Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Molina Healthcare Reports Third Quarter 2023 Financial Results By: Molina Healthcare, Inc. via Business Wire October 25, 2023 at 16:05 PM EDT 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/Contacts Investor Contact: Joseph Krocheski, Joseph.Krocheski@molinahealthcare.com, 562-549-4100 Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Molina Healthcare Reports Third Quarter 2023 Financial Results By: Molina Healthcare, Inc. via Business Wire October 25, 2023 at 16:05 PM EDT 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/Contacts Investor Contact: Joseph Krocheski, Joseph.Krocheski@molinahealthcare.com, 562-549-4100 Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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
