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
LONG BEACH, Calif.--(BUSINESS WIRE)--Oct 26, 2022--
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:
Sponsored
(In millions, except per-share results)
See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end of this release.
“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 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.
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.
The consolidated MCR for the third quarter of 2022 was 88.4%, compared to 88.9% for third quarter of 2021. The net effect of COVID added approximately 60 basis points to the consolidated MCR in the third quarter of 2022, compared to 110 basis points added to the MCR in the third quarter of 2021. The impact varied by segment. On a year-to-date basis the consolidated MCR was 87.9%.
The Medicaid MCR for the third quarter was 88.5%. The net effect of COVID added approximately 10 basis points in the quarter. On a year-to-date basis the Medicaid MCR was 88.2%, at the lower end of the Company’s long-term target range.
The Medicare MCR for the third quarter was 88.7%. The net effect of COVID added approximately 350 basis points in the quarter. On a year-to-date basis the Medicare MCR was 87.4%, in line with the Company’s long-term target range.
The Marketplace MCR for the third quarter was 86.3%. The net effect of COVID added approximately 90 basis points in the quarter. On a year-to-date basis the Marketplace MCR was 85.1%.
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.
Cash and investments at the parent company were $298 million as of September 30, 2022, compared to $348 million as of December 31, 2021.
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.
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.
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.
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.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per-share amounts)
General and administrative expenses
Depreciation and amortization
Total other expenses, net
Income before income tax expense
Net income per share – Diluted
Diluted weighted average shares outstanding
Effective income tax rate
CONSOLIDATED BALANCE SHEETS
except per-share amounts)
Cash and cash equivalents
Prepaid expenses and other current assets
Property, equipment, and capitalized software, net
Goodwill and intangible assets, net
LIABILITIES AND STOCKHOLDERS’ EQUITY
Medical claims and benefits payable
Amounts due government agencies
Accounts payable, accrued liabilities and other
Total current liabilities
Finance lease liabilities
Other long-term liabilities
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
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
Medical claims and benefits payable
Amounts due government agencies
Accounts payable, accrued liabilities and other
Net cash provided by operating activities
Proceeds from sales and maturities of investments
Net cash paid in business combinations
Purchases of property, equipment, and capitalized software
Net cash used in investing activities
Common stock withheld to settle employee tax obligations
Contingent consideration liabilities settled
Net cash used in financing activities
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
Ending Membership by Segment:
Three Months Ended September 30,
Nine Months Ended September 30,
(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:
Medical claims and benefits payable, beginning balance
Components of medical care costs related to:
Payments for medical care costs related to:
Acquired balances, net of post-acquisition adjustments
Change in non-risk and other provider payables
Medical claims and benefits payable, ending balance
Days in Claims Payable (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,
Amortization of intangible assets
Acquisition-related expenses (1)
Reflects non-recurring costs associated with acquisitions, including various transaction and integration costs.
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.
RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES (CONTINUED)
Amortization of intangible assets
Acquisition-related expenses
Adjusted net income per diluted share
Income tax effect calculated at the statutory tax rate of approximately 23.9%.
Computations assume approximately 58.5 million diluted weighted average shares outstanding.
CONTACT: Investor Contact: Joseph Krocheski,Joseph.Krocheski@molinahealthcare.com, 562-951-8382
Media Contact:Caroline Zubieta,Caroline.Zubieta@molinahealthcare.com, 562-951-1588
KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: MANAGED CARE PROFESSIONAL SERVICES HEALTH INSURANCE
SOURCE: Molina Healthcare, Inc.
Copyright Business Wire 2022.
PUB: 10/26/2022 04:15 PM/DISC: 10/26/2022 04:17 PM
http://www.businesswire.com/news/home/20221026005765/en
Sponsored
