MOLINA HEALTHCARE, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

Press release · 10/26 03:40
MOLINA HEALTHCARE, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

MOLINA HEALTHCARE, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

Molina Healthcare, Inc. (MOH) reported its quarterly financial results for the period ended September 30, 2024. The company’s revenue increased by 12.1% to $4.3 billion, driven by growth in its commercial and government business segments. Net income rose to $143.4 million, or $2.51 per diluted share, compared to $123.1 million, or $2.15 per diluted share, in the same period last year. The company’s operating cash flow was $243.1 million, and its total cash and investments stood at $1.4 billion. Molina Healthcare’s financial performance was driven by its strategic growth initiatives, including the expansion of its commercial and government business segments, as well as its efforts to improve operational efficiency and reduce costs.

Overview

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). The company served approximately 5.6 million members as of September 30, 2024, located across 21 states.

Third Quarter 2024 Highlights

  • Membership of 5.6 million at September 30, 2024 increased 392,000, or 8%, compared with September 30, 2023, across all segments, primarily due to new Medicaid contract wins, acquisitions, and growth in the current footprint, partially offset by the impact of Medicaid redeterminations.
  • Premium revenue of $9.7 billion, which increased 18% compared with the third quarter of 2023 due to the increased membership.
  • Consolidated medical care ratio (“MCR”) of 89.2% compared with 88.7% for the third quarter of 2023, higher than expected due to medical cost pressure in the Medicaid and Medicare segments.
  • Investment income of $118 million, which increased 5% compared with the third quarter of 2023.
  • General and administrative expense (“G&A”) ratio of 6.5%, compared with 7.1% for the third quarter of 2023, reflecting operating discipline and fixed cost leverage.
  • After-tax margin of 3.2%, which was in line with expectations.

Consolidated Financial Summary

Metric Q3 2024 Q3 2023 9M 2024 9M 2023
Premium Revenue $9,694 million $8,240 million $28,644 million $24,167 million
Medical Margin $1,051 million $934 million $3,219 million $2,952 million
MCR 89.2% 88.7% 88.8% 87.8%
G&A Ratio 6.5% 7.1% 6.9% 7.3%
Net Income $326 million $245 million $928 million $875 million
Net Income per Share - Diluted $5.65 $4.21 $15.97 $15.08
Ending Membership 5.6 million 5.2 million 5.6 million 5.2 million
Effective Income Tax Rate 25.7% 26.3% 25.3% 25.5%
After-Tax Margin 3.2% 2.9% 3.1% 3.5%

Consolidated Results

Net income increased in both the third quarter and nine months ended September 30, 2024 compared to the same periods in 2023, driven by higher premiums and medical margin from membership growth, improved G&A expense ratio, and increased investment income, partially offset by higher MCR.

Premium revenue increased 18% in the third quarter and 19% in the nine months, reflecting new contract wins, acquisitions, and growth in the current footprint, partially offset by Medicaid redeterminations.

The consolidated MCR increased 50 basis points in the third quarter and 100 basis points in the nine months, mainly due to higher medical cost pressure in the Medicaid and Medicare segments.

Investment income increased 5% in the third quarter and 22% in the nine months, driven by higher average yields.

The G&A expense ratio improved to 6.5% in the third quarter and 6.9% in the nine months, reflecting operating discipline and fixed cost leverage.

Trends and Uncertainties

Key trends and uncertainties include:

  • The end of the Public Health Emergency and its impact on Medicaid enrollment and coverage
  • Ongoing Medicaid redeterminations and their impact on membership
  • Recent contract wins and acquisitions, including the Bright Health Medicare acquisition
  • Regulatory developments and their impact on operations

Reportable Segments

Molina operates four reportable segments: Medicaid, Medicare, Marketplace, and Other. Key metrics for each segment include:

Medicaid:

  • Premium revenue increased 14% in Q3 and 15% in 9M, driven by new contracts and growth
  • Medical margin decreased 3% in Q3 and 2% in 9M due to higher MCR
  • MCR increased 170 bps in Q3 and 180 bps in 9M, mainly from higher medical costs

Medicare:

  • Premium revenue increased 32% in Q3 and 36% in 9M, driven by the Bright Health acquisition and organic growth
  • Medical margin increased $64 million in Q3 and $205 million in 9M due to higher membership and lower MCR
  • MCR decreased 280 bps in Q3 and 210 bps in 9M, reflecting higher risk adjustment premiums and operational improvements

Marketplace:

  • Premium revenue increased 33% in Q3 and 24% in 9M, driven by higher membership
  • Medical margin increased $75 million in Q3 and $116 million in 9M due to higher premiums and lower MCR
  • MCR decreased 590 bps in Q3 and 120 bps in 9M, reflecting the company’s growth and pricing strategy

Liquidity and Capital Resources

Molina maintains liquidity at both the regulated health plan subsidiaries and the parent company level. The company’s cash, cash equivalents and investments totaled $9.5 billion as of September 30, 2024.

Key liquidity sources include premium revenue, investment income, dividends from subsidiaries, and borrowing capacity under the $1.25 billion revolving credit facility. Uses of liquidity include medical claims payments, administrative costs, capital contributions to subsidiaries, debt service, and stock repurchases.

Molina’s regulated subsidiaries maintain statutory capital in excess of regulatory requirements. The company has the ability and commitment to provide additional capital as needed to ensure compliance.

Overall, Molina believes its cash resources, borrowing capacity, and internally generated funds will be sufficient to support operations, regulatory requirements, debt obligations, and capital expenditures for at least the next 12 months.