Molina Healthcare Inc · NYSE:MOH
Molina Healthcare — Investor Day (January 2009)
106 slides from Molina Healthcare's investor day presentation, Jan 22, 2009
Slide 1: 2009 Molina Healthcare Investor Day
1 Juan José Orellana VP, Investor Relations Molina Healthcare, Inc. 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY 2009 Investor Day
Slide 2: About today
2 About today Opening remarks Panel I Panel II 2009 Guidance
Slide 3: Safe Harbor Statement
3 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This slide presentation, as well as our accompanying oral remarks, contain numerous “forward-looking statements.” All of our forward-looking statements are subject to numerous risks, uncertainties, and other factor
Slide 4: Business Overview
4 J. Mario Molina, MD Chief Executive Officer Molina Healthcare, Inc. 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY Business Overview
Slide 5: Topics
5 Topics Strategic plan Molina markets Macroeconomic trends Management
Slide 6: Mission statement
6 Mission statement Our mission is to provide healthcare services to low-income families and individuals covered by government programs “I want this to be an exemplary organization.” Mary R. Molina Founder
Slide 7: Growth
7 Growth Premium Revenue Growth TANF 87% ABD 8% SCHIP 5% Medicare <1% Our members $ in millions Focus on government programs for poor & uninsured Goal: Revenues of $4 billion by end of 2010 Increase ABD enrollment Increase Medicare enrollment Acquisitions will continue to play an important role * Ap
Slide 8: Other financial objectives
8 Other financial objectives We must use the most cost-effective alternatives Lead our industry in limiting administrative costs No state to contribute more than 15% of revenue Keep a nickel from every dollar of revenue – EBITDA margin 5% of revenue We are the stewards of the public’s money Core Adm
Slide 9: Growth: revenue diversification
9 Growth: revenue diversification Revenue Share by State FY 2003 Revenue Share by State 3Q 2008 CA 13% NM 11% OH 21% TX 4% WA 23% MI 16% MO 7% NV <1% UT 5% CA 35% WA 43% MI 11% UT 11% Significant revenue diversification since going public in 2003
Slide 10: Commitment to quality
10 Commitment to quality ALL of Molina’s eligible health plans ranked by US News & World Report New Mexico, Utah, and Washington health plans ranked as the top Medicaid plan in their state Texas and Ohio to undergo NCQA accreditation in 2009 “Quality is everyone’s responsibility.” W. Edwards Deming
Slide 11: Business Snapshot
11 Business Snapshot Washington 295,000 California 313,000 New Mexico 84,000 Utah 55,000 Michigan 207,000 Ohio 179,000 Texas 29,000 Membership growth Markets and members served – Q3 ‘08 TANF 87% ABD 8% SCHIP 5% Medicare <1% Our members Missouri 77,000 Nevada <1,000 Florida in thousands
Slide 12: Segmentation
12 Segmentation LTC Duals ABD TANF = patients in need of more complex care (for illustrative purposes only - not an actual percentage) complexity of care number of potential enrollees Medicare Medicaid
Slide 13: Sizeable market continues to grow
13 Sizeable market continues to grow Medicaid Enrollment ˜ 59M 1. Medicaid: A Primer. Key Information on the Nation’s Health Program for Low Income People. Kaiser Commission on Medicaid and the Uninsured (January 2009) Managed care is an alternative to state’s rising Medicaid costs Migration of new
Slide 14: Competencies
14 29+ years of Medicaid experience Documented Quality: NCQA accreditation Management: experience and stability Industry leading administrative efficiency Recognized cultural & linguistic competency “Our roots are in the clinics.” Competencies
Slide 15: Stimulating the economy
15 Stimulating the economy Source: Mark Zandi, Chief Economist and Co-founder of Moody’s Economy.com: Testimony to the Senate Budget Committee, November 19, 2008. Medicaid delivers a good return on investment: $1 spent on: UI benefit extension Increase in Food Stamps Aid to State Governments (i.e. M
Slide 16: Stimulus package FMAP proposal
16 Stimulus package FMAP proposal $87 Billion for increased FMAP over the next 2 years 4.9% FMAP increase to all states Rest apportioned based on unemployment FMAP funds can not be used for rainy day funds; must be used for Medicaid Must maintain eligibility standards no more restrictive than those
Slide 17: Baucus Plan
17 Baucus Plan Other Placeholder: All poor adults eligible for Medicaid SCHIP eligibility to 250% of the FPL A national insurance exchange with subsidies up to 400% of FPL public plan option within exchange Pay-or-play for medium and large firms Preventive services covered (“Right Choices”) and Medi
Slide 18: Obama Plan
18 Obama Plan Other Placeholder: Medicaid and SCHIP expansions National insurance exchange and public plan run together sliding scale subsidies Pay-or-play for medium and large-size employers Parents must cover kids Guaranteed eligibility for insurance and federal reinsurance $50 billion over 10 yea
Slide 19: Medicare advantage
19 Medicare advantage Other Placeholder: Medicare Advantage plans will see substantial cuts in payments Congress, President Obama want to shrink or eliminate 13% gap between FFS and MA costs This would adversely affect primarily private fee-for-service plans
Slide 20: U.S. Medicaid population growth
20 U.S. Medicaid population growth Medicaid population increased quickly during the 2001 recession and its aftermath 1. Source: KCMU and Urban Institute estimates based on KCMU Medicaid enrollment data collected by Health Management Associates from 44 states, normalized to national totals (2008) 2.
Slide 21: Public coverage during a recession
21 Public coverage during a recession Income eligibility as a % of the poverty level 1. Source: Health Coverage in a Period of Rising Unemployment (Schwartz); Kaiser Commission on Medicaid and the Uninsured. (December 2008) 2. Source: Squeezed! Caught Between Unemployment Benefits and Healthcare Cos
Slide 22: SCHIP reauthorization
22 SCHIP reauthorization Washington California State includes SCHIP in Medicaid program Utah Michigan Ohio Texas Missouri Florida Many of our health plans’ principal governmental contracts include SCHIP State contracts separately for SCHIP Million Currently covered by SCHIP in U.S. 7 4 + Million Add
Slide 23: Management team
23 “No managed care CEO has been in place longer than Mario Molina.” Management team “John Molina is among the longest tenured CFOs in the managed care space.” *Source: Nersessian G., Credit Suisse Equity Research. “The Molina Chronicles” -- Takeaways from Management Meetings, Feb. 29, 2008. Mark An
Slide 24: The Medicaid opportunity
24 The Medicaid opportunity “Success is where preparation and opportunity meet.” Bobby Unser
Slide 25: Medical Affairs Update
25 James W. Howatt, MD, MBA Chief Medical Officer Molina Healthcare, Inc. Medical Affairs Update 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY
Slide 26: Leveraging data to maximize value
26 Leveraging data to maximize value The value equation Quality/Cost = Value
Slide 27: Leveraging data to maximize value
27 Leveraging data to maximize value Maternal health Discharge planning Accreditation & quality improvement In-source behavioral health value
Slide 28: Managed care: Getting it right
28 Managed care 101 Getting it right Right care Right place Right provider Right time in course of illness
Slide 29: Our priority
29 Our priority Managing medical costs equals increasing value
Slide 30: Why do we care about prematurity?
30 Why do we care about prematurity? Babies born before 32 weeks have the greatest risk for death and poor health outcomes. Social costs of preterm births: $26.2M 1. Source Preterm Birth: Causes, Consequences, and Prevention; Institute of Medicine of the National Academies. July 2006 2. Source: Nati
Slide 31: What is the 17-P Program?
31 What is the 17-P Program? A program that identifies pregnancies with a history of premature delivery Weekly administration of a hormone shot Results in an approximately 1/3rd reduction in repeat premature births
Slide 32: Maternal health: reducing prematurity
32 Maternal health: reducing prematurity 17-P program High risk OB recognition & intervention Early identification Intervention Biometrics Lengthen gestational period Engage pediatrics
Slide 33: 17-P now active across all Molina health plans
33 17-P Now active across all Molina health plans 185 Total Participating Pregnancies 85 Pending Pregnancies 58 Pregnancies delivered at full term Molina 17-P Program Results 2008 100 Completed Pregnancies 30 weeks prior pregnancy 38 weeks treated with 17-P Average Gestation:
Slide 34: Why weeks is important
34 Why 32 weeks is important. Average NICU Days by Gestational Age at Delivery NICU Days Gestational Age at Delivery (Weeks)
Slide 35: Commitment to quality
35 Commitment to quality Our long-term success will depend on the quality of services we provide Body:Enrollment 26 states now rely on some form of accreditation and it can affect enrollment algorithms Quality payments Pay for performance Quality bonuses Objective evidence Efficiency & effectiveness
Slide 36: Leveraging data to improve scores
36 Leveraging data to improve scores Identifying missed services Claims Demographics Create an ‘Every Touch’ strategy Engage all elements of Molina Member service – critical Website for providers Monitor results Roll out to all Molina plans
Slide 37: Leveraging data: results
37 Leveraging data: results Results: within 3 months of advice, an additional 9-15% (over baseline) obtained services. Impact: Molina scores estimated to increase significantly year-over-year and compared to peers. Molina has received over 10,000 “hits” with recommendations to obtain care 1
Slide 38: In-sourcing of behavioral health
38 In-sourcing of behavioral health Ohio Transition complete and generating savings in: in-patient days out-patient services reduction in neuro-psych testing Additional savings anticipated from integration of care Similar efforts underway in Texas Missouri to follow Terminated behavioral health prov
Slide 39: Discharge Planning
39 Discharge Planning Reduce Length of Stay Facilitate Effective Discharge Prevent Readmissions Medications Follow-Up Appointments Transportation Durable Medical Equipment
Slide 40: Emergency room misuse
40 Emergency room misuse Nurse Advice Line Home care advice Urgent care center referral Access Commercial clinics Incentives to PCPs to extend hours Partner with facilities Surrogate for inadequate care Monitor utilization with select diagnoses Monitor utilization by provider Case manager Chronic il
Slide 41: The Bottom Line
41 The Bottom Line Maternal health Discharge planning Accreditation & quality improvement In-source behavioral health 1% decrease in our medical care ratio $0.65 increase to earnings per share yields
Slide 42: Operations Update
42 Terry Bayer Chief Operations Officer Molina Healthcare, Inc. Operations Update 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY
Slide 43: Operations Update
43 Operations Update Leveraging data to meet operational challenges Ohio California Acquisition integration update Missouri Florida Customer service Claims
Slide 44: Focus on Data
44 Focus on Data “IN GOD WE TRUST; ALL OTHERS BRING DATA.”
Slide 45: Focus on Data - The Molina Way
45 Focus on Data - The Molina Way Resolve Identify Issues Analyze Review Data
Slide 46: Operations Update
46 Operations Update California Ohio Improving Profitability Medical Management Re-contracting Rates Missouri Florida Profitable Integration Enrollment Growth Acquisition and Start-Up in Parallel Membership Growth Medical Management Rates
Slide 47: Molina Healthcare of Ohio
47 Molina Healthcare of Ohio Serving TANF & ABD populations in 4 regions Began operations in December 2005 Cincinnati Columbus Dayton Membership History Membership CFC 89% ABD 11%
Slide 48: Molina Healthcare of Ohio – Profitability Improvement
48 Molina Healthcare of Ohio – Profitability Improvement Re-Contracting Medical Management ABD1/09 CFC1/09 Risk Adjustment Score9/08 Medical Cost Reductions Rate Increase 5%
Slide 49: Molina Healthcare of California
49 Molina Healthcare of California Membership History Membership Sacramento San Diego Los Angeles Medicaid 88% Medicare <1% SCHIP 12%
Slide 50: Molina Healthcare of California
50 Molina Healthcare of California Term High Cost Hospitals Re-contracting Medical Management All Regions Los Angeles10/08 Riverside/ SB10/08 San Diego7/08 SacramentoPending Medical Cost Reductions Rates Net Change 3.0% The rate challenges
Slide 51: Molina Healthcare of Missouri – successful integration
51 Molina Healthcare of Missouri – successful integration Membership Growth New Plan President Joanne Volovar Membership Medicaid 91% SCHIP 9% 13%
Slide 52: Molina Healthcare of Florida – successful start-up
52 Molina Healthcare of Florida – successful start-up Membership Membership Mix TANF 73% SSI 23% Members ˜ 55K 1. October data publicly available from www.fdhc.state.fl.us
Slide 53: Molina Healthcare of Florida
53 Molina Healthcare of Florida (Gp:) Jackson (Gp:) Calhoun (Gp:) Franklin (Gp:) Gadsden (Gp:) Gulf (Gp:) Leon (Gp:) Wakulla (Gp:) Alachua (Gp:) Baker (Gp:) Bay (Gp:) Brevard (Gp:) Broward 3,851 – Reform 491 – NR (Gp:) Charlotte (Gp:) Citrus (Gp:) Clay (Gp:) Collier (Gp:) Dade 30,652 - NR (Gp:) De S
Slide 54: Successful integration of Florida NetPass
54 Successful integration of Florida NetPass Active enrollment in Dade county January 2009 – 23K members Additional counties Broward Hillsborough Palm Beach Pasco Pinellas Polk * Pending AHCA approval
Slide 55: Customer service
55 Customer service Our primary customers are our members Our supporting customers include our providers Improving provider satisfaction helps organic growth Focus groups with providers revealed that faster payment would improve satisfaction
Slide 56: Speed of payment and customer service
56 Speed of payment and customer service “…reducing payment delays and administrative burdens may have more of an impact on access than modest increases in fee levels.” Cunningham, Peter J. and O’Malley, Ann S. “Do Reimbursement Delays Discourage Medicaid Participation by Physicians?” Health Affairs
Slide 57: Customer service: paying providers faster
57 Customer service Focus on paying our providers faster Note: Missouri data not included. Percentage (%) of Claims Paid within 15 days of Receipt 50% 60% 65% 70% 75% 80% 85% 90% 95% 100% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan '08 Feb '08 Mar '08 Apr
Slide 58: Customer service: turnaround time
58 Customer service Note: Missouri data not included. Average Turnaround Time in Calendar Days 4 6 8 10 12 14 16 18 20 22 24 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan '08 Feb '08 Mar '08 Apr '08 May '08 Jun '08 Jul '08 Aug '08 Sep '08 Oct '08 Nov '08 Dec
Slide 59: Customer service: turnaround time and organic growth
59 Customer service Note: Missouri data and acquisition members not included. Average Turnaround Time in Calendar Days & Organic Growth Days Members 0 5 10 15 20 25 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan '08 Feb '08 Mar '08 Apr '08 May '08 Jun '08 Jul
Slide 60: Summary
60 Summary Using data and feedback from our customers, we continue to improve our operations.
Slide 61: Compliance: A Value Proposition
61 Mark L. Andrews, Esq. Chief Legal Officer Molina Healthcare, Inc. Compliance: A Value Proposition 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY
Slide 62: Why discuss compliance now?
62 Why discuss compliance now? We are acutely aware of the daily media and regulatory reports of wrongdoing by competitors, providers, and individuals operating within the healthcare sector We are acutely aware that Molina is not among those reports and want you to know that we are also intensely fo
Slide 63: Compliance pays. How?
63 Compliance pays. How? 1. Regulatory Trust 2. Patient Confidence 3. Provider Satisfaction 4. Public Market Clarity
Slide 64: Compliance preserves value
64 Wisdom from Benjamin Franklin 1 Portrait of Benjamin Franklin, ca. 1794-1802 www.historicaldocuments.com An ounce of prevention is worth a pound of cure. Compliance preserves value
Slide 65: Non-compliance undermines earnings
65 Non-compliance undermines earnings Increased Costs Fines, penalties, judgments Litigation expenses Insurance premiums Lost Revenue Enrollment decline Enrollment freeze Resource Drain Personnel time Project distraction Lost Expansion Opportunities Stock Impact Price Trading volume
Slide 66: The impact is immediate and significant
66 The impact is immediate and significant (Gp:) volume (Gp:) daily trading price (Gp:) millions (Gp:) $0 (Gp:) $20 (Gp:) $40 (Gp:) $60 (Gp:) $80 (Gp:) $100 (Gp:) $120 (Gp:) $140 (Gp:) 10 (Gp:) 20 (Gp:) 30 (Gp:) 40 (Gp:) 10/1/07 (Gp:) 10/8/07 (Gp:) 10/15/07 (Gp:) 10/22/07 (Gp:) 10/29/07 (Gp:) 11/5/0
Slide 67: Compliance delivers quality
67 Compliance delivers quality NCQA accreditation matters Increasingly required for program entry Functions as deemer for meeting program requirements in a streamlined and more efficient manner. That means expense saved Recognized as a proper surrogate for quality – increasing regulator, patient, an
Slide 68: Compliance contributes to our success
68 Compliance contributes to our success 29 years 1. Experience we have been doing this longer 2. Core Value we choose to do this 3. Priority key component of our strategic plan What keep us out of the headlines? An enterprise wide model Spread responsibility more broadly Address ‘people’ component
Slide 69: The landscape matters
69 The landscape matters The environment is too complex for lists and memorization Changes too fast to leave in the hands of a few compliance team members Team members need to learn and embrace 6 basic concepts
Slide 70: Compliance is driven by people
70 Compliance is driven by people 1. Compliance is part of your role 2. You can’t know everything 3. You have permission to raise questions 4. Asking questions does not equal “snitching” 5. You should trust your instincts 6. There are some basic “red flags” So ask questions
Slide 71: Likely industry compliance hotbeds for 2009
71 Likely industry compliance hotbeds for 2009 ID & PHI privacy Security Data development (UM and cost) Claims Marketing/Outreach Fraud & abuse
Slide 72: Break
72 Break
Slide 73: Growth Opportunities
73 Growth Opportunities John C. Molina Chief Financial Officer Molina Healthcare, Inc. 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY
Slide 74: Growth Opportunities - 2009
74 Growth Opportunities - 2009 Organic growth Eligibility expansion New populations New market opportunities Managed care expansion
Slide 75: Organic Growth
75 Organic Growth Consolidated Molina Enrollment 2008 U.S. National Unemployment Rate 2008 2 Source: (1) Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, Kaiser Family Foundation, April 2008 (2) U.S. Bureau of Labor Statistics, September 2008 Economic deterioration will
Slide 76: States in which Molina operates
76 States in which Molina operates 7 of Molina’s 9 Health Plans are in States that rank among the Top 20 Medicaid spenders. Title:Organic growth Source: Kaiser Commission on Medicaid and the Uninsured http://www.statehealthfacts.org
Slide 77: Organic growth: federal stimulus package
77 Organic growth: federal stimulus package Federal stimulus package will increase Federal funding to current Molina markets: Adds $87B in federal match 4.9% increased funding to ALL states Federal funds to cover newly unemployed who enter the Medicaid program through 2010 Additional relief to state
Slide 78: Organic growth: FMAP increase
78 Organic growth: FMAP increase November 2008 National Rate 6.7% National Ranking The $87.0B proposed FMAP increase will be distributed based on States’ Unemployment Rates as well as FMAP percentages. Unemployment Rate
Slide 79: Eligibility expansion: SCHIP reauthorization
79 Eligibility expansion: SCHIP reauthorization House bill passed Senate bill passed out of Committee Details: Reauthorized through fiscal year 2013 Adds 4.1M children to the 7M already covered Funding for outreach Senate bill also: Requires GAO to study actuarial soundness of rates Establishes Medi
Slide 80: Eligibility expansion: SCHIP reauthorization
80 Eligibility expansion: SCHIP reauthorization Washington California State includes SCHIP in Medicaid Program Utah Michigan Ohio Texas Missouri Florida Many of our health plans’ principal governmental contracts include SCHIP State contracts separately for SCHIP Million Currently covered by SCHIP in
Slide 81: Eligibility expansion: state level
81 Eligibility expansion: state level Some states have undertaken their own efforts to expand eligibility States in which Molina operates that have already expanded eligibility to the uninsured States expanding eligibility through FPL increases States enacting Programs to Covered Uninsured populatio
Slide 82: New Populations: Long Term Care
82 New Populations: Long Term Care (LTC) Medicaid LTC expenditures are large and continue to grow. Molina has experience operating LTC plans in Texas and Washington Molina markets in which state governments spent over $1B in Long Term Care Source: ‘State Medicaid Expenditures for Long-Term Care 2008
Slide 83: New market opportunities
83 New market opportunities RFP’s for New Programs Additional Start-Up Opportunities Exclusive Provider Organization (EPO) Potential new market opportunities in 2009 and 2010
Slide 84: Managed care expansions
84 Managed care expansions States continue to view managed care as a cost-effective response to growing fiscal pressures: Medicaid Reform Initiatives in Florida, Louisiana, and Virginia Service Area Expansions in Texas Transition of ABD population to managed care Replacement of FFS and partial risk
Slide 85: Will California expand managed care?
85 Will California expand managed care? Fee For Service County Organized Health Systems Managed Care Health Plans Average California PMPM California: Managed Care provides a slower growth rate in Medi-Cal expenditures and greater budget certainty. Source: California’s Medical Assistance Program, Ann
Slide 86: Leveraging Administrative Investment
86 Joseph White Chief Accounting Officer Molina Healthcare, Inc. Leveraging Administrative Investment 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY
Slide 87: Administrative expense components
87 Administrative expense components Recruiting Training Retention Measurement Facilities 10% People 60% Technology 10% Outside Services 20% Equipment Vendors Common Processes Consistency Motivation Work Force Tax Incentive Flexibility Telecommuting Partnering Multiple Sources Industry Expertise Cos
Slide 88: Leveraging administrative expenses
88 Leveraging administrative expenses Note: Core Admin percentage excludes premium taxes. 2008E indicates estimate of 2008 financial results. Core Administrative Expense as a percent of revenue is declining
Slide 89: Molina excels in controlling administrative costs
89 Molina excels in controlling administrative costs 1. Administrative leverage as competitive advantage 2. Average of nine-month administrative cost PMPM for MOH, AGP, and CNC based on publicly reported information for quarter ended September 30, 2008. Calculation based on total administrative cost
Slide 90: Molina excels at controlling administrative costs
90 Molina excels at controlling administrative costs 1. Average of nine-month administrative cost ratios for MOH, AGP, and CNC based on publicly reported information for quarter ended September 30, 2008. The ratio represents administrative costs as a percentage of total revenue including interest in
Slide 91: Leveraging administrative costs in 2009
91 Leveraging administrative costs in 2009 A 1% increase in premium revenue potentially yields 10¢ EPS $0 $30.0 M $25.5 M (85%) $4.5 M Payable to Provider Available for Admin & Profit Revenue Note: The amounts shown above do not reflect actual results they are shown for illustrative purposes
Slide 92: Days in claims payable
92 Days in claims payable Claims inventories continue to fall Fee for service costs 65% of all medical care costs Pharmacy capitation consistent year over year Cost recovery Enhanced Now built into lag tables Greater clarity from faster payments Faster payment Familiarity with data
Slide 93: Questions?
93 Questions?
Slide 94: 2009 Guidance
94 2009 Guidance John C. Molina Chief Financial Officer Molina Healthcare, Inc. 2009 Molina Healthcare Investor Day January 22, 2009 New York, NY
Slide 95: Forward-looking statements for 2009 Guidance
95 The following 2009 Guidance presentation contains numerous "forward-looking statements" regarding the Company’s projected 2009 financial results. Any statement that refers to guidance, projections, expectations, strategies, challenges, and opportunities, or their underlying assumptions, or other
Slide 96: 2009 Earnings Guidance
96 ˜ $3.6B ˜ $15M ˜ 85.5% ˜ 10.5% ˜ 7.5% ˜ $158M - $167M ˜ $43M ˜ $14M ˜ $59M - $65M ˜ $2.20 - $2.40 ˜ 27M ˜ 41% Premium Revenue Investment Income Medical Care Ratio G&A Ratio Core G&A Ratio EBITDA D&A Interest Expense Net Income Diluted EPS Diluted Shares Outstanding Effective Tax Rate 2009 Earning
Slide 97: Projected key developments for 2009 guidance
97 Projected key developments for 2009 guidance Membership: Membership growth of approximately 10% excluding Medicare and Florida. Revenue PMPM: 3% rate increase Medical Costs: 4% increase in medical costs PMPM Administrative Costs: 4.5% decrease in admin cost PMPM Investment Income: $15M investment
Slide 98: Known rate changes impacting 2009 results
98 Known rate changes impacting 2009 results Rate Change Effective Date California Michigan Missouri New Mexico Ohio Washington 3.0% 5.5% 8.5% -1.0% / -2.5% 5.0% - -1.0% / -3.7% 7/1/2008 and 10/1/2008 10/1/2008 7/1/2008 7/1/2008 and 12/1/2008 1/1/2009 1/1/2009 and 2/1/2009
Slide 99: Organic Membership
99 Organic Membership Dec ‘07 Dec ’08E Jan ‘09E Dec ‘09G 1.15M 1.22M 1.34M 1.24M 6.1% 1.6% 8.1% % growth over previous period* Note: The percentages and enrollment shown exclude both Florida membership and the membership in Ohio transitioned from other health plans. “E” denotes estimated 2008 result
Slide 100: Consolidated membership and revenue PMPM
100 Consolidated membership and revenue PMPM Membership Per Member per Month (Gp:) Membership (Gp:) Premium Revenue PMPM ’07 over ‘06 Growth Membership: 12.4% Premium: 13.6% ’08 over ‘07 Growth Membership: 9.5% Premium: 11.0% ’09 over ‘08 Growth Membership: 15% Premium: 3% MO Acquisition MO Mang. Ca
Slide 101: Consolidated MCR and Medical Cost PMPM
101 Consolidated MCR and Medical Cost PMPM % of Premium Revenue Per Member per Month (Gp:) MCR (Gp:) Medical Costs PMPM In 2009 the MCR will increase, but medical costs PMPM will level off. Note: ‘E’ denotes estimated and ‘G’ denotes 2009 Guidance.
Slide 102: Guidance Summary vs. Preliminary 2008 Results
102 Guidance Summary vs. Preliminary 2008 Results * Represents mid point of range 2009 Guidance 2008E Results Increase/(Decrease) Premium Revenue Medical Care Ratio Core G&A Ratio EBITDA EBITA Margin Net Income Diluted EPS Diluted Shares Outstanding Effective Tax Rate Members $3.6B $3.0B $0.6B 85.5%
Slide 103: Historical net income distribution
103 Historical net income distribution Average Quarterly Contribution 2001-2008E Semi-annual contribution not anticipated to change materially in 2009.
Slide 104: Opportunities and Challenges
104 Opportunities and Challenges 1. Source: Kaiser Commission on Medicaid and the Uninsured, April 2008 2. Source: Kaiser Commission on Medicaid and the Uninsured, 2006 Opportunities Discussion Impact of Economic Conditions on Enrollment Fiscal Stimulus Florida M&A Opportunities Capital Structure Ad
Slide 105: Opportunities and Challenges
105 Opportunities and Challenges Challenges State Budgets California, New Mexico, and Washington Ohio MCR Provider Premium Tax Florida Medicare Investment Income Most States face substantial fiscal challenges. Rates Provider Cuts The Guidance assumes an Ohio MCR of 87%. Rate increase, risk adjustmen
Slide 106: Questions?
106 Questions?