News Release
Contact:
Juan José Orellana
Investor Relations
562-435-3666, ext. 111143
MOLINA HEALTHCARE REPORTS
FIRST QUARTER 2012 RESULTS
| ● | Earnings per diluted share for first quarter 2012 of $0.39 |
| ● | Quarterly EBITDA of $51.8 million, up 5% over 2011 |
| ● | Quarterly premium revenues of $1.3 billion, up 23% over 2011 |
| ● | Quarterly operating income of $33.4 million, up 7% over 2011 |
| ● | Aggregate membership up 11% over 2011 |
Long Beach, California (April 30, 2012) – Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the first quarter and three months ended March 31, 2012.
Net income for the quarter was $18.1 million, or $0.39 per diluted share, compared with net income of $17.4 million, or $0.38 per diluted share, for the quarter ended March 31, 2011.
“During the first quarter, we continued to pursue the many opportunities that are open to the Company today,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “Even as we prepare for the transfer of dual-eligible populations into managed care across many of our states, we are already growing dramatically in other directions. California health plan revenue has grown nearly 20% since the first quarter of 2011 as a result of the transition of the Seniors and Persons with Disabilities, or SPD, population into managed care. Our revenue growth in Texas is even more dramatic. With the regional and benefit expansions that were effective March 1, 2012, our Texas health plan added nearly 125,000 members and $900 million in annualized revenue. Enrollment in Texas as of today stands at 300,000 members.”
Earnings Per Share Guidance
The Company reaffirms its earnings per diluted share guidance for fiscal year 2012 of $1.75.
Overview of Financial Results
First Quarter 2012 Compared with First Quarter 2011
The Company recorded higher revenue in its Health Plans segment and experienced a higher margin in its Molina Medicaid Solutions segment. These increases were offset by lower margins in the Health Plans segment. In the aggregate, the Company achieved higher net income for the first quarter of 2012 when compared with the first quarter of 2011.
MOH Reports First Quarter 2012 Results
Page 2
The Company’s established health plans continue to perform well, with the Florida, Michigan, New Mexico, Utah, Texas, Washington and Wisconsin health plans reporting improved medical margins over the first quarter of 2011. The medical margin of the Company’s Ohio health plan was reduced as a result of a premium rate reduction effective January 1, 2012. In addition, the Ohio health plan is earning lower margins on the pharmacy benefit (added October 1, 2011) than on its business as a whole. The medical margin of the Company’s California health plan decreased primarily due to premium rate reductions effective July 1, 2011, and the mandatory assignment of SPD members to managed care plans starting June 1, 2011. The California health plan is currently experiencing a medical care ratio in excess of 90% for these members. It has been the Company’s experience that state funding agencies often underestimate the cost of serving new populations or of providing new benefits, requiring them to increase premium rates paid to managed care plans in subsequent periods.
Health Plans Segment
Premium Revenue
Premium revenue for the first quarter of 2012 increased by 22.7% over the first quarter of 2011, due primarily to a membership increase at the Texas health plan. The Company also experienced notable membership growth at its Utah and Washington health plans. A shift in member mix to populations generating higher premium revenue per member per month (PMPM) also increased premium revenue in the first quarter of 2012. The Company cares for a larger percentage of aged, blind or disabled, or ABD, members and Medicare members than a year ago. In the first quarter of 2012, 15% of the Company’s membership comprised ABD members (including California SPD and Texas STAR+ members) and Medicare members, compared with just 11% of membership in the first quarter of 2011. Premium revenue PMPM also increased due to the inclusion of revenue from the pharmacy benefit for our Ohio health plan, which did not provide this benefit in the first quarter of 2011.
Medical Care Costs
Medical care costs increased in the first quarter of 2012 primarily due to the growth of membership in the Texas health plan. The Texas health plan experienced significant growth of members in its ABD program. These members have higher medical costs than other populations. The percentage of ABD member months in our Texas plan increased from 35% in the first quarter of 2011 to 40% in the first quarter of 2012. Overall, Texas health plan membership more than doubled when compared with the first quarter of 2011. The Company’s medical margin deteriorated in the first quarter of 2012, when compared with the first quarter of 2011. The decrease in the medical margin was primarily due to:
| ● | A shift in member mix to more costly members that are transitioning to a managed care environment, including Texas and California ABD members. These members start out with higher medical care ratios; and |
| ● | Rate decreases of approximately 2% in Ohio effective January 1, 2012, and approximately 3% in California effective July 1, 2011. |
The medical margin of the California health plan decreased in the three months ended March 31, 2012, primarily due to premium rate reductions of approximately 3% effective July 1, 2011. Additionally, the California health plan has added approximately 23,000 new ABD members since the first quarter of 2011. While this change in member mix has increased blended health plan premium revenue PMPM by 18% to $153 in the first quarter of 2012 from $130 in the first quarter of 2011, associated medical care costs are also higher for these members. The California health plan’s aggregate medical care costs increased approximately 22% PMPM in the three months ended March 31, 2012, compared with the same period in 2011, while premiums increased 18% over that same time period.
MOH Reports First Quarter 2012 Results
The medical care margin of the Florida health plan increased in the three months ended March 31, 2012, primarily due to initiatives that have reduced pharmacy and behavioral health costs, coupled with a premium rate increase of approximately 7.5% effective September 1, 2011.
The medical care margin of the Michigan health plan increased in the three months ended March 31, 2012, primarily due to improved Medicare performance and lower inpatient facility costs. The Michigan health plan received a premium rate increase of approximately 1% effective October 1, 2011.
The medical care margin of the Missouri health plan decreased in the three months ended March 31, 2012, primarily due to increased inpatient facility costs associated with an unusually large number of premature infants delivered in late 2011. The health plan received a premium rate increase of approximately 5% effective July 1, 2011.
The medical care margin of the New Mexico health plan increased in the three months ended March 31, 2012. The New Mexico health plan received a premium rate reduction of approximately 2.5% effective July 1, 2011.
The medical care margin of the Ohio health plan decreased in the three months ended March 31, 2012, partially due to a premium rate reduction of approximately 2% effective January 1, 2012. Additionally, the restoration of the pharmacy benefit to all managed care plans in Ohio effective October 1, 2011, has increased the Ohio health plan’s medical care ratio. The medical care ratio attributable to the pharmacy benefit alone was approximately 87%, which resulted in a 180 basis point increase to the Ohio health plan’s aggregate medical care ratio for the first quarter of 2012.
The medical care margin of the Texas health plan increased in the three months ended March 31, 2012. Additionally, in March 2012 the Texas health plan received rate increases to provide for its assumption of inpatient and pharmacy risk for all existing populations. The Texas health plan has added significant membership since the first quarter of 2011, including approximately 76,000 Temporary Assistance for Needy Families, or TANF, members, 57,800 ABD members, and 18,000 Children’s Health Insurance Program, or CHIP, members. At April 30, 2012, the Company’s Texas enrollment was approximately 300,000 members.
The medical care margin of the Utah health plan increased in the three months ended March 31, 2012, primarily due to reduced fee-for-service inpatient and physician costs. Lower fee-for-service costs were the result of both lower unit costs and lower utilization. The Utah health plan received a premium rate reduction of approximately 2% effective July 1, 2011.
The medical care margin of the Washington health plan increased in the three months ended March 31, 2012, primarily due to lower Medicaid fee-for-service utilization.
The medical care margin of the Wisconsin health plan increased in the three months ended March 31, 2012. In the first quarter of 2011, the Wisconsin health plan recorded a premium deficiency reserve amounting to $3.35 million; there was no such reserve recorded in the first quarter of 2012. We have undertaken a number of measures – focused on both utilization and unit cost reductions – to improve the profitability of the Wisconsin health plan.
MOH Reports First Quarter 2012 Results
Molina Medicaid Solutions Segment
Performance of the Molina Medicaid Solutions segment was as follows:
| | | | |
| | | | | | | |
| | | (In thousands) | |
| Service revenue before amortization | | $ | 42,358 | | | $ | 38,860 | |
| Amortization recorded as reduction of service revenue | | | (153 | ) | | | (2,186 | ) |
| Service revenue | | | 42,205 | | | | 36,674 | |
| Cost of service revenue | | | 30,494 | | | | 31,221 | |
| General and administrative costs | | | 2,020 | | | | 2,477 | |
| Amortization of customer relationship intangibles recorded as amortization | | | 1,282 | | | | 1,282 | |
| Operating income | | $ | 8,409 | | | $ | 1,694 | |
The Company is currently deferring recognition of all revenue as well as all direct costs (to the extent that such costs are estimated to be recoverable) in Idaho until the Medicaid Management Information System, or MMIS, in that state receives certification from the Centers for Medicare and Medicaid Services, or CMS.
Consolidated Expenses
General and Administrative Expenses
General and administrative, or G&A, expenses for the consolidated entity were $120.2 million, or 8.8% of total revenue, for the three months ended March 31, 2012, compared with $94.4 million, or 8.4% of total revenue, for the three months ended March 31, 2011. The Company incurred additional expenses in the first quarter of 2012 due to investment in administrative infrastructure in anticipation of opportunities in Texas and among the dual-eligible population.
Premium Tax Expenses
Premium tax expense decreased to 3.3% of premium revenue in the three months ended March 31, 2012, from 3.4% in the three months ended March 31, 2011.
Interest Expense
Interest expense increased to $4.3 million for the three months ended March 31, 2012, from $3.6 million for the three months ended March 31, 2011, due primarily to interest expense associated with the Company’s purchase of its corporate headquarters building in December 2011. Interest expense includes non-cash interest expense relating to our convertible senior notes, which amounted to $1.4 million and $1.3 million for the three months ended March 31, 2012 and 2011, respectively.
Income Taxes
Income tax expense is recorded at an effective rate of 37.9% for the three months ended March 31, 2012, compared with 37.2% for the three months ended March 31, 2011. The higher rate in 2012 is primarily due to current period share-based compensation expense that is expected to be non-deductible for tax purposes when related awards vest.
MOH Reports First Quarter 2012 Results
Cash Flow
Cash provided by operating activities was $50.6 million for the three months ended March 31, 2012, compared with $84.1 million for the three months ended March 31, 2011. Deferred revenue was a source of operating cash totaling $44.5 million in 2012, compared with $84.2 million in 2011.
At March 31, 2012, the Company had cash and investments of $933.8 million, and the parent company had cash and investments of $37.8 million.
Reconciliation of Non-GAAP (1) to GAAP Financial Measures
EBITDA (2)
| | | Three Months Ended March 31, | |
| | | | | | | |
| | | (In thousands) | |
| Net income | | $ | 18,089 | | | $ | 17,388 | |
| Add back: | | | | | | | | |
| Depreciation and amortization reported in the consolidated statements of cash flows | | | 18,339 | | | | 18,094 | |
| Interest expense | | | 4,298 | | | | 3,603 | |
| Provision for income taxes | | | 11,033 | | | | 10,309 | |
| EBITDA | | $ | 51,759 | | | $ | 49,394 | |
____________
| (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. |
Conference Call
The Company’s management will host a conference call and webcast to discuss its first quarter results at 5:00 p.m. Eastern time on Monday, April 30, 2012. The number to call for the interactive teleconference is (212) 231-2905. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Monday, April 30, 2012, through 6:00 p.m. on Tuesday, May 1, 2012, by dialing (800) 633-8284 and entering confirmation number 21582930. 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 replay 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. Our licensed health plans in California, Florida, Michigan, Missouri, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.8 million members, and our 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.
MOH Reports First Quarter 2012 Results
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, anticipated future events, and projected earnings per diluted share for fiscal year 2012. Actual results could differ materially due to numerous known and unknown risks and uncertainties, including, without limitation, risk factors related to the following:
| ● | significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria; |
| ● | 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 seasonal flu patterns and rates of utilization that are consistent with our expectations, and the reduction over time of the high medical costs associated with new populations; |
| ● | 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, 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, and the development of actuarially sound rates with respect to such new 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 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; |
| ● | 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 or Idaho; |
| ● | government audits and reviews, and any enrollment freeze or monitoring program that may result therefrom; |
| ● | 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, arbitration, or administrative proceedings; |
| ● | 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; |
| ● | 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 April 30, 2012, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in our expectations.
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
| | | Three Months Ended March 31, | |
| | | | | | | |
| | | (In thousands, except per-share data) | |
| Revenue: | | | | | | |
| Premium revenue | | $ | 1,327,449 | | | $ | 1,081,438 | |
| Service revenue | | | 42,205 | | | | 36,674 | |
| Investment income | | | 1,717 | | | | 1,594 | |
| Rental income | | | 2,209 | | | | – | |
| Total revenue | | | 1,373,580 | | | | 1,119,706 | |
| Expenses: | | | | | | | | |
| Medical care costs | | | 1,130,988 | | | | 913,532 | |
| Cost of service revenue | | | 30,494 | | | | 31,221 | |
| General and administrative expenses | | | 120,223 | | | | 94,436 | |
| Premium tax expenses | | | 43,430 | | | | 36,550 | |
| Depreciation and amortization | | | 15,025 | | | | 12,667 | |
| Total expenses | | | 1,340,160 | | | | 1,088,406 | |
| Operating income | | | 33,420 | | | | 31,300 | |
| Interest expense | | | 4,298 | | | | 3,603 | |
| Income before income taxes | | | 29,122 | | | | 27,697 | |
| Provision for income taxes | | | 11,033 | | | | 10,309 | |
| Net income | | $ | 18,089 | | | $ | 17,388 | |
| | | | | | | | | |
Net income per share(1): | | | | | | | | |
| Basic | | $ | 0.39 | | | $ | 0.38 | |
| Diluted | | $ | 0.39 | | | $ | 0.38 | |
Weighted average shares outstanding(1): | | | | | | | | |
| Basic | | | 45,998 | | | | 45,588 | |
| Diluted | | | 46,887 | | | | 46,257 | |
| | | | | | | | | |
| Operating Statistics: | | | | | | | | |
| Ratio of medical care costs paid directly to providers to premium revenue | | | 82.8 | % | | | 82.2 | % |
| Ratio of medical care costs not paid directly to providers to premium revenue | | | 2.4 | % | | | 2.3 | % |
Medical care ratio(2) | | | 85.2 | % | | | 84.5 | % |
General and administrative expense ratio(3) | | | 8.8 | % | | | 8.4 | % |
Premium tax ratio(2) | | | 3.3 | % | | | 3.4 | % |
| Effective tax rate | | | 37.9 | % | | | 37.2 | % |
____________
| (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. |
| (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. |
MOH Reports First Quarter 2012 Results
UNAUDITED CONSOLIDATED BALANCE SHEETS
| | | | | | | |
| | | (In thousands, except per-share data) | |
| ASSETS | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 517,723 | | | $ | 493,827 | |
| Investments | | | 357,981 | | | | 336,916 | |
| Receivables | | | 222,254 | | | | 167,898 | |
| Income tax refundable | | | 15,315 | | | | 11,679 | |
| Deferred income taxes | | | 14,025 | | | | 18,327 | |
| Prepaid expenses and other current assets | | | 24,715 | | | | 19,435 | |
| Total current assets | | | 1,152,013 | | | | 1,048,082 | |
| Property, equipment, and capitalized software, net | | | 198,564 | | | | 190,934 | |
| Deferred contract costs | | | 64,414 | | | | 54,582 | |
| Intangible assets, net | | | 96,090 | | | | 101,796 | |
| Goodwill and indefinite-lived intangible assets | | | 151,088 | | | | 153,954 | |
| Auction rate securities | | | 16,129 | | | | 16,134 | |
| Restricted investments | | | 41,947 | | | | 46,164 | |
| Receivable for ceded life and annuity contracts | | | – | | | | 23,401 | |
| Other assets | | | 19,759 | | | | 17,099 | |
| | | $ | 1,740,004 | | | $ | 1,652,146 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| Current liabilities: | | | | | | | | |
| Medical claims and benefits payable | | $ | 455,833 | | | $ | 402,476 | |
| Accounts payable and accrued liabilities | | | 124,649 | | | | 147,214 | |
| Deferred revenue | | | 95,490 | | | | 50,947 | |
| Current maturities of long-term debt | | | 1,118 | | | | 1,197 | |
| Total current liabilities | | | 677,090 | | | | 601,834 | |
| Long-term debt | | | 228,150 | | | | 216,929 | |
| Deferred income taxes | | | 37,209 | | | | 33,127 | |
| Liability for ceded life and annuity contracts | | | – | | | | 23,401 | |
| Other long-term liabilities | | | 22,243 | | | | 21,782 | |
| Total liabilities | | | 964,692 | | | | 897,073 | |
| Stockholders’ equity: | | | | | | | | |
| Common stock, $0.001 par value; 80,000 shares authorized; outstanding: 46,347 shares at March 31, 2012, and 45,815 shares at December 31, 2011 | | | 46 | | | | 46 | |
| Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding | | | – | | | | – | |
| Additional paid-in capital | | | 267,876 | | | | 266,022 | |
| Accumulated other comprehensive loss | | | (1,109 | ) | | | (1,405 | ) |
| Retained earnings | | | 508,499 | | | | 490,410 | |
| Total stockholders’ equity | | | 775,312 | | | | 755,073 | |
| | | $ | 1,740,004 | | | $ | 1,652,146 | |
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | Three Months Ended March 31, | |
| | | | | | | |
| | | (In thousands) | |
| Operating activities: | | | | | | |
| Net income | | $ | 18,089 | | | $ | 17,388 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 18,339 | | | | 18,094 | |
| Deferred income taxes | | | 8,906 | | | | 1,619 | |
| Stock-based compensation | | | 4,666 | | | | 4,064 | |
| Gain on sale of subsidiary | | | (2,390 | ) | | | – | |
| Non-cash interest on convertible senior notes | | | 1,443 | | | | 1,340 | |
| Amortization of premium/discount on investments | | | 1,850 | | | | 1,644 | |
| Amortization of deferred financing costs | | | 258 | | | | 503 | |
| Tax deficiency from employee stock compensation | | | (31 | ) | | | (264 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Receivables | | | (54,356 | ) | | | (2,168 | ) |
| Prepaid expenses and other current assets | | | (5,287 | ) | | | (8,069 | ) |
| Medical claims and benefits payable | | | 53,357 | | | | (2,974 | ) |
| Accounts payable and accrued liabilities | | | (35,149 | ) | | | (25,796 | ) |
| Deferred revenue | | | 44,543 | | | | 84,172 | |
| Income taxes | | | (3,663 | ) | | | (5,430 | ) |
| Net cash provided by operating activities | | | 50,575 | | | | 84,123 | |
| | | | | | | | | |
| Investing activities: | | | | | | | | |
| Purchases of equipment | | | (13,505 | ) | | | (14,941 | ) |
| Purchases of investments | | | (88,199 | ) | | | (104,984 | ) |
| Sales and maturities of investments | | | 65,767 | | | | 61,275 | |
| Proceeds from sale of subsidiary, net of cash surrendered | | | 9,162 | | | | – | |
| Net cash paid in business combinations | | | – | | | | (3,253 | ) |
| Increase in deferred contract costs | | | (12,993 | ) | | | (9,635 | ) |
| Increase in restricted investments | | | (493 | ) | | | (7,207 | ) |
| Change in other noncurrent assets and liabilities | | | (2,457 | ) | | | (1,010 | ) |
| Net cash used in investing activities | | | (42,718 | ) | | | (79,755 | ) |
| | | | | | | | | |
| Financing activities: | | | | | | | | |
| Amount borrowed under credit facility | | | 10,000 | | | | – | |
| Principal payments on term loan | | | (301 | ) | | | – | |
| Proceeds from employee stock plans | | | 2,748 | | | | 2,462 | |
| Excess tax benefits from employee stock compensation | | | 3,592 | | | | 1,076 | |
| Net cash provided by financing activities | | | 16,039 | | | | 3,538 | |
| Net increase in cash and cash equivalents | | | 23,896 | | | | 7,906 | |
| Cash and cash equivalents at beginning of period | | | 493,827 | | | | 455,886 | |
| Cash and cash equivalents at end of period | | $ | 517,723 | | | $ | 463,792 | |
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
UNAUDITED DEPRECIATION AND AMORTIZATION DATA
(Dollar amounts in thousands)
Depreciation and amortization related to our Health Plans segment is all recorded in “Depreciation and Amortization” in the consolidated statements of income. Depreciation and amortization related to our Molina Medicaid Solutions segment is recorded within three different headings in the consolidated statements of income as follows:
| ● | 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.” |
The following table presents all depreciation and amortization recorded in our consolidated statements of income, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue.
| | | Three Months Ended March 31, | |
| | | | | | | |
| | | | | | | | | | | | | |
Depreciation, and amortization of capitalized software | | $ | 9,472 | | | | 0.7 | % | | $ | 7,401 | | | | 0.7 | % |
| Amortization of intangible assets | | | 5,553 | | | | 0.4 | | | | 5,266 | | | | 0.4 | |
| Depreciation and amortization reported as such in the consolidated statements of income | | | 15,025 | | | | 1.1 | | | | 12,667 | | | | 1.1 | |
Amortization recorded as reduction of service revenue | | | 153 | | | | – | | | | 2,186 | | | | 0.2 | |
Amortization of capitalized software recorded as cost of service revenue | | | 3,161 | | | | 0.2 | | | | 3,241 | | | | 0.3 | |
| Total | | $ | 18,339 | | | | 1.3 | % | | $ | 18,094 | | | | 1.6 | % |
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
UNAUDITED MEMBERSHIP DATA
| | | | | | | | | | |
| Total Ending Membership by Health Plan: | | | | | | | | | |
| California | | | 351,000 | | | | 355,000 | | | | 347,000 | |
| Florida | | | 69,000 | | | | 69,000 | | | | 66,000 | |
| Michigan | | | 222,000 | | | | 222,000 | | | | 225,000 | |
Missouri(1) | | | 81,000 | | | | 79,000 | | | | 82,000 | |
| New Mexico | | | 89,000 | | | | 88,000 | | | | 90,000 | |
Ohio(2) | | | 249,000 | | | | 248,000 | | | | 248,000 | |
| Texas | | | 280,000 | | | | 155,000 | | | | 128,000 | |
| Utah | | | 86,000 | | | | 84,000 | | | | 80,000 | |
| Washington | | | 356,000 | | | | 355,000 | | | | 341,000 | |
| Wisconsin | | | 42,000 | | | | 42,000 | | | | 40,000 | |
| Total | | | 1,825,000 | | | | 1,697,000 | | | | 1,647,000 | |
| | | | | | | | | | | | | |
Total Ending Membership by State for our Medicare Advantage Plans: | | | | | | | | | | | | |
| California | | | 6,900 | | | | 6,900 | | | | 5,300 | |
| Florida | | | 800 | | | | 800 | | | | 600 | |
| Michigan | | | 8,500 | | | | 8,200 | | | | 6,700 | |
| New Mexico | | | 900 | | | | 800 | | | | 700 | |
Ohio(2) | | | 200 | | | | 200 | | | | 400 | |
| Texas | | | 800 | | | | 700 | | | | 600 | |
| Utah | | | 8,100 | | | | 8,400 | | | | 6,700 | |
| Washington | | | 5,200 | | | | 5,000 | | | | 3,300 | |
| Total | | | 31,400 | | | | 31,000 | | | | 24,300 | |
| | | | | | | | | | | | | |
Total Ending Membership by State for our Aged, Blind or Disabled Population: | | | | | | | | | | | | |
| California | | | 37,300 | | | | 31,500 | | | | 14,100 | |
| Florida | | | 10,500 | | | | 10,400 | | | | 10,300 | |
| Michigan | | | 38,800 | | | | 37,500 | | | | 32,000 | |
| New Mexico | | | 5,600 | | | | 5,600 | | | | 5,600 | |
Ohio(2) | | | 29,700 | | | | 29,100 | | | | 28,200 | |
| Texas | | | 109,000 | | | | 63,700 | | | | 51,200 | |
| Utah | | | 8,700 | | | | 8,500 | | | | 8,200 | |
| Washington | | | 4,700 | | | | 4,800 | | | | 4,300 | |
| Wisconsin | | | 1,700 | | | | 1,700 | | | | 1,700 | |
| Total | | | 246,000 | | | | 192,800 | | | | 155,600 | |
____________
| (1) | Our existing contract with the state of Missouri is scheduled to expire without renewal on June 30, 2012. |
| (2) | Our existing contract with the state of Ohio is scheduled to expire without renewal on December 31, 2012. |
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)
| | | Three Months Ended March 31, 2012 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| California | | | 1,059 | | | $ | 161,685 | | | $ | 152.65 | | | $ | 141,349 | | | $ | 133.45 | | | | 87.4 | % | | $ | 2,309 | |
| Florida | | | 208 | | | | 56,190 | | | | 269.87 | | | | 49,569 | | | | 238.07 | | | | 88.2 | | | | 7 | |
| Michigan | | | 665 | | | | 167,906 | | | | 252.49 | | | | 134,211 | | | | 201.82 | | | | 79.9 | | | | 9,084 | |
Missouri(2) | | | 243 | | | | 56,613 | | | | 233.32 | | | | 53,120 | | | | 218.93 | | | | 93.8 | | | | – | |
| New Mexico | | | 266 | | | | 83,261 | | | | 313.29 | | | | 67,111 | | | | 252.52 | | | | 80.6 | | | | 1,953 | |
Ohio(3) | | | 746 | | | | 293,525 | | | | 393.73 | | | | 236,701 | | | | 317.51 | | | | 80.6 | | | | 22,853 | |
| Texas | | | 592 | | | | 198,236 | | | | 334.61 | | | | 180,089 | | | | 303.97 | | | | 90.8 | | | | 3,197 | |
| Utah | | | 252 | | | | 75,138 | | | | 297.59 | | | | 57,881 | | | | 229.24 | | | | 77.0 | | | | – | |
| Washington | | | 1,067 | | | | 215,610 | | | | 202.08 | | | | 181,425 | | | | 170.04 | | | | 84.1 | | | | 3,912 | |
| Wisconsin | | | 125 | | | | 17,142 | | | | 136.97 | | | | 16,886 | | | | 134.92 | | | | 98.5 | | | | – | |
Other(4) | | | – | | | | 2,143 | | | | – | | | | 12,646 | | | | – | | | | – | | | | 115 | |
| | | | 5,223 | | | $ | 1,327,449 | | | $ | 254.14 | | | $ | 1,130,988 | | | $ | 216.53 | | | | 85.2 | % | | $ | 43,430 | |
| | | Three Months Ended March 31, 2011 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| California | | | 1,041 | | | $ | 134,976 | | | $ | 129.63 | | | $ | 113,737 | | | $ | 109.24 | | | | 84.3 | % | | $ | 1,902 | |
| Florida | | | 192 | | | | 49,222 | | | | 256.63 | | | | 47,568 | | | | 248.01 | | | | 96.6 | | | | 17 | |
| Michigan | | | 678 | | | | 164,760 | | | | 243.06 | | | | 133,728 | | | | 197.28 | | | | 81.2 | | | | 9,846 | |
Missouri(2) | | | 245 | | | | 55,166 | | | | 225.33 | | | | 51,608 | | | | 210.79 | | | | 93.6 | | | | – | |
| New Mexico | | | 271 | | | | 84,606 | | | | 311.93 | | | | 70,038 | | | | 258.21 | | | | 82.8 | | | | 1,965 | |
Ohio(3) | | | 737 | | | | 230,340 | | | | 312.68 | | | | 171,752 | | | | 233.15 | | | | 74.6 | | | | 17,775 | |
| Texas | | | 349 | | | | 80,811 | | | | 231.49 | | | | 73,615 | | | | 210.88 | | | | 91.1 | | | | 1,340 | |
| Utah | | | 236 | | | | 67,935 | | | | 287.77 | | | | 53,839 | | | | 228.06 | | | | 79.3 | | | | – | |
| Washington | | | 1,034 | | | | 195,272 | | | | 188.81 | | | | 169,116 | | | | 163.52 | | | | 86.6 | | | | 3,642 | |
| Wisconsin | | | 120 | | | | 16,417 | | | | 137.25 | | | | 19,380 | | | | 162.02 | | | | 118.1 | | | | – | |
Other(4) | | | – | | | | 1,933 | | | | – | | | | 9,151 | | | | – | | | | – | | | | 63 | |
| | | | 4,903 | | | $ | 1,081,438 | | | $ | 220.58 | | | $ | 913,532 | | | $ | 186.34 | | | | 84.5 | % | | $ | 36,550 | |
____________
| (1) | A member month is defined as the aggregate of each month’s ending membership for the period presented. |
| (2) | Our existing contract with the state of Missouri is scheduled to expire without renewal on June 30, 2012. |
| (3) | Our existing contract with the state of Ohio is scheduled to expire without renewal on December 31, 2012. |
| (4) | “Other” medical care costs also include medically related administrative costs at the parent company. |
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA
(Amounts 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 March 31, | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Fee for service | | $ | 777,267 | | | $ | 148.81 | | | | 68.7 | % | | $ | 655,884 | | | $ | 133.78 | | | | 71.8 | % |
| Capitation | | | 136,038 | | | | 26.04 | | | | 12.0 | | | | 128,682 | | | | 26.25 | | | | 14.1 | |
| Pharmacy | | | 173,237 | | | | 33.17 | | | | 15.3 | | | | 91,576 | | | | 18.68 | | | | 10.0 | |
| Other | | | 44,446 | | | | 8.51 | | | | 4.0 | | | | 37,390 | | | | 7.63 | | | | 4.1 | |
| Total | | $ | 1,130,988 | | | $ | 216.53 | | | | 100.0 | % | | $ | 913,532 | | | $ | 186.34 | | | | 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) | | $ | 347,307 | | | $ | 301,020 | | | $ | 273,378 | |
| Capitation payable | | | 37,289 | | | | 53,532 | | | | 43,738 | |
| Pharmacy | | | 38,443 | | | | 26,178 | | | | 16,953 | |
| Other | | | 32,794 | | | | 21,746 | | | | 17,313 | |
| | | $ | 455,833 | | | $ | 402,476 | | | $ | 351,382 | |
MOH Reports First Quarter 2012 Results
MOLINA HEALTHCARE, INC.
CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Unaudited)
(Dollar amounts in thousands, except per member amounts)
The Company’s claims liability includes an allowance for adverse claims development based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims. The Company’s reserving methodology is consistently applied across all periods presented. The 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 exceeding the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table shows the components of the change in medical claims and benefits payable as of the periods indicated:
| | | Three Months Ended March 31, | | | Year Ended Dec. 31, | |
| | | | | | | | | | |
| | | | |
| Balances at beginning of period | | $ | 402,476 | | | $ | 354,356 | | | $ | 354,356 | |
| Components of medical care costs related to: | | | | | | | | | | | | |
| Current period | | | 1,167,580 | | | | 957,909 | | | | 3,911,803 | |
| Prior periods | | | (36,592 | ) | | | (44,377 | ) | | | (51,809 | ) |
| Total medical care costs | | | 1,130,988 | | | | 913,532 | | | | 3,859,994 | |
| Payments for medical care costs related to: | | | | | | | | | | | | |
| Current period | | | 750,994 | | | | 646,428 | | | | 3,516,994 | |
| Prior periods | | | 326,637 | | | | 270,078 | | | | 294,880 | |
| Total paid | | | 1,077,631 | | | | 916,506 | | | | 3,811,874 | |
| Balances at end of period | | $ | 455,833 | | | $ | 351,382 | | | $ | 402,476 | |
| | | | | | | | | | | | | |
| Benefit from prior period as a percentage of: | | | | | | | | | | | | |
| Balance at beginning of period | | | 9.1 | % | | | 12.5 | % | | | 14.6 | % |
| Premium revenue | | | 2.8 | % | | | 4.1 | % | | | 1.1 | % |
| Total medical care costs | | | 3.2 | % | | | 4.9 | % | | | 1.3 | % |
| | | | | | | | | | | | | |
| Claims Data: | | | | | | | | | | | | |
| Days in claims payable, fee for service | | | 44 | (1) | | | 41 | | | | 40 | |
| Number of members at end of period | | | 1,825,000 | | | | 1,647,000 | | | | 1,697,000 | |
| Number of claims in inventory at end of period | | | 260,800 | | | | 185,300 | | | | 111,100 | |
| Billed charges of claims in inventory at end of period | | $ | 403,800 | | | $ | 250,600 | | | $ | 207,600 | |
| Claims in inventory per member at end of period | | | 0.14 | | | | 0.11 | | | | 0.07 | |
Billed charges of claims in inventory per member at end of period | | $ | 221.26 | | | $ | 152.16 | | | $ | 122.33 | |
| Number of claims received during the period | | | 4,855,600 | | | | 4,342,200 | | | | 17,207,500 | |
| Billed charges of claims received during the period | | $ | 4,337,000 | | | $ | 3,386,600 | | | $ | 14,306,500 | |
| (1) | The increase in the days in claims payable is primarily the result of the increased membership in the Texas health plan and the rise in medical claims reserves associated with that increased membership in the first quarter of 2012. Absent the increased Texas health plan membership, the days in claims payable would have been approximately 41 days. |
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