Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

Molina Healthcare Reports Third Quarter 2022 Financial Results


Molina Healthcare, Inc. (NYSE: MOH) (the "Company") today reported third quarter 2022 GAAP earnings per diluted share of $3.95 and adjusted earnings per diluted share of $4.36. Financial results are summarized below:

 

Quarter ended

 

Nine months ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

(In millions, except per-share results)

Premium Revenue

$7,636

 

$6,800

 

$22,966

 

$19,689

Total Revenue

$7,927

 

$7,040

 

$23,751

 

$20,362

 

 

 

 

 

 

 

 

GAAP:

 

 

 

 

 

 

 

Net Income

$230

 

$143

 

$736

 

$556

EPS ? Diluted

$3.95

 

$2.46

 

$12.58

 

$9.51

Medical Care Ratio (MCR)

88.4%

 

88.9%

 

87.9%

 

88.1%

G&A Ratio

7.1%

 

7.5%

 

7.1%

 

7.3%

After-tax Margin

2.9%

 

2.0%

 

3.1%

 

2.7%

 

 

 

 

 

 

 

 

Adjusted:

 

 

 

 

 

 

 

Net Income

$254

 

$164

 

$808

 

$623

EPS ? Diluted

$4.36

 

$2.83

 

$13.81

 

$10.66

G&A Ratio

6.9%

 

7.3%

 

6.9%

 

7.1%

After-tax Margin

3.2%

 

2.3%

 

3.4%

 

3.1%

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

Quarter Highlights

"We are very pleased with our third quarter financial and operating performance, which includes the announcement of significant new business wins," said Joseph Zubretsky, President and Chief Executive Officer. "We executed well, delivered strong operating earnings, and continued to deliver on our growth strategy. Our projected 2022 earnings baseline is solid, and the embedded earnings power of the company continues to build. In summary, the company's financial and operational performance validates our long-term revenue growth strategy and its value creation potential."

Premium Revenue

Premium revenue was approximately $7.6 billion for the third quarter of 2022, an increase of 12% compared to the third 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 third quarter of 2022 was $3.95 per diluted share, compared to $2.46 per diluted share in the third quarter of 2021. Adjusted net income for the third quarter of 2022 was $4.36 per diluted share, compared to $2.83 per diluted share in the third quarter of 2021. The net effect of COVID decreased the third quarter of 2022 GAAP and adjusted EPS by $0.59 per diluted share, compared to a decrease of $1.00 per diluted share in the third quarter of 2021.

Medical Care Ratio

General and Administrative Expense Ratio

The G&A ratio for the third quarter of 2022 was 7.1%, compared to 7.5% for the third quarter of 2021. The adjusted G&A ratio was 6.9% for the third quarter of 2022, compared to 7.3% for the third quarter of 2021. The year over year improvement reflects disciplined cost management and the benefits of fixed cost leverage produced by our increase in revenue.

Balance Sheet

Cash and investments at the parent company were $298 million as of September 30, 2022, compared to $348 million as of December 31, 2021.

Cash Flow

Operating cash flow for the nine months ended September 30, 2022, was $985 million, which was lower compared to the nine months ended September 30, 2021, primarily due to the net impact of timing differences in government receivables and payables partially offset by the impact of increased net earnings.

2022 Guidance

Premium revenue for full year 2022 is now expected to be approximately $30.5 billion, above the previous guidance of approximately $30 billion. The increase of $500 million includes third quarter outperformance, the addition of the AgeWell acquisition, which closed October 1, 2022, and the expected impact of the extension of the Public Health Emergency from October to January 2023.

The Company increased its full year 2022 adjusted earnings guidance to at least $17.75 per diluted share, above the previous guidance of at least $17.60 per diluted share. The increase above previous guidance is driven by third quarter outperformance, expected margin on additional revenue resulting from the extension of the Public Health Emergency and higher expected net investment income, partially offset by higher expected G&A driven by fourth quarter marketing and open enrollment activities and new contract wins.

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 third quarter 2022 results at 8:00 a.m. Eastern Time on Thursday, October 27, 2022. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 7246369. A telephonic replay of the conference call will be available through Thursday, November 10, 2022, by dialing (877) 344-7529 and entering confirmation number 8349243. 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 5.2 million members as of September 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 September 30, 2022, which the Company expects to file on or about October 27, 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 October 26, 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

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

(In millions, except per-share amounts)

Revenue:

 

 

 

 

 

 

 

Premium revenue

$

7,636

 

 

$

6,800

 

 

$

22,966

 

 

$

19,689

 

Premium tax revenue

 

223

 

 

 

204

 

 

 

646

 

 

 

576

 

Investment income

 

49

 

 

 

20

 

 

 

82

 

 

 

39

 

Other revenue

 

19

 

 

 

16

 

 

 

57

 

 

 

58

 

Total revenue

 

7,927

 

 

 

7,040

 

 

 

23,751

 

 

 

20,362

 

Operating expenses:

 

 

 

 

 

 

 

Medical care costs

 

6,748

 

 

 

6,049

 

 

 

20,183

 

 

 

17,342

 

General and administrative expenses

 

560

 

 

 

532

 

 

 

1,682

 

 

 

1,489

 

Premium tax expenses

 

223

 

 

 

204

 

 

 

646

 

 

 

576

 

Depreciation and amortization

 

45

 

 

 

32

 

 

 

129

 

 

 

96

 

Other

 

16

 

 

 

2

 

 

 

43

 

 

 

30

 

Total operating expenses

 

7,592

 

 

 

6,819

 

 

 

22,683

 

 

 

19,533

 

Operating income

 

335

 

 

 

221

 

 

 

1,068

 

 

 

829

 

Other expenses, net:

 

 

 

 

 

 

 

Interest expense

 

28

 

 

 

30

 

 

 

83

 

 

 

90

 

Total other expenses, net

 

28

 

 

 

30

 

 

 

83

 

 

 

90

 

Income before income tax expense

 

307

 

 

 

191

 

 

 

985

 

 

 

739

 

Income tax expense

 

77

 

 

 

48

 

 

 

249

 

 

 

183

 

Net income

$

230

 

 

$

143

 

 

$

736

 

 

$

556

 

 

 

 

 

 

 

 

 

Net income per share ? Diluted

$

3.95

 

 

$

2.46

 

 

$

12.58

 

 

$

9.51

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

58.3

 

 

 

58.5

 

 

 

58.5

 

 

 

58.5

 

 

 

 

 

 

 

 

 

Operating Statistics:

 

 

 

 

 

 

 

Medical care ratio

 

88.4

%

 

 

88.9

%

 

 

87.9

%

 

 

88.1

%

G&A ratio

 

7.1

%

 

 

7.5

%

 

 

7.1

%

 

 

7.3

%

Premium tax ratio

 

2.8

%

 

 

2.9

%

 

 

2.7

%

 

 

2.8

%

Effective income tax rate

 

24.9

%

 

 

24.8

%

 

 

25.2

%

 

 

24.7

%

After-tax margin

 

2.9

%

 

 

2.0

%

 

 

3.1

%

 

 

2.7

%

MOLINA HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

September 30,

 

December 31,

 

 

2022

 

 

 

2021

 

 

Unaudited

 

 

 

(Dollars in millions,

except per-share amounts)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

4,242

 

 

$

4,438

 

Investments

 

3,639

 

 

 

3,202

 

Receivables

 

2,220

 

 

 

2,177

 

Prepaid expenses and other current assets

 

391

 

 

 

247

 

Total current assets

 

10,492

 

 

 

10,064

 

Property, equipment, and capitalized software, net

 

412

 

 

 

396

 

Goodwill and intangible assets, net

 

1,263

 

 

 

1,252

 

Restricted investments

 

242

 

 

 

212

 

Deferred income taxes

 

198

 

 

 

106

 

Other assets

 

186

 

 

 

179

 

Total assets

$

12,793

 

 

$

12,209

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

Medical claims and benefits payable

$

3,622

 

 

$

3,363

 

Amounts due government agencies

 

2,139

 

 

 

2,472

 

Accounts payable, accrued liabilities and other

 

818

 

 

 

842

 

Deferred revenue

 

663

 

 

 

370

 

Total current liabilities

 

7,242

 

 

 

7,047

 

Long-term debt

 

2,175

 

 

 

2,173

 

Finance lease liabilities

 

217

 

 

 

219

 

Other long-term liabilities

 

118

 

 

 

140

 

Total liabilities

 

9,752

 

 

 

9,579

 

Stockholders' equity:

 

 

 

Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at September 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

 

289

 

 

 

236

 

Accumulated other comprehensive loss

 

(185

)

 

 

(5

)

Retained earnings

 

2,937

 

 

 

2,399

 

Total stockholders' equity

 

3,041

 

 

 

2,630

 

Total liabilities and stockholders' equity

$

12,793

 

 

$

12,209

 

MOLINA HEALTHCARE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Nine Months Ended

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

 

 

 

(In millions)

Operating activities:

 

 

 

Net income

$

736

 

 

$

556

 

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

 

 

 

Depreciation and amortization

 

129

 

 

 

96

 

Deferred income taxes

 

(35

)

 

 

(8

)

Share-based compensation

 

80

 

 

 

49

 

Other, net

 

(3

)

 

 

9

 

Changes in operating assets and liabilities:

 

 

 

Receivables

 

(15

)

 

 

(247

)

Prepaid expenses and other current assets

 

(110

)

 

 

(43

)

Medical claims and benefits payable

 

251

 

 

 

522

 

Amounts due government agencies

 

(360

)

 

 

810

 

Accounts payable, accrued liabilities and other

 

(40

)

 

 

129

 

Deferred revenue

 

293

 

 

 

(374

)

Income taxes

 

59

 

 

 

23

 

Net cash provided by operating activities

 

985

 

 

 

1,522

 

Investing activities:

 

 

 

Purchases of investments

 

(1,764

)

 

 

(2,018

)

Proceeds from sales and maturities of investments

 

1,082

 

 

 

965

 

Net cash paid in business combinations

 

(134

)

 

 

?

 

Purchases of property, equipment, and capitalized software

 

(81

)

 

 

(56

)

Other, net

 

(41

)

 

 

3

 

Net cash used in investing activities

 

(938

)

 

 

(1,106

)

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

 

15

 

 

 

(4

)

Net cash used in financing activities

 

(258

)

 

 

(204

)

Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents

 

(211

)

 

 

212

 

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

$

4,295

 

 

$

4,435

 

MOLINA HEALTHCARE, INC.

UNAUDITED SEGMENT DATA

(Dollars in millions)

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

2022

 

2021

 

2021

Ending Membership by Segment:

 

 

 

 

 

Medicaid

4,667,000

 

4,329,000

 

3,981,000

Medicare

155,000

 

142,000

 

138,000

Marketplace

353,000

 

728,000

 

719,000

Total

5,175,000

 

5,199,000

 

4,838,000

 

Three Months Ended September 30,

 

2022

 

2021

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

 

 

 

 

 

Medicaid

$

6,125

 

$

703

 

88.5

%

 

$

5,146

 

$

532

 

89.6

%

Medicare

 

947

 

 

108

 

88.7

 

 

 

875

 

 

151

 

82.8

 

Marketplace

 

564

 

 

77

 

86.3

 

 

 

779

 

 

68

 

91.3

 

Consolidated

$

7,636

 

$

888

 

88.4

%

 

$

6,800

 

$

751

 

88.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

2022

 

2021

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

 

 

 

 

 

Medicaid

$

18,406

 

$

2,168

 

88.2

%

 

$

15,020

 

$

1,687

 

88.8

%

Medicare

 

2,847

 

 

360

 

87.4

 

 

 

2,488

 

 

329

 

86.8

 

Marketplace

 

1,713

 

 

255

 

85.1

 

 

 

2,181

 

 

331

 

84.8

 

Consolidated

$

22,966

 

$

2,783

 

87.9

%

 

$

19,689

 

$

2,347

 

88.1

%

__________________ 

 

 

 

 

 

 

 

 

 

 

 

(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:

 

Nine Months Ended

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

 

 

 

Unaudited

Medical claims and benefits payable, beginning balance

$

3,363

 

 

$

2,696

 

Components of medical care costs related to:

 

 

 

Current year

 

20,521

 

 

 

17,558

 

Prior year

 

(338

)

 

 

(216

)

Total medical care costs

 

20,183

 

 

 

17,342

 

Payments for medical care costs related to:

 

 

 

Current year

 

17,538

 

 

 

14,880

 

Prior year

 

2,481

 

 

 

2,008

 

Total paid

 

20,019

 

 

 

16,888

 

Acquired balances, net of post-acquisition adjustments

 

8

 

 

 

(27

)

Change in non-risk and other provider payables

 

87

 

 

 

68

 

Medical claims and benefits payable, ending balance

$

3,622

 

 

$

3,191

 

 

 

 

 

Days in Claims Payable (1)

 

50

 

 

 

49

 

__________________

(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,

2022

 

2021

 

2022

 

2021

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

Net income

$

230

 

 

$

3.95

 

 

$

143

 

 

$

2.46

 

 

$

736

 

 

$

12.58

 

 

$

556

 

 

$

9.51

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

19

 

 

 

0.33

 

 

 

11

 

 

 

0.20

 

 

 

56

 

 

 

0.96

 

 

 

35

 

 

 

0.60

 

Acquisition-related expenses (1)

 

12

 

 

 

0.21

 

 

 

17

 

 

 

0.28

 

 

 

38

 

 

 

0.65

 

 

 

44

 

 

 

0.75

 

Other (2)

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

 

9

 

 

 

0.16

 

Subtotal, adjustments

 

31

 

 

 

0.54

 

 

 

28

 

 

 

0.48

 

 

 

94

 

 

 

1.61

 

 

 

88

 

 

 

1.51

 

Income tax effect

 

(7

)

 

 

(0.13

)

 

 

(7

)

 

 

(0.11

)

 

 

(22

)

 

 

(0.38

)

 

 

(21

)

 

 

(0.36

)

Adjustments, net of tax

 

24

 

 

 

0.41

 

 

 

21

 

 

 

0.37

 

 

 

72

 

 

 

1.23

 

 

 

67

 

 

 

1.15

 

Adjusted net income

$

254

 

 

$

4.36

 

 

$

164

 

 

$

2.83

 

 

$

808

 

 

$

13.81

 

 

$

623

 

 

$

10.66

 

__________________

(1)

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

(2)

The nine months ended September 30, 2022 includes certain non-recurring costs associated with gain on lease termination and disposal of fixed assets. The nine months ended September 30, 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

$

944

 

 

$

16.13

 

Adjustments:

 

 

 

Amortization of intangible assets

 

77

 

 

 

1.31

 

Acquisition-related expenses

 

47

 

 

 

0.82

 

Subtotal, adjustments

 

124

 

 

 

2.13

 

Income tax effect (1)

 

(30

)

 

 

(0.51

)

Adjustments, net of tax

 

94

 

 

 

1.62

 

Adjusted net income per diluted share

$

1,038

 

 

$

17.75

 

__________________

(1)

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

(2)

Computations assume approximately 58.5 million diluted weighted average shares outstanding.

 


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News published on 26 october 2022 at 16:20 and distributed by: