EX-99.1
2
pathwaysproforma_ex991.htm
EXHIBIT 99.1
Exhibit
Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of Molina Healthcare, Inc. (the "Company"), as adjusted to give effect to the October 19, 2018, sale of its wholly owned subsidiary, Pathways Health and Community Support LLC (the "Pathways Sale") to Pyramid Health Holdings, LLC (the "Buyer"). The Pathways Sale was not a disposition that qualifies as a discontinued operation under Accounting Standards Codification No. 205, Presentation of Financial Statements.
The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2018, and the year ended December 31, 2017, give effect to the Pathways Sale as if it had occurred on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2018, gives effect to the Pathways Sale as if it had occurred on June 30, 2018.
The unaudited pro forma condensed consolidated financial statements are for informational purposes only and are not necessarily indicative of what the Company's financial performance and financial position would have been had the Pathways Sale been completed on the dates assumed, nor is such unaudited pro forma condensed consolidated financial information necessarily indicative of the results to be expected in any future period.
1
MOLINA HEALTHCARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2018
(In millions, except per-share amounts)
Historical
Adjustments to reflect Pathways Sale (a)
Pro Forma
Total revenue
$
9,529
$
(162
)
$
9,367
Operating expenses:
Medical care costs
7,572
-
7,572
Cost of service revenue
238
(151
)
87
General and administrative expenses
687
(15
)
672
Premium tax expenses
210
-
210
Health insurer fees
174
-
174
Depreciation and amortization
51
(1
)
50
Restructuring and separation costs
33
-
33
Total operating expenses
8,965
(167
)
8,798
Operating income
564
5
569
Other expenses, net
80
-
80
Income before income tax expense
484
5
489
Income tax expense
175
1
176
Net income
$
309
$
4
$
313
Net income per share:
Basic
$
5.10
$
5.16
Diluted
$
4.68
$
4.73
Weighted average shares outstanding:
Basic
60.5
60.5
Diluted
66.0
66.0
__________________
(a)
Reflects the elimination of the results of operations of Pathways Health and Community Support LLC ("Pathways"), as if the sale had occurred on January 1, 2017.
2
MOLINA HEALTHCARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
(In millions, except per-share amounts)
Historical
Adjustments to reflect Pathways Sale (a)
Pro Forma
Total revenue
$
19,883
$
(332
)
$
19,551
Operating expenses:
Medical care costs
17,073
-
17,073
Cost of service revenue
492
(318
)
174
General and administrative expenses
1,594
(29
)
1,565
Premium tax expenses
438
-
438
Depreciation and amortization
137
(5
)
132
Impairment losses
470
(171
)
299
Restructuring and separation costs
234
-
234
Total operating expenses
20,438
(523
)
19,915
Operating loss
(555
)
191
(364
)
Other expenses, net
57
-
57
Loss before income tax benefit
(612
)
191
(421
)
Income tax benefit
(100
)
29
(71
)
Net loss
$
(512
)
$
162
$
(350
)
Net loss per share:
Basic
$
(9.07
)
$
(6.19
)
Diluted
$
(9.07
)
$
(6.19
)
Weighted average shares outstanding:
Basic
56.4
56.4
Diluted
56.4
56.4
__________________
(a)
Reflects the elimination of the results of operations of Pathways, as if the sale had occurred on January 1, 2017.
3
MOLINA HEALTHCARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2018
(In millions)
Historical
Adjustments to reflect Pathways Sale (a)
Pro Forma
ASSETS
Current assets:
Cash and cash equivalents
$
3,392
$
(19
)
$
3,373
Investments
2,176
-
2,176
Restricted investments
80
-
80
Receivables
1,148
(40
)
1,108
Income tax refundable (b)
-
30
30
Prepaid expenses and other current assets
344
(5
)
339
Derivative asset
657
-
657
Assets held for sale
230
-
230
Total current assets
8,027
(34
)
7,993
Property, equipment, and capitalized software, net
276
(9
)
267
Goodwill and intangible assets, net
201
-
201
Restricted investments
117
-
117
Deferred income taxes
114
(18
)
96
Other assets
28
(1
)
27
$
8,763
$
(62
)
$
8,701
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims and benefits payable
$
1,920
$
-
$
1,920
Amounts due government agencies
1,746
-
1,746
Accounts payable and accrued liabilities
754
(20
)
734
Deferred revenue
193
-
193
Current portion of long-term debt
484
-
484
Derivative liability
657
-
657
Liabilities held for sale
66
-
66
Total current liabilities
5,820
(20
)
5,800
Long-term debt and other long-term liabilities
1,285
(1
)
1,284
Total liabilities
7,105
(21
)
7,084
Total stockholders' equity
1,658
(41
)
1,617
$
8,763
$
(62
)
$
8,701
__________________
(a)
Reflects the elimination of the assets and liabilities of Pathways, Buyer's retention of approximately $19 million of the cash balance, payment of approximately $3 million of transaction fees, and recognition of a $41 million loss on sale, net of taxes, as if the sale had occurred on June 30, 2018. A tax rate of 22% is applied to the loss on sale.
(b)
The Company will record income taxes refundable for the tax benefits arising from the loss on its investment in Pathways.
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EX - 99 . 1 2 pathwaysproforma _ ex991 . htm EXHIBIT 99 . 1 Exhibit Exhibit 99 . 1 Unaudited Pro Forma Condensed Consolidated Financial Statements The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of Molina Healthcare , Inc . ( the " Company " ) , as adjusted to give effect to the October 19 , 2018 , sale of its wholly owned subsidiary , Pathways Health and Community Support LLC ( the " Pathways Sale " ) to Pyramid Health Holdings , LLC ( the " Buyer " ) . The Pathways Sale was not a disposition that qualifies as a discontinued operation under Accounting Standards Codification No . 205 , Presentation of Financial Statements . The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30 , 2018 , and the year ended December 31 , 2017 , give effect to the Pathways Sale as if it had occurred on January 1 , 2017 . The unaudited pro forma condensed consolidated balance sheet as of June 30 , 2018 , gives effect to the Pathways Sale as if it had occurred on June 30 , 2018 . The unaudited pro forma condensed consolidated financial statements are for informational purposes only and are not necessarily indicative of what the Company 's financial performance and financial position would have been had the Pathways Sale been completed on the dates assumed , nor is such unaudited pro forma condensed consolidated financial information necessarily indicative of the results to be expected in any future period . 1 MOLINA HEALTHCARE , INC . UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30 , 2018 ( In millions , except per - share amounts ) Historical Adjustments to reflect Pathways Sale ( a ) Pro Forma Total revenue $ 9,529 $ ( 162 ) $ 9,367 Operating expenses : Medical care costs 7,572 - 7,572 Cost of service revenue 238 ( 151 ) 87 General and administrative expenses 687 ( 15 ) 672 Premium tax expenses 210 - 210 Health insurer fees 174 - 174 Depreciation and amortization 51 ( 1 ) 50 Restructuring and separation costs 33 - 33 Total operating expenses 8,965 ( 167 ) 8,798 Operating income 564 5 569 Other expenses , net 80 - 80 Income before income tax expense 484 5 489 Income tax expense 175 1 176 Net income $ 309 $ 4 $ 313 Net income per share : Basic $ 5 . 10 $ 5 . 16 Diluted $ 4 . 68 $ 4 . 73 Weighted average shares outstanding : Basic 60 . 5 60 . 5 Diluted 66 . 0 66 . 0 __________________ ( a ) Reflects the elimination of the results of operations of Pathways Health and Community Support LLC ( " Pathways " ) , as if the sale had occurred on January 1 , 2017 . 2 MOLINA HEALTHCARE , INC . UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31 , 2017 ( In millions , except per - share amounts ) Historical Adjustments to reflect Pathways Sale ( a ) Pro Forma Total revenue $ 19,883 $ ( 332 ) $ 19,551 Operating expenses : Medical care costs 17,073 - 17,073 Cost of service revenue 492 ( 318 ) 174 General and administrative expenses 1,594 ( 29 ) 1,565 Premium tax expenses 438 - 438 Depreciation and amortization 137 ( 5 ) 132 Impairment losses 470 ( 171 ) 299 Restructuring and separation costs 234 - 234 Total operating expenses 20,438 ( 523 ) 19,915 Operating loss ( 555 ) 191 ( 364 ) Other expenses , net 57 - 57 Loss before income tax benefit ( 612 ) 191 ( 421 ) Income tax benefit ( 100 ) 29 ( 71 ) Net loss $ ( 512 ) $ 162 $ ( 350 ) Net loss per share : Basic $ ( 9 . 07 ) $ ( 6 . 19 ) Diluted $ ( 9 . 07 ) $ ( 6 . 19 ) Weighted average shares outstanding : Basic 56 . 4 56 . 4 Diluted 56 . 4 56 . 4 __________________ ( a ) Reflects the elimination of the results of operations of Pathways , as if the sale had occurred on January 1 , 2017 . 3 MOLINA HEALTHCARE , INC . UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30 , 2018 ( In millions ) Historical Adjustments to reflect Pathways Sale ( a ) Pro Forma ASSETS Current assets : Cash and cash equivalents $ 3,392 $ ( 19 ) $ 3,373 Investments 2,176 - 2,176 Restricted investments 80 - 80 Receivables 1,148 ( 40 ) 1,108 Income tax refundable ( b ) - 30 30 Prepaid expenses and other current assets 344 ( 5 ) 339 Derivative asset 657 - 657 Assets held for sale 230 - 230 Total current assets 8,027 ( 34 ) 7,993 Property , equipment , and capitalized software , net 276 ( 9 ) 267 Goodwill and intangible assets , net 201 - 201 Restricted investments 117 - 117 Deferred income taxes 114 ( 18 ) 96 Other assets 28 ( 1 ) 27 $ 8,763 $ ( 62 ) $ 8,701 LIABILITIES AND STOCKHOLDERS ' EQUITY Current liabilities : Medical claims and benefits payable $ 1,920 $ - $ 1,920 Amounts due government agencies 1,746 - 1,746 Accounts payable and accrued liabilities 754 ( 20 ) 734 Deferred revenue 193 - 193 Current portion of long - term debt 484 - 484 Derivative liability 657 - 657 Liabilities held for sale 66 - 66 Total current liabilities 5,820 ( 20 ) 5,800 Long - term debt and other long - term liabilities 1,285 ( 1 ) 1,284 Total liabilities 7,105 ( 21 ) 7,084 Total stockholders ' equity 1,658 ( 41 ) 1,617 $ 8,763 $ ( 62 ) $ 8,701 __________________ ( a ) Reflects the elimination of the assets and liabilities of Pathways , Buyer 's retention of approximately $ 19 million of the cash balance , payment of approximately $ 3 million of transaction fees , and recognition of a $ 41 million loss on sale , net of taxes , as if the sale had occurred on June 30 , 2018 . A tax rate of 22 % is applied to the loss on sale . ( b ) The Company will record income taxes refundable for the tax benefits arising from the loss on its investment in Pathways . 4