Molina Healthcare, Inc. (NYSE:MOH) Q4 2022 Earnings Call Transcript

Mark Keim: And David, it’s Mark. The fact that a number of these states have also led with this thought, unprompted to me is encouraging that will be somewhat proactive here.

David Windley: Okay. That’s interesting. Second question is any thoughts on trends post-COVID in medical costs that are more durable and maybe distinction as to whether you’re betting on that or not. So thinking about things like lower ER utilization and that type of things.

Joe Zubretsky: No, I think the medical trends we’ve experienced late in the year seem to have fallen into a nice pattern of, lack of volatility and understanding what COVID is actually costing sort of like on a run rate basis. It almost evolved into a $40 million to $50 million monthly run rate. And as long as it stays stable, as long as we know where the COVID infection rate is spiking, it certainly is — the inpatient cost is certainly the more costly component, and that certainly hits the Medicare more than the Medicaid book. We have pretty good line of sight into what those services will cost us. But late in the year, it sort of settled into a nice pattern of $40 million to $50 million a month.

David Windley: And then lastly, Joe, I appreciate your comments on your — it sounds like your M&A pipeline is still very robust. Does the cost of capital change in the environment impact cadence or appetite? Has it impacted expected valuation on the seller side?

Joe Zubretsky: No, not at all. We obviously measure the returns against our weighted average cost of capital. Obviously, we’re earning more on the free cash now than we were before. So there’s less of a drag. But no, it hasn’t caused any change in momentum in terms of the appetite for counterparties in the market to want to speak to us and think about becoming part of the Molina enterprise.

David Windley: Great. That’s all I had. Thank you.

Operator: This concludes our question-and-answer session and Molina Healthcare’s fourth quarter 2022 earnings call. Thank you for attending today’s presentation. You may now disconnect.