Increases Full-Year 2023 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today
reported second quarter 2023 GAAP earnings per diluted share of
$5.35 and adjusted earnings per diluted share of $5.65. Financial
results are summarized below:
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(In millions, except per-share
results)
Premium Revenue
$8,042
$7,799
$15,927
$15,330
Total Revenue
$8,327
$8,054
$16,476
$15,824
GAAP:
Net Income
$309
$248
$630
$506
EPS – Diluted
$5.35
$4.25
$10.87
$8.63
Medical Care Ratio (MCR)
87.5%
88.1%
87.3%
87.6%
G&A Ratio
7.4%
6.8%
7.3%
7.1%
After-tax Margin
3.7%
3.1%
3.8%
3.2%
Adjusted:
Net Income
$327
$266
$664
$554
EPS – Diluted
$5.65
$4.55
$11.45
$9.45
G&A Ratio
7.4%
6.8%
7.3%
6.9%
After-tax Margin
3.9%
3.3%
4.0%
3.5%
See the Reconciliation of Unaudited
Non-GAAP Financial Measures at the end of this release.
Quarter Highlights
- As of June 30, 2023, and including the early impact of Medicaid
redeterminations, the Company served approximately 5.2 million
members, an increase of 1% compared to June 30, 2022.
- Premium revenue was approximately $8.0 billion for the second
quarter of 2023, an increase of 3% compared to the second quarter
of 2022.
- GAAP net income was $5.35 per diluted share for the second
quarter of 2023, an increase of 26% compared to the second quarter
of 2022.
- Adjusted net income was $5.65 per diluted share for the second
quarter of 2023, an increase of 24% compared to the second quarter
of 2022.
- The Company increased its full year 2023 adjusted earnings
guidance by $0.50 to at least $20.75 per diluted share, a 16%
increase compared to 2022.
“Our performance this quarter supports our long-term outlook for
revenue and earnings growth,” said Joseph Zubretsky, President and
Chief Executive Officer. “We continue to build the revenue base and
new store earnings profile, our operating results provide a very
solid earnings base, and we have seen nothing in the early stages
of the Medicaid redetermination process that changes our view of
the earnings trajectory of the business.”
Premium Revenue
Premium revenue was $8.0 billion for the second quarter of 2023,
an increase of 3% compared to the second quarter of 2022. The
higher premium revenue reflects increased Medicaid and Medicare
membership.
Net Income
GAAP net income for the second quarter of 2023 was $5.35 per
diluted share, an increase of 26% compared to the second quarter of
2022. Adjusted net income for the second quarter of 2023 was $5.65
per diluted share, an increase of 24% compared to the second
quarter of 2022.
Medical Care Ratio
- The consolidated MCR for the second quarter of 2023 was 87.5%,
reflecting continued strong operating performance and medical cost
management.
- The Medicaid MCR for the second quarter of 2023 was 88.3%, in
line with the Company’s expectation and long-term target
range.
- The Medicare MCR for the second quarter of 2023 was 89.2%,
above the Company’s long‑term target range, reflecting higher
utilization of outpatient and professional services and higher MCRs
associated with membership growth.
- The Marketplace MCR for the second quarter of 2023 was 73.7%,
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 second
quarter of 2023 were both 7.4%, reflecting new business
implementation spending ahead of new contract wins commencing in
July 2023 and next year.
Balance Sheet
Cash and investments at the parent company were $482 million as
of June 30, 2023, compared to $375 million as of December 31,
2022.
Days in claims payable at June 30, 2023, was 47.
Cash Flow
Operating cash flow for the six months ended June 30, 2023, was
$1,403 million, compared to $731 million for the six months ended
June 30, 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 $20.75, compared to the previous
guidance of at least $20.25 per diluted share. The increase to
earnings guidance reflects second quarter operating and investment
income performance above the Company’s expectations and higher
expected investment income in the second half of the year,
partially offset by some continued conservatism.
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 second quarter 2023 results at 8:00 a.m.
Eastern Time on Thursday, July 27, 2023. The number to call for the
interactive teleconference is (877) 883-0383 and the confirmation
number is 0165438. A telephonic replay of the conference call will
be available through Thursday, August 3, 2023, by dialing (877)
344-7529 and entering confirmation number 6917541. 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
126), provides managed healthcare services under the Medicaid and
Medicare programs and through the state insurance marketplaces.
Molina Healthcare served approximately 5.2 million members as of
June 30, 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, Medicaid redeterminations, and future revenue growth.
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 June 30, 2023,
which the Company expects to file on or about July 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 July 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
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
8,042
$
7,799
$
15,927
$
15,330
Premium tax revenue
169
215
341
423
Investment income
97
22
168
33
Other revenue
19
18
40
38
Total revenue
8,327
8,054
16,476
15,824
Operating expenses:
Medical care costs
7,038
6,872
13,909
13,435
General and administrative expenses
618
551
1,209
1,122
Premium tax expenses
169
215
341
423
Depreciation and amortization
42
44
86
84
Other
17
11
33
27
Total operating expenses
7,884
7,693
15,578
15,091
Operating income
443
361
898
733
Other expenses, net:
Interest expense
27
27
55
55
Total other expenses, net
27
27
55
55
Income before income tax expense
416
334
843
678
Income tax expense
107
86
213
172
Net income
$
309
$
248
$
630
$
506
Net income per share – Diluted
$
5.35
$
4.25
$
10.87
$
8.63
Diluted weighted average shares
outstanding
57.9
58.4
58.0
58.6
MOLINA HEALTHCARE,
INC.
CONSOLIDATED BALANCE
SHEETS
June 30,
December 31,
2023
2022
Unaudited
(Dollars in millions,
except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
4,910
$
4,006
Investments
3,886
3,499
Receivables
2,385
2,302
Prepaid expenses and other current
assets
260
277
Total current assets
11,441
10,084
Property, equipment, and capitalized
software, net
285
259
Goodwill and intangible assets, net
1,348
1,390
Restricted investments
249
238
Deferred income taxes
220
220
Other assets
118
123
Total assets
$
13,661
$
12,314
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
3,677
$
3,528
Amounts due government agencies
2,589
2,079
Accounts payable, accrued liabilities and
other
857
889
Deferred revenue
414
359
Total current liabilities
7,537
6,855
Long-term debt
2,178
2,176
Finance lease liabilities
203
215
Other long-term liabilities
122
104
Total liabilities
10,040
9,350
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 58 million shares at each
of June 30, 2023 and December 31, 2022
—
—
Preferred stock, $0.001 par value; 20
million shares authorized, no shares issued and outstanding
—
—
Additional paid-in capital
341
328
Accumulated other comprehensive loss
(146
)
(160
)
Retained earnings
3,426
2,796
Total stockholders’ equity
3,621
2,964
Total liabilities and stockholders’
equity
$
13,661
$
12,314
MOLINA HEALTHCARE,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2023
2022
(In millions)
Operating activities:
Net income
$
630
$
506
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
86
84
Deferred income taxes
(4
)
3
Share-based compensation
55
57
Other, net
5
(6
)
Changes in operating assets and
liabilities:
Receivables
(83
)
(43
)
Prepaid expenses and other current
assets
6
(64
)
Medical claims and benefits payable
149
405
Amounts due government agencies
510
247
Accounts payable, accrued liabilities and
other
(208
)
(147
)
Deferred revenue
55
(357
)
Income taxes
202
46
Net cash provided by operating
activities
1,403
731
Investing activities:
Purchases of investments
(924
)
(1,413
)
Proceeds from sales and maturities of
investments
546
879
Purchases of property, equipment, and
capitalized software
(63
)
(50
)
Other, net
2
(7
)
Net cash used in investing activities
(439
)
(591
)
Financing activities:
Common stock withheld to settle employee
tax obligations
(59
)
(53
)
Common stock purchases
—
(200
)
Contingent consideration liabilities
settled
—
(20
)
Other, net
4
5
Net cash used in financing activities
(55
)
(268
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash and cash equivalents
909
(128
)
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
$
4,957
$
4,378
MOLINA HEALTHCARE,
INC.
UNAUDITED SEGMENT DATA
(Dollars in millions)
June 30,
December 31,
June 30,
2023
2022
2022
Ending Membership by Segment:
Medicaid
4,741,000
4,754,000
4,610,000
Medicare
166,000
156,000
151,000
Marketplace
269,000
348,000
357,000
Total
5,176,000
5,258,000
5,118,000
Three Months Ended June
30,
2023
2022
Premium
Revenue
Medical
Margin
MCR (1)
Premium
Revenue
Medical
Margin
MCR (1)
Medicaid
$
6,485
$
756
88.3
%
$
6,301
$
755
88.0
%
Medicare
1,044
113
89.2
957
124
86.9
Marketplace
513
135
73.7
541
48
91.2
Consolidated
$
8,042
$
1,004
87.5
%
$
7,799
$
927
88.1
%
Six Months Ended June
30,
2023
2022
Premium
Revenue
Medical
Margin
MCR (1)
Premium
Revenue
Medical
Margin
MCR (1)
Medicaid
$
12,834
$
1,490
88.4
%
$
12,281
$
1,465
88.1
%
Medicare
2,090
239
88.6
1,900
252
86.7
Marketplace
1,003
289
71.2
1,149
178
84.5
Consolidated
$
15,927
$
2,018
87.3
%
$
15,330
$
1,895
87.6
%
__________________
(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:
Six Months Ended
June 30,
2023
2022
Unaudited
Medical claims and benefits payable,
beginning balance
$
3,528
$
3,363
Components of medical care costs related
to:
Current year
14,180
13,746
Prior year
(271
)
(311
)
Total medical care costs
13,909
13,435
Payments for medical care costs related
to:
Current year
11,166
10,622
Prior year
2,650
2,411
Total paid
13,816
13,033
Acquired balances, net of post-acquisition
adjustments
—
7
Change in non-risk and other provider
payables
56
3
Medical claims and benefits payable,
ending balance
$
3,677
$
3,775
Days in Claims Payable (1)
47
50
__________________
(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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
Amount
Per Diluted Share
GAAP Net income
$
309
$
5.35
$
248
$
4.25
$
630
$
10.87
$
506
$
8.63
Adjustments:
Amortization of intangible assets
$
22
$
0.36
$
19
$
0.33
$
43
$
0.73
$
37
$
0.63
Acquisition-related expenses (1)
2
0.03
7
0.11
2
0.03
26
0.45
Other (2)
—
—
(3
)
(0.04
)
—
—
—
—
Subtotal, adjustments
24
0.39
23
0.40
45
0.76
63
1.08
Income tax effect
(6
)
(0.09
)
(5
)
(0.10
)
(11
)
(0.18
)
(15
)
(0.26
)
Adjustments, net of tax
18
0.30
18
0.30
34
0.58
48
0.82
Adjusted net income
$
327
$
5.65
$
266
$
4.55
$
664
$
11.45
$
554
$
9.45
__________________
(1)
Reflects non-recurring costs
associated with acquisitions, including various transaction and
certain integration costs.
(2)
The first half of 2022 includes
certain non-recurring costs associated with gain on lease
termination and 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
$
1,137
$
19.51
Adjustments:
Amortization of intangible assets
87
1.50
Acquisition-related expenses
3
0.05
Subtotal, adjustments
90
1.55
Income tax effect (1)
(21
)
(0.31
)
Adjustments, net of tax
69
1.24
Adjusted net income
$
1,206
$
20.75
__________________
(1)
Income tax effect calculated at
the statutory tax rate of approximately 25.3%.
(2)
Computations assume approximately
58.1 million diluted weighted average shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726599444/en/
Investor Contact: Joseph Krocheski,
Joseph.Krocheski@molinahealthcare.com, 562-549-4100 Media
Contact: Caroline Zubieta,
Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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