LONG BEACH, California
,
July 29, 2022
(press release)
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Increases Full-Year 2022 Revenue and Earnings Guidance Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today reported second quarter 2022 GAAP earnings per diluted share of $4.25 and adjusted earnings per diluted share of $4.55. Financial results are summarized below: Quarter ended Six months ended June 30, June 30, 2022 2021 2022 2021 (In millions, except per-share results) Premium Revenue $7,799 $6,583 $15,330 $12,889 Total Revenue $8,054 $6,800 $15,824 $13,322 GAAP: Net Income $248 $185 $506 $413 EPS – Diluted $4.25 $3.16 $8.63 $7.05 Medical Care Ratio (MCR) 88.1% 88.4% 87.6% 87.6% G&A Ratio 6.8% 7.1% 7.1% 7.2% After-tax Margin 3.1% 2.7% 3.2% 3.1% Adjusted: Net Income $266 $199 $554 $459 EPS – Diluted $4.55 $3.40 $9.45 $7.83 G&A Ratio 6.8% 6.9% 6.9% 7.0% After-tax Margin 3.3% 2.9% 3.5% 3.4% See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end of this release. Quarter Highlights “We are very pleased with our second quarter and year-to-date performance,” said Joseph Zubretsky, President and Chief Executive Officer. “We executed well, provided high quality care to our members, delivered solid operating earnings, and continued to deliver on our growth strategy.” Premium Revenue Premium revenue was approximately $7.8 billion for the second quarter of 2022, an increase of 18% compared to the second quarter of 2021. The higher premium revenue reflects the impact of acquisitions and increased organic membership in the Medicaid and Medicare lines of business. Net Income GAAP net income for the second quarter of 2022 was $4.25 per diluted share, compared to $3.16 per diluted share in the second quarter of 2021. Adjusted net income for the second quarter of 2022 was $4.55 per diluted share, compared to $3.40 per diluted share in the second quarter of 2021. The net effect of COVID decreased the second quarter of 2022 GAAP and adjusted EPS by $0.68 per diluted share. A true up to the 2021 risk adjustment payable decreased net income by approximately $0.44 per diluted share in the second quarter of 2022. Medical Care Ratio General and Administrative Expense Ratio The G&A ratio for the second quarter of 2022 was 6.8%, compared to 7.1% for the second quarter of 2021. The adjusted G&A ratio was 6.8% for the second quarter of 2022, compared to 6.9% for the second quarter of 2021. Balance Sheet Cash and investments at the parent company were $210 million as of June 30, 2022, compared to $348 million as of December 31, 2021. Through June 30, 2022, the Company purchased approximately 658,000 shares for $200 million, at an average cost of $304.13 per share. Cash Flow Operating cash flow for the six months ended June 30, 2022, was $731 million, which was lower compared to the six months ended June 30, 2021, primarily due to the net impact of timing differences in government receivables and payables and partially offset by an increase in net earnings. 2022 Guidance Premium revenue for full year 2022 is now expected to be approximately $30 billion, above the previous guidance of approximately $29.25 billion. The guidance increase of approximately $750 million includes the extension of the Public Health Emergency from July to October, second quarter 2022 outperformance and additional pass through revenue payments. The Company increased its full year 2022 adjusted earnings guidance to at least $17.60 per diluted share, above the previous guidance of at least $17.10 per diluted share. Guidance includes the Company’s Marketplace business achieving modest profitability when excluding the 2021 risk adjustment payable true up. See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end of this release. Conference Call Management is hosting a conference call and webcast to discuss Molina Healthcare’s second quarter 2022 results at 8:00 a.m. Eastern Time on Thursday, July 28, 2022. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 4270459. A telephonic replay of the conference call will be available through Thursday, August 11, 2022, by dialing (877) 344-7529 and entering confirmation number 9675380. 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 (currently ranked 125), provides managed healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. Molina Healthcare served approximately 5.1 million members as of June 30, 2022, located across 19 states. 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 and the Company’s accompanying oral remarks contain forward-looking statements regarding its 2022 guidance, as well as its plans and expectations regarding future developments. 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 December 31, 2021, which is on file with the SEC, and also in its Quarterly Report on Form 10-Q for the three months ended June 30, 2022, which the Company expects to file on or about July 28, 2022. 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 July 27, 2022, and, except as otherwise required by law, the Company disclaims any obligation to update any forward-looking statement to conform the statement to actual results or changes in its expectations. MOLINA HEALTHCARE, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 (In millions, except per-share amounts) Revenue: Premium revenue $ 7,799 $ 6,583 $ 15,330 $ 12,889 Premium tax revenue 215 185 423 372 Investment income 22 10 33 19 Other revenue 18 22 38 42 Total revenue 8,054 6,800 15,824 13,322 Operating expenses: Medical care costs 6,872 5,819 13,435 11,293 General and administrative expenses 551 484 1,122 957 Premium tax expenses 215 185 423 372 Depreciation and amortization 44 31 84 64 Other 11 8 27 28 Total operating expenses 7,693 6,527 15,091 12,714 Operating income 361 273 733 608 Other expenses, net: Interest expense 27 30 55 60 Total other expenses, net 27 30 55 60 Income before income tax expense 334 243 678 548 Income tax expense 86 58 172 135 Net income $ 248 $ 185 $ 506 $ 413 Net income per share – Diluted $ 4.25 $ 3.16 $ 8.63 $ 7.05 Diluted weighted average shares outstanding 58.4 58.4 58.6 58.5 Operating Statistics: Medical care ratio 88.1 % 88.4 % 87.6 % 87.6 % G&A ratio 6.8 % 7.1 % 7.1 % 7.2 % Premium tax ratio 2.7 % 2.7 % 2.7 % 2.8 % Effective income tax rate 25.8 % 24.2 % 25.4 % 24.7 % After-tax margin 3.1 % 2.7 % 3.2 % 3.1 % MOLINA HEALTHCARE, INC. CONSOLIDATED BALANCE SHEETS June 30, December 31, 2022 2021 Unaudited (Dollars in millions, except per-share amounts) ASSETS Current assets: Cash and cash equivalents $ 4,312 $ 4,438 Investments 3,567 3,202 Receivables 2,240 2,177 Prepaid expenses and other current assets 213 247 Total current assets 10,332 10,064 Property, equipment, and capitalized software, net 401 396 Goodwill and intangible assets, net 1,286 1,252 Restricted investments 219 212 Deferred income taxes 141 106 Other assets 193 179 Total assets $ 12,572 $ 12,209 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Medical claims and benefits payable $ 3,775 $ 3,363 Amounts due government agencies 2,722 2,472 Accounts payable, accrued liabilities and other 715 842 Deferred revenue 13 370 Total current liabilities 7,225 7,047 Long-term debt 2,175 2,173 Finance lease liabilities 216 219 Other long-term liabilities 126 140 Total liabilities 9,742 9,579 Stockholders’ equity: Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at June 30, 2022 and December 31, 2021 — — Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding — — Additional paid-in capital 251 236 Accumulated other comprehensive loss (128 ) (5 ) Retained earnings 2,707 2,399 Total stockholders’ equity 2,830 2,630 Total liabilities and stockholders’ equity $ 12,572 $ 12,209 MOLINA HEALTHCARE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2022 2021 (In millions) Operating activities: Net income $ 506 $ 413 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 84 64 Deferred income taxes 3 7 Share-based compensation 57 35 Other, net (6 ) 10 Changes in operating assets and liabilities: Receivables (43 ) (192 ) Prepaid expenses and other current assets (64 ) (6 ) Medical claims and benefits payable 405 272 Amounts due government agencies 247 792 Accounts payable, accrued liabilities and other (147 ) (15 ) Deferred revenue (357 ) (333 ) Income taxes 46 14 Net cash provided by operating activities 731 1,061 Investing activities: Purchases of investments (1,413 ) (1,006 ) Proceeds from sales and maturities of investments 879 622 Purchases of property, equipment, and capitalized software (50 ) (29 ) Other, net (7 ) 5 Net cash used in investing activities (591 ) (408 ) Financing activities: Common stock purchases (200 ) (128 ) Common stock withheld to settle employee tax obligations (53 ) (52 ) Contingent consideration liabilities settled (20 ) (20 ) Other, net 5 — Net cash used in financing activities (268 ) (200 ) Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents (128 ) 453 Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period 4,506 4,223 Cash, cash equivalents, and restricted cash and cash equivalents at end of period $ 4,378 $ 4,676 MOLINA HEALTHCARE, INC. UNAUDITED SEGMENT DATA (Dollars in millions) June 30, December 31, June 30, 2022 2021 2021 Ending Membership by Segment: Medicaid 4,610,000 4,329,000 3,928,000 Medicare 151,000 142,000 130,000 Marketplace 357,000 728,000 638,000 Total 5,118,000 5,199,000 4,696,000 Three Months Ended June 30, 2022 2021 Premium Medical MCR (1) Premium Medical MCR (1) Medicaid $ 6,301 $ 755 88.0 % $ 5,034 $ 551 89.0 % Medicare 957 124 86.9 814 101 87.6 Marketplace 541 48 91.2 735 112 84.8 Consolidated $ 7,799 $ 927 88.1 % $ 6,583 $ 764 88.4 % Six Months Ended June 30, 2022 2021 Premium Medical MCR (1) Premium Medical MCR (1) Medicaid $ 12,281 $ 1,465 88.1 % $ 9,874 $ 1,155 88.3 % Medicare 1,900 252 86.7 1,613 178 89.0 Marketplace 1,149 178 84.5 1,402 263 81.2 Consolidated $ 15,330 $ 1,895 87.6 % $ 12,889 $ 1,596 87.6 % (1) The MCR represents medical costs as a percentage of premium revenue. MOLINA HEALTHCARE, INC. 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: Six Months Ended June 30, 2022 2021 Unaudited Medical claims and benefits payable, beginning balance $ 3,363 $ 2,696 Components of medical care costs related to: Current year 13,746 11,486 Prior year (311 ) (193 ) Total medical care costs 13,435 11,293 Payments for medical care costs related to: Current year 10,622 9,023 Prior year 2,411 1,949 Total paid 13,033 10,972 Acquired balances, net of post-acquisition adjustments 7 (26 ) Change in non-risk and other provider payables 3 (49 ) Medical claims and benefits payable, ending balance $ 3,775 $ 2,942 Days in Claims Payable (1) 50 48 (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. MOLINA HEALTHCARE, INC. 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Amount Per Amount Per Amount Per Amount Per Net income $ 248 $ 4.25 $ 185 $ 3.16 $ 506 $ 8.63 $ 413 $ 7.05 Adjustments: Amortization of intangible assets 19 0.33 12 0.20 37 0.63 24 0.40 Acquisition-related expenses (1) 7 0.11 6 0.11 26 0.45 27 0.46 Other (2) (3 ) (0.04 ) — — — — 9 0.16 Subtotal, adjustments 23 0.40 18 0.31 63 1.08 60 1.02 Income tax effect (5 ) (0.10 ) (4 ) (0.07 ) (15 ) (0.26 ) (14 ) (0.24 ) Adjustments, net of tax 18 0.30 14 0.24 48 0.82 46 0.78 Adjusted net income $ 266 $ 4.55 $ 199 $ 3.40 $ 554 $ 9.45 $ 459 $ 7.83 (1) Reflects non-recurring costs associated with acquisitions, including various transaction and integration costs. (2) The first half of 2022 includes certain non-recurring costs associated with gain on lease termination and disposal of fixed assets. The first half of 2021 includes change in premium deficiency reserves, loss on sale of property, and restructuring costs. MOLINA HEALTHCARE, INC. RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES (CONTINUED) 2022 GUIDANCE Amount Per Net income $ 937 $ 16.01 Adjustments: Acquisition-related expenses 47 0.80 Amortization of intangible assets 75 1.29 Subtotal, adjustments 122 2.09 Income tax effect (1) (29 ) (0.50 ) Adjustments, net of tax 93 1.59 Adjusted net income per diluted share $ 1,030 $ 17.60 (1) Income tax effect calculated at the statutory tax rate of approximately 23.9%. Computations assume approximately 58.5 million diluted weighted average shares outstanding. Investor Contact: Joseph Krocheski, Joseph.Krocheski@molinahealthcare.com, 562-951-8382 Source: Molina Healthcare, Inc.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20220727005733/en/
Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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