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Molina Healthcare Updates Fiscal Year 2013 Guidance To Include Impact Of Issuance Of Cash Convertible Senior Notes And Projected Higher Premium Revenue

Molina Healthcare, Inc. (NYSE: MOH) announced today that it is updating its 2013 guidance provided on February 7, 2013, to include the impact of the issuance of $550 million aggregate principal amount of cash convertible senior notes on February 15, 2013, and certain projected increases to its premium revenue. The Company is also expanding its guidance to include line items in addition to those provided on February 7, 2013. Updated 2013 guidance includes:

  • Operating income expected to increase $10 million ($0.13 per diluted share) compared with previously issued guidance due to newly expected increases in premium revenue.
  • EBITDA expected to increase $10 million compared with previously issued guidance.
  • Issuance of convertible notes expected to reduce earnings per diluted share by $0.23 compared with previously issued guidance. Updated guidance includes an incremental $17 million ($0.21 per diluted share) of non-cash interest expense.
  • Earnings per diluted share projected at $1.45 for 2013.

The issuance of the $550 million of cash convertible senior notes is expected to reduce earnings per diluted share by approximately $0.23 as follows:

  • Non-cash interest expense is expected to reduce earnings per diluted share by approximately $0.21;
  • Cash interest expense is expected to reduce earnings per diluted share by approximately $0.07; and
  • Higher interest expense is expected to be offset by higher investment income and the reductions in share count resulting from the share buyback that accompanied the note issuance, the combination of which is expected to increase earnings per diluted share by approximately $0.05.

The upsizing of the Company’s convertible note offering from the $375 million anticipated at launch to the ultimate amount of $550 million resulted in incremental interest costs of approximately $0.10 per diluted share for all of 2013.

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