Molina Healthcare Inc · NYSE:MOH

Molina Healthcare — Investor Day (September 2013)

62 slides from Molina Healthcare's investor day presentation, Sep 19, 2013

  1. Slide 1: Investor Day, September 19, 2013

    Investor Day September 19,2013B 2013 New York, New York

  2. Slide 2: Cautionary Statement

    Cautionary Safe limitation: insurance and factors 10-K, Form www.sec.gov. operating South Harbor asthat well results. exchanges Carolina; our Statement could Statement as Except revenue, the cause risk the orto 2under marketplaces; our membership, settlement the factors actual extent theand Private

  3. Slide 3: Today's Program

    Today 3 End Approx. 12:30pm-12:35pm 12:35pm-1:10pm Relations 1:10pm-1:45pm Officer 1:45pm-2:00pm 2:00pm-2:15pm 2:15pm-2:45pm 2:45pm-3:05pm 3:05pm-3:50pm 3:50pm-4:30pm 4:30pm TimeofTopic Program Health Break Financial Q&A Business Opening Speaker Plan ©Discussion 2013 Overview Remarks Discussion Moli

  4. Slide 4: Business Overview

    Business J. President September Mario Molina, Overview &19, Chief 2013 M.D. Executive New York, Officer New York

  5. Slide 5: Our Mission

    Our To © 2013 provide Mission Molina quality 5 Healthcare, health services Inc. to financially vulnerable families and individuals covered by government programs.

  6. Slide 6: Business Snapshot: Molina Healthcare Profile

    2© Business kOur 413 ton Washing (2 Michiga clinics) S Wiscons 98k Californ ia 355 (19Maine in Utah Idaho Ohio 87k Markets kof Mexico1 New 92k na3 266 CHIP 1.8 1. 2. 3. 4. ryMMI Delive 81k As South US 2013 Illinois k240 clinics) million (3 nIslan Snapshot WMMI Membership Caroli MMIS Florida Virgin (

  7. Slide 7: We've Been Busy

    We’ve Organic $550,000,000 1.125% Interest © 2013Been payable Molina Convertible Growth Busy February Healthcare, January Acquisitions 7 Senior 2013 15 Notes and Inc. Growth July due15 Capital 2020 Infrastructure

  8. Slide 8: Long Term Growth Drivers

    Long Please Estimated $D Revenue4 He 1. 2015 2. 3. 4. © uals1 ACA Acquisitions All Duals 2013 iness Term amounts refer ACA2 denotes Molina denotes potential Incremental to Acquisiti the are denote Healthcare, revenue revenue Company’s estimates revenue New Growth potential potential Inc. Mexico run-

  9. Slide 9: Industry Headlines on Medicaid Expansion

    State warn Officials insurance exchange delays expansion, next set Obamacare © Wisconsin in 2013 tosteps of begin Medicaid Molina Michigan the rejection Despite expansion clears Industry Healthcare, Medicaid way for of9Obamacare Inc.

  10. Slide 10: U.S. Projected Medicaid Spending

    U.S. Projected $399B $449B $476B $505B $536B 2013-20221 2013 $265B $297B $331B $372B Medicaid 1. Congressional Medicaid 2014 $422B Medicaid spending 2015Spending 2016 Budget continues Spending 2017 Projections Office 2018 to (CBO). grow 2019 102020 http://www.cbo.gov/publication/43947 2021 2022 © 20

  11. Slide 11: U.S. Medicaid Enrollment Continues to Grow

    U.S. Annual Change Percentage 42M 47M 50M 39M Total 37M June Enrollment Medicaid 1. Kaiser Medicaid 2002 43M 41M Monthly Change 5.9% 53M Family enrollment 42M to June 2003 54M 4.3%3.2% Enrollment 44M in 2004 Foundation. 20121 Medicaid continues 2005 0.2% 11 2006 Enrollment Medicaid -0.5% to2007 grow

  12. Slide 12: The Welcome-Mat Effect

    Welcome-Mat The affect MA Controls Rates1 2003 20% 30% 40% 50% 60% 70% 80% Medicaid 1. efforts © Health 2013 intensity Medicaid 2004 theMolina Massachusetts Affairs increase enrollment 2005 ofUnadjusted Effect Healthcare, outreach 2006 Journal. in Medicaid increased 12 2007 and “Medicaid Enrollment

  13. Slide 13: Where the States Stand on Medicaid Expansion

    Medicaid Where WI WA UT NM CA FL TX Leaning Not Participating 1. The MI OH Participating SCAdvisory Molina Toward Expansion States Board Not 13 Stand Company. on Medicaid BeyondExpansion the pledges: as of Where August the20131 states stand on Medicaid © 2013 Molina Healthcare, Inc.

  14. Slide 14: California Government Program Landscape

    California Govt Bernardino/Rive Program Medi-Cal Medicare Plan SNP Scan Inland MMP Health Group and Molina Anthem Marketpla ce Kaiser L.A. Well 1. Carved Health now… L. Kaiser Care represented Healthplan San Plan Empire Health Permanente Net A. Healthcare Anthem rside Inland Net Plan Out Health Mana

  15. Slide 15: Customer Segments for Marketplaces

    Priority Medicaid members; income Heavily Used providers Require Annual 250%+ $11.5K—$27K+ Ensuring $28K—$45K individuals 2013 Molina to uninsured forFPL Customer getting subsidized enhanced continuity Annual transitioners; ex-Medicaid Healthcare, income care income 100% services Segment of from car

  16. Slide 16: Marketplace Premium Subsidies by Income Level

    d© Marketplace Premium federal qualify FEDERAL Size 1Househol ofhourly poverty for $15,282 assistance 133% Medicaid. POVERTY –rate 4Covered 32 www.medicaid.gov CA $20,628 $25,975 $Wage8.00per $16,640annualized Hourly $12.49 Small $14.08 marketplace 1. 2013 Minimum rate Molina scale. 138% $increases

  17. Slide 17: Marketplace Pricing in California

    Marketplace Covered individual, Income Bronze Carrier Price Molina Anthem Kaiser Health CA Consolidated © 2013 Molina Rank $Net Plan Bronze $Level Molina $226 California 204 219 non-smoker $Premium Plan –270 3Premium 1133% 2Covered $5 Member —$221 Healthcare, —$221 4Subsidy $221 $49 Bronze FPL Premi

  18. Slide 18: Basic Health Program Option

    Basic Optional Offers Are Do States Operational © 2013 not ineligible Health receive continuity have Molina coverage starting access Plan 95% for Healthcare, of Medicaid 18 program of to coverage inwhat affordable 2015federal and Inc. under for for<65; interested employer individuals the government

  19. Slide 19: Mitigating Risk: Reinsurance, Risk Adjustment, Corridors

    Mitigating Reinsurance Risk 2013 Adjustment Corridors MolinaourHealthcare, Risk 19 Inc.

  20. Slide 20: Tailwinds & Headwinds

    Tailwinds Medicaid © contracts/populations 2013 Molina expansion & Headwinds Headwinds Healthcare, Delayed 20 Inc. state implementations Footprint includes 4 of 5 largest Industry tax Medicaid markets Uniquely positioned to capture Medical cost pressure associated dual eligible enrollment with new

  21. Slide 21: Strategic Priorities

    Strategic Mission Manage Organic Medicaid Dual Margin RFPs Leverage Health Our MMS 2013 mission eligible Molina plan Expansion growth our Priorities Priorities our expansion business growth isHealthcare, population business to provide 21 portfolio Inc. quality • Direct delivery health services to fi

  22. Slide 22: The Strategy: More Things Change, The More We Stick to Our Plan

    The Strategy 10th (July © 2013 More Anniversary 2, 2013) Molina 22Things Healthcare, as Change, a listedThe Inc. company More We Stick to Our

  23. Slide 23: Health Plan Discussion

    HealthBayer Terry Chief Operating Plan Discussion Officer September 19, 2013 New York, New York

  24. Slide 24: Molina MCO Footprint and Planned Growth

    Molina MCO © 2013Markets MCO MolinaFootprint Planned Healthcare, Duals & Planned Inc. Planned Growth Marketplace 24

  25. Slide 25: Preparing for Growth

    Preparing People 15% growth Dedicated Marketplace Expanded team Demonstration LTSS Infrastructure © 2013 YTD for management Process ?Molina Duals Pricing for Medicare team employee ?Growth build Premium Advertising ?Technology Healthcare, for Marketing/Sales/ collections ?precedes collection ?Networ

  26. Slide 26: One Enterprise

    One Enterprise © 2013 Molina Molina wide 26 Healthcare, approach toInc. business processes

  27. Slide 27: Technology Investment Portfolio

    Technology—Molina Contractual Operational 12% 25% Improvements Infrastructure 63% © 2013 & Business Molina Obligations New costs Healthcare, Transformation Business being IT & Investment driven Compliance Inc. by new Portfolio business 27

  28. Slide 28: Organic Growth: Ohio Expansion

    Organic New 260K In Cleveland Molina Historical Service 240 E K Jun-13 © xpansion 2013 Q3 nMolina Members K 2013 Aug-13 Healthcare Dayton Molina Growth: Cincinnati Enrollment service Molina Statewide Area Healthcare, Ohio area of expanded 260 Ohio Growth 28 Existing Service Expansio Columbus Inc. in

  29. Slide 29: Organic Growth: Florida Long-Term Care Program

    Organic Program Consolidates Stand-alone Strong Florida Under Anticipated Rates: $3,200-$3,500 11 Go © 2013 Region based Live the Live coordination LTC Molina Growth: 12/1/1 29 services. LTC Date: LTC LTC Service numerous 2/1/14 program, Date: Healthcare, Date: Florida program Live with Area 3PMPM 2

  30. Slide 30: Acquisition: New Mexico Lovelace

    Acquisition: Historical Mexico Jul Assumed 172K Medicaid Effective Community contract Salud! $54 Consideration: Mexico. Molina © 2013 2013-Aug million Program Healthcare assumed is Molina for August Lovelace Members currently Enrollment the Jul-13 Health New 2013 Medicaid Healthcare, inLovelace 1,Me

  31. Slide 31: Acquisition: South Carolina

    Acquisition: 31 Molina 1.6M Area Member Consideration: 1. Homes © Contingent 2013 Medicaid Network has Statewide Molina transfer acquired South on$59 Healthcare, eligibles program has the Service Carolina million the state?s an anticipated assets toInc. granting a full-risk of a South effective Moli

  32. Slide 32: Medicare-Medicaid Dual Implementations

    Medicare-Medicaid 32 Dual Implementations Illinois California Riverside, Diego, Molina Ohio and Central South Application State September existing Going Texas Contracts MOH RFP in © 2013 31 West progress Region Regions response Eligible expected Medicaid Carolina Live: Michigan Counties: Molina Medi

  33. Slide 33: California Duals Demonstration Timeline

    California 33 A knew January CA 2013 What know Septembe rof Readiness © Demonstration 2013… moving 2013 Jun Duals Enrollment 2014 we as Jul Molina 1/1/2014 Jun Completed Aug Anticipated 7/2013 target Duals Review JulSep Healthcare, Aug Implementation Anticipated Anticipated CA Oct Plan Sep 6/1/2013

  34. Slide 34: Molina's Target Markets for Marketplaces

    Molina’s 34 Washing kWiscons aCaliforni 1.4 M in Eligibles Molina sCountie State-run Counties State-Fed Federally © marketplace Molina Utah Eligibles 2013 Eligibles 693 90kEligible Utah87k Countie in Florida Eligibles Molina kCounties in nton Texas Target Molina Eligibles in Marketplace facilitated

  35. Slide 35: Q&A

    © 2013 Molina Healthcare, Inc. Q&A 35

  36. Slide 36: Affordable Care Act Health Insurer Fee

    Affordable Joseph Chief Accounting White Care Act Officer (ACA)September Health Insurer 19, 2013 FeeNew York, New York

  37. Slide 37: ACA Health Insurer Fee

    ACA 37 Please Section Allocated Full Oliver Year 2014 2015 2016 2017 2018 2019 Source(s): 2. 1. Note(s): © Section MOH Oliver 2013 liability Industry $8.3B $11.3B $13.9B $14.3B indexed Insurer Wyman refer 9010 Molina estimated Wyman based 9010 $tois $Fee of -100M Fee1 the 140M incurred estimates 170

  38. Slide 38: Items to Consider: Fee Reimbursement and Timing

    Items 38 Please State © 2013 Reimbursement Related refer Molina to to the Healthcare, ACA Company’s of Insurer FeeInc. Fee Fee cautionary Not Tax statements. Deductible Capital Funding Requirements Timing and Recognition

  39. Slide 39: Why the Fee Should Be Reimbursed

    Why 39 Please Reimbursement American “Medicaid marketing “Regulations Milliman: determine Milliman premiums“2 Ohio “If Michigan “We of allowance …….for 1. Note(s): 2. 3. 4. © American Mercer, Milliman 2013 the it have is Do Integrated actuarial refer later Molina We any serves Rate Academy estimated

  40. Slide 40: Lack of Tax Deductibility Requires Gross-Up

    Lack 40 Please States Deductible $$0.11 rate) Prem. Incremental $0.01 premium—even reimburses Non-Deductible For Tax assumes rate Premium Reimbursement $0.15 = Excise $0.10 Up Gross $1.00 Income The non paid ©0.10 $0.11 $0.15 2013 illustrative & ACA tax on of /Up $0.10 Tax have 10% refer Tax (premiu

  41. Slide 41: ACA Fee Accounting and Disclosure (Type I)

    ACA Please 41 Dec & Reporting (Type Recogniti on nDescriptio year Accountin Amount assessment g/ estimate Disclosure Impact •reimbursed 1. Note(s): © Full Disclosure Rcrd. No premiums Based 2013 “Non-Recognized” • Decr. 31 equity P&L Fee liability II) refer •revenue Current Jan Molina financial Disc

  42. Slide 42: ACA Fee Accounting and Disclosure (Type II)

    ACA Please 42 Dec gReportin (Type Recognit ion Descripti on prior assessment Accounti financial ng/Discl including osure impact 31 asset Impact •requirements Note(s): 1. © Full Disclosure Disclose Decr. Incr. No & Based 2013 premiums fully Year “Non-Recognized” 31 P&L year is Fee forma liability II)

  43. Slide 43: Q&A

    Q&A © 2013 43Molina Healthcare, Inc.

  44. Slide 44: Funding Our Growth

    Funding John ChiefMolina Financial Our Growth Officer September 19, 2013 New York, New York

  45. Slide 45: Long Term Growth Drivers

    Long Please Estimated Duals1 ~$ Revenue4 He 1. 2015 2. 3. 4. © ACA Acquisitions All Duals 2013 iness Term amounts refer ACA2 denotes Molina denotes potential Incremental to Acquisiti the are denote Healthcare, revenue revenue Company’s estimates revenue New Growth potential potential Inc. Mexico run

  46. Slide 46: Dual Eligibles Opportunity

    Please Dual State Statewide California2 Ohio2 Illinois2 Michigan2 Texas3 Total Annualized Source: 1. 2. 3. © Estimated 2014 2015 2013 Eligibles Dual 1.3M 115K refer 214K start Start Molina Company 156K Service Eligibles 199K 382K 527K Potential to 48K date enrollment date 132K the Market in 18K Heal

  47. Slide 47: Medicaid Expansion Eligibles Opportunity

    Please Expansion Eligibles State Medicaid Managed California Illinois Michigan New Washington Total Annualized Source: $1.0B © 2013 Mexico Estimated 2.2M refer 300K Molina Company in Care Expansion Enrollment 500K 1M Molinas 290K Potential to 250K 100K 50K 90K the Healthcare, 40K Company’s estimates

  48. Slide 48: Marketplace Enrollment Opportunity

    Please 48 Number Marketplace State Molina California Markets Florida Michigan New Ohio Texas Utah Washington Wisconsin Total Annualized Source: $1.0B © 2013 Mexico 87K Members 264K 3.7M 693K refer 546K Enrollment Molina Company of246K 10K 1.4M 150K Molinas 247K 2K Potential to 200K 30K Opportunity E

  49. Slide 49: Current and Future Capital Needs

    Please 49 Current Future Capital Costs © 2013 of refer (anticipated) Needs demands Molina regulatory acquisitions MMS infrastructure to the implementations Healthcare, on Company’s requirements regulatory health and other plans Inc. cautionary requirements expansions in in new the event and statemen

  50. Slide 50: Sources of Capital

    Sources Please 50 Current Parent Issuance Convertible Equity Debt Alternative Capital Structured © 2013Cash refer leases Molina excess of ofco-insurance Capital Financing securities to Future the net Healthcare, Company’s worth earnings –– or structured Inc. cautionary quota statements. share

  51. Slide 51: Revenue Capacity from Existing Capital

    Please 51 approximately requirement Excess $0.6B $0.4B. $0.4B Capital2 Capital1 After ACA will revenue Growth with Required Revenue3 Annualized $6.2B Capital4 Regulatory 1. 2. 3. 4. © Annualized Excess Denotes 2013 support Existing Fee; adjusting Regulatory refer Molina Capacity $8.5B minimum regula

  52. Slide 52: Capital Summary

    Summary Please Revenue Capital $17.$2.0B2B $11.2B— $0.8B—$ $2.0B Retained Parent Current $0.4B $6.2B Capacity Required 1. 2. 3. © Retained Parent Current 2013dependent Cash2 refer Revenue Molina excess required Growth earnings cash minimum of 1.1B excess earnings toGrowth $0.2B as the capital3 on He

  53. Slide 53: Why We Might Want To Raise More Capital

    Why Please 53 Capital Acquisitions © 2013 Werefer expenditures Molina Might to the Healthcare, Want Company’s Variability To Raise Inc. cautionary More in profitability Capital statements. Timing New benefits Growth above expectations Desire for capital cushion

  54. Slide 54: Adjusted Net Income Per Share

    Adjusted John ChiefMolina Financial Net Income Officer Per September Share 19, 2013 New York, New York

  55. Slide 55: Why Use Adjusted Net Income Per Share

    Why Please Other Catamaran HMS Laboratory Team Universal WellCare Significant Equity Convertible Depreciation Youve Enhances © 2013 Use Holdings Health companies refer asked compensation Molina Adjusted Health period American Corporation and Corporation to senior for Holdings and the growing Corpora

  56. Slide 56: Adjusted Net Income Per Diluted Share

    Adjusted Please 56 $2.93 $1.67 Income $Net 2011 Operations Continuing 1. this notes, © 2.00 1.00 0.27 Adjusted 2013 Income non-GAAP 2012 $1.72 and Share, Diluted refer Per Molina Net changes June net Diluted to Per Adjusted Continuing Income the Share, income Healthcare, financial 2013 Company’s in

  57. Slide 57: Reconciliation of Adjusted Net Income

    Please 57 Reconciliation Continuing Diluted FY Net YTD Depreciation capitalized Stock-based Amortization Change Adjusted continuing 1. Companys stock-based net © Adjusted 2013 income 2011 income refer Share, Molina inFY Net net fair operations operations1 financial software per Operations net per to

  58. Slide 58: Q&A

    © 2013 Molina Healthcare, Inc. 58 Q&A

  59. Slide 59: Tentative CA Settlement Agreement

    Tentative John ChiefMolina Financial CA Settlement Officer September Agreement19, 2013 New York, New York

  60. Slide 60: Tentative California Settlement Agreement

    CA2013 Please 60 Molina The As In This Following © addition, part Department tentative tentative refer has of Molina the final reached the tosettlement this settlement the tentative Healthcare, governmental oftentative Company’s Health a tentative includes settlement will Care agreement, Inc. resolv

  61. Slide 61: Investment Highlights

    Investment Please 61 Attractive Focus Proven Diversified Scalable Seasoned Over © 2013 30on refer flexible Molina years administrative government-sponsored management sector Highlights geographic to of the health Healthcare, growth experience Company’s care team exposure efficiencies prospects servi

  62. Slide 62: Q&A

    © 2013 Molina Healthcare, Inc. 62 Q&A

Molina Healthcare — Investor Day (September 2013) on 6ix