Molina Healthcare Inc · NYSE:MOH
Molina Healthcare — UBS Global Healthcare Services Conference (March 2005)
27 slides from Molina Healthcare's conference presentation, Mar 31, 2005
Slide 1: UBS Global Healthcare Services Conference
UBS Global Healthcare Services Conference February 14-16 New York City John C. Molina EVP & Chief Financial Officer Molina Healthcare, Inc.
Slide 2: Safe Harbor
Safe Harbor Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This slide presentation contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results could differ materially because of factors such as: the Company's ability to
Slide 3: Company Profile
Company Profile Multi-state managed care firm Focused on Medicaid and other government programs Approximately 720,000 members (9/30/04) Membership currently expands across 5 states ~73,000 members added in Michigan in Q4 2004 from Wellness Plan Indiana subsidiary will become active in Q2 2005 Projec
Slide 4: Medicaid's Evolving Role
Medicaid’s Evolving Role Coverage of needy populations Safety net for millions of low-income children Improves access to care and reduces disparities Pays for nearly 1 in 5 health care dollars Managed Care Opportunity A cost containment solution for state governments Opportunity for expansion with 4
Slide 5: Jointly Funded Program
Jointly Funded Program Medicaid Spending Projected Growth Rates Federal and State agencies continue to face fiscal challenges resulting from rising Medicaid expenditures 4.8% State Spending Growth 12.9% 11.7% 1.3% Federal Spending Growth Source: Kaiser Family Foundation 2004
Slide 6: Delivering Savings
Delivering Savings Medicaid managed care can reduce costs, provide spending predictability and improve access to care. Source: The Lewin Group – Medicaid Managed Care Costs Savings, July 2004 (Data 2002) $160 $170 $180 $190 $200 $210 $150 $140 $220 SAVINGS FFS Medicaid MCO PMPM Medicaid Savings Mich
Slide 7: Our Markets
Michigan Washington Utah California New Mexico 2 Our Markets Molina arranges for the delivery of healthcare services to persons eligible for Medicaid and other programs for low-income families and individuals Indiana 264,000 Contract serving the aged, blind & disabled starting Q1 ‘05 65,000 --- 53,0
Slide 8: Growth Strategy
Today Growth Strategy new populations organic growth Focused Growth Alternatives new counties & states Broaden access and member services Contract expansion in existing markets Targeted acquisitions & start up opportunities Offer services to new populations (aged, blind & disabled) Continued focus o
Slide 9: Growth Summary
Growth Summary Acquired membership From Premera Blue Cross, Washington Acquired Health Care Horizons New Mexico, 7/04 Sold Commercial Membership to Lovelace New Mexico, 8/04 Acquired Wellness Plan Membership in Michigan, 10/04 Proven ability to identify and execute transactions as well as other expa
Slide 10: Managing Our Growth
Managing Our Growth +383 Projected Commitment to Quality Local healthcare delivery Expanded management team and staff Selective centralization IS build-out Adequate financing Membership (in thousands) Since 2001
Slide 11: Recent Expansions: Start-Up
Population 6.2M Medicaid Enrollment 700K Managed Care Enrollment 503K Recent Expansions: Start-Up Molina awarded HMO license and contract in Indiana Office of Medicaid Policy and Planning seeks to increase access and choice 2 year contract covers 13 mandatory managed care counties First start-up mar
Slide 12: Recent Expansions: Selective Acquisitions
Managed Care Opportunity: ~229,000** Molina* 38% Community Health Group 40% Recent Expansions: Selective Acquisitions Notes: * Includes the membership of two pending transactions. ** Medicaid & SCHIP members. Source: California Department of Health Services Medical Care Statistics 7/2004; California
Slide 13: Continued Diversification
California 42% 3 Other States 58% California ~20% 4 Other States ~80% Continued Diversification Q4 2002 Q4 2004 California transactions will also contribute to our contract and revenue diversification strategy
Slide 14: Serving New Populations
Serving New Populations Aged, Blind or Disabled Medicaid expenditures are almost 6 times greater for the aged, blind and disabled than for families Families $14,156 $2,408 Medicaid Spending per enrollee ($) All Enrollees $5,525 Source: Urban Institute estimates based on data from the Medicaid Statis
Slide 15: Washington Medicaid Integration Project
Washington Medicaid Integration Project Molina Healthcare of Washington to coordinate four key services under a managed care model in Snohomish County 3,100 currently enrolled Immediate benefit: access to a primary care provider in a county where access has been a challenge Full implementation antic
Slide 16: Financial Highlights
Financial Highlights
Slide 17: Financial Highlights
Financial Highlights Revenues $504M $644M $794M $1.1B $1.57B Per Member Per Month $112 $118 $125 $144 $164 *Note: 2002 results exclude one-time charges of $7.8MM during the fourth quarter. 2002* Projected Projected
Slide 18: Managing Medical Costs
Managing Medical Costs Medical Care Costs $91.09 81.5% $97.27 82.5% $103.99 83.1% $121.63 84.3% $138.41 84.4% Projected Per Member Per Month Projected
Slide 19: Managing Medical Costs
Managing Medical Costs 80.0% 81.0% 82.0% 83.0% 84.0% 85.0% 86.0% Medical Care Ratio Seasonality and Trends Quarterly MCR Average MCR
Slide 20: Controlling Administrative Costs
Controlling Administrative Costs Core General & Administrative: Costs related to day to day operations Premium Taxes: State controlled tax levied on premium revenues Administrative Costs: 0.7% 7.8% 8.5% 2002* Projected 0.8% 7.5 % 8.3% 1.2% 6.6% 7.8% 1.9% 6.0% 7.9% 2.7% 5.7% 8.4% *Note: 2002 results
Slide 21: Financial Highlights
Financial Highlights Operating Income $50M $57M $68M $87M $110M Per Member Per Month 2002* $11.20 $10.39 $10.71 $10.73 $11.40 Projected Projected *Note: 2002 results exclude one-time charges of $7.8MM during the fourth quarter.
Slide 22: 2005 Rate Expectations
2005 Rate Expectations Rate Expectations California Indiana Michigan New Mexico Utah Washington flat n/a 15% 4.5% flat 4.5%
Slide 23: Balance Sheet Highlights
$90M $75M $218M $53M Available Cash Balance Sheet Highlights (9/30/2004) ~ 35% ~ 41% ~ 24% 9/30/2004 cash at the parent + unrestricted cash at subsidiaries + untapped credit Facility = total free cash on hand Cash & Equivalents $219M Debt -- Equity $313M
Slide 24: Fourth Quarter Results
Q4/2004 Q4/2003 (Unaudited) Fourth Quarter Results Revenue Medical Care Ratio G&A Ratio Net Income EPS Shares Outstanding Feb. 23 $209M 83.0% 7.1% $12M $0.46 25.7M
Slide 25: 2005 Outlook
2005 Outlook Revenue Medical Care Ratio G&A Ratio Net Income EPS Tax Rate $1.57B 84.2% 8.2% $67M $2.40 $1.59B 84.4% 8.4% $69M $2.45 37.5% to to to to to *Note: Does not include future acquisitions or expansion, all estimates assume weighted average diluted shares of 28.2M, tax rate does not take int
Slide 26: Investment Considerations
Investment Considerations Medicaid managed care is a solution to state budget pressures Demonstrated expertise in medical management Experience in acquisitions and integration Well-capitalized subsidiary health plans Strong management team In business for 25 years
Slide 27: Sous
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