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Molina Healthcare (MOH)
Q4 2010 Earnings Call
February 17, 2011 5:00 pm ET
John Molina - Chief Financial Officer, Executive Vice President of Financial Affairs, Treasurer and Director
Terry Bayer - Chief Operating Officer
Joseph White - Chief Accounting Officer
Joseph Molina - Chairman, Chief Executive Officer and President
Juan José Orellana - VP, IR
Christian Rigg - Susquehanna Financial Group, LLLP
Scott Green - Bank of America/Merrill Lynch
Joshua Raskin - Barclays Capital
Carl McDonald - Citigroup Inc
John Rex - JP Morgan Chase & Co
Ladies and gentlemen, thank you for standing by. Welcome to the Molina Healthcare Year-End 2010 Earnings Call. [Operator Instructions]
I would now like to turn the conference over to Juan José Orellana, Vice President of Investor Relations. Please go ahead, sir.
Juan José Orellana
Previous Statements by MOH
» Molina Healthcare CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Molina Healthcare, Inc. Q2 2010 Earnings Call Transcript
» Molina Healthcare, Inc. Q4 2009 Earnings Call Transcript
The company's earnings release reporting its results was issued today after the market closed and is now posted for viewing on our company website.
On the call with me today are Dr. Mario Molina, our Chief Executive Officer; John Molina, our CFO; Terry Bayer, our COO; and Joseph White, our Chief Accounting Officer. After the completion of our prepared remarks, we will open the call to take your questions.
Our comments today will contain forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act, including statements regarding our guidance for 2011. All of our forward-looking statements are based on our current expectations and assumptions, which are subject to numerous risk factors that could cause our actual results to differ materially. A description of such risk factors can be found in our earnings release and in our reports filed with the Securities and Exchange Commission, including our Form 10-K annual report, our Form 10-Q quarterly reports and our Form 8-K current reports. These reports can be accessed under the Investor Relations tab of our company website or on the SEC's website. All of the forward-looking statements made during today's call represent our judgment as of February 17, 2011, and we disclaim any obligation to update such statements.
This call is being recorded and a 30-day replay of the conference call will be available over the Internet through the company's website at molinahealthcare.com.
I would now like to turn the call over to Dr. Mario Molina.
Thank you, Juan José. Welcome, everyone, and thank you for joining us today. It has been just three weeks since we provided a comprehensive review of our business and operations at our Investor Day in New York City. Therefore, I will keep my remarks brief so that John can review some of the financial highlights for the quarter and the year and then open the call for your questions.
2010 was a very good year for Molina Healthcare. We achieved strong financial results and great operational execution. We grew revenue in enrollment, increased our EBITDA, as well as our net income, and continue to generate strong operating cash flow. It was also a very strong year for Molina strategically as we invested in our future by entering the Medicaid information or Fiscal Agent business through our acquisition from Unisys of its Health Information Management business.
We now operate that business under the name Molina Medicaid Solutions. This acquisition provides another platform for growth to compliment the growth that is expected in our Medicaid Health Plan business over the next few years. I'm pleased about the direction we have chosen and about the breadth and depth of the services portfolio that we are now bringing to the Medicaid market.
Moving onto our results. The fourth quarter was better than anticipated and it was consistent with the trends we shared with you at our Investor Day. The general operational performance and cash flow at our Health Plans was strong, led by our four largest Health Plans: California, Michigan, Ohio, and Washington. Of course, there are always challenges, particularly in new markets. In Florida, for example, medical costs remain volatile and elevated. As Terry pointed out in our Investor Day, the volatility in the medical care ratio at this health plan is caused in part by its low membership.
Florida's one of our newest markets and has considerably lower enrollment than our more mature health plans. The issues we faced in Florida are some of the same issues we faced during the beginning stages of operations of our Ohio Health Plan. We are implementing in Florida some of the same initiatives that helped lower medical costs in Ohio.
Our Wisconsin Health Plan faced the similar issues. Wisconsin is our newest health plan and with only 36,000 members, it is even smaller than our Florida Health Plan. There are still many opportunities to grow our market share in Wisconsin as the Health Plan market remains fragmented.
As we experienced in Michigan, fragmentation can provide some in-state acquisition opportunities or may force less efficient competitors out of the market.
Speaking of new markets, Molina Medicaid Solutions contributed about $3 million in operating income since we acquired the business on May 1, 2010. However, the unit reported an operating loss of about $4 million in the fourth quarter. The operating loss for the fourth quarter was a result of system stabilization costs in Idaho and Maine. We continue to make progress in these states and have also begun to work on re-procurements in Louisiana and West Virginia.