Molina Healthcare Inc · NYSE:MOH
Molina Healthcare — JP Morgan Healthcare Conference 2020
23 slides from Molina Healthcare's conference presentation, Jan 13, 2020
Slide 1: Molina Healthcare, Inc. JP Morgan Healthcare Conference
Molina Healthcare, Inc. JP Morgan Healthcare Conference Joe Zubretsky, President and Chief Executive Officer JANUARY 13, 2020
Slide 2: Cautionary Statement
Cautionary Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This presentation and the accompanying oral remarks include forward-looking statements regarding, without limitation, the Company’s capital position, planning, and deployment; our growth plans and p
Slide 3: Today's Agenda
Today’s Agenda Today’s presentation will focus on: 1 Capital Position 2 Capital Deployment 3 Financial Outlook 3
Slide 4: Capital Position
ey BRMOLINA HEALTHCARE Capital Position
Slide 5: Performance Since 2017
Performance Since 2017 Prudent capital deployment to enhance value What We Did What It Means What We Are Doing – Improved margins; created – Clean balance sheet, top – Organic growth is first priority excess capital decile margins, produce excess cash flow – Vigorously pursuing financially – Execute
Slide 6: Important Facts
Important Facts ~$13 per share in excess cash headlines other strong metrics Capital Flexibility Strong Equity Base Compelling Ratios and ROE – $800 million of excess cash at – Target regulatory capital 10% – Debt to Capital at parent 40% the parent of premium or 300% RBC – Debt to EBITDA 1.3x – Rep
Slide 7: Capital Deployment
ey BRMOLINA HEALTHCARE Capital Deployment
Slide 8: ROE Drives Capital Generation
ROE Drives Capital Generation Our capital creation and deployment model can create significant value Illustration 1 Target Statutory Capital Organic 10% of Premium Growth 2 ~4% After-Tax Margins Significant EPS Excess 40% Return on Target Stat Growth and 3 Cash Acquisitions Capital Accretion Flow Po
Slide 9: Total Deployable Capital
Total Deployable Capital Deployable capital gives us great flexibility in allocation Excess Cash at Parent 3Q19 ~$800M Undrawn Debt Capacity ~$900M Total Deployable Capital ~$1.7B 9
Slide 10: Growth Capacity
Growth Capacity Total deployable capital could support any of the following: Re-invest in $17 billion in additional premium capacity organic growth or Invest in $3.5 billion in additional premium capacity via M&A inorganic growth or Return to $1.7 billion in share repurchase capacity Shareholders 10
Slide 11: Total Deployable Capital Will be Invested Prudently
Total Deployable Capital Will be Invested Prudently Will deploy capital to achieve stable, consistent growth and accretion – Organic growth is the highest priority Re-invest in – Most efficient use of capital to grow organic growth – All lines of business are high growth – Expert team Invest in – Ro
Slide 12: Total Deployable Capital Return Profiles
Total Deployable Capital Return Profiles Attractive returns on capital deployed – Highest return use of capital Re-invest in – Least capital intensive organic growth – 65% ROE at targeted capital – Next highest return use of capital Invest in – Accretive to share repurchases inorganic growth – Benef
Slide 13: Organic Growth Model
Organic Growth Model Initiatives that drive long-term growth Medicaid Medicare Marketplace Increase Medicaid 1 1 1 Increase market share market share Increase market share Increase penetration Increase penetration Add adjacent 2 2 in existing Medicaid 2 in existing Medicaid Medicaid geographies foot
Slide 14: Track Record of Winning Business
Track Record of Winning Business Reprocurement Wins Washington Puerto Rico Mississippi Successful RFP Kentucky Mixed Result Texas Special Situations Navajo Nation Texas Future Reprocurement Opportunities Ohio California Future Procurement Opportunities Tennessee W. Virginia Nevada Missouri Iowa Geor
Slide 15: Inorganic Growth Model
Inorganic Growth Model Focus on strategic fit, operational synergies and EPS accretion 1 Attractive bolt-on membership 4 Opportunities pursued will lead opportunities in current states to incremental EPS accretion ~300 government program 2 5 Will not pursue capabilities plays health plan opportuniti
Slide 16: Inorganic Growth – Our Transaction Calculus
Inorganic Growth – Our Transaction Calculus Focus on strategic fit, operational synergies and EPS accretion Underperforming assets are attractive ROIC “Inorganic structures and organic returns” – Purchase at a significant discounted value EPS Accretion – Drive to target margins – Accretion » Earning
Slide 17: Financial Outlook
a BRMOLINA HEALTHCARE Financial Outlook
Slide 18: Reiterate Full Year 2019 Guidance
Reiterate Full Year 2019 Guidance Continued strong financial performance As of October 29, 2019 Total Revenue ~$16.1B Medical Care Ratio (MCR) ~86% G&A Ratio ~7.7% Net Income $725M – $740M EPS $11.30 – $11.55 After-tax Margin 4.3% – 4.4% 18
Slide 19: Total Company Long-Term Outlook
Total Company Long-Term Outlook Long-term, compound annual growth rates – average over time Premium Revenue Growth 10% - 12% After-Tax Margin 3.8% - 4.2% Net Income Growth 9% - 11% EPS Growth 12% - 15% 19
Slide 20: Updates
Updates Kentucky RFP Marketplace Update Texas Protest M&A Execution Management Team Additions 20
Slide 21: Thank You for Your Interest in Molina
Thank You for Your Interest in Molina 21
Slide 22: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 22
Slide 23: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2019 guidance as of 3Q19 Low End High End Net Income $725M $740M Adjustments: Depreciation and Amortization $90M $90M Interest Expense $90M $90M Income Tax Expense $235M $240M EBITDA $1,140 $1,160 23
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