Business Context and Reporting Period
Molina Healthcare, Inc. filed a Current Report on Form 8-K on November 2, 2020. The filing primarily serves to disclose a planned private offering of senior notes and provides supplemental non-GAAP financial data for the three and nine months ended September 30, 2020, to potential investors.
Key Financial Metrics
The filing provides unaudited financial data for the three and nine months ended September 30, 2020, alongside 2019 comparables. All figures are in millions of dollars.
| Metric | 3 Months Ended Sept 30, 2019 | 3 Months Ended Sept 30, 2020 | 9 Months Ended Sept 30, 2019 | 9 Months Ended Sept 30, 2020 |
|---|---|---|---|---|
| Net Income | $175 | $185 | $569 | $639 |
| EBITDA | $276 | $312 | $885 | $1,046 |
| Adjusted EBITDA | $287 | $337 | $922 | $1,099 |
| Interest Expense | $22 | $27 | $67 | $72 |
| Income Tax Expense | $58 | $77 | $181 | $271 |
The filing does not provide specific values for total revenue, operating cash flow, total debt, or liquidity ratios in this specific report.
Material Changes
- Profitability: Net income increased by $10 million (5.7%) for the three months ended September 30, 2020, compared to the prior year period. For the nine-month period, net income increased by $70 million (12.3%).
- Adjusted EBITDA: Adjusted EBITDA rose to $337 million for the three months ended September 30, 2020, from $287 million in the prior year. For the nine-month period, it increased to $1,099 million from $922 million.
- Non-Recurring Items: The 2020 Adjusted EBITDA calculation includes a $10 million adjustment for a premium deficiency reserve in Puerto Rico for both the three-month and nine-month periods. The 2019 period included adjustments for losses on debt extinguishment ($1 million for three months; $8 million for nine months).
Outlook, Risks, and Unusual Items
- Debt Offering: On November 2, 2020, the Company announced an intent to privately offer $650 million aggregate principal amount of senior notes due 2030. The offering is subject to market conditions and is targeted at qualified institutional buyers.
- Non-GAAP Limitations: Management notes that EBITDA and Adjusted EBITDA exclude interest, taxes, capital expenditures, and working capital needs. They should not be viewed as discretionary cash available for investment.
- Regulatory Disclosure: The information provided is furnished under Regulation FD and is not deemed "filed" for liability purposes under Section 18 of the Exchange Act.
Investor Verification Checklist
- Verify the final terms and pricing of the $650 million senior notes offering due 2030.
- Review the full 10-Q filing for the period ended September 30, 2020, to obtain total revenue, operating cash flow, and balance sheet details not included in this 8-K.
- Assess the impact of the Puerto Rico premium deficiency reserve on future profitability and reserve adequacy.
- Confirm the Company's total debt load and liquidity position post-offering.