Business Context and Reporting Period
This Form 8-K was filed by Molina Healthcare, Inc. on November 1, 2021. The report primarily discloses a planned private offering of senior notes and provides supplemental non-GAAP financial data to potential investors in connection with this offering.
Key Financial Metrics
The filing provides historical financial data in millions of dollars for the years ended December 31, 2018-2020, and the nine months ended September 30, 2020 and 2021. The filing does not provide GAAP revenue, cash flow, or debt balance sheet data.
| Period | Net Income | EBITDA | Adjusted EBITDA |
|---|---|---|---|
| Year Ended Dec 31, 2018 | $707 | $1,232 | $1,313 |
| Year Ended Dec 31, 2019 | $737 | $1,148 | $1,195 |
| Year Ended Dec 31, 2020 | $673 | $1,151 | $1,214 |
| Nine Months Ended Sep 30, 2020 | $639 | $1,046 | $1,099 |
| Nine Months Ended Sep 30, 2021 | $556 | $925 | $980 |
Definitions: EBITDA is defined as net income adjusted for interest, taxes, depreciation, and amortization. Adjusted EBITDA further adjusts for stock-based compensation, transaction costs, and non-cash or non-recurring charges.
Material Changes and Trends
- Net Income Decline: Net income for the nine months ended September 30, 2021 ($556 million) decreased compared to the same period in 2020 ($639 million).
- EBITDA Trend: EBITDA for the nine months ended September 30, 2021 ($925 million) was lower than the prior year period ($1,046 million).
- Non-Recurring Charges: Adjustments for non-cash or non-recurring charges in the nine months ended September 30, 2021, totaled $6 million, attributed to a premium deficiency reserve in Puerto Rico.
Outlook, Risks, and Unusual Items
Debt Offering
On November 1, 2021, the Company announced an intent to privately offer $750 million aggregate principal amount of senior notes due 2032. The offering is subject to market conditions and will be sold to qualified institutional buyers under Rule 144A and to persons outside the U.S. under Regulation S.
Limitations of Non-GAAP Measures
Management notes that EBITDA and Adjusted EBITDA have significant limitations, including the exclusion of interest expense, capital expenditures, working capital needs, and tax payments. These measures should not be viewed as substitutes for GAAP results.
Investor Verification Checklist
- Verify the final terms and pricing of the $750 million senior notes offering due 2032.
- Review the full text of the press release attached as Exhibit 99.1 for specific use of proceeds.
- Confirm the impact of the Puerto Rico premium deficiency reserve on future profitability.
- Compare the provided non-GAAP metrics against the Company's most recent GAAP 10-Q or 10-K filings to assess revenue and cash flow trends not detailed in this 8-K.