MOLINA HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
June 30, 2006 | December 31, 2005 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 312,118 | $ | 249,203 | ||||
Investments | 94,570 | 103,437 | ||||||
Receivables | 77,201 | 70,532 | ||||||
Income tax receivable | 4,785 | 3,014 | ||||||
Deferred income taxes | 2,878 | 2,339 | ||||||
Prepaid expenses and other current assets | 7,534 | 10,321 | ||||||
Total current assets | 499,086 | 438,846 | ||||||
Property and equipment, net | 34,093 | 31,794 | ||||||
Goodwill and intangible assets, net | 150,699 | 124,914 | ||||||
Restricted investments | 18,302 | 18,242 | ||||||
Receivable for ceded life and annuity contracts | 35,834 | 38,113 | ||||||
Other assets | 8,608 | 8,018 | ||||||
Total assets | $ | 746,622 | $ | 659,927 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Medical claims and benefits payable | $ | 249,789 | $ | 217,354 | ||||
Deferred revenue | 8,896 | 803 | ||||||
Accounts payable and accrued liabilities | 33,540 | 31,457 | ||||||
Total current liabilities | 292,225 | 249,614 | ||||||
Long-term debt | 15,000 | — | ||||||
Deferred income taxes | 7,346 | 4,796 | ||||||
Liability for ceded life and annuity contracts | 35,834 | 38,113 | ||||||
Other long-term liabilities | 4,660 | 4,554 | ||||||
Total liabilities | 355,065 | 297,077 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value; 80,000,000 shares authorized; issued and outstanding: 27,995,782 shares at June 30, 2006 and 27,792,360 shares at December 31, 2005 | 28 | 28 | ||||||
Preferred stock, $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||
Paid-in capital | 169,743 | 162,693 | ||||||
Accumulated other comprehensive loss | (714 | ) | (629 | ) | ||||
Retained earnings | 242,890 | 221,148 | ||||||
Treasury stock (1,201,174 shares, at cost) | (20,390 | ) | (20,390 | ) | ||||
Total stockholders’ equity | 391,557 | 362,850 | ||||||
Total liabilities and stockholders’ equity | $ | 746,622 | $ | 659,927 | ||||
MOLINA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue: | ||||||||||||||||
Premium revenue | $ | 479,823 | $ | 401,915 | $ | 929,117 | $ | 794,102 | ||||||||
Investment income | 4,811 | 2,359 | 8,893 | 4,124 | ||||||||||||
Total revenue | 484,634 | 404,274 | 938,010 | 798,226 | ||||||||||||
Expenses: | ||||||||||||||||
Medical care costs: | ||||||||||||||||
Medical services | 86,020 | 67,604 | 160,878 | 131,271 | ||||||||||||
Hospital and specialty services | 267,689 | 259,016 | 530,559 | 485,548 | ||||||||||||
Pharmacy | 48,006 | 42,870 | 93,525 | 85,785 | ||||||||||||
Total medical care costs | 401,715 | 369,490 | 784,962 | 702,604 | ||||||||||||
Salary, general and administrative expenses | 56,308 | 37,060 | 107,521 | 70,606 | ||||||||||||
Loss contract charge | — | 939 | — | 939 | ||||||||||||
Depreciation and amortization | 4,870 | 3,558 | 9,632 | 6,756 | ||||||||||||
Total expenses | 462,893 | 411,047 | 902,115 | 780,905 | ||||||||||||
Operating income (loss) | 21,741 | (6,773 | ) | 35,895 | 17,321 | |||||||||||
Other expense: | ||||||||||||||||
Interest expense | (577 | ) | (418 | ) | (991 | ) | (707 | ) | ||||||||
Other, net | — | (400 | ) | — | (400 | ) | ||||||||||
Total other expense | (577 | ) | (818 | ) | (991 | ) | (1,107 | ) | ||||||||
Income (loss) before income taxes | 21,164 | (7,591 | ) | 34,904 | 16,214 | |||||||||||
Income tax expense (benefit) | 8,012 | (2,885 | ) | 13,162 | 6,161 | |||||||||||
Net income (loss) | $ | 13,152 | $ | (4,706 | ) | $ | 21,742 | $ | 10,053 | |||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.47 | $ | (0.17 | ) | $ | 0.78 | $ | 0.36 | |||||||
Diluted | $ | 0.47 | $ | (0.17 | ) | $ | 0.77 | $ | 0.36 | |||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 27,947 | 27,707 | 27,901 | 27,662 | ||||||||||||
Diluted | 28,270 | 27,707 | 28,207 | 27,981 | ||||||||||||
MOLINA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Six months ended June 30 | ||||||||
2006 | 2005 | |||||||
Operating activities | ||||||||
Net income | $ | 21,742 | $ | 10,053 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 9,632 | 6,756 | ||||||
Amortization of capitalized credit facility fees | 429 | 338 | ||||||
Deferred income taxes | (2,483 | ) | 68 | |||||
Stock-based compensation | 2,747 | 341 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (6,208 | ) | (3,544 | ) | ||||
Prepaid expenses and other current assets | 3,098 | (287 | ) | |||||
Medical claims and benefits payable | 9,919 | 19,127 | ||||||
Accounts payable and accrued liabilities | (2,922 | ) | (6,637 | ) | ||||
Income taxes | 2,634 | (17,784 | ) | |||||
Net cash provided by operating activities | 38,588 | 8,431 | ||||||
Investing activities | ||||||||
Purchases of equipment | (7,333 | ) | (6,798 | ) | ||||
Purchases of investments | (57,737 | ) | (19,645 | ) | ||||
Sales and maturities of investments | 66,476 | 22,358 | ||||||
Decrease (increase) in restricted cash | 940 | (89 | ) | |||||
Net cash acquired (paid) in purchase transactions | 5,820 | (31,200 | ) | |||||
Increase in other long-term liabilities | 106 | 295 | ||||||
Increase in other assets | (1,070 | ) | (5,210 | ) | ||||
Net cash provided by (used in) investing activities | 7,202 | (40,289 | ) | |||||
Financing activities | ||||||||
Tax benefit from exercise of employee stock options recorded as additional paid-in capital | 653 | 1,758 | ||||||
Proceeds from exercise of stock options and employee stock purchases | 1,472 | 1,474 | ||||||
Borrowings under credit facility | 20,000 | 3,100 | ||||||
Principal payments on credit facility, capital lease obligation and mortgage note | (5,000 | ) | (82 | ) | ||||
Net cash provided by financing activities | 17,125 | 6,250 | ||||||
Net increase (decrease) in cash and cash equivalents | 62,915 | (25,608 | ) | |||||
Cash and cash equivalents at beginning of period | 249,203 | 228,071 | ||||||
Cash and cash equivalents at end of period | $ | 312,118 | $ | 202,463 | ||||
Supplemental cash flow information | ||||||||
Cash paid during the period for: | ||||||||
Income taxes | $ | 12,411 | $ | 22,122 | ||||
Interest | $ | 1,055 | $ | 281 | ||||
Schedule of non-cash investing and financing activities: | ||||||||
Change in unrealized gain on investments | $ | (128 | ) | $ | (202 | ) | ||
Deferred taxes | 43 | 79 | ||||||
Change in net unrealized gain on investments | $ | (85 | ) | $ | (123 | ) | ||
Value of stock issued for employee compensation earned in previous year | $ | 2,178 | $ | — | ||||
Details of acquisitions: | ||||||||
Fair value of assets acquired | $ | 86,003 | $ | 31,200 | ||||
Less cash acquired in purchase transaction | (49,820 | ) | — | |||||
Liabilities assumed in purchase transaction | (42,003 | ) | — | |||||
Cash (acquired) paid in purchase transaction, net of cash acquired | $ | (5,820 | ) | $ | 31,200 | |||