Good morning and welcome to Molina Healthcare's Third Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Julie Trudell, Senior Vice President, Investor Relations. Please go ahead.

Good morning and thank you for joining Molina Healthcare’s third quarter 2019 earnings call. With me today are Molina’s President and CEO, Joe Zubretsky and our CFO, Tom Tran. The press release announcing our third quarter earnings was distributed yesterday after the market closed and the release is now posted for viewing on our Investor Relations website. A replay of this call will be available shortly after the conclusion of the call through November 6. The numbers to access this replay are in the earnings release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein as of today, Wednesday, October 30, 2019 and we have not been updated subsequent to the initial earnings call. In this call, we will refer to certain non-GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our third quarter press release. During our call, we will be making forward-looking statements, including statements about our growth prospects, our 2019 guidance, and our long-term outlook. Listeners are cautioned that all of our forward-looking statements are subject to certain risks and uncertainties that can cause our actual results to differ materially from our current expectations. We advise listeners to view our risk factors discussed in our Form 10-K Annual Report for 2018 filed with the SEC as well as the risk factors listed in our other reports and filings with the SEC. After the completed prepared remarks today, we will open-up the call to take your questions. I would now like to turn the call over to our Chief Executive Officer, Joe Zubretsky. Joe?

Thank you, Julie and thank you all for joining us this morning. Late yesterday afternoon, after we issued our press release for the quarter, we learned the outcome of the Texas STAR+ RFP award. Before we discuss our quarterly results, we will first provide you with the information we have at this time. We were awarded contracts in two regions: our existing Hidalgo region, and one new region, the Northeast region. Given the real time nature of this information, a full analysis of the membership and revenue impact that is likely to occur at late 2020 is currently underway and will be completed shortly. We are naturally very disappointed in this initial outcome and are currently seeking more information from HHSC with respect to the awards. We will then decide on the course of action and exploring all of our options relating to the decision. Now let's turn to discussion to our third quarter results. Last night we reported earnings per diluted share for the third quarter of $2.75. We reported pre-tax earnings of $233 million and after-tax earnings of $175 million, resulting in pre-tax and after-tax margins of 5.5% and 4.1%, respectively. Based on our third quarter and year-to-date performance, we are raising our full-year earnings per diluted share guidance to a new range of $11.30 to $11.55 for the full-year. I will now provide some detail on our performance through the first nine months of the year. Premium revenue was $12.1 billion and in line with expectations as our membership remains relatively stable, our rates remain sound and our retention of at-risk premium continues to improve. Our medical care ratio was 85.7%. Despite some cost pressures in select markets, this MCR level demonstrates our continued ability to manage medical cost effectively, improve our claim payment practices and execute…

Thank you, Joe, and good morning. We report third quarter's earnings per diluted share of $2.75 supported by net income of $175 million and an after-tax margin of 4.1% with premium revenue up $4.1 billion. Let me provide some additional detail on the quarter. My commentary will be focused on a sequential comparison. The consolidated MCR for the third quarter of 2019 was 86.3% compared to 85.6% in the second quarter of 2019, primarily due to the seasonality of the marketplace MCR. Prior period reserve development in the quarter was negligible. The G&A ratio of our third quarter of 2019 improved by 20 basis points to 7.6% compared to 7.8% in the second quarter of 2019. The improvement in the G&A ratio was mainly due to the sequential increase in revenue. Interest expense were flat at $22 million compared to the second quarter of 2019. Let me provide some additional commentary on our performance in the third quarter by line of business. In the Medicaid business, our MCR for the quarter were sequentially flat and approximately 88%, producing an after-tax margin of 3.4%. This result were in line with our expectations. We continue to produce our targeted margins in Medicaid, while experiencing isolated medical cost pressures in certain markets, primarily due to acuity mix shift, benefit carve-ins and some loss claim activity. We fully expect that these cost pressures will continue to be managed and will ultimately end up in our premium raise. Our Medicare business comprising of our D-SNP and MMP products for the quarter continued to perform well and was in line with our expectation. The MCR for the quarter of 85.6% was fairly stable compared to 85.2% in the second quarter of 2019, producing an after-tax margin of 6.4%. More specifically on Medicare, we continue to demonstrate…

[Operator Instructions] The first question comes from Scott Fidel of Stephens. Please go ahead.

Hi. Thanks. Good morning. First question, just if you can maybe expand a little bit on the commentary on seeing some cost pressures in certain markets in the Medicaid book. Maybe just sort of discuss how many markets and geographies, products you’re seeing that? And then sort of what type of rate traction you’re seeing around some of those issues right now?

Sure, Scott. I would say the cost pressures that we're experiencing in those markets come across three dimensions. One, we did see in the quarter some aberrant and anomalous large case activity, which will abate. Second, we've seen an acuity mix shift due to some redetermination efforts, particularly in the State of Ohio. And those are primarily the reasons for the cost pressures. We believe that ultimately acuity mix shift ends up in rates. And in fact, the State of Ohio has been very reasonable and rational in rate discussions. And we believe that normal operating protocol such as utilization control, care management and looking at our network contracts harder will arrest some of the large claim activity. So there were pressures in various markets. Some of the behavioral carve-ins actually cause some rate pressure. You are never sure you're getting the right capitated rate when a benefit gets carved in. So we certainly saw some behavioral cost pressure in Washington, that will end up in rates. So acuity mix shift benefit carve-ins in some large claim activity. But all very manageable as evidenced by a very flat sequential Medicaid managed care ratio of 88%.

Got it. And a follow-up question just -- I guess sort of related maybe not just around the trends on the reserve development side. And I know you mentioned, you sort of had negligible reserve development in the quarter. I know you guys have had some pretty hefty development sort of trending over the last, let's call, 4 to 6 quarters. So, maybe sort of just update us on sort of the reserves and how you feel the adequacy is at this point? Did the reserve development get impacted by some of these issues in Medicaid or are there other factors to consider as well just around reserve development trends?

Take it to Tom in a moment, but I -- the reserve practices that we’ve -- that we undertake have remained consistent. I would say in the third and fourth quarter, your prior year reserve development should abate. Last year I thought was an exception. We had some reserve development in the fourth quarter of the prior year. I think that was an unusual phenomenon. So the fact that reserve development is over a $100 million for the year on a pre-tax basis, and has abated here in the third and fourth quarter is not unusual. Tom, anything to add?

No, nothing more to add to that, Joe. Our reserve practice remain very consistent. We feel that our reserve balance is very strong. You can see DCP have gone up two days. And none of these issue on the cost pressure you see there, M&A into any particular issue for our reserve balance at all.

Okay. Thanks.

The next question comes from Peter Costa of Wells Fargo. Please go ahead.

Good morning. Question about Texas. Your loss ratio in Texas is higher than some of your other loss ratios when I look at the government programs loss ratio. Is -- but it's hard to tell given the mix of higher acuity business, which you might have in Texas, well, that’s more profitable or less profitable than average? I guess another question is, is the contracts which you stand to lose more, more profitable or less profitable than your average profitability? And then the second question just what was that gave you the confidence at the Investor Day that the 7% to 9% organic growth rate would be there if you sort of weren't sure about the Texas result at that point in time?

Let me answer the second question, first. To be clear, at Investor Day, we said that the 7% to 9% revenue forecast for 2020 assumed status quo in Texas. So it didn't assume any increment or decrement due to a gain or loss. We are very clear on that point. So now as I said in our prepared remarks, as we do our forecast for 2020, if this award sticks and it incepts in -- on September 1, we would therefore adjust the 7% to 9% to allow for that 4-month revenue shortfall in Texas. Tom, you want to answer the question about profitability?

Sure. We obviously do not petition out profitability by specific market and even down by line of business of market, but I will provide a following general comment. The acuity of the population in Texas is generally higher because of the significant portion of ABD and MMP population in the state. So almost by nature it's much higher revenue PMPM, if you will. So with that generally we run the tax that you saw we disclosed that at a 91% MCR in the press release. However, the business is profitable. Overall, our Medicaid business as you know hovering around 3% plus or minus on an after-tax. So in some state it may be less, some state may be more than that midpoint. So -- but the business there is profitable abate the fact that it may be slightly less than the midpoint, because of high acuity of the nature of the population.

Thank you.

The next question comes from Josh Raskin of Nephron Research. Please go ahead.

Hi. Thanks. Just want to follow-up on a comment that you made, Joe, with the first question around Texas. I think you said that you will explore all your options. Now I want to make sure is that just with regarding protests and Texas specifically, or is that a broader Molina Healthcare commentary around as you kind of rethink about the long-term?

That was meant to refer to exploring our options in Texas. There is a -- there is business days to file a protest. That’s usually routine in these types of matters. But I was referring to exploring all of our options to review the scoring on the Texas awards. And then to the right set we have to pursue an additional award, we would pursue vigorously.

Okay. Which I guess leads to my second question, which is you talk last quarter around long-term targets of 10% to 12% revenue growth still being consistent with your views long-term, understanding the 2020 won't be in that range and EPS targets of 12% to 15%. And I know you don't have the scoring, so you don't know exactly what happened in Texas specifically, but is there anything that’s occurred sort of with the Texas, where you guys will have to take a step back, rethink long-term targets, rethink Molina's long-term strategy, or anything else in terms of just overall views for the company?

Our manage Medicaid duals high acuity. We do this really well. We're disappointed in Texas award and we will look at the scoring and as I said, we will pursue our rights. But nothing changes in our long-term outlook for the attractiveness of the business we're in, or the target margins that we’ve outlined for you. There is an inherent growth rate in this business that is very attractive as well. It produces significant excess cash flow and although we are disappointed in this award, we will reset our 2020 numbers and we will grow off of those and profitably.

Okay, perfect. Thanks.

The next question comes from Justin Lake of Wolfe Research. Please go ahead.

Thanks. Good morning. Just one follow-up with a couple of questions on Texas. First, in terms of the -- you’ve got a pretty big exchange footprint there, Joe, I would assume the good news is, it looks like your STAR footprint is pretty similar to your STAR+ footprint. So is it fair to say that even if you were to lose the regions that in the announcement in STAR+, you would still have an upscale to run a successful exchange strategy there, so that you wouldn’t need to exit the exchanges in Texas in any material way?

Okay. We have a lot of our exchange membership is in Dallas and Houston. We've proven in New Mexico that you can run a really profitable exchange business without being in Medicaid. And as you suggested, we still have the STAR CHIP contract and we think we have enough network growth and scale to participate in the marketplace business going forward. And the Texas marketplace business has been profitable and an attractive growth opportunity for us.

Right. And then in terms of the losses, I mean I know you’re going through the numbers. I’ve come up with something estimating close to just under a $1 billion of revenue that this low premium that this looks like. Again, no need to comment on that, because I know you’ve talked about Texas in terms of the potential for deleveraging on the SG&A side, if this were to go against you. And I’ve just wanted to kind of follow-up on that in terms of, if that number is in the right ballpark or you do lose a $1 billion of revenue, you think you could offset that SG&A and still hit your targets, or do you think that would also be a reset above and beyond just the margin contribution that -- that’s a risk here?

Various scenarios on what this might mean for revenue. But I would say the number that you articulated is certainly in the neighborhood of what could happen if we kept everything we have in Hidalgo and the Northeast gets split, let's say, evenly between two players. Those numbers are in the right neighborhood. But stranded overhead is certainly a phenomenon in this business. So just the fixed cost nature of the business, but we don't tolerate stranded overhead here and we’ve proven that in 2019. If you recall, in 2018 with the Florida and New Mexico losses, we said we had stranded overhead that we had to get at. And I think when you look at North of 4% margins across the board in this business, we've proven that we don't allow stranded overhead. We will get up the fixed cost when the revenue disappears and we will restore ourselves to our target margins.

Great. Thanks for the color.

The next question comes from Kevin Fischbeck of Bank of America. Please go ahead.

Great. Thanks. I wanted to ask about the exchanges. You’ve had -- as a couple of competitors talk about their bid strategy and their expectation for margins for next year kind of coming down and at least one of them specifically saying that their view about the minimum MLR really was a main reason why they were doing that, but they’re operating at much lower margins in the near operating. I just wanted to -- just kind of recheck with you and make to see what your thoughts were about -- whether that at all is a barrier to growth either next year or in the next couple of years in certain markets? Just trying to understand why you’re upping it into a higher margin and not seeing the same potential kept to growth?

Well, the first thing I would say, Kevin, is it's obvious that '18 and '19 have been very profitable years for us in the marketplace and '17 was quite the opposite. So when '17 roles off to 3-year average in '20, that will certainly put certain markets up against the minimum MLR. The other thing I would say is it depends on how your portfolio performs. Averages can be misleading. It really depends on how your individual properties are performing. We have some that are performing really well and others less well. And so we will bump into the minimum MLR probably in a few markets. But we certainly consider that when we filed our prices for 2020. We certainly consider that when we were loading in additional value-added benefits to put value into the product then paying rebates, and we took all that into consideration as we filed our rates for 2020. And our preliminary analysis now that everybody's rates are public is that you have very competitive positions number one and number two, in about 75% of our key markets and our flagship silver product and our bronze product which is the products that we want to be competitive. So we are still feeling really good about our growth prospects in marketplace for 2020. As a reminder, we said we are going to grow the business albeit at a lower [technical difficulty] and still attractive margin.

And you said a couple of times on the call today that your broker compensation is also, I guess, strong. Is that a change this year that you do something differently or are you paying more now in 2020 or for 2020 than you have in the past or is this just a comment that you’ve consistently been doing this?

Okay. We are paying market now. We are paying more, we are paying market. We weren't competitive on our broker commissions in a few markets last year and we’ve corrected that. So although we are paying more, we are not paying above market. We are now paying market.

Is there anything that you think is kind of draw or share with us about that dynamic like in those markets where you’re paying below? Any view about what that means to go from below market to being in-market?

Well, I think as you know about 50% of the business comes through .gov and the other 50% comes through brokers. And broker want to be paid market commission, so we believe we will have good broker loyalty, we have a strong network. And now that we're paying market commissions, it should enhance the growth rate.

Okay, great. Thanks.

The next question comes from Stephen Tanal of Goldman Sachs. Please go ahead.

Good morning, guys. I appreciate all the color, especially this early on the Texas RFP. And I guess, just wanted to follow-up on kind of the comments of stranded overhead. Joe, that was helpful, but I guess is it sort of fair to expect the earnings impact will be closer to the direct loss of what you're getting today as opposed to something larger than like the state makes available sort of financials for all the companies. And I guess the direct impact somewhere in the ballpark like 5% of EPS for looking at all that right using margins in the last reported fiscal year. So is that what you’ve managed to kind of just losing the direct impact, or should we actually think, well, even if you cut some stranded overhead, the impact could be greater for whatever reason?

I think I understand your question, but as I stated previously, certainly the margin, the fully baked margin on the product -- on the revenue that’s lost will disappear. And as I mentioned before, there will be fixed cost that will then become stranded, but we don't allow that to happen. And we’ve demonstrated that in 2019 we gave you at Investor Day initial estimates of maybe $40 million to $50 million of stranded overhead due to the New Mexico and Florida losses. And if you just look at our G&A ratios today, look at our margins today, I mean all becomes fungible at some point. But we’ve managed our G&A ratio was really, really well through this dynamic and we would be disciplined enough to do that yet again in late 2020 when this revenue phenomenon hits.

Perfect. Thanks. And then maybe one for Tom. Just in terms of the guidance revision, two questions on it. One, could you kind of confirm sort of the level of peer performance EPS that’s implied there? And the other was more mechanical just the guidance hike on investment and other income. Any reason to think that's not sort of a 100% flow-through to earnings?

In terms of the peer performance guidance, I think what you're referring to is there any sort of restructuring costs, or any kind of gain/loss on convertible, if that's what you’re referring to. And our EPS that we provided is all in. All of those item are in, okay? So in other words, we have roughly about a $0.12 of year-to-date net gain from the redemption of the convertible. So that said, that’s in the $11.32 to $11.55.

Okay, great. And then -- sorry, the investment and other income piece?

Investment income, yes. I mean it certainly -- we have provided guidance with high investment and other income. That’s a combined two items there. And that's -- we’ve seen a little bit higher investment income in the third quarter. So that's why we up the guidance for the full-year.

And does that flow-through a 100%? That was sort of just I really wanted to understand, or should we be assuming that may be with the other income part of that, the flow-through to earnings is not 100%.

The EPS, 100%, yes.

Okay. Thank you, guys. I appreciate it.

The next question comes from Charles Rhyee of Cowen. Please go ahead.

Yes. Hi, Good morning. This is a Cal Sternick on for Charles. Just recognizing that you guys are fresh off of the Texas announcement and still working through your strategy, how are you thinking about your appetite for M&A going forward just in the context of the YourCare acquisition and maybe some of the additional capital you will have from pulling out of the Texas subs? And then just more generally on M&A strategy. As we think of M&A activity is being biased or is [technical difficulty] business like Medicaid or Medicare? Thanks.

Sure. First and foremost, the best use of our excess capital is to fund organic growth. We hold about 10% of premium as regulatory capital. And the levered and unlevered returns on equity are superb. Second, we have a very, very capable M&A team. We are going to remain very disciplined. We will look for opportunities in our existing markets and in greenfield markets in our core products, particularly Medicaid, high acuity and duals and probably not traditional Medicare advantage. So we're going to stay very disciplined to our core product line. We really do seek out underperforming businesses because of our proven turnaround skills. We can harvest those performance-based synergies for our earnings stream and that’s a very, very attractive use of our human resource capital. So we are going to remain very disciplined. We still think there is opportunities out there. There's orphaned plans, there is provider owned plans, there is 501c3. And we are scouring the Universe for attractive opportunities to deploy our capital to accrete earnings-per-share.

Great. And I appreciate the commentary on the marketplace growth rates, recognizing that we are still early in the enrollment period for Medicare, I'm just wondering if you could talk about any visibility for growth there next year?

Sorry, on Medicare?

Yes.

If the question is on Medicare, as you know our Medicare is primarily centered around the D-SNP product and we have expanded footprint. We have spent -- entered into two new markets. So we expect to have membership growth in 2020. We do have some visibility against our competition now and we feel that the product will grow in 2020.

Okay. Thank you.

The next question comes from Steven Valiquette of Barclays. Please go ahead.

Great. Thanks. Good morning, everybody. So in Texas I know you don't have the scoring yet, but breaking down the awards by region, if we look at the fact that you lost in Dallas, Harris, El Paso, Bexar, Jefferson, but then you actually won brand-new business in the larger MRSA Northeast region. I guess I am just curious is there any -- really anything high-level that jumps out to you and what may have driven the new regional win, that was different mechanically than the factors that maybe in your mind, may have drove the losses in the other regions. So -- and tied into that, is there any silver lining worth pointing out with that one new that might help you in the other protest process as well? I know it's kind of preliminary and high, well, you don’t underscoring, but just curious any jumps out there? Thanks.

The answer is no, not at this stage. Obviously, the news is 12 hours old. Underscoring as you suggested has not been made available. But those are very legitimate questions and questions we will be asking, what did we learn about the scoring in the regions we lost? And what -- why were we successful in a branded region for us? So, no, we don't have any information at this time. But we will be seeking answers to those questions and then pursuing our rights that we have under our contract.

Okay. All right. I maybe follow-up offline [indiscernible] more detail later. Thanks.

Sure. You’re welcome.

The next question comes from Matthew Borsch of BMO Capital. Please go ahead.

Yes. I’m just curious about the episodes of MCR pressure in the Medicaid business. Is that something that -- and I think you had made some allusions to rate lag in the last call, but it wasn't particularly a factor. What’s been the timing of this emerging and relative to how the impact is played out, is that something that was sort of accelerating into the back part of the third quarter, or how would you characterize it?

I would characterize it as somewhat accelerating throughout the year. And I want to be very clear, when benefits get carved into a program, you do your best to understand the capitated rate you’re getting for that benefit. And sometimes it's right and sometimes it is not sufficient. So we’ve seen that in Washington with respect to the behavioral carve-in, we’ve seen it in Ohio with respect to the carve-in and the behavioral benefit that took place over a year-ago, and the acuity mix shift that has occurred and their redetermination efforts. So rates always do lag trend, but the good news is that our customers have been very rational and reasonable in understanding these cost pressures, and they have been included in recent rate discussions. And in fact, we had a midyear rate increase in Ohio to offset some of this pressure. So whether it's large claim activity, which is aberrant, whether it's the acuity mix shift, whether it's a carved in benefit, this is just managed-care dynamics and can be dealt with through operating protocols, utilization controls, network management and the like or in rate advocacy efforts. And the fact that we're still producing high 80s MLRS in the Medicaid business, 88% flat sequentially second and third quarter. I think is testimony to the fact that there is a lot going right in the portfolio even though we are seeing pressure in some isolated places.

Joe, if I could just -- if we back up and look at the broader landscape of plans in Medicaid, seeing pressure in multiple markets. Is there any, I’ve realized that the eligibility redetermination is certainly a common factor. But it first feels a little bit like the rate development to sort of turned a little bit stingy coming into this year, and now we're going through what's likely to be some bout of corrections and certainly it's extremely helpful, but you’ve reasonable business partners in most cases. But is that a mischaracterization?

It's a legitimate question. But I think it may be slightly mischaracterized. The rate discussions have been reasonable, rational. Rates appear to be actuarially sound. And any time you go through, as I said, the phenomenon of a benefit carve-in or a significant shift in acuity, you get these little rate shocks, which then quickly correct. I think the good news on redetermination is something we ought to really focus on. In this business, there's been a lot of discussion over many years as how does the managed Medicaid business respond in economic cycles? We don’t have to model it anymore, we know. And the fact that the Ohio economy is very strong, the fact that expansion members who actually do work and make some money are making more money now and going back to work, that puts pressure on membership roles. It makes an acuity mix shift happen on your existing population, but then it's collectible on rates, that's actually a very positive phenomenon. The fact that the good economy is creating pressure in one state, but then it's correctable through rates quickly is a very positive phenomenon and we no longer have to conjecture and guess how these businesses perform through economic cycles, we know.

Right. Okay. Thank you.

The next question comes from Sarah James of Piper Jaffray. Please go ahead.

Thank you. On Friday, Texas HHSC announced that Molina took over as Head of Medicaid Procurement, which is unusual to do just before an award. And in general, there has been a good amount of churn on how is running this procurement for Texas. So, just wondering if there is any color you can share on how churn in this department could have influenced the procurement environment? And if it means that there's actually going to be a different team evaluating the STAR RFP and scoring?

Sarah, it's -- I hesitate to comment on what’s going on in the inner workings of our customer. Certainly, the churn or the turnover phenomenon you suggested is real. Everybody knows it, we know it. But I can't speculate at this point on what impact that might have had in the scoring. When we get the scoring, we are going to do what we normally do. We are going to evaluate it very thoroughly. We will go through lessons learned and what we could have done better, but then we are going to pursue our rights that we have under our contract to if we think we were not scored accurately or favorably, we will pursue our rights. But I can't speculate on what might have happened inside the department that created the scoring that impacted us.

Okay. Given where we are now the top line for 2020, is there any additional flexibility that you have in the timing of investment spend or bringing forward any of the outsourcing opportunities time wise, so you can influence the pacing of SG&A improvements to offset some of the top line headwinds?

As we continue to work down the path of developing a 2020 plan, certainly SG&A management is certainly something that's on our radar screen. We are not done yet. We think there's more efficiency in our operation that can be gained, but most of the large scale outsourcing that is going to take place here has already occurred. We did a very large-scale IT outsourcing last year as you know. We outsourced some of our very specialized and esoteric utilization management capabilities. We outsourced our nurse advice line earlier this year. So most of the large-scale outsourcing has been done, but not all of that is in the current run rate and that -- mostly that should be fully in the run rate in 2020, if that was your question.

Okay. Thank you.

The next question comes from Dave Windley of Jefferies. Please go ahead.

Hi. Good morning. It's Dave Styblo in for Windley. Joe, the team has done really a commendable job of extracting cost from the business I think to the tune of $350 million to $400 million by the end of this year. And you guys have talked about another $350 million to $400 million of savings opportunities in the future. I’m curious, if any of those savings were earmarked for opportunities in Texas that might not now have an opportunity to be addressed because of the shrinking footprint for the RFP outcome?

Hey, it's a fair comment. I mean, without parsing the $300 million to $400 million of opportunity, I guess it would be just fair to say that its evenly spread across our book of business across our products and across our geographies. So, yes, if part of that was earmarked for whether it's G&A savings, payment integrity savings, care management savings, that whatever would have happened on the revenue that we lost will not happen. So I think that’s a fair comment. But we’re not going to start allocating our profit improvement opportunities to individual states and products. But it's a …

Sure.

... fair comment. It's a fair comment.

Okay. And then -- and stepping back, I know you guys have started to talk about the revenue growth opportunities and have done that for a couple of quarters now with across different businesses. I’m curious, are there any RFPs that are larger in scale that I can add chunks of revenue coming up in the next 12 to 24 months that are in your horizon, that you guys have visibility on that, that you’re willing to disclose that you'd be interested in participating in from a bid perspective?

We have a fair number of, what I will call special situations, which at this time are still confidential, that we are working on. As you know, we submitted a response to the Kentucky RFP, that’s in process and we are told that will be announced sometime in the month of November, so imminently, and the other states we showed you at Investor Day, while RFPs had really dropped, Tennessee, Georgia, West Virginia, even Iowa to some extent, we are looking at. We have ground game ongoing in various greenfield states. We are evaluating opportunities. We’ve run every opportunity through a very disciplined set of screens. The regulatory environment, the ability to build the network, strength of the incumbency and the competition, and we will pick our spots.

Okay. And then maybe just a last one. I know you commented about some of the turnover within Texas. I'm curious the way that the two RFPs are evaluated for the STAR+ and the CHIP, TANF. What are some of the key differences that you might see there that might not cause kind of a similar outcome to happen in the next RFP award announcement coming up in December?

Well, time nature of this news, it's a very legitimate question and one we are looking at. But I just don't have an answer specifically at this time for you, but obviously, we will be looking at the similarities and differences in the scoring dynamics for the two programs. And we will take that into consideration as we build our confidence level on winning the second award.

Okay. Thanks much.

This concludes today's question-and-answer session and Molina Healthcare's third quarter 2019 earnings conference call. Thank you for attending today's presentation. You may now disconnect.