Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 8-K

______________

Current Report

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 25, 2023

______________

MOLINA HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)


Delaware	1-31719	13-4204626
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

______________


200 Oceangate, Suite 100,	Long Beach,	California	90802
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (562) 435-3666

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	MOH	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


Emerging growth company			☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
			☐

Item 2.02. Results of Operations and Financial Condition.

On October 25, 2023, Molina Healthcare, Inc. (the “Company”) issued a press release reporting its financial results for the third quarter ended September 30, 2023 and affirming its previously announced full-year 2023 guidance with respect to earnings per diluted share. The full text of the press release is included as Exhibit 99.1 to this report. The information contained in the Company’s website cited in the press release is not part of this report.

Note: The information in this Form 8-K and the exhibits attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:


Exhibit No.			Description
99.1			Press release of Molina Healthcare, Inc., issued October 25, 2023.
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		MOLINA HEALTHCARE, INC.

Date:	October 25, 2023	By:	/s/ Jeff D. Barlow
			Jeff D. Barlow
			Chief Legal Officer and Secretary

News Release

Investor Contact: Joseph Krocheski, Joseph.Krocheski@molinahealthcare.com, 562-549-4100

Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588

Molina Healthcare Reports Third Quarter 2023 Financial Results

Affirms Full Year 2023 Earnings Guidance

Long Beach, Calif, October 25, 2023 – 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.

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 2

October 25, 2023

“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.

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 3

October 25, 2023

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.

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 4

October 25, 2023

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

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 5

October 25, 2023

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

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 6

October 25, 2023

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

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 7

October 25, 2023

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.

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 8

October 25, 2023

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.

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 9

October 25, 2023

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.

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Molina Healthcare, Inc. Reports Third Quarter 2023 Financial Results

Page 10

October 25, 2023

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.

-END-

Cover Page Document	Oct. 25, 2023
Cover [Abstract]
Entity Central Index Key	0001179929
Document Type	8-K
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Stock, $0.001 Par Value
Entity Incorporation, State or Country Code	DE
Entity File Number	1-31719
Entity Tax Identification Number	13-4204626
Trading Symbol	MOH
Security Exchange Name	NYSE
Document Period End Date	Oct. 25, 2023
Entity Registrant Name	MOLINA HEALTHCARE, INC.
City Area Code	562
Local Phone Number	435-3666
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Amendment Flag	false
Entity Address, Address Line One	200 Oceangate, Suite 100,
Entity Address, City or Town	Long Beach,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90802