0001179929-19-000027.txt : 20190211 0001179929-19-000027.hdr.sgml : 20190211 20190211161923 ACCESSION NUMBER: 0001179929-19-000027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20190211 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190211 DATE AS OF CHANGE: 20190211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOLINA HEALTHCARE INC CENTRAL INDEX KEY: 0001179929 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 134204626 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31719 FILM NUMBER: 19585645 BUSINESS ADDRESS: STREET 1: 200 OCEANGATE, SUITE 100 CITY: LONG BEACH STATE: CA ZIP: 90802 BUSINESS PHONE: 5624353666 MAIL ADDRESS: STREET 1: 200 OCEANGATE, SUITE 100 CITY: LONG BEACH STATE: CA ZIP: 90802 8-K 1 moh-12312018x8k.htm 8-K Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
______________
Current Report
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 11, 2019 (February 11, 2019)
______________
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-31719
13-4204626
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
______________
200 Oceangate, Suite 100, Long Beach, California 90802
(Address of principal executive offices)
Registrant’s telephone number, including area code: (562) 435-3666

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
 
¨
 





Item 2.02.    Results of Operations and Financial Condition.
On February 11, 2019, Molina Healthcare, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2018, and the Company’s fiscal year 2019 guidance. The Company has also posted a slide presentation entitled “2018 4Q Earnings Call Supplement,” dated February 11, 2019, on the Company’s website, www.molinahealthcare.com. The full text of the press release and the slide presentation are included as Exhibit 99.1 and Exhibit 99.2, respectively, to this report. The information contained in the website cited in the press release is not part of this report.
Note: The information in this Form 8-K and the exhibits attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01.    Financial Statements and Exhibits.
(d)     Exhibits:
Exhibit No.
Description
99.1
Press release of Molina Healthcare, Inc., issued February 11, 2019, as to financial results for the fourth quarter and the year ended December 31, 2018, and the Company’s fiscal year 2019 guidance.
99.2
Slide Presentation entitled “2018 4Q Earnings Call Supplement,” dated February 11, 2019.







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
MOLINA HEALTHCARE, INC.
 
 
 
Date:
February 11, 2019
By:
/s/ Jeff D. Barlow
 
 
 
Jeff D. Barlow
 
 
 
Chief Legal Officer and Secretary







EXHIBIT INDEX




EX-99.1 2 moh-12312018xer.htm EXHIBIT 99.1 Exhibit

MOH Announces Fourth Quarter and Year-End 2018 Results
Page 1
February 11, 2019

molinaa03a01a01a16.jpg


News Release

Contact:
Ryan Kubota
Investor Relations
562-435-3666, ext. 119057

MOLINA HEALTHCARE ANNOUNCES FOURTH QUARTER AND YEAR-END 2018 RESULTS AND
PROVIDES FISCAL YEAR 2019 GUIDANCE
Net income per diluted share on a GAAP basis was $3.01 in the fourth quarter of 2018 and $10.61 for the year ended December 31, 2018
Fourth quarter 2018 results include a net charge of $0.81 per diluted share, and 2018 results include a net charge of $0.22 per diluted share, for non-run-rate items
The overall medical care ratio in the fourth quarter improved to 84.6% from 86.4%, sequentially, when excluding non-run rate items
After-tax margin was 4.3% in the fourth quarter and 3.7% for the full-year 2018
The Company issued 2019 guidance of $9.25 - $9.75 net income per diluted share on a GAAP basis, which does not include any prior-period reserve development
Long Beach, California (February 11, 2019) - 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:

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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 2
February 11, 2019

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.


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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 3
February 11, 2019

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.

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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 4
February 11, 2019

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;

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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 5
February 11, 2019

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

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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 6
February 11, 2019

disclaims any obligation to update any forward-looking statements to conform the statement to actual results or changes in its expectations.

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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 7
February 11, 2019

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
)%



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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 8
February 11, 2019

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

Receivables
1,330

 
871

Prepaid expenses and other current assets
149

 
239

Derivative asset
476

 
522

Total current assets
6,462

 
7,511

Property, equipment, and capitalized software, net
241

 
342

Goodwill and intangible assets, net
190

 
255

Restricted investments
120

 
119

Deferred income taxes
117

 
103

Other assets
24

 
141

 
$
7,154

 
$
8,471

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
1,961

 
$
2,192

Amounts due government agencies
967

 
1,542

Accounts payable and accrued liabilities
390

 
366

Deferred revenue
211

 
282

Current portion of long-term debt
241

 
653

Derivative liability
476

 
522

Total current liabilities
4,246

 
5,557

Long-term debt
1,020

 
1,318

Lease financing obligations
197

 
198

Other long-term liabilities
44

 
61

Total liabilities
5,507

 
7,134

Stockholders’ equity:
 
 
 
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 62 million shares at December 31, 2018 and 60 million shares at December 31, 2017

 

Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding

 

Additional paid-in capital
643

 
1,044

Accumulated other comprehensive loss
(8
)
 
(5
)
Retained earnings
1,012

 
298

Total stockholders’ equity
1,647

 
1,337

 
$
7,154

 
$
8,471


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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 9
February 11, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
 
(In millions)
Operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
201

 
$
(262
)
 
$
707

 
$
(512
)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
23

 
39

 
127

 
178

Deferred income taxes
26

 
(26
)
 
(6
)
 
(94
)
Share-based compensation
7

 
8

 
27

 
46

Non-cash restructuring costs

 
11

 
17

 
60

Amortization of convertible senior notes and lease financing obligations
4

 
8

 
22

 
32

Loss on sales of subsidiaries, net of gain
52

 

 
15

 

Loss on debt extinguishment
(3
)
 
14

 
22

 
14

Impairment losses

 
269

 

 
470

Other, net
(2
)
 
8

 
4

 
21

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Receivables
(23
)
 
131

 
(530
)
 
103

Prepaid expenses and other current assets
123

 
(3
)
 
6

 
(56
)
Medical claims and benefits payable
(82
)
 
(286
)
 
(226
)
 
263

Amounts due government agencies
(63
)
 
219

 
(574
)
 
341

Accounts payable and accrued liabilities
(353
)
 
(102
)
 
45

 
(12
)
Deferred revenue
34

 
(187
)
 
(21
)
 
(34
)
Income taxes
(67
)
 
6

 
51

 
(16
)
Net cash (used in) provided by operating activities
(123
)
 
(153
)
 
(314
)
 
804

Investing activities:
 
 
 
 
 
 
 
Purchases of investments
(242
)
 
(803
)
 
(1,444
)
 
(2,697
)
Proceeds from sales and maturities of investments
375

 
223

 
2,445

 
1,759

Net cash received from sales of subsidiaries
190

 

 
190

 

Purchases of property, equipment, and capitalized software
(6
)
 
(1
)
 
(30
)
 
(86
)
Other, net
5

 
(5
)
 
(18
)
 
(38
)
Net cash provided by (used in) investing activities
322

 
(586
)
 
1,143

 
(1,062
)
Financing activities:
 
 
 
 
 
 
 
Repayment of credit facility

 

 
(300
)
 

Repayment of principal amount of 1.125% Convertible Notes
(62
)
 

 
(298
)
 

Cash paid for partial settlement of 1.125% Conversion Option
(146
)
 

 
(623
)
 

Cash received for partial termination of 1.125% Call Option
146

 

 
623

 

Cash paid for partial termination of 1.125% Warrants
(130
)
 

 
(549
)
 

Repayment of principal amount of 1.625% Convertible Notes

 

 
(64
)
 

Proceeds from senior notes offerings, net of issuance costs

 

 

 
325

Proceeds from borrowings under credit facility

 

 

 
300

Other, net
11

 
4

 
18

 
11

Net cash (used in) provided by financing activities
(181
)
 
4

 
(1,193
)
 
636

Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents
18

 
(735
)
 
(364
)
 
378

Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
2,908

 
4,025

 
3,290

 
2,912

Cash, cash equivalents, and restricted cash and cash equivalents at end of period
$
2,926

 
$
3,290

 
$
2,926

 
$
3,290


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MOH Announces Fourth Quarter and Year-End 2018 Results
Page 10
February 11, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP
 
As of December 31,
 
2018
 
2017
 
2016
Ending Membership by Government Program:
 
 
 
 
 
Temporary Assistance for Needy Families (“TANF”) and Children’s Health Insurance Program (“CHIP”)
2,295,000

 
2,457,000

 
2,536,000

Medicaid Expansion
660,000

 
668,000

 
673,000

Aged, Blind or Disabled (“ABD”)
406,000

 
412,000

 
396,000

Total Medicaid
3,361,000

 
3,537,000

 
3,605,000

Medicare-Medicaid Plan (“MMP”) - Integrated
54,000

 
57,000

 
51,000

Medicare Special Needs Plans
44,000

 
44,000

 
45,000

Total Medicare
98,000

 
101,000

 
96,000

Total Medicaid and Medicare
3,459,000

 
3,638,000

 
3,701,000

Marketplace
362,000

 
815,000

 
526,000

 
3,821,000

 
4,453,000

 
4,227,000

 
 
 
 
 
 
Ending Membership by Health Plan:
 
 
 
 
 
California
608,000

 
746,000

 
683,000

Florida
313,000

 
625,000

 
553,000

Illinois
224,000

 
165,000

 
195,000

Michigan
383,000

 
398,000

 
391,000

New Mexico
222,000

 
253,000

 
254,000

Ohio
302,000

 
327,000

 
332,000

Puerto Rico
252,000

 
314,000

 
330,000

South Carolina
120,000

 
116,000

 
109,000

Texas
423,000

 
430,000

 
337,000

Washington
781,000

 
777,000

 
736,000

Other (1)
193,000

 
302,000

 
307,000

 
3,821,000

 
4,453,000

 
4,227,000

__________________
(1)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.






-MORE-


MOH Announces Fourth Quarter and Year-End 2018 Results
Page 11
February 11, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
BY GOVERNMENT PROGRAM
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended December 31, 2018
 
Member
Months (1)
 
Premium Revenue
 
Medical Care Costs
 
MCR (2)
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
7.1

 
$
1,363

 
$
189.86

 
$
1,203

 
$
167.61

 
88.3
%
 
$
160

Medicaid Expansion
2.0

 
700

 
349.05

 
630

 
314.34

 
90.1

 
70

ABD
1.3

 
1,367

 
1,094.14

 
1,213

 
970.49

 
88.7

 
154

Total Medicaid
10.4

 
3,430

 
328.79

 
3,046

 
292.00

 
88.8

 
384

MMP
0.2

 
366

 
2,263.41

 
300

 
1,855.34

 
82.0

 
66

Medicare
0.1

 
161

 
1,206.96

 
126

 
944.65

 
78.3

 
35

Total Medicare
0.3

 
527

 
1,784.58

 
426

 
1,442.57

 
80.8

 
101

Total Medicaid and Medicare
10.7

 
3,957

 
368.93

 
3,472

 
323.72

 
87.7

 
485

Marketplace
1.1

 
481

 
437.79

 
303

 
275.56

 
62.9

 
178

 
11.8

 
$
4,438

 
$
375.33

 
$
3,775

 
$
319.24

 
85.1
%
 
$
663


 
Three Months Ended December 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
7.4

 
$
1,369

 
$
183.95

 
$
1,250

 
$
168.00

 
91.3
%
 
$
119

Medicaid Expansion
2.0

 
774

 
386.22

 
629

 
313.89

 
81.3

 
145

ABD
1.3

 
1,366

 
1,100.22

 
1,229

 
989.56

 
89.9

 
137

Total Medicaid
10.7

 
3,509

 
328.28

 
3,108

 
290.76

 
88.6

 
401

MMP
0.2

 
363

 
2,142.07

 
341

 
2,006.07

 
93.7

 
22

Medicare
0.1

 
152

 
1,155.15

 
124

 
948.16

 
82.1

 
28

Total Medicare
0.3

 
515

 
1,710.94

 
465

 
1,543.93

 
90.2

 
50

Total Medicaid and Medicare
11.0

 
4,024

 
366.18

 
3,573

 
325.12

 
88.8

 
451

Marketplace
2.4

 
665

 
268.39

 
678

 
273.92

 
102.1

 
(13
)
 
13.4

 
$
4,689

 
$
348.20

 
$
4,251

 
$
315.70

 
90.7
%
 
$
438

__________________
(1)
A member month is defined as the aggregate of each month’s ending membership for the period presented.
(2)
The MCR represents medical costs as a percentage of premium revenue.


-MORE-


MOH Announces Fourth Quarter and Year-End 2018 Results
Page 12
February 11, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
BY GOVERNMENT PROGRAM
(In millions, except percentages and per-member per-month amounts)
 
Year Ended December 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
29.4

 
$
5,508

 
$
187.04

 
$
4,908

 
$
166.66

 
89.1
%
 
$
600

Medicaid Expansion
8.1

 
2,884

 
356.81

 
2,587

 
320.11

 
89.7

 
297

ABD
5.0

 
5,231

 
1,049.26

 
4,763

 
955.22

 
91.0

 
468

Total Medicaid
42.5

 
13,623

 
320.43

 
12,258

 
288.31

 
90.0

 
1,365

MMP
0.7

 
1,443

 
2,192.58

 
1,241

 
1,885.59

 
86.0

 
202

Medicare
0.5

 
631

 
1,180.46

 
511

 
955.81

 
81.0

 
120

Total Medicare
1.2

 
2,074

 
1,738.85

 
1,752

 
1,468.77

 
84.5

 
322

Total Medicaid and Medicare
43.7

 
15,697

 
359.14

 
14,010

 
320.53

 
89.2

 
1,687

Marketplace
4.9

 
1,915

 
392.97

 
1,127

 
231.33

 
58.9

 
788

 
48.6

 
$
17,612

 
$
362.54

 
$
15,137

 
$
311.59

 
85.9
%
 
$
2,475


 
Year Ended December 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
TANF and CHIP
30.2

 
$
5,554

 
$
183.75

 
$
5,111

 
$
169.09

 
92.0
%
 
$
443

Medicaid Expansion
8.1

 
3,150

 
388.42

 
2,674

 
329.73

 
84.9

 
476

ABD
4.9

 
5,135

 
1,050.41

 
4,863

 
994.80

 
94.7

 
272

Total Medicaid
43.2

 
13,839

 
320.16

 
12,648

 
292.61

 
91.4

 
1,191

MMP
0.7

 
1,446

 
2,177.72

 
1,317

 
1,982.36

 
91.0

 
129

Medicare
0.5

 
601

 
1,143.63

 
493

 
939.67

 
82.2

 
108

Total Medicare
1.2

 
2,047

 
1,722.47

 
1,810

 
1,523.15

 
88.4

 
237

Total Medicaid and Medicare
44.4

 
15,886

 
357.68

 
14,458

 
325.53

 
91.0

 
1,428

Marketplace
10.8

 
2,968

 
274.47

 
2,615

 
241.84

 
88.1

 
353

 
55.2

 
$
18,854

 
$
341.39

 
$
17,073

 
$
309.14

 
90.6
%
 
$
1,781




-MORE-


MOH Announces Fourth Quarter and Year-End 2018 Results
Page 13
February 11, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
MEDICAID AND MEDICARE BY HEALTH PLAN
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended December 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
485

 
$
282.83

 
$
425

 
$
247.56

 
87.5
%
 
$
60

Florida
1.0

 
370

 
376.80

 
345

 
351.20

 
93.2

 
25

Illinois
0.7

 
242

 
361.29

 
196

 
291.63

 
80.7

 
46

Michigan
1.1

 
389

 
348.47

 
320

 
287.33

 
82.5

 
69

New Mexico
0.6

 
305

 
489.86

 
265

 
425.85

 
86.9

 
40

Ohio
0.9

 
607

 
662.51

 
527

 
575.69

 
86.9

 
80

Puerto Rico
0.8

 
147

 
173.81

 
135

 
158.97

 
91.5

 
12

South Carolina
0.3

 
126

 
352.67

 
106

 
299.17

 
84.8

 
20

Texas
0.6

 
581

 
865.75

 
538

 
801.34

 
92.6

 
43

Washington
2.3

 
512

 
225.52

 
455

 
200.72

 
89.0

 
57

Other (1)
0.6

 
193

 
344.31

 
160

 
283.96

 
82.5

 
33

 
10.7

 
$
3,957

 
$
368.93

 
$
3,472

 
$
323.72

 
87.7
%
 
$
485

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
1.8

 
$
621

 
$
335.46

 
$
531

 
$
286.70

 
85.5
%
 
$
90

Florida
1.1

 
390

 
358.34

 
349

 
320.47

 
89.4

 
41

Illinois
0.5

 
146

 
294.68

 
146

 
295.25

 
100.2

 

Michigan
1.1

 
383

 
339.23

 
325

 
287.60

 
84.8

 
58

New Mexico
0.7

 
325

 
465.52

 
279

 
400.84

 
86.1

 
46

Ohio
1.0

 
532

 
555.50

 
460

 
480.48

 
86.5

 
72

Puerto Rico
0.9

 
179

 
187.49

 
178

 
187.68

 
100.1

 
1

South Carolina
0.4

 
116

 
337.14

 
111

 
320.47

 
95.1

 
5

Texas
0.7

 
558

 
796.86

 
510

 
728.72

 
91.4

 
48

Washington
2.2

 
610

 
275.76

 
540

 
243.70

 
88.4

 
70

Other
0.6

 
164

 
292.88

 
144

 
256.26

 
87.5

 
20

 
11.0

 
$
4,024

 
$
366.18

 
$
3,573

 
$
325.12

 
88.8
%
 
$
451

__________________
(1)
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.

-MORE-


MOH Announces Fourth Quarter and Year-End 2018 Results
Page 14
February 11, 2019

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
MEDICAID AND MEDICARE BY HEALTH PLAN
(In millions, except percentages and per-member per-month amounts)
 
Year Ended December 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
7.1

 
$
1,931

 
$
273.59

 
$
1,724

 
$
244.21

 
89.3
%
 
$
207

Florida
4.2

 
1,517

 
360.98

 
1,414

 
336.43

 
93.2

 
103

Illinois
2.5

 
793

 
322.87

 
670

 
272.61

 
84.4

 
123

Michigan
4.5

 
1,550

 
344.42

 
1,303

 
289.53

 
84.1

 
247

New Mexico
2.6

 
1,241

 
474.10

 
1,140

 
435.65

 
91.9

 
101

Ohio
3.7

 
2,277

 
608.29

 
2,001

 
534.59

 
87.9

 
276

Puerto Rico
3.7

 
696

 
186.59

 
636

 
170.45

 
91.4

 
60

South Carolina
1.4

 
495

 
351.38

 
429

 
304.85

 
86.8

 
66

Texas
2.7

 
2,296

 
839.70

 
2,092

 
765.12

 
91.1

 
204

Washington
9.1

 
2,178

 
240.42

 
1,999

 
220.72

 
91.8

 
179

Other
2.2

 
723

 
329.06

 
602

 
273.55

 
83.1

 
121

 
43.7

 
$
15,697

 
$
359.14

 
$
14,010

 
$
320.53

 
89.2
%
 
$
1,687

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
7.4

 
$
2,392

 
$
321.46

 
$
2,117

 
$
284.53

 
88.5
%
 
$
275

Florida
4.3

 
1,522

 
350.15

 
1,461

 
335.97

 
96.0

 
61

Illinois
2.1

 
593

 
286.69

 
638

 
308.41

 
107.6

 
(45
)
Michigan
4.6

 
1,545

 
334.22

 
1,360

 
294.15

 
88.0

 
185

New Mexico
2.9

 
1,258

 
439.95

 
1,166

 
407.94

 
92.7

 
92

Ohio
3.9

 
2,130

 
544.98

 
1,894

 
484.66

 
88.9

 
236

Puerto Rico
3.8

 
732

 
190.13

 
691

 
179.65

 
94.5

 
41

South Carolina
1.4

 
445

 
328.41

 
412

 
304.04

 
92.6

 
33

Texas
2.8

 
2,150

 
769.82

 
1,978

 
708.20

 
92.0

 
172

Washington
8.9

 
2,445

 
275.64

 
2,143

 
241.55

 
87.6

 
302

Other
2.3

 
674

 
292.92

 
598

 
259.85

 
88.7

 
76

 
44.4

 
$
15,886

 
$
357.68

 
$
14,458

 
$
325.53

 
91.0
%
 
$
1,428



-MORE-


MOH Announces Fourth Quarter and Year-End 2018 Results
Page 15
February 11, 2019


MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—
MARKETPLACE BY HEALTH PLAN
(In millions, except percentages and per-member per-month amounts)
 
Three Months Ended December 31, 2018
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California

 
$
48

 
$
322.39

 
$
36

 
$
248.84

 
77.2
%
 
$
12

Florida
0.1

 
62

 
526.44

 
32

 
278.60

 
52.9

 
30

Michigan
0.1

 
11

 
259.20

 
8

 
166.54

 
64.3

 
3

New Mexico
0.1

 
22

 
328.32

 
19

 
302.79

 
92.2

 
3

Ohio
0.1

 
27

 
512.33

 
20

 
366.62

 
71.6

 
7

Texas
0.7

 
269

 
440.81

 
153

 
250.66

 
56.9

 
116

Washington

 
44

 
697.31

 
35

 
536.80

 
77.0

 
9

Other (1)

 
(2
)
 
NM

 

 
NM

 
NM

 
(2
)
 
1.1

 
$
481

 
$
437.79

 
$
303

 
$
275.56

 
62.9
%
 
$
178

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2017
 
Member
Months
 
Premium Revenue
 
Medical Care Costs
 
MCR
 
Medical Margin
 
Total
 
PMPM
 
Total
 
PMPM
 
 
California
0.5

 
$
68

 
$
163.41

 
$
75

 
$
181.70

 
111.2
%
 
$
(7
)
Florida
0.8

 
225

 
283.63

 
251

 
316.67

 
111.6

 
(26
)
Michigan
0.1

 
10

 
153.52

 
11

 
166.49

 
108.5

 
(1
)
New Mexico
0.1

 
28

 
387.65

 
22

 
291.42

 
75.2

 
6

Ohio

 
18

 
355.81

 
17

 
317.65

 
89.3

 
1

Texas
0.5

 
146

 
242.38

 
166

 
276.16

 
113.9

 
(20
)
Washington
0.1

 
40

 
321.91

 
28

 
233.26

 
72.5

 
12

Other
0.3

 
130

 
364.63
<