Molina Healthcare Announces Fourth Quarter and Year-End 2018 Results and Provides Fiscal Year 2019 Guidance

Montag, 11.02.19 22:15
Molina Healthcare Announces Fourth Quarter and Year-End 2018 Results and Provides Fiscal Year 2019 Guidance
Bildquelle: iStock by Getty Images
LONG BEACH, Calif. –

Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter and year ended December 31, 2018, and provided its guidance for fiscal year 2019.

“We have accomplished much over the last year as we executed the first phase of our margin recovery and sustainability plan,” said Joe Zubretsky, president and CEO. “Our full year results are a capstone to a very successful beginning of this margin turnaround and growth story.

“Our guidance for 2019 reflects continued strength as we sustain our margins while beginning to execute the growth phase of our strategy.”

Consolidated Results

Fourth Quarter of 2018 Compared With Third Quarter of 2018

Net income increased to $201 million, from $197 million in the third quarter of 2018. Net income per diluted share increased to $3.01, from $2.90 in the third quarter of 2018.

Premium revenue increased $101 million, or 2%, in the fourth quarter of 2018 compared with the third quarter of 2018. The sequential increase was mainly in Medicaid and was attributed to a lower non-run rate reduction in revenues for retroactive California Medicaid Expansion risk corridor adjustments and favorable rate changes in other programs that include retroactivity back to earlier periods in 2018.

Overall, the medical care ratio (“MCR”) decreased to 85.1%, from 87.4% in the third quarter of 2018. Excluding the $24 million retroactive California Medicaid Expansion risk corridor adjustment, related mainly to the 2017-18 state fiscal period, the MCR would have been 84.6% in the fourth quarter of 2018. Excluding the $57 million retroactive California Medicaid Expansion risk corridor adjustment related to the 2016-17 state fiscal period and a small benefit from the 2017 Marketplace cost sharing reduction (“CSR”), the MCR would have been 86.4% in the third quarter of 2018. The sequential improvement in the overall underlying MCR was due to decreases in the Medicaid, Medicare and Marketplace MCRs as follows:

  • The Medicaid MCR decreased slightly to 88.8%, from 90.5% in the third quarter of 2018. Excluding the $24 million retroactive California Medicaid Expansion risk corridor adjustment related mainly to the 2017-18 state fiscal period, the Medicaid MCR would have been 88.2% in the fourth quarter of 2018. Excluding the $57 million retroactive California Medicaid Expansion risk corridor adjustment related to the 2016-17 state fiscal period, the MCR would have been 89.0% in the third quarter of 2018. The sequential decrease was mainly due to improved performance in the Aged, Blind or Disabled (“ABD”) and Temporary Assistance for Needy Families (“TANF”) programs.
  • The Medicare MCR decreased to 80.8%, from 87.3% in the third quarter of 2018, mainly due to improved performance in our Medicare-Medicaid Integrated plans (“MMPs”).
  • The Marketplace MCR decreased to 62.9%, from 64.1% in the third quarter of 2018. Excluding the benefit of the 2017 CSR, the Marketplace MCR would have been 65.3% in the third quarter of 2018. The sequential decrease is mainly attributable to an increase in premium revenue.

The general and administrative (“G&A”) expense ratio increased to 7.2%, from 6.6% in the third quarter of 2018, due to seasonally higher spending, including sales and marketing initiatives related to the open enrollment period for the Marketplace and Medicare programs.

Fourth Quarter of 2018 Compared With Fourth Quarter of 2017

Net income for the fourth quarter of 2018 was $201 million, compared with a net loss of $262 million for the fourth quarter of 2017. Net income per diluted share was $3.01 for the fourth quarter of 2018 compared with a net loss per diluted share of $4.59 reported for the fourth quarter of 2017. In the fourth quarter of 2017, we recorded impairment losses and restructuring costs of $342 million, or $4.03 net loss per diluted share.

Capital Plan Progress

In the fourth quarter of 2018, we repaid $62 million aggregate principal amount of our 1.125% Notes and entered into privately negotiated termination agreements to terminate the respective portion of the related 1.125% Call Option and 1.125% Warrants. Year to date, we have reduced the principal amount of outstanding debt by $759 million.

Sale of Pathways Behavioral Health Subsidiary

We closed on the sale of the Pathways behavioral health subsidiary in October 2018. As a result of this transaction, we recorded a net loss of $32 million, or $0.48 per diluted share.

2019 Guidance

The following table summarizes 2019 Guidance (1):

 
Premium revenue ~$15.8B
Premium tax revenue ~$375M
Investment income and other revenue   ~$195M
Total revenue ~$16.3B
Medical care costs ~$13.7B
Medical care ratio (2) 86.7% - 87.0%
General and administrative expenses ~$1.2B
G&A ratio (3) 7.5% - 7.7%
Premium tax expenses ~$375M
Depreciation and amortization ~$85M
Interest expense and other expenses, net ~$100M
Income before income taxes $790M - $840M
Net income $600M - $630M
EBITDA (4)

$975M - $1,025M

Effective tax rate 24.5% - 25.0%
After-tax margin (3) 3.7% - 3.9%
Diluted weighted average shares ~64.7M
Net income per share $9.25 - $9.75
End-of-year by membership by government program:
Medicaid and Medicare 3.2M
Marketplace 250K - 275K
 

__________________

(1)

All amounts are estimates and do not include non-recurring significant items. Earnings per diluted share as shown is calculated on a GAAP basis; actual results may differ materially. See the Company’s risk factors as discussed in its 2018 Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.”

(2)

Medical care ratio represents medical care costs as a percentage of premium revenue.

(3)

G&A ratio represents general and administrative expenses as a percentage of total revenue. After-tax margin represents net income as a percentage of total revenue.

(4)

See reconciliation of non-GAAP financial measures at the end of this release.

 

Conference Call

Management will host a conference call and webcast to discuss Molina Healthcare’s fourth quarter and year-end 2018 results at 8:30 a.m. Eastern time on Tuesday, February 12, 2019. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 2698825. A telephonic replay of the conference call will be available through Tuesday, February 19, 2019, by dialing (877) 344-7529 and entering confirmation number 10127491. A live audio broadcast of this conference call will be available on Molina Healthcare’s website, molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 3.8 million members as of December 31, 2018. For more information about Molina Healthcare, please visit molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This earnings release contains “forward-looking statements” regarding the Company’s 2018 revised guidance, as well as its plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the following:

  • the numerous political, judicial and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare,” including the ultimate outcome on appeal of the Texas et al. v. U.S. et al. matter;
  • the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk adjustment requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, and the adequacy of agreed rates;
  • subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment;
  • effective management of the Company’s medical costs;
  • the Company’s ability to predict with a reasonable degree of accuracy utilization rates, including utilization rates associated with seasonal flu patterns or other newly emergent diseases;
  • significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
  • the full reimbursement of the ACA health insurer fee, or HIF;
  • the success of the Company’s efforts to retain existing or awarded government contracts, including the success of any requests for proposal protest filings or defenses;
  • the success of the Company’s profit improvement and maintenance initiatives, including the timing and amounts of the benefits realized, and administrative and medical cost savings achieved;
  • the Company’s ability to manage its operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of its care management initiatives;
  • the Company’s receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
  • the Company’s ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
  • the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit sharing arrangements, and risk adjustment provisions and requirements;
  • the Company’s estimates of amounts owed for such cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions;
  • the Medicaid expansion medical cost corridor, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
  • the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and the Company’s ability to recognize revenue amounts associated therewith;
  • the Company’s ability to successfully recognize the intended cost savings and other intended benefits of outsourcing certain services and functions to third parties, and its ability to manage the risk that such third parties may not perform contracted functions and services in a timely, satisfactory and compliant manner;
  • cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
  • the success of the Company’s health plan in Puerto Rico, including the resolution of the debt crisis and the effect of the PROMESA law, and the impact of any future significant weather events;
  • the success and renewal of the Company’s duals demonstration programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas;
  • the accurate estimation of incurred but not reported or paid medical costs across the Company’s health plans;
  • efforts by states to recoup previously paid and recognized premium amounts;
  • complications, member confusion, eligibility redeterminations, or enrollment backlogs related to the annual renewal of Medicaid coverage;
  • government audits, reviews, comment letters, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
  • changes with respect to the Company’s provider contracts and the loss of providers;
  • approval by state regulators of dividends and distributions by the Company’s health plan subsidiaries;
  • changes in funding under the Company’s contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
  • high dollar claims related to catastrophic illness;
  • the favorable resolution of litigation, arbitration, or administrative proceedings, including litigation involving the ACA to which we ourselves are not a direct party;
  • the relatively small number of states in which we operate health plans, including the greater scale and revenues of the Company’s California, Ohio, Texas, and Washington health plans;
  • the availability of adequate financing on acceptable terms to fund and capitalize the Company’s expansion and growth, repay the Company’s outstanding indebtedness at maturity and meet its liquidity needs, including the interest expense and other costs associated with such financing;
  • the Company’s failure to comply with the financial or other covenants in its credit agreement or the indentures governing its outstanding notes;
  • the sufficiency of the Company’s funds on hand to pay the amounts due upon conversion or maturity of its outstanding notes;
  • the failure of a state in which we operate to renew its federal Medicaid waiver;
  • the loss of services of a key executive;
  • changes generally affecting the managed care industry;
  • increases in government surcharges, taxes, and assessments;
  • newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
  • the unexpected loss of the leadership of one or more of our senior executives;
  • increasing competition and consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at sec.gov. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by its forward-looking statements will in fact occur, and the Company cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of February 11, 2019, and the Company disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.

   
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 

Three Months Ended

December 31,

Year Ended

December 31,

2018   2017 2018   2017

(In millions, except per-share amounts)

Revenue:
Premium revenue $ 4,438 $ 4,689 $ 17,612 $ 18,854
Service revenue 16 131 407 521
Premium tax revenue 97 107 417 438
Health insurer fees reimbursed 81 329
Investment income and other revenue 32   22   125   70  
Total revenue 4,664   4,949   18,890   19,883  
Operating expenses:
Medical care costs 3,775 4,251 15,137 17,073
Cost of service revenue 15 123 364 492
General and administrative expenses 335 367 1,333 1,594
Premium tax expenses 97 107 417 438
Health insurer fees 87 348
Depreciation and amortization 23 28 99 137
Restructuring and separation costs 8 73 46 234
Impairment losses   269     470  

Total operating expenses

4,340   5,218   17,744   20,438  
Loss on sales of subsidiaries, net of gain (52 )   (15 )  
Operating income (loss) 272   (269 ) 1,131   (555 )
Other expenses, net:
Interest expense 24 33 115 118

Other (income) expenses, net

(8 ) 14   17   (61 )
Total other expenses, net 16   47   132   57  
Income (loss) before income tax expense (benefit) 256 (316 ) 999 (612 )
Income tax expense (benefit) 55   (54 ) 292   (100 )
Net income (loss) $ 201   $ (262 ) $ 707   $ (512 )
 
Net income (loss) per diluted share $ 3.01   $ (4.59 ) $ 10.61   $ (9.07 )
 
Diluted weighted average shares outstanding 66.6   57.1   66.6   56.4  
 
Operating Statistics:
Medical care ratio 85.1 % 90.7 % 85.9 % 90.6 %
G&A ratio 7.2 % 7.4 % 7.1 % 8.0 %
Premium tax ratio 2.2 % 2.2 % 2.3 % 2.3 %
Effective income tax expense (benefit) rate 21.4 % (17.2 )% 29.2 % (16.4 )%
After-tax margin 4.3 % (5.3 )% 3.7 % (2.6 )%
 
 
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
December 31,
2018   2017
(In millions,
except share data)
ASSETS
Current assets:
Cash and cash equivalents $ 2,826 $ 3,186
Investments 1,681 2,524
Restricted investments 169

News und Analysen

Altmaier will bessere Wettbewerbsbedingungen in China

PEKING (dpa-AFX) - Bundeswirtschaftsminister Peter Altmaier (CDU) will sich in China für bessere Wettbewerbsbedingungen einsetzen. Zum Auftakt eines dreitägigen China-Besuches traf Altmaier am ...weiterlesen

Seite: 1 | 2 | 3 | 4 | 5 | 6 | ... | 11423