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): August 1, 2006
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)
|
One
Golden Shore Drive, Long Beach, California 90802
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (562) 435-3666
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Item
2.02. Results
of Operations and Financial Condition.
On
August
1, 2006, Molina Healthcare, Inc. issued a press release announcing its
financial
results for the second quarter and six months ended June 30, 2006. The
full text
of the press release is included as Exhibit 99.1 to this report. The information
contained in the websites cited in the press release is not part of this
report.
The
information in this Form 8-K and the exhibit attached hereto shall not
be deemed
to be “filed” for purposes of Section 18 of the Securities Act of 1934 or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933
or the
Securities Act of 1934, except as expressly set forth by specific reference
in
such a filing.
Item
9.01. Financial
Statements and Exhibits.
(d)
Exhibits:
|
Exhibit
|
|
|
No.
|
Description
|
|
99.1
|
Press
release of Molina Healthcare, Inc. issued August 1, 2006, as
to financial
results for the second quarter and six months ended June 30,
2006.
|
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:
August 1, 2006
|
|
By: /s/
Mark L.
Andrews
|
||
|
|
|
Mark
L. Andrews
Chief
Legal Officer, General Counsel
and
Corporate Secretary
|
||
EXHIBIT
INDEX
|
Exhibit
|
|
|
No.
|
Description
|
|
99.1
|
Press
release of Molina Healthcare, Inc. issued August 1, 2006, as
to financial
results for the second quarter and six months ended June 30,
2006.
|
Exhibit
99.1
News
Release
Contact:
Juan
José
Orellana
Investor
Relations
Molina
Healthcare, Inc.
562-435-3666,
ext. 111143
MOLINA
HEALTHCARE REPORTS
SECOND
QUARTER RESULTS
Long
Beach, California (August 1, 2006) — Molina Healthcare, Inc. (NYSE: MOH) today
announced its financial results for the second quarter and six months ended
June
30, 2006.
Net
income
for the quarter ended June 30, 2006, was $13.2 million, or $0.47 per diluted
share, compared with a net loss of $<4.7> million, or $<0.17> per
diluted share, for the quarter ended June 30, 2005. Net income for the
first half of 2006 was $21.7 million, or $0.77 per diluted share, compared
with
net income of $10.1 million, or $0.36 per diluted share, for the first
half of
2005.
Comparability
between the second quarter of 2006 and the second quarter of 2005 is affected
by:
|
·
|
Approximately
$5.0 million in positive prior period claims development recorded
in the
second quarter of 2006 related to the Company’s claims liability at
December 31, 2005. The effect of this item was to increase earnings
in the
second quarter of 2006 by $0.11 per diluted
share.
|
|
·
|
The
previously disclosed $13.4 million in adverse prior period claims
development recorded in the second quarter of 2005. The effect
of this
item was to decrease earnings in the second quarter of 2005 by
$0.30 per
diluted share.
|
Commenting
on the results, J. Mario Molina, M.D., president and chief executive officer
of
Molina Healthcare, Inc., said, “We are pleased with the progress we have made
over the past year. We have seen a marked improvement in our overall medical
costs as compared with last year, and in the second quarter, we completed
the
acquisition of Cape Health Plan, adding almost 90,000 members in
Michigan.”
Guidance
The
Company also issued the following update to its guidance for fiscal year
2006:
|
Earnings
per diluted share
|
$1.60
to $1.65
|
|
Net
income
|
$45.4
to $46.9 million
|
|
Premium
revenue
|
$2.0
billion
|
|
Medical
care costs as a percentage of premium revenue
|
84.7%
|
|
Administrative
expenses (including premium taxes)
as
a
percentage of total revenue
|
11.3% |
-MORE-
MOH
Announces Second Quarter Results
Page
2
August
1,
2006
The
guidance assumes an effective tax rate of 37.8% and weighted average diluted
shares outstanding of 28.4 million. In Ohio, the guidance assumes substantial
increases in enrollment by December 2006 and a medical care ratio of
approximately 89.0% for the entire year. In Indiana, the guidance assumes
a
modest increase in enrollment by December 2006 and a medical care ratio of
approximately 90.0% for the entire year.
Update
on Medical Care Cost Issues
In
its
2005 second quarter earnings release, the Company had identified four primary
factors that were adversely affecting its medical care costs:
|
·
|
Increased
hospital costs. Hospital
costs were more favorable in both the first half of 2006 and the
second
half of 2005 compared with the first half of 2005. The favorable
cost
trend appears to be the result of improvements in both utilization
and
unit costs.
|
|
·
|
Increased
costs from catastrophic cases. Catastrophic
cases declined during both the first half of 2006 and the second
half of
2005 compared with the first half of 2005.
|
|
·
|
Increased
maternity costs in Michigan and Washington.
The Company continues to believe that the revenue it receives for
providing maternity services in Michigan and Washington is not
commensurate with the costs of providing such
services.
|
|
·
|
Increased
outpatient costs. Outpatient
costs were more favorable in the
first half of 2006 compared with the first half of 2005. Outpatient
utilization declined in Washington in the first half of 2006 compared
with
the first half of 2005.
|
In
response to these cost factors, the Company implemented a number of initiatives
which it believes have better controlled its medical care costs. In particular,
the Company believes that the following actions have contributed to lower
medical care costs since the second quarter of 2005:
|
·
|
Recontracting
efforts in New Mexico, Michigan, and
Washington;
|
|
·
|
Utilization
of more cost-effective hospitals where such facilities are
available;
|
|
·
|
Enhanced
monitoring of utilization at hospitals where more cost-effective
alternatives are not available;
|
|
·
|
Increased
investment in medical and utilization management
resources;
|
|
·
|
Implementation
of a risk sharing arrangement with the state of Washington for
high cost
hemophiliac care;
|
|
·
|
Withdrawal
from two counties (one in Michigan and one in Washington) where
premium
rates were not adequate to cover medical care
costs;
|
|
·
|
Adjustment
of premium rates to reflect the increased cost of providing care
to
specific member populations; and
|
|
·
|
Increased
oversight and improvements in the quality of the Company’s claims payment
process.
|
-MORE-
MOH
Announces Second Quarter Results
Page
3
August
1,
2006
Nevertheless,
the Company can give no assurances that the improved performance is not at
least
partially the result of factors beyond the Company’s control, nor can it give
any assurances that the improved medical care cost trends will
continue.
Furthermore,
progress has not been uniform among the Company’s health plan subsidiaries. For
example, the Company’s results during the first half of 2006 were adversely
affected by the financial performance of its California HMO, principally
due to
profitability issues in San Diego County.
Financial
Results - Comparison of Quarters Ended June 30, 2006 and
2005
Premium
revenue
for the
second quarter of 2006 was $479.8 million, an increase of $77.9 million,
or
19.4%, over premium revenue for the second quarter of 2005 of $401.9 million.
Acquisitions in California (June 1, 2005) and Michigan (May 15, 2006), start-up
operations in Indiana and Ohio, and enrollment growth in Utah were the primary
drivers of the increase in premium revenue. Membership growth was partially
offset by declines in membership in Michigan, New Mexico, and California
(excluding acquisitions).
Medical
care costs
as a
percentage of premium revenue (the medical care ratio) decreased to 83.7%
in the
second quarter of 2006 from 91.9% in the second quarter of 2005. Excluding
the
effect of the $5.0 million in positive prior period claims development in
the
second quarter of 2006 and the $13.4 million in negative prior period claims
development in the second quarter of 2005, the medical care ratio would have
decreased to 84.8% in the second quarter of 2006 from 88.6% in the second
quarter of 2005. Sequentially, the Company’s medical care ratio decreased from
85.3% in the first quarter of 2006.
Sequentially,
the Company’s days in claims payable decreased to 54 days at June 30, 2006,
compared with 57 days at March 31, 2006. The Company’s days in claims
payable at June 30, 2005, were 50 days.
The
sequential decrease in days in claims payable is the result of lower medical
costs in the second quarter of 2006. The Company believes that its claims
reserves remain adequate at June 30, 2006. The Company further believes that
it
has improved its visibility into medical cost trends as a result of additional
processes and controls put into place since the second quarter of
2005.
Salary,
general and administrative expenses
were
$56.3 million for the second quarter of 2006, representing 11.6% of total
revenue, as compared with $37.1 million, or 9.2% of total revenue, for the
second quarter of 2005.
Core
G&A (defined as SG&A expenses less premium taxes) increased to 8.6% of
total revenue in the second quarter of 2006 compared with 6.7% in the second
quarter of 2005. The increase in Core G&A was due to investments in
infrastructure to support the Company’s medical care cost control initiatives
and also its information technology initiatives, its expansion into Ohio
and
Texas, and the launch of its Medicare Advantage Special Needs Plans. The
Company’s adoption of SFAS No. 123R, Share-Based Payment,
effective
January 1, 2006, reduced earnings per diluted share by approximately $0.02
in
the second quarter of 2006.
-MORE-
MOH
Announces Second Quarter Results
Page
4
August
1,
2006
Depreciation
and amortization expense
increased
by $1.3 million compared with the second quarter of 2005. Depreciation
expense
increased by $0.9 million in the second quarter of 2006 due to investments
in
infrastructure. Amortization expense increased by $0.4 million in the second
quarter of 2006 due to acquisitions in California and Michigan.
Investment
income during
the
quarter increased by $2.5 million, or 103.9%, as compared with the second
quarter of 2005 as a result of higher invested balances and higher rates
of
return.
Income
taxes were
recognized in the second quarter of 2006 based upon an effective tax rate
of
37.9% as compared with an effective tax rate of 38.0% in the second quarter
of
2005.
Financial
Results - Comparison of Six Months Ended June 30, 2006 and
2005
Premium
revenue
for the
six months ended June 30, 2006, was $929.1 million, an increase of $135.0
million, or 17.0%, over premium revenue for the six months ended June 30,
2005,
of $794.1 million. Acquisitions in California and Michigan, the start-ups
in
Indiana and Ohio, and enrollment growth in Utah were the primary drivers
of the
increase in premium revenue. Membership growth was partially offset by
declines
in membership in Michigan, New Mexico, and California (excluding acquisitions).
The
medical care ratio decreased
to 84.5% in the six months ended June 30, 2006, from 88.5% in the first
half of
2005. Excluding the $5.0 million in positive prior period claims development
in
the first half of 2006, the medical care ratio would have been 85.0%. As
noted
above, the Company believes that its medical care cost control initiatives
undertaken at the start of the third quarter of 2005 are having a positive
impact upon its medical care ratio.
Salary,
general and administrative expenses
were
$107.5 million for the six months ended June 30, 2006, representing 11.5%
of
total revenue, as compared with $70.6 million, or 8.8% of total revenue,
for the
six months ended June 30, 2005.
Core
G&A increased to 8.6% of total revenue for the six months ended June 30,
2006, compared with 6.2% in the first half of 2005. The increase in Core
G&A
was due to the infrastructure improvements and product and market expansions
as
discussed above. The Company’s adoption of SFAS No. 123R, Share-Based Payment,
effective
January 1, 2006, reduced earnings per diluted share by approximately $0.04
for
the first half of 2006.
Depreciation
and amortization expense
increased
by $2.9 million for the six months ended June 30, 2006, compared with the
first
half of 2005. Depreciation expense increased by $2.1 million in 2006 due
to
investments in infrastructure, principally at the Company’s corporate offices.
Amortization expense increased by $0.8 million in 2006 due to acquisitions
in
California and Michigan.
Investment
income during
the
six months ended June 30, 2006, increased by $4.8 million, or 115.6%, as
compared with the same period in 2005 as a result of higher invested balances
and higher rates of return.
Income
taxes were
recognized for the six months ended June 30, 2006, based upon an effective
tax
rate of 37.7% as compared with an effective tax rate of 38.0% for the six
months
ended June 30, 2005.
-MORE-
MOH
Announces Second Quarter Results
Page
5
August
1,
2006
Cash
Flow
Cash
provided by operating activities for the six months ended June 30,
2006, was
$38.6 million. Net income and the timing of payments for medical claims
and
benefits payable were the primary sources of cash provided by operating
activities. Cash provided by operating activities for the same period
in 2005
was $8.4 million.
At
June
30, 2006, the Company owed $15.0 million under its $180.0 million credit
facility.
At
June
30, 2006, the Company had consolidated cash and investments of approximately
$406.7 million. The Company’s parent had approximately $37.0 million in cash and
investments at June 30, 2006.
Membership
The
following table details the Company’s ending membership by state at June 30,
2006, March 31, 2006, and June 30, 2005:
|
June
30,
|
March
31,
|
June
30,
|
||||||||
|
2006
|
2006
|
2005
|
||||||||
|
California
|
307,000
|
312,000
|
339,000
|
|||||||
|
Indiana
|
37,000
|
28,000
|
8,000
|
|||||||
|
Michigan
|
232,000
|
143,000
|
152,000
|
|||||||
|
New
Mexico
|
59,000
|
59,000
|
60,000
|
|||||||
|
Ohio
|
30,000
|
27,000
|
N/A
|
1 | ||||||
|
Utah
|
57,000
|
61,000
|
54,000
|
|||||||
|
Washington
|
286,000
|
288,000
|
285,000
|
|||||||
|
Total
|
1,008,000
|
918,000
|
898,000
|
|||||||
1
The
Company’s Ohio HMO commenced operations in December 2005.
The
following table details member months (defined as the aggregation
of each
month’s ending membership for the period) by state for the periods
indicated:
|
Quarter
Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
March
31,
|
June
30,
|
June
30,
|
June
30,
|
||||||||||||
|
2006
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
|
California
|
927,000
|
947,000
|
839,000
|
1,874,000
|
1,592,000
|
|||||||||||
|
Indiana
|
99,000
|
79,000
|
20,000
|
178,000
|
20,000
|
|||||||||||
|
Michigan
|
565,000
|
431,000
|
463,000
|
996,000
|
934,000
|
|||||||||||
|
New
Mexico
|
176,000
|
178,000
|
183,000
|
354,000
|
370,000
|
|||||||||||
|
Ohio
|
86,000
|
48,000
|
N/A
|
1 |
134,000
|
N/A
|
1 | |||||||||
|
Utah
|
179,000
|
181,000
|
169,000
|
360,000
|
328,000
|
|||||||||||
|
Washington
|
858,000
|
868,000
|
842,000
|
1,726,000
|
1,665,000
|
|||||||||||
|
Total
|
2,890,000
|
2,732,000
|
2,516,000
|
5,622,000
|
4,909,000
|
|||||||||||
1
The
Company’s Ohio HMO commenced operations in December 2005.
-MORE-
MOH
Announces Second Quarter Results
Page
6
August
1,
2006
Conference
Call
The
live
broadcast of Molina Healthcare’s conference call will begin at 5:00 p.m. Eastern
Time, August 1, 2006. The telephone number for this interactive conference
call
is 212-346-6560. A 30-day online replay will be available beginning
approximately one hour following the conclusion of the live broadcast.
A link to
the call can be found on the Company’s website at www.molinahealthcare.com
or at
www.earnings.com.
Molina
Healthcare, Inc. is a multi-state managed care organization that arranges
for
the delivery of healthcare services to persons eligible for Medicaid
and other
government-sponsored programs for low-income families and individuals.
Molina
Healthcare, Inc. currently operates health plans in California, Indiana,
Michigan, New Mexico, Ohio, Utah, and Washington. More information about
Molina
Healthcare, Inc. can be obtained at www.molinahealthcare.com.
Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995:
This press release contains “forward-looking statements” identified by words
such as “will,” “expects,” “believes,” “anticipates,” “plans,” “projects,”
“estimates,” “intends,” and similar words and expressions. In addition,
any statements that refer to earnings guidance, expectations, projections,
or
their underlying assumptions, or other characterizations of future events
or
circumstances, are forward-looking statements. All of the Company’s
forward-looking statements are based on current expectations and assumptions
that are subject to numerous known and unknown risks, uncertainties,
and other
factors that could cause actual results to differ materially. Such factors
include, without limitation, risks related to: the continuation of the
improvement in the Company’s medical care cost trends; the
Company’s ability to accurately identify medical care cost issues and to address
them through its medical care cost control initiatives; the Company’s ability to
accurately estimate incurred but not reported medical costs; high dollar
claims
related to catastrophic illness; slower growth in enrollment than projected
in
the Company’s Ohio and Indiana subsidiaries; potential
reductions in funding for Medicaid and other government-sponsored healthcare
programs; the successful renewal and continuation of the government contracts
of
the Company’s health plans; the favorable resolution of pending litigation or
arbitration; the adequacy of contractual rates and premiums paid to the
Company’s health plans and the implementation of appropriate rate increases;
the
Company’s ability to successfully integrate its completed acquisitions; the
ability to enter into more favorable hospital or provider contracts;
the
availability of financing to fund the Company’s acquisitions; membership
eligibility processes and methodologies, including citizenship recertification,
and the successful maintenance of member enrollment levels; unexpected
changes
in member utilization patterns, healthcare practices, or healthcare
technologies; changes in federal or state laws or regulations or in their
interpretation; risks associated with the Company’s start-up operations in new
states; epidemics; and other risks and uncertainties as detailed in
the
Company’s reports and filings with the Securities and Exchange Commission and
available on its website at www.sec.gov.
All forward-looking statements in this release represent the Company’s judgment
as of August 1, 2006. The Company disclaims any obligation to update any
forward-looking statement to conform the statement to actual results
or changes
in the Company’s expectations.
-MORE-
MOH
Announces Second Quarter Results
Page
7
August
1,
2006
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Dollars
in thousands, except for per share data)
(Unaudited)
|
Three
Months Ended
June
30,
|
Six Months
Ended
June
30,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenue:
|
|||||||||||||
|
Premium
revenue
|
$
|
479,823
|
$
|
401,915
|
$
|
929,117
|
$
|
794,102
|
|||||
|
Investment
income
|
4,811
|
2,359
|
8,893
|
4,124
|
|||||||||
|
Total
revenue
|
484,634
|
404,274
|
938,010
|
798,226
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Medical
care costs:
|
|||||||||||||
|
Medical
services
|
86,020
|
67,604
|
160,878
|
131,271
|
|||||||||
|
Hospital
and specialty services
|
267,689
|
257,266
|
530,559
|
483,798
|
|||||||||
|
Pharmacy
|
48,006
|
42,870
|
93,525
|
85,785
|
|||||||||
|
Provider
settlements
|
—
|
1,750
|
—
|
1,750
|
|||||||||
|
Total
medical care costs
|
401,715
|
369,490
|
784,962
|
702,604
|
|||||||||
|
Salary,
general and administrative expenses
|
56,308
|
37,060
|
107,521
|
70,606
|
|||||||||
|
Loss
contract charge (1)
|
—
|
939
|
—
|
939
|
|||||||||
|
Depreciation
and amortization
|
4,870
|
3,558
|
9,632
|
6,756
|
|||||||||
|
Total
expenses
|
462,893
|
411,047
|
902,115
|
780,905
|
|||||||||
|
Operating
income (loss)
|
21,741
|
(6,773
|
)
|
35,895
|
17,321
|
||||||||
|
Other
expense:
|
|||||||||||||
|
Interest
expense
|
(577
|
)
|
(418
|
)
|
(991
|
)
|
(707
|
)
|
|||||
|
Other,
net (2)
|
—
|
(400
|
)
|
—
|
(400
|
)
|
|||||||
|
Total
other expense
|
(577
|
)
|
(818
|
)
|
(991
|
)
|
(1,107
|
)
|
|||||
|
Income
(loss) before income taxes
|
21,164
|
(7,591
|
)
|
34,904
|
16,214
|
||||||||
|
Income
tax expense (benefit)
|
8,012
|
(2,885
|
)
|
13,162
|
6,161
|
||||||||
|
Net
income (loss)
|
$
|
13,152
|
$
|
(4,706
|
)
|
$
|
21,742
|
$
|
10,053
|
||||
|
Net
income (loss) per share:
|
|||||||||||||
|
Basic
|
$
|
0.47
|
$
|
(0.17
|
)
|
$
|
0.78
|
$
|
0.36
|
||||
|
Diluted
|
$
|
0.47
|
$
|
(0.17
|
)
|
$
|
0.77
|
$
|
0.36
|
||||
|
Weighted
average number of common shares and
|
|||||||||||||
|
potential
dilutive common shares outstanding
|
28,270,000
|
27,707,000
|
28,207,000
|
27,981,000
|
|||||||||
|
Operating
Statistics:
|
|||||||||||||
|
Medical
care ratio (3), excluding
provider settlements
|
83.7
|
%
|
91.5
|
%
|
84.5
|
%
|
88.3
|
%
|
|||||
|
Provider
settlements
|
—
|
0.4
|
%
|
—
|
0.2
|
%
|
|||||||
|
Total
medical care ratio
|
83.7
|
%
|
91.9
|
%
|
84.5
|
%
|
88.5
|
%
|
|||||
|
Salary,
general and administrative expense
|
|||||||||||||
|
ratio
(4), excluding
premium taxes
|
8.6
|
%
|
6.7
|
%
|
8.6
|
%
|
6.2
|
%
|
|||||
|
Premium
taxes included in salary,
|
|||||||||||||
|
general
and administrative expenses
|
3.0
|
%
|
2.5
|
%
|
2.9
|
%
|
2.6
|
%
|
|||||
|
Total
salary, general and
|
|||||||||||||
|
administrative
expense ratio
|
11.6
|
%
|
9.2
|
%
|
11.5
|
%
|
8.8
|
%
|
|||||
|
Members
(5)
|
1,008,000
|
898,000
|
|||||||||||
|
Days
in claims payable
|
54
|
50
|
|||||||||||
(1)
Represents
a charge related to a transition services agreement entered into in connection
with the transfer of certain commercial members to another health plan in
August
2004.
(2)
Represents
a charge of $0.4 million related to the write-off of costs associated with
a
registration statement filed during the second quarter of 2005.
(3)
Medical
care ratio represents medical care costs as a percentage of premium revenue.
(4)
Salary,
general and administrative expense ratio represents such expenses as a
percentage of total revenue.
(5)
Number
of
members at end of period.
-MORE-
MOH
Announces Second Quarter Results
Page
8
August
1,
2006
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED
BALANCE SHEETS
(Dollars
in thousands, except per share data)
|
June
30,
2006
|
Dec. 31,
2005
|
||||||
|
(Unaudited)
|
|||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
312,118
|
$
|
249,203
|
|||
|
Investments
|
94,570
|
103,437
|
|||||
|
Receivables
|
77,201
|
70,532
|
|||||
|
Income
tax receivable
|
4,785
|
3,014
|
|||||
|
Deferred
income taxes
|
2,878
|
2,339
|
|||||
|
Prepaid
and other current assets
|
7,534
|
10,321
|
|||||
|
Total
current assets
|
499,086
|
438,846
|
|||||
|
Property
and equipment, net
|
34,093
|
31,794
|
|||||
|
Goodwill
and intangible assets, net
|
148,528
|
124,914
|
|||||
|
Restricted
investments
|
18,302
|
18,242
|
|||||
|
Receivable
for ceded life and annuity contracts
|
35,834
|
38,113
|
|||||
|
Other
assets
|
8,608
|
8,018
|
|||||
|
Total
assets
|
$
|
744,451
|
$
|
659,927
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Medical
claims and benefits payable
|
$
|
249,789
|
$
|
217,354
|
|||
|
Deferred
revenue
|
8,896
|
803
|
|||||
|
Accounts
payable and accrued liabilities
|
33,540
|
31,457
|
|||||
|
Total
current liabilities
|
292,225
|
249,614
|
|||||
|
Long-term
debt, less current maturities
|
15,000
|
—
|
|||||
|
Deferred
income taxes
|
5,175
|
4,796
|
|||||
|
Liability
for ceded life and annuity contracts
|
35,834
|
38,113
|
|||||
|
Other
long-term liabilities
|
4,660
|
4,554
|
|||||
|
Total
liabilities
|
352,894
|
297,077
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Common
stock, $0.001 par value; 80,000,000 shares authorized;
|
|||||||
|
issued
and outstanding: 27,995,782 shares at June 30, 2006, and
|
|||||||
|
27,792,360
shares at December 31, 2005
|
28
|
28
|
|||||
|
Preferred
stock, $0.001 par value; 20,000,000 shares authorized,
|
|||||||
|
no
shares issued and outstanding
|
—
|
—
|
|||||
|
Additional
paid-in capital
|
169,743
|
162,693
|
|||||
|
Accumulated
other comprehensive loss
|
(714
|
)
|
(629
|
)
|
|||
|
Retained
earnings
|
242,890
|
221,148
|
|||||
|
Treasury
stock (1,201,174 shares, at cost)
|
(20,390
|
)
|
(20,390
|
)
|
|||
|
Total
stockholders’ equity
|
391,557
|
362,850
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
744,451
|
$
|
659,927
|
|||
-MORE-
MOH
Announces Second Quarter Results
Page
9
August
1,
2006
MOLINA
HEALTHCARE, INC.
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars
in thousands)
(Unaudited)
|
Six
Months Ended
June
30,
|
|||||||
|
2006
|
2005
|
||||||
|
Operating
activities:
|
|||||||
|
Net
income
|
$
|
21,742
|
$
|
10,053
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
9,632
|
6,756
|
|||||
|
Amortization
of capitalized credit facility fees
|
429
|
338
|
|||||
|
Deferred
income taxes
|
(2,482
|
)
|
68
|
||||
|
Stock-based
compensation
|
2,747
|
341
|
|||||
|
Changes
in operating assets and liabilities:
|
|||||||
|
Receivables
|
(6,208
|
)
|
(3,544
|
)
|
|||
|
Prepaid
and other current assets
|
3,098
|
(287
|
)
|
||||
|
Medical
claims and benefits payable
|
9,919
|
19,127
|
|||||
|
Accounts
payable and accrued liabilities
|
(2,923
|
)
|
(6,637
|
)
|
|||
|
Income
taxes
|
2,634
|
(17,784
|
)
|
||||
|
Net
cash provided by operating activities
|
38,588
|
8,431
|
|||||
|
Investing
activities:
|
|||||||
|
Purchases
of equipment
|
(7,333
|
)
|
(6,798
|
)
|
|||
|
Purchases
of investments
|
(57,737
|
)
|
(19,645
|
)
|
|||
|
Sales
and maturities of investments
|
66,476
|
22,358
|
|||||
|
Net
cash acquired (paid) in purchase transactions
|
5,820
|
(31,200
|
)
|
||||
|
Decrease
(increase) in restricted cash
|
940
|
(89
|
)
|
||||
|
Increase
in other long-term liabilities
|
106
|
295
|
|||||
|
Increase
in other assets
|
(1,070
|
)
|
(5,210
|
)
|
|||
|
Net
cash provided by (used in) investing activities
|
7,202
|
(40,289
|
)
|
||||
|
Financing
activities:
|
|||||||
|
Borrowing
under credit facility
|
20,000
|
3,100
|
|||||
|
Principal
payments on credit facility, capital lease obligations and mortgage
note
|
(5,000
|
)
|
(82
|
)
|
|||
|
Tax
benefit from exercise of employee stock options
|
|||||||
|
recorded
as additional paid-in capital
|
653
|
1,758
|
|||||
|
Proceeds
from exercise of stock options and employee stock purchases
|
1,472
|
1,474
|
|||||
|
Net
cash provided by financing activities
|
17,125
|
6,250
|
|||||
|
Net
increase (decrease) in cash and cash equivalents
|
62,915
|
(25,608
|
)
|
||||
|
Cash
and cash equivalents at beginning of period
|
249,203
|
228,071
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
312,118
|
$
|
202,463
|
|||
-MORE-
MOH
Announces Second Quarter Results
Page
10
August
1,
2006
MOLINA
HEALTHCARE, INC.
CHANGE
IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars
in thousands)
(Unaudited)
The
following table shows the components of the change in medical claims and
benefits payable for the six months ended June 30, 2006 and
2005:
|
Six
Months Ended
June
30,
|
|||||||
|
|
|
|
2006
|
2005
|
|||
|
Balances
at beginning of period
|
$
|
217,354
|
$
|
160,210
|
|||
|
Medical
claims and benefits payable from business acquired
|
|||||||
|
during
the period
|
22,516
|
-
|
|||||
|
Components
of medical care costs related to:
|
|||||||
|
Current
year
|
819,466
|
702,454
|
|||||
|
Prior
years
|
(34,504
|
)
|
150
|
||||
|
Total
medical care costs
|
784,962
|
702,604
|
|||||
|
Payments
for medical care costs related to:
|
|||||||
|
Current
year
|
603,585
|
538,999
|
|||||
|
Prior
years
|
171,458
|
144,478
|
|||||
|
Total
paid
|
775,043
|
683,477
|
|||||
|
Balances
at end of period
|
$
|
249,789
|
$
|
179,337
|
|||
The
Company’s claims liability includes an allowance for adverse claims development
based on historical experience and other factors including, but not limited
to,
variation in claims payment patterns, changes in utilization and cost trends,
known outbreaks of disease and large claims. The Company’s reserving methodology
is consistently applied across all periods presented. Accordingly, any benefit
recognized in medical care costs resulting from favorable development of
an
estimated liability at the start of the period (captured as a component of
“medical
care costs related to prior years”)
may be
offset by the addition of an allowance for adverse claims development when
estimating the liability at the end of the period (captured as a component
of
“medical
care costs related to current year”).
During
the second quarter of 2006, the Company recognized a net benefit in medical
care
costs of approximately $5.0 million due to favorable development of its medical
claims liability at December 31, 2005.
-END-