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Molina Healthcare Inc. Reports Operating Results (10-Q)

August 06, 2012 | About:
10qk

10qk

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Molina Healthcare Inc. (MOH) filed Quarterly Report for the period ended 2012-06-30.

Molina Healthcare, Inc. has a market cap of $1.07 billion; its shares were traded at around $23.24 with a P/E ratio of 45.4 and P/S ratio of 0.2. Molina Healthcare, Inc. had an annual average earning growth of 9.9% over the past 10 years.

Highlight of Business Operations:

The Texas health plan added 172,000 members and $255.1 million in revenue year over year. Most of this growth was due to regional and benefit expansions effective March 1, 2012. The medical care ratio of the Texas health plan was 109.4% for the second quarter of 2012, compared with 95.0% for the second quarter of 2011. Because revenues of the Texas health plan constituted nearly 25% of our total premium revenue for the second quarter of 2012, the high medical care ratio in that state had a disproportionately large impact on our overall financial results. Absent $14.1 million of unfavorable prior period development of claims reserves from the first quarter of 2012 and the impact of the $10.0 million premium deficiency reserve discussed below, the medical care ratio of the Texas health plan would have been approximately 102.7% in the second quarter of 2012. The following table captures the effect of prior period development and the premium deficiency reserve on the Texas health plans medical care ratio and medical care costs for the three months ended June 30, 2012:

The medical care ratio for the ABD membership in the Hidalgo and El Paso service areas was 139% and 146%, respectively, during the second quarter of 2012. Absent unfavorable prior period development from the first quarter of 2012 and the premium deficiency reserve, the medical care ratios of the ABD membership in the Hidalgo and El Paso service areas would have been 116% and 133%, respectively, consistent with our estimates. The medical care ratio for the aggregate ABD membership in Texas was approximately 119%. Absent unfavorable prior period development of claims reserves and the premium deficiency reserve, the medical care ratio for the aggregate ABD membership in Texas was approximately 109%. ABD membership overall constitutes approximately 70% of all Texas health plan revenue. ABD membership in the Hidalgo and El Paso service areas alone contributed 28% of the Texas health plans total revenue for the second quarter of 2012.

In the six months ended June 30, 2012, compared with the six months ended June 30, 2011, premium revenue grew 28% due to a membership increase of approximately 9.5% (on a member-month basis), and PMPM revenue increase of approximately 16.6%. Medicare premium revenue was $230.5 million for the six months ended June 30, 2012, compared with $180.8 million for the six months ended June 30, 2011.

The provision for income taxes is recorded at an effective rate of 40.9% for the three months ended June 30, 2012 compared with 37.1% for the three months ended June 30, 2011, and 43.4% for the six months ended June 30, 2012 compared with 37.2% for the six months ended June 30, 2011. The higher rates in 2012 are primarily due to the greater proportional impact of non-deductible expenses on the effective tax rate as earnings before taxes decrease.

Cash provided by operating activities for the six months ended June 30, 2012 was $236.0 million compared with $114.9 million for the six months ended June 30, 2011, an increase of $121.1 million. Higher medical claims and benefits payable at our Texas health plan was the primary reason for the increase in cash flow provided by operating activities, followed by an increase in deferred revenue. Medical claims and benefits payable were a source of operating cash of $123.1 million in the six months ended June 30, 2012 compared with a use of operating cash of $12.7 million in the six months ended June 30, 2011. Deferred revenue was a source of operating cash amounting to $125.4 million in the six months ended June 30, 2012, compared with $38.1 million in the six months ended June 30, 2011.

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