Question-and-Answer Session
Operator
(Operator Instructions). And our first question comes from the line of Josh Raskin with Lehman Brothers. Please proceed.
Josh Raskin - Lehman Brothers
Hi, thanks. Good evening. Three questions, I guess. The first just a quick one, I think it's easy. New Mexico, I'm just a little confused by the accounting for that one, the $6.2 million that I'm talking about. Why is that a revenue boost and not a cost, if it's a minimum MLR? I think I'm missing out on how it works.
Joe White
Hi, Josh. This is Joe White speaking. The requirement in New Mexico is that funds that exceed to the extent we fall below a certain minimum medical loss ratio we have to return the appropriate piece of the revenue to the state. So, for example, if we had $100 of revenue and $79 of medical expense, we would calculate the revenue due from the state based on in effect taking that $79 and dividing it by 0.8 and that is the appropriate amount of revenue we can recognize. So that's the difference between that and what the state pays us is what we owe the state back.
Josh Raskin - Lehman Brothers
Okay. I got you. So I think I did understand it, I just didn't get the mechanics. Second question just on the higher comp accruals on the SG&A, they came a little bit higher. Now, obviously the guidance today is still sort of $0.05 below the original year. But am I correct in assuming that the updated guidance last quarter included lower comp expense and now you're getting back a portion of that? Is that the way it works?
Joe White
That's correct.
Josh Raskin - Lehman Brothers
Okay. That's an easy one, and then just the last one. Just on Ohio, obviously, you guys are looking at sort of a 91% MLR overall in the first half of the year and you'd suggest a goal of 88%, sounds like that's going to be sort of tough to get to, obviously. Ohio is a big market, a couple of hundred basis points here is a lot. So I'm just curious in terms of the new goals for Ohio, you talked about being a long-term partner with the state and I think long-term financially viable, but when is the cut-off, is the first question, and then what are the other states that are making up what I calculate to be somewhere between $0.35 and $0.40 this year?
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