Molina Healthcare Announces Pricing of $750 Million of 6.250% Senior Notes Due 2033

Rhea-AI Summary

Molina Healthcare (NYSE: MOH) has announced the pricing of $750 million in senior notes due 2033, with a 6.250% interest rate. The notes will be sold privately to qualified institutional buyers and will be payable semi-annually starting July 15, 2025. After deducting fees, the company expects net proceeds of approximately $740 million, which will be used for general corporate purposes including debt repayment, acquisitions, share repurchases, capital expenditures, working capital, and capital contributions to health plan subsidiaries.

Positive

• Successful raising of $750 million through senior notes offering
• Strong market access to institutional capital
• Flexible use of proceeds allowing for strategic investments and growth opportunities

Negative

• High interest rate of 6.250% represents significant debt servicing cost
• Additional long-term debt burden extending to 2033
• Potential dilution risk if proceeds are used for share repurchases

Insights

Financial Analyst

This $750 million senior notes offering at 6.25% interest represents a significant debt financing move by Molina Healthcare. The pricing is relatively competitive in the current high-rate environment, though it will add approximately $46.9 million in annual interest expenses. The net proceeds of $740 million provide substantial financial flexibility for multiple strategic initiatives.

The company's flexible use of proceeds, including potential acquisitions, share repurchases and capital contributions to health plan subsidiaries, suggests a balanced approach to capital allocation. This debt issuance strengthens Molina's liquidity position without immediately diluting shareholders, though it does increase the company's leverage. The 2033 maturity provides a comfortable timeline for repayment while locking in current rates for an extended period.

LONG BEACH, Calif.--(BUSINESS WIRE)-- Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today announced that it priced $750 million aggregate principal amount of its 6.250% senior notes due 2033 (the “Notes”) to be sold in a private offering to individuals reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain persons outside the United States in reliance on Regulation S under the Securities Act. The offering is expected to close on or about November 18, 2024 (such actual closing date, the “Settlement Date”), subject to the satisfaction of customary closing conditions.

The Notes will not be guaranteed by any of the Company’s subsidiaries at the time of issuance. The Notes will bear interest at a rate of 6.250% per year. Interest will be payable semi-annually in arrears on January 15 and July 15 of each year, commencing July 15, 2025, and will accrue from the Settlement Date. The Notes will mature on January 15, 2033.

The Company estimates that after deducting fees and expenses payable by the Company, the net proceeds from the issuance and sale of the Notes will be approximately $740 million (the “Net Proceeds”). The Company intends to use the Net Proceeds for general corporate purposes, which may include repayment of indebtedness, funding for acquisitions, share repurchases, capital expenditures, additions to working capital and capital contributions to the Company’s health plan subsidiaries to meet statutory requirements in new or existing states.

The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the benefit of, a U.S. person (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase the Notes and shall not constitute an offer, solicitation or sale in any state or jurisdiction where such offer, solicitation or sale is prohibited.

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. For more information about Molina Healthcare, please visit molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements. The Company intends such forward-looking statements to be covered under the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements provide current expectations of future events based on certain assumptions, and all statements other than statements of historical fact contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by words such as “expects,” “intends,” “will,” “may,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to, statements related to the Company’s offering of the Notes and the intended use of the Net Proceeds of the offering, which are subject to risks and uncertainties, including, without limitation, risks related to whether the Company will consummate the offering of the Notes on the expected terms, or at all, market and other general economic conditions, and whether the Company will be able to satisfy the conditions required to close any sale of the Notes. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by its forward-looking statements will in fact occur, and it cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of the date hereof, and, except as otherwise required by law, the Company disclaims any obligation to update any forward‑looking statements to conform the statement to actual results or changes in its expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241113807381/en/

Investor Contact:

Jeff Geyer

Jeffrey.Geyer@molinahealthcare.com

305-317-3012

Media Contact:

Caroline Zubieta

Caroline.Zubieta@molinahealthcare.com

562-951-1588

Source: Molina Healthcare, Inc.

FAQ

What is the interest rate and maturity date for Molina Healthcare's (MOH) new senior notes?

Molina Healthcare's senior notes have a 6.250% interest rate and will mature on January 15, 2033.

How much will Molina Healthcare (MOH) raise from the senior notes offering?

Molina Healthcare will raise $750 million in gross proceeds, with expected net proceeds of approximately $740 million after fees and expenses.

What will Molina Healthcare (MOH) use the proceeds from the senior notes for?

The proceeds will be used for general corporate purposes, including debt repayment, acquisitions, share repurchases, capital expenditures, working capital, and capital contributions to health plan subsidiaries.

When will the interest payments begin for Molina Healthcare's (MOH) 2033 senior notes?

Interest payments will begin on July 15, 2025, and will be paid semi-annually on January 15 and July 15 of each year.