Increases Full-Year 2023 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today
reported first quarter 2023 GAAP earnings per diluted share of
$5.52 and adjusted earnings per diluted share of $5.81.
Quarter ended
March 31,
2023
2022
(In millions, except per-share
results)
Premium Revenue
$7,885
$7,531
Total Revenue
$8,149
$7,770
GAAP:
Net Income
$321
$258
EPS – Diluted
$5.52
$4.39
Medical Care Ratio (MCR)
87.1%
87.1%
G&A Ratio
7.2%
7.4%
After-tax Margin
3.9%
3.3%
Adjusted:
Net Income
$337
$288
EPS – Diluted
$5.81
$4.90
G&A Ratio
7.2%
7.1%
After-tax Margin
4.1%
3.7%
See the Reconciliation of Unaudited
Non-GAAP Financial Measures at the end of this release.
Quarter Highlights
- As of March 31, 2023, the Company served approximately 5.3
million members, an increase of 4% compared to March 31, 2022.
- Premium revenue was approximately $7.9 billion for the first
quarter of 2023, an increase of 5% compared to the first quarter of
2022.
- GAAP net income was $5.52 per diluted share for the first
quarter of 2023, an increase of 26% compared to the first quarter
of 2022.
- Adjusted net income was $5.81 per diluted share for the first
quarter of 2023, an increase of 19% compared to the first quarter
of 2022.
- The Company increased its full year 2023 adjusted earnings
guidance to at least $20.25 per diluted share, compared to its
previous guidance of at least $19.75 per diluted share.
“We are very pleased with our first quarter results and
increased 2023 earnings guidance,” said Joseph Zubretsky, President
and Chief Executive Officer. “We delivered strong financial
performance and continued our momentum of winning new state
contracts, providing additional visibility into future premium and
earnings growth.”
Premium Revenue
Premium revenue was $7.9 billion for the first quarter of 2023,
an increase of 5% compared to the first quarter of 2022. The higher
premium revenue reflects increased organic membership and the
impact of acquisitions in the Medicaid and Medicare lines of
business, offset by a decline in Marketplace.
Net Income
GAAP net income for the first quarter of 2023 was $5.52 per
diluted share, an increase of 26% compared to the first quarter of
2022. Adjusted net income for the first quarter of 2023 was $5.81
per diluted share, an increase of 19% compared to the first quarter
of 2022.
Medical Care Ratio
- The consolidated MCR for the first quarter of 2023 was 87.1%,
reflecting continued strong medical cost management.
- The Medicaid MCR for the first quarter of 2023 was 88.4%, in
line with the Company’s expectation and long-term target
range.
- The Medicare MCR for the first quarter of 2023 was 88.0%, in
line with the Company’s expectation and long-term target
range.
- The Marketplace MCR for the first quarter of 2023 was 68.6%,
reflecting the Company’s pricing strategy and seasonality.
General and Administrative Expense Ratio
The G&A ratio and the adjusted G&A ratio for the first
quarter of 2023 were 7.2%, reflecting new business implementation
spending ahead of new contract wins, incepting in July 2023 and
January 2024.
Balance Sheet
Cash and investments at the parent company were $283 million as
of March 31, 2023, compared to $375 million as of December 31,
2022.
Days in claims payable at March 31, 2023, was 48, compared to 47
at December 31, 2022.
Cash Flow
Operating cash flow for the first quarter of 2023 was $916
million, compared to $363 million in the first quarter of 2022. The
increase compared to the prior year was primarily due to the net
impact of timing differences in government receivables and
payables, and the growth in operations.
2023 Guidance
The Company increased its full year 2023 adjusted earnings per
share guidance to at least $20.25, compared to the previous
guidance of at least $19.75 per diluted share.
See the Reconciliation of Unaudited Non-GAAP Financial Measures
at the end of this release.
Conference Call
Management will host a conference call and webcast to discuss
Molina Healthcare’s first quarter 2023 results at 8:00 a.m. Eastern
Time on Thursday, April 27, 2023. The number to call for the
interactive teleconference is (877) 883-0383 and the confirmation
number is 1543593. A telephonic replay of the conference call will
be available through Thursday, May 4, 2023, by dialing (877)
344-7529 and entering confirmation number 5745408. 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 5.3 million members as of
March 31, 2023, 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 2023
guidance, including the Company’s 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, 2022, which is on file
with the U.S. Securities and Exchange Commission (the “SEC”), and
also in its Quarterly Report on Form 10-Q for the period ended
March 31, 2023, which the Company expects to file on or about April
27, 2023.
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 26, 2023, 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,
2023
2022
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
7,885
$
7,531
Premium tax revenue
172
208
Investment income
71
11
Other revenue
21
20
Total revenue
8,149
7,770
Operating expenses:
Medical care costs
6,871
6,563
General and administrative expenses
591
571
Premium tax expenses
172
208
Depreciation and amortization
44
40
Other
16
16
Total operating expenses
7,694
7,398
Operating income
455
372
Other expenses, net:
Interest expense
28
28
Total other expenses, net
28
28
Income before income tax expense
427
344
Income tax expense
106
86
Net income
$
321
$
258
Net income per share – Diluted
$
5.52
$
4.39
Diluted weighted average shares
outstanding
58.0
58.7
MOLINA HEALTHCARE,
INC.
CONSOLIDATED BALANCE
SHEETS
March 31,
December 31,
2023
2022
Unaudited
(Dollars in millions,
except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
4,554
$
4,006
Investments
3,810
3,499
Receivables
2,536
2,302
Prepaid expenses and other current
assets
259
277
Total current assets
11,159
10,084
Property, equipment, and capitalized
software, net
274
259
Goodwill and intangible assets, net
1,369
1,390
Restricted investments
242
238
Deferred income taxes
208
220
Other assets
119
123
Total assets
$
13,371
$
12,314
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
3,824
$
3,528
Amounts due government agencies
2,349
2,079
Accounts payable, accrued liabilities and
other
787
889
Deferred revenue
654
359
Total current liabilities
7,614
6,855
Long-term debt
2,177
2,176
Finance lease liabilities
204
215
Other long-term liabilities
88
104
Total liabilities
10,083
9,350
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 58 million shares at each
of March 31, 2023 and December 31, 2022
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
296
328
Accumulated other comprehensive loss
(125
)
(160
)
Retained earnings
3,117
2,796
Total stockholders’ equity
3,288
2,964
Total liabilities and stockholders’
equity
$
13,371
$
12,314
MOLINA HEALTHCARE,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
2023
2022
(In millions)
Operating activities:
Net income
$
321
$
258
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
44
40
Deferred income taxes
1
16
Share-based compensation
25
34
Other, net
5
(8
)
Changes in operating assets and
liabilities:
Receivables
(234
)
21
Prepaid expenses and other current
assets
7
(32
)
Medical claims and benefits payable
296
263
Amounts due government agencies
270
137
Accounts payable, accrued liabilities and
other
(215
)
(81
)
Deferred revenue
295
(352
)
Income taxes
101
67
Net cash provided by operating
activities
916
363
Investing activities:
Purchases of investments
(646
)
(403
)
Proceeds from sales and maturities of
investments
371
513
Purchases of property, equipment, and
capitalized software
(32
)
(23
)
Other, net
5
(13
)
Net cash (used in) provided by investing
activities
(302
)
74
Financing activities:
Common stock withheld to settle employee
tax obligations
(58
)
(52
)
Contingent consideration liabilities
settled
—
(20
)
Other, net
(7
)
(5
)
Net cash used in financing activities
(65
)
(77
)
Net increase in cash, cash equivalents,
and restricted cash and cash equivalents
549
360
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
$
4,597
$
4,866
MOLINA HEALTHCARE,
INC.
UNAUDITED SEGMENT DATA
(Dollars in millions)
March 31,
December 31,
March 31,
2023
2022
2022
Ending Membership by Segment:
Medicaid
4,834,000
4,754,000
4,566,000
Medicare
161,000
156,000
148,000
Marketplace
271,000
348,000
371,000
Total
5,266,000
5,258,000
5,085,000
Three Months Ended March
31,
2023
2022
Premium Revenue
Medical Margin
MCR (1)
Premium Revenue
Medical Margin
MCR (1)
Medicaid
$
6,349
$
734
88.4
%
$
5,980
$
710
88.1
%
Medicare
1,046
126
88.0
943
128
86.5
Marketplace
490
154
68.6
608
130
78.6
Consolidated
$
7,885
$
1,014
87.1
%
$
7,531
$
968
87.1
%
__________________
(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,
2023
2022
Unaudited
Medical claims and benefits payable,
beginning balance
$
3,528
$
3,363
Components of medical care costs related
to:
Current year
7,169
6,769
Prior year
(298
)
(206
)
Total medical care costs
6,871
6,563
Payments for medical care costs related
to:
Current year
4,487
4,197
Prior year
2,358
2,199
Total paid
6,845
6,396
Acquired balances, net of post-acquisition
adjustments
—
(25
)
Change in non-risk and other provider
payables
270
96
Medical claims and benefits payable,
ending balance
$
3,824
$
3,601
Days in Claims Payable (1)
48
51
__________________
(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,
2023
2022
Amount
Per Diluted Share
Amount
Per Diluted Share
GAAP Net income
$
321
$
5.52
$
258
$
4.39
Adjustments:
Amortization of intangible assets
$
21
$
0.38
$
18
$
0.30
Acquisition-related expenses (1)
—
—
19
0.33
Other (2)
—
—
3
0.04
Subtotal, adjustments
21
0.38
40
0.67
Income tax effect
(5
)
(0.09
)
(10
)
(0.16
)
Adjustments, net of tax
16
0.29
30
0.51
Adjusted net income
$
337
$
5.81
$
288
$
4.90
__________________
(1)
Reflects non-recurring costs associated
with acquisitions, including various transaction and certain
integration costs.
(2)
The three months ended March 31, 2022
includes certain non-recurring costs associated with disposal of
fixed assets.
MOLINA HEALTHCARE,
INC.
RECONCILIATION OF UNAUDITED
NON-GAAP FINANCIAL MEASURES (CONTINUED)
2023 GUIDANCE
Amount
Per Diluted Share (2)
GAAP Net income
$
1,105
$
19.02
Adjustments:
Amortization of intangible assets
90
1.55
Acquisition-related expenses
5
0.08
Subtotal, adjustments
95
1.63
Income tax effect (1)
(23
)
(0.40
)
Adjustments, net of tax
72
1.23
Adjusted net income
$
1,177
$
20.25
__________________
(1)
Income tax effect calculated at the statutory tax rate of
approximately 23.7%.
(2)
Computations assume approximately 58.1 million diluted weighted
average shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005700/en/
Investor Contact: Joseph Krocheski,
Joseph.Krocheski@molinahealthcare.com, 562-951-8382 Media
Contact: Caroline Zubieta,
Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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