Molina Healthcare reports Q1 GAAP net income of US$258.0M, up from US$228.0M a year ago, with total revenue of US$7.8B up from US$6.5B a year ago; medical care ratio at 87.1%, up from year-ago's 86.8%, with membership increasing 10% to 5.1 million members

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LONG BEACH, California , April 29, 2022 (press release) –

Increases Full-Year 2022 Revenue and Earnings Guidance

Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today reported first quarter 2022 GAAP earnings per diluted share of $4.39 and adjusted earnings per diluted share of $4.90. Financial results are summarized below:

 

Quarter ended

 

March 31,

 

2022

 

2021

 

 

 

 

(In millions, except per-share results)

Premium Revenue

$7,531

 

$6,306

Total Revenue

$7,770

 

$6,522

 

 

 

 

GAAP:

 

 

 

Net Income

$258

 

$228

EPS – Diluted

$4.39

 

$3.89

Medical Care Ratio (MCR)

87.1%

 

86.8%

G&A Ratio

7.4%

 

7.3%

After-tax Margin

3.3%

 

3.5%

 

 

 

 

Adjusted:

 

 

 

Net Income

$288

 

$260

EPS – Diluted

$4.90

 

$4.44

G&A Ratio

7.1%

 

7.0%

After-tax Margin

3.7%

 

4.0%

See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end of this release.

 

Quarter Highlights

  • As of March 31, 2022, the Company served approximately 5.1 million members, an increase of 480,000 members or 10% compared to March 31, 2021.
  • Premium revenue was approximately $7.5 billion for the first quarter of 2022, an increase of 19% compared to the first quarter of 2021.
  • GAAP earnings were $4.39 per diluted share.
  • Adjusted earnings were $4.90 per diluted share.
  • The net effect of COVID decreased net income by approximately $0.57 per diluted share in the first quarter of 2022.
  • The Company increased its full year 2022 premium revenue guidance to approximately $29.25 billion, compared to its previous guidance of approximately $28.5 billion.
  • The Company increased its full year 2022 adjusted earnings guidance to no less than $17.10 per diluted share, compared to its previous guidance of no less than $17.00 per diluted share.

“We are very pleased with our first quarter results,” said Joseph Zubretsky, President and Chief Executive Officer. “We are maintaining strong momentum across each dimension of our strategy by delivering high quality health care for members, achieving meaningful top line growth, and producing attractive margins. The Company’s performance continues to validate our long-term strategy and its value creation potential.”

Premium Revenue

Premium revenue was approximately $7.5 billion for the first quarter of 2022, an increase of 19% compared to the first quarter of 2021. The higher premium revenue reflects increased organic membership in the Medicaid and Medicare lines of business and the impact of acquisitions.

Net Income

Net income for the first quarter of 2022 was $4.39 per diluted share, compared to $3.89 per diluted share in the first quarter of 2021. Adjusted net income for the first quarter of 2022 was $4.90 per diluted share, compared to $4.44 per diluted share in the first quarter of 2021. The net effect of COVID decreased the first quarter of 2022 GAAP and adjusted EPS by $0.57 per diluted share, compared to a negligible impact in the first quarter of 2021.

Medical Care Ratio

The consolidated MCR for the first quarter of 2022 was 87.1%, compared to 86.8% for first quarter of 2021. The net effect of COVID added approximately 50 basis points to the consolidated MCR. In the prior year, the net effect of COVID was negligible. In both periods, the impact varied by line of business.

  • The Medicaid MCR of 88.1% was in line with the Company’s long-term target. The net effect of COVID added approximately 10 basis points in the quarter.
  • The Medicare MCR of 86.5% was favorable to the Company’s long-term target. The net effect of COVID added approximately 190 basis points in the quarter.
  • The Marketplace MCR of 78.6% was in line with the Company’s long-term target and reflects the successful execution of the Company’s product repositioning strategy. The net effect of COVID added approximately 270 basis points in the quarter.

General and Administrative Expense Ratio

The G&A ratio for the first quarter of 2022 was 7.4%, compared to 7.3% for the first quarter of 2021. The adjusted G&A ratio was 7.1% for the first quarter, compared to 7.0% for the first quarter of 2021 reflecting temporary labor challenges and one-time items.

Balance Sheet

Cash and investments at the parent company were $250 million as of March 31, 2022, compared to $348 million as of December 31, 2021.

Cash Flow

Operating cash flow for the first quarter of 2022 was $363 million and was lower compared to the first quarter of 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 $29.25 billion, compared to the previous guidance of approximately $28.5 billion. The guidance increase of approximately $750 million includes the extension of the Public Health Emergency from April to July, higher Marketplace membership, and pass through revenue payments.

The Company increased its full year 2022 adjusted earnings guidance to no less than $17.10 per diluted share, compared to the previous guidance of no less than $17.00 per diluted share, reflecting:

  • Strong first quarter 2022 performance and expected underlying business strength in the rest of the year; and,
  • Margin associated with the increase in premium revenue guidance; partially offset by,
  • A $0.50 per diluted share increase in projected net effect of COVID.

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 first quarter 2022 results at 8:00 a.m. Eastern Time on Thursday, April 28, 2022. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 6168107. A telephonic replay of the conference call will be available through Thursday, May 12, 2022, by dialing (877) 344-7529 and entering confirmation number 3378643. 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 155), 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 March 31, 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 March 31, 2022, which the Company expects to file on or about April 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 April 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

 

March 31,

 

2022

 

2021

 

 

 

 

 

(In millions, except per-share amounts)

Revenue:

 

 

 

Premium revenue

$

7,531

 

 

$

6,306

 

Premium tax revenue

 

208

 

 

 

187

 

Investment income

 

11

 

 

 

9

 

Other revenue

 

20

 

 

 

20

 

Total revenue

 

7,770

 

 

 

6,522

 

Operating expenses:

 

 

 

Medical care costs

 

6,563

 

 

 

5,474

 

General and administrative expenses

 

571

 

 

 

473

 

Premium tax expenses

 

208

 

 

 

187

 

Depreciation and amortization

 

40

 

 

 

33

 

Other

 

16

 

 

 

20

 

Total operating expenses

 

7,398

 

 

 

6,187

 

Operating income

 

372

 

 

 

335

 

Other expenses, net:

 

 

 

Interest expense

 

28

 

 

 

30

 

Total other expenses, net

 

28

 

 

 

30

 

Income before income tax expense

 

344

 

 

 

305

 

Income tax expense

 

86

 

 

 

77

 

Net income

$

258

 

 

$

228

 

 

 

 

 

Net income per share – Diluted

$

4.39

 

 

$

3.89

 

 

 

 

 

Diluted weighted average shares outstanding

 

58.7

 

 

 

58.6

 

 

 

 

 

Operating Statistics:

 

 

 

Medical care ratio

 

87.1

%

 

 

86.8

%

G&A ratio

 

7.4

%

 

 

7.3

%

Premium tax ratio

 

2.7

%

 

 

2.9

%

Effective income tax rate

 

25.0

%

 

 

25.2

%

After-tax margin

 

3.3

%

 

 

3.5

%

MOLINA HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

March 31,

 

December 31,

 

2022

 

2021

 

Unaudited

 

 

 

(Dollars in millions, except per-share amounts)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

4,804

 

 

$

4,438

 

Investments

 

2,988

 

 

 

3,202

 

Receivables

 

2,156

 

 

 

2,177

 

Prepaid expenses and other current assets

 

198

 

 

 

247

 

Total current assets

 

10,146

 

 

 

10,064

 

Property, equipment, and capitalized software, net

 

393

 

 

 

396

 

Goodwill and intangible assets, net

 

1,305

 

 

 

1,252

 

Restricted investments

 

221

 

 

 

212

 

Deferred income taxes

 

114

 

 

 

106

 

Other assets

 

181

 

 

 

179

 

Total assets

$

12,360

 

 

$

12,209

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Medical claims and benefits payable

$

3,601

 

 

$

3,363

 

Amounts due government agencies

 

2,613

 

 

 

2,472

 

Accounts payable, accrued liabilities and other

 

809

 

 

 

842

 

Deferred revenue

 

18

 

 

 

370

 

Total current liabilities

 

7,041

 

 

 

7,047

 

Long-term debt

 

2,174

 

 

 

2,173

 

Finance lease liabilities

 

217

 

 

 

219

 

Other long-term liabilities

 

134

 

 

 

140

 

Total liabilities

 

9,566

 

 

 

9,579

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value, 150 million shares authorized; outstanding: 59 million shares at March 31, 2022, and 58 million shares at December 31, 2021

 

 

 

 

 

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

 

 

 

 

 

Additional paid-in capital

 

218

 

 

 

236

 

Accumulated other comprehensive loss

 

(81

)

 

 

(5

)

Retained earnings

 

2,657

 

 

 

2,399

 

Total stockholders’ equity

 

2,794

 

 

 

2,630

 

Total liabilities and stockholders’ equity

$

12,360

 

 

$

12,209

 

 

MOLINA HEALTHCARE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Three Months Ended

 

March 31,

 

2022

 

2021

 

 

 

 

 

(In millions)

Operating activities:

 

 

 

Net income

$

258

 

 

$

228

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

40

 

 

 

33

 

Deferred income taxes

 

16

 

 

 

6

 

Share-based compensation

 

34

 

 

 

24

 

Other, net

 

(8

)

 

 

12

 

Changes in operating assets and liabilities:

 

 

 

Receivables

 

21

 

 

 

(98

)

Prepaid expenses and other current assets

 

(32

)

 

 

(15

)

Medical claims and benefits payable

 

263

 

 

 

168

 

Amounts due government agencies

 

137

 

 

 

432

 

Accounts payable, accrued liabilities and other

 

(81

)

 

 

16

 

Deferred revenue

 

(352

)

 

 

(304

)

Income taxes

 

67

 

 

 

66

 

Net cash provided by operating activities

 

363

 

 

 

568

 

Investing activities:

 

 

 

Purchases of investments

 

(403

)

 

 

(388

)

Proceeds from sales and maturities of investments

 

513

 

 

 

308

 

Purchases of property, equipment, and capitalized software

 

(23

)

 

 

(16

)

Other, net

 

(13

)

 

 

9

 

Net cash provided by (used in) investing activities

 

74

 

 

 

(87

)

Financing activities:

 

 

 

Common stock withheld to settle employee tax obligations

 

(52

)

 

 

(51

)

Contingent consideration liabilities settled

 

(20

)

 

 

(20

)

Common stock purchases

 

 

 

 

(128

)

Other, net

 

(5

)

 

 

(8

)

Net cash used in financing activities

 

(77

)

 

 

(207

)

Net increase in cash, cash equivalents, and restricted cash and cash equivalents

 

360

 

 

 

274

 

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

$

4,866

 

 

$

4,497

 

MOLINA HEALTHCARE, INC.

UNAUDITED SEGMENT DATA

(Dollars in millions)

 

 

 

 

 

 

 

March 31,

 

December 31,

 

March 31,

 

2022

 

2021

 

2021

Ending Membership by Segment:

 

 

 

 

 

Medicaid

4,566,000

 

 

4,329,000

 

 

3,859,000

 

Medicare

148,000

 

 

142,000

 

 

126,000

 

Marketplace

371,000

 

 

728,000

 

 

620,000

 

Total

5,085,000

 

 

5,199,000

 

 

4,605,000

 

 

Three Months Ended March 31,

 

2022

 

2021

 

Premium
Revenue

 

Medical
Margin

 

MCR (1)

 

Premium
Revenue

 

Medical
Margin

 

MCR (1)

 

 

 

 

 

 

Medicaid

$

5,980

 

 

$

710

 

 

88.1

%

 

$

4,840

 

 

$

604

 

 

87.5

%

Medicare

 

943

 

 

 

128

 

 

86.5

 

 

 

799

 

 

 

77

 

 

90.3

 

Marketplace

 

608

 

 

 

130

 

 

78.6

 

 

 

667

 

 

 

151

 

 

77.3

 

Consolidated

$

7,531

 

 

$

968

 

 

87.1

%

 

$

6,306

 

 

$

832

 

 

86.8

%

______________________________

 

 

 

 

 

 

 

 

 

 

 

(1) The MCR represents medical costs as a percentage of premium revenue.

 

MOLINA HEALTHCARE, INC.

CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE

(Dollars in millions)

   

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:

   

 

Three Months Ended

 

March 31,

 

2022

 

2021

 

Unaudited

Medical claims and benefits payable, beginning balance

$

3,363

 

 

$

2,696

 

Components of medical care costs related to:

 

 

 

Current year

 

6,769

 

 

 

5,668

 

Prior year

 

(206

)

 

 

(194

)

Total medical care costs

 

6,563

 

 

 

5,474

 

Payments for medical care costs related to:

 

 

 

Current year

 

4,197

 

 

 

3,513

 

Prior year

 

2,199

 

 

 

1,781

 

Total paid

 

6,396

 

 

 

5,294

 

Acquired balances, net of post-acquisition adjustments

 

(25

)

 

 

(25

)

Change in non-risk and other provider payables

 

96

 

 

 

(12

)

Medical claims and benefits payable, ending balance

$

3,601

 

 

$

2,839

 

 

 

 

 

Days in Claims Payable (1)

 

51

 

 

 

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.

RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES

(In millions, except per diluted share amounts)

   

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 March 31,

2022

 

2021

 

Amount

 

Per Diluted
Share

 

Amount

 

Per Diluted
Share

Net income

$

258

 

 

$

4.39

 

 

$

228

 

 

$

3.89

 

Adjustments:

 

 

 

 

 

 

 

Acquisition-related expenses (1)

 

19

 

 

 

0.33

 

 

 

21

 

 

 

0.36

 

Amortization of intangible assets

 

18

 

 

 

0.30

 

 

 

12

 

 

 

0.21

 

Other (2)

 

3

 

 

 

0.04

 

 

 

9

 

 

 

0.15

 

Subtotal, adjustments

 

40

 

 

 

0.67

 

 

 

42

 

 

 

0.72

 

Income tax effect

 

(10

)

 

 

(0.16

)

 

 

(10

)

 

 

(0.17

)

Adjustments, net of tax

 

30

 

 

 

0.51

 

 

 

32

 

 

 

0.55

 

Adjusted net income

$

288

 

 

$

4.90

 

 

$

260

 

 

$

4.44

 

______________________________

 

 

 

 

 

 

 

(1) Reflects non-recurring costs associated with acquisitions, including various transaction and integration costs.

(2) The three months ended March 31, 2022 includes certain non-recurring costs associated with disposal of fixed assets. The three months ended March 31, 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
Diluted
Share (2)

Net income

$

911

 

 

$

15.60

 

Adjustments:

 

 

 

Acquisition-related expenses

 

47

 

 

 

0.80

 

Amortization of intangible assets

 

66

 

 

 

1.13

 

Other

 

3

 

 

 

0.04

 

Subtotal, adjustments

 

116

 

 

 

1.97

 

Income tax effect (1)

 

(28

)

 

 

(0.47

)

Adjustments, net of tax

 

88

 

 

 

1.50

 

Adjusted net income per diluted share

$

999

 

 

$

17.10

 

______________________________

 

 

 

(1) Income tax effect calculated at the statutory tax rate of approximately 23.9%.

(2) Computations assume approximately 58.4 million diluted weighted average shares outstanding.

 

View source version on businesswire.comhttps://www.businesswire.com/news/home/20220427005789/en/

Investor Contact: Joseph Krocheski, Joseph.Krocheski@molinahealthcare.com, 562-951-8382
Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588

Source: Molina Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

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