MOH - Earnings call transcript Q4 2021 | Molina Healthcare, Inc.

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Operator

Good day and welcome to the Molina Healthcare Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joe Krocheski, SVP, Investor Relations. Please go ahead.

Joe Krocheski

to fourth welcome call. XXXX and morning Molina quarter Healthcare’s earnings Good

our was call, days. in me available and our yesterday Keim. CFO, announcing The access President replay are this numbers earnings website. will release. are and A be the quarter conclusion Shortly Joe release Joining Molina’s to our is on CEO, replay today market after available after the distributed the Relations Zubretsky and press fourth closed earnings of Investor a for XX the Mark

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

certain your of could differ call I the Listeners that prepared cautioned Zubretsky. with our our remarks, outlook. listeners Executive factors and over will call, in environment, During subject Form our Officer, XX-Q current call uncertainties advise but our regarding current completion as now forward-looking filed of in from our cause to will the Annual pandemic, listed materially filings we we risk as After and all the the Form the the factors term well are discussed our statements to statements, X-K our open review the our guidance, risk Joe? to Chief Joe SEC XX-K to turn and with up are embedded the the actual longer COVID-XX earnings questions. Report to take Form to, SEC. including certain risks not our power, limited forward-looking acquisitions, statements that our XXXX recent be our making results expectations. will We

Joe Zubretsky

Thank for and earnings morning. our and we reaffirmation good initiatives growth XXXX year will financial on guidance, Today, fourth results provide and the initial Joe full our updates profitable our strategy. sustaining and growth our you, quarter revenue and several topics; of XXXX,

increased $X.XX with through diluted our by the adjusted diluted The decreasing premium billion, of revenue for than quarter night, and of tax challenges. medical the management consolidated adjusted ratio The G&A me Last and $X.XX, net COVID with $X.X our after medical we XX% care XXX care income margin more managing fuel million prior which approximately in appropriate the while start ratio business making reported quarter pandemic-related year. while increase per by investments continued earnings managed fourth X.X%. We We is of demonstrates highlights. to to an consolidated cost over X.X% expected. points, adjusted the solid share net Let ratio, growth. $X.XX reflecting effect previously an of adjusted net per basis of discipline $XXX share income produced of XX.X% fourth performance

after adjusted X.X%, line long-term our our tax with COVID, squarely of effect target. margin net the Excluding was in

financial marks with pleased operating growth of growth. pandemic. solid sustained continue with executed well a the effects which performance in we successful We year and to another while a execution of focused driving of performance earnings the very our very while a global are navigating produce We The of our delivery fourth significant year, respect high solid to strategy. both the quarter yet end quarter profitable level margins, of revenue the and

higher X% of share $X.XX increase adjusted We full than XXXX of related effect of improved was the implying of a to initial reported Now, performance. we highlight, earnings guidance, absorbed to $XX.XX, cost $X year year underlying net turning diluted full initial year over $X.XX full per COVID, guidance. which

with was the our and this the X.X the special We to XXXX of This acquisition members, $XX.X full premium perspective, with our well-balanced target. enrollment initial a year-over-year. Medicaid successful suspension Notably, member three our net margin redetermination strong ended on organic XXXX in long-term is sustain and growth. the $X.X XX% tax premium a X.X%, XX% after membership guidance. growth across testament over we all premium From million consistent of revenue bolt above COVID, enhanced our of billion, was revenue to profitable transition year our by increase growth a an billion segments generated was and effect Excluding million increase of and period revenue marketplace. between year growth X.X

Turning full business, we of representing our premium, XX% and strong our business. continue performance execute stable now as flagship by premium company total line revenue Medicaid, year on earnings, of growth to the produced fundamentals. highlights underlying to

moderate Medicaid achieved a XX.X% MCR medical year, by strong was as ratio full business our consistent net the cost COVID effective long-term For target, medical management. with our offset care of

and particularly deliver while the portfolio continued The eliminated. and For was will right continue risk state and to quality Underlying environment growing stable well was all our medical performed some but already recaptured sharing care. well many our we have across to our stable population dimensions. outperformance of within controlled, corridors trend high been be high of contracts costs diversified year, acuity members,

result, members XX. This our both an in turn program. Medicare target D-SNP and clinically medical high very XX,XXX a line in each manage financially plays the our demonstrating MMP squarely members ability care our role and ratio of range acuity For important strong to was the business with XX.X%, line in and our year, of long-term the as over age portfolio, our Medicaid year

been XX.X%, medical the special our members the the high to XXX,XXX for Mark for year impact margin digit of Later, care selection the full This to our environmental the target. will marketplace allow will XX% reflects in significant of well geographies, marketplace told, largest accounting in related in year the long-term enrollment of enrollment a ratio marketplace effect above period. performance disappointment. attracted adverse All period, summarize have and month. special taken Our was mid-single related steps us net this restore cost cost the XXXX. the during which our to were member full product has target our factors, we Approximately our COVID

in guidance hear that marketplace XXXX planned decrease is in included related in will our reduction a and revenue You membership marketplace XX% a revenue.

forward. product strong very However, expect of our also a repositioning dimensions we successful was business of and a year XXXX this establish across to XXXX for accretive growth be earnings to going strategy. foundation this multiple profitable our significantly

to validating contract, new new well a our existing re-procured Medicaid were state our awarded contracts, as win retain in state new successfully ability and states. we Ohio business as Specifically, in contract Nevada,

Our at a M&A high engine level. continued to execute

in $X.X we During $X.X Affinity acquisition, approximately adding the we annual approximately revenue. revenue excellent annual over previously New growing closed Texas earnings year in provide margin, our for $X announced and impacts and managing representing revenue three of to pandemic. accretion. to acquisition, of full our business continue approximately ongoing premium and summary, which premium clinical York, Medicaid Cigna’s continued the In while members acquisitions year, through and AgeWell combined New the billion. XXX,XXX October, we billion premium two XXXX ability successfully And closed produce York-based In revenue, to results billion financial new demonstrate integrated the of successfully enterprise

headwinds on consistent and pleased any run the health growth contract regulatory guidance, closed acquisition acquisition. our emergency of growth third XXXX of suspension we beyond revenue will the marketplace are growth be full with annual year-over-year when of profitable the Medicaid success our further Redeterminations In effect basis and extension earnings resulting and revenue continued our planned provided the outlook decline rate with the premium billion, our well-balanced win, recent XXXX, with is before very in XX% premium footprint XXXX new revenue; of is of growth strategy. on a to the AgeWell call. organic April. in we current our approximately Incremental quarter and a the our public This guidance between This to initial reported beginning $XX.X in X% Turning project increase and the revenue. the

Moving X.X% year target. after margin, earnings no consistent our per is $XX long-term growth our or with initial guidance XX% XXXX full adjusted to less than tax year-over-year. a project earnings guidance, adjusted share We

per profile headwinds yet share earnings few providing it. operating of power XX% support embedded to the improvement investor line business, guidance growth. delivery features XXXX realization earnings and and profitable and close in organic our pure a our September the to I have at the XX% In before margin. of our not care embedded premium strategy. integration metrics reset XXXX have play our our driving Included conference. believe we provide XXXX earnings which matured, in earnings to in additional and shared with key acquisition that right we of regulatory members, remaining durable share marketplace to staying a earnings to has care strong still earnings is we remain frame aspire XXXX the guidance per lowest attractive growth, operating XXXX remain reflects strategy our cost the politically. XXXX to share and now of attractive team and with produce earnings growth concluding long-term core. our regulatory With and demographically, partially will effects characteristics, a growth execute sustainable of summary, power squarely growth. to $X of margin very quality still COVID provide fully government of the the to Our by high comments managed earnings few right pressure $X.XX growth We committed while targets We growth We future of to per offset headwinds. revenue and in We intend the

and and long-term XXXX XX% XX% us on confidence, premium us of strong growth Our achieve we average per to target over and guidance give to great revenue can XX% our finish XXXX growth share time. position XX% earnings our well to

years dedication, our conclude have want XX,XXX to XXXX financials skill, to my for to With achieve and for Mark service call to continued that, Molina some we achieved, the over express will form in nearly steadfast on the I everything will foundation I and and Mark? remarks, the the my additional come. we gratitude turn color to colleagues. Their management guidance. I As everything team and our

Mark Keim

full year result by strong This some an thoughts to Good strong XX.X% costs our segment. our we effect net on Thank In by then I details XXXX you, some of Joe. the performance. was MCR of reported sheet MCR, will results Beginning cost Medicare, offset quarter medical quarter fourth management. morning In a that included turn reported COVID, continuation additional fourth XX.X%. and Medicaid, the and guidance. balance from I of our morning, our with will everyone. discuss

our on XX.X%. the segments. a greater expected other than quarter, better the on During Omicron in offset MCR and effect emergence cost Medicare had variant adjustment our than marketplace, reported COVID quarter. the risk the of the Focused medical was net impact of population In management

While infection marketplace membership, of almost the MCR. our the grew population August, The declined of from fourth also peak in COVID contributed XX% results in Period Special the Enrollment of rates effect our Delta pressure continued quarter, the quarter. to net marketplace marketplace variant to the in elevated COVID to in which book the

to was our Turning full Medicare performance offset This Medicaid consolidated is strong of performance businesses results, target, XX.X%. year result year full long-term business. our the in modestly MCR our our as by above marketplace was and

Specifically, XX% to long-term target. XX.X%, our with was our MCR Medicaid in year XX% line full

target. with in long-term our Our management, strong both MCR offset of XX% Medicaid In net to COVID. and effect full year line the XX% Medicare cost Medicare, XX.X%, medical was

COVID year long-term is as basis points XXX approximately of above includes well full the Special Period. Enrollment XXX target, and points net well our of XX% of to as from of the effect approximately XX.X% marketplace Our impact the MCR basis XX%

dividends capital XX which We at million. quarter, our trailing Turning harvested our XXXX parent end is Debt brought months times end of now subsidiary million in of company cash year EBITDA. balance sheet, to remains the balance foundation our quarter XXX X.X $XXX the the strong. the

XX.X%. is ratio cap debt-to-total Our

reflect XX.X% and a fall net of on capacity basis, growth These ratios metrics company However, investment. the ample for these and to cash X.X conservative debt parent leverage position, respectively. and times net additional cash,

of During extend points, notes our XXXX senior debt notes This offering the refinancing by will debt and quarter, to lower due to XX we our redeemed interest using due expense the XXXX total proceeds our maturity XXXX. our basis towers XXXX. of November

More the final capital strategy. step our in importantly, marks transaction the restructuring

addressed and well have coupon We maturities eliminated rated term below costly bonds convertible at similarly the issuers. all near rates

quarter payable Turning represented in to days XX of claims continue approach an in reserves, consistent at sequentially. and quarters prior Days position. be medical reserve our remains our costs reserve with end we of days the the expense, confident to two increase of

We members. ended with Now guidance, Medicaid approximately X.X million beginning to XXXX with turning membership.

reflects the XXXX more than In membership our redeterminations, discussed, approximately we ended growth and which members. with drivers XXXX result in million of offset As will guidance members. expect resumption X.X XXXX Medicare, end we Medicaid of year XXX,XXX

total strong from enrollment, strategy In reflects membership with in We Medicare XXXX and ended XXXX. the limited this levels to of attrition approximately to approximately AEP XXX,XXX for begin business approximately members D-SNP acquisition. we we members, Based expect marketplace, and Accounting our our with we MAPD normal through our XXXX growth expect members. for XXX,XXX with margins end members. achieve of in to SEP Texas target year, a Medicaid end XXXX reflecting open XXXX year expect of This addition on Cigna XXX,XXX XXX,XXX members. the products and

revenue Turning now to premium guidance.

approximately billion growth. of or X% revenue premium expect $XX.X We

this Excluding our over XXXX. regulatory and XX% headwinds marketplace represents growth reset,

Specifically, our $X.X growth revenue year and Cigna October of includes XX, the X Medicaid on acquired following guidance Texas the which practice, which these full closed began January a offsetting restore our on approximately AgeWell revenue, marketplace and footprint, business, current approximately billion reflecting of $XXX Affinity drivers; premium lower closed pharmacy XXX the million are business, Medicaid to XXXX business, X. headwinds from resumption California Medicaid Partially a carve in revenue related our the which past Consistent of and Medicare billion, XXX growth; the benefits several growth the for January for organic excluded Nevada our to million contract, $X.X Medicaid X.X million drivers strategy contracts. premium target redeterminations, our with and this guidance. to out of is Ohio in and margins approximately from billion growth in XXXX of combined

We when $XXX this continue the to XXXX provide close closed. additional to year, and premium of in third will or in quarter more of expect this revenue million acquisition

$XX guidance. XX% of guidance reflecting no now We less Turning full per year initial to our XXXX. growth over earnings than introduced earnings adjusted XXXX share,

consisting reflects guidance approximately Complete $X.XX per EPS improvement share Texas margins Care for Medicare approximately attain net Magellan of we Passport COVID, $X approximately as Our per of the roughly of risk closed target and share Medicaid Cigna per share per earnings in and the in share, embedded per Affinity $X.XX $X.XX for adjustment, recently and acquisition. approximately realization $X.XX of lower XXXX effective share

not actions COVID. previously per of the of be This Our XXXX in share guidance also resumption includes to of accomplished the the net in marketplace pharmacy The will approximately restoration lower $X.XX by the is mid-single and digits already of margins net improvement organic through marketplace offset benefit carve effect margin XXXX captured discussed outs. and of impact earnings redeterminations growth taken.

a subsidies. product to have response impact. renewing medical we cost COVID enrollment the we higher anticipating our expect higher premium more trend, Specifically, to SEP on a and a moderate period, member tier We redesigned open percentage in the increase members. silver recently offerings, Based concluded price focusing of on to

on XXXX, and also mix revised revised a lower design of in distribution membership and eligibility expect the product strategies. our based rules enrollment special We

of also improve these many adjustment risk expect changes We our will results.

metrics. select to guidance on Moving P&L

acquired ratio in We marketplace MCR management businesses, expect our our progress actions is XXXX, medical to in in net be effect performance over scores. to legacy improvement XX%. and of due improvement approximately risk care medical improve continued XXXX COVID, lower primarily Medicare to our cost in The and

capabilities. count margin to our be our growth ratio just tax X.X%, rate is shares to of expect costs Adjusted to after at The year the is growth improve management, is flat in expected produced offset mix, discipline expected G&A expected in fixed with be continued will adjusted to investment our range. and XX.X%. Weighted tax expect we We of by consistent and long-term effective XX% reflects half targeted average million that remain over leveraged XX.X to year. This revenue the share our be earnings first full X.X%. cost from and

mentioned, target as the $X including Affinity, of which approximately share of comprising impact embedded in of embedded projected leaving earnings, approximately offset $X.XX and $X.XX of share, XXXX As a COVID $X.XX per a guidance realization our attain effect our continue $X in XXXX our to net a should pending the share earnings power partially of approximately includes and closed Medicaid by XXXX. per per roughly Medicaid on business margins dissipate share, we Texas acquisition of deals, Cigna’s share redetermination AgeWell, XXXX,

are power accounting our temporarily profile, an a As that post impact take remarks. drivers are reminder, we this Operator, suppressing of earnings our not Medicaid XXXX. rather to guidance, XXXX but prepared represent earnings questions. This our and the of current now redeterminations projection concludes embedded does ready of

Operator

[Operator go Kevin Fischbeck of ahead. from is please Instructions] question America, first Bank The of

Kevin Fischbeck

that mid volatile that to term. off this Great. think long is strategy you sustainably, Okay. of of years, is because can given hard comfortable year, a a ask from dropped to years, about over to the business kind just mid digits either are guidance. how back year that see grew business bit in I the Thanks. so for the you looking grow business of low you high Thanks. about over picture How wanted that XX% Can you six I you surprise this a in term. was last in base XX% to actually very that those that little by eight year, single guess, long by talk me what over exchange just about to sorry, and, a forecasting -- it’s or you this do

Joe Zubretsky

our leverage our Medicaid the Medicaid Joe. It and Medicaid pricing Kevin. changed. adjunct poor, the network footprint. is We our Medicaid. an The business leverage network, positioning really to strategic hasn’t we of This is working Sure, serve we

that the we of or XXX,XXX membership a are XX% year significant decision. the of you’re this grew metallic observing poor easier the from market to is adverse Enrollment added his and members; Period, distribution changed, working the element perspective, is Mark year structural to perspective, emphasize repositioning the is in this is was product, segment of much but tier selection. beyond only continue Really more from have are from a you’re really perspective, pricing financially from to approaching. Special hasn’t what seeing a a to the which allocation comments, subsidized. perspective, never target partially a a and our expected, to members strategy to a capital What price the as That what We manage. silver intended anybody fully of to So function that and tear not suggested

this will a margin. we we is digit with So, our and on add? to focused business we’re Mark, than let on up are to where more membership obtain float anything and membership mid-single margin down ability

Mark Keim

think right, I Joe. that’s

of you like about XXX,XXX If to have that which it much at in at Backing XXXX end that SEP, talked out space XXXX. none would almost a the about, year. Joe we this the have XXXX, more would XXXX, this a XXXX were year. like lot back pretty members time SEP us the for wasn’t looked looked lot if last look probably knew of

we I as this not right mentioned, about for XXXX the but margin portfolio ‘XX the before Joe will and SEP, are lot for think volume. so in in level a Here pricing like level, our that’s outlook entirely we an be with XXXX is

Kevin Fischbeck

is or I of market Molina’s want decision. increased a is is issue I sure pricing more just here. this about competition make company-specific This just strategy. a understand or You’re it talking not irrational to

Joe Zubretsky

we’re and at you is a if on zero from individuals Enrollment our then product a And That’s of income at buy added the look out who have members the year marketplace always us Medicaid Special XX,XXX members to Our to a to XXX,XXX the again, times roles capture XX,XXX to and marketplace on been of to and at higher coming strategy. focus premium. Medicaid footprint at strategy month while the just back Period, ago, a course to acuity.

X% It’s pandemic, allocation we of the revenue, the at function X% capital decision. is leveraging a Medicaid comfortable this think we’ve our to of repositioned function it’s appropriate now we this SEP, of profile roughly with a So are capital of and allocation our is risk footprint, and the this a as business business.

Kevin Fischbeck

helpful. That’s Thank you. Okay.

Operator

of BMO Please question Markets. next Matt from ahead. The go Capital is Borsch

Arianna Brady

give I how is timing have for This Thanks. process? around the Arianna and morning. could certainty Good much expected of on Brady the Matt if wondering on the you more and was visibility Borsch. Medicaid detail you redetermination

Joe Zubretsky

Sure.

approximately will July the having With until since been beginning reestablishing required, the to notification We XXX,XXX X.X and not to residual happen of re-determining, equates that that organically, of public members then will We emergency $X.X billion billion $X.X of partially XXXX. revenue numbers. estimate now and Mark, pandemic, April, to the periods extended that over health that billion by approximately are a we given that the you a decrease the through over grew believe revenue. members, billion want that go to given X. be XXXX first partially $X.X target will eligibility

Mark Keim

Yeah, build that. to just on

X.X that’s decline over a time of billion that’s but couple a going happen So to years. over

million my impacting million in mentioned XXX prepared XXX I in remarks, our ‘XX. outlook, and the additional XXXX So

So the was They’ll target impacts I keep off years of across the since members over and the that the come as time pandemic. two are health revenue we these the emergency, expectation public per our mentioned. gain half of start would

Arianna Brady

Thank Great. you.

Operator

of from Rich Sachs. Goldman Nathan question ahead. is Next Please go

Nathan Rich

questions. saw the for And Hi, to market. attrition of help think that’s in much maybe balanced ended we member may think margins contemplated selection the the mid-single to factors competitive trying were impacted kind the mentioned, for digit improvement as for where that by that’s the about to us adverse between up seen that XXXX, and about any dynamic marketplace margins about could that marketplace. during how margins XXXX XXXX. in get due in I’m the good decline XXX,XXX selection you wanted and to think period the and you on Mark, marketplace follow that have year in the you and the that I sign how Thanks up member attrition, maybe I guess I potentially just morning. to member SEP think, XXX,XXX adverse

Joe Zubretsky

that first should membership revenue silver than flow. Well, is by much question, what’s book we silver tier, less noted, revenue the design the by therefore interesting has tier is shifted product on down a the to down richer and because membership be although revenue and XX% and XX%, the over

is higher. PMPM the much silver on revenue So

leverage the produced produced respect With digit. very are digit margin, to a billion SEP -- margin positive. to a mid-single revenue low-single of in business the business is confident to the operating So on we pandemic, -- this This this a very due return and XXXX. loss on $X

to We mid-single digit to margin a that revenue of in gain billion on expect now return XXXX. $X

to a Mark, it to produced. elimination So, in the of the numbers? and due COVID that sort of pandemic, much it of seven SEP a selection to adverse increase the eight the the of point also margins, lot due

Mark Keim

Yeah, absolutely.

of look out, membership we’re So mix Why Last be about in of silver. down very as new portfolio to revenues ‘XX our point in our bronze XXXX. some a different XX% had if Joe you the our XX% versus XXXX, at Within XX%. down we versus are that’ll XX% you end as is year, bronze, membership, marketplace our mentioned, but down of ‘XX disconnect? in

the you and bronze silver, revenue quite are PMPMs XXX As in different XXX and bronze, average about the the PMPM, about across silver portfolio. in I’m on between sure they’re know

a just offsets of So those volume decline, the PMPMs on members. on that higher of kind lot

MLR. significant year marketplace tracking long-term year, for couple from this New things which of in our A is middle guidance we’re Year. pricing, we of Now year mentioned XX.X that on but as year a the XX, bridges obviously, looked took to last this two we the margins, into the MCR Joe smack last it’s

high I cost we points around think from remarks, COVID our COVID points SEP. across the basis and basis what year in carried SEP and at of we question a specific XXX Your prepared did us? mentioned XXX marketplace last level

I regulations think up together pure distribution we differently X% I’m you So puts headwind different have all the in are have COVID, the different, New our behaved SEP, that and in strategy we’ll this the people expecting in optimistic the not be will for that’s don’t New sign of exposure. more COVID a that place, market us Year. can year, a outlook Year two and those just put

get So Year. you the New into pricing X% the coming

talking You that SEP trend I’m trend remove a normalized of have very a for high assumption a there and you throw about. on could XX%, headwind that what XX% assumption to be clear COVID and path MLR

Nathan Rich

Thanks. detail. Appreciate the

Operator

Wells The next Baxter go of from is Please ahead. Fargo. Stephen question

Stephen Baxter

me the on earnings at seems I And Hi. kind power ballpark second, can talked should we on you’ve about first, business. guess, maybe three a just margins. earnings like, sounds about appreciated it. that’s were how roughly foregone trying like balance, COVID XXXX? back sounds just Thanks power. it will guess for $X.XX pressure you’re about quarter impacting more you’re half updated I I detail in all still of It there think, -- point. like view the be the the It actions just, at a getting the sort the target the But dollar required or is of we per exchange of excuse membership in scores, through you make you’re a sure dynamics aggregate to of that this same I on appreciate of the if that. you $X little think what’s provide as before, were saying could then think maybe businesses, follow

Thanks. to Just the you where is. opportunity understand feel still like trying

Joe Zubretsky

Stephen. Sure,

of with embedded the acquisition. about results top $XX.XX for it $X.XX the previously we’ve of we growing not acquisitive, it in something of real. account Clearly, which was disclosed, been a power. And significant the XXXX, our sitting earnings the impact for accretion earnings thought construct, mentioned was on so actual was power, we as reasonable also embedded pandemic, didn’t we And helpful is construct You because the abstract, to for. it’s account our to closed theoretical

an $X.XX top on $XX.XX embedded additional sitting our in in So of ‘XX was results earnings.

embedded harvested acquisitions, Texas our inside $X.XX of an are to to embedded have the of bit for continued earnings the which the top $XX net on little $XX well. a to earnings -- least $XX is as that of effect plan $X.XX will power, Also, additional as portfolio at We XXXX. the COVID, of AgeWell and Cigna suggested, sitting due and due Affinity add new you

of the things. attempt Embedded time. net and the So we here of care, a we been effect COVID, inside real to account then account harvested exists earnings effect due We plan, cost three estimate the pandemic, we the to account curtailment for COVID-related of it’s for And XXXX growth future have construct, the direct add corridor. for earnings effects and the the to is the some to still over utilization

the XXXX. suggested, corridors for XXXX. has to been that We of that significant three had were were reduced previously nine we significant As in financially them

So on Ohio, Washington, they in of into the Mississippi. ‘XX and state linger

We that’s too will But what’s XXXX PAHD confidence lingering [phonetic] for are effects eliminated. they corridor. have when the three COVID effective of in the the really $X every net be ends,

Stephen Baxter

color. for Thanks

Operator

Michael question is go The Morgan next ahead. from Hall of Please Stanley.

Michael Hall

ahead double Appreciate that you low percent lost, I color to just these Hey, were is earnings no margin, to pretty to were margin a exchanges, very you of now the X% at the long-term a thank negligible. large was on guys. margin, where at portfolio maybe ready so are impact And basically you’re growth right-sized, a lives to on so understand basically, even digit the to but fully confident charge negative clarify, looking year? you’re appears place X% wanted forward,

Joe Zubretsky

Yes.

at high answer a again, additional Just, ratio. enrollment is yes, color, the very membership loss special that some ran

volume XX% it and XXX% quarter of XXX% the at in fourth and the the fourth volume, year. the about the year; quarter for full the ran month fact, In XX% in MCR member just represented alone for about

significant that So a to contribution our issues year. was this

into completely the XXX pressure, we The that pre-SEP. over where next points it is have expect reverse year. it MCR should entire to been, blend business was it suggested, basis of positioned Mark As so year,

Medicaid highly As we footprint, our follow I members. said, we to sell subsidized

Now to silver that future. probably mid-single growth the the over confident digit than repositioned we’ve have here single mix to more this that solid a bronze, baseline, margins, digit and is we low foreseeable every mid

Operator

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

Josh Raskin

as ago, about successful and it’s some seems sort and more you’ve I though and I’m there extract got getting over it’s morning. next there than Thanks. it around more you cycle. corporate point Molina big question you anyone earnings is M&A. more scale to as the about opportunistic by years curious from Joe, Thanks. other flowing. picture we the think sort top where the mainly of got line and of the where just about, over a point improvement but life Good much in become few some long years, And talked term. feels I’ve maybe ebbing a at non-insurance-based turnaround, important? obviously And and their we’re look been are are membership, real where that since headwinds, margin plan to the And this not bigger that But a expected capabilities embedded value four driven value

Joe Zubretsky

demographics, would It allocation with yes, much to opportunities the a to certainly that in growing our the that, we we of in acuity We at around. actual rate XX% growth suggested by to look is do manage the high the taker see well, as this XX% in. to beyond in and enough if ability much so that risks, don’t other business to particularly all really we’re the continue XX% for of growth of beyond the growth providers. lanes part sustain companies, there of both didn’t never particularly a and aware it have to in use foreseeable capitated revenue growth, and take capability in to members, We planning look to membership capital. XXXX, our that we’re ballast aware far growth, runway well XX% process this integration of believe, the marketplace, And strategic don’t with swim acuity we’re residual segment, future, have well Medicaid, builds be EPS we vertical for Medicare, grow happen high is mechanism, need

strategic at allocate So certainly we not look vertically planning going with process, build, are capital we to capability integrate to providers. in always our

number do capital. much of don’t will high to we For much that the with beyond go the that that’s do But need lives a not there’s managed acuity us, we deployment think that. lives good particularly and runway of so

Josh Raskin

Thanks. helpful. Very

Operator

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

Justin Lake

exchanges. morning. here Good the Thanks. of couple on questions A

talked exchange First, to down. third membership quarter, being back Joe, you the going flat about to had

ballpark, could expected. be of decline the I pressure XX% that some us that flat potentially, right indicated certainly in you was So think more the here, any than but certainly the there fact is

What could changed this little something you so is there the just and between that what So significantly exchanges, something? I tell? pie did hoping more was today you you or happened us a structural quarter like or for turn? or commissions the bit tell that about third can the outlook you Is did cut

Joe Zubretsky

the markets Well, strategies product. executing be, place XXXX in just our they we’re were we were going as certainly of we enrollment. but Yes, is withdrew bronze had the the all for about third open down quarter, during to into membership in all that

take to were how then I XXX,XXX of with up is Now, was membership if product Would Molina-based going hoped to a was of end Sure silver estimation. a gate matter the just it but more members fine. silver? out those many have of up

set XX% quite take you where off the product different, that a it stayed know we most of to renewal have pull the are that circumstances off hard in the basically how members, three would was members But and Molina as membership the with so are silver. a of So in complete shelf, much news good shelf, the them them have, it product states is of except are do silver.

well where really the that portends So up we digit irrespective really, we’re ended margin. of in of up, for where good mid-single started we the ending production place and a

Justin Lake

couple I’d of a love your then And to things. get Great. on opinion

that about the you the with Special there’s like, fact view you to members think in over Enrollment lot those don’t think Medicaid terms if love what on You Period, from a the members? I’d have see of like about and the of XXXX, could talked we both do move sticky exchanges. Medicaid how to talk those Also, your lot Special a we redetermination, impact happens hear with that do right, those Period, in membership of margins of Enrollment membership. is,

different you can what two you give of Do going of enrollment happens think those grows think do your us or you versus you given shrinks? with marketplace kind overall, of it what XXXX factors swing So, terms do think things is specifically? in those to in all XXXX? And the view then maybe

Joe Zubretsky

it, Sure. anytime Well, that selection the you, available no need you adverse certainly. effects the buy and is were it When of to insurance surprise should significant. you be it,

So special during the question then becomes, what the happens was to the bronze. that period of enrollment cohort, a uptake lot

renew all. the they into product at was extent silver or bronze with us that So us Molina that was one no available, either affordable, product was to and renewed didn’t that

had other over didn’t is really member more still that’s if they’re scoring able now they’re the have in means fact that year we The be we’ll the still for acuity appropriately a fact now count the that important risk them. to high score of that risk we’ve the them for will revenue. change, fact more silver but acuity, capture The and means

follow and strategy, earn the some score looking always market are So it’s residual -- to term, fine, footprint. book the the members be the very and extend fact this My our comments not will this a at acuity, now into Medicaid to I’m has we is my XXXX renewed least been that of capture renewal to into product. of always but going is their visibility these have is a was a looking for for I to high risk into which subsidy number Long strategy word, Medicaid. the high, view we right silver is our able really

time probably members they’re level highly have and subsidized eligible income above part an marketplace just product. As for get Medicaid, jobs

always Our market. that strategy been target to has

has Now, the our been than but less on been that’s strategy. perfect that execution always

poor, going is flex this people population up down. Medicaid with with So and the the to working grow as

grow think I So that the a to and it’s mid yield that’s that it’s an number. But membership a to Medicaid move is Medicaid X%, flex And will as digit there, rate, of the that’s growth down and right confident growth and we way think up with think should of Day that’s said, up another rolls half X% that that. the the half probably as we’re we with business low-single product Investor -- I down.

Mark Keim

thing Mark. I only is is well. asked And think to you Justin, add I’d it The about redetermination as that

which has today. and is our out a those projections. we marketplace in some we’ve for our have is to and picked members about know projections the Medicare in redetermination, members case through margins through we you revenue some sell, meaningful pick in coming to the off to our to we upside upside some there meaningful the up we expect members don’t all product at here drive up products have As redetermination that have talked effort But the marketplace numbers cross what

Justin Lake

Right. Thanks.

Operator

of Rice Your next AJ Credit is ahead. go from Please question Suisse.

AJ Rice

Hi, everybody.

just business. me Let ask you Medicaid the about

your that’s about Kaiser RFP comment be? defending pipeline where the the to looks press that’s what be the you you Permanente. can state been with if lately going difference? give And So in are opportunities the Do your I if crease that don’t for where missed on that. a specifically, think on rating are, would composite expectations with perspective across maybe discussion requirements might you’ve this like, idea average comment I’ve California you nuances think ‘XX your wonder from And that there commented you’re process, RFP And I or in or the on of Medicaid. normal seeing

Joe Zubretsky

we plan of for about the ‘XX. more the be obviously revenue, and and I AJ, a of billion of It’s with revenue it’s team billion XXXX $XX the that produced couldn’t margin. first, mean, X% XX% result tax and thanks asking Medicaid in for going $XX total base Medicaid. north the nearly premium of operate after it’s now of to a revenue, pleased

a are be all The those the RFP RFP was are of a writing but we of defend well Mississippi middle yes, effort, the in to really dated, existing We believe business. confidence do to continue distributed great late retain contracts, run you proposal have suggested. Texas three, the and other as high we is California run first longer our yesterday. in California, new procurements and Most a will a of distributed team. just win And quarter have in in We as here the business sit we we today. three the have them. We

the of the incremental. work. rest awarded that’s respect Kaiser the some I it’s landscape, were think and managed not was us to pretty bid yes, As disappointed with though complex medical going care a to how you but event industry know, it’s it’s the it’s And no a contract that entire transformational state as region’s reshape

impact in of the will tooth plan regions have the most plans where health In major be share. fact, local

confidence confidence high high in in California, Texas. So,

respect you fact well, say for that we certainly acquisition STAR+PLUS five years. the that state state. population. to so the fact, as in new With that $XXX over know, process every to the to respect states, every pipeline to regard in the We holds four Cigna is with testimony chase there’s In went opportunity the high us won’t the regulatory billion it

selective and of are extremely can team, demonstrated our a where series We deal a proposal defending success business are Nevada and Kentucky have evaluating win a criteria. as But win Ohio think our writing the and team, contract. of very we great we to active, date with win to development

inorganically, the So robust. of outlook growth, is organically the revenue, for XX% at to business is performing well and extremely and and needs enhance it pretty both

AJ Rice

for on rate the on ‘XX thoughts Any average? Okay. increase

Joe Zubretsky

I think book. across across rate don’t the Medicaid the digit increase was specific we’ve a low-single in percentage given but

with costs view trend, pace normalized medical low-single actuarial digit. its of has with which generally comfortable our soundness. It are was also We kept

and rational, the medical the these based be baseline the as quickly actuarial rate environment originally as It’s on to the of is of principle corridors soundness return and to of happening seems a estimated. sound prospective stable. setting we So rates removal a

AJ Rice

a Thanks great. lot. Okay,

Operator

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

Steven Valiquette

I two on marketplace. morning, Good questions Thanks. Great. guess more interrelated

by You from know, XXX. in off membership first, just with XXX the drop to XX%

to it membership, conservative at ask think then the second that, year have particular? progression the you around with that And now around the then end this? first the expected of that’ll decline And interrelated, decline of in As is maybe just this just we all it’s any to XX% XX%. about cadence do kind out possible XXX revenue it sense quarterly question, where number, the is shake end quarter the the maybe, around in

bronze As color drives a think we that just for proxy get what trying shift numbers, about by how delta that? driven those just to delta silver increases, the premium is just two, more little of on from to that between much two versus the that a between

Joe Zubretsky

silver, to digit the significant Most a in in But did increase is that of attain go business. for rate those products PMPM differential revenues shift it highest single it and very the from is generate. we that a which bronze

where we we Annual of and XXX with Enrollment end, said period. whole I we we terms started XX,XXX start, where In [phonetic] and members, think after the

levels a pre-pandemic averaged of to X% projecting are attrition, X.X% which We month.

Now, by end. year we’ll than if that with doesn’t more happen, members XXX,XXX end up

members also Special during up Enrollment. We’re not many expecting to pick

As you know, at the been the Special Enrollment only are still to Period eligibility exists eligible. significantly Level Poverty reduced people income where than less but have XXX% requirements of Federal

– is end. we about at won’t that we end up we’re SEP is So, if where we year by in X% if X.X% confident pick attrition number members, year, will and XXX,XXX to a the

Steven Valiquette

all Got Okay, it. Thanks. right.

Operator

from Stephens. ahead. go of is Please question next The Scott Fidel

Scott Fidel.

morning. Thanks. Hi. Good

walk initial Thanks. us GR your and thoughts priorities [phonetic] the you your capital you Just give of M&A in capital interested how can notice? appointment on terms think at about XXXX us buybacks, just through etc. advance then And if opportunity, MA

Joe Zubretsky

looked XXX,XXX from growing is the of and which that marketing the XXX,XXX it Medicare grown will demonstrations, very the business, row advanced DSNP we like notice, won’t his surface. other year Sure. though it of the on fact grow, Obviously, its rest the second product half business were are with attractive pleased even our in is members a industry, in the likely that half And We’ve is grow. significant. to we

happy in of of increases, the appropriately, today. characteristics it territory digit have we’re positioned a give in room us lot we’re right So of straight two to the with rate new business years and rate to product benefits margins We the the and tax put think mid-single where after the really growth to win business.

foreseeable and our business grow Day. we really bullish the will said team have in mark? So Capital we’re on as that we our here deployment, that Medicare business great Investor future, over a

Mark Keim

good capital about feel really I the on powder. So our dry side,

a the year the cash balance off We’re starting parent. good at with

needed. can of is flow the me to a for if And Our year more see projected lot I the strong. you gives room raise cash leverage metrics

the on of I I’m the course, in never targets, for against. the the right about, when side, where deploy of M&A own might the I’m now; things all of commitment course commitments probably On just part some annual is good an of Joe their just and we move adamant capital but happen the means small amount to to though, we’re What sight some of year. year. of do. Number plays by when that’s, turns the of pipeline basis, like that amount M&A we during on year. what been There’s repurchases, that see small on number appropriate. out we’ll always a at to have the hopper line is is out and would any a though, big there hygiene hoping that have our Not which Part but function share what make how encouraged not of speed, they normal on, they do about seeing we by a

Operator

next Please of question Hill George is from Deutsche ahead. The Bank. go

George Hill

commentary And PBM morning, could taking just all? have know for in was the I out here, I on I question. meaningful anything talk has that covered you a and Hey, at notes. about the carve-ins. ask is about, thanks the hear going the prepared guys, called I guess impact my to you didn’t good and one lot so in didn’t guys been

does from how impact meaningful walk there mechanics, So the maybe PBM the statement? the Is it any just kind impact the of income through of maybe financials carve-ins?

Joe Zubretsky

the yes to California. carve referring PBM George, are, outs, in you think, I

George Hill

Carve in state. to out you for carve the guys,

Joe Zubretsky

Okay.

Okay. Thank you.

year half in is have And taken Medicaid average them Ohio. a are make a for revenues we for thing. outs, carve into forecast year out million there’s fee to generally sure $XXX These revenue the margin the due Sure, year that. with California of carry a same which and service full wanted our that implication environment talking the about we’re of the Just a obviously, decrement, to a margin. to

of $XXX revenue. the of the million average it loss of think Medicaid as So margins on

George Hill

Helpful. Thank you.

Operator

And Gary the Taylor Please comes go ahead. Cowen. question last from of

Gary Taylor

any just it refining you Do exchange a the of way have too sort early? on on Hi, good of that is morning. piece you what -- bit. any population, or on do or have but it like one the Most little non-SEC look other, questions retention my figures versus touched historically

Joe Zubretsky

about want to or make year many question. the you’re talking renew the sure throughout our members retention, you how prior Gary, from answer lapse you’re rate When your we talking about year? say

Gary Taylor

The latter.

Mark Keim

we our good pretty a say proportion renewal, with at Part have even of starting members this point, a last book, our this much membership is year Yeah, us. that do of better than rolled year. over meaningfully with number better smaller insight is the of

adjustment percentage much code know a and of higher thing those history obviously the that’s those right much on a risk year risk them because able that renewal members adjustment, the and better a So of we starting better, we with members good converts to position have this really into right year we members and and the out kept gate. being

adjustments. into that feel about good level it higher risk we renewals, and So translate does of

Gary Taylor

or I maybe mean of Medicare like was one recoup sounds kind to second another your you’re my related to has saying risk XXXX. COVID that that at remaining the recapture that’s thought point, $X, or it one Does on the that headwinds there’s dollar and of adjustment embedded the in then still it And $X.XX I in cited am going you’re [Multiple you for just Right. changed $X.XX pandemic, Speakers].

Mark Keim

Mark. It’s No.

we Your get so Medicare carrying during way out assessments historically, in-home to able quite $X the talk our we to score weren’t risk in the the $X. and about the used embedded were there we earnings. scoring We, of just risk good. memory is do That and had is pandemic we

late ‘XX. of we that XXXX, which of the we Now fourth window able part third bit from extended is the to of especially more news for back submissions able actually the that. to get CMS were into good in quarter, the were the little in meant realize quarter, half a

result, $X.XX As at fell the $X.XX year of end a realize guidance. and the in that dollar to will our that

getting talk used at $X.XX and we you in dollar in guidance third the you’re got about $X.XX quarters, it. fourth to other the So

Gary Taylor

it. Got

thank Okay, you.

Operator

today’s attending today’s and our and Thank for you concludes presentation. This answer question conference. session

You disconnect. may now

Molina Healthcare (MOH) 10 Feb 222021 Q4 Earnings call transcript