MOH - Earnings call transcript Q4 2019 | Molina Healthcare, Inc.

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Operator

Good day, and welcome to the Molina Healthcare Fourth 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 of Investor Relations. Please go ahead.

Julie Trudell

you Molina thank XXXX fourth and call. earnings morning, for Healthcare's joining quarter Good are and Molina's and today me With President Tom our CEO, Tran. CFO, Zubretsky; Joe earnings quarter The and closed, Relations is viewing full our website. release for release yesterday fourth posted our press year the announcing the XXXX on was now market distributed after and Investor XX. A of this conclusion shortly after replay the of this call will through available February be call numbers access release. replay in are earnings to the The the

call. rebroadcast the our measures. GAAP as press of presentation, those February direct who earnings to to For remarks been comparable this herein of listening you fourth remind made refer release. XX, can not the will the certain A found the be quarter most initial of this that measures non-GAAP XXXX subsequent in have are we call, Tuesday, to updated XXXX, these In we are and today, reconciliation measures with

SEC. from we be review Listeners statements in in for our our are During materially outlook. expectations. risks results forward-looking differ statements, all the our our cautioned long-term can listeners growth listed statements factors including the reports as to factors risk that XX-K relating that to XXXX our our of cause will guidance SEC annual other current filings our with and to to advise filed certain subject our We Form our prospects, the actual with discussed risk report our call, XXXX and are as making uncertainties forward-looking and well

turn Zubretsky. I Executive call remarks, would open Joe? to our Joe questions. Chief and your of the completion prepared over our the the will call After now like to Officer, take we

Joseph Zubretsky

and Julie, Thank good you, morning.

share XXXX I of growth from review year diluted today, results. call provide and of provide earnings On guidance our each income of Yesterday, capital full our and million the margin quarter with with of will three with year net our pleased business. $XXX reported our for of on our X.X%. allocation XXXX, $X.XX, full discuss quarter am the earnings and year after-tax lines detail per the fourth we priorities initiatives, highlights quarter full fourth fourth I an and

or $XX.X growth. year, and costs cost met in our expectations. was Premium to ensuring ratio leveraged the The care revenue quality our XX.X%, the we cost beginning expectations. For X.X%, control while exceeded containment highest care base with efforts our full of fixed for members. The our ratio we billion continued as was line medical our as invest in while medical to G&A was

our focus Medicaid and million improved total XX.X% by X.X% able $XXX and in a in, to in premium of year after-tax when margins. resulted All exceptionally growth We X.X% revenue to In margins of decreased XXXX income company in in earned deliver were and earnings we margin The Medicare to our X.X% early-stage margins was after-tax share Medicare due per performance Marketplace. in and diluted Marketplace this testament X% X.X% business. net on contract a and losses, share legacy supported earnings X%, $XX.XX. high Medicaid, our of by per of margins

to an business we excess structure the already-strong sheet generate and while balance improved flow. During year, capital continued cash the significant

bringing million $X.X the an billion. our the to of for dividends additional $XXX In quarter, year we fourth subsidiaries, the from total harvested operating

second to we comment of In half February to in a the XXbX-X growth XXXX, our the cash made on December at on As share the we X, million. trading XXXX strategy. $XXX I for now plan, repurchase XXXX, under $XXX Board of billion. program was parent up shares our pivot million of authorized repurchased Through progress X.X will million. December a $X unrestricted company early

acquisitions: provide two health announced for revenue, we in but months, York few have and margin growth. financially Illinois. plans of Upstate YourCare underperforming membership NextLevel past New opportunity and These stable in the Health improvement, acquisitions and During leverage membership operating

As approximately $XX transaction, price seven over with the The serve Illinois annual XX,XXX will price NextLevel counties In serve acquisition, Medicaid approximately annual New Medicaid a we approximately and The members York is in revenue purchase members County, million. with $XX in Western result approximately we in revenues million. YourCare is million. $XXX will LTSS XX,XXX Cook approximately million. of of the purchase of $XXX

rate enhancing fund growth will to are these both with close premium XXXX. the acquisitions expected the cash our available We of and year, in for revenue half first

as of Navajos have to program to is American develop further, that passed entity New XX,XXX managed Pursuant to discrete fully-capitated care by in operational under has Medicaid the Mexico's quality The for of stipulates who legislation of situation, in are In largest the the entity a health designed Navajo with new been partner be the Navajo Mexico care us are expected we New eligible Medicaid. create XXXX. the on special contract building need. a an The program unmet New the Mexico with and Native and there access to business American will will Nation Nation to a working reservation, Native health Mexico, Nation the improve first for which Molina approximately The to be legislation, umbrella traditional New offering program. is arm care Navajo legislation plan. that operate the

the in XXXX, contracts. an our Kentucky, canceled to state's administration In response we Medicaid and the the one were high-quality Turning submitted new selected RFPs. bids. proposal awards the In Medicaid on RFP and a the now rebid to XXXX December in of update winning as

capabilities already community successful updated details we submitted were that have originally and and again. be proposal commitments the that local We our we hopeful therefore, are successful that will

announced in were October Texas, In STAR+PLUS to RFP disappointing the awards us.

flawed. administrative process we we have record and the excellent severely Therefore, proposal, believe pursuing service believe of this was program our high-quality submitted we track also in While an a are we scoring rights.

flaws out fundamental process. points of detailed scoring filed protest in team Our the a a number which

been would than of for contract so the be have protest. ruling the operate line X, to given earlier XXXX, time XXXX. We not for new that full year our contract effective the we under existing the no believe on a a We expect date January

These capital organic by to allocation are priorities: and anchored core capital our growth repurchases. of our accretive second, third, and first, other share through acquisitions; our growth returning initiatives growth excess businesses; shareholders via inorganic programmatically

we to XXXX meaningful highlights our It continuing guidance the our to by expect announced we full strategy. to top year our growth that X%, organically premium growth assuming In turning margins. our a some guidance. in grow of year closed and while by attractive revenues June produce is pivot in context, Now acquisitions X.X% expect which to as are is revenue follows: XXXX XX. line first

the For margins after-tax company, expect to produce we of X.X% X.X%. to total strong

trend we We business stable cost expect improve to from rate the in continue and as benefit to a Medicaid our environment. performance

In maintain the grow revenues Insurer Medicare, we headwind expect Fee. our to the position reinstatement margin attractive of and industry-specific despite Health of the

to now to decline and margin in that our XXXX clear profit growth expect expectations were optimistic relative a challenging XXXX, we point too for is it the XXXX pool as us Marketplace pricing strategy. However, now jump-off into our a membership performance the presents extraordinary

full measured of a diluted excess finally, share earnings have And year profile we deployment the a by range capital. $XX.XX. $XX.XX enhanced per all GAAP as of We XXXX, earnings in result for of of to our expect the this,

previously, revenue guidance over assumed the an be and premium a is which range to Our X.X% within XXXX gave acquisitions. for full billion, to approximately This growth we increase expected X% is year $XX.X state of Texas X% steady in XXXX. the no

acquisitions by volume rate revenue year-over-year, and basis. to Level our YourCare June XX% increase attributed would increase premium and close growth of is premium the an annualized is and member Next an approximately XX% XX, business. mix X% attributed of to increases Assuming on XX%

and We baseline have produces balanced our growth. and solid strong XXXX which portfolio, supports future a business a for

underlying provide implemented share guidance premium will impact reflects annualized awards by increases. line approximately Medicaid X.X%. we our of business. Now of the in I growth This that and In business, the this markets XXXX expect rate past market our year, details grow to underpenetrated RFP we net revenue some

over From X.X% year-end our is expected of produce The the advocacy including we rate membership to in expect XXXX of our XXXX increase X% over a slight Our environment acquisitions. perspective, well. to rational margins is approximately X.X%, range of working rate X% earnings and after-tax the membership an XXXX. Medicaid X and when are an improvement efforts

manage stable, low of to medical continue network at-risk cost effectively continue risk trends, medical improve payment continue our member and single-digit We retention revenue our to management offset in and we utilization efforts and improve scores. integrity, our to costs control as

new XXX growing new and expected to grow counties our Recall, entering is and revenues including share filed we with XXXX, business existing Carolina, product in products XX%, Medicare states, by gained DSNP in counties. Our approximately by XX%. market in Ohio South X DSNP premium

toward having of We full our DSNP of continue goal progress penetration footprint. in Medicaid product our to our

kept line margins to yields Our margin X.X%, after-tax headwind range the high-acuity XXXX. on of dampens LTSS manage year-end Fee be in In in to continue scores. continue points. medical have million cost which X.X% the Medicare by population XX perspective risk premium expect an increase improve an is our including Insurer pace membership over after-tax, effectively we and basis business, trend, we this to approximately From the with an member X% Medicare, expected in all-in of we of to earnings Health $XX

In XXX,XXX states, set, in We competitive our from business, footprint to served more average XXXX members, our we and margins. South with Carolina. exceptionally X%. be expanded Marketplace produced our Marketplace a In and XXXX our in we approximately lowered year-end XXXX, XX% at an members increase on prices XXX,XXX Mississippi two year-end XXXX effort including began high product

with growth after-tax range. in in of We X.X% X.X% Marketplace X.X% expect to XXXX the revenue margins

and This expectations, growth investments expectation. did to product in pricing shortfall are below had true in most Our particularly and and X as comprised produce which Texas revenue level we we membership not of was our Marketplace design of the outlook our markets, Florida, the forecasted. initial made membership the

XXXX. move many, our price to in over In expect we to thus, membership the had fewer differential competitive not year attrition approximately but lower seen pricing we XXX,XXX and than a summary, the year-end all end of however, prior. years, same and had expect markets, saw We years we increase in we members, in do, past members XX% than with for be

after year confidence. look another we in with and conclusion, solid of to XXXX performance XXXX, In beyond

healthy a a value-creating strong deployment. management product and We have structure capital team, to portfolio, a deep a approach capital

a pure-play and be are care will business. We government we managed

to We with flow stay business generation. compelling cash core. believe very attractive going free are close care that managed has We the government the growth to characteristics

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

Thomas Tran

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

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

in specifically, X.X%. the More of points for sequentially producing business, margin basis the to our after-tax XX improved quarter Medicaid an MCR XX.X%,

We to in well continue perform Medicaid.

The in XXXX, Our after-tax compared for of third quarter. Medicare the of the was producing business quarter stable XX.X% quarter XX.X% X.X%. continued the to of to perform in well an margin MCR

an quarter with business continued quarter third to we to compared report of of margin MCR in XXXX, XX.X% line seasonal generally Marketplace the in well as XX.X% an for producing our of X.X%. the and Finally, after-tax expectations perform

third costs the the X% on significant. quarter the current XXXX for the XXXX, in the prior the increased Regarding compared overall marketing by to open points to fourth same of year, impact to enrollment Medicare due influenza, and and to XX quarter in during G&A mainly the for quarter basis higher not X.X% spending but of compared Marketplace. The sales ratio quarter was were in

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

quarters, days days Our reserve of to consistent reserve of prior medical payable quarter XXXX strong. XX remains compared our cost XX the days in is expense XXXX. claim the quarter in position of fourth with represents approach and third XX in and Days

health capital As of statutory plans equates total December billion, $X.X our surplus to had approximately approximately of XXXX, which XXX% risk-based XX, of and capital.

a for authorized due million was million share for shares, of And share cash of up In million. $XXX an approximately shares total February $XXX X.X the $XXX timing improvement for additional an bringing premium Operating flow million, to number to to and to to the payments. repurchased compared the XXX,XXX $XX repurchase X, we quarter, million. Subsequent the Board Directors receipt XXXX, X.X million. December, government of quarter, XXXX through of repurchased primarily program repurchase we during the

of year is in guidance range full a $XX.XX $XX.XX. XXXX share basis GAAP a initial Our earnings to per on

this not and yet the acquisitions We closed. transaction as have not NextLevel YourCare include have

XXXX, will in Our state this we for guidance as a run the assumes steady year year. through believe full Texas the existing contract

for increase and over to NextLevel revenue year the impact be XXXX XX, increase XXXX the by $XX.X and would XXXX. to X.X% reflects is for premium approximately would earnings a full approximately the billion, from Our negligible. the were YourCare acquisition expected which year-over-year revenue be close premium X acquisition X% If June

increase expect be due higher medical XXXX. XXXX the to is in of XX.X%. We XX.X% primarily in over to care The ratio range Marketplace a a to MCR

to leverage improvements, G&A approximately fixed and our somewhat reinvestment productivity growth to by initiatives. expect This cost ratio improve offset We growth, X.X%. revenue reflects in

in driven approximately an to Fee. the expected is by increase Insurer XX% XXXX, Health the from rate tax effective be Our of impact XX%,

after-tax to lower primarily to margins Joe expect in mentioned. of margins range that due a X.X%, Marketplace previously We X.X%

not While and the leap do quarterly first actions. year be impact year than of earnings timing diluted give to XX% our point the of that we full want do outlook due I share capital our less the guidance, to the quarter of per out will

announce like That XX, an are we City. prepared ready to be holding Lastly, in York May now Investor New we questions. our on Operator, I remarks. will that would take to concludes Day XXXX

Operator

Instructions]. [Operator

Wells first The comes today Peter question Fargo. Costa from of

Peter Costa

end further growth? How it business explore here about of do And the forward? we do believe are Really this of bit expect that just talk that will wanted business' margins at impact to Or competitors. the further year pricing up? a deteriorate in with competition coming you little the to terms with situation then Exchange you going much price

Joseph Zubretsky

of We price either one or our about our Bronze, one point number in XX% Silver We hit Pete. XX% price our our or of in in Sure, on the about two geographies. are product, our premium we price number position point hit geographies. zero number meaning

move didn't hit price And all we had the prior. in in hit our the differential years geographies. price for price members we fewer point So did we where than seen point,

get volume price the X% didn't into the expected decreases we get we we the that average put for to So market.

like $XXX that XXXX, million, more would will high $XXX in the a XXXX felt earned million So earnings reset. exceptionally XXXX which should million $XXX That in million XXXX. year. was approximately year be say We $XX like XXXX. I been But more a and have

while -- think looks the I point was the particularly So jump-off the spread XXXX wide, in challenging.

for We subsidized. high I think land. we to need to go margins our through network. the of the business. see have very our Medicaid are footprint, our XX% hopes this Nearly pricing XXXX leverages members fully Medicaid still cycle for where It

poor. the working So working serving we're servicing the poor --

and So grow pool fits see strategically. can go it time. pricing the we let's cycle how through the But XXXX profit over

Operator

Borsch Next question of comes Matthew from Capital. BMO

Matthew Borsch

at of intense also price than you the ACA, dynamic a Texas, expected? more and you Maybe members it Yes. reflect other in years. in saw being Marketplace the a are the you you competition in prior to? little And not might there maturity And Does had same on price bit point that moving your that Florida alluded membership. curious, attribute is the factors as market? I'm the just more to move Or

Joseph Zubretsky

as moving I last was it's misforecasted on of point, the result up. think of elasticity moving Matt, prices the of And demand. where members we the question were

the would movement for think and price were and have the differential as into suggested, the I declined, you're As you same price matures. think members for $XX. moderated And increases move as less going prices market, seeing seasons now as I even and market, $XX

are of members you longer, plan and if not with more to health high-acuity going these a members their they stay using they're your services. move lot chronic As become

reprice force. share at to that to capture the the into markets to that we yes, So as try we And think something price seasoning a to competitive point, hit and it. do to attain. the I with places On we the maturity did we're going certain in Florida, in and Texas, of think due market we XXXX, the we first those has can not tried market point look in your

Operator

The Evercore next Mike of Newshel from question ISI. comes

Michael Newshel

on just changes, mean that how price pricing the next sensitive how favoring membership Day? a follow-up the exchanges. less long-term is terms you growth in you margin the about you the Investor approach at I growth? to versus since on provided thinking change that and going enrollment Maybe appear of to revenue does year And just also optimizing are margin targets

Joseph Zubretsky

that is Yes. referred this balance The you what in to need to you business. titrate

for this how marketplace. fewer grow are many news retained. can the move, of that in You're means And you you favorable that members into looking the for put more the while also point that price members is members all

-- We're that last projecting year, had more we're to attrition well, per X% month. we about membership projecting X.X% this be to year So X%. like

members as stay of services likely less care more probably to they're and chronic, said, I move. As heavy with health longer, users you

but the members So member say that's that, good yes, I market seasons, fewer will as for move, retention. would

Michael Newshel

exchanges? about guidance about on How long-term the that? are you How thinking

Joseph Zubretsky

base. the business, think point. we get probably it take I say, We'll profit all look and to picture our networks. originally our it price forecasted. there commission product still can the the factors our XXXX and And through reforecasting look at had business. broker suffice at this margin pricing course, design think lower we We'll at of relationships We're will we go then, to structures the cycle. pool, and than long-term to although grow off albeit we longer of We'll look have in not a the for

Operator

The Steve Goldman Tanal from comes of next question Sachs.

Stephen Tanal

then and one ones couple Maybe on the of on guidance just marketplace. the a quick

included 'XX? that level prior a if guidance? understand, just developing similar to period is about first so, the of in think it I And half -- at wanted in year the to now the was our prior $X.XX development So year. is

Joseph Zubretsky

in Prior not XXXX our is year guidance. development included

Stephen Tanal

you a sort what just Perfect. would the be amount go of Kind of give And then of revenue what sense so of as like? planned? Can basis that lost the would a Texas STAR+PLUS. net award look if annualized the earnings of delta we an doesn't us on and have sense appeal,

Joseph Zubretsky

as Well, awards, went X, published, the be the would department effective September on contract they contract XXXX. new has the if right -- now, through

from million, in approximately anywhere and will Medicaid be earnings So therefore, loss. per contract, drag it of months revenue share the of estimate to this year. And $XXX we $X.XX four that's $X.XX

necessarily Now cost full three take by the just the quarter, to because I going that get multiply In impact fast out not you wouldn't fast one enough. you're year can't the enough. cost take to out

$XXX readjust this So cost to to the of the year, contract. of for a cost annual the the our million of $X.XX latter in and we half our fixed effect. revenue year some time drag to and But Medicaid the in structure estimate last year need base loss full the half through $X.XX

Stephen Tanal

on guide? just helpful. that's you on Marketplace. if embedded MLR the Wondering in Super Then could the the comment

Joseph Zubretsky

you sorry, question? can repeat the I'm

Stephen Tanal

for MLR guide? 'XX the embedded Marketplace that's in The

Joseph Zubretsky

XX%, Yes. XXXX. It's up approximately in XX% from

Operator

Justin Research. comes of question from next Lake The Wolfe

Justin Lake

could you sheet through walk for hoping your year. of was I the capital the end and balance projections

trying year the of the deals the expect the guidance? you Just in get share idea an the closed, to on did flexibility. Assuming capital that's repo end

Joseph Zubretsky

and just that moved as more up XXXX, were in -- we Sure, stock structure getting expensive. -- recap, our notes to capital the during getting were the more were that more retiring very were expensive price Justin. convertible that And

period we substantially the now a freed notes XX months, of up billion, are $X.X over So gone. right and

count. Now a on dilutive you have effect know, those your notes share as

X.X share the a our as count already year actually into notes on And next is so retiring program catalyst those million shares. dynamics, repurchase having repurchased share be will going

of company, at we All free $X billion excess that parent have the and said, cash which year-end it's means cash flow. being in still

have $XXX billion intend grow debt shares we also to million of dry We fund total the to way the acquisitions, a undrawn our to. and of powder of capacity for $X.X business to repurchase

Thomas Tran

to I thing generate Joe in dividend as attract as continue XXXX. The subsidiary continue add expect here, profit we would from that we said, to only is our to

us give also will do structure additional to dividend additional there other that things. flexibility So

Justin Lake

us tell pretty out That's helpful. share acquisitions? these what mean, Can easily. expect to spend figure on we I could you number repurchase the you

Joseph Zubretsky

Well, for contract $XX be the $XX million tip other. $XX million the we one, will for million. have under

could X $XXX So $XX future. for but at we top some And then our have up million in acquisitions. that share total of left current point million repurchase still the in authorization, the we

Justin Lake

a And of quick then just questions. numbers couple

the -- to but because lower once to us just debt dilutive less want $X.XX I this to give it commentary would an to you XXXX? so sure than costs, And year, would second, basis XX financed? you'd to to Joe, would then you be assumption investment full can taxes. on be First, -- year were it on you able we income it's shouldn't three for that some actually cut $X.XX that multiply saying make by that on follow-up be get get a the just be

Joseph Zubretsky

reduce I'll September answer of we lose structure. we're on $X.XX the second contracts question drag, first. Yes, looking the to that's would were at quickly cost how we still X. if our correct. But

-- so have less XXXX but it don't year income? a full And expecting I'm Xx be effect. investment number, than we Tom, would the I

Thomas Tran

Sure.

of if investment On the get it's and income. $XXX And million. other investment at you look we question love to XXXX, income,

that year through restructuring XXXX, would be due Typically, you quarter. some higher million be normal you say our see had a we to this fund $XX dropped yields went significantly to couple of to a past I over as see portfolio. that happened would of the than quarter because lower number FET should decreased Third about have times. for roughly

don't have front number the right in of So me. I

right give So me call. after with you up let you the I'll number. follow the exact just

Operator

Scott The question next from Stephens. of comes Fidel

Scott Fidel

how Kentucky, Louisiana. number more what year in states Texas, It transpired thematically. looking XXXX. think North terms on your a thoughts Joe, RFP Medicaid we of the just at little I in about more and just in of process maybe messy a pretty out Question, ask Carolina, And want to something just when a in was interested RFPs the broadly played

aggregate one idiosyncratic dynamics play any certainly takeaways you an we've one-off in I RFPs it out a sort there's around seen state. more process. bit from year at traditionally interested could we've what broader mean seen. the Medicaid difficult a look it just you of if than together, of was clearly, in of Just general when difficult, But each holistically, much in each RFP for these think

Joseph Zubretsky

a I how specific the terms a point. an always have mentioned reasonable have. We them than any We And view go intrigue still in game it unfolded. fair lot hard. protect sites you think that's of nonincumbents certainly we which We they ground all of a don't think think around incumbent, chance of works. new have turf your displacing ones the means you need and to the after differently

RFP and state political to know a landscape, we're that. in relationships really be two hold provider relationships, to has regulatory and dropped have You get and an before doing the year or the order to in a the

Nevada, the screens I all we we Indiana, year, Missouri, evaluate the ability can that while the we and develop noise put of to shots little pipeline Iowa, as this ones take reasonable might of a We'll the So win. Georgia, a think the our we'll structure, further friendliness we you them and the strength network. to of still And go environment, through the after regulatory think rate incumbency of Tennessee, believe have it, mentioned, those out. some idiosyncratic through,

a was don't I growth my though, bit state noisy. has term, long So aspects view wins as of suggest, of XXXX new changed the think you even

Scott Fidel

guidance then quick one Okay. question. And just

flow for Just operating XXXX? your good the cash on in thoughts range

Thomas Tran

lot. flow a really Well, fluctuate operating cash

of on depends payments. timing that government So

So not we in -- only zone. good

to in. flow that's cash be positive every operating see just to you're the quarter, forward. expect going But of and the fluctuations, business We nature we're going

Operator

Raskin question Research. Josh of from The Nephron next comes

Joshua Raskin

as on Quick guidance ones well.

amortization then almost the you're well. a share X% think buybacks like year? And expectations that reduction, we think I feels difference about next adjusted buybacks? reauthorization Just assumes EPS. Is that it of in as count boost it Any the of sort for seeing. share as

Joseph Zubretsky

end in question second expensive retiring and first you the which, up XXXX, over we In very as then your notes, convertible to diluted answer know, share the I'll hand Josh, it Tom. were count.

portion activity the the of reduction anticipate just of about repurchase count of any in share the spillover the $XXX in to convert program. the X/X It in not our hitting does rate remaining So all actual result the million run authorization. count top-up and reduction retirement effect a share as share full XXXX the XXXX, existing is is

Thomas Tran

Yes.

On intangible the amortization.

million table If release, we in drop you XXXX. for the XXXX. look a approximately disclosed going pretax is the number to in little earnings That $XX at it's bit

to So about full roughly about versus the this year, $X.XX but I expect $X.XX be roughly for to year per share $X.XX.

Joshua Raskin

last cost pressures high-cost then Perfect. the of no guys of quarter -- markets, and And Medicaid Okay. And around select of some your claims. some specific some you obviously, talked sign that. was in were, quarter? lingering you mention Or of what were as the guys look any press release. to Maybe back that drivers seeing? any No the potential what still in the

Joseph Zubretsky

the there. with of most was quarter, The and ago; the inclusion of It course, really we cost redetermination, were we shift. year behavioral aware due one to concerned some mix Ohio IMD due in acuity a to here and X and then, the in and that wasn't. note over pressure the carve-in third the second In benefit; facilities behavioral did things: of

forward. rate state, said participants part got other very in often we've work rate a increase advocacy going this Ohio increase important of we got and X/X/XX and very As is in the then that mid-XXXX for a and a with significant business, the rate

X/X/XXXX. the was on largely a concerned been rate are nice with, advocacy solved rate we we So increase that and efforts that think most has one with our and

Operator

of next Charles Cowen. Rhyee from The comes question

Charles Rhyee

back questions. the on quick One, marketplace. Just two going

fewer really to products growth? beyond pricing, members differentiate you're because If is of drive the anything pricing seeing there do to move that can you

Joseph Zubretsky

features, implemented they're call help many cycle. broker are benefit loyalty, we and commission dental, Yes. of design benefit membership. and There then, ancillary competitive in and And structure some your this broker your which -- we'll relationships of what for vision is we of move course,

of at looking So our cycle. in those all pricing XXXX factors we're

Charles Rhyee

then great. and -- Okay, back to And just going Kentucky.

us You bid you And mentioned that little on you a maybe for when RFP revised any at bid. changes you looked resubmitted? Were thoughts of you major give the changes your resubmitted the kind talk can revised of there there? as more sort kind you bit what of --

Joseph Zubretsky

went Sure. competitors could RFP RFP call the tried change all. did you as The The all only our the and I imagine and absorb competitors looked I'll better to I'm did, the And did questions you matters, on at them not shore of sure we which where said, response, your capabilities is to changes at would administrative up were two. really. we what did, and as I did. well. back But

Operator

Valiquette of next from Barclays. The comes Steven question

Steven Valiquette

STAR+PLUS questions memberships Marketplace. of to your maybe in particular that why soft I your the And soft? Florida that that just have have from Texas? outcome around there the in relative do then you thoughts, XXXX couple unfavorable have And award were Molina in your expectations. I membership been Is the you growth mean, any I you Florida around may a mentioned, and that. on have hurt follow-up initial a chance Marketplace guess, Texas the after for any So think may Texas first, headlines

Joseph Zubretsky

different are distinct and dynamics in Texas two the No. from each separate regulatory et regimes, and cetera. under quite businesses The other

each pricing. business the So It other. and do no, had competitive was Marketplace we do not Medicaid anything with think that to

It's can. You a blind the you do best bid.

is competitors where predict XX% our news Silver to as I our in in of hit good we I are of your think said, Bronze the and try going. did And You geographies geographies. XX%

the and point we'll profitable rate attrition year. places. price to will stick, do in better the And many forward. hit going We'll hopefully, membership, have try next we sticky So and

Steven Valiquette

you in are stability again Marketplace. mean just the you you and January mentioned renewals on mentioned the then members for MLR. that I And quickly XX% retained, month last or which visibility XXX,XXX of gave Okay.

discussion is the is for kind just you're that explore floors percent that members, because on it's mean, is is whole a little in to for less expected? this little a marketplace in mechanically book, that what up this you maybe hitting and XXXX new 'XX around is what than leading net than lower it of your come lower I margins. of not seeing? expected possible a members margins larger Or to retained MLR what making really Just

Joseph Zubretsky

state, minimum the one XXXX, New MLR we in In at Mexico. are

years XXXX XXXX year. And was X-year -- year. the as calculation. good poor X a was And just an know, we as now. exceptionally for been We XXXX year you it's have a announced, particularly The rolling the

the So pricing MLR not the to put the the but story not sorry, is on really on new additional of the the part will couple a the minimum It's overall of -- margin. that story, material larger in the product that volume really it's MLR. pressure states, equation

Operator

The from question JPMorgan. of Taylor next Gary comes

Gary Taylor

to questions my want next bit. I margins a been of Medicaid to little year go have just Most back for answered.

mentioned had points I Ohio. XX guidance. is think increases rate up your And you in some basis

your XXXX this So I've with question of what allowed better, in And guess that rule it's those. public getting to staying Trump now of are effect the has contemplated litigated, being and charge least I while worse, is, impact you what terms thoughts noted being on the take environment have in margins? terms for same? my general, whether redetermination at in any just enrollment

Joseph Zubretsky

on of impact in quarter-over-quarter half the public that Medicaid question, consideration. your the steady. Gary, redetermination, has held into And last pretty part membership on charge all sequential the certainly saw The membership XXXX. took stabilize year. the of We last in we the of much

the and And have of were going particularly so many moderated. Ohio, efforts Michigan on on, significant that redetermination

something the and Certainly, high only nationwide Texas Department our of it, subject Illinois of we're it. are we're in considered But our to XXX,XXX Security of it. really of affected in charges, is populations particular of that the states, public that by are we California, chilling but X and people concentrations certainly Homeland aware have estimates guidance. aware effect the

It did in well many rate We to of on and profit actually Ohio. geographies. rates our improvement. respect not was just With

pace rational. the all sound. just very And cost rate in geographies, I of actually low exceeded it some stable. really only not medical It's about is As our It's said, places. environment kept with in trend, it rate single-digit

margins helps in that So XXXX.

of integrity, business. to scores and And to profitability profit we Medicare improvement utilization initiatives. book risk both contribute continue the the away control, pound our at better also, Medicaid the Payment all of

we perhaps maintain this pretty we're in margin confident can position XXXX beyond. and So

Gary Taylor

One other year development. I if on could, question, just prior

flat $X.XX that roughly $X last almost into GAAP the maybe bit that or I think is lines heading of than that development few you us you're $X.XX I just could not largest just Your little to remind But been assuming guidance it's is know so year-over-year excess roughly what And business historically contributors were XXXX? on higher recur. of hurdling the think years. -- a earnings can does about $X we that

Thomas Tran

favorable the of Most XXXX were related Sure. throughout development that have business. we reported to Medicaid

Operator

of The next question of Kevin Bank comes Fischbeck America. from

Kevin Fischbeck

Great.

sounds versus membership minutes. Exchange expectations that back than to It just So the on the changes to delta I you're is rather margin. saying like your go really about a these for few want

line of you kind are less when expected pricing margin were saying last you business with the in more So the is year? you what or that

Joseph Zubretsky

Kevin. No,

range We you. be expected long-term -- gave closer the the margin more guidance that to we to

many But we're said the times, certainly conversation a without can't as statement. we about or have membership you margin So in lower. companion coming

grow off important to going is to be million earnings story of will the goal base and Our our profit growth the pretty growing $XX it pool forward.

into every We'll and relationships, with our try time. forces. profit We'll the over So single here our grow broker go goal cycle. the the we pricing year to pool competitive through is sort work to

whether to XXXX go back take there. range can the some will had as it cycle, get more. time the after-tax margin into But forecasted, Now get it we'll we X% we know pricing originally to we

Kevin Fischbeck

I not was think And said is MLR it minimum the the issue. big you a MLR? minimum

minimum margins in XXXX Just if markets what lower-margin issue So is the not that you growth drop, it's MLR it? caused a expected? being than in to big

Thomas Tran

lower really Yes, a does major not the factor XXXX, in the it's play factor, Kevin, you margin if in MLR will. but

X-year rolling year, As calculation. Joe your off the come of XXXX mentioned we bad off before,

I say, state expect minimum higher, have we New loss, just XXXX, and the higher would to than more Mexico. So rebate

Joseph Zubretsky

one, into the played margin base, factors significant. the leverage those of of the compression all is higher off year. for But revenue operating the Number

that. forget not Let's

Your variable cost base. in sales expense your is fixed cost certainly you're there, but leveraging

hit So hurt the leverage in the this really, us we line revenue of operating really fact in that business. didn't

Kevin Fischbeck

the how into there year? beneficial Or guess, tailwind people then next hit you a that Okay. price does fact the more already states, you give pricing might incremental minimum that differential? I in MLR be for switching that given rethinking are that you weren't now

Joseph Zubretsky

here consideration we months the we if Again, X in to average. going And up cycle, when we're against the go into we'll rolling XXXX a as and X-year be into forecast. with the you go it's to the state know, forecasting it have pricing in take into year that pricing. Well,

So a you it's Mexico. can't it's states said, it story get the Tom part it just But in all back significant than in We bump of a X But New part more as a not of story. year. the significant for year. It not takes into couple might time. again, this

Kevin Fischbeck

guess I And Okay. question. last

So just to tie just costs basically, as coming basically this are The in down. expected.

issue. expected. You anywhere in as here? We're a and not about membership a issue no continue growth There's them cost expect cost of talking come to pricing issue, MLR in really to

Joseph Zubretsky

I the try and It's price misforecasted balance of hit that's those exactly Yes, it. think factors year, to you anticipate three we it. for. and And didn't it we that this

Operator

next from Dave Windley The comes of Jefferies. question

David Windley

Listen have but I and covered, a couple.

does quickly. acquisitions, if execute playbook execution? make date, operational I'm execute able well remarks relatively organic you your Joe, acquisitions? that neutral close I how an the assume? quickly that they financially naturally some And mentioned execution prepared to playbook think opportunity, just operational business this think the how do of low and his -- earnings you X were I neutral you that gives better? in said How wondering Or On does your they to you can assume you Are the pretty they these that guess in be would by in quickly pretty would which that margin, year. the much Tom

Joseph Zubretsky

after just million bear XX it's mind, We believe getting our them, months can of that them. target these operating we run not operating to year whatever margins year of $XXX get to is. rate X hate And leverage, in X in properties is our infrastructure, two existing just it's These real. in with keep York, but talking I target about our folded into to particular, New margin. Ohio. of revenue same and to upstate operating basically the

the very off a it. we large more it Illinois in, We health have We We management. get fold no and plan. leverage need operating

to months it run of produces to of of leverage So you rate because margins the get, ownership. target operating actually we after and north our your get XX plan

David Windley

Got it.

your to acquiring a And you're more? is Okay. XXX where right approximate delta from them margins am points target I basis that good or

Joseph Zubretsky

are in particular These Yes. basically breakeven. two properties

David Windley

after for And as in quarter? reduction us was simplicity. breakeven. XXXX, fourth Okay, To the retirement average year share can in after count just question the ending the for opposed the fourth you the did of the then quarter, like in convert, count and buyback count for that the the the to give what share share you the

Thomas Tran

you table. Yes. what to is the The count ending be to lower we share guidance provided going than on

about the going bit So because quarters. to is number roughly less flow of as share of XXXX. share, it's buy a end the a number XX for throughout you than probably million little And

David Windley

those understand to, comments process within that the movers. think period you two shopping. is that Okay. your I same? open higher? retention is Do Great. going the you fewer movement question, thought to during you're that an I the and in also year And be Joe, different as translating I'm kind of about -- last the think talked And attrition. on had My interpreting about enrollment period like during

Joseph Zubretsky

point. Good

during retention was XX%. north open enrollment Our of

with members. the ended are beginning year now XXX,XXX membership. XXX,XXX our those of XX% the we year of inside So members

medical you year. the saw it this We cost. And can last in also see

can You expensive see conditions chronic drugs. use pharmacy, higher using of

are the So clearly members more chronic.

it in see risk the You scores.

enrollment lost past, You X% where And month. see that are month, X% the we'll open it in a in rate retention lose we retention the projecting to about rate. and therefore, the only X.X% a we've

David Windley

then but in guidance, to you your that I kind into baked make of just sure. And Okay. chronic that then higher presume mix consistent expected pricing you is with and MLR expectation? what

Joseph Zubretsky

them long as and produce and are risk for get Yes, scores, you higher paid right members get absolutely. And target higher profitability. acuity again, members, can fine the as acuity

and risk at have So better the yes, every get to we took we're price But scores, we that the as better day. book. into that consideration we getting and

Operator

question next comes Piper The from of Sarah Sandler. James

Sarah James

But guide. margins. and in average guidance midpoint and gave margin Medicare the the that both is XXXX peer They're well your at above still Medicaid long-term you net guidance well company I-Day. of below the of For long-term

for sustainable 'XX? guidance net heightened X.X% margins margin we thinking to Molina a you're about is long-term how that experiencing be Medicaid for are as in whole? I'm So the should And the still if and X.X% what Medicare wondering

Joseph Zubretsky

in based all after-tax, And a margins Medicaid to and projection X.X% environment. Well, on of rate X.X% that rational XXXX the believe Medicaid certainly, reasonable, for again, with a are sustainable. we actuarial

So those margins costs. to sustain able manage our that's ability and for the to being context medical

the our benefits LTSS On It's at managing is acuity high in It's side, are different. we're and burdened These with very Medicare book DSNP MMP. mind, Advantage. heavily Medicare bear members, those. and not traditional good

starkly business of the a characteristics $X.X billion larger book it's with players. different of So Medicare than many

these the traditional right in area. comparison. this comparison believe think we to the sustainable MA don't are is I margins But So

you're as has margin guidance cycle XXXX right. pricing determination the lower in that rebalance through long-term make Marketplace go to that our for operate long-term end yes, we caused It's still us really to guidance at Marketplace, stands And our on we'll the the XXXX And range. or whether of not. as

Sarah James

you're because compare the maybe MA right Got I your own it. about mix the if book, to And margins there. product

X.X% And HIF. X%, you also the above bit absorbing XX they're good mentioned then a running points guide. they're So the from basis long-term

points off, in? So you margin long-term book? how HIF add you profile as And do book we the about going MA XX falls can think your back that when about of basis forward, the think that

Joseph Zubretsky

the Well, goes clearly, year, a complete it's next for reversal. when away HIF

So on you're right that point.

are mid-XXs, on the book come going higher attract in, Typically, that produces and members As you business coming the seasons members MLR. as see it we mid-XXs. in more new grow aggressively, newer a to the

That in growing more would MLR, which the expect dynamic in put book start in pressure put this grow but be we in all if will as the would we the and turn contemplated So I on book aggressively, pricing will forecasting. that that this future. on pressure that's the margins,

Thomas Tran

less you be Tom. provide income question I from This investment with Justin before. on in million we than investment expect revenue want to data. a Lake There's the other XXXX. XXXX, about just $XX is to

Operator

from Bank. Deutsche of comes Hill next George question The

George Hill

I been tack think Marketplace my I'll the most about have on of just X more questions answered. environment.

guess. like inclusive wasn't you -- kind of what kind price book? Do went in And churn drive price the And I trying I your that like guess, think weren't guess, those of and looking numbers about If market you the share? to type that lot and what were you like, a X% I churn for, there's And business. that the recognize expected, of pieces decrease kind to that aggregate I'm sensitivity tell do to market? to grow of in of I churn looked churn of know able what do that decreases of of is economic out, get necessary book figure what does you kind you market, market guys you with across with what moving

Joseph Zubretsky

of Yes. members. lot thing I first that, are enrollment, is say There XX% would all, a open moving did of of an pieces. our we And retain one

have mind we or decreased dynamic nearly now and we moderated have $XX the at members. fully-subsidized So of this these Keep are in data is competitors bearing saw. least $X, the our own price a and sort believe $XX prices to But even stabilized differential. point. as Hard say what

in they same I acuity, left half are market Marketplace, highly dealt XX leaving members, to be Marketplace not that price About using the dynamic than at subsidized those services. think with. We're prior The in a That's some members members move. But niche. likely think, high as these full years. large. dynamics, we've million have might the have prices and the they're XX% So members. always And subsidy. of a We're They're for less serving for have I differential have moderated, our different wide. the a subsidy. of serving members

Operator

the conference. presentation. today's Thank well This attending concludes as you for as session our question-and-answer

now You lines. your disconnect may

Molina Healthcare (MOH) 11 Feb 202019 Q4 Earnings call transcript