UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 26, 2012

MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
 	 	 	 	 	
Delaware	 	1-31719	 	13-4204626	
(State of incorporation)	 	(Commission File Number)	 	(I.R.S. Employer Identification Number)	

200 Oceangate, Suite 100, Long Beach, California 90802
(Address of principal executive offices)

Registrant’s telephone number, including area code: (562) 435-3666

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 
 Item 2.02.      Results of Operations and Financial Condition.
 
On July 26, 2012, Molina Healthcare, Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2012.  The full text of the press release is included as Exhibit 99.1 to this report. The information contained in the websites cited in the press release is not part of this report.

The information in this Form 8-K and the exhibit attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.

Item 9.01.       Financial Statements and Exhibits.
 
(d)         Exhibits:
 
Exhibit
No.                  Description

99.1	Press release of Molina Healthcare, Inc. issued July 26, 2012, as to financial results for the second quarter ended June 30, 2012.	

 

 

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	 	 	MOLINA HEALTHCARE, INC.	
 	 	
Date: July 26, 2012	 	By:    /s/ Jeff D. Barlow	
 	 	Jeff D. Barlow
Sr. Vice President – General Counsel, and Secretary	

 

 
 
EXHIBIT INDEX

Exhibit
No.                  Description

99.1	Press release of Molina Healthcare, Inc. issued July 26, 2012, as to financial results for the second quarter ended June 30, 2012.	

 

News Release

Contact:
Juan José Orellana
Investor Relations
562-435-3666, ext. 111143

MOLINA HEALTHCARE REPORTS
SECOND QUARTER 2012 RESULTS

●  	Loss per diluted share for second quarter 2012 of $0.80	

●  	Premium deficiency reserves of $13 million	

●  	Quarterly premium revenues of $1.5 billion, up 32% over 2011	

●  	Aggregate membership up 13% over 2011	

●  	Cash provided by operating activities up $155 million over 2011	

Long Beach, California (July 26, 2012) – Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the second quarter and six months ended June 30, 2012.

Net loss for the quarter was $37.3 million, or $0.80 per diluted share, compared with net income of $17.4 million, or $0.38 per diluted share, for the quarter ended June 30, 2011.

“The second quarter of 2012 illustrated both the opportunities and the challenges facing Molina Healthcare today,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc.  “The opportunities before us are clear.  The renewal of our contract in Ohio, the continued development of the dual eligible opportunity across many of our markets, our entry into the Florida Nursing Home Diversion Program, the certification of our Idaho MMIS, and the Supreme Court’s decision upholding many aspects of the Affordable Care Act make it clear that our company’s revenue potential is far greater than it ever has been.  However, developments in Texas during the second quarter emphasize the importance of adequate rates and disciplined cost control for new populations and markets.  I remain confident that Molina Healthcare will overcome the challenges that come with the many opportunities before us, delivering much improved financial results in the future.”

Earnings Per Share Guidance

Because of uncertainties surrounding the pace at which our medical cost containment initiatives in Texas will take effect, we previously withdrew and are not issuing fiscal year 2012 guidance with respect to matters related to or derived from medical costs, including earnings guidance.
 
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MOH Reports Second Quarter 2012 Results
Page 2
July 26, 2012
 
Overview of Financial Results

The Company’s financial performance in the second quarter of 2012 was impacted by the previously disclosed challenges with the Company’s aged, blind or disabled, or ABD, contracts in Texas, particularly in the Hidalgo and El Paso service areas, and losses in Missouri (where our health plan terminated operations effective June 30, 2012) and in Wisconsin.  The Company believes that its financial performance issues in the quarter were limited to its Texas, Missouri, and Wisconsin health plans. Excluding the Texas, Missouri, and Wisconsin health plans, the Company’s overall medical care ratio was 85.3% and 84.4% for the three and six months ended June 30, 2012, respectively.  The Company will receive rate increases in Texas effective September 1, 2012, which, together with various initiatives to reduce utilization and decrease unit costs, are expected to improve the performance of the Texas health plan.  As stated above, the Company has now exited the Missouri market.

Health Plans Segment Results

Second Quarter 2012 Compared with Second Quarter 2011
 
Premium Revenue	
 
Premium revenue for the second quarter of 2012 increased 32% over the second quarter of 2011, due primarily to membership increases, a shift in member mix to populations generating higher premium revenue per member per month (PMPM), and increased revenue linked to benefit expansions.

Membership at the Texas health plan more than doubled year over year, while also growing significantly in Ohio and Washington.  Growth in the Company’s ABD membership led to higher premium revenue PMPM in 2012.  ABD membership, as a percent of total membership, has increased over 40% year over year.  Premium revenue PMPM also increased in the second quarter of 2012 as a result of the inclusion of revenue from the pharmacy benefit for the Ohio health plan effective October 1, 2011, and as a result of the inclusion of revenue from the inpatient facility and pharmacy benefits across all of the Texas health plan’s membership effective March 1, 2012.
 
Medical Care Costs	
 
Medical care costs increased in the second quarter of 2012 primarily due to high costs at the Texas health plan and the addition of the pharmacy benefit in Ohio effective October 1, 2011.  The Company’s medical margin deteriorated year over year primarily due to:

●  	Higher medical costs in Texas and higher medical costs for ABD members in California; and	

●  	Rate decreases of approximately 2% in Ohio effective January 1, 2012, and of approximately 3% in California effective July 1, 2011.	

Individual Health Plan Analysis

The Texas health plan added 172,000 members and $255.1 million in revenue year over year.  Most of this growth was due to regional and benefit expansions effective March 1, 2012.  The medical care ratio of the Texas health plan was 109.4% for the second quarter of 2012, compared with 95.0% for the second quarter of 2011.  Because revenues of the Texas health plan constituted nearly 25% of the Company’s total premium revenue for the second quarter of 2012, the high medical care ratio in that state had a disproportionately large impact on the Company’s overall financial results.  Absent $14.1 million of unfavorable prior period development of claims reserves from the first quarter of 2012 and the impact of the $10.0 million premium deficiency reserve discussed below, the medical care ratio of the Texas health plan would have been approximately 102.7% in the second quarter of 2012.
 
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MOH Reports Second Quarter 2012 Results
Page 3
July 26, 2012

The following table captures the effect of prior period development and the premium deficiency reserve on the Texas health plan’s medical care ratio and medical care costs for the quarter ended June 30, 2012:

 	 	Texas Results
For Quarter Ended
June 30, 2012	 	
 	 	Medical Care Ratio	 	 	Medical Care Costs	 	
 	 	(Dollars in thousands)	 	
Reported financial performance	 	 	109.4	%	 	$	393,237	 	
Impact of prior period claims development	 	 	(3.9	)	 	 	(14,100	)	
Impact of premium deficiency reserve (two months ending August 31, 2012)	 	 	(2.8	)	 	 	(10,000	)	
Medical ratio and medical care cost adjusted to exclude impact of prior period development and premium deficiency reserve	 	 	102.7	%	 	$	369,137	 	

As previously disclosed, the Company believes that premium rates associated with the ABD contracts in the Hidalgo and El Paso service areas are not adequate to cover the medical costs associated with serving members under existing conditions.  Utilization of long-term care services, including personal attendant services and adult day health care services, is currently far exceeding the utilization of those services elsewhere in the state and also far exceeding the utilization assumptions used by the state of Texas in the development, and the Company’s evaluation of, premium rates.

The Company recorded a premium deficiency reserve for the Texas health plan at June 30, 2012, of $10.0 million.  This premium deficiency reserve encompasses the two months ending August 31, 2012.  The state of Texas has released preliminary rates effective September 1, 2012.  The Company believes that these preliminary rates, if enacted, will yield a blended rate increase of approximately 6% overall (approximately $7.4 million per month) for the Texas health plan. The Company believes that the premium rates effective in Texas on September 1, 2012, together with various medical cost containment initiatives, will allow the Texas health plan to return to profitability during Texas state fiscal year 2013 (September 1, 2012 through August 31, 2013).  Accordingly, the Company does not believe that a premium deficiency reserve will be required in Texas subsequent to September 1, 2012.

The medical care ratio for the ABD membership in the Hidalgo and El Paso service areas was 139% and 146%, respectively, during the second quarter of 2012.  Absent unfavorable prior period development from the first quarter of 2012 and the premium deficiency reserve, the medical care ratios of the ABD membership in the Hidalgo and El Paso service areas would have been 116% and 133%, respectively, consistent with the Company’s previously disclosed estimates.  The medical care ratio for the aggregate ABD membership in Texas was approximately 119%.  Absent unfavorable prior period development of claims reserves and the premium deficiency reserve, the medical care ratio for the aggregate ABD membership in Texas was approximately 109%.  ABD membership overall constitutes approximately 70% of all Texas health plan revenue.  ABD membership in the Hidalgo and El Paso service areas alone contributed 28% of the Texas health plan’s total revenue for the second quarter of 2012.

The Company estimates that its current monthly loss before taxes for the Texas health plan overall is approximately $14 million, inclusive of payments made under its management services agreement with Molina Healthcare, Inc., the corporate parent of the Texas health plan.  The Company believes that the profitability of the Texas health plan will improve over time by the estimated amounts shown below.  The Company also believes that enrollment may decrease at the Texas health plan during the third quarter of 2012.
 
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MOH Reports Second Quarter 2012 Results
Page 4
July 26, 2012

 	 	Expected Monthly Increase to Profitability	 	
 	 	(In thousands)	 	
Blended rate increase effective September 1, 2012	 	$	7,400	 	
Provider contract changes expected to be effective by December 2012	 	 	3,400	 	
Other initiatives (including changes to hospital payments and prior authorizations) expected to be effective by December 2012	 	 	3,200	 	
 	 	$	14,000	 	

The increase in the medical care ratio of the California health plan year over year was primarily due to premium rate reductions effective July 1, 2011, and the mandatory assignment of ABD members previously served under fee-for-service arrangements.  These members were transitioned into managed care plans effective upon their month of birth beginning in June 2011.  The last of these members were transitioned into managed care in May 2012.  The medical care ratio for these new members is approximately 95%, compared with a medical care ratio of approximately 85% for ABD members not subject to mandatory enrollment.  Individuals who are new to managed care often have higher utilization of medical services upon initially enrolling into managed care plans.  Utilization of heath care services is declining, however, for those ABD members added earlier in the mandatory enrollment process.  This data leads the Company to believe that medical care costs will decrease for the mandatory ABD members over time.

Profitability at the Florida health plan improved substantially year over year due to a premium rate increase effective September 1, 2011, the re-contracting of portions of the health plan’s specialty care network, and lower inpatient utilization.

The medical care ratio of the Michigan health plan increased to 87.1% in the second quarter of 2012 from 78.7% in the second quarter of 2011.  The higher medical care ratio in 2012 was the result of a reduction to premium rates that was linked to a decrease in premium taxes, and higher pharmacy and inpatient facility costs.  Partially offsetting the higher medical care ratio was a decrease of $8.7 million in premium tax expense.  Both premium taxes and premium rates were reduced equivalently effective April 1, 2012.  If the reduction to premium rates linked to a decrease in premium taxes had been in effect in the prior year, the medical care ratio for the second quarter of 2011 would have been approximately 82%.

The medical care ratio of the Missouri health plan increased to 104.9% in the second quarter of 2012 compared with 90.2% in the second quarter of 2011.  The increase in the medical care ratio was primarily the result of higher inpatient utilization and high dollar claims.  Unfavorable prior period development of claims reserves from the first quarter of 2012 was $7.6 million in the second quarter of 2012.

Profitability at the New Mexico health plan improved substantially year over year due to the absence in 2012 of contractually required reductions to revenue made in 2011.

The medical care ratio of the Ohio health plan increased to 82.6% for the second quarter of 2012 from 77.6% for the second quarter of 2011.  The increase in the Ohio health plan’s medical care ratio was primarily the result of a 2% rate reduction effective January 1, 2012, together with the assumption of the lower margin pharmacy benefit effective October 1, 2011.  Although the Ohio health plan’s medical care ratio increased in 2012, the medical margin (measured as total premium revenue less total medical care costs) remained constant.
 
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MOH Reports Second Quarter 2012 Results
Page 5
July 26, 2012

Absent a one-time revenue benefit of $12.1 million recorded in the second quarter of 2011, the medical care ratio of the Utah health plan decreased to 82.5% in the second quarter of 2012 from 89.4% in the second quarter of 2011.

Lower inpatient facility costs tied to reduced inpatient utilization led the Washington health plan to report improved profitability year over year.

The Wisconsin health plan reported a medical care ratio of 121.1% for the second quarter of 2012 compared with 80.8% for the second quarter of 2011.  The Company believes that premium rates associated with its contract in the state of Wisconsin are not adequate to cover the costs of servicing that contract.  Accordingly, the Company recorded a premium deficiency reserve for the Wisconsin health plan at June 30, 2012, of $3.0 million.  The Wisconsin health plan will receive new premium rates effective January 1, 2013.  Absent the $3.0 million premium deficiency reserve, the medical care ratio of the Wisconsin health plan would have been approximately 105.2% for the second quarter of 2012.

Molina Medicaid Solutions Segment Results

Performance of the Molina Medicaid Solutions segment was as follows:

 	 	Three Months Ended
June 30,	 	 	Six Months Ended
June 30,	 	
 	 	2012	 	 	2011	 	 	2012	 	 	2011	 	
 	 	(In thousands)	 	
Service revenue before amortization	 	$	41,877	 	 	$	38,434	 	 	$	84,235	 	 	$	77,294	 	
Amortization recorded as reduction
of service revenue	 	 	(153	)	 	 	(1,546	)	 	 	(306	)	 	 	(3,732	)	
Service revenue	 	 	41,724	 	 	 	36,888	 	 	 	83,929	 	 	 	73,562	 	
Cost of service revenue	 	 	30,613	 	 	 	39,215	 	 	 	61,107	 	 	 	70,436	 	
General and administrative costs	 	 	3,187	 	 	 	1,875	 	 	 	5,207	 	 	 	4,352	 	
Amortization of customer relationship
intangibles recorded as amortization	 	 	1,282	 	 	 	1,282	 	 	 	2,564	 	 	 	2,564	 	
Operating income (loss)	 	$	6,642	 	 	$	(5,484	)	 	$	15,051	 	 	$	(3,790	)	

Operating income for the Company’s Molina Medicaid Solutions segment improved $12.1 million and $18.8 million for the three months and six months ended June 30, 2012, respectively.  This improvement was primarily the result of stabilization of the Company’s newest Medicaid Management Information Systems, or MMIS, in Idaho and Maine.  On July 17, 2012, the Company announced that the Centers for Medicare and Medicaid Services, or CMS, had certified the MMIS implemented by Molina Medicaid Solutions in Idaho retroactive to June 1, 2010.  This certification will allow the state of Idaho to receive 75% federal financial participation for the operation of the MMIS retroactive to that date.  Among the reasons cited by the Company for purchasing Molina Medicaid Solutions effective May 1, 2010, was the benefit of reducing the Company’s reliance on health plan operations.  For the quarter ended June 30, 2012, the Molina Medicaid Solutions segment gross profit margin rate was 27%, compared with 8% for the Health Plans segment.

Cash Flow

Cash provided by operating activities was $236.0 million for the six months ended June 30, 2012, compared with $114.9 million for the six months ended June 30, 2011.  Deferred revenue was a source of operating cash amounting to $125.4 million in 2012, compared with $38.1 million in 2011.

At June 30, 2012, the Company had cash and investments of $1.1 billion, and the parent company had cash and investments of $39.8 million.
 
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MOH Reports Second Quarter 2012 Results
Page 6
July 26, 2012
 
Reconciliation of Non-GAAP (1) to GAAP Financial Measures

EBITDA (2)

 	 	Three Months Ended
June 30,	 	 	Six Months Ended
June 30,	 	
 	 	2012	 	 	2011	 	 	2012	 	 	2011	 	
 	 	(In thousands)	 	
Net (loss) income	 	$	(37,306	)	 	$	17,440	 	 	$	(19,217	)	 	$	34,828	 	
Add back:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization reported in
the consolidated statements of cash flows	 	 	19,671	 	 	 	16,508	 	 	 	38,010	 	 	 	34,602	 	
Interest expense	 	 	3,808	 	 	 	3,683	 	 	 	8,106	 	 	 	7,286	 	
Provision for income taxes	 	 	(25,769	)	 	 	10,287	 	 	 	(14,736	)	 	 	20,596	 	
EBITDA	 	$	(39,596	)	 	$	47,918	 	 	$	12,163	 	 	$	97,312	 	
____________

(1)	GAAP stands for U.S. generally accepted accounting principles.	

(2)	EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense, and the provision for income taxes.  This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities, nor should EBITDA be considered in isolation from these GAAP measures of operating performance.  Management uses EBITDA as a supplemental metric in evaluating the Company’s financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods.  For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating the Company’s performance and the performance of other companies in the Company’s industry.	

Conference Call

The Company’s management will host a conference call and webcast to discuss its second quarter results at 5:00 p.m. Eastern time on Thursday, July 26, 2012.  The number to call for the interactive teleconference is (212) 231-2927.  A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Thursday, July 26, 2012, through 6:00 p.m. on Friday, July 27, 2012, by dialing (800) 633-8284 and entering confirmation number 21596713.  A live broadcast of Molina Healthcare’s conference call will be available on the Company’s website,  www.molinahealthcare.com , or at www.earnings.com .  A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.

About Molina Healthcare

Molina Healthcare, Inc. provides quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program.  The Company’s licensed health plans in California, Florida, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.8 million members, and its subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida.
 
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MOH Reports Second Quarter 2012 Results
Page 7
July 26, 2012

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company’s plans, expectations, anticipated future events, and projected earnings per diluted share for fiscal year 2012.  Actual results could differ materially due to numerous known and unknown risks and uncertainties, including, without limitation, risk factors related to the following:

●  	the success and timing of our medical cost containment initiatives in Texas, the finalization of rate increases in Texas effective September 1, 2012, and other risks associated with the expansion of our Texas health plan’s service areas as of March 1, 2012;	

●  	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;	

●  	uncertainties regarding the implementation of the Patient Protection and Affordable Care Act, including the potential refusal of a state to expand Medicaid eligibility to its uninsured population, issues surrounding state insurance exchanges, the impact of the health insurance industry excise tax, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures;	

●  	management of the Company’s medical costs, including seasonal flu patterns and rates of utilization that are consistent with the Company’s expectations, and the reduction over time of the high medical costs associated with new populations;	

●  	the success of the Company’s efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states, and the Company’s ability to grow the Company’s revenues consistent with the Company’s expectations;	

●  	the accurate estimation of incurred but not reported medical costs across the Company’s health plans;	

●  	risks associated with the continued growth in new Medicaid and Medicare enrollees, and the development of actuarially sound rates with respect to such new enrollees, including dually eligible enrollees;	

●  	retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates;	

●  	the continuation and renewal of the government contracts of both the Company’s health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed;	

●  	the timing of receipt and recognition of revenue and the amortization of expense under the state contracts of Molina Medicaid Solutions in Maine or Idaho;	

●  	additional administrative costs and the potential payment of additional amounts to providers and/or the state by Molina Medicaid Solutions as a result of MMIS implementation issues in Maine or Idaho;	

●  	government audits and reviews, and any enrollment freeze or monitoring program that may result therefrom;	

●  	changes with respect to the Company’s provider contracts and the loss of providers;	

●  	the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;	

●  	the interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures;	

●  	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, including the Medicaid RFA litigation and duals RFA protest matters now pending in the state of Ohio;	

●  	restrictions and covenants in the Company’s credit facility;	

●  	the relatively small number of states in which we operate health plans;	

●  	the availability of financing to fund and capitalize the Company’s acquisitions and start-up activities and to meet the Company’s liquidity needs;	

●  	a state’s failure to renew its federal Medicaid waiver;	

●  	an inadvertent unauthorized disclosure of protected health information;	

●  	changes generally affecting the managed care or Medicaid management information systems industries;	

●  	increases in government surcharges, taxes, and assessments;	

●  	changes in general economic conditions, including unemployment rates;	

●  	increasing consolidation in the Medicaid industry;	

and numerous other risk factors, including those discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission.  These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at  www.sec.gov .  Given these risks and uncertainties, we can give no assurances that the Company’s forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by the Company’s forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements.  All forward‐looking statements in this release represent the Company’s judgment as of July 26, 2012, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.
 
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MOH Reports Second Quarter 2012 Results
Page 8
July 26, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 	 	Three Months Ended
June 30,	 	 	Six Months Ended
June 30,	 	
 	 	2012	 	 	2011	 	 	2012	 	 	2011	 	
 	 	(Amounts in thousands, except
net (loss) income per share)	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	
Premium revenue	 	$	1,492,272	 	 	$	1,128,770	 	 	$	2,819,721	 	 	$	2,210,208	 	
Service revenue	 	 	41,724	 	 	 	36,888	 	 	 	83,929	 	 	 	73,562	 	
Investment income	 	 	1,108	 	 	 	1,446	 	 	 	2,825	 	 	 	3,040	 	
Rental income	 	 	1,320	 	 	 	–	 	 	 	3,529	 	 	 	–	 	
Total revenue	 	 	1,536,424	 	 	 	1,167,104	 	 	 	2,910,004	 	 	 	2,286,810	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Medical care costs	 	 	1,377,577	 	 	 	949,359	 	 	 	2,508,565	 	 	 	1,862,891	 	
Cost of service revenue	 	 	30,613	 	 	 	39,215	 	 	 	61,107	 	 	 	70,436	 	
General and administrative expenses	 	 	131,485	 	 	 	96,921	 	 	 	251,708	 	 	 	191,357	 	
Premium tax expenses	 	 	39,629	 	 	 	37,709	 	 	 	83,059	 	 	 	74,259	 	
Depreciation and amortization	 	 	16,387	 	 	 	12,490	 	 	 	31,412	 	 	 	25,157	 	
Total expenses	 	 	1,595,691	 	 	 	1,135,694	 	 	 	2,935,851	 	 	 	2,224,100	 	
Operating (loss) income	 	 	(59,267	)	 	 	31,410	 	 	 	(25,847	)	 	 	62,710	 	
Interest expense	 	 	3,808	 	 	 	3,683	 	 	 	8,106	 	 	 	7,286	 	
(Loss) income before income taxes	 	 	(63,075	)	 	 	27,727	 	 	 	(33,953	)	 	 	55,424	 	
Provision for income taxes	 	 	(25,769	)	 	 	10,287	 	 	 	(14,736	)	 	 	20,596	 	
Net (loss) income	 	$	(37,306	)	 	$	17,440	 	 	$	(19,217	)	 	$	34,828	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	(0.80	)	 	$	0.38	 	 	$	(0.42	)	 	$	0.76	 	
Diluted	 	$	(0.80	)	 	$	0.38	 	 	$	(0.42	)	 	$	0.75	 	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	46,355	 	 	 	45,897	 	 	 	46,176	 	 	 	45,743	 	
Diluted	 	 	46,355	 	 	 	46,471	 	 	 	46,176	 	 	 	46,392	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Statistics:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ratio of medical care costs paid directly to
providers to premium revenue	 	 	90.3	%	 	 	81.9	%	 	 	86.8	%	 	 	82.1	%	
Ratio of medical care costs not paid directly
to providers to premium revenue	 	 	2.0	%	 	 	2.2	%	 	 	2.2	%	 	 	2.2	%	
Medical care ratio (1)	 	 	92.3	%	 	 	84.1	%	 	 	89.0	%	 	 	84.3	%	
General and administrative expense ratio (2)	 	 	8.6	%	 	 	8.3	%	 	 	8.6	%	 	 	8.4	%	
Premium tax ratio (1)	 	 	2.7	%	 	 	3.3	%	 	 	2.9	%	 	 	3.4	%	
Effective tax rate	 	 	(40.9	%)	 	 	37.1	%	 	 	(43.4	%)	 	 	37.2	%	
____________

(1)	Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium taxes as a percentage of premium revenue.	

(2)	Computed as a percentage of total operating revenue.	
 
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MOH Reports Second Quarter 2012 Results
Page 9
July 26, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS

 	 	June 30,
2012	 	 	Dec. 31,
2011	 	
 	 	(Amounts in thousands,
except per-share data)	 	
ASSETS	 	
Current assets:	 	 	 	 	 	 	
Cash and cash equivalents	 	$	727,092	 	 	$	493,827	 	
Investments	 	 	344,910	 	 	 	336,916	 	
Receivables	 	 	161,007	 	 	 	167,898	 	
Income tax refundable	 	 	31,389	 	 	 	11,679	 	
Deferred income taxes	 	 	26,858	 	 	 	18,327	 	
Prepaid expenses and other current assets	 	 	29,780	 	 	 	19,435	 	
Total current assets	 	 	1,321,036	 	 	 	1,048,082	 	
Property, equipment, and capitalized software, net	 	 	206,489	 	 	 	190,934	 	
Deferred contract costs	 	 	71,344	 	 	 	54,582	 	
Intangible assets, net	 	 	90,402	 	 	 	101,796	 	
Goodwill and indefinite-lived intangible assets	 	 	151,088	 	 	 	153,954	 	
Auction rate securities	 	 	13,101	 	 	 	16,134	 	
Restricted investments	 	 	43,608	 	 	 	46,164	 	
Receivable for ceded life and annuity contracts	 	 	–	 	 	 	23,401	 	
Other assets	 	 	20,400	 	 	 	17,099	 	
 	 	$	1,917,468	 	 	$	1,652,146	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Medical claims and benefits payable	 	$	525,538	 	 	$	402,476	 	
Accounts payable and accrued liabilities	 	 	136,065	 	 	 	147,214	 	
Deferred revenue	 	 	176,373	 	 	 	50,947	 	
Current maturities of long-term debt	 	 	1,130	 	 	 	1,197	 	
Total current liabilities	 	 	839,106	 	 	 	601,834	 	
Long-term debt	 	 	269,338	 	 	 	216,929	 	
Deferred income taxes	 	 	40,713	 	 	 	33,127	 	
Liability for ceded life and annuity contracts	 	 	–	 	 	 	23,401	 	
Other long-term liabilities	 	 	22,301	 	 	 	21,782	 	
Total liabilities	 	 	1,171,458	 	 	 	897,073	 	
Stockholders’ equity:	 	 	 	 	 	 	 	 	
Common stock, $0.001 par value; 80,000 shares authorized;
outstanding: 46,527 shares at June 30, 2012 and 45,815 shares
at December 31, 2011	 	 	46	 	 	 	46	 	
Preferred stock, $0.001 par value; 20,000 shares authorized,
no shares issued and outstanding	 	 	–	 	 	 	–	 	
Additional paid-in capital	 	 	275,556	 	 	 	266,022	 	
Accumulated other comprehensive loss	 	 	(785	)	 	 	(1,405	)	
Retained earnings	 	 	471,193	 	 	 	490,410	 	
Total stockholders’ equity	 	 	746,010	 	 	 	755,073	 	
 	 	$	1,917,468	 	 	$	1,652,146	 	
 
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MOH Reports Second Quarter 2012 Results
Page 10
July 26, 2012

MOLINA HEALTHCARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 	 	Three Months Ended
June 30,	 	 	Six Months Ended
June 30,	 	
 	 	2012	 	 	2011	 	 	2012	 	 	2011	 	
 	 	(Amounts in thousands)	 	
Operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	$	(37,306	)	 	$	17,440	 	 	$	(19,217	)	 	$	34,828	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	19,671	 	 	 	16,508	 	 	 	38,010	 	 	 	34,602	 	
Deferred income taxes	 	 	(9,527	)	 	 	(4,458	)	 	 	(621	)	 	 	(2,839	)	
Stock-based compensation	 	 	5,146	 	 	 	4,310	 	 	 	9,812	 	 	 	8,374	 	
Gain on sale of subsidiary	 	 	–	 	 	 	–	 	 	 	(2,390	)	 	 	–	 	
Non-cash interest on convertible
senior notes	 	 	1,472	 	 	 	1,371	 	 	 	2,915	 	 	 	2,711	 	
Change in fair value of interest rate
swap agreement	 	 	1,086	 	 	 	–	 	 	 	1,086	 	 	 	–	 	
Amortization of premium/discount
on investments	 	 	1,765	 	 	 	1,795	 	 	 	3,615	 	 	 	3,439	 	
Amortization of deferred financing costs	 	 	257	 	 	 	504	 	 	 	515	 	 	 	1,007	 	
Tax deficiency from employee
stock compensation	 	 	(19	)	 	 	(225	)	 	 	(50	)	 	 	(489	)	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Receivables	 	 	61,247	 	 	 	7,611	 	 	 	6,891	 	 	 	26,999	 	
Prepaid expenses and other current assets	 	 	(5,065	)	 	 	5,289	 	 	 	(10,352	)	 	 	(2,780	)	
Medical claims and benefits payable	 	 	69,705	 	 	 	(9,769	)	 	 	123,062	 	 	 	(12,743	)	
Accounts payable and accrued liabilities	 	 	12,167	 	 	 	17,081	 	 	 	(22,982	)	 	 	(8,715	)	
Deferred revenue	 	 	80,883	 	 	 	(24,541	)	 	 	125,426	 	 	 	38,075	 	
Income taxes	 	 	(16,074	)	 	 	(2,141	)	 	 	(19,737	)	 	 	(7,571	)	
Net cash provided by operating activities	 	 	185,408	 	 	 	30,775	 	 	 	235,983	 	 	 	114,898	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Purchases of equipment	 	 	(19,796	)	 	 	(15,925	)	 	 	(33,301	)	 	 	(30,866	)	
Purchases of investments	 	 	(56,149	)	 	 	(78,663	)	 	 	(144,348	)	 	 	(183,647	)	
Sales and maturities of investments	 	 	71,005	 	 	 	60,159	 	 	 	136,772	 	 	 	121,434	 	
Proceeds from sale of subsidiary,
net of cash surrendered	 	 	–	 	 	 	–	 	 	 	9,162	 	 	 	–	 	
Net cash paid in business combinations	 	 	–	 	 	 	–	 	 	 	–	 	 	 	(3,253	)	
Increase in deferred contract costs	 	 	(10,062	)	 	 	(6,770	)	 	 	(23,055	)	 	 	(16,405	)	
Increase in restricted investments	 	 	(1,661	)	 	 	(1,023	)	 	 	(2,154	)	 	 	(8,230	)	
Change in other noncurrent assets
and liabilities	 	 	(1,926	)	 	 	3,200	 	 	 	(4,383	)	 	 	2,190	 	
Net cash used in investing activities	 	 	(18,589	)	 	 	(39,022	)	 	 	(61,307	)	 	 	(118,777	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Amount borrowed under credit facility	 	 	50,000	 	 	 	–	 	 	 	60,000	 	 	 	–	 	
Repayment of amount borrowed
under credit facility	 	 	(10,000	)	 	 	–	 	 	 	(10,000	)	 	 	–	 	
Principal payments on term loan	 	 	(272	)	 	 	–	 	 	 	(573	)	 	 	–	 	
Proceeds from employee stock plans	 	 	2,737	 	 	 	3,178	 	 	 	5,485	 	 	 	5,640	 	
Excess tax benefits from employee stock compensation	 	 	85	 	 	 	490	 	 	 	3,677	 	 	 	1,566	 	
Net cash provided by financing activities	 	 	42,550	 	 	 	3,668	 	 	 	58,589	 	 	 	7,206	 	
Net increase (decrease) in cash
and cash equivalents	 	 	209,369	 	 	 	(4,579	)	 	 	233,265	 	 	 	3,327	 	
Cash and cash equivalents at
beginning of period	 	 	517,723	 	 	 	463,792	 	 	 	493,827	 	 	 	455,886	 	
Cash and cash equivalents at end of period	 	$	727,092	 	 	$	459,213	 	 	$	727,092	 	 	$	459,213	 	
 
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MOH Reports Second Quarter 2012 Results
Page 11
July 26, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED DEPRECIATION AND AMORTIZATION DATA

Depreciation and amortization related to the Company’s Health Plans segment is all recorded in “Depreciation and Amortization” in the consolidated statements of operations.  Depreciation and amortization related to the Company’s Molina Medicaid Solutions segment is recorded within three different headings in the consolidated statements of operations as follows:

 	●	Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and Amortization;”	

 	●	Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service Revenue;” and	

 	●	Depreciation is recorded within the heading “Cost of Service Revenue.”	

The following table presents all depreciation and amortization recorded in the Company’s consolidated statements of operations, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue.

 	 	Three Months Ended June 30,	 	
 	 	2012	 	 	2011	 	
 	 	Amount	 	 	% of Total
Revenue	 	 	Amount	 	 	% of Total
Revenue	 	
 	 	(Dollar amounts in thousands)	 	
Depreciation and amortization of
capitalized software	 	$	10,851	 	 	 	0.7	%	 	$	7,225	 	 	 	0.6	%	
Amortization of intangible assets	 	 	5,536	 	 	 	0.4	 	 	 	5,265	 	 	 	0.5	 	
Depreciation and amortization reported as such in the consolidated statements of operations	 	 	16,387	 	 	 	1.1	 	 	 	12,490	 	 	 	1.1	 	
Amortization recorded as reduction
of service revenue	 	 	153	 	 	 	–	 	 	 	1,546	 	 	 	0.1	 	
Amortization of capitalized software recorded as cost of service revenue	 	 	3,131	 	 	 	0.2	 	 	 	2,472	 	 	 	0.2	 	
Total	 	$	19,671	 	 	 	1.3	%	 	$	16,508	 	 	 	1.4	%	

 	 	Six Months Ended June 30,	 	
 	 	2012	 	 	2011	 	
 	 	Amount	 	 	% of Total
Revenue	 	 	Amount	 	 	% of Total
Revenue	 	
 	 	(Dollar amounts in thousands)	 	
Depreciation, and amortization of
capitalized software	 	$	20,323	 	 	 	0.7	%	 	$	14,625	 	 	 	0.6	%	
Amortization of intangible assets	 	 	11,089	 	 	 	0.4	 	 	 	10,532	 	 	 	0.5	 	
Depreciation and amortization reported as such in the consolidated statements of operations	 	 	31,412	 	 	 	1.1	 	 	 	25,157	 	 	 	1.1	 	
Amortization recorded as reduction
of service revenue	 	 	306	 	 	 	–	 	 	 	3,732	 	 	 	0.2	 	
Amortization of capitalized software recorded as cost of service revenue	 	 	6,292	 	 	 	0.2	 	 	 	5,713	 	 	 	0.2	 	
Total	 	$	38,010	 	 	 	1.3	%	 	$	34,602	 	 	 	1.5	%	
 
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MOH Reports Second Quarter 2012 Results
Page 12
July 26, 2012
MOLINA HEALTHCARE, INC.
UNAUDITED MEMBERSHIP DATA

 	 	June 30,
2012	 	 	March 31,
2012	 	 	Dec. 31,
2011	 	 	June 30,
2011	 	
Total Ending Membership by Health Plan:	 	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	350,000	 	 	 	351,000	 	 	 	355,000	 	 	 	348,000	 	
Florida	 	 	70,000	 	 	 	69,000	 	 	 	69,000	 	 	 	66,000	 	
Michigan	 	 	220,000	 	 	 	222,000	 	 	 	222,000	 	 	 	220,000	 	
Missouri (1)	 	 	79,000	 	 	 	81,000	 	 	 	79,000	 	 	 	80,000	 	
New Mexico	 	 	89,000	 	 	 	89,000	 	 	 	88,000	 	 	 	89,000	 	
Ohio	 	 	260,000	 	 	 	249,000	 	 	 	248,000	 	 	 	245,000	 	
Texas	 	 	301,000	 	 	 	280,000	 	 	 	155,000	 	 	 	129,000	 	
Utah	 	 	86,000	 	 	 	86,000	 	 	 	84,000	 	 	 	82,000	 	
Washington	 	 	356,000	 	 	 	356,000	 	 	 	355,000	 	 	 	345,000	 	
Wisconsin	 	 	42,000	 	 	 	42,000	 	 	 	42,000	 	 	 	41,000	 	
Total	 	 	1,853,000	 	 	 	1,825,000	 	 	 	1,697,000	 	 	 	1,645,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Ending Membership by State for the
Medicare Advantage Plans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	7,000	 	 	 	6,900	 	 	 	6,900	 	 	 	6,000	 	
Florida	 	 	900	 	 	 	800	 	 	 	800	 	 	 	600	 	
Michigan	 	 	8,900	 	 	 	8,500	 	 	 	8,200	 	 	 	7,100	 	
New Mexico	 	 	900	 	 	 	900	 	 	 	800	 	 	 	700	 	
Ohio	 	 	200	 	 	 	200	 	 	 	200	 	 	 	200	 	
Texas	 	 	800	 	 	 	800	 	 	 	700	 	 	 	600	 	
Utah	 	 	8,300	 	 	 	8,100	 	 	 	8,400	 	 	 	7,000	 	
Washington	 	 	5,700	 	 	 	5,200	 	 	 	5,000	 	 	 	4,000	 	
Total	 	 	32,700	 	 	 	31,400	 	 	 	31,000	 	 	 	26,200	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Ending Membership by State for the
Aged, Blind or Disabled Population:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	41,100	 	 	 	37,300	 	 	 	31,500	 	 	 	17,000	 	
Florida	 	 	10,400	 	 	 	10,500	 	 	 	10,400	 	 	 	10,300	 	
Michigan	 	 	40,000	 	 	 	38,800	 	 	 	37,500	 	 	 	31,600	 	
New Mexico	 	 	5,600	 	 	 	5,600	 	 	 	5,600	 	 	 	5,600	 	
Ohio	 	 	29,600	 	 	 	29,700	 	 	 	29,100	 	 	 	28,700	 	
Texas	 	 	111,000	 	 	 	109,000	 	 	 	63,700	 	 	 	52,000	 	
Utah	 	 	8,800	 	 	 	8,700	 	 	 	8,500	 	 	 	8,300	 	
Washington	 	 	4,400	 	 	 	4,700	 	 	 	4,800	 	 	 	4,400	 	
Wisconsin	 	 	1,700	 	 	 	1,700	 	 	 	1,700	 	 	 	1,700	 	
Total	 	 	252,600	 	 	 	246,000	 	 	 	192,800	 	 	 	159,600	 	
____________

(1)  	The Company’s contract with the state of Missouri expired without renewal on June 30, 2012.	
 
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MOH Reports Second Quarter 2012 Results
Page 13
July 26, 2012
 
MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)

 	 	Three Months Ended June 30, 2012	 	 	
 	 	Member
Months(1)	 	 	Premium Revenue	 	 	Medical Care Costs	 	 	Medical
Care Ratio	 	 	Premium Tax
Expense	 	 	
 	 	 	 	 	Total	 	 	PMPM	 	 	Total	 	 	PMPM	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	1,056	 	 	$	167,644	 	 	$	158.77	 	 	$	149,239	 	 	$	141.34	 	 	 	89.0	%	 	$	2,695	 	 	 	 	 	
Florida	 	 	210	 	 	 	57,303	 	 	 	273.00	 	 	 	48,442	 	 	 	230.79	 	 	 	84.5	 	 	 	(20	)	 	 	 	 	
Michigan	 	 	662	 	 	 	162,758	 	 	 	245.89	 	 	 	141,682	 	 	 	214.04	 	 	 	87.1	 	 	 	1,073	 	 	 	 	 	
Missouri (2)	 	 	240	 	 	 	57,205	 	 	 	237.97	 	 	 	59,981	 	 	 	249.52	 	 	 	104.9	 	 	 	–	 	 	 	 	 	
New Mexico	 	 	266	 	 	 	85,360	 	 	 	320.92	 	 	 	67,836	 	 	 	255.03	 	 	 	79.5	 	 	 	2,257	 	 	 	 	 	
Ohio	 	 	762	 	 	 	297,069	 	 	 	389.85	 	 	 	245,284	 	 	 	321.89	 	 	 	82.6	 	 	 	23,012	 	 	 	 	 	
Texas	 	 	907	 	 	 	359,486	 	 	 	396.63	 	 	 	393,237	 	 	 	433.87	 	 	 	109.4	 	 	 	6,669	 	 	 	 	 	
Utah	 	 	259	 	 	 	76,911	 	 	 	297.00	 	 	 	63,419	 	 	 	244.90	 	 	 	82.5	 	 	 	–	 	 	 	 	 	
Washington	 	 	1,068	 	 	 	207,376	 	 	 	194.14	 	 	 	174,045	 	 	 	162.93	 	 	 	83.9	 	 	 	3,799	 	 	 	 	 	
Wisconsin	 	 	125	 	 	 	18,788	 	 	 	150.12	 	 	 	22,758	 	 	 	181.84	 	 	 	121.1	 	 	 	–	 	 	 	 	 	
Other (3)	 	 	–	 	 	 	2,372	 	 	 	–	 	 	 	11,654	 	 	 	–	 	 	 	–	 	 	 	144	 	 	 	 	 	
 	 	 	5,555	 	 	$	1,492,272	 	 	$	268.65	 	 	$	1,377,577	 	 	$	248.00	 	 	 	92.3	%	 	$	39,629	 	 	 	 	 	

 	 	Three Months Ended June 30, 2011	 	 	
 	 	Member
Months(1)	 	 	Premium Revenue	 	 	Medical Care Costs	 	 	Medical
Care Ratio	 	 	Premium Tax
Expense	 	 	
 	 	 	 	 	Total	 	 	PMPM	 	 	Total	 	 	PMPM	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	1,043	 	 	$	139,097	 	 	$	133.35	 	 	$	117,511	 	 	$	112.66	 	 	 	84.5	%	 	$	1,921	 	 	 	 	 	
Florida	 	 	197	 	 	 	49,770	 	 	 	252.78	 	 	 	48,294	 	 	 	245.29	 	 	 	97.0	 	 	 	34	 	 	 	 	 	
Michigan	 	 	668	 	 	 	165,575	 	 	 	247.74	 	 	 	130,325	 	 	 	195.00	 	 	 	78.7	 	 	 	9,728	 	 	 	 	 	
Missouri (2)	 	 	243	 	 	 	56,625	 	 	 	232.80	 	 	 	51,100	 	 	 	210.08	 	 	 	90.2	 	 	 	–	 	 	 	 	 	
New Mexico	 	 	270	 	 	 	81,973	 	 	 	304.29	 	 	 	68,579	 	 	 	254.57	 	 	 	83.7	 	 	 	2,423	 	 	 	 	 	
Ohio	 	 	736	 	 	 	230,874	 	 	 	313.36	 	 	 	179,102	 	 	 	243.09	 	 	 	77.6	 	 	 	17,782	 	 	 	 	 	
Texas	 	 	391	 	 	 	104,399	 	 	 	267.06	 	 	 	99,154	 	 	 	253.64	 	 	 	95.0	 	 	 	2,063	 	 	 	 	 	
Utah	 	 	244	 	 	 	77,507	 	 	 	318.32	 	 	 	58,473	 	 	 	240.15	 	 	 	75.4	 	 	 	–	 	 	 	 	 	
Washington	 	 	1,027	 	 	 	202,595	 	 	 	197.39	 	 	 	171,742	 	 	 	167.33	 	 	 	84.8	 	 	 	3,662	 	 	 	 	 	
Wisconsin	 	 	121	 	 	 	17,840	 	 	 	147.02	 	 	 	14,415	 	 	 	118.79	 	 	 	80.8	 	 	 	44	 	 	 	 	 	
Other (3)	 	 	–	 	 	 	2,515	 	 	 	–	 	 	 	10,664	 	 	 	–	 	 	 	–	 	 	 	52	 	 	 	 	 	
 	 	 	4,940	 	 	$	1,128,770	 	 	$	228.50	 	 	$	949,359	 	 	$	192.18	 	 	 	84.1	%	 	$	37,709	 	 	 	 	 	
____________

(1)  	A member month is defined as the aggregate of each month’s ending membership for the period presented.	

(2)  	The Company’s contract with the state of Missouri expired without renewal on June 30, 2012.	

(3)  	“Other” medical care costs also include medically related administrative costs at the parent company.	
 
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MOH Reports Second Quarter 2012 Results
Page 14
July 26, 2012

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN
(Amounts in thousands except per member per month amounts)

 	 	Six Months Ended June 30, 2012	 	 	
 	 	Member
Months(1)	 	 	Premium Revenue	 	 	Medical Care Costs	 	 	Medical
Care Ratio	 	 	Premium Tax
Expense	 	 	
 	 	 	 	 	Total	 	 	PMPM	 	 	Total	 	 	PMPM	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	2,115	 	 	$	329,329	 	 	$	155.70	 	 	$	290,588	 	 	$	137.39	 	 	 	88.2	%	 	$	5,004	 	 	 	 	 	
Florida	 	 	418	 	 	 	113,493	 	 	 	271.44	 	 	 	98,011	 	 	 	234.41	 	 	 	86.4	 	 	 	(13	)	 	 	 	 	
Michigan	 	 	1,327	 	 	 	330,664	 	 	 	249.20	 	 	 	275,893	 	 	 	207.92	 	 	 	83.4	 	 	 	10,157	 	 	 	 	 	
Missouri (2)	 	 	483	 	 	 	113,818	 	 	 	235.63	 	 	 	113,101	 	 	 	234.15	 	 	 	99.4	 	 	 	–	 	 	 	 	 	
New Mexico	 	 	532	 	 	 	168,621	 	 	 	317.10	 	 	 	134,947	 	 	 	253.78	 	 	 	80.0	 	 	 	4,210	 	 	 	 	 	
Ohio	 	 	1,508	 	 	 	590,594	 	 	 	391.77	 	 	 	481,985	 	 	 	319.72	 	 	 	81.6	 	 	 	45,865	 	 	 	 	 	
Texas	 	 	1,499	 	 	 	557,722	 	 	 	372.11	 	 	 	573,326	 	 	 	382.53	 	 	 	102.8	 	 	 	9,866	 	 	 	 	 	
Utah	 	 	511	 	 	 	152,049	 	 	 	297.29	 	 	 	121,300	 	 	 	237.17	 	 	 	79.8	 	 	 	–	 	 	 	 	 	
Washington	 	 	2,135	 	 	 	422,986	 	 	 	198.11	 	 	 	355,470	 	 	 	166.49	 	 	 	84.0	 	 	 	7,711	 	 	 	 	 	
Wisconsin	 	 	250	 	 	 	35,930	 	 	 	143.54	 	 	 	39,644	 	 	 	158.31	 	 	 	110.3	 	 	 	–	 	 	 	 	 	
Other (3)	 	 	–	 	 	 	4,515	 	 	 	–	 	 	 	24,300	 	 	 	–	 	 	 	–	 	 	 	259	 	 	 	 	 	
 	 	 	10,778	 	 	$	2,819,721	 	 	$	261.61	 	 	$	2,508,565	 	 	$	232.75	 	 	 	89.0	%	 	$	83,059	 	 	 	 	 	

 	 	Six Months Ended June 30, 2011	 	 	
 	 	Member
Months(1)	 	 	Premium Revenue	 	 	Medical Care Costs	 	 	Medical
Care Ratio	 	 	Premium Tax
Expense	 	 	
 	 	 	 	 	Total	 	 	PMPM	 	 	Total	 	 	PMPM	 	 	 	 	 	 	 	 	 	 	 	
California	 	 	2,084	 	 	$	274,073	 	 	$	131.49	 	 	$	231,248	 	 	$	110.95	 	 	 	84.4	%	 	$	3,823	 	 	 	 	 	
Florida	 	 	389	 	 	 	98,992	 	 	 	254.68	 	 	 	95,863	 	 	 	246.63	 	 	 	96.8	 	 	 	51	 	 	 	 	 	
Michigan	 	 	1,346	 	 	 	330,335	 	 	 	245.38	 	 	 	264,053	 	 	 	196.15	 	 	 	79.9	 	 	 	19,575	 	 	 	 	 	
Missouri (2)	 	 	488	 	 	 	111,792	 	 	 	229.05	 	 	 	102,707	 	 	 	210.44	 	 	 	91.9	 	 	 	–	 	 	 	 	 	
New Mexico	 	 	541	 	 	 	166,579	 	 	 	308.12	 	 	 	138,616	 	 	 	256.40	 	 	 	83.2	 	 	 	4,388	 	 	 	 	 	
Ohio	 	 	1,473	 	 	 	461,213	 	 	 	313.02	 	 	 	350,853	 	 	 	238.12	 	 	 	76.1	 	 	 	35,557	 	 	 	 	 	
Texas	 	 	740	 	 	 	185,210	 	 	 	250.28	 	 	 	172,769	 	 	 	233.47	 	 	 	93.3	 	 	 	3,403	 	 	 	 	 	
Utah	 	 	480	 	 	 	145,442	 	 	 	303.28	 	 	 	112,312	 	 	 	234.20	 	 	 	77.2	 	 	 	–	 	 	 	 	 	
Washington	 	 	2,061	 	 	 	397,867	 	 	 	193.09	 	 	 	340,857	 	 	 	165.42	 	 	 	85.7	 	 	 	7,323	 	 	 	 	 	
Wisconsin	 	 	241	 	 	 	34,257	 	 	 	142.17	 	 	 	33,794	 	 	 	140.25	 	 	 	98.7	 	 	 	44	 	 	 	 	 	
Other (3)	 	 	–	 	 	 	4,448	 	 	 	–	 	 	 	19,819	 	 	 	–	 	 	 	–	 	 	 	95	 	 	 	 	 	
 	 	 	9,843	 	 	$	2,210,208	 	 	$	224.56	 	 	$	1,862,891	 	 	$	189.27	 	 	 	84.3	%	 	$	74,259	 	 	 	 	 	
____________

(1)	A member month is defined as the aggregate of each month’s ending membership for the period presented.	

(2)	The Company’s contract with the state of Missouri expired without renewal on June 30, 2012.	

(3)	“Other” medical care costs also include medically related administrative costs of the parent company.	
 
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MOH Reports Second Quarter 2012 Results
Page 15
July 26, 2012

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA
(Amounts in thousands except per member per month amounts)

The following tables provide the details of the Company’s medical care costs for the periods indicated:

 	 	Three Months Ended June 30,	 	
 	 	2012	 	 	2011	 	
 	 	Amount	 	 	PMPM	 	 	% of
Total	 	 	Amount	 	 	PMPM	 	 	% of
Total	 	
Fee for service	 	$	981,002	 	 	$	176.60	 	 	 	71.2	%	 	$	695,551	 	 	$	140.80	 	 	 	73.2	%	
Capitation	 	 	138,891	 	 	 	25.00	 	 	 	10.1	 	 	 	125,958	 	 	 	25.50	 	 	 	13.2	 	
Pharmacy	 	 	212,944	 	 	 	38.33	 	 	 	15.5	 	 	 	87,870	 	 	 	17.79	 	 	 	9.4	 	
Other	 	 	44,740	 	 	 	8.07	 	 	 	3.2	 	 	 	39,980	 	 	 	8.09	 	 	 	4.2	 	
Total	 	$	1,377,577	 	 	$	248.00	 	 	 	100.0	%	 	$	949,359	 	 	$	192.18	 	 	 	100.0	%	

 	 	Six Months Ended June 30,	 	
 	 	2012	 	 	2011	 	
 	 	Amount	 	 	PMPM	 	 	% of
Total	 	 	Amount	 	 	PMPM	 	 	% of
Total	 	
Fee for service	 	$	1,758,269	 	 	$	163.13	 	 	 	70.1	%	 	$	1,351,435	 	 	$	137.31	 	 	 	72.5	%	
Capitation	 	 	274,929	 	 	 	25.51	 	 	 	11.0	 	 	 	254,640	 	 	 	25.87	 	 	 	13.7	 	
Pharmacy	 	 	386,181	 	 	 	35.83	 	 	 	15.4	 	 	 	179,446	 	 	 	18.23	 	 	 	9.6	 	
Other	 	 	89,186	 	 	 	8.28	 	 	 	3.5	 	 	 	77,370	 	 	 	7.86	 	 	 	4.2	 	
Total	 	$	2,508,565	 	 	$	232.75	 	 	 	100.0	%	 	$	1,862,891	 	 	$	189.27	 	 	 	100.0	%	

The following table provides the details of the Company’s medical claims and benefits payable as of the dates indicated:

 	 	June 30,
2012	 	 	Dec. 31,
2011	 	 	June 30,
2011	 	
 	 	(In thousands)	 	
Fee-for-service claims incurred but not paid (IBNP)	 	$	378,782	 	 	$	301,020	 	 	$	270,558	 	
Capitation payable	 	 	79,739	 	 	 	53,532	 	 	 	43,131	 	
Pharmacy	 	 	34,848	 	 	 	26,178	 	 	 	15,094	 	
Other	 	 	32,169	 	 	 	21,746	 	 	 	12,830	 	
 	 	$	525,538	 	 	$	402,476	 	 	$	341,613	 	
 
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MOH Reports Second Quarter 2012 Results
Page 16
July 26, 2012

MOLINA HEALTHCARE, INC.
UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE

The Company’s claims liability includes an allowance for adverse claims development based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims.  The Company’s reserving methodology is consistently applied across all periods presented.  The amounts displayed for “ Components of medical care costs related to: Prior periods ” represent the amount by which the Company’s original estimate of claims and benefits payable at the beginning of the period were (more) or less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported.  The following table shows the components of the change in medical claims and benefits payable as of the periods indicated:

 	 	Six Months Ended June 30,	 	 	Three Months Ended June 30,	 	 	 	 	
 	 	2012	 	 	2011	 	 	2012	 	 	2011	 	 	Year Ended
Dec. 31, 2011	 	
 	 	(Dollars in thousands, except per-member amounts)	 	
Balances at beginning of period	 	$	402,476	 	 	$	354,356	 	 	$	455,833	 	 	$	351,382	 	 	$	354,356	 	
Components of medical care costs related to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current period	 	 	2,544,922	 	 	 	1,908,289	 	 	 	1,377,084	 	 	 	969,100	 	 	 	3,911,803	 	
Prior periods	 	 	(36,357	)	 	 	(45,398	)	 	 	493	 	 	 	(19,741	)	 	 	(51,809	)	
Total medical care costs	 	 	2,508,565	 	 	 	1,862,891	 	 	 	1,377,577	 	 	 	949,359	 	 	 	3,859,994	 	
Payments for medical care costs related to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current period	 	 	2,033,611	 	 	 	1,584,636	 	 	 	891,573	 	 	 	666,081	 	 	 	3,516,994	 	
Prior periods	 	 	351,892	 	 	 	290,998	 	 	 	416,299	 	 	 	293,047	 	 	 	294,880	 	
Total paid	 	 	2,385,503	 	 	 	1,875,634	 	 	 	1,307,872	 	 	 	959,128	 	 	 	3,811,874	 	
Balances at end of period	 	$	525,538	 	 	$	341,613	 	 	$	525,538	 	 	$	341,613	 	 	$	402,476	 	
Benefit from prior period as a percentage of:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	 	9.0	%	 	 	12.8	%	 	 	(0.1	%)	 	 	5.6	%	 	 	14.6	%	
Premium revenue	 	 	1.3	%	 	 	2.1	%	 	 	0.0	%	 	 	1.7	%	 	 	1.1	%	
Total medical care costs	 	 	1.4	%	 	 	2.4	%	 	 	0.0	%	 	 	2.1	%	 	 	1.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Claims Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Days in claims payable, fee for service	 	 	44	 	 	 	39	 	 	 	44	 	 	 	39	 	 	 	40	 	
Number of members at end of period	 	 	1,853,000	 	 	 	1,645,000	 	 	 	1,853,000	 	 	 	1,645,000	 	 	 	1,697,000	 	
Number of claims in inventory
at end of period	 	 	209,200	 	 	 	121,900	 	 	 	209,200	 	 	 	121,900	 	 	 	111,100	 	
Billed charges of claims in inventory
at end of period	 	$	324,500	 	 	$	205,800	 	 	$	324,500	 	 	$	205,800	 	 	$	207,600	 	
Claims in inventory per member
at end of period	 	 	0.11	 	 	 	0.07	 	 	 	0.11	 	 	 	0.07	 	 	 	0.07	 	
Billed charges of claims in inventory
per member at end of period	 	$	175.12	 	 	$	125.11	 	 	$	175.12	 	 	$	125.11	 	 	$	122.33	 	
Number of claims received
during the period	 	 	10,375,700	 	 	 	8,715,200	 	 	 	5,520,100	 	 	 	4,373,000	 	 	 	17,207,500	 	
Billed charges of claims received during the period	 	$	9,388,700	 	 	$	6,963,300	 	 	$	5,051,800	 	 	$	3,576,700	 	 	$	14,306,500	 	

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