LONG BEACH, California
,
February 7, 2024
(press release)
–
Introduces Full Year 2024 Revenue and Earnings Guidance
Three months ended Year ended
2023 2022 2023 2022 (In millions, except per-share results) Premium Revenue
Total Revenue
GAAP: Net Income
EPS – Diluted
Medical Care Ratio (MCR) 89.1% 88.3% 88.1% 88.0% G&A Ratio 7.1% 7.6% 7.2% 7.2% After-tax Margin 2.4% 0.7% 3.2% 2.5% Adjusted: Net Income
EPS – Diluted
G&A Ratio 7.0% 7.5% 7.2% 7.1% After-tax Margin 2.8% 2.9% 3.6% 3.3% See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end of this release. Full Year Highlights “We are very pleased with our fourth quarter and full year results,” said
Premium Revenue Net Income Medical Care Ratio (MCR) General and Administrative Expense Ratio Balance Sheet Days in claims payable at
Cash Flow 2024 Guidance The Company expects its full year adjusted earnings per share in 2024 to be at least
Guidance reflects the continued realization of embedded earnings and underlying organic growth. Guidance metrics are summarized below: Full Year 2024 Guidance Premium Revenue
Total Revenue
GAAP Net Income
Adjusted Net Income
GAAP EPS – Diluted >
Adjusted EPS – Diluted >
Diluted weighted average shares 58.1M Year End Total Membership 5.7M Medicaid 5.1M Medicare 270K Marketplace 370K MCR 88.2% GAAP G&A Ratio 7.1% Adjusted G&A Ratio 7.0% Effective Tax Rate 25.7% GAAP After-tax Margin 3.2% Adjusted After-tax Margin 3.4% See the Reconciliations of Unaudited Non-GAAP Financial Measures at the end of this release. Conference Call About
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Actual results could differ materially due to numerous known and unknown risks and uncertainties. These risks and uncertainties are discussed under the headings “Forward-Looking Statements,” and “Risk Factors,” in the Company’s Annual Report on Form 10‑K for the year ended
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 developments 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
Three Months Ended Year Ended
2023 2022 2023 2022 (In millions, except per-share amounts) Revenue: Premium revenue $ 8,362 $ 7,917 $ 32,529 $ 30,883 Premium tax revenue 552 227 1,069 873 Investment income 114 61 394 143 Other revenue 20 18 80 75 Total revenue 9,048 8,223 34,072 31,974 Operating expenses: Medical care costs 7,454 6,992 28,669 27,175 General and administrative expenses 645 629 2,462 2,311 Premium tax expenses 552 227 1,069 873 Depreciation and amortization 43 47 171 176 Impairment — 208 — 208 Other 38 15 128 58 Total operating expenses 8,732 8,118 32,499 30,801 Operating income 316 105 1,573 1,173 Other expenses, net: Interest expense 27 27 109 110 Total other expenses, net 27 27 109 110 Income before income tax expense 289 78 1,464 1,063 Income tax expense 73 22 373 271 Net income $ 216 $ 56 $ 1,091 $ 792 Net income per share – Diluted $ 3.70 $ 0.96 $ 18.77 $ 13.55 Diluted weighted average shares outstanding 58.2 58.4 58.1 58.5
2023 2022 Unaudited (Dollars in millions, except per-share amounts) ASSETS Current assets: Cash and cash equivalents $ 4,848 $ 4,006 Investments 4,259 3,499 Receivables 3,104 2,302 Prepaid expenses and other current assets 331 277 Total current assets 12,542 10,084 Property, equipment, and capitalized software, net 270 259
1,449 1,390 Restricted investments 261 238 Deferred income taxes, net 227 220 Other assets 143 123 Total assets $ 14,892 $ 12,314 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Medical claims and benefits payable $ 4,204 $ 3,528 Amounts due government agencies 2,294 2,079 Accounts payable, accrued liabilities and other 1,252 889 Deferred revenue 418 359 Total current liabilities 8,168 6,855 Long-term debt 2,180 2,176 Finance lease liabilities 205 215 Other long-term liabilities 124 104 Total liabilities 10,677 9,350 Stockholders’ equity: Common stock,
— — Preferred stock,
— — Additional paid-in capital 410 328 Accumulated other comprehensive loss (82 ) (160 ) Retained earnings 3,887 2,796 Total stockholders’ equity 4,215 2,964 Total liabilities and stockholders’ equity $ 14,892 $ 12,314
Year Ended
2023 2022 (In millions) Operating activities: Net income $ 1,091 $ 792 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 171 176 Deferred income taxes (31 ) (66 ) Share-based compensation 115 103 Impairment — 208 Other, net 2 8 Receivables (778 ) (95 ) Prepaid expenses and other current assets (69 ) (124 ) Medical claims and benefits payable 580 153 Amounts due government agencies 196 (428 ) Accounts payable, accrued liabilities and other 328 55 Deferred revenue 59 (11 ) Income taxes (2 ) 2 Net cash provided by operating activities 1,662 773 Investing activities: Purchases of investments (1,433 ) (1,913 ) Proceeds from sales and maturities of investments 772 1,398 Net cash paid in business combinations (3 ) (134 ) Purchases of property, equipment, and capitalized software (84 ) (91 ) Other, net 4 (50 ) Net cash used in investing activities (744 ) (790 ) Financing activities: Common stock withheld to settle employee tax obligations (60 ) (54 ) Common stock purchases — (400 ) Contingent consideration liabilities settled — (20 ) Other, net 2 33 Net cash used in financing activities (58 ) (441 ) Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents 860 (458 ) Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period 4,048 4,506 Cash, cash equivalents, and restricted cash and cash equivalents at end of period $ 4,908 $ 4,048
2023 2022 Ending Membership by Segment: Medicaid 4,542,000 4,754,000 Medicare 172,000 156,000 Marketplace 281,000 348,000 Total 4,995,000 5,258,000 Three Months Ended
2023 2022 Premium Revenue Medical Margin MCR (1) Premium Revenue Medical Margin MCR (1) Medicaid $ 6,782 $ 731 89.2 % $ 6,421 $ 813 87.3 % Medicare 1,057 71 93.3 948 77 91.8 Marketplace 523 106 79.8 548 35 93.8 Consolidated $ 8,362 $ 908 89.1 % $ 7,917 $ 925 88.3 % Year Ended
2023 2022 Premium Revenue Medical Margin MCR (1) Premium Revenue Medical Margin MCR (1) Medicaid $ 26,327 $ 2,973 88.7 % $ 24,827 $ 2,981 88.0 % Medicare 4,179 388 90.7 3,795 437 88.5 Marketplace 2,023 499 75.3 2,261 290 87.2 Consolidated $ 32,529 $ 3,860 88.1 % $ 30,883 $ 3,708 88.0 % (1) The MCR represents medical costs as a percentage of premium revenue.
The Company’s claims liabilities include additional reserves to account for moderately adverse conditions based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims. The Company’s reserving methodology is consistently applied across all periods presented. The amounts displayed for “Components of medical care costs related to: Prior year” represent the amounts by which the original estimates of claims and benefits payable at the beginning of the year were more than the actual liabilities based on information (principally the payment of claims) developed since those liabilities were first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated: Year Ended
2023 2022 Unaudited Medical claims and benefits payable, beginning balance $ 3,528 $ 3,363 Components of medical care costs related to: Current year 29,096 27,459 Prior year (427 ) (284 ) Total medical care costs 28,669 27,175 Payments for medical care costs related to: Current year 25,615 24,345 Prior year 2,734 2,670 Total paid 28,349 27,015 Acquired balances, net of post-acquisition adjustments 96 12 Change in non-risk and other provider payables 260 (7 ) Medical claims and benefits payable, ending balance $ 4,204 $ 3,528 Days in Claims Payable (1) 50 47 (1) The Company calculates Days in Claims Payable using claims incurred but not paid, or IBNP, and other fee-for-service payables included in medical claims and benefits payable, and quarterly fee-for-service related costs included in medical care costs within the Company’s consolidated financial statements.
The Company believes that certain non-GAAP (generally accepted accounting principles) financial measures are useful supplemental measures to investors in comparing the Company’s performance to the performance of other public companies in the health care industry. The non-GAAP financial measures are also used internally to enable management to assess the Company’s performance consistently over time. These non-GAAP financial measures, presented below, should be considered as supplements to, and not as substitutes for or superior to, GAAP measures. Adjustments represent additions and deductions to GAAP net income as indicated in the table below, which include the non-cash impact of amortization of acquired intangible assets, acquisition-related expenses, and the impact of certain expenses and other items that management believes are not indicative of longer-term business trends and operations. Adjusted G&A Ratio represents the GAAP G&A ratio, recognizing adjustments. Adjusted net income represents GAAP net income recognizing the adjustments, net of tax. The Company believes that adjusted net income is helpful to investors in assessing the Company’s financial performance. Adjusted net income per diluted share represents adjusted net income divided by weighted average common shares outstanding on a fully diluted basis. Adjusted after-tax margin represents adjusted net income, divided by total revenue. Three Months Ended
Year Ended
2023 2022 2023 2022 Amount Per Diluted Share Amount Per Diluted Share Amount Per Diluted Share Amount Per Diluted Share GAAP Net income $ 216 $ 3.70 $ 56 $ 0.96 $ 1,091 $ 18.77 $ 792 $ 13.55 Adjustments: Amortization of intangible assets $ 22 $ 0.37 $ 21 $ 0.35 $ 85 $ 1.47 $ 77 $ 1.32 Acquisition-related expenses (1) 3 0.05 11 0.18 7 0.12 49 0.83 Impairment — — 208 3.57 — — 208 3.56 Other (2) 27 0.47 — — 68 1.17 — — Subtotal, adjustments 52 0.89 240 4.10 160 2.76 334 5.71 Income tax effect (13 ) (0.21 ) (56 ) (0.96 ) (38 ) (0.65 ) (78 ) (1.34 ) Adjustments, net of tax 39 0.68 184 3.14 122 2.11 256 4.37 Adjusted net income $ 255 $ 4.38 $ 240 $ 4.10 $ 1,213 $ 20.88 $ 1,048 $ 17.92 (1) Reflects non-recurring costs associated with acquisitions, including various transaction and certain integration costs. (2) The year ended
Amount Per Diluted Share (2) GAAP Net income $ 1,278 $ 22.00 Adjustments: Amortization of intangible assets 94 1.62 Acquisition-related expenses 21 0.35 Subtotal, adjustments 115 1.97 Income tax effect (1) (27 ) (0.47 ) Adjustments, net of tax 88 1.50 Adjusted net income $ 1,366 $ 23.50 (1) Income tax effect calculated at the statutory tax rate of approximately 23.9%. (2) Computations assume approximately 58.1 million diluted weighted average shares outstanding. View source version on businesswire.com: https://www.businesswire.com/news/home/20240207058929/en/ Investor Contact: Media Contact: Source:
Premium revenue was approximately
GAAP net income for the full year 2023 was
The G&A ratio and the adjusted G&A ratio for the full year 2023 were both 7.2%, reflecting continued cost discipline and new business implementation spending throughout the year relating to new contract wins.
Cash and investments at the parent company were
Operating cash flow for the year ended
Premium revenue for the full year is expected to be approximately
Management will host a conference call and webcast to discuss Molina Healthcare’s fourth quarter and year ended
This earnings release and the Company’s accompanying oral remarks contain forward-looking statements. The Company intends such forward-looking statements to be covered under the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements provide current expectations of future events based on certain assumptions, and all statements other than statements of historical fact contained in this earnings release and the Company’s accompanying oral remarks may be forward-looking statements. In some cases, you can identify forward-looking statements by words such as “guidance,” “future,” “anticipates,” “believes,” “embedded,” “estimates,” “expects,” “growth,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this earnings release include, but are not limited to, statements regarding its 2024 guidance, expectations with respect to continued realization of embedded earnings and underlying organic growth, and our management’s plans and objectives for future operations and business strategy.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED BALANCE SHEETS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED SEGMENT DATA
(Dollars in millions)
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CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in millions)
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RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES
(In millions, except per diluted share amounts)
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RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES (CONTINUED)
2024 GUIDANCE
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Joseph.Krocheski@molinahealthcare.com
562-549-4100
Caroline.Zubieta@molinahealthcare.com
562-951-1588
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