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Molina Healthcare, Inc. Q2 2010 Earnings Call Transcript

Molina Healthcare, Inc. Q2 2010 Earnings Call Transcript

Molina Healthcare, Inc. (MOH)

Q2 2010 Earnings Conference Call

August 4, 2010 5:00 PM ET


Juan José Orellana – VP, IR

Mario Molina – CEO

John Molina – CFO

Joseph White – Chief Accounting Officer

Terry Bayer – COO

Jim Howatt – Chief Marketing Officer


Josh Raskin – Barclays Capital

Chris Brek (ph)

Tom Carroll – Stifel Nicolaus

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John Rex – JP Morgan

Scott Green – Bank of America Merrill Lynch



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» Molina Healthcare Inc. Q2 2009 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Molina Healthcare’s second quarter 2010 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator instructions) As a reminder this conference is being recorded, Wednesday August 4, 2010.

I would now like to turn the call over to Juan José Orellana, Vice President of Investor Relations. Please go ahead, sir.

Juan José Orellana

Thank you, (Lensie). Hello everyone, and thank you for joining us. The purpose of this call is to discuss Molina Healthcare’s financial results for the second quarter ended June 30, 2010. The company’s earnings release reporting its results was issued today after the market closed, and was posted for viewing on our company website. We also issued another press release shortly after our earnings release. That second release announced our offering of common stock.

Certain securities regulations prohibit the discussion of the offering or of any of the filings that have or will be made in connection with that offering. As a result, there can be no discussion of the offering on this call or on other similar calls until the offering is complete. The offering also limits our ability to comment on our expectations about the future.

We therefore ask that during the question-and-answer session at the end of this call, you limit your questions to matters having only to do with our second quarter earnings announcements.

On the call with me today are Dr. Mario Molina, our CEO; John Molina, our CFO; Terry Bayer, our COO; Dr. Jim Howatt, our CMO; and Joseph White, our Chief Accounting Officer. After the completion of our prepared remarks, we will open the call to take your questions.

Our comments today will contain forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act. All of our forward-looking statements are based on our current expectations and assumptions which are subject to numerous risk factors that could cause our actual results to differ materially.

A description of such risk factors can be found in our earnings release and in our reports filed with the Securities and Exchange Commission including our Form 10-K Annual Report for fiscal year 2009 and our Form 10-Q quarterly reports and our Form 8-K current reports. These reports can be accessed under the Investor Relations tab of our company website or on the SEC’s website. All forward-looking statements made during today’s call represent our judgment as of August 4, 2010, and we disclaim any obligation to update such statements.

This call is being recorded, and a 30-day replay of the conference call will be available over the Internet through the company’s website at

I would now like to turn the call over to Dr. Mario Molina.

Mario Molina

Thank you Juan José. Hello everyone and thank you for joining our earnings call. I will start today’s call by reviewing key company events for the quarter and then turn the call over to John, who will review the financial details of the quarter.

We’d had busy quarter. On the growth front, we were awarded a Star Plus Medicaid managed care contract for the Dallas service area. Our Molina Medicaid solutions product HealthPass went live in Idaho in June. And although technically not a second quarter event, we reached a definitive agreement to acquire Abri Health Plan, a Medicaid health plan in the state of Wisconsin.

Our health plans continued to perform well with marked improvements in California and New Mexico. Let me highlight each of these key events. In Texas, we were awarded a contract for the Star Plus program. The Star Plus program is the Texas Medicaid managed care program designed to provide primary care, acute care and long-term care services to the aged, blind or disabled populations.

The contract is for the Dallas service area which includes Dallas and six surrounding counties. It is estimated that there are approximately 50,000 aged blind or disabled beneficiaries in this service area, who will be making a choice in the first quarter of 2011 among Molina and two other health plans.

We’re excited about this contract award as it further expands our footprint in the state of Texas and increases our involvement in the care of aged blind or disabled beneficiaries. As a remainder, Molina Healthcare, Texas already serves approximately 42,000 Medicaid beneficiaries in the Harris Service Area, which includes Houston and in the Bexar service area which includes San Antonio.

Nearly 45% of those members fall in the aged blind or disabled category. On May 3rd of this year, we introduced Molina Medicaid solutions, our fiscal intermediary business, following the closing of our acquisition of HIM from Unisys. We are pleased to announce that we began the operations phase of our contract in the state of Idaho on June 1. As with any major systems implementation, the updating of software or hardware may result in temporary glitches.

There have been a few bumps on the road, but our team in Idaho was working closely with the state and the local provider community to resolve issues arising from the new system. A few weeks ago we announced our entry into a definitive agreement to acquire Abri Health Plan in Wisconsin. Abri is a Medicaid managed care provider that currently participates in the BadgerCare Plus and SSI Managed Care programs in Wisconsin. Abri servers approximately 18,000 members with the bulk of the membership concentrated in the Milwaukee area.

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