June 17, 2024

Stream Health Care

It Looks Good On You

Molina Healthcare Reports Fourth Quarter and Year-End 2023 Financial Results

10 min read

Introduces Full Year 2024 Revenue and Earnings Guidance

LONG BEACH, Calif., February 07, 2024–(BUSINESS WIRE)–Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today reported fourth quarter 2023 GAAP earnings per diluted share of $3.70 and adjusted earnings per diluted share of $4.38. The Company also reported full year 2023 GAAP earnings per diluted share of $18.77 and adjusted earnings per diluted share of $20.88. Financial results are summarized below:

 

Three months ended

 

Year ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

(In millions, except per-share results)

Premium Revenue

$8,362

 

$7,917

 

$32,529

 

$30,883

Total Revenue

$9,048

 

$8,223

 

$34,072

 

$31,974

 

 

 

 

 

 

 

 

GAAP:

 

 

 

 

 

 

 

Net Income

$216

 

$56

 

$1,091

 

$792

EPS – Diluted

$3.70

 

$0.96

 

$18.77

 

$13.55

Medical Care Ratio (MCR)

89.1%

 

88.3%

 

88.1%

 

88.0%

G&A Ratio

7.1%

 

7.6%

 

7.2%

 

7.2%

After-tax Margin

2.4%

 

0.7%

 

3.2%

 

2.5%

 

 

 

 

 

 

 

 

Adjusted:

 

 

 

 

 

 

 

Net Income

$255

 

$240

 

$1,213

 

$1,048

EPS – Diluted

$4.38

 

$4.10

 

$20.88

 

$17.92

G&A Ratio

7.0%

 

7.5%

 

7.2%

 

7.1%

After-tax Margin

2.8%

 

2.9%

 

3.6%

 

3.3%

 

 

 

 

 

 

 

 

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

Full Year Highlights

  • As of December 31, 2023, the Company served approximately 5.0 million members.

  • Premium revenue was approximately $32.5 billion for the full year 2023, an increase of 5% year over year.

  • GAAP net income was $18.77 per diluted share for the full year 2023, an increase of 39% year over year.

  • Adjusted net income was $20.88 per diluted share for the full year 2023, an increase of 17% year over year.

  • The Company issued its full year 2024 earnings guidance with expected premium revenue of approximately $38 billion and adjusted earnings of at least $23.50 per diluted share.

“We are very pleased with our fourth quarter and full year results,” said Joseph Zubretsky, President and Chief Executive Officer. “Our 2023 performance reflects the successful execution of our growth strategy which positions us to achieve sustainable and profitable growth in 2024 and beyond.”

Premium Revenue
Premium revenue was approximately $32.5 billion for the full year 2023, an increase of 5% year over year. The higher premium revenue reflects the impact of acquisitions and new RFP wins, partially offset by Medicaid redeterminations.

Net Income
GAAP net income for the full year 2023 was $18.77 per diluted share, an increase of 39% year over year. Adjusted net income for the full year 2023 was $20.88 per diluted share, an increase of 17% year over year.

Medical Care Ratio (MCR)

  • The consolidated MCR for the full year 2023 was 88.1%, consistent with expectation and in line with the Company’s long-term target range.

  • The Medicaid MCR for the full year 2023 was 88.7%, in line with the Company’s expectation and long-term target range. The full year MCR includes the moderate impact from the net effect of redetermination acuity shifts and risk corridors, as well as the impact of new store additions which typically run above portfolio average in the first year.

  • The Medicare MCR for the full year 2023 was 90.7%, above the Company’s long‑term target range, reflecting higher utilization of supplemental benefits, in-home services, and high-cost drugs throughout the year.

  • The Marketplace MCR for the full year 2023 was 75.3%, below the Company’s long-term target range, reflecting the success of the Company’s product and pricing strategy to return the business to target margins.

General and Administrative Expense Ratio
The G&A ratio and the adjusted G&A ratio for the full year 2023 were both 7.2%, reflecting continued cost discipline and new business implementation spending throughout the year relating to new contract wins.

Balance Sheet
Cash and investments at the parent company were $742 million as of December 31, 2023 compared to $375 million as of December 31, 2022.

Days in claims payable at December 31, 2023 was 50.

Cash Flow
Operating cash flow for the year ended December 31, 2023 was $1,662 million, compared to $773 million for the year ended December 31, 2022. The increase in 2023 cash flow was due to the growth in operations and net earnings from organic and new RFP starts and acquisitions, accompanied by the net impact of timing differences in government receivables and payables.

2024 Guidance
Premium revenue for the full year is expected to be approximately $38 billion, an increase of approximately 17% from the full year 2023.

The Company expects its full year adjusted earnings per share in 2024 to be at least $23.50 per share, representing approximately 13% growth over the full year 2023.

Guidance reflects the continued realization of embedded earnings and underlying organic growth. Guidance metrics are summarized below:

 

Full Year 2024 Guidance

 

 

Premium Revenue

$38.0B

 

 

Total Revenue

$39.6B

 

 

GAAP Net Income

$1,278M

 

 

Adjusted Net Income

$1,366M

 

 

GAAP EPS – Diluted

>$22.00

 

 

Adjusted EPS – Diluted

>$23.50

 

 

Diluted weighted average shares

58.1M

 

 

 

 

 

 

Year End Total Membership

5.7M

 

 

Medicaid

5.1M

 

 

Medicare

270K

 

 

Marketplace

370K

 

 

 

 

 

 

MCR

88.2%

 

 

GAAP G&A Ratio

7.1%

 

 

Adjusted G&A Ratio

7.0%

 

 

Effective Tax Rate

25.7%

 

 

GAAP After-tax Margin

3.2%

 

 

Adjusted After-tax Margin

3.4%

 

 

 

 

 

 

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

Conference Call
Management will host a conference call and webcast to discuss Molina Healthcare’s fourth quarter and year ended December 31, 2023 results at 8:00 a.m. Eastern Time on Thursday, February 8, 2024. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 4221213. A telephonic replay of the conference call will be available through Thursday, February 15, 2024, by dialing (877) 344-7529 and entering confirmation number 3687293. 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 include, but are not limited to, statements regarding its 2024 guidance, expectations with respect to continued realization of embedded earnings and underlying organic growth, and our management’s plans and objectives for future operations and business strategy.

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 Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023, and September 30, 2023, which are on file with the SEC, and its Annual Report on Form 10-K for the year ended December 31, 2023, to be filed with the SEC.

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 February 7, 2024, 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

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

(In millions, except per-share amounts)

Revenue:

 

 

 

 

 

 

 

Premium revenue

$

8,362

 

$

7,917

 

$

32,529

 

$

30,883

Premium tax revenue

 

552

 

 

227

 

 

1,069

 

 

873

Investment income

 

114

 

 

61

 

 

394

 

 

143

Other revenue

 

20

 

 

18

 

 

80

 

 

75

Total revenue

 

9,048

 

 

8,223

 

 

34,072

 

 

31,974

Operating expenses:

 

 

 

 

 

 

 

Medical care costs

 

7,454

 

 

6,992

 

 

28,669

 

 

27,175

General and administrative expenses

 

645

 

 

629

 

 

2,462

 

 

2,311

Premium tax expenses

 

552

 

 

227

 

 

1,069

 

 

873

Depreciation and amortization

 

43

 

 

47

 

 

171

 

 

176

Impairment

 

 

 

208

 

 

 

 

208

Other

 

38

 

 

15

 

 

128

 

 

58

Total operating expenses

 

8,732

 

 

8,118

 

 

32,499

 

 

30,801

Operating income

 

316

 

 

105

 

 

1,573

 

 

1,173

Other expenses, net:

 

 

 

 

 

 

 

Interest expense

 

27

 

 

27

 

 

109

 

 

110

Total other expenses, net

 

27

 

 

27

 

 

109

 

 

110

Income before income tax expense

 

289

 

 

78

 

 

1,464

 

 

1,063

Income tax expense

 

73

 

 

22

 

 

373

 

 

271

Net income

$

216

 

$

56

 

$

1,091

 

$

792

 

 

 

 

 

 

 

 

Net income per share – Diluted

$

3.70

 

$

0.96

 

$

18.77

 

$

13.55

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

58.2

 

 

58.4

 

 

58.1

 

 

58.5

 

 

 

 

MOLINA HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS

 

 

December 31,

 

 

2023

 

 

 

2022

 

 

Unaudited

 

 

 

(Dollars in millions,

except per-share amounts)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

4,848

 

 

$

4,006

 

Investments

 

4,259

 

 

 

3,499

 

Receivables

 

3,104

 

 

 

2,302

 

Prepaid expenses and other current assets

 

331

 

 

 

277

 

Total current assets

 

12,542

 

 

 

10,084

 

Property, equipment, and capitalized software, net

 

270

 

 

 

259

 

Goodwill and intangible assets, net

 

1,449

 

 

 

1,390

 

Restricted investments

 

261

 

 

 

238

 

Deferred income taxes, net

 

227

 

 

 

220

 

Other assets

 

143

 

 

 

123

 

Total assets

$

14,892

 

 

$

12,314

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Medical claims and benefits payable

$

4,204

 

 

$

3,528

 

Amounts due government agencies

 

2,294

 

 

 

2,079

 

Accounts payable, accrued liabilities and other

 

1,252

 

 

 

889

 

Deferred revenue

 

418

 

 

 

359

 

Total current liabilities

 

8,168

 

 

 

6,855

 

Long-term debt

 

2,180

 

 

 

2,176

 

Finance lease liabilities

 

205

 

 

 

215

 

Other long-term liabilities

 

124

 

 

 

104

 

Total liabilities

 

10,677

 

 

 

9,350

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at each of December 31, 2023, and December 31, 2022

 

 

 

 

 

Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding

 

 

 

 

 

Additional paid-in capital

 

410

 

 

 

328

 

Accumulated other comprehensive loss

 

(82

)

 

 

(160

)

Retained earnings

 

3,887

 

 

 

2,796

 

Total stockholders’ equity

 

4,215

 

 

 

2,964

 

Total liabilities and stockholders’ equity

$

14,892

 

 

$

12,314

 

 

 

 

 

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Year Ended

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

 

 

 

(In millions)

Operating activities:

 

 

 

Net income

$

1,091

 

 

$

792

 

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

 

 

 

Depreciation and amortization

 

171

 

 

 

176

 

Deferred income taxes

 

(31

)

 

 

(66

)

Share-based compensation

 

115

 

 

 

103

 

Impairment

 

 

 

 

208

 

Other, net

 

2

 

 

 

8

 

Receivables

 

(778

)

 

 

(95

)

Prepaid expenses and other current assets

 

(69

)

 

 

(124

)

Medical claims and benefits payable

 

580

 

 

 

153

 

Amounts due government agencies

 

196

 

 

 

(428

)

Accounts payable, accrued liabilities and other

 

328

 

 

 

55

 

Deferred revenue

 

59

 

 

 

(11

)

Income taxes

 

(2

)

 

 

2

 

Net cash provided by operating activities

 

1,662

 

 

 

773

 

Investing activities:

 

 

 

Purchases of investments

 

(1,433

)

 

 

(1,913

)

Proceeds from sales and maturities of investments

 

772

 

 

 

1,398

 

Net cash paid in business combinations

 

(3

)

 

 

(134

)

Purchases of property, equipment, and capitalized software

 

(84

)

 

 

(91

)

Other, net

 

4

 

 

 

(50

)

Net cash used in investing activities

 

(744

)

 

 

(790

)

Financing activities:

 

 

 

Common stock withheld to settle employee tax obligations

 

(60

)

 

 

(54

)

Common stock purchases

 

 

 

 

(400

)

Contingent consideration liabilities settled

 

 

 

 

(20

)

Other, net

 

2

 

 

 

33

 

Net cash used in financing activities

 

(58

)

 

 

(441

)

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

 

860

 

 

 

(458

)

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

$

4,908

 

 

$

4,048

 

 

 

 

 

MOLINA HEALTHCARE, INC.
UNAUDITED SEGMENT DATA
(Dollars in millions)

 

 

December 31,

 

2023

 

2022

Ending Membership by Segment:

 

 

 

Medicaid

4,542,000

 

4,754,000

Medicare

172,000

 

156,000

Marketplace

281,000

 

348,000

Total

4,995,000

 

5,258,000

 

 

 

 

Three Months Ended December 31,

 

2023

 

2022

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

 

 

 

 

 

Medicaid

$

6,782

 

$

731

 

89.2

%

 

$

6,421

 

$

813

 

87.3

%

Medicare

 

1,057

 

 

71

 

93.3

 

 

 

948

 

 

77

 

91.8

 

Marketplace

 

523

 

 

106

 

79.8

 

 

 

548

 

 

35

 

93.8

 

Consolidated

$

8,362

 

$

908

 

89.1

%

 

$

7,917

 

$

925

 

88.3

%

 

 

 

Year Ended December 31,

 

2023

 

2022

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

Premium

Revenue

 

Medical

Margin

 

MCR (1)

 

 

 

 

 

 

Medicaid

$

26,327

 

$

2,973

 

88.7

%

 

$

24,827

 

$

2,981

 

88.0

%

Medicare

 

4,179

 

 

388

 

90.7

 

 

 

3,795

 

 

437

 

88.5

 

Marketplace

 

2,023

 

 

499

 

75.3

 

 

 

2,261

 

 

290

 

87.2

 

Consolidated

$

32,529

 

$

3,860

 

88.1

%

 

$

30,883

 

$

3,708

 

88.0

%

 

__________________

(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:

 

 

Year Ended

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Unaudited

Medical claims and benefits payable, beginning balance

$

3,528

 

 

$

3,363

 

Components of medical care costs related to:

 

 

 

Current year

 

29,096

 

 

 

27,459

 

Prior year

 

(427

)

 

 

(284

)

Total medical care costs

 

28,669

 

 

 

27,175

 

Payments for medical care costs related to:

 

 

 

Current year

 

25,615

 

 

 

24,345

 

Prior year

 

2,734

 

 

 

2,670

 

Total paid

 

28,349

 

 

 

27,015

 

Acquired balances, net of post-acquisition adjustments

 

96

 

 

 

12

 

Change in non-risk and other provider payables

 

260

 

 

 

(7

)

Medical claims and benefits payable, ending balance

$

4,204

 

 

$

3,528

 

 

 

 

 

Days in Claims Payable (1)

 

50

 

 

 

47

 

__________________

(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 December 31,

 

Year Ended December 31,

2023

 

2022

 

2023

 

2022

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

 

Amount

 

Per

Diluted

Share

GAAP Net income

$

216

 

 

$

3.70

 

 

$

56

 

 

$

0.96

 

 

$

1,091

 

 

$

18.77

 

 

$

792

 

 

$

13.55

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

$

22

 

 

$

0.37

 

 

$

21

 

 

$

0.35

 

 

$

85

 

 

$

1.47

 

 

$

77

 

 

$

1.32

 

Acquisition-related expenses (1)

 

3

 

 

 

0.05

 

 

 

11

 

 

 

0.18

 

 

 

7

 

 

 

0.12

 

 

 

49

 

 

 

0.83

 

Impairment

 

 

 

 

 

 

 

208

 

 

 

3.57

 

 

 

 

 

 

 

 

 

208

 

 

 

3.56

 

Other (2)

 

27

 

 

 

0.47

 

 

 

 

 

 

 

 

 

68

 

 

 

1.17

 

 

 

 

 

 

 

Subtotal, adjustments

 

52

 

 

 

0.89

 

 

 

240

 

 

 

4.10

 

 

 

160

 

 

 

2.76

 

 

 

334

 

 

 

5.71

 

Income tax effect

 

(13

)

 

 

(0.21

)

 

 

(56

)

 

 

(0.96

)

 

 

(38

)

 

 

(0.65

)

 

 

(78

)

 

 

(1.34

)

Adjustments, net of tax

 

39

 

 

 

0.68

 

 

 

184

 

 

 

3.14

 

 

 

122

 

 

 

2.11

 

 

 

256

 

 

 

4.37

 

Adjusted net income

$

255

 

 

$

4.38

 

 

$

240

 

 

$

4.10

 

 

$

1,213

 

 

$

20.88

 

 

$

1,048

 

 

$

17.92

 

__________________

(1)

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

(2)

The year ended December 31, 2023, reflects a non-recurring credit loss on 2022 Marketplace risk adjustment receivables due to the insolvency of an issuer in the Texas risk pool, non-recurring litigation costs and one-time termination benefits. The year ended December 31, 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)
2024 GUIDANCE

 

 

Amount

 

Per

Diluted

Share (2)

GAAP Net income

$

1,278

 

 

$

22.00

 

Adjustments:

 

 

 

Amortization of intangible assets

 

94

 

 

 

1.62

 

Acquisition-related expenses

 

21

 

 

 

0.35

 

Subtotal, adjustments

 

115

 

 

 

1.97

 

Income tax effect (1)

 

(27

)

 

 

(0.47

)

Adjustments, net of tax

 

88

 

 

 

1.50

 

Adjusted net income

$

1,366

 

 

$

23.50

 

__________________

(1)

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

(2)

Computations assume approximately 58.1 million diluted weighted average shares outstanding.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240207058929/en/

Contacts

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

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

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