure of a state in which we operate to renew its federal Medicaid waiver;
changes generally affecting the managed care or Medicaid management information systems industries;
increases in government surcharges, taxes, and assessments, including but not limited to the deductibility of certain compensation costs;
newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
increasing competition and consolidation in the Medicaid industry;
and numerous other risk factors, including those discussed in 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 sec.gov. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by its forward-looking statements will in fact occur, and the Company cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of April 30, 2018, and the Company disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.



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MOH Reports First Quarter 2018 Results
Page 8
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended March 31,
 
2018
 
2017
 
(Dollar amounts in millions, except per-share amounts)
Revenue:
 
 
 
Premium revenue
$
4,323

 
$
4,648

Service revenue
134

 
131

Premium tax revenue
104

 
111

Health insurer fees reimbursed
61

 

Investment income and other revenue
24

 
14

Total revenue
4,646

 
4,904

Operating expenses:
 
 
 
Medical care costs
3,722

 
4,111

Cost of service revenue
120

 
122

General and administrative expenses
352

 
439

Premium tax expenses
104

 
111

Health insurer fees
75

 

Depreciation and amortization
26

 
39

Restructuring and separation costs
25

 

Total operating expenses
4,424

 
4,822

Operating income
222

 
82

Other expenses (income), net:
 
 
 
Interest expense
33

 
26

Other expense (income), net
10

 
(75
)
Total other expenses (income), net
43

 
(49
)
Income before income tax expense

179

 
131

Income tax expense
72

 
54

Net income
$
107

 
$
77

 
 
 
 
Net income per diluted share
$
1.64

 
$
1.37

 
 
 
 
Diluted weighted average shares outstanding
65.2

 
56.2

 
 
 
 
Operating Statistics:
 
 
 
Medical care ratio
86.1
%
 
88.4
%
G&A ratio
7.6
%
 
8.9
%
Premium tax ratio
2.3
%
 
2.3
%
Effective income tax expense rate
40.3
%
 
41.6
%
Net profit margin
2.3
%
 
1.6
%



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MOH Reports First Quarter 2018 Results
Page 9
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
March 31,
 
December 31,
 
2018
 
2017
 
(In millions,
except per-share data)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
3,729

 
$
3,186

Investments
2,444

 
2,524

Restricted investments
77

 
169

Receivables
950

 
871

Prepaid expenses and other current assets
411

 
239

Derivative asset
585

 
522

Total current assets
8,196

 
7,511

Property, equipment, and capitalized software, net
318

 
342

Goodwill and intangible assets, net
250

 
255

Restricted investments
120

 
119

Deferred income taxes
114

 
103

Other assets
135

 
141

 
$
9,133

 
$
8,471

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
2,023

 
$
2,192

Amounts due government agencies
1,714

 
1,542

Accounts payable and accrued liabilities
713

 
366

Deferred revenue
404

 
282

Current portion of long-term debt
566

 
653

Derivative liability
585

 
522

Total current liabilities
6,005

 
5,557

Long-term debt
1,318

 
1,318

Lease financing obligations
198

 
198

Other long-term liabilities
59

 
61

Total liabilities
7,580

 
7,134

Stockholders’ equity:
 
 
 
Common stock, $0.001 par value, 150 shares authorized; outstanding: 62 shares at March 31, 2018 and 60 shares at December 31, 2017

 

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

 

Additional paid-in capital
1,153

 
1,044

Accumulated other comprehensive loss
(12
)
 
(5
)
Retained earnings
412

 
298

Total stockholders’ equity
1,553

 
1,337

 
$
9,133

 
$
8,471


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MOH Reports First Quarter 2018 Results
Page 10
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended March 31,
 
2018
 
2017
 
(In millions)
Operating activities:
 
 
 
Net income
$
107

 
$
77

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
37

 
49

Deferred income taxes
(6
)
 
(5
)
Share-based compensation
6

 
6

Non-cash restructuring charges
17

 

Amortization of convertible senior notes and lease financing obligations
7

 
8

Loss on debt extinguishment
10

 

Other, net
2

 
3

Changes in operating assets and liabilities:
 
 
 
Receivables
(83
)
 
(32
)
Prepaid expenses and other current assets
(239
)
 
(12
)
Medical claims and benefits payable
(163
)
 
(3
)
Amounts due government agencies
172

 
373

Accounts payable and accrued liabilities
319

 
50

Deferred revenue
130

 
146

Income taxes
78

 
59

Net cash provided by operating activities
394

 
719

Investing activities:
 
 
 
Purchases of investments
(389
)
 
(733
)
Proceeds from sales and maturities of investments
543

 
433

Purchases of property, equipment, and capitalized software
(4
)
 
(26
)
Increase in restricted investments held-to-maturity

 
(5
)
Other, net
(5
)
 
(6
)
Net cash provided by (used in) investing activities
145

 
(337
)
Financing activities:
 
 
 
Cash paid for financing transaction fees
(5
)
 

Proceeds from employee stock plans

 
1

Other, net

 
(2
)
Net cash used in financing activities
(5
)
 
(1
)
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
534

 
381

Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
3,290

 
2,912

Cash, cash equivalents, and restricted cash and cash equivalents at end of period
$
3,824

 
$
3,293


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MOH Reports First Quarter 2018 Results
Page 11
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP
 
March 31,
 
December 31,
 
March 31,
 
2018
 
2017
 
2017
Ending Membership by Program:
 
 
 
 
 
Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP)
2,435,000

 
2,457,000

 
2,548,000

Medicaid Expansion
662,000

 
668,000

 
684,000

Aged, Blind or Disabled (ABD)
411,000

 
412,000

 
401,000

Total Medicaid
3,508,000

 
3,537,000

 
3,633,000

Medicare-Medicaid Plan (MMP) - Integrated
56,000

 
57,000

 
55,000

Medicare Special Needs Plans
44,000

 
44,000

 
43,000

Total Medicare
100,000

 
101,000

 
98,000

Excluding Marketplace
3,608,000

 
3,638,000

 
3,731,000

Marketplace
453,000

 
815,000

 
1,035,000

 
4,061,000

 
4,453,000

 
4,766,000

 
 
 
 
 
 
Ending Membership by Health Plan:
 
 
 
 
 
California
656,000

 
746,000

 
765,000

Florida
414,000

 
625,000

 
711,000

Idaho (1)
2,000

 

 

Illinois
151,000

 
165,000

 
194,000

Michigan
388,000

 
398,000

 
417,000

New Mexico
250,000

 
253,000

 
270,000

New York
32,000

 
32,000

 
34,000

Ohio
328,000

 
327,000

 
351,000

Puerto Rico
316,000

 
314,000

 
326,000

South Carolina
117,000

 
116,000

 
111,000

Texas
476,000

 
430,000

 
493,000

Utah
90,000

 
152,000

 
172,000

Washington
779,000

 
777,000

 
785,000

Wisconsin
62,000

 
118,000

 
137,000

 
4,061,000

 
4,453,000

 
4,766,000

_________________________
(1)
Idaho operations commenced January 1, 2018.






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MOH Reports First Quarter 2018 Results
Page 12
April 30, 2018


MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2018
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
7.4

 
$
1,373

 
$
185.14

 
$
1,272

 
$
171.56

 
92.7
%
 
$
101

Medicaid Expansion
2.0

 
752

 
372.75

 
641

 
317.46

 
85.2

 
111

ABD
1.2

 
1,254

 
1,014.23

 
1,155

 
934.55

 
92.1

 
99

Total Medicaid
10.6

 
3,379

 
316.69

 
3,068

 
287.56

 
90.8

 
311

MMP
0.2

 
357

 
2,137.88

 
305

 
1,824.21

 
85.3

 
52

Medicare
0.1

 
157

 
1,188.97

 
131

 
994.81

 
83.7

 
26

Total Medicare
0.3

 
514

 
1,718.61

 
436

 
1,457.75

 
84.8

 
78

Non-Marketplace
10.9

 
3,893

 
354.94

 
3,504

 
319.48

 
90.0

 
389

Marketplace
1.4

 
430

 
312.87

 
218

 
158.40

 
50.6

 
212

 
12.3

 
$
4,323

 
$
350.25

 
$
3,722

 
$
301.55

 
86.1
%
 
$
601


 
Three Months Ended March 31, 2017
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
7.7

 
$
1,402

 
$
182.69

 
$
1,304

 
$
170.02

 
93.1
%
 
$
98

Medicaid Expansion
2.0

 
817

 
398.70

 
689

 
336.51

 
84.4

 
128

ABD
1.2

 
1,196

 
1,006.84

 
1,130

 
951.32

 
94.5

 
66

Total Medicaid
10.9

 
3,415

 
312.98

 
3,123

 
286.35

 
91.5

 
292

MMP
0.2

 
344

 
2,088.96

 
307

 
1,859.41

 
89.0

 
37

Medicare
0.1

 
138

 
1,068.20

 
117

 
902.67

 
84.5

 
21

Total Medicare
0.3

 
482

 
1,640.63

 
424

 
1,439.20

 
87.7

 
58

Non-Marketplace
11.2

 
3,897

 
347.84

 
3,547

 
316.62

 
91.0

 
350

Marketplace
2.9

 
751

 
262.16

 
564

 
196.72

 
75.0

 
187

 
14.1

 
$
4,648

 
$
330.39

 
$
4,111

 
$
292.20

 
88.4
%
 
$
537

______________________
(1)
A member month is defined as the aggregate of each month’s ending membership for the period presented.
(2)
The MCR represents medical costs as a percentage of premium revenue.


-MORE-


MOH Reports First Quarter 2018 Results
Page 13
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—NON-MARKETPLACE
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
494

 
$
272.61

 
$
412

 
$
227.31

 
83.4
%
 
$
82

Florida
1.0

 
382

 
351.58

 
345

 
317.41

 
90.3

 
37

Idaho (1)

 
4

 
960.33

 
4

 
977.00

 
101.8

 

Illinois
0.5

 
141

 
298.17

 
122

 
257.50

 
86.4

 
19

Michigan
1.1

 
376

 
336.64

 
331

 
296.19

 
88.0

 
45

New Mexico
0.7

 
319

 
466.17

 
310

 
453.30

 
97.2

 
9

New York
0.1

 
46

 
468.91

 
39

 
396.76

 
84.6

 
7

Ohio
0.9

 
551

 
576.60

 
460

 
481.26

 
83.5

 
91

Puerto Rico
1.0

 
186

 
193.13

 
174

 
181.39

 
93.9

 
12

South Carolina
0.3

 
122

 
348.08

 
104

 
297.52

 
85.5

 
18

Texas
0.7

 
562

 
809.90

 
519

 
747.53

 
92.3

 
43

Utah
0.3

 
92

 
339.71

 
77

 
284.61

 
83.8

 
15

Washington
2.3

 
584

 
256.66

 
574

 
252.41

 
98.3

 
10

Wisconsin
0.2

 
34

 
183.97

 
29

 
154.53

 
84.0

 
5

Other (2)

 

 

 
4

 

 

 
(4
)
 
10.9

 
$
3,893

 
$
354.94

 
$
3,504

 
$
319.48

 
90.0
%
 
$
389

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
572

 
$
308.57

 
$
484

 
$
261.31

 
84.7
%
 
$
88

Florida
1.1

 
364

 
339.30

 
352

 
328.45

 
96.8

 
12

Idaho (1)

 

 

 

 

 

 

Illinois
0.6

 
161

 
276.58

 
180

 
310.08

 
112.1

 
(19
)
Michigan
1.2

 
382

 
327.41

 
333

 
284.58

 
86.9

 
49

New Mexico
0.7

 
308

 
422.87

 
299

 
410.75

 
97.1

 
9

New York
0.1

 
46

 
441.19

 
42

 
409.63

 
92.8

 
4

Ohio
1.0

 
520

 
527.79

 
462

 
469.04

 
88.9

 
58

Puerto Rico
1.0

 
183

 
186.51

 
165

 
168.18

 
90.2

 
18

South Carolina
0.3

 
105

 
317.07

 
98

 
293.34

 
92.5

 
7

Texas
0.7

 
527

 
751.86

 
489

 
696.43

 
92.6

 
38

Utah
0.3

 
89

 
313.20

 
72

 
253.75

 
81.0

 
17

Washington
2.2

 
605

 
273.18

 
535

 
241.77

 
88.5

 
70

Wisconsin
0.2

 
33

 
165.40

 
27

 
135.91

 
82.2

 
6

Other (2)

 
2

 

 
9

 

 

 
(7
)
 
11.2

 
$
3,897

 
$
347.84

 
$
3,547

 
$
316.62

 
91.0
%
 
$
350

__________________
(1)
Idaho operations commenced January 1, 2018.
(2)
“Other” medical care costs include primarily medically related administrative costs at the parent company.

-MORE-


MOH Reports First Quarter 2018 Results
Page 14
April 30, 2018


MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—MARKETPLACE
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
0.2

 
$
49

 
$
253.93

 
$
31

 
$
162.64

 
64.0
 %
 
$
18

Florida
0.2

 
45

 
271.12

 
(16
)
 
(95.60
)
 
(35.3
)
 
61

Michigan
0.1

 
13

 
224.11

 
9

 
144.16

 
64.3

 
4

New Mexico
0.1

 
34

 
438.67

 
19

 
246.50

 
56.2

 
15

Ohio
0.1

 
26

 
403.44

 
17

 
262.87

 
65.2

 
9

Texas
0.7

 
229

 
308.74

 
146

 
196.89

 
63.8

 
83

Utah (1)

 
(3
)
 
NM

 
(10
)
 
NM

 
NM

 
7

Washington

 
39

 
526.36

 
30

 
405.40

 
77.0

 
9

Wisconsin (1)

 
(2
)
 
NM

 
(8
)
 
NM

 
NM

 
6

Other

 

 

 

 

 

 

 
1.4

 
$
430

 
$
312.87

 
$
218

 
$
158.40

 
50.6
 %
 
$
212

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
0.4

 
$
72

 
$
184.34

 
$
26

 
$
65.53

 
35.5
 %
 
$
46

Florida
1.0

 
292

 
292.80

 
206

 
205.91

 
70.3

 
86

Michigan
0.1

 
11

 
149.23

 
6

 
95.92

 
64.3

 
5

New Mexico
0.1

 
22

 
265.06

 
19

 
232.50

 
87.7

 
3

Ohio
0.1

 
21

 
334.26

 
17

 
273.72

 
81.9

 
4

Texas
0.7

 
157

 
222.40

 
113

 
161.02

 
72.4

 
44

Utah
0.2

 
45

 
202.48

 
51

 
228.20

 
112.7

 
(6
)
Washington
0.1

 
37

 
302.51

 
46

 
365.94

 
121.0

 
(9
)
Wisconsin
0.2

 
94

 
453.39

 
81

 
389.80

 
86.0

 
13

Other

 

 

 
(1
)
 

 

 
1

 
2.9

 
$
751

 
$
262.16

 
$
564

 
$
196.72

 
75.0
 %
 
$
187

__________________
(1)
We terminated Marketplace operations at our Utah and Wisconsin health plans effective January 1, 2018, so the ratios for 2018 periods are not meaningful for those health plans.

-MORE-


MOH Reports First Quarter 2018 Results
Page 15
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—TOTAL
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended March 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
2.0

 
$
543

 
$
270.80

 
$
443

 
$
221.03

 
81.6
%
 
$
100

Florida
1.2

 
427

 
340.91

 
329

 
262.65

 
77.0

 
98

Idaho

 
4

 
960.33

 
4

 
977.00

 
101.8

 

Illinois
0.5

 
141

 
298.17

 
122

 
257.50

 
86.4

 
19

Michigan
1.2

 
389

 
331.08

 
340

 
288.68

 
87.2

 
49

New Mexico
0.8

 
353

 
463.33

 
329

 
431.94

 
93.2

 
24

New York
0.1

 
46

 
468.91

 
39

 
396.76

 
84.6

 
7

Ohio
1.0

 
577

 
565.62

 
477

 
467.41

 
82.6

 
100

Puerto Rico
1.0

 
186

 
193.13

 
174

 
181.39

 
93.9

 
12

South Carolina
0.3

 
122

 
348.08

 
104

 
297.52

 
85.5

 
18

Texas
1.4

 
791

 
551.28

 
665

 
463.37

 
84.1

 
126

Utah
0.3

 
89

 
328.83

 
67

 
246.78

 
75.0

 
22

Washington
2.3

 
623

 
265.20

 
604

 
257.25

 
97.0

 
19

Wisconsin
0.2

 
32

 
172.09

 
21

 
110.91

 
64.4

 
11

Other

 

 

 
4

 

 

 
(4
)
 
12.3

 
$
4,323

 
$
350.25

 
$
3,722

 
$
301.55

 
86.1
%
 
$
601

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
2.2

 
$
644

 
$
286.92

 
$
510

 
$
227.19

 
79.2
%
 
$
134

Florida
2.1

 
656

 
316.86

 
558

 
269.33

 
85.0

 
98

Idaho

 

 

 

 

 

 

Illinois
0.6

 
161

 
276.58

 
180

 
310.08

 
112.1

 
(19
)
Michigan
1.3

 
393

 
316.80

 
339

 
273.36

 
86.3

 
54

New Mexico
0.8

 
330

 
406.90

 
318

 
392.72

 
96.5

 
12

New York
0.1

 
46

 
441.19

 
42

 
409.63

 
92.8

 
4

Ohio
1.1

 
541

 
516.00

 
479

 
457.14

 
88.6

 
62

Puerto Rico
1.0

 
183

 
186.51

 
165

 
168.18

 
90.2

 
18

South Carolina
0.3

 
105

 
317.07

 
98

 
293.34

 
92.5

 
7

Texas
1.4

 
684

 
486.96

 
602

 
428.55

 
88.0

 
82

Utah
0.5

 
134

 
264.73

 
123

 
242.57

 
91.6

 
11

Washington
2.3

 
642

 
274.74

 
581

 
248.40

 
90.4

 
61

Wisconsin
0.4

 
127

 
311.30

 
108

 
264.53

 
85.0

 
19

Other

 
2

 

 
8

 

 

 
(6
)
 
14.1

 
$
4,648

 
$
330.39

 
$
4,111

 
$
292.20

 
88.4
%
 
$
537



-MORE-


MOH Reports First Quarter 2018 Results
Page 16
April 30, 2018

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

The following tables provide the details of our medical care costs for the periods indicated:
 
Three Months Ended March 31,
 
2018
 
2017
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
2,745

 
$
222.38

 
73.8
%
 
$
3,086

 
$
219.32

 
75.1
%
Pharmacy
583

 
47.25

 
15.6

 
616

 
43.76

 
15.0

Capitation
312

 
25.28

 
8.4

 
324

 
23.06

 
7.9

Other
82

 
6.64

 
2.2

 
85

 
6.06

 
2.0

 
$
3,722

 
$
301.55

 
100.0
%
 
$
4,111

 
$
292.20

 
100.0
%
The following table provides the details of our medical claims and benefits payable as of the dates indicated:
 
March 31,
 
December 31,
 
2018
 
2017
Fee-for-service claims incurred but not paid (IBNP)
$
1,586

 
$
1,717

Pharmacy payable
127

 
112

Capitation payable
62

 
67

Other (1)
248

 
296

 
$
2,023

 
$
2,192

______________________
(1)
“Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. As of March 31, 2018 and December 31, 2017, we had recorded non-risk provider payables of approximately $146 million and $122 million, respectively.


-MORE-


MOH Reports First Quarter 2018 Results
Page 17
April 30, 2018

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

Our claims liability includes a provision for adverse claims deviation based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims. Our reserving methodology is consistently applied across all periods presented. The amounts displayed for “Components of medical care costs related to: Prior period” represent the amount by which our original estimate of claims and benefits payable at the beginning of the period was (more) less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:
 
Three Months Ended March 31,
 
Year Ended December 31, 2017
 
2018
 
2017
 
Medical claims and benefits payable, beginning balance
$
2,192

 
$
1,929

 
$
1,929

Components of medical care costs related to:
 
 
 
 
 
Current period
3,963

 
4,253

 
17,037

Prior period
(241
)
 
(142
)
 
36

Total medical care costs
3,722

 
4,111

 
17,073

 
 
 
 
 
 
Change in non-risk provider payables
45

 
(96
)
 
(106
)
Payments for medical care costs related to:
 
 
 
 
 
Current period
2,498

 
2,683

 
15,130

Prior period
1,438

 
1,335

 
1,574

Total paid
3,936

 
4,018

 
16,704

Medical claims and benefits payable, ending balance
$
2,023

 
$
1,926

 
$
2,192

 
 
 
 
 
 
Benefit from prior period as a percentage of:
 
 
 
 
 
Balance at beginning of period
11.0
%
 
7.4
%
 
(1.9
)%
Premium revenue, trailing twelve months
1.3
%
 
0.8
%
 
(0.2
)%
Medical care costs, trailing twelve months
1.4
%
 
0.9
%
 
(0.2
)%
 
 
 
 
 
 
Days in claims payable, fee for service (1)
53

 
45

 
54

______________________
(1)
Claims payable includes primarily IBNP. Additionally, it includes certain fee-for-service payables reported in “Other” medical claims and benefits payable amounting to $22 million, $119 million and $99 million, as of March 31, 2018, 2017 and December 31, 2017, respectively.



-MORE-


MOH Reports First Quarter 2018 Results
Page 18
April 30, 2018

MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES

We use non-generally accepted accounting principles, or non-GAAP, financial measures as supplemental metrics in evaluating our financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing our performance to the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures. See further information regarding non-GAAP measures below the tables (in millions, except per diluted share amounts).
 
Three Months Ended March 31,
 
2018
 
2017
 
 
 
 
Net income
$
107

 
$
77

Adjustments:
 
 
 
Depreciation, and amortization of intangible assets and capitalized software
34

 
46

Interest expense
33

 
26

Income tax expense
72

 
54

EBITDA
$
246

 
$
203

 
Three Months Ended March 31,
2018
 
2017
 
 
 
Amount
 
Per Diluted share
 
Amount
 
Per Diluted share
Net income
$
107

 
$
1.64

 
$
77

 
$
1.37

Adjustment:
 
 
 
 
 
 
 
Amortization of intangible assets
5

 
0.08

 
9

 
0.16

Income tax effect (1)
(1
)
 
(0.01
)
 
(3
)
 
(0.06
)
Amortization of intangible assets, net of tax effect
4

 
0.07

 
6

 
0.10

Adjusted net income
$
111

 
$
1.71

 
$
83

 
$
1.47

________________________
(1)
Income tax effect of adjustments calculated at the blended federal and state statutory tax rate of 22% and 37% for the first quarters of 2018 and 2017, respectively.

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

-MORE-


MOH Reports First Quarter 2018 Results
Page 19
April 30, 2018

MOLINA HEALTHCARE, INC.
2018 REVISED GUIDANCE

Reconciliation of Non-GAAP Financial Measures
(in millions, except per-share amounts)
 
Low End
 
High End
Net income
$
272

 
$
306

Adjustments:
 
 
 
Depreciation, and amortization of intangible assets and capitalized software
148

 
148

Interest expense
125

 
125

Income tax expense
179

 
189

EBITDA
$
724

 
$
768

 
Low End
 
High End
 
Amount
 
Per share (2)
 
Amount
 
Per share (2)
Net income
$
272

 
$
4.00

 
$
306

 
$
4.50

Adjustments:
 
 
 
 
 
 
 
Amortization of intangible assets
21

 
0.31

 
21

 
0.31

Income tax effect (1)
(5
)
 
(0.07
)
 
(5
)
 
(0.07
)
Amortization of intangible assets, net of tax effect
16

 
0.24

 
16

 
0.24

Adjusted net income
$
288

 
$
4.24

 
$
322

 
$
4.74

________________________
(1)
Income tax effect calculated at the statutory tax rate of 22%.
(2)
Computation assumes 68.0 million diluted weighted average shares outstanding.



-END-