No bad stock

Molina Healthcare, Inc.
CEO : Mr. Joseph Michael Zubretsky

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	11.0% YoY	-45.0%	-45.4%	2023-02-09

Joe Zubretsky says,

Q4 2022 Financial Results

• Adjusted earnings per diluted share of $4.10, representing 42% YoY growth
• 88.3% consolidated medical care ratio (MCR)
• 7.5% adjusted G&A ratio
• 3.9% adjusted pretax margin
• Full year premium revenue grew by 15% to about $31 billion, and adjusted EPS grew by 32% to $17.92

Medicaid and Medicare Businesses

• Medicaid represents 80% of enterprise revenue, with predictable operating results and cash flows
• Membership and premium revenue grew by 10% and 21%, respectively, driven by new contracts and organic growth
• Reported MCR of 88% for Medicaid is consistent with pre-pandemic levels
• High acuity Medicare niche serving low income members representing 12% of enterprise revenue grew by 10% in membership and 13% in premium revenue

Marketplace Business

• Repositioned the business and performed at roughly breakeven
• Believes they have positioned the marketplace business to achieve target margins in 2023

2023 Guidance

• Projects 2023 premium revenue of $32 billion, representing a 19% CAGR since 2019
• Expects to produce $1.50 per share of core growth and operational improvements, resulting in core earnings per share of at least $20.40 and adjusted EPS guidance of at least $19.75

Growth Strategy

• Projected line of sight to $35.5 billion in 2024 and a clear path to $42 billion in 2025
• RFP wins in Mississippi, California, Iowa, and Nebraska will add $4.4 billion in run rate premium revenue
• Currently have a growing Medicaid footprint in half of the 41 states with managed Medicaid
• Acquisition pipeline remains replete with actionable opportunities

Mark Keim says,

Q4 2022 and Full Year Performance

• The consolidated MCR for the fourth quarter was 88.3%, and the full year consolidated MCR was 88%, consistent with pre-pandemic levels.
• Medicaid MCR was 87.3% in Q4 and 88% for the full year, at the low end of the long-term target range, driven by effective medical cost management and favorable retroactive premiums.
• Medicare MCR was 91.8% in Q4 and 88.5% for the full year, modestly above the long-term target range, primarily due to higher COVID, flu, and the mix effect of significant growth in MAPD.
• Marketplace MCR was 93.8% in Q4 and 87.2% for the full year, exceeding the long-term target range, due to normal seasonality, increased utilization in some markets, and the impact of prior year provider balances.

Balance Sheet and Guidance

• Days in claims payable at the end of the quarter was 47%, about three days lower sequentially, driven by the increased mix of LTSS claims and an additional payment cycle in the quarter.
• 2023 guidance includes membership projections of approximately 4.7 million members in Medicaid, approximately 175,000 members in Medicare, and approximately 230,000 members in Marketplace.
• 2023 premium revenue guidance is $32 billion, representing 4% growth from 2022, with several offsetting items including known pharmacy carve-outs, redeterminations, and lower Marketplace membership.
• Full year adjusted earnings per share guidance is at least $19.75, reflecting the realization of embedded earnings, contribution from acquisitions, organic growth, and several operating levers, partially offset by the impact of redeterminations and one-time non-recurring implementation costs.
• Consolidated medical care ratio is expected to be approximately 88%, and adjusted G&A ratio is expected to fall slightly to 7%, even while absorbing the impact of one-time non-recurring implementation costs for new contract wins.

Q & A sessions,

Medicaid

• The company won $5 billion in new Medicaid awards over the past five years and defended all existing contracts.
• The company expects to conclude 2023 with about 4.7 million members, similar to the previous year.
• The redetermination process is expected to remove around 300,000 members, but the company anticipates offsets from acquisitions and fee-for-service in California.

Earnings

• The company doubled revenue base, produced industry-leading margins of 4% to 5% on a pretax basis, and grew earnings per share from a loss in 2017 to nearly $20 per share in 2023 guidance.
• The company expects to share their view of the next five years with investors at an Investor Day later this year.

COVID-19

• The company consciously separated the two major components of their embedded earnings – $4 of earning their target margins on latent contracts and M&A, and $2 of lingering COVID-era corridors, which they don’t control.
• Eliminating lingering COVID-19 corridors is outside the company’s control, but they believe that over time, the corridors will either be compressed or eliminated.

DCP

• The company added AgeWell in the fourth quarter, which brought in the LTSS membership and adjudicates and pays faster.
• The extra payment cycle and faster adjudication from AgeWell drove the decline in DCP from 50 to 47.
• The company has the same approach to development and triangles, and its purchase is the same as its reserving.

Actuarial Soundness Principle

• The company believes that if there is a significant shift in acuity somewhere in the book of business, the actuarial soundest principle will prevail, and they’ll be able to have a productive conversation about it.
• The states, customers, and their actuaries are aware of the potential for an acuity shift somewhere due to the redetermination process.