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false0001179929 0001179929 2019-10-29 2019-10-29


 
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): October 29, 2019 (October 29, 2019)
______________
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-31719
13-4204626
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
______________
200 Oceangate, Suite 100, Long Beach, California 90802
(Address of principal executive offices)
Registrant’s telephone number, including area code: (562) 435-3666
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 Par Value
MOH
New York Stock Exchange
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 October 29, 2019, Molina Healthcare, Inc. (the “Company”) issued a press release reporting its financial results for the third quarter ended September 30, 2019, and raising the Company’s full year 2019 earnings 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.
Note: 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, 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 October 29, 2019, as to financial results for the third quarter ended September 30, 2019, and raising the Company’s full year 2019 earnings 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:
October 29, 2019
By:
/s/ Jeff D. Barlow
 
 
 
Jeff D. Barlow
 
 
 
Chief Legal Officer and Secretary






EXHIBIT INDEX
Exhibit No.
Description
Press release of Molina Healthcare, Inc., issued October 29, 2019, as to financial results for the third quarter ended September 30, 2019, and raising the Company’s full year 2019 earnings guidance.
Exhibit
https://cdn.kscope.io/dc69d3b238ad771a18ce6e960db1d04e-molinaa03a01a01a17.jpg
News Release
Investor Contact: Julie Trudell, Julie.Trudell@molinahealthcare.com, 562-912-6720
Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588
____________________________________________________________________________

Molina Healthcare Reports Third Quarter 2019 Financial Results
Raises Full Year 2019 Earnings Guidance

Long Beach, Calif., October 29, 2019 – Molina Healthcare, Inc. (NYSE: MOH) today reported net income for the third quarter of 2019 of $175 million, or $2.75 per diluted share, compared to net income of $197 million, or $2.90 per diluted share, in the third quarter of 2018. Financial results for the third quarter of 2019 are summarized below:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
 
(In millions, except per share results)
Premium Revenue

$4,084

 

$4,337

 

$12,085

 

$13,174

Total Revenue

$4,243

 

$4,697

 

$12,555

 

$14,226

Pre-Tax Income

$233

 

$259

 

$750

 

$743

Net Income

$175

 

$197

 

$569

 

$506

EPS - Diluted

$2.75

 

$2.90

 

$8.80

 

$7.60

MCR
86.3
%
 
87.4
%
 
85.7
%
 
86.2
%
G&A Ratio
7.6
%
 
6.6
%
 
7.6
%
 
7.0
%
Pre-Tax Margin
5.5
%
 
5.5
%
 
6.0
%
 
5.2
%
Effective Tax Rate
24.7
%
 
24.0
%
 
24.1
%
 
31.9
%
After-Tax Margin
4.1
%
 
4.2
%
 
4.5
%
 
3.6
%

Highlights include:
•
Premium revenue was $4.1 billion in the third quarter of 2019, a 5.8% decrease compared to the third quarter of 2018.
•
Medical care ratio (MCR) was 86.3% in the third quarter of 2019 compared to 87.4% for the third quarter of 2018.
•
General and administrative (G&A) expense ratio increased to 7.6% in the third quarter of 2019 compared to 6.6% for the third quarter of 2018.
•
The third quarter results include a charge of $2 million, or a $0.03 net loss per diluted share, for the repayment of convertible notes.
•
After-tax margin was 4.1% for the third quarter of 2019 compared to 4.2% in the third quarter of 2018.
•
Cash and investments at the parent company amounted to $796 million as of September 30, 2019.
•
Operating cash flows for the nine months ended September 30, 2019, were $398 million.
•
Raised full year 2019 earnings guidance to $11.30 - $11.55 from $11.20 - $11.50, which does not include any future prior-period reserve development.
•
On October 10, 2019, the Company entered into a definitive agreement to acquire certain assets of YourCare Health Plan, Inc. Through this transaction, expected to close early next year, the Company will serve approximately 46,000 Medicaid members in seven counties in Western New York.


-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 2
October 29, 2019

“We are pleased with our performance this quarter as we sustained our margin profile, produced significant excess capital, and increased our full year 2019 guidance,” said Joe Zubretsky, president and CEO. “We have accomplished this in the backdrop of commencing our pivot to growth.”

Premium Revenue
Premium revenue for the third quarter of 2019 decreased 5.8% to $4.1 billion compared to $4.3 billion in the third quarter of 2018, which was in line with the Company’s expectations.

For the nine months ended September 30, 2019, premium revenue decreased 8.3% to $12.1 billion, from $13.2 billion for the comparable period in 2018. In both periods, the lower premium revenue is primarily a result of previously announced losses of Medicaid membership in New Mexico and Florida.

Medical Care Ratio
The consolidated MCR for the third quarter of 2019 was 86.3% compared to 87.4% in the third quarter of 2018. Prior period reserve development in the quarter was negligible.
The MCR for the nine months ended September 30, 2019, improved to 85.7% compared to 86.2% for the comparable period in 2018, due to a combination of the following:
•
The Medicaid MCR improved to 88.2% compared to 90.4% for the nine months ended September 30, 2018, due to improvement in all programs.
•
The Medicare MCR improved to 85.2% compared to 85.7% for the nine months ended September 30, 2018.
•
The Marketplace MCR was 66.7% compared to 57.5% for the nine months ended September 30, 2018. The 2018 period was positively impacted by reduced medical care costs from Cost Sharing Reduction (CSR) subsidies related to 2017 dates of service. In addition, the current year was impacted by a relatively smaller benefit from prior-year Marketplace risk adjustment compared to 2018.

General and Administrative Expense Ratio
The general and administrative expenses were 7.6% of total revenues in the third quarter of 2019 compared to 6.6% in the third quarter of 2018.

For the nine months ended September 30, 2019, the G&A ratio was 7.6% compared to 7.0% in the comparable prior-year period. In both periods, the year-over-year increases are due mainly to the year-over-year decline in total revenues.

Interest Expense
Interest expense was $22 million in the third quarter of 2019 compared to $26 million in the third quarter of 2018. The decline was due to continued repayment of convertible notes.

Other Expenses
The third quarter results included a $2 million charge on the repayment of convertible notes, resulting in a $0.03 net loss per diluted share.

Balance Sheet
Cash and investments at the parent company amounted to $796 million as of September 30, 2019, compared to $467 million as of June 30, 2019.
During the third quarter of 2019, the parent company received $430 million of dividends from the regulated health plan subsidiaries.

-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 3
October 29, 2019

The Company repaid $55 million of principal on the convertible notes during the quarter, and $240 million since the beginning of the year. The impact of capital deployment actions in the quarter resulted in lower interest expense, a slight loss on repayment of the convertible notes, and a lower share count.

Cash Flow
Operating cash flows for the nine months ended September 30, 2019, amounted to $398 million and were higher compared to the nine months ended September 30, 2018, primarily due to the normal fluctuations of working capital.

Outlook
The Company raised its full year 2019 earnings guidance range to $11.30 - $11.55 per diluted share, from previously issued guidance of $11.20 - $11.50.
Guidance is based on the following:
•
Assumes no future restructuring or non-run rate significant items; and
•
Assumes no future prior period development.
 
 
October 29, 2019 (1)
 
July 30, 2019 (1)
 
 
(current)
 
(previous)
Premium revenue
 
$16.1B
 
$16.1B
Medicaid
 
$12.4B
 
$12.3B
Medicare
 
$2.2B
 
$2.2B
Marketplace
 
$1.5B
 
$1.6B
Premium tax revenue
 
$565M
 
$450M
Investment income and other revenue
 
$135M
 
$115M
Total revenue
 
$16.8B
 
$16.7B
Medical care costs
 
$13.8B
 
$13.8B
General and administrative expenses
 
$1.3B
 
$1.3B
Premium tax expenses
 
$565M
 
$450M
EBITDA (2)
 
$1,140M - $1,160M
 
$1,135M - $1,160M
Depreciation and amortization
 
$90M
 
$90M
Interest expense and other expenses, net
 
$90M
 
$90M
Income before income taxes
 
$960M - $980M
 
$955M - $980M
Net income
 
$725M - $740M
 
$725M - $740M
Net income per share
 
$11.30 - $11.55
 
$11.20 - $11.50
Diluted weighted average shares
 
64.2M
 
64.5M
 
 
 
 
 
End-of-year membership:
 
 
 
 
Medicaid and Medicare
 
3.1M
 
3.1M
Marketplace
 
270K
 
270K - 280K
 
 
 
 
 
Operating Statistics:
 
 
 
 
Medical care ratio
 
86%
 
86%
G&A ratio
 
7.7%
 
7.7%
Effective income tax expense rate
 
24.3%
 
24.2%
After-tax margin
 
4.3% - 4.4%
 
4.2% - 4.4%
Medicaid
 
3%
 
3%
Medicare
 
7%
 
7%
Marketplace
 
11%
 
11%
__________________
(1)
All amounts are rounded and approximations.
(2)
See reconciliation of non-GAAP financial measures at the end of this release.

-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 4
October 29, 2019

Conference Call
Management will host a conference call and webcast to discuss Molina Healthcare’s third quarter 2019 results at 8:00 a.m. Eastern time on Wednesday, October 30, 2019. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 5680857. A telephonic replay of the conference call will be available through Wednesday, November 6, 2019, by dialing (877) 344-7529 and entering confirmation number 10135133. 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 healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 3.3 million members as of September 30, 2019. For more information about Molina Healthcare, please visit molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This earnings release contains forward-looking statements regarding the Company’s revised 2019 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 risks and uncertainties are discussed in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and the section entitled “Forward-Looking Statements” in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019.
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 October 29, 2019, and, except as otherwise required by law, the Company disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.



-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 5
October 29, 2019

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
 
(In millions, except per-share amounts)
Revenue:
 
 
 
 
 
 
 
Premium revenue
$
4,084

 
$
4,337

 
$
12,085

 
$
13,174

Premium tax revenue
119

 
110

 
367

 
320

Health insurer fees reimbursed
—

 
83

 
—

 
248

Service revenue
—

 
130

 
—

 
391

Investment income and other revenue
40

 
37

 
103

 
93

Total revenue
4,243

 
4,697

 
12,555

 
14,226

Operating expenses:
 
 
 
 
 
 
 
Medical care costs
3,523

 
3,790

 
10,360

 
11,362

General and administrative expenses
323

 
311

 
953

 
998

Premium tax expenses
119

 
110

 
367

 
320

Health insurer fees
—

 
87

 
—

 
261

Depreciation and amortization
21

 
25

 
68

 
76

Restructuring costs
—

 
5

 
5

 
38

Cost of service revenue
—

 
111

 
—

 
349

Total operating expenses
3,986

 
4,439

 
11,753

 
13,404

Gain on sale of subsidiary
—

 
37

 
—

 
37

Operating income
257

 
295

 
802

 
859

Other expenses, net:
 
 
 
 
 
 
 
Interest expense
22

 
26

 
67

 
91

Other expenses (income), net
2

 
10

 
(15
)
 
25

Total other expenses, net
24

 
36

 
52

 
116

Income before income tax expense
233

 
259

 
750

 
743

Income tax expense
58

 
62

 
181

 
237

Net income
$
175

 
$
197

 
$
569

 
$
506

 
 
 
 
 
 
 
 
Net income per share, diluted
$
2.75

 
$
2.90

 
$
8.80

 
$
7.60

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
63.6

 
67.9

 
64.6

 
66.6

 
 
 
 
 
 
 
 
Operating Statistics:
 
 
 
 
 
 
 
Medical care ratio
86.3
%
 
87.4
%
 
85.7
%
 
86.2
%
G&A ratio
7.6
%
 
6.6
%
 
7.6
%
 
7.0
%
Premium tax ratio
2.8
%
 
2.5
%
 
2.9
%
 
2.4
%
Effective income tax rate
24.7
%
 
24.0
%
 
24.1
%
 
31.9
%
After-tax margin
4.1
%
 
4.2
%
 
4.5
%
 
3.6
%
Medicaid
3.4
%
 
2.8
%
 
3.1
%
 
2.0
%
Medicare
6.4
%
 
1.4
%
 
7.0
%
 
3.7
%
Marketplace
8.1
%
 
15.3
%
 
11.9
%
 
16.7
%



-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 6
October 29, 2019

CONSOLIDATED BALANCE SHEETS
 
September 30,
 
December 31,
 
2019
 
2018
 
Unaudited
 
 
 
(Dollars in millions,
except per-share amounts)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
2,679

 
$
2,826

Investments
1,757

 
1,681

Receivables
1,280

 
1,330

Prepaid expenses and other current assets
140

 
149

Derivative asset
21

 
476

Total current assets
5,877

 
6,462

Property, equipment, and capitalized software, net
379

 
241

Goodwill and intangible assets, net
176

 
190

Restricted investments
79

 
120

Deferred income taxes
82

 
117

Other assets
108

 
24

 
$
6,701

 
$
7,154

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
1,975

 
$
1,961

Amounts due government agencies
612

 
967

Accounts payable and accrued liabilities
478

 
390

Deferred revenue
207

 
211

Current portion of long-term debt
15

 
241

Derivative liability
21

 
476

Total current liabilities
3,308

 
4,246

Long-term debt
1,239

 
1,020

Finance lease liabilities
233

 
197

Other long-term liabilities
90

 
44

Total liabilities
4,870

 
5,507

Stockholders’ equity:
 
 
 
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 63 million shares at September 30, 2019 and 62 million shares at December 31, 2018
—

 
—

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

 
—

Additional paid-in capital
160

 
643

Accumulated other comprehensive income (loss)
5

 
(8
)
Retained earnings
1,666

 
1,012

Total stockholders’ equity
1,831

 
1,647

 
$
6,701

 
$
7,154


-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 7
October 29, 2019

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
 
(In millions)
Operating activities:
 
 
 
 
 
 
 
Net income
$
175

 
$
197

 
$
569

 
$
506

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
21

 
31

 
68

 
104

Deferred income taxes
(12
)
 
(26
)
 
7

 
(32
)
Share-based compensation
10

 
7

 
29

 
20

Amortization of convertible senior notes and finance lease liabilities
1

 
5

 
5

 
18

Loss (gain) on debt repayment
2

 
10

 
(15
)
 
25

Gain on sale of subsidiary
—

 
(37
)
 
—

 
(37
)
Non-cash restructuring costs
—

 
—

 
—

 
17

Other, net
(8
)
 
2

 
(5
)
 
6

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Receivables
(41
)
 
(192
)
 
50

 
(507
)
Prepaid expenses and other current assets
(24
)
 
64

 
(6
)
 
(117
)
Medical claims and benefits payable
208

 
123

 
14

 
(144
)
Amounts due government agencies
(372
)
 
(716
)
 
(355
)
 
(511
)
Accounts payable and accrued liabilities
98

 
49

 
37

 
398

Deferred revenue
177

 
(13
)
 
(4
)
 
(55
)
Income taxes
7

 
(9
)
 
4

 
118

Net cash provided by (used in) operating activities
242

 
(505
)
 
398

 
(191
)
Investing activities:
 
 
 
 
 
 
 
Purchases of investments
(776
)
 
(288
)
 
(1,938
)
 
(1,202
)
Proceeds from sales and maturities of investments
1,099

 
735

 
1,890

 
2,070

Purchases of property, equipment, and capitalized software
(10
)
 
(10
)
 
(30
)
 
(24
)
Other, net
—

 
(14
)
 
(2
)
 
(23
)
Net cash provided by (used in) investing activities
313

 
423

 
(80
)
 
821

Financing activities:
 
 
 
 
 
 
 
Repayment of principal amount of 1.125% Convertible Notes
(55
)
 
(140
)
 
(240
)
 
(236
)
Cash paid for partial settlement of 1.125% Conversion Option
(105
)
 
(343
)
 
(578
)
 
(477
)
Cash received for partial termination of 1.125% Call Option
105

 
343

 
578

 
477

Cash paid for partial termination of 1.125% Warrants
(90
)
 
(306
)
 
(514
)
 
(419
)
Proceeds from borrowings under Term Loan Facility
—

 
—

 
220

 
—

Repayment of Credit Facility
—

 
—

 
—

 
(300
)
Repayment of 1.625% Convertible Notes
—

 
(64
)
 
—

 
(64
)
Other, net
(3
)
 
1

 
24

 
7

Net cash used in financing activities
(148
)
 
(509
)
 
(510
)
 
(1,012
)
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents
407

 
(591
)
 
(192
)
 
(382
)
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
2,327

 
3,499

 
2,926

 
3,290

Cash, cash equivalents, and restricted cash and cash equivalents at end of period
$
2,734

 
$
2,908

 
$
2,734

 
$
2,908


-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 8
October 29, 2019

HEALTH PLANS SEGMENT MEMBERSHIP
 
September 30,
2019
 
December 31, 2018

September 30,
2018
Ending Membership by Government Program:
 
 
 
 
 
TANF and CHIP
1,993,000

 
2,295,000

 
2,436,000

Medicaid Expansion
598,000

 
660,000

 
664,000

ABD
364,000

 
406,000

 
415,000

Total Medicaid
2,955,000

 
3,361,000

 
3,515,000

MMP - Integrated
58,000

 
54,000

 
55,000

Medicare Special Needs Plans
44,000

 
44,000

 
45,000

Total Medicare
102,000

 
98,000

 
100,000

Total Medicaid and Medicare
3,057,000

 
3,459,000

 
3,615,000

Marketplace
289,000

 
362,000

 
384,000

 
3,346,000

 
3,821,000

 
3,999,000

 
 
 
 
 
 
Ending Membership by Health Plan:
 
 
 
 
 
California
580,000

 
608,000

 
623,000

Florida (1)
136,000

 
313,000

 
395,000

Illinois
224,000

 
224,000

 
223,000

Michigan
361,000

 
383,000

 
394,000

New Mexico (1)
24,000

 
222,000

 
234,000

Ohio
292,000

 
302,000

 
315,000

Puerto Rico
186,000

 
252,000

 
320,000

South Carolina
134,000

 
120,000

 
117,000

Texas
350,000

 
423,000

 
436,000

Washington
818,000

 
781,000

 
770,000

Other (2)
241,000

 
193,000

 
172,000

 
3,346,000

 
3,821,000

 
3,999,000

__________________
(1)
The Company’s Medicaid contracts in New Mexico and in all but two regions in Florida terminated in late 2018 and early 2019. During 2019, the Company continues to serve Medicare and Marketplace members in both Florida and New Mexico, as well as Medicaid members in two regions in Florida.
(2)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.






-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 9
October 29, 2019

UNAUDITED SELECTED FINANCIAL DATA
(In millions, except percentages and per-member per-month amounts)
HEALTH PLANS SEGMENT FINANCIAL DATA — BY GOVERNMENT PROGRAM
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended September 30, 2019
TANF and CHIP
6.0

 
$
1,225

 
$
202.46

 
$
1,071

 
$
176.88

 
87.4
%
 
$
154

Medicaid Expansion
1.8

 
696

 
385.63

 
622

 
345.25

 
89.5

 
74

ABD
1.1

 
1,247

 
1,136.67

 
1,097

 
1,000.56

 
88.0

 
150

Total Medicaid
8.9

 
3,168

 
353.81

 
2,790

 
311.70

 
88.1

 
378

MMP
0.2

 
399

 
2,328.70

 
345

 
2,010.50

 
86.3

 
54

Medicare
0.1

 
160

 
1,230.01

 
134

 
1,029.75

 
83.7

 
26

Total Medicare
0.3

 
559

 
1,854.96

 
479

 
1,587.61

 
85.6

 
80

Total Medicaid and Medicare
9.2

 
3,727

 
402.76

 
3,269

 
353.31

 
87.7

 
458

Marketplace
0.9

 
357

 
410.23

 
254

 
292.21

 
71.2

 
103

 
10.1

 
$
4,084

 
$
403.40

 
$
3,523

 
$
348.06

 
86.3
%
 
$
561

 
Three Months Ended September 30, 2018
TANF and CHIP
7.4

 
$
1,379

 
$
187.03

 
$
1,228

 
$
166.41

 
89.0
%
 
$
151

Medicaid Expansion
2.0

 
671

 
333.11

 
640

 
317.62

 
95.3

 
31

ABD
1.2

 
1,322

 
1,054.92

 
1,186

 
946.38

 
89.7

 
136

Total Medicaid
10.6

 
3,372

 
316.86

 
3,054

 
286.86

 
90.5

 
318

MMP
0.2

 
353

 
2,159.72

 
323

 
1,981.45

 
91.7

 
30

Medicare
0.1

 
156

 
1,157.71

 
121

 
895.25

 
77.3

 
35

Total Medicare
0.3

 
509

 
1,706.95

 
444

 
1,490.63

 
87.3

 
65

Total Medicaid and Medicare
10.9

 
3,881

 
354.70

 
3,498

 
319.63

 
90.1

 
383

Marketplace
1.2

 
456

 
394.02

 
292

 
252.61

 
64.1

 
164

 
12.1

 
$
4,337

 
$
358.46

 
$
3,790

 
$
313.23

 
87.4
%
 
$
547

 
Nine Months Ended September 30, 2019
TANF and CHIP
18.3

 
$
3,594

 
$
196.01

 
$
3,141

 
$
171.30

 
87.4
%
 
$
453

Medicaid Expansion
5.4

 
2,055

 
380.08

 
1,810

 
334.85

 
88.1

 
245

ABD
3.3

 
3,590

 
1,097.94

 
3,200

 
978.64

 
89.1

 
390

Total Medicaid
27.0

 
9,239

 
342.03

 
8,151

 
301.77

 
88.2

 
1,088

MMP
0.5

 
1,193

 
2,368.38

 
1,034

 
2,051.90

 
86.6

 
159

Medicare
0.4

 
489

 
1,270.32

 
399

 
1,037.24

 
81.7

 
90

Total Medicare
0.9

 
1,682

 
1,892.63

 
1,433

 
1,612.29

 
85.2

 
249

Total Medicaid and Medicare
27.9

 
10,921

 
391.44

 
9,584

 
343.53

 
87.8

 
1,337

Marketplace
2.8

 
1,164

 
414.17

 
776

 
276.28

 
66.7

 
388

 
30.7

 
$
12,085

 
$
393.52

 
$
10,360

 
$
337.37

 
85.7
%
 
$
1,725

 
Nine Months Ended September 30, 2018
TANF and CHIP
22.3

 
$
4,145

 
$
186.12

 
$
3,705

 
$
166.35

 
89.4
%
 
$
440

Medicaid Expansion
6.1

 
2,184

 
359.37

 
1,957

 
322.01

 
89.6

 
227

ABD
3.7

 
3,864

 
1,034.25

 
3,550

 
950.11

 
91.9

 
314

Total Medicaid
32.1

 
10,193

 
317.70

 
9,212

 
287.10

 
90.4

 
981

MMP
0.5

 
1,077

 
2,173.90

 
941

 
1,899.26

 
87.4

 
136

Medicare
0.4

 
470

 
1,171.59

 
385

 
959.54

 
81.9

 
85

Total Medicare
0.9

 
1,547

 
1,725.71

 
1,326

 
1,479.06

 
85.7

 
221

Total Medicaid and Medicare
33.0

 
11,740

 
355.96

 
10,538

 
319.50

 
89.8

 
1,202

Marketplace
3.8

 
1,434

 
379.91

 
824

 
218.44

 
57.5

 
610

 
36.8

 
$
13,174

 
$
358.42

 
$
11,362

 
$
309.12

 
86.2
%
 
$
1,812

__________________
(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-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 10
October 29, 2019

HEALTH PLANS SEGMENT FINANCIAL DATA — MEDICAID AND MEDICARE
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended September 30, 2019
California
1.6

 
$
510

 
$
315.90

 
$
423

 
$
261.97

 
82.9
%
 
$
87

Florida
0.3

 
130

 
436.99

 
127

 
427.80

 
97.9

 
3

Illinois
0.7

 
257

 
383.41

 
232

 
347.28

 
90.6

 
25

Michigan
1.1

 
401

 
373.01

 
332

 
307.97

 
82.6

 
69

Ohio
0.9

 
615

 
687.38

 
563

 
628.98

 
91.5

 
52

Puerto Rico
0.6

 
117

 
209.25

 
102

 
182.53

 
87.2

 
15

South Carolina
0.4

 
151

 
379.20

 
138

 
347.23

 
91.6

 
13

Texas
0.7

 
592

 
912.76

 
540

 
833.51

 
91.3

 
52

Washington
2.3

 
643

 
269.52

 
570

 
238.55

 
88.5

 
73

Other (1) (2)
0.6

 
311

 
437.60

 
242

 
341.29

 
78.0

 
69

 
9.2

 
$
3,727

 
$
402.76

 
$
3,269

 
$
353.31

 
87.7
%
 
$
458

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
California
1.7

 
$
435

 
$
249.00

 
$
446

 
$
255.22

 
102.5
%
 
$
(11
)
Florida
1.0

 
388

 
363.16

 
362

 
339.33

 
93.4

 
26

Illinois
0.7

 
207

 
312.72

 
182

 
274.98

 
87.9

 
25

Michigan
1.1

 
397

 
350.05

 
321

 
282.49

 
80.7

 
76

New Mexico (2)
0.6

 
304

 
471.66

 
275

 
426.69

 
90.5

 
29

Ohio
0.9

 
584

 
624.84

 
532

 
568.93

 
91.1

 
52

Puerto Rico
1.0

 
179

 
189.65

 
162

 
171.96

 
90.7

 
17

South Carolina
0.4

 
124

 
354.53

 
112

 
318.56

 
89.9

 
12

Texas
0.7

 
577

 
848.47

 
525

 
772.14

 
91.0

 
52

Washington
2.3

 
511

 
226.77

 
444

 
197.04

 
86.9

 
67

Other (1)
0.5

 
175

 
334.29

 
137

 
261.49

 
78.2

 
38

 
10.9

 
$
3,881

 
$
354.70

 
$
3,498

 
$
319.63

 
90.1
%
 
$
383

 
Nine Months Ended September 30, 2019
California
4.9

 
$
1,508

 
$
306.96

 
$
1,286

 
$
261.76

 
85.3
%
 
$
222

Florida
1.0

 
418

 
410.71

 
374

 
367.95

 
89.6

 
44

Illinois
2.0

 
726

 
365.35

 
632

 
318.26

 
87.1

 
94

Michigan
3.3

 
1,199

 
370.77

 
990

 
305.99

 
82.5

 
209

Ohio
2.7

 
1,835

 
682.59

 
1,653

 
614.89

 
90.1

 
182

Puerto Rico
1.8

 
341

 
190.42

 
301

 
167.98

 
88.2

 
40

South Carolina
1.2

 
427

 
368.35

 
378

 
326.61

 
88.7

 
49

Texas
2.0

 
1,789

 
910.64

 
1,623

 
826.20

 
90.7

 
166

Washington
7.1

 
1,868

 
261.92

 
1,691

 
236.98

 
90.5

 
177

Other (1) (2)
1.9

 
810

 
402.31

 
656

 
325.93

 
81.0

 
154

 
27.9

 
$
10,921

 
$
391.44

 
$
9,584

 
$
343.53

 
87.8
%
 
$
1,337

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
California
5.3

 
$
1,446

 
$
270.63

 
$
1,299

 
$
243.14

 
89.8
%
 
$
147

Florida
3.2

 
1,147

 
356.15

 
1,069

 
331.93

 
93.2

 
78

Illinois
1.8

 
551

 
308.45

 
474

 
265.47

 
86.1

 
77

Michigan
3.4

 
1,161

 
343.08

 
983

 
290.26

 
84.6

 
178

New Mexico (2)
2.0

 
936

 
469.19

 
875

 
438.70

 
93.5

 
61

Ohio
2.8

 
1,670

 
590.71

 
1,474

 
521.26

 
88.2

 
196

Puerto Rico
2.9

 
549

 
190.34

 
501

 
173.83

 
91.3

 
48

South Carolina
1.1

 
369

 
350.94

 
323

 
306.76

 
87.4

 
46

Texas
2.1

 
1,715

 
831.21

 
1,554

 
753.31

 
90.6

 
161

Washington
6.8

 
1,666

 
245.40

 
1,544

 
227.41

 
92.7

 
122

Other (1)
1.6

 
530

 
323.84

 
442

 
269.98

 
83.4

 
88

 
33.0

 
$
11,740

 
$
355.96

 
$
10,538

 
$
319.50

 
89.8
%
 
$
1,202

_______________
(1)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.
(2)
In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to the Company’s consolidated operating results.

-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 11
October 29, 2019

HEALTH PLANS SEGMENT FINANCIAL DATA — MARKETPLACE
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended September 30, 2019
California
0.2

 
$
57

 
$
371.07

 
$
33

 
$
210.87

 
56.8
%
 
$
24

Florida
0.1

 
41

 
349.53

 
25

 
212.00

 
60.7

 
16

Michigan
—

 
7

 
431.41

 
4

 
289.45

 
67.1

 
3

Ohio
—

 
25

 
792.96

 
19

 
626.30

 
79.0

 
6

Texas
0.4

 
142

 
351.04

 
105

 
257.68

 
73.4

 
37

Washington
0.1

 
45

 
719.67

 
33

 
548.75

 
76.2

 
12

Other (1)
0.1

 
40

 
480.41

 
35

 
408.35

 
85.0

 
5

 
0.9

 
$
357

 
$
410.23

 
$
254

 
$
292.21

 
71.2
%
 
$
103

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
California
0.2

 
$
49

 
$
309.04

 
$
37

 
$
235.63

 
76.2
%
 
$
12

Florida
0.2

 
66

 
548.60

 
45

 
362.39

 
66.1

 
21

Michigan
—

 
12

 
233.51

 
7

 
145.13

 
62.1

 
5

New Mexico
0.1

 
28

 
419.20

 
18

 
249.33

 
59.5

 
10

Ohio
0.1

 
27

 
485.08

 
18

 
336.86

 
69.4

 
9

Texas
0.6

 
228

 
357.54

 
134

 
209.80

 
58.7

 
94

Washington
—

 
44

 
656.70

 
34

 
518.75

 
79.0

 
10

Other (2)
—

 
2

 
NM

 
(1
)
 
NM

 
NM

 
3

 
1.2

 
$
456

 
$
394.02

 
$
292

 
$
252.61

 
64.1
%
 
$
164

 
Nine Months Ended September 30, 2019
California
0.5

 
$
174

 
$
364.72

 
$
101

 
$
210.76

 
57.8
%
 
$
73

Florida
0.4

 
152

 
389.44

 
81

 
207.22

 
53.2

 
71

Michigan
—

 
27

 
474.12

 
15

 
265.95

 
56.1

 
12

Ohio
0.1

 
79

 
801.90

 
53

 
543.00

 
67.7

 
26

Texas
1.3

 
457

 
344.19

 
331

 
249.44

 
72.5

 
126

Washington
0.2

 
143

 
744.47

 
97

 
509.50

 
68.4

 
46

Other (1)
0.3

 
132

 
494.59

 
98

 
364.71

 
73.7

 
34

 
2.8

 
$
1,164

 
$
414.17

 
$
776

 
$
276.28

 
66.7
%
 
$
388

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
California
0.6

 
$
171

 
$
326.82

 
$
89

 
$
169.98

 
52.0
%
 
$
82

Florida
0.5

 
211

 
491.13

 
67

 
155.24

 
31.6

 
144

Michigan
0.1

 
40

 
248.24

 
23

 
145.38

 
58.6

 
17

New Mexico
0.2

 
93

 
426.07

 
55

 
247.57

 
58.1

 
38

Ohio
0.2

 
84

 
466.75

 
58

 
324.91

 
69.6

 
26

Texas
2.0

 
679

 
330.92

 
440

 
214.65

 
64.9

 
239

Washington
0.2

 
139

 
654.78

 
105

 
497.00

 
75.9

 
34

Other (2)
—

 
17

 
NM

 
(13
)
 
NM

 
NM

 
30

 
3.8

 
$
1,434

 
$
379.91

 
$
824

 
$
218.44

 
57.5
%
 
$
610

__________________
(1)
“Other” includes the New Mexico, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results in 2019.
(2)
“Other” includes the Utah and Wisconsin health plans, where the Company did not participate in the Marketplace in 2018. Therefore, the ratios for 2018 periods are not meaningful (NM).


-MORE-

Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 12
October 29, 2019

HEALTH PLANS SEGMENT FINANCIAL DATA — TOTAL
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
 
Three Months Ended September 30, 2019
California
1.8

 
$
567

 
$
320.67

 
$
456

 
$
257.55

 
80.3
%
 
$
111

Florida
0.4

 
171

 
412.29

 
152

 
366.86

 
89.0

 
19

Illinois
0.7

 
257

 
383.41

 
232

 
347.28

 
90.6

 
25

Michigan
1.1

 
408

 
373.92

 
336

 
307.68

 
82.3

 
72

Ohio
0.9

 
640

 
690.88

 
582

 
628.89

 
91.0

 
58

Puerto Rico
0.6

 
117

 
209.25

 
102

 
182.53

 
87.2

 
15

South Carolina
0.4

 
151

 
379.20

 
138

 
347.23

 
91.6

 
13

Texas
1.1

 
734

 
696.46

 
645

 
611.78

 
87.8

 
89

Washington
2.4

 
688

 
280.85

 
603

 
246.36

 
87.7

 
85

Other (1) (2)
0.7

 
351

 
442.14

 
277

 
348.40

 
78.8

 
74

 
10.1

 
$
4,084

 
$
403.40

 
$
3,523

 
$
348.06

 
86.3
%
 
$
561

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
California
1.9

 
$
484

 
$
253.96

 
$
483

 
$
253.60

 
99.9
%
 
$
1

Florida
1.2

 
454

 
382.20

 
407

 
341.70

 
89.4

 
47

Illinois
0.7

 
207

 
312.72

 
182

 
274.98

 
87.9

 
25

Michigan
1.1

 
409

 
345.28

 
328

 
276.88

 
80.2

 
81

New Mexico (2)
0.7

 
332

 
466.63

 
293

 
409.68

 
87.8

 
39

Ohio
1.0

 
611

 
616.95

 
550

 
555.83

 
90.1

 
61

Puerto Rico
1.0

 
179

 
189.65

 
162

 
171.96

 
90.7

 
17

South Carolina
0.4

 
124

 
354.53

 
112

 
318.56

 
89.9

 
12

Texas
1.3

 
805

 
611.01

 
659

 
500.14

 
81.9

 
146

Washington
2.3

 
555

 
239.25

 
478

 
206.38

 
86.3

 
77

Other (1)
0.5

 
177

 
336.18

 
136

 
260.19

 
77.4

 
41

 
12.1

 
$
4,337

 
$
358.46

 
$
3,790

 
$
313.23

 
87.4
%
 
$
547

 
Nine Months Ended September 30, 2019
California
5.4

 
$
1,682

 
$
312.08

 
$
1,387

 
$
257.25

 
82.4
%
 
$
295

Florida
1.4

 
570

 
404.81

 
455

 
323.37

 
79.9

 
115

Illinois
2.0

 
726

 
365.35

 
632

 
318.26

 
87.1

 
94

Michigan
3.3

 
1,226

 
372.58

 
1,005

 
305.29

 
81.9

 
221

Ohio
2.8

 
1,914

 
686.80

 
1,706

 
612.35

 
89.2

 
208

Puerto Rico
1.8

 
341

 
190.42

 
301

 
167.98

 
88.2

 
40

South Carolina
1.2

 
427

 
368.35

 
378

 
326.61

 
88.7

 
49

Texas
3.3

 
2,246

 
682.10

 
1,954

 
593.50

 
87.0

 
292

Washington
7.3

 
2,011

 
274.52

 
1,788

 
244.10

 
88.9

 
223

Other (1) (2)
2.2

 
942

 
413.13

 
754

 
330.48

 
80.0

 
188

 
30.7

 
$
12,085

 
$
393.52

 
$
10,360

 
$
337.37

 
85.7
%
 
$
1,725

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
California
5.9

 
$
1,617

 
$
275.64

 
$
1,388

 
$
236.61

 
85.8
%
 
$
229

Florida
3.7

 
1,358

 
372.07

 
1,136

 
311.09

 
83.6

 
222

Illinois
1.8

 
551

 
308.45

 
474

 
265.47

 
86.1

 
77

Michigan
3.5

 
1,201

 
338.83

 
1,006

 
283.77

 
83.7

 
195

New Mexico (2)
2.2

 
1,029

 
464.92

 
930

 
419.78

 
90.3

 
99

Ohio
3.0

 
1,754

 
583.29

 
1,532

 
509.52

 
87.4

 
222

Puerto Rico
2.9

 
549

 
190.34

 
501

 
173.83

 
91.3

 
48

South Carolina
1.1

 
369

 
350.94

 
323

 
306.76

 
87.4

 
46

Texas
4.1

 
2,394

 
581.74

 
1,994

 
484.70

 
83.3

 
400

Washington
7.0

 
1,805

 
257.82

 
1,649

 
235.59

 
91.4

 
156

Other (1)
1.6

 
547

 
334.26

 
429

 
262.27

 
78.5

 
118

 
36.8

 
$
13,174

 
$
358.42

 
$
11,362

 
$
309.12

 
86.2
%
 
$
1,812

__________________
(1)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to the Company’s consolidated operating results.
(2)
In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to the Company’s consolidated operating results.

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Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 13
October 29, 2019

SELECTED FINANCIAL DATA

The following table provides details of the Company’s medical care costs for the periods indicated:
 
Three Months Ended September 30,
 
2019
 
2018
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
2,685

 
$
265.12

 
76.2
%
 
$
2,865

 
$
236.74

 
75.6
%
Pharmacy
412

 
40.74

 
11.7

 
495

 
40.90

 
13.1

Capitation
283

 
28.01

 
8.0

 
297

 
24.52

 
7.8

Other
143

 
14.19

 
4.1

 
133

 
11.07

 
3.5

 
$
3,523

 
$
348.06

 
100.0
%
 
$
3,790

 
$
313.23

 
100.0
%
 
Nine Months Ended September 30,
 
2019
 
2018
 
Amount
 
PMPM
 
% of
Total
 
Amount
 
PMPM
 
% of
Total
Fee for service
$
7,793

 
$
253.77

 
75.2
%
 
$
8,471

 
$
230.46

 
74.6
%
Pharmacy
1,254

 
40.83

 
12.1

 
1,645

 
44.76

 
14.5

Capitation
856

 
27.88

 
8.3

 
891

 
24.23

 
7.8

Other
457

 
14.89

 
4.4

 
355

 
9.67

 
3.1

 
$
10,360

 
$
337.37

 
100.0
%
 
$
11,362

 
$
309.12

 
100.0
%

The following table provides details of the Company’s medical claims and benefits payable as of the dates indicated:
 
September 30,
 
December 31,
 
2019
 
2018
Fee-for-service claims incurred but not paid (IBNP)
$
1,424

 
$
1,562

Pharmacy payable
128

 
115

Capitation payable
57

 
52

Other (1)
366

 
232

 
$
1,975

 
$
1,961

______________________
(1)
“Other” medical claims and benefits payable include amounts payable to certain providers for which the Company acts as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact the Company’s consolidated statements of income. As of September 30, 2019 and December 31, 2018, the Company had recorded non-risk provider payables of approximately $239 million and $107 million, respectively.


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Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 14
October 29, 2019

CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in millions)


The Company’s 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. The Company’s reserving methodology is consistently applied across all periods presented. The amounts displayed for “Components of medical care costs related to: Prior period” represent the amount by which the original estimate of claims and benefits payable at the beginning of the period was more than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:
 
Nine Months Ended
 
Year Ended
 
September 30,
 
Dec. 31, 2018
 
2019
 
2018
 
Medical claims and benefits payable, beginning balance
$
1,961

 
$
2,192

 
$
2,192

Components of medical care costs related to:
 
 
 
 
 
Current period
10,613

 
11,670

 
15,478

Prior period (1)
(253
)
 
(308
)
 
(341
)
Total medical care costs
10,360

 
11,362

 
15,137

Change in non-risk and other provider payables
131

 
60

 
13

Payments for medical care costs related to:
 
 
 
 
 
Current period
8,996

 
9,866

 
13,671

Prior period
1,481

 
1,706

 
1,710

Total paid
10,477

 
11,572

 
15,381

Medical claims and benefits payable, ending balance
$
1,975

 
$
2,042

 
$
1,961

 
 
 
 
 
 
Days in claims payable, fee for service (2)
50

 
53

 
53

______________________
(1)
The September 30, 2018, and December 31, 2018, amounts include the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81 million.
(2)
Claims payable includes primarily IBNP. It also includes certain fee-for-service payables reported in “Other” medical claims and benefits payable amounting to $42 million, $34 million and $43 million, as of September 30, 2019, September 30, 2018, and December 31, 2018, respectively.



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Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 15
October 29, 2019

SUMMARY OF NON-RUN RATE ITEMS AFFECTING CURRENT QUARTER AND YEAR-TO-DATE FINANCIAL RESULTS
(In millions, except per diluted share amounts)

The table below summarizes the impact of certain expenses and other items that management believes are not indicative of longer-term business trends and operations. The individual items presented below increase (decrease) income before income tax expense.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
 
Amount
 
Per Diluted Share (1)
(Loss) gain on debt repayment
$
(2
)
 
$
(0.03
)
 
$
(10
)
 
$
(0.12
)
 
$
15

 
$
0.18

 
$
(25
)
 
$
(0.33
)
Restructuring costs
—

 
—

 
(5
)
 
(0.06
)
 
(5
)
 
(0.06
)
 
(38
)
 
(0.45
)
Gain on sale of subsidiary
—

 
—

 
37

 
0.42

 
—

 
—

 
37

 
0.43

 
$
(2
)
 
$
(0.03
)
 
$
22

 
$
0.24

 
$
10

 
$
0.12

 
$
(26
)
 
$
(0.35
)
______________________
(1)
Except for permanent differences between GAAP and tax (such as certain expenses that are not deductible for tax purposes), per diluted share amounts are generally calculated at the statutory income tax rate of 22.6% and 22% for 2019 and 2018, respectively.


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Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 16
October 29, 2019

NON-GAAP FINANCIAL MEASURES
The Company uses non-generally accepted accounting principles, or non-GAAP, financial measures as supplemental metrics in evaluating the Company’s financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing the Company’s performance to the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures. See further information regarding non-GAAP measures below the tables.
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
175

 
$
197

 
$
569

 
$
506

Adjustments:
 
 
 
 


 


Depreciation, and amortization of intangible assets and capitalized software
21

 
28

 
68

 
95

Interest expense
22

 
26

 
67

 
91

Income tax expense
58

 
62

 
181

 
237

EBITDA
$
276

 
$
313

 
$
885

 
$
929

Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:
Earnings before interest, taxes, depreciation and amortization (“EBITDA”): Net income on a GAAP basis less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax expense. The Company believes that EBITDA is helpful in assessing the Company’s ability to meet the cash demands of its operating units.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2019
 
2018
 
2019
 
2018
 
 
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
Net income
$
175

 
$
2.75

 
$
197

 
$
2.90

 
$
569

 
$
8.80

 
$
506

 
$
7.60

Adjustment:
 
 
 
 
 
 
 
 
 
 


 


 


Amortization of intangible assets
4

 
0.07

 
6

 
0.08

 
13

 
0.21

 
16

 
0.23

Income tax effect (1)
(1
)
 
(0.02
)
 
(2
)
 
(0.01
)
 
(3
)
 
(0.05
)
 
(4
)
 
(0.05
)
Adjustment, net of tax effect
3

 
0.05

 
4

 
0.07

 
10

 
0.16

 
12

 
0.18

Adjusted net income
$
178

 
$
2.80

 
$
201

 
$
2.97

 
$
579

 
$
8.96

 
$
518

 
$
7.78

________________________
(1)
Income tax effect of adjustments calculated at the blended federal and state statutory tax rate of 22.6% and 22% for 2019 and 2018, respectively.
Adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release follow:
Adjusted net income: Net income on a GAAP basis less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate. The Company believes that adjusted net income is helpful in assessing the Company’s 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.

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Molina Healthcare, Inc. Announces Third Quarter 2019 Results
Page 17
October 29, 2019


2019 REVISED GUIDANCE

Reconciliation of Non-GAAP Financial Measures
 
Low End
 
High End
 
(In millions)
Net income
$
725

 
$
740

Adjustments:
 
 
 
Depreciation, and amortization of intangible assets and capitalized software
90

 
90

Interest expense
90

 
90

Income tax expense
235

 
240

EBITDA
$
1,140

 
$
1,160




-END-