Contact:
Juan José Orellana
Investor Relations
562-435-3666, ext. 111143
MOLINA HEALTHCARE REPORTS
FOURTH QUARTER AND YEAR-END 2010 RESULTS
| · | Earnings per diluted share for 2010 of $1.98, up 66% over 2009 |
| · | Annual premium revenues of $4 billion, up 9% over 2009 |
| · | Annual operating income of $105 million, up 100% over 2009 |
| · | Aggregate membership up 11% over 2009 |
Long Beach, California (February 17, 2011) – Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter and year ended December 31, 2010.
Net income for the quarter was $17.6 million, or $0.58 per diluted share, compared with a net loss of $4.5 million, or $0.18 per diluted share, for the quarter ended December 31, 2009. Net income for the year ended December 31, 2010, was $55.0 million, or $1.98 per diluted share, compared with net income of $30.9 million, or $1.19 per diluted share, for the year ended December 31, 2009.
“Our strong 2010 results reflect a year of accomplishment and growth. We continue to deliver on our strategy of providing a diversified suite of health care services to meet the needs of low-income families and the government programs that serve them,” said J. Mario Molina, M.D., president and chief executive officer of Molina Healthcare. “By delivering administrative value to state agencies through our Molina Medicaid Solutions segment and by continuing to provide quality, cost-effective care in the increasingly challenging rate environment, we have positioned our Company to continue to deliver strong revenue growth and management of medical costs in 2011.”
Guidance
The Company confirms its guidance issued on January 26, 2011.
Overview of Financial Results
Fourth Quarter 2010 Compared with Third Quarter 2010
Net income for the fourth quarter of 2010 increased $1.5 million from the third quarter of 2010. Operating income increased over 11%, primarily due to lower fee-for-service medical care costs. Medical care costs as a percentage of premium revenue (the medical care ratio) were 82.7% in the fourth quarter of 2010 compared with 84.2% in the third quarter of 2010.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Fourth Quarter 2010 Compared with Fourth Quarter 2009
Health Plans Segment
Premium revenue grew 8.4% in the fourth quarter of 2010 compared with the fourth quarter of 2009, due to a membership increase of 10.9%. On a PMPM basis, however, consolidated premium revenue decreased 3.0% because of declines in premium rates. The decrease in PMPM revenue was primarily due to the transfer of the pharmacy benefit to the state fee-for-service program in Ohio effective February 1, 2010. Exclusive of the transfer of the pharmacy benefit in Ohio, Medicaid premium revenue PMPM was unchanged from the fourth quarter of 2009. Medicare enrollment exceeded 24,000 members at December 31, 2010, and Medicare premium revenue for the quarter was $76.5 million compared with $40.0 million in the fourth quarter of 2009.
The medical care ratio decreased to 82.7% in the fourth quarter of 2010 compared with 87.5% for the same period of 2009.
The medical care ratio of the California health plan decreased to 81.9% in the fourth quarter of 2010 from 90.4% in the fourth quarter of 2009, primarily due to lower inpatient facility fee-for-service costs resulting from provider network restructuring and improved medical management.
The medical care ratio of the Florida health plan increased to 100.2% in the fourth quarter of 2010 from 97.1% in the fourth quarter of 2009, primarily due to higher capitation costs and higher fee-for-service costs in the outpatient and physician categories. The Company has undertaken a number of measures – focused on both utilization and unit cost reductions – to improve the profitability of the Florida health plan.
The medical care ratio of the Michigan health plan increased to 81.9% in the fourth quarter of 2010 from 80.0% in the fourth quarter of 2009, primarily due to lower premium revenue PMPM and higher inpatient facility fee-for-service costs.
The medical care ratio of the New Mexico health plan decreased to 82.1% in the fourth quarter of 2010 from 85.3% in the fourth quarter of 2009, primarily due to reduced fee-for-service costs which more than offset a premium reduction of approximately 9% PMPM effective November 1, 2010.
The medical care ratio of the Ohio health plan decreased to 74.5% in the fourth quarter of 2010 from 87.5% in the fourth quarter of 2009, due to an increase in Medicaid premium PMPM of approximately 6% effective January 1, 2010, (exclusive of the reduction related to pharmacy benefits) and reduced fee-for-service costs in the outpatient and physician categories, partially offset by higher inpatient facility fee-for-service costs.
The medical care ratio of the Utah health plan decreased to 83.2% in the fourth quarter of 2010 from 95.4% in the fourth quarter of 2009, primarily due to reduced fee-for-service costs in the outpatient and physician categories and an increase in Medicaid premium PMPM of approximately 7% effective July 1, 2010.
The medical care ratio of the Washington health plan decreased to 83.2% in the fourth quarter of 2010 from 87.0% in the fourth quarter of 2009, primarily due to reduced fee-for-service costs in the outpatient and physician categories and an increase in Medicaid premium PMPM of approximately 2.5% effective July 1, 2010.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Days in medical claims and benefits payable. Beginning January 1, 2010, and for all prior periods presented, the Company is reporting days in medical claims and benefits payable relating to fee-for-service medical claims only. This computation includes only fee-for-service medical care costs and related liabilities and therefore calculates the extent of reserves for those liabilities that are most subject to estimation.
The days in medical claims and benefits payable amount reported prior to 2010 included all medical care costs (fee-for-service, capitation, pharmacy, and administrative), and all medical claims liabilities, including those liabilities that are typically paid concurrently, or shortly after the costs are incurred, such as capitation cost and pharmacy costs. Medical claims liabilities used in this calculation do not include accrued costs, such as salaries, associated with the administrative portion of medical costs.
By including only fee-for-service medical costs and liabilities in this computation, the Company’s days in claims payable metric will be more indicative of the size of the Company’s reserves for liabilities subject to a substantial degree of estimation. The days in medical claims and benefits payable, excluding the Company’s Wisconsin health plan acquired September 1, 2010, were as follows:
| (Dollars in thousands) | | | | | | | | | |
| Days in claims payable – fee-for-service only | | 42 days | | | 42 days | | | 44 days | |
| Number of claims in inventory at end of period | | | 143,600 | | | | 110,200 | | | | 93,100 | |
| Billed charges of claims in inventory at end of period | | $ | 218,900 | | | $ | 158,900 | | | $ | 131,400 | |
Consolidated Expenses
General and administrative expenses, or G&A, were $100.4 million, or 9.3% of total revenue, for the fourth quarter of 2010 compared with $77.0 million, or 8.0% of total revenue, for the fourth quarter of 2009. The increase in the G&A ratio was the result of higher administrative expenses for the Health Plan segment, driven in part by the cost of the Company’s Medicare expansion, higher variable compensation expense as a result of substantially improved financial performance in 2010, and the acquisition of Molina Medicaid Solutions.
| | | Three Months Ended December 31, | |
| | | | | | | |
| | | | | | | | | | | | | |
| | | (In thousands) | |
| Medicare-related administrative costs | | $ | 9,275 | | | | 0.9 | % | | $ | 5,721 | | | | 0.6 | % |
| Non Medicare-related administrative costs: | | | | | | | | | | | | | | | | |
| Molina Medicaid Solutions segment administrative costs | | | 1,974 | | | | 0.2 | | | | – | | | | – | |
| Health Plans segment administrative payroll, including employee incentive compensation | | | 72,350 | | | | 6.7 | | | | 53,905 | | | | 5.6 | |
| All other Health Plans segment administrative expense | | | 16,775 | | | | 1.5 | | | | 17,420 | | | | 1.8 | |
| | | $ | 100,374 | | | | 9.3 | % | | $ | 77,046 | | | | 8.0 | % |
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Premium tax expense decreased to 3.4% of premium revenue in the fourth quarter of 2010 from 4.3% in the fourth quarter of 2009, primarily due to lower premium taxes in California. California premium taxes in the fourth quarter of 2009 included an adjustment imposed by the state that was retroactive to January 1, 2009. No such retroactive adjustment was made in the fourth quarter of 2010.
Depreciation and amortization expense related to the Company’s Health Plans segment is all recorded in “Depreciation and Amortization” in the Company’s consolidated statements of operations. Depreciation and amortization related to the Company’s Molina Medicaid Solutions segment is recorded within three different captions in the Company’s consolidated statements of operations as follows:
| · | Amortization of purchased intangibles relating to customer relationships is reported as amortization in “Depreciation and Amortization;” |
| · | Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of service revenue; and |
| · | Depreciation is recorded as cost of service revenue. |
The following table presents all depreciation and amortization recorded in the Company’s consolidated statements of operations, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue, and reconciles that amount to the condensed consolidated statements of cash flows.
| | | Three Months Ended December 31, | |
| | | | | | | |
| | | | | | | | | | | | | |
| | | (In thousands) | |
| Depreciation and amortization | | $ | 12,470 | | | | 1.2 | % | | $ | 9,642 | | | | 1.0 | % |
| Amortization recorded as reduction of service revenue | | | 4,070 | | | | 0.4 | | | | – | | | | – | |
| Depreciation recorded as cost of service revenue | | | 3,740 | | | | 0.3 | | | | – | | | | – | |
| Depreciation and amortization reported in the condensed consolidated statements of cash flows | | $ | 20,280 | | | | 1.9 | % | | $ | 9,642 | | | | 1.0 | % |
Interest expense was $3.5 million for the fourth quarter of 2010, consistent with the fourth quarter of 2009.
Income tax expense (benefit) was recorded at an effective rate of 41.2% in the fourth quarter of 2010 compared with (53.7%) in the fourth quarter of 2009. The lower rate in 2009 was primarily due to the Company’s pre-tax loss recognized during the quarter and higher than previously estimated California enterprise zone tax credits.
Through December 31, 2009, the Company’s income tax expense included both the Michigan business income tax, or BIT, and the Michigan modified gross receipts tax, or MGRT. Effective January 1, 2010, the Company has recorded the MGRT as a premium tax and not as an income tax. The Company will continue to record the BIT as an income tax. For the fourth quarter and year ended December 31, 2009, premium tax expense and income tax expense have been reclassified to conform to this presentation.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Year Ended December 31, 2010, Compared with Year Ended December 31, 2009
Health Plans Segment
Premium revenue grew 9% in the year ended December 31, 2010, compared with the same period in 2009, due to a membership increase of 10.9%. On a PMPM basis, however, consolidated premium revenue decreased 2.1% because of declines in premium rates. The decrease in PMPM revenue was primarily due to the transfer of the pharmacy benefit to the state fee-for-service programs in Ohio (effective February 1, 2010) and Missouri (effective October 1, 2009). Exclusive of the transfer of the pharmacy benefit in Ohio and Missouri, Medicaid premium revenue PMPM increased approximately 1.5% from 2009. Medicare enrollment exceeded 24,000 members at December 31, 2010, and Medicare premium revenue for 2010 was $265.2 million compared with $135.9 million fo r the same period in 2009.
The medical care ratio decreased to 84.5% for 2010 compared with 86.8% for 2009.
The medical care ratio of the California health plan decreased to 83.5% for the year ended December 31, 2010, from 92.2% for the same period in 2009, primarily due to lower inpatient facility fee-for-service costs resulting from provider network restructuring and improved medical management.
The medical care ratio of the Florida health plan increased to 95.4% for the year ended December 31, 2010, from 93.8% for 2009, primarily due to higher capitation costs and higher fee-for-service costs in the outpatient and physician categories.
The medical care ratio of the Michigan health plan increased to 83.7% for the year ended December 31, 2010, from 81.5% for 2009, primarily due to higher inpatient facility fee-for-service costs.
The medical care ratio of the New Mexico health plan decreased to 80.6% for the year ended December 31, 2010, from 85.7% for the same period in 2009, primarily due to reduced fee-for-service costs which more than offset decreased premium revenue PMPM.
The medical care ratio of the Ohio health plan decreased to 79.1% for the year ended December 31, 2010, from 86.1% for the same period in 2009, primarily due to an increase in Medicaid premium PMPM of approximately 6% effective January 1, 2010, (exclusive of the reduction related to pharmacy benefits), partially offset by higher inpatient facility fee-for-service costs.
The medical care ratio of the Utah health plan decreased to 91.3% for the year ended December 31, 2010, from 91.8% for the same period in 2009, due to improved financial performance in the second half of 2010. That improved financial performance was the result of reduced fee-for-service costs in the second half of 2010 and an increase in Medicaid premium PMPM of approximately 7% effective July 1, 2010.
The medical care ratio of the Washington health plan decreased to 83.9% for the year ended December 31, 2010, from 84.5% for the same period in 2009, primarily due to reduced fee-for-service costs which more than offset decreased premium revenue PMPM. Premium revenue PMPM decreased for all of 2010 compared to 2009 because the rate increase of approximately 2.5% effective July 1, 2010, was not enough to offset decreases received during the second half of 2009.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Consolidated Expenses
General and administrative expenses were $346.0 million, or 8.5% of total revenue, for 2010 compared with $276.0 million, or 7.5% of total revenue, for 2009. The increase in the G&A ratio was the result of higher administrative expenses for the Health Plan segment, driven in part by the cost of the Company’s Medicare expansion, higher variable compensation expense as a result of substantially improved financial performance in 2010, employee severance and settlement costs of $5.5 million, and costs relating to the acquisitions of Molina Medicaid Solutions and the Wisconsin health plan.
| | | | |
| | | | | | | |
| | | | | | | | | | | | | |
| | | (In thousands) | |
| Medicare-related administrative costs | | $ | 30,254 | | | | 0.7 | % | | $ | 18,564 | | | | 0.5 | % |
| Non Medicare-related administrative costs: | | | | | | | | | | | | | | | | |
| Employee severance and settlement costs | | | 5,548 | | | | 0.1 | | | | 1,257 | | | | – | |
| Molina Medicaid Solutions segment administrative costs | | | 5,135 | | | | 0.1 | | | | – | | | | – | |
| Molina Medicaid Solutions and Wisconsin plan acquisition costs | | | 2,957 | | | | 0.1 | | | | – | | | | – | |
| Health Plans segment administrative payroll, including employee incentive compensation | | | 239,146 | | | | 5.9 | | | | 204,432 | | | | 5.6 | |
| All other Health Plans segment administrative expense | | | 62,953 | | | | 1.6 | | | | 51,774 | | | | 1.4 | |
| | | $ | 345,993 | | | | 8.5 | % | | $ | 276,027 | | | | 7.5 | % |
Premium tax expense was 3.5% of premium revenue in 2010, consistent with 2009.
Depreciation and amortization expense is reported as discussed earlier. The following table presents all depreciation and amortization recorded in the Company’s statements of operations regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue, and reconciles that amount to the condensed consolidated statements of cash flows.
| | | | |
| | | | | | | |
| | | | | | | | | | | | | |
| | | (In thousands) | |
| Depreciation and amortization | | $ | 45,704 | | | | 1.1 | % | | $ | 38,110 | | | | 1.0 | % |
| Amortization recorded as reduction of service revenue | | | 8,316 | | | | 0.2 | | | | – | | | | – | |
| Depreciation recorded as cost of service revenue | | | 6,745 | | | | 0.2 | | | | – | | | | – | |
| Depreciation and amortization reported in the condensed consolidated statements of cash flows | | $ | 60,765 | | | | 1.5 | % | | $ | 38,110 | | | | 1.0 | % |
Interest expense increased to $15.5 million for 2010 compared with $13.8 million for 2009.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Income tax expense was recorded at an effective rate of 38.6% for the year ended December 31, 2010, compared with 19.1% in the same period of 2009. The lower rate in 2009 was primarily due to discrete tax benefits recorded in 2009 as a result of settling tax examinations, and higher than previously estimated tax credits.
Molina Medicaid Solutions Segment (acquired May 1, 2010)
Molina Medicaid Solutions contributed $2.6 million to operating income for the year ended December 31, 2010, but reported an operating loss of $3.6 million for the quarter ended December 31, 2010. The operating loss for the fourth quarter of 2010 was primarily the result of system stabilization costs incurred for two of Molina Medicaid Solutions’ contracts.
Performance of Molina Medicaid Solutions for the quarter and year ended December 31, 2010, was as follows:
| | | | | | | |
| | | | |
| | | (In thousands) | |
| Service revenue before amortization | | $ | 40,554 | | | $ | 98,125 | |
| Amortization of contract backlog recorded as contra-service revenue | | | (4,070 | ) | | | (8,316 | ) |
| Service revenue | | | 36,484 | | | | 89,809 | |
| | | | | | | | | |
| Cost of service revenue | | | 36,788 | | | | 78,647 | |
| General and administrative costs | | | 1,974 | | | | 5,135 | |
| Amortization of customer relationships intangibles | | | 1,275 | | | | 3,418 | |
| Operating (loss) income | | $ | (3,553 | ) | | $ | 2,609 | |
Cash Flow
Cash provided by operating activities for 2010 was $161.6 million compared with $155.4 million for 2009, an increase of $6.2 million.
Deferred revenue, which was a source of operating cash totaling $88.2 million in 2009, was a use of operating cash totaling $41.9 million in 2010. The change in deferred revenue was offset by increases in net income, depreciation and amortization, and other current liabilities.
Cash used in investing activities increased significantly in 2010 compared with 2009 due chiefly to the acquisition of Molina Medicaid Solutions, which totaled $131.3 million.
Cash provided by financing activities increased due to funds generated by the Company’s equity offering in the third quarter of 2010, which totaled $111.1 million net of issuance costs. Amounts borrowed under the Company’s credit facility to fund the acquisition of Molina Medicaid Solutions in the second quarter of 2010 were repaid in the third quarter using proceeds from the equity offering.
At December 31, 2010, the Company had cash and investments (not including restricted investments) of $771.7 million, including non-current auction rate securities with a fair value of $20.4 million. At December 31, 2010, the parent company had unrestricted cash and investments of $65.1 million, including auction rate securities with a fair value of $6.0 million.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Investment income decreased to $6.3 million in 2010 compared with $9.1 million in 2009. This decline was due primarily to lower interest rates.
Reconciliation of Non-GAAP to GAAP Financial Measures
EBITDA (1)
| | | Three Months Ended December 31, | | | | |
| | | | | | | | | | | | | |
| | | (In thousands) | |
| Operating income (loss) | | $ | 33,432 | | | $ | (5,804 | ) | | $ | 105,001 | | | $ | 51,934 | |
| Add back: | | | | | | | | | | | | | | | | |
| Depreciation and amortization reported in the condensed consolidated statements of cash flows | | | 20,280 | | | | 9,642 | | | | 60,765 | | | | 38,110 | |
EBITDA | | $ | 53,712 | | | $ | 3,838 | | | $ | 165,766 | | | $ | 90,044 | |
| (1) | The Company calculates EBITDA consistently on a quarterly and annual basis by adding back depreciation and amortization to operating income. 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 the Company’s financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reason s, management believes that EBITDA is a useful supplemental measure to investors in evaluating the Company’s performance and the performance of other companies in its industry. |
Equity Offering
The Company issued 4,350,000 shares in connection with the equity offering it conducted in the third quarter of 2010 as described earlier. The offering added approximately 1.7 million shares to the weighted average number of common shares outstanding for the year ended December 31, 2010.
Conference Call
The Company’s management will host a conference call and webcast to discuss its fourth quarter and year-end results at 5:00 p.m. Eastern time on Thursday, February 17, 2011. The number to call for the interactive teleconference is (212) 271-4657. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Thursday, February 17, 2011, through 6:00 p.m. on Friday, February 18, 2011, by dialing (800) 633-8284 and entering confirmation number 21502798. A live broadcast of Molina Healthcare’s conference call will be available on the Company’s website, www.molinahealthcare.com, or at www.earnings.com. A 30-day online repl ay will be available approximately an hour following the conclusion of the live broadcast.
About Molina Healthcare
Molina Healthcare, Inc. provides quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program. Molina’s licensed health plans in California, Florida, Michigan, Missouri, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.6 million members, and the Company’s subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company’s plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties, including, without limitation, risk factors related to the following:
| · | significant budgetary pressures on state governments and their potential inability to maintain the currently agreed-upon payment rates to our health plans, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria; |
| · | increases in our Aged, Blind or Disabled membership at our California and Texas health plans consistent with our expectations; |
| · | uncertainties regarding the impact of the Patient Protection and Affordable Care Act, including its possible repeal, judicial overturning of the individual insurance mandate, the effect of various implementing regulations, and uncertainties regarding the likely impact of other federal or state health care and insurance reform measures; |
| · | management of our medical costs, including seasonal flu patterns and rates of utilization that are consistent with our expectations; |
| · | the success of our efforts to retain existing government contracts in connection with upcoming state requests for proposals (RFPs) in Washington and Louisiana; |
| · | the success of our efforts to obtain new government contracts in connection with upcoming RFPs in both existing states (Texas and Florida) and new states (Arizona, Georgia, and Illinois) and our ability to grow our revenues through 2012 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 Medicaid pharmaceutical rebates; |
| · | the continuation and renewal of the government contracts of our health plans and of Molina Medicaid Solutions and the terms on 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; |
| · | additional administrative costs and the potential payment of additional amounts to providers and/or the state as a result of MMIS implementation issues in Idaho; |
| · | the certification of the MMIS systems in both Maine and Idaho during 2011; |
| · | government audits and reviews, including the audit of our Medicare plans by CMS; |
| · | changes with respect to our provider contracts and the loss of providers; |
| · | the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, 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; |
| · | 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 or arbitration matters; |
| · | restrictions and covenants in our credit facility, and the approach of its maturity date in May 2012; |
| · | 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; |
| · | a state’s failure to renew its federal Medicaid waiver; |
| · | an inadvertent unauthorized disclosure of protected health information; |
| · | 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; |
and numerous other risk factors, including those discussed in our periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of our Company website or on the SEC’s website at www.sec.gov. Given these risks and uncertainties, we can give no assurances that our forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by our forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements. All forward‐looking statements in this release represent our judgment as of February 17, 2011, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in our expectations.
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MOH Reports Fourth Quarter and Year-End 2010 Results
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February 17, 2011
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per-share data)
| | | Three Months Ended December 31, | | | | |
| | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | |
| Premium revenue | | $ | 1,042,889 | | | $ | 962,411 | | | $ | 3,989,909 | | | $ | 3,660,207 | |
| Service revenue | | | 36,484 | | | | − | | | | 89,809 | | | | − | |
| Investment income | | | 1,379 | | | | 1,813 | | | | 6,259 | | | | 9,149 | |
Total operating revenue | | | 1,080,752 | | | | 964,224 | | | | 4,085,977 | | | | 3,669,356 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Medical care costs | | | 862,491 | | | | 842,371 | | | | 3,370,857 | | | | 3,176,236 | |
| Cost of service revenue | | | 36,788 | | | | − | | | | 78,647 | | | | − | |
| General and administrative expenses | | | 100,374 | | | | 77,046 | | | | 345,993 | | | | 276,027 | |
Premium tax expenses (1) | | | 35,197 | | | | 40,969 | | | | 139,775 | | | | 128,581 | |
| Depreciation and amortization | | | 12,470 | | | | 9,642 | | | | 45,704 | | | | 38,110 | |
Total expenses | | | 1,047,320 | | | | 970,028 | | | | 3,980,976 | | | | 3,618,954 | |
| Gain on purchase of convertible senior notes | | | − | | | | − | | | | − | | | | 1,532 | |
| Operating income (loss) | | | 33,432 | | | | (5,804 | ) | | | 105,001 | | | | 51,934 | |
| Interest expense | | | (3,453 | ) | | | (3,860 | ) | | | (15,509 | ) | | | (13,777 | ) |
| | | | | | | | | | | | | | | | | |
| Income (loss) before income taxes | | | 29,979 | | | | (9,664 | ) | | | 89,492 | | | | 38,157 | |
Income tax expense (benefit) (1) | | | 12,351 | | | | (5,192 | ) | | | 34,522 | | | | 7,289 | |
| Net income (loss) | | $ | 17,628 | | | $ | (4,472 | ) | | $ | 54,970 | | | $ | 30,868 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.58 | | | $ | (0.18 | ) | | $ | 2.00 | | | $ | 1.19 | |
| Diluted | | $ | 0.58 | | | $ | (0.18 | ) | | $ | 1.98 | | | $ | 1.19 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of common shares and potentially dilutive common shares outstanding | | | 30,495 | | | | 25,552 | | | | 27,754 | | | | 25,984 | |
| | | | | | | | | | | | | | | | | |
| Operating Statistics: | | | | | | | | | | | | | | | | |
| Ratio of medical care costs paid directly to providers to premium revenue | | | 80.4 | % | | | 85.5 | % | | | 82.3 | % | | | 84.8 | % |
| Ratio of medical care costs not paid directly to providers to premium revenue | | | 2.3 | | | | 2.0 | | | | 2.2 | | | | 2.0 | |
Medical care ratio (2) | | | 82.7 | % | | | 87.5 | % | | | 84.5 | % | | | 86.8 | % |
General and administrative expense ratio (3) | | | 9.3 | % | | | 8.0 | % | | | 8.5 | % | | | 7.5 | % |
Premium tax ratio (1), (2) | | | 3.4 | % | | | 4.3 | % | | | 3.5 | % | | | 3.5 | % |
Effective tax rate (1) | | | 41.2 | % | | | (53.7 | )% | | | 38.6 | % | | | 19.1 | % |
| (1) | Effective January 1, 2010, the Company has recorded the MGRT as a premium tax and not as an income tax. For the three months and year ended December 31, 2009, premium tax expense and income tax expense have been reclassified to conform to this presentation. |
| (2) | Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium taxes as a percentage of premium revenue. |
| (3) | Computed as a percentage of total operating revenue. |
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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 11
February 17, 2011
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per-share data)
| | | | | | | |
| | | | | | | |
| ASSETS | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 455,886 | | | $ | 469,501 | |
| Investments | | | 295,375 | | | | 174,844 | |
| Receivables | | | 168,190 | | | | 136,654 | |
| Income and related taxes refundable | | | − | | | | 6,067 | |
| Deferred income taxes | | | 15,716 | | | | 8,757 | |
| Prepaid expenses and other current assets | | | 22,772 | | | | 14,383 | |
| Total current assets | | | 957,939 | | | | 810,206 | |
| Property and equipment, net | | | 100,537 | | | | 78,171 | |
| Deferred contract costs | | | 28,444 | | | | − | |
| Intangible assets, net | | | 105,500 | | | | 80,846 | |
| Goodwill and indefinite-lived intangible assets | | | 212,228 | | | | 133,408 | |
| Investments | | | 20,449 | | | | 59,687 | |
| Restricted investments | | | 42,100 | | | | 36,274 | |
| Receivable for ceded life and annuity contracts | | | 24,649 | | | | 25,455 | |
| Other assets | | | 17,368 | | | | 19,988 | |
| | | $ | 1,509,214 | | | $ | 1,244,035 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| Current liabilities: | | | | | | | | |
| Medical claims and benefits payable | | $ | 354,356 | | | $ | 315,316 | |
| Accounts payable and accrued liabilities | | | 137,930 | | | | 71,732 | |
| Deferred revenue | | | 60,086 | | | | 101,985 | |
| Income taxes payable | | | 13,176 | | | | − | |
| Total current liabilities | | | 565,548 | | | | 489,033 | |
| Long-term debt | | | 164,014 | | | | 158,900 | |
| Deferred income taxes | | | 16,235 | | | | 12,506 | |
| Liability for ceded life and annuity contracts | | | 24,649 | | | | 25,455 | |
| Other long-term liabilities | | | 19,711 | | | | 15,403 | |
| Total liabilities | | | 790,157 | | | | 701,297 | |
| | | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
Common stock, $0.001 par value; 80,000 shares authorized, outstanding 30,309 shares at December 31, 2010, and 25,607 shares at December 31, 2009 | | | 30 | | | | 26 | |
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares outstanding | | | − | | | | − | |
| Additional paid-in capital | | | 251,627 | | | | 129,902 | |
| Accumulated other comprehensive loss | | | (2,192 | ) | | | (1,812 | ) |
| Retained earnings | | | 469,592 | | | | 414,622 | |
| Total stockholders’ equity | | | 719,057 | | | | 542,738 | |
| | | $ | 1,509,214 | | | $ | 1,244,035 | |
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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 12
February 17, 2011
MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | Three Months Ended December 31, | | | | |
| | | | | | | | | | | | | |
| Operating activities: | | | | | | | | | | | | |
| Net income (loss) | | $ | 17,628 | | | $ | (4,472 | ) | | $ | 54,970 | | | $ | 30,868 | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 20,280 | | | | 9,642 | | | | 60,765 | | | | 38,110 | |
| Unrealized loss (gain) on trading securities | | | − | | | | 115 | | | | (4,170 | ) | | | (3,394 | ) |
| (Gain) loss on rights agreement | | | − | | | | (104 | ) | | | 3,807 | | | | 3,100 | |
| Deferred income taxes | | | (8,555 | ) | | | (2,323 | ) | | | (4,092 | ) | | | (1 | ) |
| Stock-based compensation | | | 2,263 | | | | 1,755 | | | | 9,531 | | | | 7,485 | |
| Non-cash interest on convertible senior notes | | | 1,314 | | | | 1,219 | | | | 5,114 | | | | 4,782 | |
| Gain on purchase of convertible senior notes | | | − | | | | − | | | | − | | | | (1,532 | ) |
| Amortization of deferred financing costs | | | 502 | | | | 832 | | | | 1,780 | | | | 1,872 | |
| Tax deficiency from employee stock compensation | | | (292 | ) | | | (45 | ) | | | (968 | ) | | | (749 | ) |
| Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
| Receivables | | | 57,357 | | | | 7,475 | | | | (7,539 | ) | | | (8,092 | ) |
| Prepaid expenses and other current assets | | | (1,449 | ) | | | (71 | ) | | | (9,756 | ) | | | 383 | |
| Medical claims and benefits payable | | | 416 | | | | 12,202 | | | | 34,363 | | | | 22,874 | |
| Accounts payable and accrued liabilities | | | 25,351 | | | | (10,877 | ) | | | 40,482 | | | | (26,467 | ) |
| Deferred revenue | | | 22,438 | | | | 17,350 | | | | (41,899 | ) | | | 88,181 | |
| Income taxes | | | 15,931 | | | | (7,610 | ) | | | 19,258 | | | | (2,049 | ) |
| Net cash provided by operating activities | | | 153,184 | | | | 25,088 | | | | 161,646 | | | | 155,371 | |
| | | | | | | | | | | | | | | | | |
| Investing activities: | | | | | | | | | | | | | | | | |
| Purchases of property and equipment | | | (16,620 | ) | | | (7,480 | ) | | | (48,538 | ) | | | (35,870 | ) |
| Purchases of investments | | | (140,222 | ) | | | (59,429 | ) | | | (302,842 | ) | | | (186,764 | ) |
| Sales and maturities of investments | | | 39,913 | | | | 54,595 | | | | 225,106 | | | | 204,365 | |
| Net cash paid in business combinations | | | (3,512 | ) | | | (394 | ) | | | (130,743 | ) | | | (11,294 | ) |
| Increase in deferred contract costs | | | (8,703 | ) | | | − | | | | (29,319 | ) | | | − | |
| (Increase) decrease in restricted investments | | | 2,947 | | | | 6,126 | | | | (5,566 | ) | | | 1,928 | |
| Change in other long-term assets and liabilities | | | 490 | | | | 587 | | | | 2,830 | | | | (10,078 | ) |
| Net cash used in investing activities | | | (125,707 | ) | | | (5,995 | ) | | | (289,072 | ) | | | (37,713 | ) |
| | | | | | | | | | | | | | | | | |
| Financing activities: | | | | | | | | | | | | | | | | |
| Amount borrowed under credit facility | | | − | | | | − | | | | 105,000 | | | | − | |
| Proceeds from common stock offering, net of issuance costs | | | (115 | ) | | | − | | | | 111,131 | | | | − | |
| Repayment of amount borrowed under credit facility | | | − | | | | − | | | | (105,000 | ) | | | − | |
| Treasury stock purchases | | | − | | | | − | | | | − | | | | (27,712 | ) |
| Purchase of convertible senior notes | | | − | | | | − | | | | − | | | | (9,653 | ) |
| Credit facility fees paid | | | − | | | | − | | | | (1,671 | ) | | | − | |
| Excess tax benefits from employee stock compensation | | | (125 | ) | | | 5 | | | | 295 | | | | 31 | |
| Proceeds from employee stock plans | | | 2,194 | | | | 934 | | | | 4,056 | | | | 2,015 | |
| Net cash provided by (used in) financing activities | | | 1,954 | | | | 939 | | | | 113,811 | | | | (35,319 | ) |
| Net increase (decrease) in cash and cash equivalents | | | 29,431 | | | | 20,032 | | | | (13,615 | ) | | | 82,339 | |
| Cash and cash equivalents at beginning of period | | | 426,455 | | | | 449,469 | | | | 469,501 | | | | 387,162 | |
| Cash and cash equivalents at end of period | | $ | 455,886 | | | $ | 469,501 | | | $ | 455,886 | | | $ | 469,501 | |
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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 13
February 17, 2011
UNAUDITED MEMBERSHIP DATA
Total Ending Membership By Health Plan: | | | | | | | | | |
| California | | | 344,000 | | | | 349,000 | | | | 351,000 | |
| Florida | | | 61,000 | | | | 57,000 | | | | 50,000 | |
| Michigan | | | 227,000 | | | | 225,000 | | | | 223,000 | |
| Missouri | | | 81,000 | | | | 79,000 | | | | 78,000 | |
| New Mexico | | | 91,000 | | | | 91,000 | | | | 94,000 | |
| Ohio | | | 245,000 | | | | 241,000 | | | | 216,000 | |
| Texas | | | 94,000 | | | | 96,000 | | | | 40,000 | |
| Utah | | | 79,000 | | | | 78,000 | | | | 69,000 | |
| Washington | | | 355,000 | | | | 353,000 | | | | 334,000 | |
Wisconsin (1) | | | 36,000 | | | | 28,000 | | | | – | |
| | | | 1,613,000 | | | | 1,597,000 | | | | 1,455,000 | |
| | | | | | | | | | | | | |
Total Ending Membership By State for the Medicare Advantage Plans (1): | | | | | | | | | | | | |
| California | | | 4,900 | | | | 4,300 | | | | 2,100 | |
| Florida | | | 500 | | | | 500 | | | | – | |
| Michigan | | | 6,300 | | | | 5,700 | | | | 3,300 | |
| New Mexico | | | 600 | | | | 600 | | | | 400 | |
| Texas | | | 700 | | | | 600 | | | | 500 | |
| Utah | | | 8,900 | | | | 8,600 | | | | 4,000 | |
| Washington | | | 2,600 | | | | 2,300 | | | | 1,300 | |
| | | | 24,500 | | | | 22,600 | | | | 11,600 | |
| | | | | | | | | | | | | |
Total Ending Membership By State for the Aged, Blind or Disabled Population: | | | | | | | | | | | | |
| California | | | 13,900 | | | | 13,500 | | | | 13,900 | |
| Florida | | | 10,000 | | | | 9,500 | | | | 8,800 | |
| Michigan | | | 31,700 | | | | 31,400 | | | | 32,200 | |
| New Mexico | | | 5,700 | | | | 5,700 | | | | 5,700 | |
| Ohio | | | 28,200 | | | | 27,900 | | | | 22,600 | |
| Texas | | | 19,000 | | | | 18,900 | | | | 17,600 | |
| Utah | | | 8,000 | | | | 7,900 | | | | 7,500 | |
| Washington | | | 4,000 | | | | 3,700 | | | | 3,200 | |
Wisconsin (1) | | | 1,700 | | | | 1,700 | | | | – | |
| | | | 122,200 | | | | 120,200 | | | | 111,500 | |
| (1) | The Company acquired the Wisconsin health plan on September 1, 2010. As of December 31, 2010, the Wisconsin health plan had approximately 3,000 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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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 14
February 17, 2011
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)
| | | | | | | | Three Months Ended December 31, 2010 | |
| | | | | | | | Premium Revenue | | | | Medical Care Costs | | | | | | | | |
| | | | Member Months (1) | | | | Total | | | | PMPM | | | | Total | | | | PMPM | | | | Medical Care Ratio | | | | Premium Tax Expense (2) | |
| California | | | 1,039 | | | $ | 130,060 | | | $ | 125.18 | | | $ | 106,452 | | | $ | 102.46 | | | | 81.9 | % | | $ | 1,759 | |
| Florida | | | 181 | | | | 46,648 | | | | 257.35 | | | | 46,760 | | | | 257.96 | | | | 100.2 | | | | 3 | |
Michigan (2) | | | 679 | | | | 161,411 | | | | 237.66 | | | | 132,146 | | | | 194.57 | | | | 81.9 | | | | 9,882 | |
| Missouri | | | 242 | | | | 53,978 | | | | 223.40 | | | | 44,525 | | | | 184.28 | | | | 82.5 | | | | – | |
| New Mexico | | | 270 | | | | 85,635 | | | | 316.84 | | | | 70,287 | | | | 260.05 | | | | 82.1 | | | | 2,139 | |
| Ohio | | | 734 | | | | 218,641 | | | | 297.78 | | | | 162,851 | | | | 221.80 | | | | 74.5 | | | | 17,107 | |
| Texas | | | 282 | | | | 57,835 | | | | 205.13 | | | | 48,121 | | | | 170.68 | | | | 83.2 | | | | 1,004 | |
| Utah | | | 236 | | | | 67,036 | | | | 284.00 | | | | 55,760 | | | | 236.23 | | | | 83.2 | | | | – | |
| Washington | | | 1,061 | | | | 196,013 | | | | 184.78 | | | | 163,008 | | | | 153.67 | | | | 83.2 | | | | 3,235 | |
Wisconsin (3) | | | 106 | | | | 23,723 | | | | 224.90 | | | | 21,420 | | | | 203.07 | | | | 90.3 | | | | – | |
Other (4) | | | – | | | | 1,909 | | | | – | | | | 11,161 | | | | – | | | | – | | | | 68 | |
| | | | 4,830 | | | $ | 1,042,889 | | | $ | 215.93 | | | $ | 862,491 | | | $ | 178.58 | | | | 82.7 | % | | $ | 35,197 | |
| | | | | | | | Three Months Ended December 31, 2009 | | |
| | | | | | | | Premium Revenue | | | | Medical Care Costs | | | | | | | | |
| | | | Member Months (1) | | | | Total | | | | PMPM | | | | Total | | | | PMPM | | | | Medical Care Ratio | | | | Premium Tax Expense (2) | |
| California | | | 1,059 | | | $ | 127,716 | | | $ | 120.56 | | | $ | 115,506 | | | $ | 109.03 | | | | 90.4 | % | | $ | 6,035 | |
| Florida | | | 141 | | | | 35,910 | | | | 254.97 | | | | 34,882 | | | | 247.67 | | | | 97.1 | | | | 6 | |
Michigan (2) | | | 651 | | | | 151,845 | | | | 233.07 | | | | 121,457 | | | | 186.43 | | | | 80.0 | | | | 10,443 | |
| Missouri | | | 232 | | | | 52,507 | | | | 226.21 | | | | 45,954 | | | | 197.97 | | | | 87.5 | | | | – | |
| New Mexico | | | 279 | | | | 102,079 | | | | 365.48 | | | | 87,090 | | | | 311.82 | | | | 85.3 | | | | 3,008 | |
| Ohio | | | 637 | | | | 216,849 | | | | 340.60 | | | | 189,796 | | | | 298.11 | | | | 87.5 | | | | 15,759 | |
| Texas | | | 119 | | | | 41,205 | | | | 347.41 | | | | 31,633 | | | | 266.71 | | | | 76.8 | | | | 683 | |
| Utah | | | 206 | | | | 51,912 | | | | 252.21 | | | | 49,528 | | | | 240.63 | | | | 95.4 | | | | – | |
| Washington | | | 997 | | | | 179,617 | | | | 180.21 | | | | 156,251 | | | | 156.77 | | | | 87.0 | | | | 5,033 | |
Wisconsin (3) | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
Other (4) | | | – | | | | 2,771 | | | | – | | | | 10,274 | | | | – | | | | – | | | | 2 | |
| | | | 4,321 | | | $ | 962,411 | | | $ | 222.68 | | | $ | 842,371 | | | $ | 194.91 | | | | 87.5 | % | | $ | 40,969 | |
| (1) | A member month is defined as the aggregate of each month’s ending membership for the period presented. |
| (2) | Effective January 1, 2010, the Company has recorded the Michigan gross receipts tax, or MGRT, as a premium tax and not as an income tax. The 2009 amounts have been reclassified to conform to this presentation. |
| (3) | The Company acquired the Wisconsin health plan on September 1, 2010. |
| (4) | “Other” medical care costs primarily include medically related administrative costs at the parent company. |
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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 15
February 17, 2011
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)
| | | | | | | | Year Ended December 31, 2010 | |
| | | | | | | | Premium Revenue | | | | Medical Care Costs | | | | | | | | |
| | | | Member Months (1) | | | | Total | | | | PMPM | | | | Total | | | | PMPM | | | | Medical Care Ratio | | | | Premium Tax Expense (2) | |
| California | | | 4,197 | | | $ | 506,871 | | | $ | 120.77 | | | $ | 423,021 | | | $ | 100.79 | | | | 83.5 | % | | $ | 6,912 | |
| Florida | | | 664 | | | | 170,683 | | | | 256.87 | | | | 162,839 | | | | 245.07 | | | | 95.4 | | | | 1 | |
Michigan (2) | | | 2,708 | | | | 630,134 | | | | 232.66 | | | | 527,596 | | | | 194.80 | | | | 83.7 | | | | 39,187 | |
| Missouri | | | 946 | | | | 210,852 | | | | 222.98 | | | | 180,291 | | | | 190.66 | | | | 85.5 | | | | – | |
| New Mexico | | | 1,104 | | | | 366,784 | | | | 332.02 | | | | 295,633 | | | | 267.61 | | | | 80.6 | | | | 9,300 | |
| Ohio | | | 2,817 | | | | 860,324 | | | | 305.42 | | | | 680,802 | | | | 241.69 | | | | 79.1 | | | | 67,358 | |
| Texas | | | 708 | | | | 188,716 | | | | 266.72 | | | | 162,714 | | | | 229.97 | | | | 86.2 | | | | 3,251 | |
| Utah | | | 921 | | | | 258,076 | | | | 280.27 | | | | 235,576 | | | | 255.84 | | | | 91.3 | | | | – | |
| Washington | | | 4,141 | | | | 758,849 | | | | 183.27 | | | | 636,617 | | | | 153.75 | | | | 83.9 | | | | 13,513 | |
Wisconsin (3) | | | 134 | | | | 30,033 | | | | 224.75 | | | | 27,574 | | | | 206.35 | | | | 91.8 | | | | – | |
Other (4) | | | – | | | | 8,587 | | | | – | | | | 38,194 | | | | – | | | | – | | | | 253 | |
| | | | 18,340 | | | $ | 3,989,909 | | | $ | 217.56 | | | $ | 3,370,857 | | | $ | 183.80 | | | | 84.5 | % | | $ | 139,775 | |
| | | | | | | | Year Ended December 31, 2009 | |
| | | | | | | | Premium Revenue | | | | Medical Care Costs | | | | | | | | |
| | | | Member Months (1) | | | | Total | | | | PMPM | | | | Total | | | | PMPM | | | | Medical Care Ratio | | | | Premium Tax Expense (2) | |
| California | | | 4,135 | | | $ | 481,717 | | | $ | 116.49 | | | $ | 443,892 | | | $ | 107.34 | | | | 92.2 | % | | $ | 16,446 | |
| Florida | | | 386 | | | | 102,232 | | | | 264.94 | | | | 95,936 | | | | 248.62 | | | | 93.8 | | | | 16 | |
Michigan (2) | | | 2,523 | | | | 557,421 | | | | 220.94 | | | | 454,431 | | | | 180.12 | | | | 81.5 | | | | 36,482 | |
| Missouri | | | 927 | | | | 230,222 | | | | 248.25 | | | | 191,585 | | | | 206.59 | | | | 83.2 | | | | – | |
| New Mexico | | | 1,042 | | | | 404,026 | | | | 387.67 | | | | 346,044 | | | | 332.03 | | | | 85.7 | | | | 11,043 | |
| Ohio | | | 2,411 | | | | 803,521 | | | | 333.33 | | | | 691,402 | | | | 286.82 | | | | 86.1 | | | | 47,849 | |
| Texas | | | 402 | | | | 134,860 | | | | 335.69 | | | | 110,794 | | | | 275.78 | | | | 82.2 | | | | 2,513 | |
| Utah | | | 793 | | | | 207,297 | | | | 261.43 | | | | 190,319 | | | | 240.02 | | | | 91.8 | | | | – | |
| Washington | | | 3,847 | | | | 726,137 | | | | 188.77 | | | | 613,876 | | | | 159.58 | | | | 84.5 | | | | 14,175 | |
Wisconsin (3) | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
Other (4) | | | – | | | | 12,774 | | | | – | | | | 37,957 | | | | – | | | | – | | | | 57 | |
| | | | 16,466 | | | $ | 3,660,207 | | | $ | 222.24 | | | $ | 3,176,236 | | | $ | 192.85 | | | | 86.8 | % | | $ | 128,581 | |
| (1) | A member month is defined as the aggregate of each month’s ending membership for the period presented. |
| (2) | Effective January 1, 2010, the Company has recorded the Michigan gross receipts tax, or MGRT, as a premium tax and not as an income tax. The 2009 amounts have been reclassified to conform to this presentation. |
| (3) | The Company acquired the Wisconsin health plan on September 1, 2010. |
| (4) | “Other” medical care costs primarily include medically related administrative costs at the parent company. |
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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 16
February 17, 2011
| | UNAUDITED SELECTED FINANCIAL DATA |
| | (Dollars in thousands except per member per month amounts) |
The following tables provide the details of the Company’s medical care costs for the periods indicated:
| | | Three Months Ended December 31, 2010 | | | Three Months Ended December 31, 2009 | |
| | | | | | | | | % of Total Medical Care Costs | | | | | | | | | % of Total Medical Care Costs | |
| Fee-for-service | | $ | 597,183 | | | $ | 123.64 | | | | 69.2 | % | | $ | 556,118 | | | $ | 128.68 | | | | 66.0 | % |
| Capitation | | | 145,166 | | | | 30.06 | | | | 16.8 | | | | 145,187 | | | | 33.59 | | | | 17.2 | |
| Pharmacy | | | 84,645 | | | | 17.53 | | | | 9.8 | | | | 108,617 | | | | 25.13 | | | | 12.9 | |
| Other | | | 35,497 | | | | 7.35 | | | | 4.2 | | | | 32,449 | | | | 7.51 | | | | 3.9 | |
| | | $ | 862,491 | | | $ | 178.58 | | | | 100.0 | % | | $ | 842,371 | | | $ | 194.91 | | | | 100.0 | % |
| | | Year Ended December 31, 2010 | | | Year Ended December 31, 2009 | |
| | | | | | | | | % of Total Medical Care Costs | | | | | | | | | % of Total Medical Care Costs | |
| Fee-for-service | | $ | 2,360,858 | | | $ | 128.73 | | | | 70.0 | % | | $ | 2,077,489 | | | $ | 126.14 | | | | 65.4 | % |
| Capitation | | | 555,487 | | | | 30.29 | | | | 16.5 | | | | 558,538 | | | | 33.91 | | | | 17.6 | |
| Pharmacy | | | 325,935 | | | | 17.77 | | | | 9.7 | | | | 414,785 | | | | 25.18 | | | | 13.1 | |
| Other | | | 128,577 | | | | 7.01 | | | | 3.8 | | | | 125,424 | | | | 7.62 | | | | 3.9 | |
| | | $ | 3,370,857 | | | $ | 183.80 | | | | 100.0 | % | | $ | 3,176,236 | | | $ | 192.85 | | | | 100.0 | % |
The following table provides the details of the Company’s medical claims and benefits payable as of the dates indicated:
| | | | | | | | | | |
| Fee-for-service claims incurred but not paid (IBNP) | | $ | 275,259 | | | $ | 271,285 | | | $ | 246,508 | |
| Capitation payable | | | 49,598 | | | | 53,410 | | | | 39,995 | |
| Pharmacy payable | | | 14,649 | | | | 14,663 | | | | 20,609 | |
| Other | | | 14,850 | | | | 13,982 | | | | 8,204 | |
| | | $ | 354,356 | | | $ | 353,340 | | | $ | 315,316 | |
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MOH Reports Fourth Quarter and Year-End 2010 Results
Page 17
February 17, 2011
MOLINA HEALTHCARE, INC.
CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in thousands, except per-member amounts)
(Unaudited)
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. The negative amounts displayed for “Components of medical care costs related to: Prior periods” represent the amount by which the Company’s original estimate of claims and benefits payable at the beginning of the period exceeded the actual amount of the liability based on information (principally the payment of claims) developed since that liability was firs t reported. The following table shows the components of the change in medical claims and benefits payable as of the periods indicated:
| | | | |
| | | | | | | |
| Balances at beginning of period | | $ | 315,316 | | | $ | 292,442 | |
| Balance of acquired subsidiary | | | 3,228 | | | | – | |
| Components of medical care costs related to: | | | | | | | | |
Current period | | | 3,420,235 | | | | 3,227,794 | |
Prior periods | | | (49,378 | ) | | | (51,558 | ) |
| Total medical care costs | | | 3,370,857 | | | | 3,176,236 | |
| Payments for medical care costs related to: | | | | | | | | |
Current period | | | 3,085,388 | | | | 2,920,015 | |
Prior periods | | | 249,657 | | | | 233,347 | |
| Total paid | | | 3,335,045 | | | | 3,153,362 | |
| Balances at end of period | | $ | 354,356 | | | $ | 315,316 | |
| | | | | | | | | |
| Benefit from prior period as a percentage of: | | | | | | | | |
Balance at beginning of period | | | 15.7 | % | | | 17.6 | % |
Premium revenue | | | 1.2 | % | | | 1.4 | % |
Total medical care costs | | | 1.5 | % | | | 1.6 | % |
| | | | | | | | | |
Claims Data (1): | | | | | | | | |
| Days in claims payable, fee for service only | | | 42 | | | | 44 | |
| Number of members at end of period | | | 1,613,000 | | | | 1,455,000 | |
| Number of claims in inventory at end of period | | | 143,600 | | | | 93,100 | |
| Billed charges of claims in inventory at end of period | | $ | 218,900 | | | $ | 131,400 | |
| Claims in inventory per member at end of period | | | 0.09 | | | | 0.06 | |
| Billed charges of claims in inventory per member at end of period | | $ | 135.71 | | | $ | 90.31 | |
| Number of claims received during the period | | | 14,554,800 | | | | 12,930,100 | |
| Billed charges of claims receivedduring the period | | $ | 11,686,100 | | | $ | 9,769,000 | |
| (1) | “Claims Data” does not include the Company’s Wisconsin health plan acquired September 1, 2010. |
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