Molina Medicaid Solutions - DHHR

e10vkbasis at the New Mexico health plan, and the transition of members into capitated arrangements in California.50Table of ContentsHealth Plans Segment Operating DataThe following table summarizes premium revenue, medical care costs, medical care ratio, and premium taxes by health plan for the periods indicated (PMPM amountsare in whole dollars; member months and other dollar amounts are in thousands):Year Ended December 31, 2009Member Premium Revenue Medical Care Costs Medical Premium TaxMonths(1) Total PMPM Total PMPM Care Ratio ExpenseCalifornia 4,135 $ 481,717 $ 116.49 $ 443,892 $ 107.34 92.2% $ 16,446Florida(2) 386 102,232 264.94 95,936 248.62 93.8 16Michigan 2,523 557,421 220.94 454,431 180.12 81.5 36,482Missouri 927 230,222 248.25 191,585 206.59 83.2 —New Mexico 1,042 404,026 387.67 346,044 332.03 85.7 11,043Ohio 2,411 803,521 333.33 691,402 286.82 86.1 47,849Texas 402 134,860 335.69 110,794 275.78 82.2 2,513Utah 793 207,297 261.43 190,319 240.02 91.8 —Washington 3,847 726,137 188.77 613,876 159.58 84.5 14,175Other(3),(4) — 12,774 — 37,957 — — 5716,466 $ 3,660,207 $ 222.24 $ 3,176,236 $ 192.85 86.8% $ 128,581Year Ended December 31, 2008Member Premium Revenue Medical Care Costs Medical Premium TaxMonths(1) Total PMPM Total PMPM Care Ratio ExpenseCalifornia 3,721 $ 417,027 $ 112.06 $ 363,776 $ 97.75 87.2% $ 12,503Florida(2) — — — — — — —Michigan 2,526 509,782 201.86 405,683 160.64 79.6 31,760Missouri 910 225,280 247.62 184,298 202.58 81.8 —New Mexico 970 348,576 359.45 286,004 294.92 82.1 11,713Ohio 1,998 602,826 301.76 549,182 274.91 91.1 30,505Texas 348 110,178 316.32 84,324 242.09 76.5 1,995Utah 659 155,991 236.75 139,011 210.98 89.1 —Washington 3,514 709,943 202.02 575,085 163.64 81.0 11,668Other(3),(4) — 11,637 — 33,949 — — 2114,646 $ 3,091,240 $ 210.97 $ 2,621,312 $ 178.90 84.8% $ 100,165(1) A member month is defined as the aggregate of each month’s ending membership for the period presented.(2) The Florida health plan began enrolling members in December 2008.(3) “Other” medical care costs also include medically related administrative costs at the parent company.(4) As of December 31, 2009, our Nevada health plan no longer served members. Premium revenue and medical care costs for the Nevada health plan have been included in“Other.”51Table of ContentsGeneral and administrative expensesG&A expenses were 7.5% of revenue in the year ended December 31, 2009, compared with 8.0% for the year ended December 31, 2008. Year-over-year, premiumrevenue grew faster than administrative costs, causing administrative costs, as a percentage of revenue, to decrease. On a PMPM basis, G&A decreased to $16.76 in 2009, from$17.04 for the same period in 2008.Year Ended December 31,2009 2008% of Total % of TotalAmount Revenue Amount Revenue(In thousands)Medicare-related administrative costs $ 18,857 0.5% $ 18,451 0.6%Non Medicare-related administrative costs:Administrative payroll, including employee incentive compensation 205,396 5.6 190,932 6.1Florida health plan start up expenses — — 2,495 0.1All other administrative expense 51,774 1.4 37,768 1.2G&A expenses $ 276,027 7.5% $ 249,646 8.0%Depreciation and AmortizationDepreciation and amortization expense increased $4.4 million for the year ended December 31, 2009 compared with 2008, primarily due to depreciation expenseassociated with investments in infrastructure. The following table presents the components of depreciation and amortization:Year Ended December 31,2009 2008% of Total % of TotalAmount Revenue Amount Revenue(In thousands)Depreciation $ 25,172 0.7% $ 20,718 0.7%Amortization of intangible assets 12,938 0.3 12,970 0.4Depreciation and amortization reported in the consolidated statements of cash flows $ 38,110 1.0% $ 33,688 1.1%Gain on Retirement of Convertible Senior NotesIn February 2009, we purchased and retired $13.0 million face amount of our convertible senior notes. In connection with the purchase of the notes, we recorded a pretaxgain of $1.5 million in 2009. There was no comparable transaction in 2008.Interest ExpenseInterest expense was $13.8 million for the year ended December 31, 2009, a slight increase over interest expense of $13.2 million for the year ended December 31, 2008.Interest expense includes non-cash interest expense relating to our convertible senior notes, which totaled $4.8 million, and $4.7 million for the years ended December 31, 2009,and 2008, respectively.Income TaxesIncome taxes were recorded at an effective rate of 19.1% for the year ended December 31, 2009, compared with 36.8% in the prior year. The decrease in the effectivetax rate was primarily due to discrete tax benefits recognized during the year relating to settling tax examinations, and higher than previously estimated California enterprisezone tax credits.52Table of ContentsFor the years ended December 31, 2009 and 2008, amounts for premium tax expense and income tax expense have been reclassified to conform to the presentation ofMGRT as a premium tax. The MGRT amounted to $5.5 million and $5.1 million for the years ended December 31, 2009, and 2008, respectively. There was no impact to netincome for either period presented relating to this change.http://sec.gov/Archives/edgar/data/1179929/000095012311023069/a58840e10vk.htm[1/6/2012 11:08:51 AM]