Affirms Full Year 2023 Earnings Guidance
Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today
reported third quarter 2023 GAAP earnings per diluted share of
$4.21 and adjusted earnings per diluted share of $5.05. Financial
results are summarized below:
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(In millions, except per-share
results)
Premium Revenue
$8,240
$7,636
$24,167
$22,966
Total Revenue
$8,548
$7,927
$25,024
$23,751
GAAP:
Net Income
$245
$230
$875
$736
EPS – Diluted
$4.21
$3.95
$15.08
$12.58
Medical Care Ratio (MCR)
88.7%
88.4%
87.8%
87.9%
G&A Ratio
7.1%
7.1%
7.3%
7.1%
After-tax Margin
2.9%
2.9%
3.5%
3.1%
Adjusted:
Net Income
$294
$254
$958
$808
EPS – Diluted
$5.05
$4.36
$16.50
$13.81
G&A Ratio
7.1%
6.9%
7.2%
6.9%
After-tax Margin
3.4%
3.2%
3.8%
3.4%
See the Reconciliation of Unaudited
Non-GAAP Financial Measures at the end of this release.
Quarter Highlights
- As of September 30, 2023, the Company served approximately 5.2
million members, an increase of 1% year over year.
- Premium revenue was approximately $8.2 billion for the third
quarter of 2023, an increase of 8% year over year.
- GAAP net income was $4.21 per diluted share for the third
quarter of 2023, an increase of 7% year over year.
- Adjusted net income was $5.05 per diluted share for the third
quarter of 2023, an increase of 16% year over year.
- The Company affirms its full-year 2023 adjusted earnings
guidance of at least $20.75 per diluted share, an increase of 16%
year over year.
“We are very pleased with our third-quarter performance,” said
Joseph Zubretsky, President and Chief Executive Officer. “We have
maintained our attractive margin profile during this unprecedented
industry-wide redetermination process while continuing to generate
double-digit growth.”
Premium Revenue Premium revenue was $8.2 billion for the
third quarter of 2023, an increase of 8% year over year. The higher
premium revenue reflects changing member mix year over year.
Net Income GAAP net income for the third quarter of 2023
was $4.21 per diluted share, an increase of 7% year over year. The
GAAP EPS includes a $0.54 per share nonrecurring credit loss charge
for a Marketplace risk adjustment receivable in the Company’s Texas
health plan. Adjusted net income for the third quarter of 2023 was
$5.05 per diluted share, an increase of 16% year over year.
Medical Care Ratio (MCR)
- The consolidated MCR for the third quarter of 2023 was
88.7%.
- The Medicaid MCR for the third quarter of 2023 was 88.8%, in
line with the Company’s expectation and long-term target
range.
- The Medicare MCR for the third quarter of 2023 was 92.4%, above
the Company’s long‑term target range, reflecting higher utilization
of outpatient, professional, and in-home services.
- The Marketplace MCR for the third quarter of 2023 was 78.9%,
reflecting the Company’s pricing strategy and improved risk
adjustment results.
General and Administrative Expense Ratio The G&A
ratio and the adjusted G&A ratio for the third quarter of 2023
were both 7.1%, reflecting new business implementation spending
relating to new contract wins.
Balance Sheet Cash and investments at the parent company
were $481 million as of September 30, 2023 compared to $375 million
as of December 31, 2022.
Days in claims payable at September 30, 2023 was 51.
Cash Flow Operating cash flow for the nine months ended
September 30, 2023 was $2,352 million, compared to $985 million for
the nine months ended September 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 affirms its full-year 2023
adjusted earnings per share guidance of at least $20.75, reflecting
third quarter results that were largely consistent with the
Company’s expectations, in addition to considerations of
seasonality and conservatism.
Conference Call Management will host a conference call
and webcast to discuss Molina Healthcare’s third quarter 2023
results at 8:00 a.m. Eastern Time on Thursday, October 26, 2023.
The number to call for the interactive teleconference is (877)
883-0383 and the confirmation number is 2183620. A telephonic
replay of the conference call will be available through Thursday,
November 2, 2023, by dialing (877) 344-7529 and entering
confirmation number 3586044. 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, provides managed healthcare services under the
Medicaid and Medicare programs and through the state insurance
marketplaces. 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. 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 and the Company’s
accompanying oral remarks include, but are not limited to,
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 in the
Company’s other filings with the SEC, including its Quarterly
Report on Form 10-Q for the period ended September 30, 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 October 25, 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(In millions, except per-share
amounts)
Revenue:
Premium revenue
$
8,240
$
7,636
$
24,167
$
22,966
Premium tax revenue
176
223
517
646
Investment income
112
49
280
82
Other revenue
20
19
60
57
Total revenue
8,548
7,927
25,024
23,751
Operating expenses:
Medical care costs
7,306
6,748
21,215
20,183
General and administrative expenses
608
560
1,817
1,682
Premium tax expenses
176
223
517
646
Depreciation and amortization
42
45
128
129
Other
57
16
90
43
Total operating expenses
8,189
7,592
23,767
22,683
Operating income
359
335
1,257
1,068
Other expenses, net:
Interest expense
27
28
82
83
Total other expenses, net
27
28
82
83
Income before income tax expense
332
307
1,175
985
Income tax expense
87
77
300
249
Net income
$
245
$
230
$
875
$
736
Net income per share – Diluted
$
4.21
$
3.95
$
15.08
$
12.58
Diluted weighted average shares
outstanding
58.1
58.3
58.1
58.5
MOLINA HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
December 31,
2023
2022
Unaudited
(Dollars in millions,
except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
5,565
$
4,006
Investments
4,111
3,499
Receivables
2,460
2,302
Prepaid expenses and other current
assets
332
277
Total current assets
12,468
10,084
Property, equipment, and capitalized
software, net
290
259
Goodwill and intangible assets, net
1,471
1,390
Restricted investments
261
238
Deferred income taxes
255
220
Other assets
125
123
Total assets
$
14,870
$
12,314
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Medical claims and benefits payable
$
4,235
$
3,528
Amounts due government agencies
2,476
2,079
Accounts payable, accrued liabilities and
other
1,090
889
Deferred revenue
691
359
Total current liabilities
8,492
6,855
Long-term debt
2,179
2,176
Finance lease liabilities
199
215
Other long-term liabilities
121
104
Total liabilities
10,991
9,350
Stockholders’ equity:
Common stock, $0.001 par value, 150
million shares authorized; outstanding: 58 million shares at each
of September 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
373
328
Accumulated other comprehensive loss
(165
)
(160
)
Retained earnings
3,671
2,796
Total stockholders’ equity
3,879
2,964
Total liabilities and stockholders’
equity
$
14,870
$
12,314
MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
Nine Months Ended
September 30,
2023
2022
(In millions)
Operating activities:
Net income
$
875
$
736
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
128
129
Deferred income taxes
(33
)
(35
)
Share-based compensation
88
80
Other, net
3
(3
)
Changes in operating assets and
liabilities:
Receivables
(132
)
(15
)
Prepaid expenses and other current
assets
(69
)
(110
)
Medical claims and benefits payable
611
251
Amounts due government agencies
377
(360
)
Accounts payable, accrued liabilities and
other
(137
)
(40
)
Deferred revenue
332
293
Income taxes
309
59
Net cash provided by operating
activities
2,352
985
Investing activities:
Purchases of investments
(1,295
)
(1,764
)
Proceeds from sales and maturities of
investments
670
1,082
Net cash paid in business combinations
(3
)
(134
)
Purchases of property, equipment, and
capitalized software
(89
)
(81
)
Other, net
(2
)
(41
)
Net cash used in investing activities
(719
)
(938
)
Financing activities:
Common stock withheld to settle employee
tax obligations
(60
)
(53
)
Common stock purchases
—
(200
)
Contingent consideration liabilities
settled
—
(20
)
Other, net
(1
)
15
Net cash used in financing activities
(61
)
(258
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash and cash equivalents
1,572
(211
)
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
$
5,620
$
4,295
MOLINA HEALTHCARE, INC.
UNAUDITED SEGMENT DATA (Dollars in millions)
September 30,
December 31,
September 30,
2023
2022
2022
Ending Membership by Segment:
Medicaid
4,757,000
4,754,000
4,667,000
Medicare
173,000
156,000
155,000
Marketplace
276,000
348,000
353,000
Total
5,206,000
5,258,000
5,175,000
Three Months Ended September
30,
2023
2022
Premium
Revenue
Medical
Margin
MCR (1)
Premium
Revenue
Medical
Margin
MCR (1)
Medicaid
$
6,711
$
752
88.8
%
$
6,125
$
703
88.5
%
Medicare
1,032
78
92.4
947
108
88.7
Marketplace
497
104
78.9
564
77
86.3
Consolidated
$
8,240
$
934
88.7
%
$
7,636
$
888
88.4
%
Nine Months Ended September
30,
2023
2022
Premium
Revenue
Medical
Margin
MCR (1)
Premium
Revenue
Medical
Margin
MCR (1)
Medicaid
$
19,545
$
2,242
88.5
%
$
18,406
$
2,168
88.2
%
Medicare
3,122
317
89.8
2,847
360
87.4
Marketplace
1,500
393
73.8
1,713
255
85.1
Consolidated
$
24,167
$
2,952
87.8
%
$
22,966
$
2,783
87.9
%
______________________________________ (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:
Nine Months Ended
September 30,
2023
2022
Unaudited
Medical claims and benefits payable,
beginning balance
$
3,528
$
3,363
Components of medical care costs related
to:
Current year
21,573
20,521
Prior year
(358
)
(338
)
Total medical care costs
21,215
20,183
Payments for medical care costs related
to:
Current year
18,228
17,538
Prior year
2,707
2,481
Total paid
20,935
20,019
Acquired balances, net of post-acquisition
adjustments
96
8
Change in non-risk and other provider
payables
331
87
Medical claims and benefits payable,
ending balance
$
4,235
$
3,622
Days in Claims Payable (1)
51
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
Amount
Per
Diluted
Share
GAAP Net income
$
245
$
4.21
$
230
$
3.95
$
875
$
15.08
$
736
$
12.58
Adjustments:
Amortization of intangible assets
$
20
$
0.36
$
19
$
0.33
$
63
$
1.09
$
56
$
0.96
Acquisition-related expenses (1)
2
0.04
12
0.21
4
0.07
38
0.65
Other (2)
41
0.70
—
—
41
0.70
—
—
Subtotal, adjustments
63
1.10
31
0.54
108
1.86
94
1.61
Income tax effect
(14
)
(0.26
)
(7
)
(0.13
)
(25
)
(0.44
)
(22
)
(0.38
)
Adjustments, net of tax
49
0.84
24
0.41
83
1.42
72
1.23
Adjusted net income
$
294
$
5.05
$
254
$
4.36
$
958
$
16.50
$
808
$
13.81
_______________________
(1)
Reflects non-recurring costs associated
with acquisitions, including various transaction and certain
integration costs.
(2)
The three and nine months ended September
30, 2023, reflect a credit loss on 2022 Marketplace risk adjustment
receivables due to the insolvency of an issuer in the Texas risk
pool. The nine months ended September 30, 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
$
1,099
$
18.92
Adjustments:
Amortization of intangible assets
87
1.50
Acquisition-related expenses
5
0.08
Other
48
0.82
Subtotal, adjustments
140
2.40
Income tax effect (1)
(33
)
(0.57
)
Adjustments, net of tax
107
1.83
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/20231025877862/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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