Molina Healthcare Announces Proposed Offering of $500 Million of Senior Notes Due 2033

Rhea-AI Summary

Molina Healthcare (NYSE: MOH) has announced plans to privately offer $500 million in senior notes due 2033. The offering will be made to qualified institutional buyers under Rule 144A and to certain non-U.S. persons under Regulation S. The notes will not be guaranteed by company subsidiaries at issuance. Net proceeds will be used for general corporate purposes, including potential debt repayment, acquisitions, share repurchases, capital expenditures, working capital, and capital contributions to health plan subsidiaries for statutory requirements.

Positive

• Raising $500 million in additional capital through senior notes offering
• Flexible use of proceeds allowing for strategic investments, acquisitions, and share repurchases
• Strengthening financial position for health plan subsidiaries' statutory requirements

Negative

• Increase in long-term debt obligations
• Additional interest expense burden through 2033

Insights

Financial Analyst

This $500 million senior notes offering represents a strategic financial move by Molina Healthcare to strengthen its capital structure. The 10-year notes (2033 maturity) provide long-term financing flexibility, with proceeds targeted for various corporate initiatives including potential acquisitions and share repurchases. With a market cap of $19.3 billion, this debt issuance represents only 2.6% of the company's market value, suggesting a manageable leverage increase.

The private placement to qualified institutional buyers indicates strong institutional interest and allows for faster execution compared to a public offering. The unguaranteed structure of these notes provides operational flexibility, though it may impact pricing. Key focus areas for investors should be the final interest rate terms and how management prioritizes the use of proceeds, particularly regarding M&A opportunities versus share repurchases.

LONG BEACH, Calif.--(BUSINESS WIRE)-- Molina Healthcare, Inc. (NYSE: MOH) (the “Company”) today announced that it intends to privately offer, subject to market and other conditions, $500 million aggregate principal amount of senior notes due 2033 (the “Notes”). The Company will make the offering pursuant to an exemption under the Securities Act of 1933, as amended (the “Securities Act”). The initial purchasers will sell the Notes only to persons reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act and to certain persons outside the United States in reliance on Regulation S under the Securities Act (“Regulation S”).

The Notes will not be guaranteed by any of the Company’s subsidiaries at the time of issuance. The interest rate, offering price and other terms of the Notes will be determined by negotiations between the Company and the representative of the initial purchasers. The issuance of the Notes will be subject to customary closing conditions.

The Company intends to use the net proceeds from this offering 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 “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 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/20241112956793/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

How much is Molina Healthcare (MOH) planning to raise through senior notes in 2023?

Molina Healthcare (MOH) is planning to raise $500 million through senior notes due 2033.

What will Molina Healthcare (MOH) use the senior notes proceeds 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.

Who can purchase Molina Healthcare's (MOH) new senior notes offering?

The notes will only be sold to qualified institutional buyers under Rule 144A and certain non-U.S. persons under Regulation S.