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þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 13-4204626 (I.R.S. Employer Identification No.) | |
200 Oceangate, Suite 100 | ||
Long Beach, California | 90802 | |
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Large accelerated filero | Accelerated filerþ | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
Table of Contents
Item 1. | Financial Statements. |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Amounts in thousands, | ||||||||
except per-share data) | ||||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 487,492 | $ | 455,886 | ||||
Investments | 324,902 | 295,375 | ||||||
Receivables | 180,039 | 168,190 | ||||||
Income tax refundable | 5,781 | — | ||||||
Deferred income taxes | 14,096 | 15,716 | ||||||
Prepaid expenses and other current assets | 22,285 | 22,772 | ||||||
Total current assets | 1,034,595 | 957,939 | ||||||
Property and equipment, net | 127,657 | 100,537 | ||||||
Deferred contract costs | 52,839 | 28,444 | ||||||
Intangible assets, net | 84,495 | 105,500 | ||||||
Goodwill and indefinite-lived intangible assets | 212,484 | 212,228 | ||||||
Auction rate securities | 18,112 | 20,449 | ||||||
Restricted investments | 50,494 | 42,100 | ||||||
Receivable for ceded life and annuity contracts | 23,696 | 24,649 | ||||||
Other assets | 13,932 | 17,368 | ||||||
$ | 1,618,304 | $ | 1,509,214 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Medical claims and benefits payable | $ | 361,055 | $ | 354,356 | ||||
Accounts payable and accrued liabilities | 141,688 | 137,930 | ||||||
Deferred revenue | 101,701 | 60,086 | ||||||
Income taxes payable | — | 13,176 | ||||||
Total current liabilities | 604,444 | 565,548 | ||||||
Long-term debt | 168,109 | 164,014 | ||||||
Deferred income taxes | 22,948 | 16,235 | ||||||
Liability for ceded life and annuity contracts | 23,696 | 24,649 | ||||||
Other long-term liabilities | 17,287 | 19,711 | ||||||
Total liabilities | 836,484 | 790,157 | ||||||
Stockholders’ equity (1): | ||||||||
Common stock, $0.001 par value; 80,000 shares authorized; outstanding: 45,690 shares at September 30, 2011 and 45,463 shares at December 31, 2010 | 46 | 45 | ||||||
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding | — | — | ||||||
Additional paid-in capital | 260,166 | 251,612 | ||||||
Accumulated other comprehensive loss | (1,762 | ) | (2,192 | ) | ||||
Retained earnings | 523,370 | 469,592 | ||||||
Total stockholders’ equity | 781,820 | 719,057 | ||||||
$ | 1,618,304 | $ | 1,509,214 | |||||
(1) | All applicable share and per-share amounts reflect the retroactive effects of the three-for-two common stock split in the form of a stock dividend that was effective May 20, 2011. |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Amounts in thousands, except | ||||||||||||||||
net income per share) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Revenue: | ||||||||||||||||
Premium revenue | $ | 1,138,230 | $ | 1,005,115 | $ | 3,348,438 | $ | 2,947,020 | ||||||||
Service revenue | 37,728 | 32,271 | 111,290 | 53,325 | ||||||||||||
Investment income | 764 | 1,760 | 3,804 | 4,880 | ||||||||||||
Total revenue | 1,176,722 | 1,039,146 | 3,463,532 | 3,005,225 | ||||||||||||
Expenses: | ||||||||||||||||
Medical care costs | 959,158 | 845,937 | 2,822,049 | 2,508,366 | ||||||||||||
Cost of service revenue | 34,584 | 27,605 | 105,020 | 41,859 | ||||||||||||
General and administrative expenses | 99,610 | 88,660 | 290,967 | 245,619 | ||||||||||||
Premium tax expenses | 36,374 | 35,037 | 110,633 | 104,578 | ||||||||||||
Depreciation and amortization | 13,430 | 11,954 | 38,587 | 33,234 | ||||||||||||
Total expenses | 1,143,156 | 1,009,193 | 3,367,256 | 2,933,656 | ||||||||||||
Operating income | 33,566 | 29,953 | 96,276 | 71,569 | ||||||||||||
Interest expense | 4,380 | 4,600 | 11,666 | 12,056 | ||||||||||||
Income before income taxes | 29,186 | 25,353 | 84,610 | 59,513 | ||||||||||||
Provision for income taxes | 10,236 | 9,180 | 30,832 | 22,171 | ||||||||||||
Net income | $ | 18,950 | $ | 16,173 | $ | 53,778 | $ | 37,342 | ||||||||
Net income per share (1): | ||||||||||||||||
Basic | $ | 0.41 | $ | 0.38 | $ | 1.18 | $ | 0.94 | ||||||||
Diluted | $ | 0.41 | $ | 0.38 | $ | 1.16 | $ | 0.93 | ||||||||
Weighted average shares outstanding (1): | ||||||||||||||||
Basic | 45,834 | 42,177 | 45,693 | 39,767 | ||||||||||||
Diluted | 46,296 | 42,546 | 46,334 | 40,203 | ||||||||||||
(1) | All applicable share and per-share amounts reflect the retroactive effects of the three-for-two common stock split in the form of a stock dividend that was effective May 20, 2011. |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Net income | $ | 18,950 | $ | 16,173 | $ | 53,778 | $ | 37,342 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Unrealized (loss) gain on investments | (165 | ) | (68 | ) | 430 | (295 | ) | |||||||||
Other comprehensive (loss) income | (165 | ) | (68 | ) | 430 | (295 | ) | |||||||||
Comprehensive income | $ | 18,785 | $ | 16,105 | $ | 54,208 | $ | 37,047 | ||||||||
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Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Amounts in thousands) | ||||||||
(Unaudited) | ||||||||
Operating activities: | ||||||||
Net income | $ | 53,778 | $ | 37,342 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 52,414 | 40,485 | ||||||
Deferred income taxes | 8,069 | 4,463 | ||||||
Stock-based compensation | 12,723 | 7,268 | ||||||
Non-cash interest on convertible senior notes | 4,095 | 3,800 | ||||||
Amortization of premium/discount on investments | 5,300 | 1,023 | ||||||
Amortization of deferred financing costs | 2,451 | 1,278 | ||||||
Unrealized gain on trading securities | — | (4,170 | ) | |||||
Loss on rights agreement | — | 3,807 | ||||||
Tax deficiency from employee stock compensation | (647 | ) | (676 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (11,789 | ) | (64,896 | ) | ||||
Prepaid expenses and other current assets | (1,819 | ) | (7,707 | ) | ||||
Medical claims and benefits payable | 6,699 | 33,347 | ||||||
Accounts payable and accrued liabilities | 246 | 15,131 | ||||||
Deferred revenue | 42,600 | (64,337 | ) | |||||
Income taxes | (18,957 | ) | 3,327 | |||||
Net cash provided by operating activities | 155,163 | 9,485 | ||||||
Investing activities: | ||||||||
Purchases of equipment | (45,921 | ) | (31,918 | ) | ||||
Purchases of investments | (258,209 | ) | (162,620 | ) | ||||
Sales and maturities of investments | 226,413 | 184,170 | ||||||
Net cash paid in business combinations | (3,253 | ) | (127,231 | ) | ||||
Increase in deferred contract costs | (32,765 | ) | (20,616 | ) | ||||
Increase in restricted investments | (8,394 | ) | (8,513 | ) | ||||
Change in other noncurrent assets and liabilities | (533 | ) | 2,340 | |||||
Net cash used in investing activities | (122,662 | ) | (164,388 | ) | ||||
Financing activities: | ||||||||
Amount borrowed under credit facility | — | 105,000 | ||||||
Proceeds from common stock offering, net of issuance costs | — | 111,246 | ||||||
Repayment of amount borrowed under credit facility | — | (105,000 | ) | |||||
Treasury stock purchases | (7,000 | ) | — | |||||
Credit facility fees paid | (1,125 | ) | (1,671 | ) | ||||
Proceeds from employee stock plans | 5,640 | 1,862 | ||||||
Excess tax benefits from employee stock compensation | 1,590 | 420 | ||||||
Net cash (used in) provided by financing activities | (895 | ) | 111,857 | |||||
Net increase (decrease) in cash and cash equivalents | 31,606 | (43,046 | ) | |||||
Cash and cash equivalents at beginning of period | 455,886 | 469,501 | ||||||
Cash and cash equivalents at end of period | $ | 487,492 | $ | 426,455 | ||||
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Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Amounts in thousands) | ||||||||
(Unaudited) | ||||||||
Supplemental cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Income taxes | $ | 43,550 | $ | 12,129 | ||||
Interest | $ | 5,026 | $ | 7,175 | ||||
Schedule of non-cash investing and financing activities: | ||||||||
Common stock used for stock-based compensation | $ | 3,751 | $ | 2,173 | ||||
Details of business combinations: | ||||||||
Increase in fair value of assets acquired | $ | (256 | ) | $ | (161,862 | ) | ||
(Decrease) increase in fair value of liabilities assumed | (1,045 | ) | 25,880 | |||||
(Decrease) increase in payable to seller | (1,952 | ) | 8,751 | |||||
Net cash paid in business combinations | $ | (3,253 | ) | $ | (127,231 | ) | ||
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(Unaudited)
September 30, 2011
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• | Each contract calls for the provision of its own specific set of products and services, which vary significantly between contracts; and |
• | The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our newer contracts (commercial off-the-shelf technology solutions). |
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• | ASU No. 2009-13, Revenue Recognition (ASC Topic 605) — Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force. This guidance modifies previous requirements by requiring the use of the “best estimate of selling price” in the absence of vendor-specific objective evidence (“VSOE”) or verifiable objective evidence (“VOE”) (now referred to as “TPE” or third-party evidence) for determining the selling price of a deliverable. A vendor is now required to use its best estimate of the selling price when more objective evidence of the selling price cannot be determined. By providing an alternative for determining the selling price of deliverables, this guidance allows companies to allocate arrangement consideration in multiple deliverable arrangements in a manner that better reflects the transaction’s economics. In addition, the residual method of allocating arrangement consideration is no longer permitted under this new guidance. We have adopted this guidance effective January 1, 2011, and will apply it on a prospective basis for all new or materially modified revenue arrangements with multiple deliverables entered into on or after January 1, 2011. Because we did not enter into any new or materially modified agreements with multiple elements and fixed payments in the nine months ended September 30, 2011 that would have been impacted by this guidance, the adoption did not have a material impact on the timing or pattern of revenue recognition. |
For the year ended December 31, 2010, there would have been no change in revenue recognized relating to multiple-element arrangements if we had adopted this guidance retrospectively for contracts entered into prior to January 1, 2011. |
• | ASU No. 2011-08, Intangibles—Goodwill and Other (ASC Topic 350) — Testing Goodwill for Impairment,a consensus of the FASB Emerging Issues Task Force. This guidance allows an entity the option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, an entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. We do not expect the adoption of this guidance to impact our consolidated financial position, results of operations or cash flows. This guidance is effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. |
• | ASU No. 2010-28, Intangibles—Goodwill and Other (ASC Topic 350) — When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,a consensus of the FASB Emerging Issues Task Force. This guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The adoption of this guidance did not impact our consolidated financial position, results of operations or cash flows. Effective for interim and annual reporting beginning on or after December 15, 2010, we adopted this guidance in full effective January 1, 2011. |
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• | ASU No. 2011-05, Comprehensive Income (ASC Topic 220) — Presentation of Comprehensive Income,a consensus of the FASB Emerging Issues Task Force. This guidance eliminates the option to present components of OCI as part of the statement of changes to stockholders’ equity. All filers are required to present all non-owner changes in stockholders’ equity in a single statement of comprehensive income or in two separate but consecutive statements. We do not expect the adoption of this guidance to impact our consolidated financial position, results of operations or cash flows. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Shares outstanding at the beginning of the period | 46,062 | 38,717 | 45,463 | 38,410 | ||||||||||||
Weighted-average number of shares repurchased | (235 | ) | — | (160 | ) | — | ||||||||||
Weighted-average number of shares issued | 7 | 3,460 | 390 | 1,357 | ||||||||||||
Denominator for basic earnings per share | 45,834 | 42,177 | 45,693 | 39,767 | ||||||||||||
Dilutive effect of employee stock options and stock grants (1) | 462 | 369 | 641 | 436 | ||||||||||||
Denominator for diluted earnings per share (2) | 46,296 | 42,546 | 46,334 | 40,203 | ||||||||||||
(1) | Options to purchase common shares are included in the calculation of diluted earnings per share when their exercise prices are below the average fair value of the common shares for each of the periods presented. For the three months ended September 30, 2011, and 2010, there were approximately 316,000 and 708,000 antidilutive weighted options, respectively. For the nine months ended September 30, 2011, and 2010, there were approximately 126,000 and 738,000 antidilutive weighted options, respectively. Restricted shares are included in the calculation of diluted earnings per share when their grant date fair values are below the average fair value of the common shares for each of the periods presented. For the three months ended September 30, 2011 and 2010, there were approximately 57,000 and 9,000 antidilutive weighted restricted shares, respectively. For the nine months ended September 30, 2011 there were no antidilutive restricted shares. For the nine months ended September 30, 2010, there were approximately 9,000 antidilutive restricted shares. | |
(2) | Potentially dilutive shares issuable pursuant to our convertible senior notes were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the three month and nine month periods ended September 30, 2011 and 2010. |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Restricted stock awards | $ | 4,004 | $ | 2,367 | $ | 11,742 | $ | 6,113 | ||||||||
Stock options (including shares issued under our employee stock purchase plan) | 345 | 393 | 981 | 1,155 | ||||||||||||
Total stock-based compensation expense | $ | 4,349 | $ | 2,760 | $ | 12,723 | $ | 7,268 | ||||||||
Weighted | ||||||||
Average | ||||||||
Grant Date | ||||||||
Shares | Fair Value | |||||||
Unvested balance as of December 31, 2010 | 1,253,624 | $ | 15.55 | |||||
Granted | 759,300 | 23.52 | ||||||
Vested | (483,735 | ) | 17.39 | |||||
Forfeited | (69,531 | ) | 15.44 | |||||
Unvested balance as of September 30, 2011 | 1,459,658 | 19.09 | ||||||
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Average | Remaining | ||||||||||||||
Grant Date | Intrinsic | Contractual | ||||||||||||||
Shares | Fair Value | Value | term | |||||||||||||
(In thousands) | (Years) | |||||||||||||||
Stock options outstanding as of December 31, 2010 | 770,421 | $ | 20.39 | |||||||||||||
Exercised | (185,672 | ) | 19.23 | |||||||||||||
Forfeited | (21,700 | ) | 21.45 | |||||||||||||
Stock options outstanding as of September 30, 2011 | 563,049 | 20.74 | $ | 204 | 4.2 | |||||||||||
Stock options exercisable and expected to vest as of September 30, 2011 | 562,965 | 20.74 | $ | 204 | 4.2 | |||||||||||
Exercisable as of September 30, 2011 | 560,799 | 20.73 | $ | 204 | 4.2 | |||||||||||
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• | Level 1 — Observable inputs such as quoted prices in active markets:Our Level 1 securities consist of government-sponsored enterprise securities (GSEs) and U.S. treasury notes. Level 1 securities are classified as current investments in the accompanying consolidated balance sheets. These securities are actively traded and therefore the fair value for these securities is based on quoted market prices on one or more securities exchanges. | |
• | Level 2 — Inputs other than quoted prices in active markets that are either directly or indirectly observable:Our Level 2 securities consist of corporate debt securities, municipal securities, and certificates of deposit, and are classified as current investments in the accompanying consolidated balance sheets. Our investments in securities classified as Level 2 are traded frequently though not necessarily daily. Fair value for these securities is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets. | |
• | Level 3 — Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions:We hold investments in auction rate securities which are designated as available-for-sale, and are reported at fair value of $18.1 million (par value of $21.3 million) as of September 30, 2011. Our investments in auction rate securities are collateralized by student loan portfolios guaranteed by the U.S. government. We continued to earn interest on substantially all of these auction rate securities as of September 30, 2011. Due to events in the credit markets, the auction rate securities held by us experienced failed auctions beginning in the first quarter of 2008. As such, quoted prices in active markets were not readily available during the majority of 2008, 2009, and 2010, and continued to be unavailable as of September 30, 2011. To estimate the fair value of these securities, we used pricing models that included factors such as the collateral underlying the securities, the creditworthiness of the counterparty, the timing of expected future cash flows, and the expectation of the next time the security would have a successful auction. The estimated values of these securities were also compared, when possible, to valuation data with respect to similar securities held by other parties. We concluded that these estimates, given the lack of market available pricing, provided a reasonable basis for determining the fair value of the auction rate securities as of September 30, 2011. For our investments in auction rate securities, we do not intend to sell, nor is it more likely than not that we will be required to sell, these investments before recovery of their cost. |
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Total | Level 1 | Level 2 | Level 3 | |||||||||||||
(In thousands) | ||||||||||||||||
Corporate debt securities | $ | 215,875 | $ | — | $ | 215,875 | $ | — | ||||||||
Government-sponsored enterprise securities (GSEs) | 45,224 | 45,224 | — | — | ||||||||||||
Municipal securities | 36,088 | — | 36,088 | — | ||||||||||||
U.S. treasury notes | 24,454 | 24,454 | — | — | ||||||||||||
Certificates of deposit | 3,261 | — | 3,261 | — | ||||||||||||
Auction rate securities | 18,112 | — | — | 18,112 | ||||||||||||
$ | 343,014 | $ | 69,678 | $ | 255,224 | $ | 18,112 | |||||||||
(Level 3) | ||||
(In thousands) | ||||
Balance at December 31, 2010 | $ | 20,449 | ||
Total gains (realized or unrealized): | ||||
Included in other comprehensive income | 913 | |||
Settlements | (3,250 | ) | ||
Balance at September 30, 2011 | $ | 18,112 | ||
The amount of total gains for the period included in other comprehensive income attributable to the change in unrealized gains relating to assets still held at September 30, 2011 | $ | 913 | ||
(Level 3) | ||||
(In thousands) | ||||
Balance at December 31, 2010 | $ | (2,800 | ) | |
Total gains included in earnings | 2,800 | |||
Balance at September 30, 2011 | $ | — | ||
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September 30, 2011 | ||||||||||||||||
Gross | Estimated | |||||||||||||||
Unrealized | Fair | |||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(In thousands) | ||||||||||||||||
Corporate debt securities | $ | 219,955 | $ | 98 | $ | 4,178 | $ | 215,875 | ||||||||
GSEs | 45,338 | 44 | 158 | 45,224 | ||||||||||||
Municipal securities (including non-current auction rate securities) | 57,477 | 165 | 3,442 | 54,200 | ||||||||||||
U.S. treasury notes | 24,323 | 136 | 5 | 24,454 | ||||||||||||
Certificates of deposit | 3,261 | — | — | 3,261 | ||||||||||||
$ | 350,354 | $ | 443 | $ | 7,783 | $ | 343,014 | |||||||||
December 31, 2010 | ||||||||||||||||
Gross | Estimated | |||||||||||||||
Unrealized | Fair | |||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(In thousands) | ||||||||||||||||
Corporate debt securities | $ | 179,124 | $ | 193 | $ | 1,388 | $ | 177,929 | ||||||||
GSEs | 59,790 | 293 | 370 | 59,713 | ||||||||||||
Municipal securities (including non-current auction rate securities) | 55,247 | 78 | 4,313 | 51,012 | ||||||||||||
U.S. treasury notes | 23,864 | 114 | 60 | 23,918 | ||||||||||||
Certificates of deposit | 3,252 | — | — | 3,252 | ||||||||||||
$ | 321,277 | $ | 678 | $ | 6,131 | $ | 315,824 | |||||||||
Estimated | ||||||||
Cost | Fair Value | |||||||
(In thousands) | ||||||||
Due in one year or less | $ | 159,060 | $ | 156,445 | ||||
Due one year through five years | 170,494 | 168,888 | ||||||
Due after ten years | 20,800 | 17,681 | ||||||
$ | 350,354 | $ | 343,014 | |||||
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In a Continuous Loss | In a Continuous Loss | |||||||||||||||||||||||
Position | Position | |||||||||||||||||||||||
for Less than 12 Months | for 12 Months or More | Total | ||||||||||||||||||||||
Estimated | Estimated | Estimated | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Corporate debt securities | $ | 169,582 | $ | 3,625 | $ | 17,720 | $ | 553 | $ | 187,302 | $ | 4,178 | ||||||||||||
GSEs | 18,522 | 78 | 1,167 | 80 | 19,689 | 158 | ||||||||||||||||||
Municipal securities | 22,731 | 188 | 21,055 | 3,254 | 43,786 | 3,442 | ||||||||||||||||||
U.S. treasury notes | 4,705 | 5 | — | — | 4,705 | 5 | ||||||||||||||||||
$ | 215,540 | $ | 3,896 | $ | 39,942 | $ | 3,887 | $ | 255,482 | $ | 7,783 | |||||||||||||
In a Continuous Loss | In a Continuous Loss | |||||||||||||||||||||||
Position | Position | |||||||||||||||||||||||
for Less than 12 Months | for 12 Months or More | Total | ||||||||||||||||||||||
Estimated | Estimated | Estimated | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Corporate debt securities | $ | 103,225 | $ | 1,060 | $ | 10,490 | $ | 328 | $ | 113,715 | $ | 1,388 | ||||||||||||
GSEs | 13,014 | 71 | 7,539 | 299 | 20,553 | 370 | ||||||||||||||||||
Municipal securities | 18,884 | 117 | 25,271 | 4,196 | 44,155 | 4,313 | ||||||||||||||||||
U.S. treasury notes | 5,480 | 40 | 6,806 | 20 | 12,286 | 60 | ||||||||||||||||||
$ | 140,603 | $ | 1,288 | $ | 50,106 | $ | 4,843 | $ | 190,709 | $ | 6,131 | |||||||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Health Plans segment: | ||||||||
California | $ | 31,742 | $ | 46,482 | ||||
Michigan | 11,265 | 13,596 | ||||||
Missouri | 24,025 | 22,841 | ||||||
New Mexico | 9,722 | 18,310 | ||||||
Ohio | 27,901 | 21,622 | ||||||
Washington | 11,766 | 14,486 | ||||||
Wisconsin | 7,777 | 5,437 | ||||||
Others | 7,029 | 5,187 | ||||||
Total Health Plans segment | 131,227 | 147,961 | ||||||
Molina Medicaid Solutions segment | 48,812 | 20,229 | ||||||
$ | 180,039 | $ | 168,190 | |||||
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September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
California | $ | 372 | $ | 372 | ||||
Florida | 8,196 | 4,508 | ||||||
Insurance Company | 4,672 | 4,689 | ||||||
Michigan | 1,000 | 1,000 | ||||||
Missouri | 505 | 508 | ||||||
New Mexico | 15,902 | 15,881 | ||||||
Ohio | 9,077 | 9,066 | ||||||
Texas | 3,500 | 3,501 | ||||||
Utah | 2,799 | 1,279 | ||||||
Washington | 151 | 151 | ||||||
Wisconsin | — | 260 | ||||||
Other | 4,320 | 885 | ||||||
$ | 50,494 | $ | 42,100 | |||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(In thousands) | ||||||||
Due in one year or less | $ | 45,281 | $ | 45,292 | ||||
Due one year through five years | 5,213 | 5,266 | ||||||
$ | 50,494 | $ | 50,558 | |||||
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As of | As of | |||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Details of the liability component: | ||||||||
Principal amount | $ | 187,000 | $ | 187,000 | ||||
Unamortized discount | (18,891 | ) | (22,986 | ) | ||||
Net carrying amount | $ | 168,109 | $ | 164,014 | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Interest cost recognized for the period relating to the: | ||||||||||||||||
Contractual interest coupon rate of 3.75% | $ | 1,753 | $ | 1,753 | $ | 5,259 | $ | 5,259 | ||||||||
Amortization of the discount on the liability component | 1,384 | 1,291 | 4,095 | 3,800 | ||||||||||||
Total interest cost recognized | $ | 3,137 | $ | 3,044 | $ | 9,354 | $ | 9,059 | ||||||||
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Molina | ||||||||||||
Medicaid | ||||||||||||
Health Plans | Solutions | Total | ||||||||||
(In thousands) | ||||||||||||
Three months ended September 30, 2011 | ||||||||||||
Premium revenue | $ | 1,138,230 | $ | — | $ | 1,138,230 | ||||||
Service revenue | — | 37,728 | 37,728 | |||||||||
Investment income | 764 | — | 764 | |||||||||
Total revenue | $ | 1,138,994 | $ | 37,728 | $ | 1,176,722 | ||||||
Operating income (loss) | $ | 33,773 | $ | (207 | ) | $ | 33,566 | |||||
Nine months ended September 30, 2011 | ||||||||||||
Premium revenue | $ | 3,348,438 | $ | — | $ | 3,348,438 | ||||||
Service revenue | — | 111,290 | 111,290 | |||||||||
Investment income | 3,804 | — | 3,804 | |||||||||
Total revenue | $ | 3,352,242 | $ | 111,290 | $ | 3,463,532 | ||||||
Operating income (loss) | $ | 100,273 | $ | (3,997 | ) | $ | 96,276 | |||||
Three months ended September 30, 2010 | ||||||||||||
Premium revenue | $ | 1,005,115 | $ | — | $ | 1,005,115 | ||||||
Service revenue | — | 32,271 | 32,271 | |||||||||
Investment income | 1,760 | — | 1,760 | |||||||||
Total revenue | $ | 1,006,875 | $ | 32,271 | $ | 1,039,146 | ||||||
Operating income | $ | 28,796 | $ | 1,157 | $ | 29,953 | ||||||
Nine months ended September 30, 2010 | ||||||||||||
Premium revenue | $ | 2,947,020 | $ | — | $ | 2,947,020 | ||||||
Service revenue | — | 53,325 | 53,325 | |||||||||
Investment income | 4,880 | — | 4,880 | |||||||||
Total revenue | $ | 2,951,900 | $ | 53,325 | $ | 3,005,225 | ||||||
Operating income | $ | 65,407 | $ | 6,162 | $ | 71,569 | ||||||
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Segment operating income | $ | 33,566 | $ | 29,953 | $ | 96,276 | $ | 71,569 | ||||||||
Interest expense | 4,380 | 4,600 | 11,666 | 12,056 | ||||||||||||
Income before income taxes | $ | 29,186 | $ | 25,353 | $ | 84,610 | $ | 59,513 | ||||||||
Molina | ||||||||||||
Medicaid | ||||||||||||
Health Plans | Solutions | Total | ||||||||||
(In thousands) | ||||||||||||
As of September 30, 2011 | $ | 1,389,940 | $ | 228,364 | $ | 1,618,304 | ||||||
As of December 31, 2010 | $ | 1,333,599 | $ | 175,615 | $ | 1,509,214 | ||||||
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | significant budget pressures on state governments which cause them to lower rates unexpectedly or to rescind expected rates increases, or their failure to maintain existing benefit packages or membership eligibility thresholds or criteria; |
• | uncertainties regarding the impact of the Patient Protection and Affordable Care Act, including its possible repeal, judicial overturning of the individual insurance mandate or Medicaid expansion, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures; |
• | management of our medical costs, including costs associated with unexpectedly severe or widespread illnesses such as influenza, and rates of utilization that are consistent with our expectations; |
• | the success of our efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states (including in Washington, Ohio, and Missouri), and our ability to grow our revenues consistent with our expectations; |
• | the accurate estimation of incurred but not reported medical costs across our health plans; |
• | risks associated with the continued growth in new Medicaid and Medicare enrollees; |
• | retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including the California rate cut expected to be retroactive to July 1, 2011, and Medicaid pharmaceutical rebates; |
• | the continuation and renewal of the government contracts of both our health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed; |
• | the timing of receipt and recognition of revenue and the amortization of expense under the state contracts of Molina Medicaid Solutions in Maine and Idaho; |
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• | reductions to revenue, additional administrative costs and the potential payment of additional amounts to providers and/or the state by Molina Medicaid Solutions as a result of MMIS implementation issues in Maine and/or Idaho; |
• | government audits and reviews, including the audit of our Medicare plans by the Centers for Medicare and Medicaid Services, or CMS; |
• | changes with respect to our provider contracts and the loss of providers; |
• | the establishment, interpretation, and implementation of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, administrative cost and profit ceilings, and profit sharing arrangements; |
• | the interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures; |
• | the successful integration of our acquisitions; |
• | approval by state regulators of dividends and distributions by our health plan subsidiaries; |
• | changes in funding under our 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, and the costs associated therewith; |
• | restrictions and covenants in our credit facility; |
• | the relatively small number of states in which we operate health plans; |
• | the availability of financing to fund and capitalize our acquisitions and start-up activities and to meet our liquidity needs and the costs and fees associated therewith; |
• | a state’s failure to renew its federal Medicaid waiver; |
• | an inadvertent unauthorized disclosure of protected health information by us or our business associates; |
• | changes generally affecting the managed care or Medicaid management information systems industries; |
• | increases in government surcharges, taxes, and assessments; |
• | changes in general economic conditions, including unemployment rates. |
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September 30, | June 30, | December 31, | September 30, | |||||||||||||
2011 | 2011 | 2010 | 2010 | |||||||||||||
Total Ending Membership by Health Plan: | ||||||||||||||||
California | 350,000 | 348,000 | 344,000 | 349,000 | ||||||||||||
Florida | 67,000 | 66,000 | 61,000 | 57,000 | ||||||||||||
Michigan | 217,000 | 220,000 | 227,000 | 225,000 | ||||||||||||
Missouri | 78,000 | 80,000 | 81,000 | 79,000 | ||||||||||||
New Mexico | 89,000 | 89,000 | 91,000 | 91,000 | ||||||||||||
Ohio | 256,000 | 245,000 | 245,000 | 241,000 | ||||||||||||
Texas | 148,000 | 129,000 | 94,000 | 96,000 | ||||||||||||
Utah | 82,000 | 82,000 | 79,000 | 78,000 | ||||||||||||
Washington | 350,000 | 345,000 | 355,000 | 353,000 | ||||||||||||
Wisconsin (1) | 41,000 | 41,000 | 36,000 | 28,000 | ||||||||||||
Total | 1,678,000 | 1,645,000 | 1,613,000 | 1,597,000 | ||||||||||||
Total Ending Membership by State for our Medicare Advantage Plans (1): | ||||||||||||||||
California | 6,500 | 6,000 | 4,900 | 4,300 | ||||||||||||
Florida | 700 | 600 | 500 | 500 | ||||||||||||
Michigan | 7,600 | 7,100 | 6,300 | 5,700 | ||||||||||||
New Mexico | 800 | 700 | 600 | 600 | ||||||||||||
Ohio | 100 | 200 | — | — | ||||||||||||
Texas | 600 | 600 | 700 | 600 | ||||||||||||
Utah | 7,400 | 7,000 | 8,900 | 8,600 | ||||||||||||
Washington | 4,500 | 4,000 | 2,600 | 2,300 | ||||||||||||
Total | 28,200 | 26,200 | 24,500 | 22,600 | ||||||||||||
Total Ending Membership by State for our Aged, Blind or Disabled Population: | ||||||||||||||||
California | 23,700 | 17,000 | 13,900 | 13,500 | ||||||||||||
Florida | 10,400 | 10,300 | 10,000 | 9,500 | ||||||||||||
Michigan | 31,600 | 31,600 | 31,700 | 31,400 | ||||||||||||
New Mexico | 5,600 | 5,600 | 5,700 | 5,700 | ||||||||||||
Ohio | 29,900 | 28,700 | 28,200 | 27,900 | ||||||||||||
Texas | 61,800 | 52,000 | 19,000 | 18,900 | ||||||||||||
Utah | 8,300 | 8,300 | 8,000 | 7,900 | ||||||||||||
Washington | 4,700 | 4,400 | 4,000 | 3,700 | ||||||||||||
Wisconsin (1) | 1,700 | 1,700 | 1,700 | 1,700 | ||||||||||||
Total | 177,700 | 159,600 | 122,200 | 120,200 | ||||||||||||
(1) | We acquired the Wisconsin health plan on September 1, 2010. As of September 30, 2011, the Wisconsin health plan had approximately 2,200 Medicare Advantage members covered under a reinsurance contract with a third party; these members are not included in the membership tables herein. |
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• | Fee-for-service— Expenses paid for specific encounters or episodes of care according to a fee schedule or other basis established by the state or by contract with the provider. |
• | Capitation— Expenses for PMPM payments to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. |
• | Pharmacy— Expenses for all drug, injectible, and immunization costs paid through our pharmacy benefit manager. |
• | Other— Expenses for medically related administrative costs of approximately $76.3 million, and $61.9 million, for the nine months ended September 30, 2011 and 2010, respectively, including certain provider incentive costs, reinsurance, costs to operate our medical clinics, and other medical expenses. |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollar amounts in thousands, except per share data) | ||||||||||||||||
Earnings per diluted share | $ | 0.41 | $ | 0.38 | $ | 1.16 | $ | 0.93 | ||||||||
Premium revenue | $ | 1,138,230 | $ | 1,005,115 | $ | 3,348,438 | $ | 2,947,020 | ||||||||
Service revenue | $ | 37,728 | $ | 32,271 | $ | 111,290 | $ | 53,325 | ||||||||
Operating income | $ | 33,566 | $ | 29,953 | $ | 96,276 | $ | 71,569 | ||||||||
Net income | $ | 18,950 | $ | 16,173 | $ | 53,778 | $ | 37,342 | ||||||||
Total ending membership | 1,678,000 | 1,597,000 | 1,678,000 | 1,597,000 | ||||||||||||
Premium revenue | 96.7 | % | 96.7 | % | 96.7 | % | 98.1 | % | ||||||||
Service revenue | 3.2 | 3.1 | 3.2 | 1.8 | ||||||||||||
Investment income | 0.1 | 0.2 | 0.1 | 0.1 | ||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Medical care ratio | 84.3 | % | 84.2 | % | 84.3 | % | 85.1 | % | ||||||||
General and administrative expense ratio | 8.5 | % | 8.5 | % | 8.4 | % | 8.2 | % | ||||||||
Premium tax ratio | 3.2 | % | 3.5 | % | 3.3 | % | 3.5 | % | ||||||||
Operating income | 2.9 | % | 2.9 | % | 2.8 | % | 2.4 | % | ||||||||
Net income | 1.6 | % | 1.6 | % | 1.6 | % | 1.2 | % | ||||||||
Effective tax rate | 35.1 | % | 36.2 | % | 36.4 | % | 37.3 | % |
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Three Months Ended September 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
% of | % of | |||||||||||||||||||||||
Amount | PMPM | Total | Amount | PMPM | Total | |||||||||||||||||||
Fee-for-service | $ | 698,995 | $ | 140.55 | 72.9 | % | $ | 601,836 | $ | 130.60 | 71.1 | % | ||||||||||||
Capitation | 129,315 | 26.00 | 13.5 | 136,425 | 29.61 | 16.1 | ||||||||||||||||||
Pharmacy | 89,191 | 17.93 | 9.3 | 76,049 | 16.50 | 9.0 | ||||||||||||||||||
Other | 41,657 | 8.39 | 4.3 | 31,627 | 6.87 | 3.8 | ||||||||||||||||||
Total | $ | 959,158 | $ | 192.87 | 100.0 | % | $ | 845,937 | $ | 183.58 | 100.0 | % | ||||||||||||
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• | Fee-for-service and capitation costs combined increased approximately 4%. Excluding the disproportionate impact of the Texas health plan, where we have experienced high utilization and unit costs for both physician and outpatient services (which include personal care services), fee-for-service costs were flat PMPM. |
• | Capitation costs decreased approximately 12% PMPM, primarily due to the transition of members in Michigan and Washington into fee-for-service networks. |
• | Fee-for-service costs increased approximately 8% PMPM, partially due to the transition of members from capitated provider networks into fee-for-service networks. |
• | Pharmacy costs increased approximately 9% PMPM. |
• | Hospital utilization decreased approximately 7%. |
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Three Months Ended September 30, 2011 | ||||||||||||||||||||||||||||
Member | Premium Revenue | Medical Care Costs | Medical | Premium Tax | ||||||||||||||||||||||||
Months(1) | Total | PMPM | Total | PMPM | Care Ratio | Expense | ||||||||||||||||||||||
California | 1,049 | $ | 144,888 | $ | 138.11 | $ | 128,596 | $ | 122.58 | 88.8 | % | $ | 1,114 | |||||||||||||||
Florida | 199 | 51,569 | 258.96 | 46,009 | 231.04 | 89.2 | (17 | ) | ||||||||||||||||||||
Michigan | 656 | 165,636 | 252.46 | 135,899 | 207.13 | 82.0 | 9,644 | |||||||||||||||||||||
Missouri | 234 | 58,196 | 248.80 | 45,428 | 194.22 | 78.1 | — | |||||||||||||||||||||
New Mexico | 267 | 79,644 | 297.82 | 67,043 | 250.70 | 84.2 | 2,084 | |||||||||||||||||||||
Ohio | 745 | 232,616 | 312.55 | 182,363 | 245.02 | 78.4 | 18,072 | |||||||||||||||||||||
Texas | 414 | 105,577 | 255.25 | 98,954 | 239.24 | 93.7 | 1,613 | |||||||||||||||||||||
Utah | 243 | 69,763 | 286.47 | 55,293 | 227.05 | 79.3 | — | |||||||||||||||||||||
Washington | 1,043 | 211,131 | 202.49 | 174,912 | 167.76 | 82.8 | 3,776 | |||||||||||||||||||||
Wisconsin(2) | 123 | 17,269 | 139.95 | 13,656 | 110.67 | 79.1 | — | |||||||||||||||||||||
Other(3) | — | 1,941 | — | 11,005 | — | — | 88 | |||||||||||||||||||||
4,973 | $ | 1,138,230 | $ | 228.88 | $ | 959,158 | $ | 192.87 | 84.3 | % | $ | 36,374 | ||||||||||||||||
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Three Months Ended September 30, 2010 | ||||||||||||||||||||||||||||
Member | Premium Revenue | Medical Care Costs | Medical | Premium Tax | ||||||||||||||||||||||||
Months(1) | Total | PMPM | Total | PMPM | Care Ratio | Expense | ||||||||||||||||||||||
California | 1,046 | $ | 128,350 | $ | 122.75 | $ | 103,002 | $ | 98.51 | 80.3 | % | $ | 1,888 | |||||||||||||||
Florida | 169 | 43,485 | 256.25 | 42,258 | 249.02 | 97.2 | (14 | ) | ||||||||||||||||||||
Michigan | 675 | 156,609 | 232.05 | 134,238 | 198.90 | 85.7 | 9,655 | |||||||||||||||||||||
Missouri | 236 | 52,952 | 224.63 | 45,930 | 194.84 | 86.7 | — | |||||||||||||||||||||
New Mexico | 274 | 93,602 | 341.38 | 78,121 | 284.92 | 83.5 | 2,170 | |||||||||||||||||||||
Ohio | 715 | 210,651 | 294.55 | 171,051 | 239.18 | 81.2 | 16,734 | |||||||||||||||||||||
Texas | 180 | 48,188 | 267.95 | 43,129 | 239.82 | 89.5 | 861 | |||||||||||||||||||||
Utah | 234 | 67,566 | 289.28 | 57,381 | 245.67 | 84.9 | — | |||||||||||||||||||||
Washington | 1,051 | 195,578 | 186.03 | 155,307 | 147.73 | 79.4 | 3,622 | |||||||||||||||||||||
Wisconsin(2) | 28 | 6,310 | 224.18 | 6,154 | 218.65 | 97.5 | — | |||||||||||||||||||||
Other(3) | — | 1,824 | — | 9,366 | — | — | 121 | |||||||||||||||||||||
4,608 | $ | 1,005,115 | $ | 218.12 | $ | 845,937 | $ | 183.58 | 84.2 | % | $ | 35,037 | ||||||||||||||||
(1) | A member month is defined as the aggregate of each month’s ending membership for the period presented. | |
(2) | We acquired the Wisconsin health plan on September 1, 2010. | |
(3) | “Other” medical care costs also include medically related administrative costs at the parent company. |
Sept. 30, | June 30, | Dec. 31, | Sept. 30, | |||||||||||||
(Dollars in thousands) | 2011 | 2011 | 2010 | 2010 | ||||||||||||
Days in claims payable — fee-for-service only | 39 days | 39 days | 42 days | 42 days | ||||||||||||
Number of claims in inventory at end of period | 132,200 | 121,900 | 143,600 | 110,200 | ||||||||||||
Billed charges of claims in inventory at end of period (dollars in thousands) | $ | 187,000 | $ | 205,800 | $ | 218,900 | $ | 158,900 |
Three Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Service revenue before amortization | $ | 39,273 | $ | 34,926 | ||||
Amortization recorded as reduction of service revenue | (1,545 | ) | (2,655 | ) | ||||
Service revenue | 37,728 | 32,271 | ||||||
Cost of service revenue | 34,584 | 27,605 | ||||||
General and administrative costs | 2,069 | 2,195 | ||||||
Amortization of customer relationship intangibles recorded as amortization | 1,282 | 1,314 | ||||||
Operating (loss) income | $ | (207 | ) | $ | 1,157 | |||
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Nine Months Ended September 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
% of | % of | |||||||||||||||||||||||
Amount | PMPM | Total | Amount | PMPM | Total | |||||||||||||||||||
Fee-for-service | $ | 2,050,430 | $ | 138.40 | 72.7 | % | $ | 1,763,675 | $ | 130.55 | 70.3 | % | ||||||||||||
Capitation | 383,955 | 25.92 | 13.6 | 410,321 | 30.37 | 16.4 | ||||||||||||||||||
Pharmacy | 268,637 | 18.13 | 9.5 | 241,290 | 17.86 | 9.6 | ||||||||||||||||||
Other | 119,027 | 8.03 | 4.2 | 93,080 | 6.89 | 3.7 | ||||||||||||||||||
Total | $ | 2,822,049 | $ | 190.48 | 100.0 | % | $ | 2,508,366 | $ | 185.67 | 100.0 | % | ||||||||||||
• | Pharmacy costs (adjusted for the state’s retention of the pharmacy benefit in Ohio effective February 1, 2010) increased approximately 6% PMPM. |
• | Capitation costs decreased approximately 15% PMPM, primarily due to the transition of members in Michigan and Washington into fee-for-service networks. |
• | Fee-for-service costs increased approximately 6% PMPM, partially due to the transition of members from capitated provider networks into fee-for-service networks. |
• | Fee-for-service and capitation costs combined increased approximately 2% PMPM. |
• | Hospital utilization decreased approximately 7%. |
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Nine Months Ended September 30, 2011 | ||||||||||||||||||||||||||||
Member | Premium Revenue | Medical Care Costs | Medical | Premium Tax | ||||||||||||||||||||||||
Months(1) | Total | PMPM | Total | PMPM | Care Ratio | Expense | ||||||||||||||||||||||
California | 3,133 | $ | 418,961 | $ | 133.71 | $ | 359,844 | $ | 114.84 | 85.9 | % | $ | 4,937 | |||||||||||||||
Florida | 588 | 150,561 | 256.13 | 141,872 | 241.35 | 94.2 | 34 | |||||||||||||||||||||
Michigan | 2,002 | 495,971 | 247.70 | 399,952 | 199.75 | 80.6 | 29,219 | |||||||||||||||||||||
Missouri | 722 | 169,988 | 235.45 | 148,135 | 205.18 | 87.1 | — | |||||||||||||||||||||
New Mexico | 808 | 246,223 | 304.71 | 205,659 | 254.51 | 83.5 | 6,472 | |||||||||||||||||||||
Ohio | 2,218 | 693,829 | 312.86 | 533,216 | 240.44 | 76.9 | 53,629 | |||||||||||||||||||||
Texas | 1,154 | 290,787 | 252.06 | 271,723 | 235.54 | 93.4 | 5,016 | |||||||||||||||||||||
Utah | 723 | 215,205 | 297.62 | 167,605 | 231.79 | 77.9 | — | |||||||||||||||||||||
Washington | 3,104 | 608,998 | 196.25 | 515,769 | 166.20 | 84.7 | 11,099 | |||||||||||||||||||||
Wisconsin(2) | 364 | 51,526 | 141.42 | 47,450 | 130.23 | 92.1 | 44 | |||||||||||||||||||||
Other(3) | — | 6,389 | — | 30,824 | — | — | 183 | |||||||||||||||||||||
14,816 | $ | 3,348,438 | $ | 226.01 | $ | 2,822,049 | $ | 190.48 | 84.3 | % | $ | 110,633 | ||||||||||||||||
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Nine Months Ended September 30, 2010 | ||||||||||||||||||||||||||||
Member | Premium Revenue | Medical Care Costs | Medical | Premium Tax | ||||||||||||||||||||||||
Months(1) | Total | PMPM | Total | PMPM | Care Ratio | Expense | ||||||||||||||||||||||
California | 3,158 | $ | 376,811 | $ | 119.32 | $ | 316,569 | $ | 100.24 | 84.0 | % | $ | 5,153 | |||||||||||||||
Florida | 483 | 124,035 | 256.70 | 116,079 | 240.23 | 93.6 | (2 | ) | ||||||||||||||||||||
Michigan | 2,029 | 468,723 | 230.98 | 395,450 | 194.87 | 84.4 | 29,305 | |||||||||||||||||||||
Missouri | 704 | 156,874 | 222.83 | 135,766 | 192.85 | 86.5 | — | |||||||||||||||||||||
New Mexico | 834 | 281,149 | 336.93 | 225,346 | 270.06 | 80.2 | 7,161 | |||||||||||||||||||||
Ohio | 2,083 | 641,683 | 308.11 | 517,951 | 248.70 | 80.7 | 50,251 | |||||||||||||||||||||
Texas | 426 | 130,881 | 307.51 | 114,593 | 269.24 | 87.6 | 2,247 | |||||||||||||||||||||
Utah | 685 | 191,040 | 278.99 | 179,816 | 262.60 | 94.1 | — | |||||||||||||||||||||
Washington | 3,080 | 562,836 | 182.75 | 473,609 | 153.78 | 84.2 | 10,278 | |||||||||||||||||||||
Wisconsin(2) | 28 | 6,310 | 224.18 | 6,154 | 218.65 | 97.5 | — | |||||||||||||||||||||
Other(3) | — | 6,678 | — | 27,033 | — | — | 185 | |||||||||||||||||||||
13,510 | $ | 2,947,020 | $ | 218.14 | $ | 2,508,366 | $ | 185.67 | 85.1 | % | $ | 104,578 | ||||||||||||||||
(1) | A member month is defined as the aggregate of each month’s ending membership for the period presented. | |
(2) | We acquired the Wisconsin health plan on September 1, 2010. | |
(3) | “Other” medical care costs also include medically related administrative costs of the parent company. |
Nine Months Ended | Five Months Ended | |||||||
September 30, 2011 | September 30, 2010 | |||||||
(In thousands) | ||||||||
Service revenue before amortization | $ | 116,567 | $ | 57,571 | ||||
Amortization recorded as reduction of service revenue | (5,277 | ) | (4,246 | ) | ||||
Service revenue | 111,290 | 53,325 | ||||||
Cost of service revenue | 105,020 | 41,859 | ||||||
General and administrative costs | 6,421 | 3,161 | ||||||
Amortization of customer relationship intangibles recorded as amortization | 3,846 | 2,143 | ||||||
Operating (loss) income | $ | (3,997 | ) | $ | 6,162 | |||
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• | Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and Amortization;” |
• | Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service Revenue;” and |
• | Depreciation is recorded within the heading “Cost of Service Revenue.” |
Three Months Ended September 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
% of Total | % of Total | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Depreciation | $ | 8,234 | 0.7 | % | $ | 6,840 | 0.6 | % | ||||||||
Amortization of intangible assets | 5,196 | 0.4 | 5,114 | 0.5 | ||||||||||||
Depreciation and amortization reported as such in the | ||||||||||||||||
consolidated statements of income | 13,430 | 1.1 | 11,954 | 1.1 | ||||||||||||
Amortization recorded as reduction of service revenue | 1,545 | 0.1 | 2,655 | 0.3 | ||||||||||||
Depreciation recorded as cost of service revenue | 2,837 | 0.2 | 1,964 | 0.2 | ||||||||||||
Total | $ | 17,812 | 1.4 | % | $ | 16,573 | 1.6 | % | ||||||||
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Nine Months Ended September 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
% of Total | % of Total | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Depreciation | $ | 22,859 | 0.7 | % | $ | 19,963 | 0.7 | % | ||||||||
Amortization of intangible assets | 15,728 | 0.5 | 13,271 | 0.4 | ||||||||||||
Depreciation and amortization reported as such in the consolidated statements of income | 38,587 | 1.2 | 33,234 | 1.1 | ||||||||||||
Amortization recorded as reduction of service revenue | 5,277 | 0.1 | 4,246 | 0.1 | ||||||||||||
Depreciation recorded as cost of service revenue | 8,550 | 0.2 | 3,005 | 0.1 | ||||||||||||
Total | $ | 52,414 | 1.5 | % | $ | 40,485 | 1.3 | % | ||||||||
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Net income | $ | 18,950 | $ | 16,173 | $ | 53,778 | $ | 37,342 | ||||||||
Add back: | ||||||||||||||||
Depreciation and amortization reported in the consolidated statements of cash flows | 17,812 | 16,573 | 52,414 | 40,485 | ||||||||||||
Interest expense | 4,380 | 4,600 | 11,666 | 12,056 | ||||||||||||
Provision for income taxes | 10,236 | 9,180 | 30,832 | 22,171 | ||||||||||||
EBITDA | $ | 51,378 | $ | 46,526 | $ | 148,690 | $ | 112,054 | ||||||||
(1) | GAAP stands for U.S. generally accepted accounting principles. | |
(2) | EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense, and the provision for income taxes. This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities, nor should EBITDA be considered in isolation from these GAAP measures of operating performance. Management uses EBITDA as a supplemental metric in evaluating our financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating our performance and the performance of other companies in our industry. |
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• | The determination of the amount of revenue to be recognized under certain contracts that place revenue at risk dependent upon the achievement of certain quality or administrative measurements, or the expenditure of certain percentages of revenue on defined expenses, or requirements that we return a certain portion of our profits to state governments; |
• | The deferral of revenue and costs associated with contracts held by our Molina Medicaid Solutions segment; and; |
• | The determination of medical claims and benefits payable. |
• | Florida Health Plan Medical Cost Floor (Minimum) for Behavioral Health:A portion of premium revenue paid to our Florida health plan by the state of Florida may be refunded to the state if certain minimum amounts are not spent on defined behavioral health care costs. At September 30, 2011, we had not recorded any liability under the terms of this contract provision. If the state of Florida disagrees with our interpretation of the existing contract terms, an adjustment to the amounts owed may be required. Any changes to the terms of this provision, including revisions to the definitions of premium revenue or behavioral health care costs, the period of time over which performance is measured or the manner of its measurement, or the percentages used in the calculations, may affect the profitability of our Florida health plan. |
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• | New Mexico Health Plan Medical Cost Floors (Minimums) and Administrative Cost and Profit Ceilings (Maximums):A portion of premium revenue paid to our New Mexico health plan by the state of New Mexico may be refunded to the state if certain minimum amounts are not spent on defined medical care costs, or if administrative costs or profit (as defined) exceed certain amounts. Our contract with the state of New Mexico requires that we spend a minimum percentage of premium revenue on certain explicitly defined medical care costs (the medical cost floor). Effective July 1, 2008, our New Mexico health plan entered into a new four-year contract that, in addition to retaining the medical cost floor, added certain limits on the amount our New Mexico health plan can: (a) expend on administrative costs; and (b) retain as profit. At September 30, 2011, we had recorded a liability of $16.5 million under the terms of these contract provisions. If the state of New Mexico disagrees with our interpretation of the existing contract terms, an adjustment to the amounts owed may be required. Any changes to the terms of these provisions, including revisions to the definitions of premium revenue, medical care costs, administrative costs or profit, the period of time over which performance is measured or the manner of its measurement, or the percentages used in the calculations, may affect the profitability of our New Mexico health plan. |
• | New Mexico Health Plan At-Risk Premium Revenue:Under our contract with the state of New Mexico, up to 0.75% of our New Mexico health plan’s revenue may be refundable to the state if certain performance measures are not met. These performance measures are generally linked to various quality of care and administrative measures dictated by the state. For the state fiscal year ended June 30, 2011, our New Mexico health plan has received $2.6 million in at-risk revenue for state fiscal year 2011. We have recognized $1.9 million of that amount as revenue, and recorded a liability of approximately $0.7 million as of September 30, 2011, for the remainder. For the state fiscal year ended June 30, 2012 we have received $0.6 million in at-risk revenue. We have recognized $0.4 million as revenue, and have recorded a liability of $0.2 million for the remainder. If the state of New Mexico disagrees with our estimation of our compliance with the at-risk premium requirements, an adjustment to the amounts owed may be required. |
• | Ohio Health Plan At-Risk Premium Revenue:Under our contract with the state of Ohio, up to 1% of our Ohio health plan’s revenue may be refundable to the state if certain performance measures are not met. Effective February 1, 2010 through June 30, 2011, an additional 0.25% of the Ohio health plan’s revenue became refundable if certain pharmacy specific performance measures were not met. These performance measures are generally linked to various quality-of-care measures dictated by the state. For the state fiscal year ended June 30, 2011, our Ohio health plan received $10.3 million in at-risk revenue. We have recognized $8.6 million of that amount as revenue, and recorded a liability of approximately $1.7 million for the remainder. To date for the state fiscal year ended June 30, 2012, we have received $2.7 million in at-risk revenue, of which $2.3 million has been recognized as revenue, and $0.4 million was recorded as a liability as of September 30, 2011. If the state of Ohio disagrees with our estimation of our compliance with the at-risk premium requirements, an adjustment to the amounts owed may be required. For example, during the third quarter of 2010, we reversed the recognition of approximately $3.3 million of at-risk revenue, of which $1.9 million and $1.4 million were initially recognized in 2010, and 2009, respectively. |
• | Utah Health Plan Premium Revenue:Our Utah health plan was entitled to receive additional premium revenue from the state of Utah as an incentive payment for saving the state of Utah money in relation to fee-for-service Medicaid during the period 2003 through August 31, 2009. | ||
During the second quarter of 2011 we settled all claims related to state contract years 2006 through 2009 and received payments amounting to $13.6 million in settlement of this matter. The state in turn has made demands upon us amounting to $9.6 million to recover alleged over payment of premium revenue to us for the period 2003 through 2009. We are disputing many of those claims and as of September 30, 2011 have recorded a liability of approximately $4.6 million in connection with the premium revenue overpayments. |
• | Texas Health Plan Profit Sharing:Under our contract with the state of Texas there is a profit-sharing agreement, where we pay a rebate to the state of Texas if our Texas health plan generates pretax income, as defined in the contract, above a certain specified percentage, as determined in accordance with a tiered rebate schedule. The rebates, if any, are calculated separately for the TANF/CHIP and ABD products. We are limited in the amount of administrative costs that we may deduct in calculating the rebate, if any. As of September 30, 2011, we had an aggregate liability of approximately $1.3 million accrued pursuant to our profit-sharing agreement with the state of Texas for the 2011 and 2012 contract years (ending August 31st of each year). Because the final settlement calculations include a claims run-out period of nearly one year, an adjustment to the amounts owed may be required. |
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• | Texas Health Plan At-Risk Premium Revenue:Under our contract with the state of Texas, up to 1% of our Texas health plan’s revenue may be refundable to the state if certain performance measures are not met. These performance measures are generally linked to various quality-of-care measures established by the state. The time period for the assessment of these performance measures previously followed the state’s fiscal year, but effective January 1, 2011, it follows the calendar year. The state of Texas has notified us that it has discontinued the program for the 2011 calendar year. |
• | Wisconsin Health Plan incentive revenue: Under our contract with the state of Wisconsin, a portion of the capitation premiums are withheld by the state and placed into an incentive pool. The amounts withheld are 3.25% of revenue in the southeast region of the state for the Badger Care program and 1% for the remaining membership in the state. If certain performance measures are met, the plan may be eligible to receive these additional funds as an incentive payment. As of September 30, 2011 we have determined that there is persuasive evidence that at least a portion of these funds have been earned and a receivable $0.4 million is established accordingly. |
• | Medicare Premium Revenue:Based on member encounter data that we submit to CMS, our Medicare revenue is subject to retroactive adjustment for both member risk scores and member pharmacy cost experience for up to two years after the original year of service. This adjustment takes into account the acuity of each member’s medical needs relative to what was anticipated when premiums were originally set for that member. In the event that a member requires less acute medical care than was anticipated by the original premium amount, CMS may recover premium from us. In the event that a member requires more acute medical care than was anticipated by the original premium amount, CMS may pay us additional retroactive premium. A similar retroactive reconciliation is undertaken by CMS for our Medicare members’ pharmacy utilization. That analysis is similar to the process for the adjustment of member risk scores, but is further complicated by member pharmacy cost sharing provisions attached to the Medicare pharmacy benefit that do not apply to the services measured by the member risk adjustment process. We estimate the amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ heath care utilization patterns and CMS practices. Based on our knowledge of member health care utilization patterns, we have recorded a liability of approximately $1.2 million related to the potential recoupment of Medicare premium revenue at September 30, 2011. To the extent that the premium revenue ultimately received from CMS differs from recorded amounts, we will adjust reported Medicare revenue. |
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• | Each contract calls for the provision of its own specific set of products and services, which vary significantly between contracts; and |
• | The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our newer contracts (commercial off-the-shelf technology solutions). |
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Sept. 30, | Dec. 31, | Sept. 30, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
(In thousands) | ||||||||||||
Fee-for-service claims incurred but not paid (IBNP) | $ | 283,160 | $ | 275,259 | $ | 271,285 | ||||||
Capitation payable | 49,259 | 49,598 | 53,410 | |||||||||
Pharmacy | 16,615 | 14,649 | 14,663 | |||||||||
Other | 12,021 | 14,850 | 13,982 | |||||||||
$ | 361,055 | $ | 354,356 | $ | 353,340 | |||||||
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Increase (Decrease) in | ||||
Medical Claims and | ||||
(Decrease) Increase in Estimated Completion Factors | Benefits Payable | |||
(6%) | $ | 113,904 | ||
(4%) | 75,936 | |||
(2%) | 37,968 | |||
2% | (37,968 | ) | ||
4% | (75,936 | ) | ||
6% | (113,904 | ) |
Increase (Decrease) in | ||||
Medical Claims and | ||||
(Decrease) Increase in Trended Per member Per Month Cost Estimates | Benefits Payable | |||
(6%) | $ | (61,288 | ) | |
(4%) | (40,859 | ) | ||
(2%) | (20,429 | ) | ||
2% | 20,429 | |||
4% | 40,859 | |||
6% | 61,288 |
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• | We overestimated the impact of an increase in pending high dollar claims at our Ohio health plan. |
• | We underestimated the lower cost associated with changes to provider fee schedules (primarily for outpatient facility costs) in New Mexico effective November 1, 2010. |
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• | In Missouri, delays in claims processing late in the fourth quarter of 2010 led us to underestimate the size of our claims liability at December 31, 2010. |
• | We underestimated the costs associated with our assumption of risk for a new population in Texas (rural CHIP members) effective September 1, 2010. |
• | In New Mexico, we underestimated the degree to which cuts to the Medicaid fees schedule would reduce our liability as of December 31, 2009. |
• | In California, we underestimated the extent to which various network restructuring, provider contracting, and medical management initiatives had reduced our medical care costs during the second half of 2009, thereby resulting in a lower liability at December 31, 2009. |
• | The assumption of risk for new populations by our Texas health plan; Dallas-Fort Worth area ABD members effective February 1, 2011; Jefferson service area members effective September 30, 2011. |
• | The transition of certain members by our Washington and Michigan health plans from full-risk capitated provider arrangements to fee-for-service providers effective December 31, 2010. This change had the effect of transferring back to the Company risk that had previously been assumed by capitated medical providers. |
• | A substantial decline in Medicaid claims inventory at our Ohio health plan and for our overall Medicare membership. |
• | A substantial increase in Medicaid claims inventory in Missouri and New Mexico. |
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Six | Three | |||||||||||||||||||
Months | Months | Year | ||||||||||||||||||
Nine Months Ended | Ended | Ended | Ended | |||||||||||||||||
Sept. 30, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||||||||||||
2011 | 2010 | 2011 | 2011 | 2010 | ||||||||||||||||
(Dollars in thousands, except | ||||||||||||||||||||
per-member amounts) | ||||||||||||||||||||
Balances at beginning of period | $ | 354,356 | $ | 315,316 | $ | 354,356 | $ | 354,356 | $ | 315,316 | ||||||||||
Balance of acquired subsidiary | — | — | — | — | 3,228 | |||||||||||||||
Components of medical care costs related to: | ||||||||||||||||||||
Current period | 2,871,515 | 2,554,579 | 1,908,289 | 957,909 | 3,420,235 | |||||||||||||||
Prior periods | (49,466 | ) | (46,213 | ) | (45,398 | ) | (44,377 | ) | (49,378 | ) | ||||||||||
Total medical care costs | 2,822,049 | 2,508,366 | 1,862,891 | 913,532 | 3,370,857 | |||||||||||||||
Payments for medical care costs related to: | ||||||||||||||||||||
Current period | 2,522,374 | 2,219,896 | 1,584,636 | 646,428 | 3,085,388 | |||||||||||||||
Prior periods | 292,976 | 250,446 | 290,998 | 270,078 | 249,657 | |||||||||||||||
Total paid | 2,815,350 | 2,470,342 | 1,875,634 | 916,506 | 3,335,045 | |||||||||||||||
Balances at end of period | $ | 361,055 | $ | 353,340 | $ | 341,613 | $ | 351,382 | $ | 354,356 | ||||||||||
Benefit from prior period as a percentage of: | ||||||||||||||||||||
Balance at beginning of period | 14.0 | % | 14.7 | % | 12.8 | % | 12.5 | % | 15.7 | % | ||||||||||
Premium revenue | 1.5 | % | 1.6 | % | 2.1 | % | 4.1 | % | 1.2 | % | ||||||||||
Total medical care costs | 1.8 | % | 1.8 | % | 2.4 | % | 4.9 | % | 1.5 | % | ||||||||||
Claims Data: | ||||||||||||||||||||
Days in claims payable, fee for service | 39 | 42 | 39 | 41 | 42 | |||||||||||||||
Number of members at end of period | 1,678,000 | 1,597,000 | 1,645,000 | 1,647,000 | 1,613,000 | |||||||||||||||
Number of claims in inventory at end of period | 132,200 | 110,200 | 121,900 | 185,300 | 143,600 | |||||||||||||||
Billed charges of claims in inventory at end of period | $ | 187,000 | $ | 158,900 | $ | 205,800 | $ | 250,600 | $ | 218,900 | ||||||||||
Claims in inventory per member at end of period | 0.08 | 0.07 | 0.07 | 0.11 | 0.09 | |||||||||||||||
Billed charges of claims in inventory per member at end of period | $ | 111.44 | $ | 99.50 | $ | 125.11 | $ | 152.16 | $ | 135.71 | ||||||||||
Number of claims received during the period | 12,864,800 | 10,701,900 | 8,715,200 | 4,342,200 | 14,554,800 | |||||||||||||||
Billed charges of claims received during the period | $ | 10,573,900 | $ | 8,615,500 | $ | 6,963,300 | $ | 3,386,600 | $ | 11,686,100 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
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Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
In the event the expected reduction in the rates paid to our California health plan is not finally implemented, is not made effective retroactive to July 1, 2011, or is otherwise modified, our results of operations may be affected.
California Assembly Bill 97, or AB 97, is legislation that was signed by Governor Jerry Brown on March 24, 2011. Among other things, AB 97 proposes to effect a 10% reduction in Medi-Cal provider rates. The California Department of Health Care Services has indicated that the 10% rate reduction will be effective retroactive to July 1, 2011. The Company believes that this reduction in provider payments, if effected, will translate into a premium reduction of approximately 6% for the California health plan. Because of the expected reduction in its rates effective July 1, 2011, the California health plan reduced its recognized premium revenue by approximately $7.5 million in the third quarter of 2011. However, at September 30, 2011, the California health plan had not recorded any potential recovery of provider payments related to this estimated premium reduction.
The proposed rate reduction was submitted for approval to CMS, and CMS had requested additional information from the state in support of the rate cut. On October 27, 2011, CMS indicated its general approval of the rate cut. However, the immediate effect of that approval is unclear, and it is anticipated that litigation will be commenced by providers or others to enjoin the implementation of the rate cut.
If the proposed rate cut is not finally implemented, if it is not made retroactive to July 1, 2011, or if it is otherwise modified from its current form, the results of our California health plan could be affected. In addition, recoveries from providers related to any final implemented rate cut could also affect the results of our California health plan.
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Total Number of | Maximum Number (or | |||||||||||||||
Shares Purchased as | Approximate Dollar Value) | |||||||||||||||
Total Number | Part of Publicly | of Shares That May Yet Be | ||||||||||||||
of Shares | Average Price | Announced Plans or | Purchased Under the Plans | |||||||||||||
Purchased (a) | Paid per Share | Programs (b)(c) | or Programs (b)(c)(d) | |||||||||||||
July 1 — July 31 | 1,361 | (e) | $ | 27.77 | — | $ | 7,000,000 | |||||||||
August 1 — August 31 | 402,800 | (e) | $ | 17.50 | 399,900 | $ | — | |||||||||
September 1 — September 30 | 644 | (e) | $ | 18.79 | — | $ | — | |||||||||
Total | 404,805 | (e) | $ | 17.53 | 399,900 | |||||||||||
(a) | During the three months ended September 30, 2011, we did not repurchase any shares of our common stock outside of our publicly announced stock repurchase program except 4,905 shares of common stock withheld to settle our employees’ income tax obligations. |
(b) | On July 27, 2011, our board of directors approved a stock repurchase program of up to $7 million to be used to purchase shares of our common stock under a Rule 10b5-1 trading plan. Our repurchases under this program were completed in August 2011. |
(c) | Effective as of October 26, 2011, our board of directors has authorized the repurchase of $75 million in aggregate of either our common stock or our convertible senior notes due 2014. The repurchase program extends through October 25, 2012, but the Company reserves the right to suspend or discontinue the program at any time. No repurchases have been made by the Company pursuant to this repurchase plan during the quarter ended September 30, 2011. |
(d) | As the repurchase plan effective October 26, 2011 was not in effect during the quarter ended September 30, 2011, this column does not include the maximum value of shares that may be purchased pursuant to this plan. |
(e) | Includes shares withheld by the Company to satisfy our employees’ income tax withholdings. |
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Item 6. | Exhibits |
Exhibit No. | Title | |||
31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended. | |||
31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended. | |||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101.INS (1) | XBRL Taxonomy Instance Document. | |||
101.SCH (1) | XBRL Taxonomy Extension Schema Document. | |||
101.CAL (1) | XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF (1) | XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB (1) | XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE (1) | XBRL Taxonomy Extension Presentation Linkbase Document. |
(1) | Pursuant to Rule 406T of Regulation S-T, XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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MOLINA HEALTHCARE, INC. (Registrant) | ||||
Dated: October 28, 2011 | /s/ JOSEPH M. MOLINA, M.D. | |||
Joseph M. Molina, M.D. | ||||
Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) | ||||
Dated: October 28, 2011 | /s/ JOHN C. MOLINA, J.D. | |||
John C. Molina, J.D. | ||||
Chief Financial Officer and Treasurer (Principal Financial Officer) |
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Exhibit No. | Title | |||
31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended. | |||
31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) under the | |||
Securities Exchange Act of 1934, as amended. | ||||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101.INS (1) | XBRL Taxonomy Instance Document. | |||
101.SCH (1) | XBRL Taxonomy Extension Schema Document. | |||
101.CAL (1) | XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF (1) | XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB (1) | XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE (1) | XBRL Taxonomy Extension Presentation Linkbase Document. |
(1) | Pursuant to Rule 406T of Regulation S-T, XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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