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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Molina Healthcare Inc | NYSE:MOH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-10.07 | -2.86% | 342.23 | 350.50 | 336.87 | 349.85 | 594,457 | 01:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-4204626
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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200 Oceangate, Suite 100
Long Beach, California
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90802
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
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¨
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ITEM NUMBER
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Page
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PART I - Financial Information
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1.
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||
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2.
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||
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3.
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4.
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||
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Part II
- Other Information
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1.
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||
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1A.
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||
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2.
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||
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|
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3.
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Defaults Upon Senior Securities
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Not Applicable.
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4.
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Mine Safety Disclosures
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Not Applicable.
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5.
|
Other Information
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Not Applicable.
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6.
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||
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||
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|
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Three Months Ended March 31,
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||||||
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2018
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2017
|
||||
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(In millions, except per-share data)
(Unaudited)
|
||||||
Revenue:
|
|
|
|
||||
Premium revenue
|
$
|
4,323
|
|
|
$
|
4,648
|
|
Service revenue
|
134
|
|
|
131
|
|
||
Premium tax revenue
|
104
|
|
|
111
|
|
||
Health insurer fees reimbursed
|
61
|
|
|
—
|
|
||
Investment income and other revenue
|
24
|
|
|
14
|
|
||
Total revenue
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4,646
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|
|
4,904
|
|
||
Operating expenses:
|
|
|
|
||||
Medical care costs
|
3,722
|
|
|
4,111
|
|
||
Cost of service revenue
|
120
|
|
|
122
|
|
||
General and administrative expenses
|
352
|
|
|
439
|
|
||
Premium tax expenses
|
104
|
|
|
111
|
|
||
Health insurer fees
|
75
|
|
|
—
|
|
||
Depreciation and amortization
|
26
|
|
|
39
|
|
||
Restructuring and separation costs
|
25
|
|
|
—
|
|
||
Total operating expenses
|
4,424
|
|
|
4,822
|
|
||
Operating income
|
222
|
|
|
82
|
|
||
Other expenses (income), net:
|
|
|
|
||||
Interest expense
|
33
|
|
|
26
|
|
||
Other expense (income), net
|
10
|
|
|
(75
|
)
|
||
Total other expenses (income), net
|
43
|
|
|
(49
|
)
|
||
Income before income tax expense
|
179
|
|
|
131
|
|
||
Income tax expense
|
72
|
|
|
54
|
|
||
Net income
|
$
|
107
|
|
|
$
|
77
|
|
|
|
|
|
||||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
1.79
|
|
|
$
|
1.38
|
|
Diluted
|
$
|
1.64
|
|
|
$
|
1.37
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Amounts in millions)
(Unaudited)
|
||||||
Net income
|
$
|
107
|
|
|
$
|
77
|
|
Other comprehensive (loss) income:
|
|
|
|
||||
Unrealized investment (loss) gain
|
(7
|
)
|
|
1
|
|
||
Less: effect of income taxes
|
—
|
|
|
—
|
|
||
Other comprehensive (loss) income, net of tax
|
(7
|
)
|
|
1
|
|
||
Comprehensive income
|
$
|
100
|
|
|
$
|
78
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(Amounts in millions,
except per-share data)
|
||||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,729
|
|
|
$
|
3,186
|
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Investments
|
2,444
|
|
|
2,524
|
|
||
Restricted investments
|
77
|
|
|
169
|
|
||
Receivables
|
950
|
|
|
871
|
|
||
Prepaid expenses and other current assets
|
411
|
|
|
239
|
|
||
Derivative asset
|
585
|
|
|
522
|
|
||
Total current assets
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8,196
|
|
|
7,511
|
|
||
Property, equipment, and capitalized software, net
|
318
|
|
|
342
|
|
||
Goodwill and intangible assets, net
|
250
|
|
|
255
|
|
||
Restricted investments
|
120
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|
|
119
|
|
||
Deferred income taxes
|
114
|
|
|
103
|
|
||
Other assets
|
135
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|
|
141
|
|
||
|
$
|
9,133
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|
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$
|
8,471
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||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Medical claims and benefits payable
|
$
|
2,023
|
|
|
$
|
2,192
|
|
Amounts due government agencies
|
1,714
|
|
|
1,542
|
|
||
Accounts payable and accrued liabilities
|
713
|
|
|
366
|
|
||
Deferred revenue
|
404
|
|
|
282
|
|
||
Current portion of long-term debt
|
566
|
|
|
653
|
|
||
Derivative liability
|
585
|
|
|
522
|
|
||
Total current liabilities
|
6,005
|
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|
5,557
|
|
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Long-term debt
|
1,318
|
|
|
1,318
|
|
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Lease financing obligations
|
198
|
|
|
198
|
|
||
Other long-term liabilities
|
59
|
|
|
61
|
|
||
Total liabilities
|
7,580
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|
|
7,134
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value, 150 shares authorized; outstanding: 62 shares at March 31, 2018 and 60 shares at December 31, 2017
|
—
|
|
|
—
|
|
||
Preferred stock, $0.001 par value; 20 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,153
|
|
|
1,044
|
|
||
Accumulated other comprehensive loss
|
(12
|
)
|
|
(5
|
)
|
||
Retained earnings
|
412
|
|
|
298
|
|
||
Total stockholders’ equity
|
1,553
|
|
|
1,337
|
|
||
|
$
|
9,133
|
|
|
$
|
8,471
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
|
Outstanding
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(In millions)
|
|||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||
Balance at January 1, 2018
|
60
|
|
|
$
|
—
|
|
|
$
|
1,044
|
|
|
$
|
(5
|
)
|
|
$
|
298
|
|
|
$
|
1,337
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
107
|
|
|||||
Adoption of Topic 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|||||
Adoption of ASU 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||
1.625% Convertible Notes exchange transaction
|
2
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Balance at March 31, 2018
|
62
|
|
|
$
|
—
|
|
|
$
|
1,153
|
|
|
$
|
(12
|
)
|
|
$
|
412
|
|
|
$
|
1,553
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Amounts in millions)
(Unaudited) |
||||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
107
|
|
|
$
|
77
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37
|
|
|
49
|
|
||
Deferred income taxes
|
(6
|
)
|
|
(5
|
)
|
||
Share-based compensation
|
6
|
|
|
6
|
|
||
Non-cash restructuring costs
|
17
|
|
|
—
|
|
||
Amortization of convertible senior notes and lease financing obligations
|
7
|
|
|
8
|
|
||
Loss on debt extinguishment
|
10
|
|
|
—
|
|
||
Other, net
|
2
|
|
|
3
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(83
|
)
|
|
(32
|
)
|
||
Prepaid expenses and other current assets
|
(239
|
)
|
|
(12
|
)
|
||
Medical claims and benefits payable
|
(163
|
)
|
|
(3
|
)
|
||
Amounts due government agencies
|
172
|
|
|
373
|
|
||
Accounts payable and accrued liabilities
|
319
|
|
|
50
|
|
||
Deferred revenue
|
130
|
|
|
146
|
|
||
Income taxes
|
78
|
|
|
59
|
|
||
Net cash provided by operating activities
|
394
|
|
|
719
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of investments
|
(389
|
)
|
|
(733
|
)
|
||
Proceeds from sales and maturities of investments
|
543
|
|
|
433
|
|
||
Purchases of property, equipment and capitalized software
|
(4
|
)
|
|
(26
|
)
|
||
Increase in restricted investments held-to-maturity
|
—
|
|
|
(5
|
)
|
||
Other, net
|
(5
|
)
|
|
(6
|
)
|
||
Net cash provided by (used in) investing activities
|
145
|
|
|
(337
|
)
|
||
Financing activities:
|
|
|
|
||||
Cash paid for financing transaction fees
|
(5
|
)
|
|
—
|
|
||
Proceeds from employee stock plans
|
—
|
|
|
1
|
|
||
Other, net
|
—
|
|
|
(2
|
)
|
||
Net cash used in financing activities
|
(5
|
)
|
|
(1
|
)
|
||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
534
|
|
|
381
|
|
||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
3,290
|
|
|
2,912
|
|
||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
3,824
|
|
|
$
|
3,293
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Amounts in millions)
(Unaudited) |
||||||
Supplemental cash flow information:
|
|
|
|
||||
|
|
|
|
||||
Schedule of non-cash investing and financing activities:
|
|
|
|
||||
Common stock used for share-based compensation
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
|
|
|
||||
Details of change in fair value of derivatives, net:
|
|
|
|
||||
Gain (loss) on 1.125% Call Option
|
$
|
63
|
|
|
$
|
(86
|
)
|
(Loss) gain on 1.125% Conversion Option
|
(63
|
)
|
|
86
|
|
||
Change in fair value of derivatives, net
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
1.625% Convertible Notes exchange transaction:
|
|
|
|
||||
Common stock issued in exchange for 1.625% Convertible Notes
|
$
|
131
|
|
|
$
|
—
|
|
Component of 1.625% Convertible Notes allocated to additional paid-in capital, net of income taxes
|
(23
|
)
|
|
—
|
|
||
Net increase to additional paid-in capital
|
$
|
108
|
|
|
$
|
—
|
|
•
|
Income taxes refundable with “Prepaid expenses and other current assets;”
|
•
|
Income taxes payable with “Accounts payable and accrued liabilities;”
|
•
|
Goodwill, and intangible assets, net to a single line; and
|
•
|
Deferred contract costs with “Other assets.”
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Cash and cash equivalents
|
$
|
3,729
|
|
|
$
|
3,198
|
|
Restricted cash and cash equivalents
|
95
|
|
|
95
|
|
||
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows
|
$
|
3,824
|
|
|
$
|
3,293
|
|
1)
|
Contractual Provisions That May Adjust or Limit Revenue or Profit:
|
•
|
Medical Cost Floors (Minimums), and Medical Cost Corridors:
A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded a liability under the terms of such contract provisions of
$148 million
and
$135 million
at
March 31, 2018
and
December 31, 2017
, respectively. Approximately
$97 million
and
$96 million
of the liability
|
•
|
Retroactive Premium Adjustments:
State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, rather than in the months of service to which the retroactive adjustment applies.
|
•
|
Minimum MLR:
Federal regulations have established a minimum annual medical loss ratio (Minimum MLR) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of income.
|
•
|
Risk adjustment:
Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk transfer payment into the pool if their composite risk scores are below the average risk score, and will receive a risk transfer payment from the pool if their composite risk scores are above the average risk score. We estimate our ultimate premium based on insurance policy year-to-date experience, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of income. As of March 31, 2018, and December 31, 2017 the Marketplace risk adjustment payable amounted to
$1,129 million
and
$912 million
, respectively.
|
•
|
Minimum MLR:
The ACA has established a Minimum MLR of
80%
for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of income.
|
2)
|
Quality Incentives:
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Dollars in millions)
|
||||||
Maximum available quality incentive premium - current period
|
$
|
40
|
|
|
$
|
38
|
|
Quality incentive premium revenue recognized in current period:
|
|
|
|
||||
Earned current period
|
$
|
24
|
|
|
$
|
19
|
|
Earned prior periods
|
11
|
|
|
5
|
|
||
Total
|
$
|
35
|
|
|
$
|
24
|
|
|
|
|
|
||||
Quality incentive premium revenue recognized as a percentage of total premium revenue
|
0.8
|
%
|
|
0.5
|
%
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Receivables:
|
|
|
|
||||
Molina Medicaid Solutions
|
$
|
41
|
|
|
$
|
30
|
|
Other
|
46
|
|
|
44
|
|
||
Deferred contract costs (contract assets) – Molina Medicaid Solutions
|
103
|
|
|
101
|
|
||
Deferred revenue (contract liabilities) – Molina Medicaid Solutions
|
41
|
|
|
49
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions, except net income per share)
|
||||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
107
|
|
|
$
|
77
|
|
Denominator:
|
|
|
|
||||
Shares outstanding at the beginning of the period
|
59
|
|
|
56
|
|
||
Weighted-average number of shares issued:
|
|
|
|
||||
1.625% Exchange
(1)
|
1
|
|
|
—
|
|
||
Denominator for basic net income per share
|
60
|
|
|
56
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Convertible senior notes
(1)
|
1
|
|
|
—
|
|
||
1.125% Warrants
(1)
|
4
|
|
|
—
|
|
||
Denominator for diluted net income per share
|
65
|
|
|
56
|
|
||
|
|
|
|
||||
Net income per share:
(2)
|
|
|
|
||||
Basic
|
$
|
1.79
|
|
|
$
|
1.38
|
|
Diluted
|
$
|
1.64
|
|
|
$
|
1.37
|
|
(1)
|
For more information regarding the
1.625%
Exchange and the convertible senior notes, refer to Note
7
, “
Debt
.” For more information regarding the
1.125%
Warrants, refer to Note
9
, “
Stockholders' Equity
.” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method.
|
(2)
|
Source data for calculations in thousands.
|
|
Total
|
|
Quoted Market Prices (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,618
|
|
|
$
|
—
|
|
|
$
|
1,618
|
|
|
$
|
—
|
|
U.S. treasury notes
|
329
|
|
|
329
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities (GSEs)
|
227
|
|
|
227
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
131
|
|
|
—
|
|
|
131
|
|
|
—
|
|
||||
Asset-backed securities
|
110
|
|
|
—
|
|
|
110
|
|
|
—
|
|
||||
Certificate of deposit
|
27
|
|
|
—
|
|
|
27
|
|
|
—
|
|
||||
Other
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Subtotal - current investments
|
2,444
|
|
|
556
|
|
|
1,888
|
|
|
—
|
|
||||
Corporate debt securities
|
66
|
|
|
—
|
|
|
66
|
|
|
—
|
|
||||
U.S. treasury notes
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Subtotal - current restricted investments
|
77
|
|
|
11
|
|
|
66
|
|
|
—
|
|
||||
1.125% Call Option derivative asset
|
585
|
|
|
—
|
|
|
—
|
|
|
585
|
|
||||
Total assets
|
$
|
3,106
|
|
|
$
|
567
|
|
|
$
|
1,954
|
|
|
$
|
585
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Conversion Option derivative liability
|
$
|
585
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
585
|
|
Total liabilities
|
$
|
585
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
585
|
|
|
Total
|
|
Quoted Market Prices (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,588
|
|
|
$
|
—
|
|
|
$
|
1,588
|
|
|
$
|
—
|
|
U.S. treasury notes
|
388
|
|
|
388
|
|
|
—
|
|
|
—
|
|
||||
GSEs
|
253
|
|
|
253
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
141
|
|
|
—
|
|
|
141
|
|
|
—
|
|
||||
Asset-backed securities
|
117
|
|
|
—
|
|
|
117
|
|
|
—
|
|
||||
Certificates of deposit
|
37
|
|
|
—
|
|
|
37
|
|
|
—
|
|
||||
Subtotal - current investments
|
2,524
|
|
|
641
|
|
|
1,883
|
|
|
—
|
|
||||
Corporate debt securities
|
101
|
|
|
—
|
|
|
101
|
|
|
—
|
|
||||
U.S. treasury notes
|
68
|
|
|
68
|
|
|
—
|
|
|
—
|
|
||||
Subtotal - current restricted investments
|
169
|
|
|
68
|
|
|
101
|
|
|
—
|
|
||||
1.125% Call Option derivative asset
|
522
|
|
|
—
|
|
|
—
|
|
|
522
|
|
||||
Total assets
|
$
|
3,215
|
|
|
$
|
709
|
|
|
$
|
1,984
|
|
|
$
|
522
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Conversion Option derivative liability
|
$
|
522
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
522
|
|
Total liabilities
|
$
|
522
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
522
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
||||||||
|
(In millions)
|
||||||||||||||
5.375% Notes
|
$
|
693
|
|
|
$
|
694
|
|
|
$
|
692
|
|
|
$
|
730
|
|
1.125% Convertible Notes
|
502
|
|
|
1,111
|
|
|
496
|
|
|
1,052
|
|
||||
4.875% Notes
|
326
|
|
|
307
|
|
|
325
|
|
|
329
|
|
||||
Credit Facility
|
300
|
|
|
300
|
|
|
300
|
|
|
300
|
|
||||
1.625% Convertible Notes
|
63
|
|
|
90
|
|
|
157
|
|
|
220
|
|
||||
|
$
|
1,884
|
|
|
$
|
2,502
|
|
|
$
|
1,970
|
|
|
$
|
2,631
|
|
|
March 31, 2018
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
Fair
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,627
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
1,618
|
|
U.S. treasury notes
|
330
|
|
|
—
|
|
|
1
|
|
|
329
|
|
||||
GSEs
|
229
|
|
|
—
|
|
|
2
|
|
|
227
|
|
||||
Municipal securities
|
133
|
|
|
—
|
|
|
2
|
|
|
131
|
|
||||
Asset backed securities
|
111
|
|
|
—
|
|
|
1
|
|
|
110
|
|
||||
Certificates of deposit
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Subtotal - current investments
|
2,459
|
|
|
—
|
|
|
15
|
|
|
2,444
|
|
||||
Corporate debt securities
|
66
|
|
|
—
|
|
|
—
|
|
|
66
|
|
||||
U.S. treasury notes
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
Subtotal - current restricted investments
|
77
|
|
|
—
|
|
|
—
|
|
|
77
|
|
||||
|
$
|
2,536
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
2,521
|
|
|
December 31, 2017
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
Fair
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,591
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
1,588
|
|
U.S. treasury notes
|
389
|
|
|
—
|
|
|
1
|
|
|
388
|
|
||||
GSEs
|
255
|
|
|
—
|
|
|
2
|
|
|
253
|
|
||||
Municipal securities
|
142
|
|
|
—
|
|
|
1
|
|
|
141
|
|
||||
Asset-backed securities
|
117
|
|
|
—
|
|
|
—
|
|
|
117
|
|
||||
Certificates of deposit
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||
Subtotal - current investments
|
2,531
|
|
|
1
|
|
|
8
|
|
|
2,524
|
|
||||
Corporate debt securities
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
||||
U.S. treasury notes
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
||||
Subtotal - current restricted investments
|
169
|
|
|
—
|
|
|
—
|
|
|
169
|
|
||||
|
$
|
2,700
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
2,693
|
|
|
Amortized Cost
|
|
Estimated
Fair Value
|
||||
|
(In millions)
|
||||||
Due in one year or less
|
$
|
1,576
|
|
|
$
|
1,573
|
|
Due after one year through five years
|
959
|
|
|
947
|
|
||
Due after five years through ten years
|
1
|
|
|
1
|
|
||
|
$
|
2,536
|
|
|
$
|
2,521
|
|
|
In a Continuous Loss Position
for Less than 12 Months
|
|
In a Continuous Loss Position
for 12 Months or More
|
||||||||||||||||||
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
1,276
|
|
|
$
|
7
|
|
|
610
|
|
|
$
|
93
|
|
|
$
|
2
|
|
|
71
|
|
U.S. Treasury notes
|
364
|
|
|
1
|
|
|
81
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
GSEs
|
179
|
|
|
1
|
|
|
67
|
|
|
95
|
|
|
1
|
|
|
47
|
|
||||
Municipal securities
|
85
|
|
|
1
|
|
|
97
|
|
|
38
|
|
|
1
|
|
|
46
|
|
||||
Asset backed securities
|
97
|
|
|
1
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
2,001
|
|
|
$
|
11
|
|
|
915
|
|
|
$
|
226
|
|
|
$
|
4
|
|
|
164
|
|
|
In a Continuous Loss Position
for Less than 12 Months
|
|
In a Continuous Loss Position
for 12 Months or More
|
||||||||||||||||||
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
1,297
|
|
|
$
|
3
|
|
|
561
|
|
|
$
|
94
|
|
|
$
|
1
|
|
|
69
|
|
U.S. Treasury Notes
|
470
|
|
|
1
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
GSEs
|
173
|
|
|
1
|
|
|
69
|
|
|
95
|
|
|
1
|
|
|
47
|
|
||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
1
|
|
|
48
|
|
||||
|
$
|
1,940
|
|
|
$
|
5
|
|
|
719
|
|
|
$
|
227
|
|
|
$
|
3
|
|
|
164
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
(In millions)
|
||||||
Due in one year or less
|
$
|
117
|
|
|
$
|
117
|
|
Due after one year through five years
|
3
|
|
|
3
|
|
||
|
$
|
120
|
|
|
$
|
120
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Fee-for-service claims incurred but not paid (IBNP)
|
$
|
1,586
|
|
|
$
|
1,717
|
|
Pharmacy payable
|
127
|
|
|
112
|
|
||
Capitation payable
|
62
|
|
|
67
|
|
||
Other
|
248
|
|
|
296
|
|
||
|
$
|
2,023
|
|
|
$
|
2,192
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Dollars in millions)
|
||||||
Medical claims and benefits payable, beginning balance
|
$
|
2,192
|
|
|
$
|
1,929
|
|
Components of medical care costs related to:
|
|
|
|
||||
Current period
|
3,963
|
|
|
4,253
|
|
||
Prior periods
|
(241
|
)
|
|
(142
|
)
|
||
Total medical care costs
|
3,722
|
|
|
4,111
|
|
||
|
|
|
|
||||
Change in non-risk provider payables
|
45
|
|
|
(96
|
)
|
||
|
|
|
|
||||
Payments for medical care costs related to:
|
|
|
|
||||
Current period
|
2,498
|
|
|
2,683
|
|
||
Prior periods
|
1,438
|
|
|
1,335
|
|
||
Total paid
|
3,936
|
|
|
4,018
|
|
||
Medical claims and benefits payable, ending balance
|
$
|
2,023
|
|
|
$
|
1,926
|
|
Benefit from prior period as a percentage of:
|
|
|
|
||||
Balance at beginning of period
|
11.0
|
%
|
|
7.4
|
%
|
||
Premium revenue, trailing twelve months
|
1.3
|
%
|
|
0.8
|
%
|
||
Medical care costs, trailing twelve months
|
1.4
|
%
|
|
0.9
|
%
|
•
|
Across all of our health plans, the inventory of unpaid claims increased significantly during the first half of 2017, then decreased in the last half of 2017 and into 2018. Changes in claims inventories impact the timing between date of service and the date of claim payment, increasing the volatility of our liability estimates.
|
•
|
According to The Centers for Disease Control and Prevention, and confirmed by our own claims experience, the influenza season was much more severe this year than last year in several states in which we operate health plans. Although we have established liabilities for additional expected claims related to influenza, our liability estimates are subject to more than the usual amount of uncertainty.
|
•
|
At our Florida health plan a new clinical service system was implemented in the first quarter of 2018. This system impacted the reporting of inpatient authorizations used in our development of claims liabilities, which makes our liability estimates subject to more than the usual amount of uncertainty.
|
•
|
We recently implemented a new process for increased quality review of claims payments in nine of our health plans. While we do not anticipate this new process will impact the percentage of claims paid within the timely turnaround requirements, we believe it will have a minor impact on the timing of some paid claims. For this reason, our liability estimates in the nine health plans are subject to more than the usual amount of uncertainty.
|
•
|
The impact of the provision for adverse claims deviation and the accrued cost of settling claims as discussed above. Because we re-establish the provision for adverse claims deviation and the accrued cost of settling claims on a consistent basis every quarter, the impact of this item on first quarter 2018 results was minimal.
|
•
|
Across all of our health plans, the inventory of unpaid claims increased significantly during the first half of 2017, then decreased in the last half of 2017. In hindsight, the impact of the changes in claims processing timing reduced our liabilities more than we had anticipated.
|
•
|
December 2017 data from The Centers for Disease Control and Prevention indicated widespread influenza activity in several states in which we operate health plans. The additional liabilities established in consideration of increased claims related to a more severe influenza season turned out to be conservative.
|
•
|
In establishing our liability at December 31, 2017, we anticipated an increase in the utilization of medical services by Marketplace members concerned about the future of their healthcare coverage as a result of uncertainties related to high premium increases and issuer exits. This induced demand did not materialize to the degree we expected.
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Current portion of long-term debt:
|
|
|
|
||||
1.125% Convertible Notes, net of unamortized discount
|
$
|
505
|
|
|
$
|
499
|
|
1.625% Convertible Notes, net of unamortized discount
|
63
|
|
|
157
|
|
||
Lease financing obligations
|
1
|
|
|
1
|
|
||
Debt issuance costs
|
(3
|
)
|
|
(4
|
)
|
||
|
566
|
|
|
653
|
|
||
Non-current portion of long-term debt:
|
|
|
|
||||
5.375% Notes
|
700
|
|
|
700
|
|
||
4.875% Notes
|
330
|
|
|
330
|
|
||
Credit Facility
|
300
|
|
|
300
|
|
||
Debt issuance costs
|
(12
|
)
|
|
(12
|
)
|
||
|
1,318
|
|
|
1,318
|
|
||
Lease financing obligations
|
198
|
|
|
198
|
|
||
|
$
|
2,082
|
|
|
$
|
2,169
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Contractual interest at coupon rate
|
$
|
2
|
|
|
$
|
3
|
|
Amortization of the discount
|
7
|
|
|
8
|
|
||
|
$
|
9
|
|
|
$
|
11
|
|
•
|
Any future debt and/or equity transactions including term loans, but excluding any Credit Facility drawing (excluding transactions with proceeds used for working capital purposes and acquisition financings up to
$300 million
); and
|
•
|
On August 20, 2018 (the first put date for the 1.625% Convertible Notes), the Bridge Credit Agreement shall permanently be reduced by the greater of
$150 million
; and the principal amount of the 1.625% Convertible Notes that are exchanged into equity or otherwise defeased on or prior to that date.
|
•
|
On or prior to August 20, 2018, to:
|
◦
|
Redeem, repurchase, repay, tender for, or acquire for value all or any portion of our 1.625% Convertible Notes, defined and discussed further below, or to satisfy the cash portion of any consideration due upon any conversion of the 1.625% Convertible Notes; and/or
|
◦
|
Pay any interest due on all or any portion of the 4.875% Notes.
|
•
|
On or after August 20, 2018, to repurchase all or any portion of the 1.625% Convertible Notes that we are obligated to repurchase; and
|
•
|
Subsequent to August 20, 2018 (or such earlier date in the event that there are no longer any 1.625% Convertible Notes outstanding), in any other manner not otherwise prohibited in the indenture governing the 4.875% Notes.
|
|
Balance Sheet Location
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
|
(In millions)
|
||||||
Derivative asset:
|
|
|
|
|
|
||||
1.125% Call Option
|
Current assets: Derivative asset
|
|
$
|
585
|
|
|
$
|
522
|
|
Derivative liability:
|
|
|
|
|
|
||||
1.125% Conversion Option
|
Current liabilities: Derivative liability
|
|
$
|
585
|
|
|
$
|
522
|
|
|
Restricted Stock Awards
|
|
Performance Stock Awards
|
|
Performance Stock Units
|
|
Total
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||
Unvested balance, December 31, 2017
|
401,804
|
|
|
84,762
|
|
|
91,828
|
|
|
578,394
|
|
|
$
|
58.35
|
|
Granted
|
321,798
|
|
|
—
|
|
|
188,455
|
|
|
510,253
|
|
|
72.46
|
|
|
Vested
|
(163,043
|
)
|
|
(32,929
|
)
|
|
—
|
|
|
(195,972
|
)
|
|
55.16
|
|
|
Forfeited
|
(59,931
|
)
|
|
(44,384
|
)
|
|
(47,650
|
)
|
|
(151,965
|
)
|
|
62.99
|
|
|
Unvested balance, March 31, 2018
|
500,628
|
|
|
7,449
|
|
|
232,633
|
|
|
740,710
|
|
|
67.96
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Granted:
|
|
|
|
||||
Restricted stock awards
|
$
|
23
|
|
|
$
|
17
|
|
Performance stock units
|
14
|
|
|
—
|
|
||
|
$
|
37
|
|
|
$
|
17
|
|
Vested:
|
|
|
|
||||
Restricted stock awards
|
$
|
12
|
|
|
$
|
10
|
|
Performance stock awards
|
3
|
|
|
6
|
|
||
|
$
|
15
|
|
|
$
|
16
|
|
•
|
Streamlining of our organizational structure to eliminate redundant layers of management, consolidate regional support services, and other staff reductions to improve efficiency and the speed and quality of decision making;
|
•
|
Re-design of core operating processes such as provider payment, utilization management, quality monitoring and improvement, and information technology, to achieve more effective and cost-efficient outcomes;
|
•
|
Remediation of high-cost provider contracts and enhancement of high quality, cost-effective networks;
|
•
|
Restructuring, including selective exits, of direct delivery operations; and
|
•
|
Partnering with the lowest-cost, most effective vendors.
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||||||||
|
|
Write-offs of Current and Long-lived Assets
|
|
Consulting Fees
|
|
Contract Termination Costs
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Health Plans
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Other
|
5
|
|
|
20
|
|
|
1
|
|
|
—
|
|
|
26
|
|
|||||
|
$
|
6
|
|
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
25
|
|
|
Separation Costs - Former Executives
|
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||||||||||
|
|
|
Write-offs of Current and Long-lived Assets
|
|
Consulting Fees
|
|
Contract Termination Costs
|
|
|||||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Health Plans
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
72
|
|
Molina Medicaid Solutions
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Other
|
36
|
|
|
39
|
|
|
57
|
|
|
45
|
|
|
2
|
|
|
179
|
|
||||||
|
$
|
36
|
|
|
$
|
73
|
|
|
$
|
80
|
|
|
$
|
45
|
|
|
$
|
25
|
|
|
$
|
259
|
|
|
Separation Costs - Former Executives
|
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Accrued as of December 31, 2017
|
$
|
2
|
|
|
$
|
11
|
|
|
$
|
35
|
|
|
$
|
48
|
|
Adjustments
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Charges
|
—
|
|
|
6
|
|
|
2
|
|
|
8
|
|
||||
Cash payments
|
(2
|
)
|
|
(12
|
)
|
|
(9
|
)
|
|
(23
|
)
|
||||
Accrued as of March 31, 2018
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
27
|
|
|
$
|
32
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Total revenue:
|
|
|
|
||||
Health Plans
|
$
|
4,509
|
|
|
$
|
4,771
|
|
Molina Medicaid Solutions
|
51
|
|
|
46
|
|
||
Other
|
86
|
|
|
87
|
|
||
Consolidated
|
$
|
4,646
|
|
|
$
|
4,904
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Gross margin:
|
|
|
|
||||
Health Plans
|
$
|
601
|
|
|
$
|
537
|
|
Molina Medicaid Solutions
|
8
|
|
|
4
|
|
||
Other
|
6
|
|
|
5
|
|
||
Total gross margin
|
615
|
|
|
546
|
|
||
Add: other operating revenues
(1)
|
189
|
|
|
125
|
|
||
Less: other operating expenses
(2)
|
(582
|
)
|
|
(589
|
)
|
||
Operating income
|
222
|
|
|
82
|
|
||
Other expenses (income), net
|
43
|
|
|
(49
|
)
|
||
Income before income taxes
|
$
|
179
|
|
|
$
|
131
|
|
(1)
|
Other operating revenues include premium tax revenue, health insurer fees reimbursed, and investment income and other revenue.
|
(2)
|
Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, and restructuring and separation costs.
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
333
|
|
|
$
|
52
|
|
|
$
|
4,592
|
|
|
$
|
(331
|
)
|
|
$
|
4,646
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
4
|
|
|
—
|
|
|
3,718
|
|
|
—
|
|
|
3,722
|
|
|||||
Cost of service revenue
|
—
|
|
|
43
|
|
|
77
|
|
|
—
|
|
|
120
|
|
|||||
General and administrative expenses
|
267
|
|
|
4
|
|
|
412
|
|
|
(331
|
)
|
|
352
|
|
|||||
Premium tax expenses
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
104
|
|
|||||
Health insurer fees
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
|||||
Depreciation and amortization
|
18
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
26
|
|
|||||
Restructuring and separation costs
|
26
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
25
|
|
|||||
Total operating expenses
|
315
|
|
|
47
|
|
|
4,393
|
|
|
(331
|
)
|
|
4,424
|
|
|||||
Operating income
|
18
|
|
|
5
|
|
|
199
|
|
|
—
|
|
|
222
|
|
|||||
Interest expense
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|||||
Other expenses, net
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
(Loss) income before income taxes
|
(25
|
)
|
|
5
|
|
|
199
|
|
|
—
|
|
|
179
|
|
|||||
Income tax expense
|
9
|
|
|
1
|
|
|
62
|
|
|
—
|
|
|
72
|
|
|||||
Net (loss) income before equity in net losses of subsidiaries
|
(34
|
)
|
|
4
|
|
|
137
|
|
|
—
|
|
|
107
|
|
|||||
Equity in net earnings (losses) of subsidiaries
|
141
|
|
|
(3
|
)
|
|
—
|
|
|
(138
|
)
|
|
—
|
|
|||||
Net income
|
$
|
107
|
|
|
$
|
1
|
|
|
$
|
137
|
|
|
$
|
(138
|
)
|
|
$
|
107
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Net income
|
$
|
107
|
|
|
$
|
1
|
|
|
$
|
137
|
|
|
$
|
(138
|
)
|
|
$
|
107
|
|
Other comprehensive loss, net of tax
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
7
|
|
|
(7
|
)
|
|||||
Comprehensive income
|
$
|
100
|
|
|
$
|
1
|
|
|
$
|
130
|
|
|
$
|
(131
|
)
|
|
$
|
100
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
341
|
|
|
$
|
48
|
|
|
$
|
4,857
|
|
|
$
|
(342
|
)
|
|
$
|
4,904
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
4
|
|
|
—
|
|
|
4,107
|
|
|
—
|
|
|
4,111
|
|
|||||
Cost of service revenue
|
—
|
|
|
42
|
|
|
80
|
|
|
—
|
|
|
122
|
|
|||||
General and administrative expenses
|
297
|
|
|
7
|
|
|
477
|
|
|
(342
|
)
|
|
439
|
|
|||||
Premium tax expenses
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|||||
Depreciation and amortization
|
27
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
39
|
|
|||||
Total operating expenses
|
328
|
|
|
49
|
|
|
4,787
|
|
|
(342
|
)
|
|
4,822
|
|
|||||
Operating income (loss)
|
13
|
|
|
(1
|
)
|
|
70
|
|
|
—
|
|
|
82
|
|
|||||
Interest expense
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|||||
Other income, net
|
(75
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|||||
Income (loss) before income taxes
|
62
|
|
|
(1
|
)
|
|
70
|
|
|
—
|
|
|
131
|
|
|||||
Income tax expense
|
31
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
54
|
|
|||||
Net income (losses) before equity in earnings (losses) of subsidiaries
|
31
|
|
|
(1
|
)
|
|
47
|
|
|
—
|
|
|
77
|
|
|||||
Equity in net earnings (losses) of subsidiaries
|
46
|
|
|
(2
|
)
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
77
|
|
|
$
|
(3
|
)
|
|
$
|
47
|
|
|
$
|
(44
|
)
|
|
$
|
77
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Net income (loss)
|
$
|
77
|
|
|
$
|
(3
|
)
|
|
$
|
47
|
|
|
$
|
(44
|
)
|
|
$
|
77
|
|
Other comprehensive income, net of tax
|
1
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|||||
Comprehensive income (loss)
|
$
|
78
|
|
|
$
|
(3
|
)
|
|
$
|
48
|
|
|
$
|
(45
|
)
|
|
$
|
78
|
|
|
March 31, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
307
|
|
|
$
|
27
|
|
|
$
|
3,395
|
|
|
$
|
—
|
|
|
$
|
3,729
|
|
Investments
|
399
|
|
|
—
|
|
|
2,045
|
|
|
—
|
|
|
2,444
|
|
|||||
Restricted investments
|
77
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|||||
Receivables
|
2
|
|
|
41
|
|
|
907
|
|
|
—
|
|
|
950
|
|
|||||
Due from (to) affiliates
|
147
|
|
|
(5
|
)
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
60
|
|
|
8
|
|
|
343
|
|
|
—
|
|
|
411
|
|
|||||
Derivative asset
|
585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
585
|
|
|||||
Total current assets
|
1,577
|
|
|
71
|
|
|
6,548
|
|
|
—
|
|
|
8,196
|
|
|||||
Property, equipment, and capitalized software, net
|
206
|
|
|
30
|
|
|
82
|
|
|
—
|
|
|
318
|
|
|||||
Goodwill and intangible assets, net
|
15
|
|
|
43
|
|
|
192
|
|
|
—
|
|
|
250
|
|
|||||
Restricted investments
|
—
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
120
|
|
|||||
Investment in subsidiaries, net
|
2,531
|
|
|
79
|
|
|
—
|
|
|
(2,610
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
28
|
|
|
—
|
|
|
104
|
|
|
(18
|
)
|
|
114
|
|
|||||
Other assets
|
41
|
|
|
105
|
|
|
5
|
|
|
(16
|
)
|
|
135
|
|
|||||
|
$
|
4,398
|
|
|
$
|
328
|
|
|
$
|
7,051
|
|
|
$
|
(2,644
|
)
|
|
$
|
9,133
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical claims and benefits payable
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
2,020
|
|
|
$
|
—
|
|
|
$
|
2,023
|
|
Amounts due government agencies
|
—
|
|
|
1
|
|
|
1,713
|
|
|
—
|
|
|
1,714
|
|
|||||
Accounts payable and accrued liabilities
|
151
|
|
|
40
|
|
|
522
|
|
|
—
|
|
|
713
|
|
|||||
Deferred revenue
|
—
|
|
|
41
|
|
|
363
|
|
|
—
|
|
|
404
|
|
|||||
Current portion of long-term debt
|
566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
566
|
|
|||||
Derivative liability
|
585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
585
|
|
|||||
Total current liabilities
|
1,305
|
|
|
82
|
|
|
4,618
|
|
|
—
|
|
|
6,005
|
|
|||||
Long-term debt
|
1,516
|
|
|
—
|
|
|
16
|
|
|
(16
|
)
|
|
1,516
|
|
|||||
Deferred income taxes
|
—
|
|
|
18
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
24
|
|
|
1
|
|
|
34
|
|
|
—
|
|
|
59
|
|
|||||
Total liabilities
|
2,845
|
|
|
101
|
|
|
4,668
|
|
|
(34
|
)
|
|
7,580
|
|
|||||
Total stockholders’ equity
|
1,553
|
|
|
227
|
|
|
2,383
|
|
|
(2,610
|
)
|
|
1,553
|
|
|||||
|
$
|
4,398
|
|
|
$
|
328
|
|
|
$
|
7,051
|
|
|
$
|
(2,644
|
)
|
|
$
|
9,133
|
|
|
December 31, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
504
|
|
|
$
|
28
|
|
|
$
|
2,654
|
|
|
$
|
—
|
|
|
$
|
3,186
|
|
Investments
|
192
|
|
|
—
|
|
|
2,332
|
|
|
—
|
|
|
2,524
|
|
|||||
Restricted investments
|
169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|||||
Receivables
|
2
|
|
|
30
|
|
|
839
|
|
|
—
|
|
|
871
|
|
|||||
Due from (to) affiliates
|
148
|
|
|
(6
|
)
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
103
|
|
|
14
|
|
|
138
|
|
|
(16
|
)
|
|
239
|
|
|||||
Derivative asset
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|||||
Total current assets
|
1,640
|
|
|
66
|
|
|
5,821
|
|
|
(16
|
)
|
|
7,511
|
|
|||||
Property, equipment, and capitalized software, net
|
223
|
|
|
33
|
|
|
86
|
|
|
—
|
|
|
342
|
|
|||||
Goodwill and intangible assets, net
|
15
|
|
|
43
|
|
|
197
|
|
|
—
|
|
|
255
|
|
|||||
Restricted investments
|
—
|
|
|
—
|
|
|
119
|
|
|
—
|
|
|
119
|
|
|||||
Investment in subsidiaries, net
|
2,306
|
|
|
82
|
|
|
—
|
|
|
(2,388
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
17
|
|
|
—
|
|
|
101
|
|
|
(15
|
)
|
|
103
|
|
|||||
Other assets
|
32
|
|
|
103
|
|
|
7
|
|
|
(1
|
)
|
|
141
|
|
|||||
|
$
|
4,233
|
|
|
$
|
327
|
|
|
$
|
6,331
|
|
|
$
|
(2,420
|
)
|
|
$
|
8,471
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical claims and benefits payable
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
2,189
|
|
|
$
|
—
|
|
|
$
|
2,192
|
|
Amounts due government agencies
|
—
|
|
|
1
|
|
|
1,541
|
|
|
—
|
|
|
1,542
|
|
|||||
Accounts payable and accrued liabilities
|
178
|
|
|
40
|
|
|
148
|
|
|
—
|
|
|
366
|
|
|||||
Deferred revenue
|
—
|
|
|
49
|
|
|
233
|
|
|
—
|
|
|
282
|
|
|||||
Current portion of long-term debt
|
653
|
|
|
—
|
|
|
16
|
|
|
(16
|
)
|
|
653
|
|
|||||
Derivative liability
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|||||
Total current liabilities
|
1,356
|
|
|
90
|
|
|
4,127
|
|
|
(16
|
)
|
|
5,557
|
|
|||||
Long-term debt
|
1,516
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,516
|
|
|||||
Deferred income taxes
|
—
|
|
|
15
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
24
|
|
|
2
|
|
|
36
|
|
|
(1
|
)
|
|
61
|
|
|||||
Total liabilities
|
2,896
|
|
|
107
|
|
|
4,163
|
|
|
(32
|
)
|
|
7,134
|
|
|||||
Total stockholders’ equity
|
1,337
|
|
|
220
|
|
|
2,168
|
|
|
(2,388
|
)
|
|
1,337
|
|
|||||
|
$
|
4,233
|
|
|
$
|
327
|
|
|
$
|
6,331
|
|
|
$
|
(2,420
|
)
|
|
$
|
8,471
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
6
|
|
|
$
|
9
|
|
|
$
|
379
|
|
|
$
|
—
|
|
|
$
|
394
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of investments
|
(130
|
)
|
|
—
|
|
|
(259
|
)
|
|
—
|
|
|
(389
|
)
|
|||||
Proceeds from sales and maturities of investments
|
5
|
|
|
—
|
|
|
538
|
|
|
—
|
|
|
543
|
|
|||||
Purchases of property, equipment and capitalized software
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Capital contributions to subsidiaries
|
(80
|
)
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|||||
Change in amounts due to/from affiliates
|
(3
|
)
|
|
(2
|
)
|
|
5
|
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
2
|
|
|
(6
|
)
|
|
(1
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Net cash (used in) provided by investing activities
|
(207
|
)
|
|
(10
|
)
|
|
362
|
|
|
—
|
|
|
145
|
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash paid for financing transaction fees
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Net cash used in financing activities
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents
|
(206
|
)
|
|
(1
|
)
|
|
741
|
|
|
—
|
|
|
534
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
513
|
|
|
28
|
|
|
2,749
|
|
|
—
|
|
|
3,290
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
307
|
|
|
$
|
27
|
|
|
$
|
3,490
|
|
|
$
|
—
|
|
|
$
|
3,824
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
144
|
|
|
$
|
21
|
|
|
$
|
554
|
|
|
$
|
—
|
|
|
$
|
719
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of investments
|
—
|
|
|
—
|
|
|
(733
|
)
|
|
—
|
|
|
(733
|
)
|
|||||
Proceeds from sales and maturities of investments
|
92
|
|
|
—
|
|
|
341
|
|
|
—
|
|
|
433
|
|
|||||
Purchases of property, equipment and capitalized software
|
(18
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|
—
|
|
|
(26
|
)
|
|||||
Decrease in restricted investments held-to-maturity
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Capital contributions to subsidiaries
|
(106
|
)
|
|
1
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|||||
Dividends from subsidiaries
|
50
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|||||
Change in amounts due to/from affiliates
|
(60
|
)
|
|
2
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Net cash used in investing activities
|
(42
|
)
|
|
(8
|
)
|
|
(287
|
)
|
|
—
|
|
|
(337
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from employee stock plans
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Other, net
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Net cash used in financing activities
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
101
|
|
|
13
|
|
|
267
|
|
|
—
|
|
|
381
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
86
|
|
|
6
|
|
|
2,820
|
|
|
—
|
|
|
2,912
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
187
|
|
|
$
|
19
|
|
|
$
|
3,087
|
|
|
$
|
—
|
|
|
$
|
3,293
|
|
•
|
the success of the Company’s profit improvement and maintenance initiatives, including the timing and amounts of the benefits realized, and administrative savings achieved;
|
•
|
the numerous political and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare;”
|
•
|
the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk transfer requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, and the adequacy of agreed rates;
|
•
|
subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment/risk transfer;
|
•
|
effective management of the Company’s medical costs;
|
•
|
the Company’s ability to predict with a reasonable degree of accuracy utilization rates, including utilization rates associated with seasonal flu patterns or other newly emergent diseases;
|
•
|
significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
|
•
|
the Company’s ability to manage its operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of its care management initiatives;
|
•
|
the Company’s ability to consummate and realize benefits from acquisitions or divestitures;
|
•
|
the Company’s receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
|
•
|
the Company’s ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
|
•
|
the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit sharing arrangements, and risk adjustment provisions and requirements;
|
•
|
the Company’s estimates of amounts owed for such cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions;
|
•
|
the Medicaid expansion cost corridors in California, New Mexico, and Washington, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
|
•
|
the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and the Company’s ability to recognize revenue amounts associated therewith;
|
•
|
cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
|
•
|
the success of the Company’s health plan in Puerto Rico, including the resolution of the Puerto Rico debt crisis, payment of all amounts due under the Company’s Medicaid contract, the effect of the PROMESA law, the impact of Hurricane Maria and the Company’s efforts to better manage the health care costs of its Puerto Rico health plan;
|
•
|
the success and renewal of the Company’s duals demonstration programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas;
|
•
|
the accurate estimation of incurred but not reported or paid medical costs across the Company’s health plans;
|
•
|
efforts by states to recoup previously paid and recognized premium amounts;
|
•
|
complications, member confusion, or enrollment backlogs related to the annual renewal of Medicaid coverage;
|
•
|
government audits and reviews, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
|
•
|
changes with respect to the Company’s provider contracts and the loss of providers;
|
•
|
approval by state regulators of dividends and distributions by the Company’s health plan subsidiaries;
|
•
|
changes in funding under the Company’s contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
|
•
|
high dollar claims related to catastrophic illness;
|
•
|
the favorable resolution of litigation, arbitration, or administrative proceedings;
|
•
|
the relatively small number of states in which we operate health plans, including the greater scale and revenues of the Company’s California, Ohio, Texas, and Washington health plans;
|
•
|
the availability of adequate financing on acceptable terms to fund and capitalize the Company’s expansion and growth, repay the Company’s outstanding indebtedness at maturity and meet its liquidity needs, including the interest expense and other costs associated with such financing;
|
•
|
the Company’s failure to comply with the financial or other covenants in its credit agreements or the indentures governing its outstanding notes;
|
•
|
the sufficiency of the Company’s funds on hand to pay the amounts due upon conversion or maturity of its outstanding notes;
|
•
|
the failure of a state in which we operate to renew its federal Medicaid waiver;
|
•
|
changes generally affecting the managed care or Medicaid management information systems industries;
|
•
|
increases in government surcharges, taxes, and assessments, including but not limited to the deductibility of certain compensation costs;
|
•
|
newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
and
|
•
|
increasing competition and consolidation in the Medicaid industry
;
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Dollar amounts in millions, except per-share amounts)
|
||||||
Ending total membership
|
4.1
|
|
|
4.8
|
|
||
|
|
|
|
||||
Premium revenue
|
$
|
4,323
|
|
|
$
|
4,648
|
|
Health Plans segment medical margin
(1)
|
$
|
601
|
|
|
$
|
537
|
|
Operating income
|
$
|
222
|
|
|
$
|
82
|
|
|
|
|
|
||||
Net income
|
$
|
107
|
|
|
$
|
77
|
|
Net income per diluted share
|
$
|
1.64
|
|
|
$
|
1.37
|
|
Diluted weighted average shares outstanding
|
65.2
|
|
|
56.2
|
|
||
|
|
|
|
||||
Adjusted net income per diluted share*
|
$
|
1.71
|
|
|
$
|
1.47
|
|
EBITDA*
|
$
|
246
|
|
|
$
|
203
|
|
|
|
|
|
||||
Operating Statistics:
|
|
|
|
||||
MCR
(2)
|
86.1
|
%
|
|
88.4
|
%
|
||
G&A ratio
(3)
|
7.6
|
%
|
|
8.9
|
%
|
||
Premium tax ratio
(2)
|
2.3
|
%
|
|
2.3
|
%
|
||
Effective income tax expense rate
|
40.3
|
%
|
|
41.6
|
%
|
||
Net profit margin
(3)
|
2.3
|
%
|
|
1.6
|
%
|
(1)
|
Medical margin is equal to premium revenue minus medical care costs.
|
(2)
|
MCR represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue.
|
(3)
|
G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue.
|
•
|
The medical care ratio for the Medicaid and Medicare programs combined decreased to
90.0%
, from
91.0%
in the
first quarter of 2017
.
Improved performance at the Florida, Illinois, Ohio and South Carolina health plans, partially offset by a decline in performance at the Washington health plan, drove the decrease in the consolidated medical care ratio for Medicaid and Medicare combined. The 2017 CSR reimbursement had no impact on the medical care ratio for the Company’s Medicaid and Medicare programs.
|
•
|
The medical care ratio for the Marketplace operations was
50.6%
for the first quarter of 2018.
Excluding the impact of the 2017 Marketplace CSR adjustment noted below, the medical care ratio for Marketplace operations decreased to approximately
67%
, from
75%
in the first quarter of 2017. Improved profitability in Marketplace operations is primarily the result of premium increases implemented effective January 1, 2018.
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Amount
|
|
Per Diluted Share
(1)
|
|
Amount
|
|
Per Diluted Share
(1)
|
||||||||
|
(In millions, except per diluted share amounts)
|
||||||||||||||
Reimbursement of Marketplace CSR subsidies, for 2017 dates of service
|
$
|
70
|
|
|
$
|
0.83
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring costs
|
(25
|
)
|
|
(0.30
|
)
|
|
—
|
|
|
—
|
|
||||
Loss on debt extinguishment
|
(10
|
)
|
|
(0.15
|
)
|
|
—
|
|
|
—
|
|
||||
Fee received for terminated acquisition
|
—
|
|
|
—
|
|
|
75
|
|
|
0.84
|
|
||||
|
$
|
35
|
|
|
$
|
0.38
|
|
|
$
|
75
|
|
|
$
|
0.84
|
|
(1)
|
Except for certain items that are not deductible for tax purposes, per diluted share amounts are generally calculated at statutory income tax rates of 22% and 37% for the first quarters of 2018 and 2017, respectively.
|
|
|
|
|
|
|
Premium Revenue
|
|
|
|
|
|||
|
|
|
|
Membership as of
|
|
Three Months Ended
|
|
Anticipated
|
|||||
State Health Plan
|
|
Medicaid Program(s)
|
|
March 31, 2018
|
|
March 31, 2018
|
|
Award Date
|
|
Effective Date
|
|||
Puerto Rico
|
|
All
|
|
316,000
|
|
|
$
|
186
|
|
|
Q2 2018
|
|
10/1/2018
|
Texas
|
|
ABD, MMP
|
|
99,000
|
|
|
479
|
|
|
Q3 2018
|
|
1/1/2020
|
|
Texas
|
|
TANF, CHIP
|
|
129,000
|
|
|
77
|
|
|
Q1 2019
|
|
1/1/2020
|
|
Washington
(1)
|
|
All in 7 of 9 regions
|
|
606,000
|
|
|
444
|
|
|
Q2 2018
|
|
1/1/2019
|
(1)
|
The re-procurement information presented for the Washington health plan includes all Medicaid membership in the following regions: Northeast, Northwest, Central and Southeast, Pierce County, King County, Olympic Peninsula, and West-Central. Five of the seven largest regions’ contracts that are awarded will be effective January 1, 2019. The remaining two will be effective on January 1, 2020.
|
•
|
Ending the entitlement nature of Medicaid by capping future increases in federal health spending for these programs, and shifting more of the risk for health costs in the future to states and consumers;
|
•
|
Reversing the ACA’s expansion of Medicaid that enables states to cover low-income childless adults;
|
•
|
Changing Medicaid to a state block grant program, including potentially capping spending on a per-enrollee basis (a “per capita cap”);
|
•
|
Requiring Medicaid beneficiaries to work;
|
•
|
Limiting the amount of lifetime benefits for Medicaid beneficiaries; and
|
•
|
Numerous other potential changes and reforms.
|
•
|
Exited the Utah and Wisconsin Marketplaces;
|
•
|
Reduced the scope of our Washington state participation;
|
•
|
Increased premiums averaging 58%
|
•
|
Mitigated our exposure to uncertainties relating to cost share reduction (CSR) funding and reconciliation; and
|
•
|
Adjusted broker commissions to market rates.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Health Plans segment medical margin
(1)
|
$
|
601
|
|
|
$
|
537
|
|
Molina Medicaid Solutions segment service margin
(2)
|
8
|
|
|
4
|
|
||
Other segment service margin
(2)
|
6
|
|
|
5
|
|
||
|
$
|
615
|
|
|
$
|
546
|
|
|
|
|
|
||||
Health Plans segment medical care ratio
|
86.1
|
%
|
|
88.4
|
%
|
(1)
|
Represents premium revenue minus medical care costs.
|
(2)
|
Represents service revenue minus cost of service revenue.
|
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
|||
Ending Membership by Program:
|
|
|
|
|
|
|||
Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP)
|
2,435,000
|
|
|
2,457,000
|
|
|
2,548,000
|
|
Medicaid Expansion
|
662,000
|
|
|
668,000
|
|
|
684,000
|
|
Aged, Blind or Disabled (ABD)
|
411,000
|
|
|
412,000
|
|
|
401,000
|
|
Total Medicaid
|
3,508,000
|
|
|
3,537,000
|
|
|
3,633,000
|
|
Medicare-Medicaid Plan (MMP) – Integrated
(1)
|
56,000
|
|
|
57,000
|
|
|
55,000
|
|
Medicare Special Needs Plans (Medicare)
|
44,000
|
|
|
44,000
|
|
|
43,000
|
|
Total Medicare
|
100,000
|
|
|
101,000
|
|
|
98,000
|
|
Non-Marketplace
|
3,608,000
|
|
|
3,638,000
|
|
|
3,731,000
|
|
Marketplace
|
453,000
|
|
|
815,000
|
|
|
1,035,000
|
|
|
4,061,000
|
|
|
4,453,000
|
|
|
4,766,000
|
|
|
|
|
|
|
|
|||
Ending Membership by Health Plan:
|
|
|
|
|
|
|||
California
|
656,000
|
|
|
746,000
|
|
|
765,000
|
|
Florida
|
414,000
|
|
|
625,000
|
|
|
711,000
|
|
Idaho
(2)
|
2,000
|
|
|
—
|
|
|
—
|
|
Illinois
|
151,000
|
|
|
165,000
|
|
|
194,000
|
|
Michigan
|
388,000
|
|
|
398,000
|
|
|
417,000
|
|
New Mexico
|
250,000
|
|
|
253,000
|
|
|
270,000
|
|
New York
|
32,000
|
|
|
32,000
|
|
|
34,000
|
|
Ohio
|
328,000
|
|
|
327,000
|
|
|
351,000
|
|
Puerto Rico
|
316,000
|
|
|
314,000
|
|
|
326,000
|
|
South Carolina
|
117,000
|
|
|
116,000
|
|
|
111,000
|
|
Texas
|
476,000
|
|
|
430,000
|
|
|
493,000
|
|
Utah
|
90,000
|
|
|
152,000
|
|
|
172,000
|
|
Washington
|
779,000
|
|
|
777,000
|
|
|
785,000
|
|
Wisconsin
|
62,000
|
|
|
118,000
|
|
|
137,000
|
|
|
4,061,000
|
|
|
4,453,000
|
|
|
4,766,000
|
|
(1)
|
MMP members receive both Medicaid and Medicare coverage from Molina Healthcare.
|
(2)
|
Idaho operations commenced January 1, 2018.
|
|
PMPM Premiums
|
||||||||||
|
Low
|
|
High
|
|
Consolidated
|
||||||
TANF and CHIP
|
$
|
130.00
|
|
|
$
|
330.00
|
|
|
$
|
190.00
|
|
Medicaid Expansion
|
330.00
|
|
|
500.00
|
|
|
370.00
|
|
|||
ABD
|
440.00
|
|
|
1,530.00
|
|
|
1,010.00
|
|
|||
MMP – Integrated
|
1,320.00
|
|
|
3,200.00
|
|
|
2,140.00
|
|
|||
Medicare
|
600.00
|
|
|
1,380.00
|
|
|
1,190.00
|
|
|||
Marketplace
|
220.00
|
|
|
530.00
|
|
|
310.00
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
7.4
|
|
|
$
|
1,373
|
|
|
$
|
185.14
|
|
|
$
|
1,272
|
|
|
$
|
171.56
|
|
|
92.7
|
%
|
|
$
|
101
|
|
Medicaid Expansion
|
2.0
|
|
|
752
|
|
|
372.75
|
|
|
641
|
|
|
317.46
|
|
|
85.2
|
|
|
111
|
|
|||||
ABD
|
1.2
|
|
|
1,254
|
|
|
1,014.23
|
|
|
1,155
|
|
|
934.55
|
|
|
92.1
|
|
|
99
|
|
|||||
Total Medicaid
|
10.6
|
|
|
3,379
|
|
|
316.69
|
|
|
3,068
|
|
|
287.56
|
|
|
90.8
|
|
|
311
|
|
|||||
MMP
|
0.2
|
|
|
357
|
|
|
2,137.88
|
|
|
305
|
|
|
1,824.21
|
|
|
85.3
|
|
|
52
|
|
|||||
Medicare
|
0.1
|
|
|
157
|
|
|
1,188.97
|
|
|
131
|
|
|
994.81
|
|
|
83.7
|
|
|
26
|
|
|||||
Total Medicare
|
0.3
|
|
|
514
|
|
|
1,718.61
|
|
|
436
|
|
|
1,457.75
|
|
|
84.8
|
|
|
78
|
|
|||||
Non-Marketplace
|
10.9
|
|
|
3,893
|
|
|
354.94
|
|
|
3,504
|
|
|
319.48
|
|
|
90.0
|
|
|
389
|
|
|||||
Marketplace
|
1.4
|
|
|
430
|
|
|
312.87
|
|
|
218
|
|
|
158.40
|
|
|
50.6
|
|
|
212
|
|
|||||
|
12.3
|
|
|
$
|
4,323
|
|
|
$
|
350.25
|
|
|
$
|
3,722
|
|
|
$
|
301.55
|
|
|
86.1
|
%
|
|
$
|
601
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
7.7
|
|
|
$
|
1,402
|
|
|
$
|
182.69
|
|
|
$
|
1,304
|
|
|
$
|
170.02
|
|
|
93.1
|
%
|
|
$
|
98
|
|
Medicaid Expansion
|
2.0
|
|
|
817
|
|
|
398.70
|
|
|
689
|
|
|
336.51
|
|
|
84.4
|
|
|
128
|
|
|||||
ABD
|
1.2
|
|
|
1,196
|
|
|
1,006.84
|
|
|
1,130
|
|
|
951.32
|
|
|
94.5
|
|
|
66
|
|
|||||
Total Medicaid
|
10.9
|
|
|
3,415
|
|
|
312.98
|
|
|
3,123
|
|
|
286.35
|
|
|
91.5
|
|
|
292
|
|
|||||
MMP
|
0.2
|
|
|
344
|
|
|
2,088.96
|
|
|
307
|
|
|
1,859.41
|
|
|
89.0
|
|
|
37
|
|
|||||
Medicare
|
0.1
|
|
|
138
|
|
|
1,068.20
|
|
|
117
|
|
|
902.67
|
|
|
84.5
|
|
|
21
|
|
|||||
Total Medicare
|
0.3
|
|
|
482
|
|
|
1,640.63
|
|
|
424
|
|
|
1,439.20
|
|
|
87.7
|
|
|
58
|
|
|||||
Non-Marketplace
|
11.2
|
|
|
3,897
|
|
|
347.84
|
|
|
3,547
|
|
|
316.62
|
|
|
91.0
|
|
|
350
|
|
|||||
Marketplace
|
2.9
|
|
|
751
|
|
|
262.16
|
|
|
564
|
|
|
196.72
|
|
|
75.0
|
|
|
187
|
|
|||||
|
14.1
|
|
|
$
|
4,648
|
|
|
$
|
330.39
|
|
|
$
|
4,111
|
|
|
$
|
292.20
|
|
|
88.4
|
%
|
|
$
|
537
|
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
(2)
|
“MCR” represents medical costs as a percentage of premium revenue.
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.8
|
|
|
$
|
494
|
|
|
$
|
272.61
|
|
|
$
|
412
|
|
|
$
|
227.31
|
|
|
83.4
|
%
|
|
$
|
82
|
|
Florida
|
1.0
|
|
|
382
|
|
|
351.58
|
|
|
345
|
|
|
317.41
|
|
|
90.3
|
|
|
37
|
|
|||||
Idaho
(1)
|
—
|
|
|
4
|
|
|
960.33
|
|
|
4
|
|
|
977.00
|
|
|
101.8
|
|
|
—
|
|
|||||
Illinois
|
0.5
|
|
|
141
|
|
|
298.17
|
|
|
122
|
|
|
257.50
|
|
|
86.4
|
|
|
19
|
|
|||||
Michigan
|
1.1
|
|
|
376
|
|
|
336.64
|
|
|
331
|
|
|
296.19
|
|
|
88.0
|
|
|
45
|
|
|||||
New Mexico
|
0.7
|
|
|
319
|
|
|
466.17
|
|
|
310
|
|
|
453.30
|
|
|
97.2
|
|
|
9
|
|
|||||
New York
|
0.1
|
|
|
46
|
|
|
468.91
|
|
|
39
|
|
|
396.76
|
|
|
84.6
|
|
|
7
|
|
|||||
Ohio
|
0.9
|
|
|
551
|
|
|
576.60
|
|
|
460
|
|
|
481.26
|
|
|
83.5
|
|
|
91
|
|
|||||
Puerto Rico
|
1.0
|
|
|
186
|
|
|
193.13
|
|
|
174
|
|
|
181.39
|
|
|
93.9
|
|
|
12
|
|
|||||
South Carolina
|
0.3
|
|
|
122
|
|
|
348.08
|
|
|
104
|
|
|
297.52
|
|
|
85.5
|
|
|
18
|
|
|||||
Texas
|
0.7
|
|
|
562
|
|
|
809.90
|
|
|
519
|
|
|
747.53
|
|
|
92.3
|
|
|
43
|
|
|||||
Utah
|
0.3
|
|
|
92
|
|
|
339.71
|
|
|
77
|
|
|
284.61
|
|
|
83.8
|
|
|
15
|
|
|||||
Washington
|
2.3
|
|
|
584
|
|
|
256.66
|
|
|
574
|
|
|
252.41
|
|
|
98.3
|
|
|
10
|
|
|||||
Wisconsin
|
0.2
|
|
|
34
|
|
|
183.97
|
|
|
29
|
|
|
154.53
|
|
|
84.0
|
|
|
5
|
|
|||||
Other
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
|
10.9
|
|
|
$
|
3,893
|
|
|
$
|
354.94
|
|
|
$
|
3,504
|
|
|
$
|
319.48
|
|
|
90.0
|
%
|
|
$
|
389
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.8
|
|
|
$
|
572
|
|
|
$
|
308.57
|
|
|
$
|
484
|
|
|
$
|
261.31
|
|
|
84.7
|
%
|
|
$
|
88
|
|
Florida
|
1.1
|
|
|
364
|
|
|
339.30
|
|
|
352
|
|
|
328.45
|
|
|
96.8
|
|
|
12
|
|
|||||
Idaho
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Illinois
|
0.6
|
|
|
161
|
|
|
276.58
|
|
|
180
|
|
|
310.08
|
|
|
112.1
|
|
|
(19
|
)
|
|||||
Michigan
|
1.2
|
|
|
382
|
|
|
327.41
|
|
|
333
|
|
|
284.58
|
|
|
86.9
|
|
|
49
|
|
|||||
New Mexico
|
0.7
|
|
|
308
|
|
|
422.87
|
|
|
299
|
|
|
410.75
|
|
|
97.1
|
|
|
9
|
|
|||||
New York
|
0.1
|
|
|
46
|
|
|
441.19
|
|
|
42
|
|
|
409.63
|
|
|
92.8
|
|
|
4
|
|
|||||
Ohio
|
1.0
|
|
|
520
|
|
|
527.79
|
|
|
462
|
|
|
469.04
|
|
|
88.9
|
|
|
58
|
|
|||||
Puerto Rico
|
1.0
|
|
|
183
|
|
|
186.51
|
|
|
165
|
|
|
168.18
|
|
|
90.2
|
|
|
18
|
|
|||||
South Carolina
|
0.3
|
|
|
105
|
|
|
317.07
|
|
|
98
|
|
|
293.34
|
|
|
92.5
|
|
|
7
|
|
|||||
Texas
|
0.7
|
|
|
527
|
|
|
751.86
|
|
|
489
|
|
|
696.43
|
|
|
92.6
|
|
|
38
|
|
|||||
Utah
|
0.3
|
|
|
89
|
|
|
313.20
|
|
|
72
|
|
|
253.75
|
|
|
81.0
|
|
|
17
|
|
|||||
Washington
|
2.2
|
|
|
605
|
|
|
273.18
|
|
|
535
|
|
|
241.77
|
|
|
88.5
|
|
|
70
|
|
|||||
Wisconsin
|
0.2
|
|
|
33
|
|
|
165.40
|
|
|
27
|
|
|
135.91
|
|
|
82.2
|
|
|
6
|
|
|||||
Other
(2)
|
—
|
|
|
2
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
|
11.2
|
|
|
$
|
3,897
|
|
|
$
|
347.84
|
|
|
$
|
3,547
|
|
|
$
|
316.62
|
|
|
91.0
|
%
|
|
$
|
350
|
|
(1)
|
Idaho operations commenced January 1, 2018.
|
(2)
|
“Other” medical care costs include primarily medically related administrative costs at the parent company.
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.2
|
|
|
$
|
49
|
|
|
$
|
253.93
|
|
|
$
|
31
|
|
|
$
|
162.64
|
|
|
64.0
|
%
|
|
$
|
18
|
|
Florida
|
0.2
|
|
|
45
|
|
|
271.12
|
|
|
(16
|
)
|
|
(95.60
|
)
|
|
(35.3
|
)
|
|
61
|
|
|||||
Michigan
|
0.1
|
|
|
13
|
|
|
224.11
|
|
|
9
|
|
|
144.16
|
|
|
64.3
|
|
|
4
|
|
|||||
New Mexico
|
0.1
|
|
|
34
|
|
|
438.67
|
|
|
19
|
|
|
246.50
|
|
|
56.2
|
|
|
15
|
|
|||||
Ohio
|
0.1
|
|
|
26
|
|
|
403.44
|
|
|
17
|
|
|
262.87
|
|
|
65.2
|
|
|
9
|
|
|||||
Texas
|
0.7
|
|
|
229
|
|
|
308.74
|
|
|
146
|
|
|
196.89
|
|
|
63.8
|
|
|
83
|
|
|||||
Utah
(1)
|
—
|
|
|
(3
|
)
|
|
NM
|
|
|
(10
|
)
|
|
NM
|
|
|
NM
|
|
|
7
|
|
|||||
Washington
|
—
|
|
|
39
|
|
|
526.36
|
|
|
30
|
|
|
405.40
|
|
|
77.0
|
|
|
9
|
|
|||||
Wisconsin
(1)
|
—
|
|
|
(2
|
)
|
|
NM
|
|
|
(8
|
)
|
|
NM
|
|
|
NM
|
|
|
6
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
1.4
|
|
|
$
|
430
|
|
|
$
|
312.87
|
|
|
$
|
218
|
|
|
$
|
158.40
|
|
|
50.6
|
%
|
|
$
|
212
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.4
|
|
|
$
|
72
|
|
|
$
|
184.34
|
|
|
$
|
26
|
|
|
$
|
65.53
|
|
|
35.5
|
%
|
|
$
|
46
|
|
Florida
|
1.0
|
|
|
292
|
|
|
292.80
|
|
|
206
|
|
|
205.91
|
|
|
70.3
|
|
|
86
|
|
|||||
Michigan
|
0.1
|
|
|
11
|
|
|
149.23
|
|
|
6
|
|
|
95.92
|
|
|
64.3
|
|
|
5
|
|
|||||
New Mexico
|
0.1
|
|
|
22
|
|
|
265.06
|
|
|
19
|
|
|
232.50
|
|
|
87.7
|
|
|
3
|
|
|||||
Ohio
|
0.1
|
|
|
21
|
|
|
334.26
|
|
|
17
|
|
|
273.72
|
|
|
81.9
|
|
|
4
|
|
|||||
Texas
|
0.7
|
|
|
157
|
|
|
222.40
|
|
|
113
|
|
|
161.02
|
|
|
72.4
|
|
|
44
|
|
|||||
Utah
|
0.2
|
|
|
45
|
|
|
202.48
|
|
|
51
|
|
|
228.20
|
|
|
112.7
|
|
|
(6
|
)
|
|||||
Washington
|
0.1
|
|
|
37
|
|
|
302.51
|
|
|
46
|
|
|
365.94
|
|
|
121.0
|
|
|
(9
|
)
|
|||||
Wisconsin
|
0.2
|
|
|
94
|
|
|
453.39
|
|
|
81
|
|
|
389.80
|
|
|
86.0
|
|
|
13
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
2.9
|
|
|
$
|
751
|
|
|
$
|
262.16
|
|
|
$
|
564
|
|
|
$
|
196.72
|
|
|
75.0
|
%
|
|
$
|
187
|
|
(1)
|
We terminated Marketplace operations at our Utah and Wisconsin health plans effective January 1, 2018, so the ratios for 2018 periods are not meaningful for those health plans.
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
2.0
|
|
|
$
|
543
|
|
|
$
|
270.80
|
|
|
$
|
443
|
|
|
$
|
221.03
|
|
|
81.6
|
%
|
|
$
|
100
|
|
Florida
|
1.2
|
|
|
427
|
|
|
340.91
|
|
|
329
|
|
|
262.65
|
|
|
77.0
|
|
|
98
|
|
|||||
Idaho
|
—
|
|
|
4
|
|
|
960.33
|
|
|
4
|
|
|
977.00
|
|
|
101.8
|
|
|
—
|
|
|||||
Illinois
|
0.5
|
|
|
141
|
|
|
298.17
|
|
|
122
|
|
|
257.50
|
|
|
86.4
|
|
|
19
|
|
|||||
Michigan
|
1.2
|
|
|
389
|
|
|
331.08
|
|
|
340
|
|
|
288.68
|
|
|
87.2
|
|
|
49
|
|
|||||
New Mexico
|
0.8
|
|
|
353
|
|
|
463.33
|
|
|
329
|
|
|
431.94
|
|
|
93.2
|
|
|
24
|
|
|||||
New York
|
0.1
|
|
|
46
|
|
|
468.91
|
|
|
39
|
|
|
396.76
|
|
|
84.6
|
|
|
7
|
|
|||||
Ohio
|
1.0
|
|
|
577
|
|
|
565.62
|
|
|
477
|
|
|
467.41
|
|
|
82.6
|
|
|
100
|
|
|||||
Puerto Rico
|
1.0
|
|
|
186
|
|
|
193.13
|
|
|
174
|
|
|
181.39
|
|
|
93.9
|
|
|
12
|
|
|||||
South Carolina
|
0.3
|
|
|
122
|
|
|
348.08
|
|
|
104
|
|
|
297.52
|
|
|
85.5
|
|
|
18
|
|
|||||
Texas
|
1.4
|
|
|
791
|
|
|
551.28
|
|
|
665
|
|
|
463.37
|
|
|
84.1
|
|
|
126
|
|
|||||
Utah
|
0.3
|
|
|
89
|
|
|
328.83
|
|
|
67
|
|
|
246.78
|
|
|
75.0
|
|
|
22
|
|
|||||
Washington
|
2.3
|
|
|
623
|
|
|
265.20
|
|
|
604
|
|
|
257.25
|
|
|
97.0
|
|
|
19
|
|
|||||
Wisconsin
|
0.2
|
|
|
32
|
|
|
172.09
|
|
|
21
|
|
|
110.91
|
|
|
64.4
|
|
|
11
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
|
12.3
|
|
|
$
|
4,323
|
|
|
$
|
350.25
|
|
|
$
|
3,722
|
|
|
$
|
301.55
|
|
|
86.1
|
%
|
|
$
|
601
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
2.2
|
|
|
$
|
644
|
|
|
$
|
286.92
|
|
|
$
|
510
|
|
|
$
|
227.19
|
|
|
79.2
|
%
|
|
$
|
134
|
|
Florida
|
2.1
|
|
|
656
|
|
|
316.86
|
|
|
558
|
|
|
269.33
|
|
|
85.0
|
|
|
98
|
|
|||||
Idaho
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Illinois
|
0.6
|
|
|
161
|
|
|
276.58
|
|
|
180
|
|
|
310.08
|
|
|
112.1
|
|
|
(19
|
)
|
|||||
Michigan
|
1.3
|
|
|
393
|
|
|
316.80
|
|
|
339
|
|
|
273.36
|
|
|
86.3
|
|
|
54
|
|
|||||
New Mexico
|
0.8
|
|
|
330
|
|
|
406.90
|
|
|
318
|
|
|
392.72
|
|
|
96.5
|
|
|
12
|
|
|||||
New York
|
0.1
|
|
|
46
|
|
|
441.19
|
|
|
42
|
|
|
409.63
|
|
|
92.8
|
|
|
4
|
|
|||||
Ohio
|
1.1
|
|
|
541
|
|
|
516.00
|
|
|
479
|
|
|
457.14
|
|
|
88.6
|
|
|
62
|
|
|||||
Puerto Rico
|
1.0
|
|
|
183
|
|
|
186.51
|
|
|
165
|
|
|
168.18
|
|
|
90.2
|
|
|
18
|
|
|||||
South Carolina
|
0.3
|
|
|
105
|
|
|
317.07
|
|
|
98
|
|
|
293.34
|
|
|
92.5
|
|
|
7
|
|
|||||
Texas
|
1.4
|
|
|
684
|
|
|
486.96
|
|
|
602
|
|
|
428.55
|
|
|
88.0
|
|
|
82
|
|
|||||
Utah
|
0.5
|
|
|
134
|
|
|
264.73
|
|
|
123
|
|
|
242.57
|
|
|
91.6
|
|
|
11
|
|
|||||
Washington
|
2.3
|
|
|
642
|
|
|
274.74
|
|
|
581
|
|
|
248.40
|
|
|
90.4
|
|
|
61
|
|
|||||
Wisconsin
|
0.4
|
|
|
127
|
|
|
311.30
|
|
|
108
|
|
|
264.53
|
|
|
85.0
|
|
|
19
|
|
|||||
Other
|
—
|
|
|
2
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
|
14.1
|
|
|
$
|
4,648
|
|
|
$
|
330.39
|
|
|
$
|
4,111
|
|
|
$
|
292.20
|
|
|
88.4
|
%
|
|
$
|
537
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of Total
|
|
Amount
|
|
PMPM
|
|
% of Total
|
||||||||||
Fee for service
|
$
|
2,745
|
|
|
$
|
222.38
|
|
|
73.8
|
%
|
|
$
|
3,086
|
|
|
$
|
219.32
|
|
|
75.1
|
%
|
Pharmacy
|
583
|
|
|
47.25
|
|
|
15.6
|
|
|
616
|
|
|
43.76
|
|
|
15.0
|
|
||||
Capitation
|
312
|
|
|
25.28
|
|
|
8.4
|
|
|
324
|
|
|
23.06
|
|
|
7.9
|
|
||||
Other
|
82
|
|
|
6.64
|
|
|
2.2
|
|
|
85
|
|
|
6.06
|
|
|
2.0
|
|
||||
|
$
|
3,722
|
|
|
$
|
301.55
|
|
|
100.0
|
%
|
|
$
|
4,111
|
|
|
$
|
292.20
|
|
|
100.0
|
%
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
|
(In millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
394
|
|
|
$
|
719
|
|
|
$
|
(325
|
)
|
Net cash provided by (used in) investing activities
|
145
|
|
|
(337
|
)
|
|
482
|
|
|||
Net cash used in financing activities
|
(5
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
$
|
534
|
|
|
$
|
381
|
|
|
$
|
153
|
|
Credit Facility Financial Covenants
|
Required Per Agreement
|
|
As of March 31, 2018
|
|
|
|
|
Net leverage ratio
|
<4.0x
|
|
2.7x
|
Interest coverage ratio
|
>3.5x
|
|
6.9x
|
Estimated Savings Expected to be Realized by Reportable Segment
|
|
Health Plans
|
|
Other
|
|
Total
|
|
|
(In millions)
|
||||
General and administrative expenses
|
|
$65
|
|
$92 to $152
|
|
$157 to $217
|
Medical care costs
|
|
$126 to $166
|
|
$17
|
|
$143 to $183
|
|
|
$191 to $231
|
|
$109 to $169
|
|
$300 to $400
|
•
|
Health Plans segment medical claims and benefits payable
. Refer to Notes to Consolidated Financial Statements, Note
6
, “
Medical Claims and Benefits Payable
,” for a table that presents the components of the change in medical claims and benefits payable, and for additional information regarding the factors used to determine our changes in estimates for all periods presented in the accompanying consolidated financial statements. Other than the discussion as noted above, there have been no significant changes during the
three months ended March 31, 2018
, to our disclosure reported in “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
•
|
Health Plans segment contractual provisions that may adjust or limit revenue or profit
. For a discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Notes to Consolidated Financial Statements, Note
2
, “
Significant Accounting Policies
.”
|
•
|
Health Plans segment quality incentives
. For a discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Notes to Consolidated Financial Statements, Note
2
, “
Significant Accounting Policies
.”
|
•
|
Goodwill and intangible assets, net.
There have been no significant changes during the three months ended March 31, 2018, to our disclosure reported in “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
|
Three Months Ended March 31,
|
||||||
2018
|
|
2017
|
|||||
|
(In millions)
|
||||||
Net income
|
$
|
107
|
|
|
$
|
77
|
|
Adjustments:
|
|
|
|
||||
Depreciation, and amortization of intangible assets and capitalized software
|
34
|
|
|
46
|
|
||
Interest expense
|
33
|
|
|
26
|
|
||
Income tax expense
|
72
|
|
|
54
|
|
||
EBITDA*
|
$
|
246
|
|
|
$
|
203
|
|
|
Three Months Ended March 31,
|
||||||||||||||
2018
|
|
2017
|
|||||||||||||
|
(In millions, except diluted per-share amounts)
|
||||||||||||||
Net income
|
$
|
107
|
|
|
$
|
1.64
|
|
|
$
|
77
|
|
|
$
|
1.37
|
|
Adjustment:
|
|
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
5
|
|
|
0.08
|
|
|
9
|
|
|
0.16
|
|
||||
Income tax effect
(1)
|
(1
|
)
|
|
(0.01
|
)
|
|
(3
|
)
|
|
(0.06
|
)
|
||||
Amortization of intangible assets, net of tax effect
|
4
|
|
|
0.07
|
|
|
6
|
|
|
0.10
|
|
||||
Adjusted net income*
|
$
|
111
|
|
|
$
|
1.71
|
|
|
$
|
83
|
|
|
$
|
1.47
|
|
(1)
|
Income tax effect of adjustments calculated at the blended federal and state statutory tax rates of 22% and 37% for the first quarters of 2018 and 2017, respectively.
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly
Announced
Plans or
Programs
|
|
Approximate
Dollar Value
of Shares Authorized to Be Purchased Under the Plans or Programs
|
||||||
January 1 - January 31
|
2,705
|
|
|
$
|
91.83
|
|
|
—
|
|
|
$
|
—
|
|
February 1 - February 28
|
17,365
|
|
|
$
|
90.63
|
|
|
—
|
|
|
$
|
—
|
|
March 1 - March 31
|
48,853
|
|
|
$
|
72.36
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
68,923
|
|
|
$
|
77.73
|
|
|
—
|
|
|
|
(1)
|
During the
three months ended March 31, 2018
, we withheld
68,923
shares of common stock under our 2011 Equity Incentive Plan to settle employee income tax obligations.
|
Exhibit No.
|
|
Title
|
|
Method of Filing
|
|
|
|
|
|
|
Fourth Amended and Restated Bylaws of Molina Healthcare, Inc.
|
|
Filed as Exhibit 3.1 to registrant’s Form 8-K filed March 2, 2018.
|
|
|
|
|
|
|
|
Amended and Restated Commitment Letter, dated as of January 2, 2018, by and among Molina Healthcare, Inc., SunTrust Bank, SunTrust Robinson Humphrey, Inc., Barclays Bank PLC, MUFG, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Morgan Stanley Senior Funding, Inc.
|
|
Filed as Exhibit 10.1 to registrant’s Form 8-K filed January 2, 2018.
|
|
|
|
|
|
|
|
Bridge Credit Agreement, dated as of January 2, 2018, by and among Molina Healthcare, Inc., as the Borrower, Molina Information Systems, LLC, Molina Pathways LLC and Pathways Health and Community Support LLC, as the Guarantors, SunTrust Bank, Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Bank of America, N.A., and Morgan Stanley Senior Funding, Inc., as Lenders, and SunTrust Bank, as Administrative Agent.
|
|
Filed as Exhibit 10.2 to registrant’s Form 8-K filed January 2, 2018.
|
|
|
|
|
|
|
|
Section 302 Certification of Chief Executive Officer
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Section 302 Certification of Chief Financial Officer
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
|
101.INS
|
|
XBRL Taxonomy Instance Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
MOLINA HEALTHCARE, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
Dated:
|
April 30, 2018
|
|
/s/ JOSEPH M. ZUBRETSKY
|
|
|
|
Joseph M. Zubretsky
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated:
|
April 30, 2018
|
|
/s/ JOSEPH W. WHITE
|
|
|
|
Joseph W. White
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
1 Year Molina Healthcare Chart |
1 Month Molina Healthcare Chart |
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