Business Context and Reporting Period
Molina Healthcare, Inc. (MOH) filed a Current Report on Form 8-K on May 28, 2020, reporting events occurring on May 27, 2020. The filing primarily addresses a proposed private offering of senior notes, a potential amendment to its credit agreement, and ongoing discussions regarding the sale of its Puerto Rico Medicaid business.
Key Financial Metrics
The filing provides historical Non-GAAP financial measures (EBITDA and Adjusted EBITDA) to potential investors in connection with the proposed offering. The filing does not provide current GAAP revenue, profit, cash flow, or debt balances for the period ending May 2020.
| Period | Net Income (Loss) | EBITDA | Adjusted EBITDA |
|---|---|---|---|
| Year Ended Dec 31, 2017 | $(512) million | $(329) million | $261 million |
| Year Ended Dec 31, 2018 | $707 million | $1,232 million | $1,313 million |
| Year Ended Dec 31, 2019 | $737 million | $1,148 million | $1,195 million |
| Three Months Ended Mar 31, 2019 | $198 million | $308 million | $319 million |
| Three Months Ended Mar 31, 2020 | $178 million | $294 million | $306 million |
Note: The filing does not provide a clear value for current liquidity, total debt, or operating margins for the quarter ended March 31, 2020, beyond the Net Income and Adjusted EBITDA figures listed above.
Material Changes and Strategic Events
- Proposed Debt Offering: The Company intends to privately offer $800 million aggregate principal amount of senior notes due 2028 to qualified institutional buyers.
- Credit Facility Amendment: The Company intends to amend its credit agreement to establish a $1.0 billion senior unsecured revolving credit facility. This requires the full repayment of the existing term loan facility. Commitments in excess of the facility size have been received from a syndicate of lenders.
- Puerto Rico Business Sale: The Company is in discussions to sell its Puerto Rico Medicaid business, which generated $474 million in premium revenues in 2019. Completion is expected in the third quarter of 2020. Management does not believe the sale will have a material impact on results of operations.
Guidance, Risks, and Contingencies
The filing does not contain updated financial guidance or management commentary on future earnings projections. However, it highlights several risks and contingencies:
- Transaction Completion Risk: There is no assurance that the Proposed Credit Agreement Amendment or the Puerto Rico business sale will be completed in a timely manner or at all.
- Market Conditions: The $800 million note offering is subject to market and other conditions.
- Non-GAAP Limitations: The Company notes that EBITDA and Adjusted EBITDA exclude interest, taxes, capital expenditures, and working capital needs, and should not be viewed as discretionary cash available for investment.
Investor Verification Checklist
- Verify the final terms and pricing of the $800 million senior notes due 2028 once the offering is completed.
- Confirm the successful closing of the $1.0 billion revolving credit facility amendment and the repayment of the existing term loan.
- Monitor the status of the Puerto Rico Medicaid business sale and any regulatory approvals required for the third-quarter 2020 closing.
- Review the Company's next quarterly earnings report (10-Q) for updated GAAP revenue, cash flow, and debt balances, as this 8-K does not provide current GAAP financial statements.