MOH - Earnings call transcript Q3 2019 | Molina Healthcare, Inc.

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Operator

Good morning and welcome to Molina Healthcare's Third Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Julie Trudell, Senior Vice President, Investor Relations. Please go ahead.

Julie Trudell

Good morning and thank you for joining Molina Healthcare’s third quarter 2019 earnings call. Molina’s Tran. CEO, are our Zubretsky today Tom CFO, me President Joe and and With

release. release in our release November call press website. available the access for The shortly announcing to on X. A market the yesterday was viewing replay conclusion call this closed The after replay distributed after of numbers and will Investor the through the our is earnings this posted third now are Relations quarter be earnings the of

those the remarks we herein October For to to remind earnings you have as Wednesday, the presentation, listen of this subsequent call. we who rebroadcast today, been and that made XX, updated initial not the XXXX of

measures with most GAAP call, found our can comparable we in the be refer measures this quarter non-GAAP will these press measures. release. third certain directly In of to A reconciliation

making view discussed Form Annual the and our will results remarks your our guidance, including we During filings in take questions. uncertainties of all for to After Listeners completed be We about call, cause risk from current listeners SEC. XX-K the outlook. to subject factors differ with that XXXX expectations. our long-term forward-looking will our our can growth our as actual prepared and to risks SEC today, XXXX our our our certain filed our forward-looking are the statements, well and statements that prospects, other call reports advise Report cautioned as materially open-up risk to in we statements factors listed with the are the

Chief Executive the turn to Joe? over Officer, Zubretsky. Joe like our to now would I call

Joe Zubretsky

joining after learned issued award. thank release the our we yesterday morning. we the and Late this Julie RFP us you, quarter, STAR+ you of press for all outcome Texas the for Thank afternoon,

our at we discuss you quarterly the time. first provide this will results, have with we we Before information

the new We Hidalgo existing region, were one region. two in contracts Northeast and awarded region, regions: our

is a information, completed membership of that will nature to revenue time impact likely real full underway this is and XXXX the be analysis the Given currently late and of at shortly. occur

very are information in to naturally from respect are disappointed the initial We seeking currently awards. outcome HHSC more this with and

then will all our and to the of relating options of course exploring the action decision. decide We on

third Now to per night third of earnings share our results. X.X%, discussion year-to-date Last in Based and turn reported per let's of earnings after-tax quarter diluted to pre-tax X.X% and full-year diluted third our after-tax our earnings million pre-tax reported $XXX $X.XX. margins guidance on quarter full-year. for $XX.XX earnings of are we we of We a quarter the and million, $XXX respectively. to new of resulting raising and for performance, range the to share $XX.XX

some Premium $XX.X provide months and expectations remain our the line was improve. sound rates and detail with our as our first in on the revenue now retention will nine performance premium continues I year. of remains at-risk of to through membership billion stable, our relatively

our select improvement claim Our and medical demonstrates other cost level XX.X%. improve cost was ability markets, our to in this medical payment Despite profit pressures care ratio some continued initiatives. effectively, manage MCR practices execute

X.X% was expectations managed with excellent our members to provide also ratio G&A The resources and our in as to we efficiently service line providers.

after in operating harvest parent to paying dividends from excess resulting continue capital million We company debt. our down subsidiaries, the nearly $XXX at of

a simplified and We have capital a very strong efficient balance structure. sheet and

attractive profile. earnings attained have a fairly We

XX% share after-tax Total earnings average in minor produced track are X% months ratio the nine fluctuations. with as We’ve medical the than in of supported for by XX.X% margins marketplace. in performed slightly $X.XX Medicare seasonal expected. on year company better first of per quarterly X% X.X% of Our remains Medicaid, care portfolio the over at and

investment combined the margin. capacity. with million track EBITDA billion $XXX free full-year, approximately X% are to a $X.X report we which when $X.X of billion And EBITDA or of debt, approximately for a cash, We’ve undrawn on creates

some comments now news growth change our At for to to of Day, on like XXXX, would with XXXX rate I the respect may we provide XX% Texas. with inorganic forecasted which outlook. our premium revenue Investor

elements However, many to that of growth still the related are rate intact.

awards in XXXX we our In growth impact expected of the will the annualized D-SNP Medicaid reflect growth year, some Medicaid we expansion. in along implemented this product RFP Medicare, that with expect marketplace, from our footprint our and structure into highly two are that South both and Ohio. and the existing entry new of rates broker analysis our expansion compensation states, Carolina suggests competitive. In

together, our grow ability these us to factors in confidence membership. Taken give

of continue not-for-profit will important our we plan positive the a we from Upstate to Plan, from the dimension derived resulting proven turnaround in we synergies leverage YourCare York. growth Health be strategy, weeks Two an prospects, and long-term that membership announced signed a growth Inorganic our ago, skills. to acquire agreement definitive operating because of New growth

to contiguous discussed This XX,XXX Upstate of acquisitions Day. to in members services plan. XXXX Investor seven tuck-in YourCare expect in at we which type our Western early is counties indicative Medicaid we transaction, that the New close bolt-on Syracuse-based York, of in

to XXXX now our updated Turning full-year earnings guidance.

margin and gives Our supported margins to after-tax marketplace. of Medicaid, for in share X.X% raising confidence earnings full-year a per range XX% approximately earnings to $XX.XX. share of Medicare X.X%, implies for an to for guidance guidance X% us year-to-date per of This by X% after-tax $XX.XX performance

fact, to grown over about mind this team Tom, team a even in does call in face overcome of revenue create word I decline future Bear Texas demonstrated levels in significant Before revenue If, a has the the XXXX. would challenges. like to the the to margins that industry-leading The in shortfall. turning this has another news. development ability to many say

pursue challenge the the and we will that ahead. meeting revenue to to continue committed again are We opportunities lie

the Tom for the financials. Now, I turn on will Tom? call over to more detail Tran

Tom Tran

premium of Thank up you, third share by after-tax per revenue with $XXX good and billion. an report $X.XX We X.X% supported of Joe, net earnings and diluted of quarter's morning. $X.X income million margin

of be additional The comparison. quarter second a was sequential marketplace the commentary for XXXX, Let XX.X% consolidated development Prior due quarter. to quarter of detail on the to focused provide was primarily negligible. XX.X% period the MCR XXXX quarter some of in MCR. me the in on third reserve will My the seasonality the compared

The points XX in to compared the were ratio G&A of mainly expense to to X.X% quarter our ratio $XX increase due quarter XXXX. second of second by at sequential G&A the improvement improved in basis million of to compared XXXX The third revenue. the X.X% in flat of Interest quarter XXXX. was the

flat on producing of an of our were with business, expectations. result our X.X%. provide me were approximately after-tax commentary line our Let in performance In additional MCR and the This XX%, the margin business. Medicaid the quarter quarter sequentially by some third in line for

cost produce raise. expect cost to mix will pressures Medicaid, certain continue due We continue that while and our to acuity end pressures to isolated up in loss experiencing will in margins benefit We medical markets, these be ultimately shift, activity. carve-ins managed fully and primarily our targeted premium claim some in

cost. for margin Medicare fairly in our and was of quarter our comprising well products by was XXXX, MMP embedded Our the after-tax managing X.X%. high long-term members management our specifically XX.X% in second are perform MCR This continue our of of compared service healthcare and which continued More and high-quality demonstrate Medicare, of the of quarter XX.X% product. an on in leading at access includes business quarter excellence to for providing stable to benefits, D-SNP to -- supports acuity we with expectation. a market to the The in producing line reasonable recent MMP

this as increased. adjustment of this see the quality our result competitiveness and continue commensurate business efforts, and population revenue margin profile should more becoming are to risk beyond. And acuity we adjustment our our We of position has our us attractive additional to the and which risk reinvest risk scores growth in Medicare to Medicare benefits, us help as allow maintain product in with XXXX

to in of continues our Finally, line XX.X% MCR our to second generally we the quarter for of expectation is XXXX. quarter in seasonal and XX.X% with marketplace compared in well perform report as the business

XXXX, ease attractive offer a value-added profile so competitive raise marketplace grow allow a increase reminder, margin but still and to benefits more As the we us on at more year next the filed sustainable, of up membership margin. for lower, business can commissions,

sheet, balance quarter. for the cash cash and our to Turning position flow

primarily is factors. in in quarter the days due our payable remains days position reserve Days of XX and reserve to seasonal strong. claim quarter compared of with approach increase represent claim payable and and XX consistent the expense second The prior to XX third quarters days and is sequential of Our in XXXX medical cost days XXXX.

million As of We approximately risk-based $XX of of $X.X and the redeemed the and XXXX. capital quarter health reduced total the of which approximately our remain during statutory September XX, to capital. of million balance and notes $XX $XXX and early the by the will convertible beginning plans XXX% billion, year, only since surplus million equates outstanding outstanding have convertible be in the notes XXXX, of

Capital to period XXXX. higher in million primarily cash count XXXX on months deployment and the quarter, notes diluted decreased by $XXX which amount Operating actions the payments. share when of lower lower a is to have in interest expense, due compared to to in of share X% the million for result nine year-over-year ended same the XX, on flow timing basis repayment government the a and convertible fully XX.X gain September

to guidance to per $XX.XX raised a share our $X.XX. of to XXXX of We $XX.XX a to Shifting from $XX.XX range quarter $XX.XX. This fourth implies of year outlook. range earnings our full a to range $X.XX

ready are remarks. our Operator, we concludes questions. now take This to prepared

Operator

from The Instructions] Please Fidel Scott ahead. go [Operator first question of Stephens. comes

Scott Fidel

Hi. Thanks. morning. Good

on that? some cost many Maybe those sort pressures of rate maybe just you’re discuss seeing commentary seeing traction markets question, sort expand and And products geographies, markets on Medicaid you bit can the issues some now? if how in seeing then just what you’re right of of a First around the certain little of type book. in

Joe Zubretsky

and the experiencing cost I which we're three that the quarter pressures those anomalous did in say we see Scott. across dimensions. aberrant Sure, activity, case would come will some One, markets abate. large in

network to the mix of of acuity Ohio in those such We the shift as believe that Second, of Ohio. pressures. State utilization protocol some fact, some And State care the and our ends the rates. harder mix activity. up in large reasons believe normal the looking at primarily for will And And particularly ultimately and rate due seen an reasonable we've arrest cost has rational operating very efforts, claim we in discussions. in acuity management contracts redetermination control, been that shift are

various pressures So there markets. were in

some Some rate cause behavioral actually of the pressure. carve-ins

You capitated a right are gets benefit never getting in. sure you're carved the rate when

behavioral cost pressure saw in that So end in Washington, certainly we up rates. some will

activity. managed Medicaid care very sequential carve-ins manageable ratio as evidenced some shift XX%. flat So But a all very claim acuity of mix benefit large in by

Scott Fidel

trends of the some side. Got I guess mentioned, hefty the to -- of know question it. reserve of the have quarter. I just reserve And around development related quarters. a sort you trending pretty you guys development let's I in maybe sort call, you last, had just X on the follow-up had X over negligible sort development not know And

you on to how of this is sort development get sort maybe reserve the reserve feel just Medicaid by So, Did are trends? just and these the factors well reserves the in development adequacy of issues impacted other some consider update as us around point? or of there at

Joe Zubretsky

had the prior have abate. Take an the development fourth moment, but say prior I reserve we year. your reserve quarter, reserve the should we’ve of We -- in would undertake was and it consistent. Last to quarter thought the -- I fourth exception. year remained in development a Tom in practices I year some that that third

I unusual an think that phenomenon. was

and So has a not and add? unusual. basis, anything quarter here the to over fourth on is Tom, in abated that a is year for million development the reserve third pre-tax fact the $XXX

Tom Tran

add nothing No, to more to Joe. that,

We reserve balance strong. feel remain practice our is very Our consistent. that very reserve

cost these the all. balance DCP into issue You two of can at M&A there, And for gone have see pressure you none our reserve days. any see particular up issue on

Scott Fidel

Okay. Thanks.

Operator

comes question Peter Please of Costa ahead. The next go from Wells Fargo.

Peter Costa

morning. about Good Texas. Question

but that higher acuity which time? what loss it's you I profitability? the just loss gave your another hard higher in profitable organic there sort the at the which more you then X% than Day more have I profitable Texas ratios business, given at than in to second to profitable if your you programs in confidence average? tell Is about of And the at point lose is of mix that’s of Texas other question than question less government is, guess -- you the contracts more, when or would weren't result might ratio. the rate that is sure the the to Texas, that or average be growth less look was stand X% Investor well, ratio loss some Your profitable

Joe Zubretsky

answer said the quo me X% Day, forecast in clear, at Investor revenue to question, To first. Texas. be X% status XXXX the we Let assumed second for that

didn't decrement gain it loss. So due assume or any a to or increment

on We very that are clear point.

now in our X% this shortfall if remarks, incepts XXXX, So you for that we for we to X-month about question the September and adjust as to answer said prepared Tom, it forecast revenue in therefore -- to our I want allow on in X% award as do X, the Texas. sticks profitability? would

Tom Tran

and Sure. generally of obviously in by will The comment. market, population population portion specific because higher general line by of Texas profitability business and not down state. do following We but petition the of of out the of ABD provide acuity I in significant even MMP is market the a

revenue you higher if much it's PMPM, nature by almost will. So

the So the saw press we with run that XX% that we MCR generally in release. disclosed you a tax that at

is business on the as Overall, business you around profitable. or know Medicaid after-tax. an plus However, X% our hovering minus

So less, be it state be in midpoint. some than some more that may may state

there the population. less the than -- midpoint, the but because the fact the of is So abate acuity that high be profitable of may nature it slightly of business

Peter Costa

Thank you.

Operator

next ahead. comes Please from question Nephron go Raskin Josh of The Research.

Josh Raskin

Hi. Thanks.

Just comment the Joe, want that to first question you follow-up Texas. around on made, a with

explore that I said think all will options. you you your

about sure Now commentary and long-term? or make of I that Healthcare that Texas want Molina with to as broader regarding a you protests kind is rethink around specifically, is just the

Joe Zubretsky

routine Texas. refer our to a to There But was options we And matters. vigorously. the referring we all awards. usually these is file of That review I to a is pursue then the there -- to right award, our in would exploring to That’s days to types business in additional exploring meant Texas options on set scoring pursue of protest. to have the an was

Josh Raskin

revenue leads that’s Texas, range the and anything which back, consistent don't you of else XX% targets company? views what specifically, strategy, long-term guys being but rethink targets is long-term, guess terms And scoring, know my with don't have XXXX or there your you you to XX% occurred be Texas I second growth to I that Which happened the overall talk to won't Molina's views to last question, XX% Okay. long-term around in is quarter the understanding EPS XX%. still of of a you step rethink exactly in so anything of in will where sort targets, take know the have with long-term just for

Joe Zubretsky

Texas reset cash profitably. acuity. attractive high and XXXX the this our in inherent for in our business outlined business do we’ve significant There growth long-term off for We're will produces we said, nothing those this is pursue although in, that will It this rate duals we Medicaid manage We But an will Our we will disappointed the excess of really well. is look outlook and margins that our grow very we scoring we're you. in I rights. and award or the target changes in at flow award, are well. as disappointed as the we and numbers of attractiveness and

Josh Raskin

Okay, perfect. Thanks.

Operator

comes The Please Justin from next Lake ahead. Wolfe go of question Research.

Justin Lake

Thanks. Good morning.

one of questions Texas. with follow-up Just couple a on

to is, First, of footprint the in footprint Joe, is your pretty big news pretty -- terms got similar your footprint. the you’ve assume like there, looks STAR I a would it good exchange STAR+

were exchanges material that need fair exchange in to in way? there, the Texas in is lose even to to a you the would still to strategy So upscale say exit run an you in any STAR+, if announcement that it wouldn’t that have so the you regions successful

Joe Zubretsky

Okay.

growth enough STAR an profitable We've And without lot to network CHIP a exchange us. opportunity the attractive New forward. you you and proven that We the have participate business and in our still has we contract the in Dallas and we profitable Medicaid. of marketplace really have membership going in is and marketplace run business Mexico for being been can we think scale have Houston. exchange And Texas growth in a business suggested, as

Josh Raskin

also through Right. I’ve need know that up low of estimating the of numbers. ballpark against just you if I close that you. billion under And to or a And right a losses, your on above is you -- this would still I’ve premium revenue potential of with deleveraging that reset of could to going were a a kind risk just lose of that in contribution I terms then because in come wanted revenue, hit here? offset of, you in that, you’re the about do $X you and think the follow-up comment $X go the side, to that that’s and just this targets, be know looks that the or this Texas like. I that mean you’ve SG&A terms the something in Again, think on on billion terms if do no talked for beyond SG&A to margin number

Joe Zubretsky

Various on in would certainly this Hidalgo in business. articulated we what happen is the right phenomenon in Those Northeast everything that say this But the overhead split, the say, what kept you stranded could numbers revenue. neighborhood players. evenly the two certainly I is a might between in and we But number gets for mean scenarios are have neighborhood. of let's if

we’ve fixed don't So business, of just stranded here tolerate in the but cost proven XXXX. the and nature we that overhead

we And at margins and that you I with overhead in proven If we don't overhead. we've stranded at. X% losses, of when we that to stranded board allow North think we business, New you recall, had said look this in XXXX Mexico the the had get Florida across

ourselves restore get to and revenue cost up fixed target the will our will the margins. We disappears we when

Josh Raskin

color. Great. Thanks the for

Operator

ahead. of of Kevin next comes from The America. Bank go question Please Fischbeck

Kevin Fischbeck

ask I exchanges. to wanted the Thanks. about Great.

to their for the of I bid margins doing margins was talk at for in were the had specifically of to kept couple margin as into year thoughts their why MLR upping operating. a same see in one the really -- that their your that at that, all least it markets? they next certain wanted recheck to and year the just whether seeing what just about You’ve to next lower you and higher growth? strategy reason in at either of a them -- much next main with barrier years a were competitors operating near potential is to about kind of about expectation understand saying and coming or down make trying and couple -- not but a Just minimum they’re view you’re kind growth of why

Joe Zubretsky

Well, the very obvious been it's opposite. marketplace that and in would and Kevin, first thing profitable us have was 'XX I years quite for say, 'XX the is the 'XX

roles off will 'XX when against the that 'XX, average up put So certainly in MLR. markets minimum certain to X-year

be other how misleading. say your Averages performs. The really is your thing I depends It how can are individual it performing. depends on properties would portfolio on

performing that others We have and some well are really less well.

bronze now two, of and our is product for to in bump XXXX. and number will consider prices that we is key We all product filed rates consider and consideration that that markets. put our which we we the we flagship filed preliminary loading everybody's rates certainly and XXXX. that our few for we certainly our minimum a you products that about have were rebates, so when that then XX% competitive. into benefits the number very the value to when took silver our we But public into MLR in one And product additional our into markets as positions be probably paying want competitive we And are analysis value-added in

about growth for are marketplace So really XXXX. we our prospects in still good feeling

said margin. we lower going we at are business and albeit attractive [technical a As the a still to grow difficulty] reminder,

Kevin Fischbeck

this on call Is or this? And is in in strong. you broker differently today now change year you that XXXX compensation of that said times something couple or just a you have for are also, consistently a XXXX this you past that the your than you’ve paying do a is the been or doing more comment guess, I that

Joe Zubretsky

Okay.

now. are paying market We

commissions in corrected and year we we’ve more, a competitive few market. paying last on paying are We weren't markets are our We broker that.

we we more, although paying are not So paying above are market.

now market. paying are We

Kevin Fischbeck

in-market? what Is about from there anything or draw market below that like with us view that markets below? dynamic those of that you think in about Any paying where kind to you’re go means share to is being

Joe Zubretsky

we through should Well, it comes XX% you broker know think broker business be good and comes a market enhance market other brokers. the as the through we loyalty, that network. rate. about strong paying we're want And paid believe now have And so will commission, the of have XX% growth I commissions, to .gov we

Kevin Fischbeck

great. Okay, Thanks.

Operator

next of Goldman The question from go ahead. comes Stephen Please Tanal Sachs.

Stephen Tanal

RFP. And loss opposed than you're companies. direct reported I all something to the the the of follow-up but impact guess, stranded that color, financials will at the as margins kind fiscal looking comments the year. morning, of helpful, that is guys. on the guess And sort the of right Texas the available this like the especially impact getting I to just in all I Good fair early was sort like in all appreciate the of I earnings it to of to overhead. guess state larger ballpark of Joe, wanted X% expect for direct using on last closer EPS somewhere be what makes for today

that direct even think, is you if we impact or of cut stranded what you’ve whatever greater impact, So reason? losing the overhead, managed should actually to some be could just the for well, kind

Joe Zubretsky

I managed gave we I understand will million margin then certainly $XX today, initial all cost previously, million there stated at fully product as at if be we’ve G&A would the through disciplined the ratio losses. I maybe be stranded, in some our fixed become and Mexico look the stranded today, estimates that that And the your that’s G&A at yet of this happen. but and to of our in And hits. to And don't when due I demonstrated Day we’ve will the you to will as Florida overhead again late disappear. dynamic well Investor do mentioned allow enough on we we that to margins becomes really ratios XXXX $XX but revenue lost mean margin, really, before, our -- you baked XXXX just fungible question, I New this But revenue at think phenomenon was point. on look that

Stephen Tanal

maybe then for And one Tom. Thanks. Perfect.

two of performance hike terms of guidance the in and you XXX% of mechanical to was there? other revision, the questions it. that's investment think not guidance earnings? other implied confirm could the on Just One, flow-through kind a of just EPS that’s peer of the on level And to sort more sort income. Any reason

Tom Tran

I peer referring you’re you're in. what In any if of of kind our that on the or costs, sort to terms of performance all what guidance, And that's provided referring convertible, gain/loss think we is EPS there is to. any restructuring

okay? a are we $X.XX in of item in, those So the roughly words, gain from about of the year-to-date other All net of have redemption convertible.

So said, the that’s to $XX.XX in $XX.XX. that

Stephen Tanal

piece? income -- and other investment Okay, sorry, then great. the And

Tom Tran

income. -- a have investment Investment other it income, two third certainly we seen And the higher -- items guidance with that's income in I investment a we’ve bit little mean provided yes. combined high That’s and quarter. there.

the So that's the full-year. why we for up guidance

Stephen Tanal

earnings understand, with that, is income to flow-through flow-through just really the I be should of or That wanted And XXX%? of sort that assuming not be XXX%. does we the was that a may to other part

Tom Tran

yes. The EPS, XXX%,

Stephen Tanal

Okay. guys. Thank I it. you, appreciate

Operator

question Rhyee next Charles comes ahead. of Please from The go Cowen.

Cal Sternick

on Sternick Cal Yes. Charles. Hi, is for a morning. This Good

thinking off M&A just some your through subs? the strategy. pulling you And that of have more going just the the working fresh how appetite about still you from YourCare of out context are are on announcement your recognizing strategy, and of and additional forward generally capital Texas guys the for then the will of you Texas in maybe acquisition Just M&A

we business of activity is M&A As or being [technical difficulty] biased Medicare? or think is Medicaid like Thanks.

Joe Zubretsky

Sure.

growth. use our XX% to foremost, are excess of First and levered regulatory as superb. unlevered fund about the on the And organic and capital premium We hold is equity returns best of capital.

Second, capable team. very, we have very M&A a

disciplined. remain going We are very to

traditional in existing markets core for and probably Medicaid, look and our in opportunities our We particularly greenfield will advantage. duals not high in and products, acuity markets Medicare

to We very, stay harvest attractive and because capital. to that’s going use We underperforming core out our skills. really can product seek very our line. we're for proven our stream our do turnaround of businesses So synergies disciplined very a performance-based earnings human those resource of

there XXXcX. are scouring going is for We attractive plans, is There's capital is Universe deploy provider And there earnings-per-share. owned to very remain to plans, to we So opportunities we there are out the disciplined. accrete think opportunities there. orphaned still our

Cal Sternick

talk any And on the are Medicare, appreciate for if for wondering marketplace the enrollment the early I recognizing Great. just that there year? I'm you still rates, we commentary period in growth could about visibility growth next

Joe Zubretsky

on Medicare? Sorry,

Cal Sternick

Yes.

Joe Zubretsky

around the footprint. Medicare, as our Medicare expanded is centered you D-SNP If question and have product know on is we primarily the

We markets. -- into two have spent entered new

grow in now feel that the So we will and XXXX. do expect to our competition have membership growth in XXXX. product We have some against visibility we

Cal Sternick

you. Thank Okay.

Operator

comes of ahead. Please next question Barclays. Steven Valiquette from The go

Steven Valiquette

morning, Good Thanks. Great. everybody.

Paso, you larger MRSA losses in scoring really won that I business am to you guess the mind, curious is by know high-level we lost and actually down that what region. in you any may regional then the the region, maybe El I other just if Dallas, may I at driven in have look Texas -- but anything drove breaking in you fact that yet, brand-new different there the win, out the regions. Bexar, the have jumps mechanically the factors that Jefferson, in have awards than but new your So don't Northeast the Harris, was

but I jumps silver there don’t you help is kind as just into tied one So underscoring, might new lining process Thanks. that protest there? well, it's that of know with out out -- preliminary you that, pointing worth and and other any well? in curious high, any the

Joe Zubretsky

will not we will legitimate as not very learn be stage. we at are we made this at did any regions seeking no, questions be old. asking, contract. XX lost? Underscoring we questions hours But news those the And that a So, you us? rights questions has our in those is answer we we the suggested no, why under is and we successful Obviously, the for have what branded this information don't then -- to But available. been The have in our about and region scoring were what pursuing answers time.

Steven Valiquette

I Okay. later. right. maybe All follow-up more offline [indiscernible] Thanks. detail

Joe Zubretsky

Sure.

You’re welcome.

Operator

The go next Matthew ahead. comes of BMO Capital. from Borsch question Please

Matthew Borsch

Is the is emerging I’m think of Medicaid that the sort that to third relative the been the factor. of Yes. accelerating but how particularly MCR it? something played curious quarter, about a last impact -- allusions I you into that had back of made and is call, pressure lag something how business. the you to in it was the and just What’s in of wasn't the timing rate characterize some or this out, would that episodes part

Joe Zubretsky

accelerating want I capitated would that be a year. characterize do I program, into your throughout understand it very rate clear, benefit. the as to carved best somewhat you when to for get And benefits you’re the getting

it's And it sometimes sufficient. and sometimes is not right

the place carve-in, and So we’ve seen we’ve took over acuity the seen respect and shift year-ago, behavioral to Ohio in has benefit Washington a their mix in that occurred respect with and efforts. carve-in the behavioral the it to that with that redetermination

in they rate understanding customers and but always these rate offset been have that do to some we pressure. Ohio recent rates been cost rational very this and news have And reasonable included trend, midyear had our the of pressures, in discussions. lag is in in good So a increase fact,

in in or XX% utilization the quarter. management it's and controls, acuity shift, flat protocols, through business, carved still fact and is second network operating the a the activity, third XXs we're it's claim advocacy producing MLRS whether and dynamics with high dealt whether large mix just can that be efforts. Medicaid aberrant, in it's whether is benefit, sequentially managed-care which So rate like this And the

I the in is right seeing that the there lot even think fact we pressure going is are a some testimony to in portfolio places. though isolated

Matthew Borsch

to likely Joe, pressure common we and reasonable most redetermination if I be eligibility rate of bit there of certainly Is that But like now but sort some bout any, the back a this Medicaid, landscape cases. mischaracterization? a a partners could helpful, is through feels at -- just broader corrections But extremely up we're bit going of in in to plans and business in a development first little and realized markets. I’ve it's is factor. coming the multiple what's you’ve into turned year, the if look that it seeing stingy certainly little

Joe Zubretsky

slightly think question. rate have significant these the said, And acuity, carve-in shift correct. legitimate benefit you reasonable, any Rates in be discussions of I a may go quickly you be then It's phenomenon rational. appear mischaracterized. little it which or through, as I been get to a The rate shocks, a But actuarially sound. time

ought have news many to good that this businesses is through the we and respond fact a economy there's it through think cycles, pressure strong, members then lot pressure very who puts mix it's longer but a The redetermination that discussion focus on. economy a managed the we perform we is as over creating an the economic know. really and phenomenon. cycles? are of business, business work model no fact some Medicaid something that on And positive correctable on good fact does have In we actually expansion years been is I shift membership that the to population, positive phenomenon don’t that's actually money work, rates, guess We in now on do anymore, the it's how then and acuity make your back on in roles. these It money the very quickly is Ohio going to state, making but collectible and happen existing very more how know. to one conjecture economic makes rates

Matthew Borsch

Right.

Okay. Thank you.

Operator

James of question ahead. Sarah Jaffray. The comes go Please Piper next from

Sarah James

Friday, Molina of took an in has good is that to been award. just general, this And there unusual HHSC Texas. do Head a which Medicaid Procurement, procurement as Texas of announced amount for churn On is before over how you. Thank on running

the any STAR how and So, department a scoring? in RFP just this wondering can there's be the on influenced if evaluating that color you to could procurement different environment? there And churn going means if team it share is have actually

Joe Zubretsky

the scoring. might going scoring, the But -- speculate what we the do. at the phenomenon normally point you hesitate customer. real. turnover get it's what this the it, we to on Sarah, going we our suggested inner is in impact had Everybody I it. what’s When on churn comment have can't in know do workings are Certainly, on I of we that knows to or

thoroughly. evaluate to We it are very going

have go have us. can't have scoring we inside will I favorably, learned speculate created we what that pursue our through we if accurately and the on rights. rights going We that are that our what we done then will could we But contract department might scored not to but pursue lessons to better, happened under the our we or think impacted were

Sarah James

Okay.

there SG&A where you have pacing Given are some XXXX, can wise, now of opportunities top the you offset timing improvements the of to the headwinds? or forward influence so spend of any time line that flexibility investment outsourcing additional of in top the for the bringing we any is line

Joe Zubretsky

work we certainly our developing down continue plan, the management that's is on screen. XXXX As to something a path of certainly radar SG&A

be We are outsourcing know. last the IT specialized of operation and there's as nurse think our already capabilities. We large-scale earlier year year. very done management that but efficiency did advice this We place is outsourced has yet. our some outsourced take gained, our large can you to of occurred. utilization going a We not more scale very that here We esoteric line outsourcing in most

run most in and not be but is So mostly in rate your should outsourcing fully -- has question. large-scale the that if the rate in the was done, of been all that that current run XXXX, of that

Sarah James

you. Thank Okay.

Operator

ahead. from go comes of question next Dave Windley The Please Jefferies.

David Styblo

about in to morning. the have this think I $XXX Joe, year. by It's of business Styblo extracting the the because curious, another if opportunities now for RFP for million Texas the to I’m the of opportunity to savings of future. million earmarked the might in an those have that $XXX footprint $XXX were commendable Dave guys you savings done million tune outcome? be for Good not from to end of shrinking $XXX the has million opportunities talked in Hi. of really addressed a of And cost Windley. job any team

Joe Zubretsky

fair mean, book of that our our of to guess I Hey, comment. to products I across our evenly would it's it $XXX the $XXX business say without just geographies. spread across parsing its across million be fair million a and opportunity,

that would that of revenue integrity part if care have earmarked for management happen. was whether it's payment yes, happened we savings, on savings, not G&A the So, will lost that whatever savings,

think that’s products. I But opportunities our individual improvement fair and a profit to start But a So comment. it's we’re not to going … states allocating

David Styblo

Sure.

Joe Zubretsky

fair It's fair ... comment. comment. a

David Styblo

on have for talk Okay. different revenue the quarters couple opportunities guys back, that and a you know guys in chunks your can started RFPs from -- of are up now XX across coming you of horizon, are I add about to I’m participating there to and XX visibility the growth disclose in you'd any that that stepping have to curious, that in in you’re willing in revenue And that that businesses. I months have next done bid that be a scale then with larger perspective? that, interested are

Joe Zubretsky

working fair We number call on. this are of, at which confidential, have will still are a situations, what time I we that special

that’s Georgia, West at response other are even RFPs we to that we we submitted we the showed the extent, process the Virginia, are November, told Kentucky while in will and RFP, of a some in states you Investor Tennessee, looking had know, really you Day, month announced imminently, As so at. sometime dropped, to Iowa be and

have ground game in greenfield ongoing We states. various

the network, opportunity incumbency The set and the are to regulatory of ability screens. spots. of disciplined and We very pick evaluating opportunities. competition, strength our we every the will We’ve through environment, build a the run

David Styblo

kind maybe Okay. the two you the I evaluated for the commented Texas. outcome I'm coming a one. And in differences there just about of next some are that happen last you STAR+ RFP RFPs curious similar the see and turnover know might a some the announcement are December? the cause then within to way up What that TANF. in of CHIP, the award that key of might not

Joe Zubretsky

at Well, one but a legitimate don't at. answer obviously, take second into in we award. dynamics are just be scoring build our the as time we consideration nature similarities differences and this programs. news, that the for level for two time looking have very the this will looking at And confidence But winning the specifically will an of it's we question and on you, we I

David Styblo

much. Thanks Okay.

Operator

session Healthcare's XXXX question-and-answer today's quarter conference presentation. for concludes earnings attending and Molina This today's Thank call. you third

You may disconnect. now

Molina Healthcare (MOH) 30 Oct 192019 Q3 Earnings call transcript