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x
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ANNUAL 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
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value
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New York Stock Exchange
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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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¨
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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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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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Expanding existing markets.
Our Health Plans segment enrollment has grown approximately
36%
since December 31, 2013, primarily a result of:
|
◦
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Our 2014 growth initiatives associated with the Affordable Care Act (ACA). Since the inception of these programs in January 2014 through the end of fiscal 2014, we have added approximately
385,000
Medicaid expansion members,
18,000
integrated Medicare-Medicaid Plan (MMP) members, and
15,000
Marketplace members;
|
◦
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The inception and growth of operations at our newer health plans in South Carolina and Illinois, adding over 200,000 members in the aggregate in fiscal 2014; and
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◦
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Acquisition of two Medicaid contracts in Florida, which added approximately
73,000
new members in fiscal 2014.
|
•
|
Entering new strategic markets.
In 2014, we were awarded a managed care contract in the Commonwealth of Puerto Rico that is expected to enroll its first members April 1, 2015.
Total enrollment is expected to be approximately 350,000 new members, with anticipated annualized revenue of $750 million.
|
•
|
Funding future growth.
Debt financing transactions generated net cash of
approximately $
123 million
; such transactions both extended the maturity date and lowered the rate of our convertible senior notes previously due in 2014.
|
•
|
Medicaid Expansion.
In the states that have elected to participate, the ACA provides for the expansion of the Medicaid program to offer eligibility to nearly all low-income people under age 65 with incomes at or below 138% of the federal poverty line. Medicaid expansion membership phased in beginning January 1, 2014. Since that date, our health plans in California, Illinois, Michigan, New Mexico, Ohio, and Washington have begun participating in Medicaid expansion. At
December 31, 2014
,
our membership included approximately
385,000
Medicaid expansion members, or
15%
of total membership.
|
•
|
Health Insurance Marketplace
.
The ACA authorized the creation of Marketplace insurance exchanges, allowing individuals and small groups to purchase health insurance that is federally subsidized, effective January 1, 2014. We participate in the Marketplace in all of the states in which we operate, except Illinois and South Carolina. At
December 31, 2014
,
we had approximately
15,000
Marketplace members
.
|
•
|
Medicare-Medicaid Plans
.
Policymakers at the federal and state levels are increasingly focused on the design and implementation of programs that improve the coordination of care for those who qualify to receive both Medicare and Medicaid services (the "dual eligible"), and to deliver services to the dual eligible in a more financially efficient manner. As a result of these efforts, 15 states have undertaken demonstration programs to integrate Medicare and Medicaid services for dual-eligible individuals. The health plans participating in such demonstrations are referred to as Medicare-Medicaid Plans (MMPs). Our MMPs in California, Illinois, and Ohio offered coverage beginning in 2014, and we expect to begin offering MMP coverage in South Carolina and Texas in the first quarter of 2015, and in Michigan in the second quarter of 2015.
|
•
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Direct Delivery.
Growth and aging of the U.S. population foreshadows an increasing shortage of physicians over the next 15 years. Health care reform is expected to worsen this shortage. We believe the shortage will be felt most acutely among already under-served populations, such as the financially vulnerable families and individuals we serve. While we have no plans to become an organization that fully integrates primary care delivery with our health plans, by leveraging our direct delivery capability on a selective basis we can improve access for our plan members in areas that are most under-served by primary care providers. We operate primary care clinics in the states of California, Florida, New Mexico, Utah, Virginia and Washington. In addition, we perform certain medical and administrative management services for a hospital in Long Beach, California, including the assumption of financial benefit and risk for a number of acute care beds at the hospital. We believe that this arrangement improves hospital access for our members in the Long Beach, California area, and enhances our overall direct delivery strategy. We may incur losses while we seek to modify various business operations and patient behaviors under the management services agreement.
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•
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Multi-Product Managed Care Organizations - National and regional managed care organizations that have Medicaid members in addition to numerous commercial health plan and Medicare members.
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•
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Medicaid HMOs - National and regional managed care organizations that focus principally on providing health care services to Medicaid beneficiaries, many of which operate in only one city or state.
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•
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Prepaid Health Plans - Health plans that provide less comprehensive services on an at-risk basis or that provide benefit packages on a non-risk basis.
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•
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Primary Care Case Management Programs - Programs established by the states through contracts with primary care providers to provide primary care services to Medicaid beneficiaries, as well as to provide limited oversight of other services.
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•
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Disease Management Programs.
We develop specialized disease management programs that address the particular health care needs of our members. "
motherhood matters!
sm"
is a comprehensive program designed to improve pregnancy outcomes and enhance member satisfaction. "
breathe with ease!"
is a multi-disciplinary disease management program that provides health education resources and case management services to assist physicians caring for asthmatic members between the ages of three and 15. "
Healthy Living with Diabetes"
is a diabetes disease management program. "
Heart Healthy Living"
is a cardiovascular disease management program for members who have suffered from congestive heart failure, angina, heart attack, or high blood pressure.
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•
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Educational Programs.
Educational programs are an important aspect of our approach to health care delivery. These programs are designed to increase awareness of various diseases, conditions, and methods of prevention in a manner that supports our providers while meeting the unique needs of our members. For example, we provide our members with information to guide them through various episodes of care. This information, which is available in several languages, is designed to educate members on the use of primary care physicians, emergency rooms, and nurse call centers.
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•
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Pharmacy Management Programs.
Our pharmacy management programs focus on physician education regarding appropriate medication utilization and encouraging the use of generic medications. Our pharmacists and medical directors work with our pharmacy benefits manager to maintain a formulary that promotes both improved patient care and generic drug use. We employ full-time pharmacists and pharmacy technicians who work with physicians to educate them on the uses of specific drugs, the implementation of best practices, and the importance of cost-effective care.
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•
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Provider Self Services - Providers have the ability to access information regarding their members and claims. Key functionalities include "Check Member Eligibility," "View Claim," and "View/Submit Authorizations."
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•
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Member Self Services
- Members can access information regarding their personal data, and can perform the following key functionalities: "View Benefits," "Request New ID Card," "Print Temporary ID Card," and "Request Change of Address/PCP."
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•
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File Exchange Services - Various trading partners, such as service partners, providers, vendors, management companies, and individual IPAs, are able to exchange data files (such as those that may be required by federal health care privacy regulations, or any other proprietary format) with us using the file exchange functionality.
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•
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We must measure provider access and availability in terms of the time needed to reach the doctor’s office using public transportation;
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•
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Our quality improvement programs must emphasize member education and outreach and include measures designed to promote utilization of preventive services;
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•
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We must have linkages with schools, city or county health departments, and other community-based providers of health care, to demonstrate our ability to coordinate all of the sources from which our members may receive care;
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•
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We must be able to meet the needs of the disabled and others with special needs;
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•
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Our providers and member service representatives must be able to communicate with members who do not speak English or who are deaf; and
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•
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Our member handbook, newsletters, and other communications must be written at the prescribed reading level, and must be available in languages other than English.
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•
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Our provider network is adequate;
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•
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Our quality and utilization management processes comply with state requirements;
|
•
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We have adequate procedures in place for responding to member and provider complaints and grievances;
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•
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We can meet requirements for the timely processing of provider claims;
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•
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We can collect and analyze the information needed to manage our quality improvement activities;
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•
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We have the financial resources necessary to pay our anticipated medical care expenses and the infrastructure needed to account for our costs;
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•
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We have the systems required to process enrollment information, to report on care and services provided, and to process claims for payment in a timely fashion; and
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•
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We have the financial resources needed to protect the state, our providers, and our members against the insolvency of one of our health plans.
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•
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Establish the capability to receive and transmit electronically certain administrative health care transactions, like claims payments, in a standardized format;
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•
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Afford privacy to patient health information; and
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•
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Protect the privacy of patient health information through physical and electronic security measures.
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•
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Risks associated with the health care federal excise tax
.
One notable provision of the ACA is an excise tax or annual fee that applies to most health plans, including commercial health plans and Medicaid managed care plans like Molina Healthcare. While characterized as a "fee" in the text of the ACA, the intent of Congress was to impose a broad-based health insurance industry excise tax, with the understanding that the tax could be passed on to consumers, most likely through higher commercial insurance premiums.
However, because Medicaid is a government funded program, Medicaid health plans have no alternative but to look to their respective state partners for payment to offset the impact of this tax. Additionally, when states reimburse us for the amount of the HIF, that reimbursement is itself subject to income tax, the HIF, and applicable state premium taxes. Because the HIF is not deductible for income tax purposes, our net income is reduced by the full amount of the assessment.
The state of California has not formally committed to reimburse us for either the HIF itself, or the related tax effects. The states of Michigan and Utah have reimbursed us for the HIF, but have not formally committed to reimbursement for the related tax effect. The total amount of HIF revenue for which agreements were not secured (and revenue was not recognized) amounted to approximately $20 million for fiscal 2014. We expect to collect and recognize this revenue related to 2014 in 2015. We further expect to recognize revenue in 2015 sufficient to reimburse us for the full amount of the HIF we will pay (along with related tax effects) in September of 2015.
We expect our 2015 HIF assessment related to our Medicaid business to be approximately $143 million, with an expected tax effect from the reimbursement of the assessment of approximately $88 million. Therefore, the total reimbursement needed as a result of the Medicaid-related HIF is approximately $231
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•
|
Risks associated with the duals expansion
. Nine million low-income elderly and disabled people are covered under both the Medicare and Medicaid programs. These beneficiaries are more likely than other Medicare beneficiaries to be frail, live with multiple chronic conditions, and have functional and cognitive impairments. Medicare is their primary source of health insurance coverage, as it is for the nearly 50 million elderly and under-65 disabled beneficiaries in 2012. Medicaid supplements Medicare by paying for services not covered by Medicare, such as dental care and long-term care services and support, and by helping to cover Medicare’s premiums and cost-sharing requirements. Together, these two programs help to shield very low-income Medicare beneficiaries from potentially unaffordable out-of-pocket medical and long-term care costs.
Policymakers at the federal and state levels are increasingly focused on the design and implementation of programs that improve the coordination of care for those who qualify to receive both Medicare and Medicaid services (the "dual eligible"), and to deliver services to the dual eligible in a more financially efficient manner. As a result of these efforts, 15 states have undertaken demonstration programs to integrate Medicare and Medicaid services for dual-eligible individuals. The health plans participating in such demonstrations are referred to as Medicare-Medicaid Plans (MMPs). Our MMPs in California, Illinois, and Ohio offered coverage beginning in 2014, and we expect to begin offering MMP coverage in South Carolina and Texas in the first quarter of 2015, and in Michigan in the second quarter of 2015.
|
•
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Risks associated with Medicaid expansion
.
In the states that have elected to participate, the ACA provides for the expansion of the Medicaid program to offer eligibility to nearly all low-income people under age 65 with incomes at or below 138% of the federal poverty line. Medicaid expansion membership phased in beginning January 1, 2014. Since that date, our health plans in California, Illinois, Michigan, New Mexico, Ohio, and Washington have begun participating in Medicaid expansion. At
December 31, 2014
,
our membership included approximately
385,000
Medicaid expansion members, or
15%
of total membership.
The new enrollees in our health plans represent a population that is different from the population of Medicaid enrollees we have historically managed. All of the risk factors described above with regard to the duals demonstration programs apply equally to Medicaid expansion.
|
•
|
Risks associated with health insurance marketplaces
.
The ACA authorized the creation of Marketplace insurance exchanges, allowing individuals and small groups to purchase health insurance that is federally subsidized, effective January 1, 2014. We participate in the Marketplace in all of the states in which we operate, except Illinois and South Carolina. At
December 31, 2014
,
we had approximately
15,000
Marketplace members
, and that enrollment is expected to grow appreciably in 2015, particularly at our Florida health plan.
All of the risk factors described above with regard to the duals demonstration programs apply equally to our participation in the insurance marketplaces.
|
•
|
Risks associated with the King v. Burwell case.
There is a case currently pending before the United States Supreme Court to be argued on March 4, 2015, challenging whether the IRS may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the ACA. In the event the Supreme Court rules against Health and Human Services Secretary Burwell, no federal subsidies would be allowed to be paid to those individuals purchasing health insurance through the federally facilitated exchanges, of which there are currently 36. This would undermine the functioning of those exchanges, and cause major disruption under the entire ACA throughout the nation.
|
•
|
Risk associated with implementing regulations
. There are many parts of the ACA that require further guidance in the form of regulations. Due to the breadth and complexity of the ACA, the lack of implementing regulations and interpretive guidance, and the phased nature of the ACA’s implementation, the overall impact of the ACA on our business and on the health industry in general over the coming years is difficult to predict and not yet fully known, and implementing regulations could contain provisions that have a material adverse effect on our business, financial condition, cash flows, or results of operations.
|
•
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additional employees who are not familiar with our operations or our corporate culture,
|
•
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new provider networks which may operate on terms different from our existing networks,
|
•
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additional members who may decide to transfer to other health care providers or health plans,
|
•
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disparate information, claims processing, and record-keeping systems,
|
•
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internal controls and accounting policies, including those which require the exercise of judgment and complex estimation processes, such as estimates of claims incurred but not reported, accounting for goodwill, intangible assets, stock-based compensation, and income tax matters, and
|
•
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new regulatory schemes, relationships, practices, and compliance requirements.
|
•
|
a staggered board of directors, so that it would take three successive annual meetings to replace all directors,
|
•
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prohibition of stockholder action by written consent, and
|
•
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advance notice requirements for the submission by stockholders of nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a meeting.
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Date Range
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High
|
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Low
|
||||
2014
|
|
|
|
||||
First Quarter
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$
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39.21
|
|
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$
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32.41
|
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Second Quarter
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$
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46.17
|
|
|
$
|
32.86
|
|
Third Quarter
|
$
|
48.03
|
|
|
$
|
39.23
|
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Fourth Quarter
|
$
|
54.57
|
|
|
$
|
40.79
|
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2013
|
|
|
|
||||
First Quarter
|
$
|
33.85
|
|
|
$
|
25.70
|
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Second Quarter
|
$
|
38.74
|
|
|
$
|
30.26
|
|
Third Quarter
|
$
|
40.90
|
|
|
$
|
33.31
|
|
Fourth Quarter
|
$
|
37.39
|
|
|
$
|
31.10
|
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Total Number
of Shares
Purchased (1)
|
|
Average Price
Paid per Share (1)
|
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Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
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Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)
|
||||||
October 1 — October 31
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1,052
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$
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41.66
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—
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$
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47,338,505
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November 1 — November 30
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1,781
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|
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$
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48.64
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|
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—
|
|
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$
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47,338,505
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December 1 — December 31
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1,523
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|
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$
|
49.96
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|
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—
|
|
|
$
|
47,338,505
|
|
|
4,356
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|
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$
|
47.42
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—
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(1)
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During the quarter we withheld 4,356 shares of common stock under our 2002 Equity Incentive Plan and 2011 Equity Incentive Plan to settle our employees' income tax obligations.
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(2)
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Effective as of September 30, 2013, our board of directors authorized the repurchase of up to $50 million in aggregate of our common stock. This repurchase program expired December 31, 2014.
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December 31,
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Name
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2009
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2010
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2011
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2012
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2013
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2014
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||||||||||||
Molina Healthcare, Inc.
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$
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100.00
|
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$
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121.78
|
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$
|
146.46
|
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$
|
177.48
|
|
$
|
227.92
|
|
$
|
351.09
|
|
S&P 500
|
100.00
|
|
115.06
|
|
117.49
|
|
136.30
|
|
180.44
|
|
205.14
|
|
||||||
Old Peer Group
|
100.00
|
|
112.08
|
|
135.26
|
|
142.21
|
|
177.30
|
|
236.56
|
|
||||||
New Peer Group
|
100.00
|
|
111.51
|
|
124.46
|
|
147.53
|
|
178.64
|
|
225.58
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010 (1)
|
||||||||||
Statements of Income Data:
|
|
|
|
|
|
|
|
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|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Premium revenue
|
$
|
9,022,511
|
|
|
$
|
6,179,170
|
|
|
$
|
5,544,121
|
|
|
$
|
4,211,493
|
|
|
$
|
3,632,142
|
|
Service revenue (1)
|
210,051
|
|
|
204,535
|
|
|
187,710
|
|
|
160,447
|
|
|
89,809
|
|
|||||
Premium tax revenue
|
294,388
|
|
|
172,017
|
|
|
158,991
|
|
|
154,589
|
|
|
139,775
|
|
|||||
Health insurer fee revenue
|
119,484
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Investment income
|
8,093
|
|
|
6,890
|
|
|
5,075
|
|
|
5,446
|
|
|
6,198
|
|
|||||
Other revenue
|
12,074
|
|
|
26,322
|
|
|
18,312
|
|
|
8,288
|
|
|
7,140
|
|
|||||
Total revenue
|
9,666,601
|
|
|
6,588,934
|
|
|
5,914,209
|
|
|
4,540,263
|
|
|
3,875,064
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
8,076,331
|
|
|
5,380,124
|
|
|
4,991,188
|
|
|
3,664,161
|
|
|
3,190,566
|
|
|||||
Cost of service revenue (1)
|
156,764
|
|
|
161,494
|
|
|
141,208
|
|
|
143,987
|
|
|
78,647
|
|
|||||
General and administrative expenses
|
764,693
|
|
|
665,996
|
|
|
518,615
|
|
|
393,452
|
|
|
326,193
|
|
|||||
Premium tax expenses
|
294,388
|
|
|
172,017
|
|
|
158,991
|
|
|
154,589
|
|
|
139,775
|
|
|||||
Health insurer fee expenses
|
88,591
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Depreciation and amortization
|
92,917
|
|
|
72,743
|
|
|
63,114
|
|
|
48,253
|
|
|
43,246
|
|
|||||
Total operating expenses
|
9,473,684
|
|
|
6,452,374
|
|
|
5,873,116
|
|
|
4,404,442
|
|
|
3,778,427
|
|
|||||
Operating income
|
192,917
|
|
|
136,560
|
|
|
41,093
|
|
|
135,821
|
|
|
96,637
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
56,811
|
|
|
52,071
|
|
|
16,769
|
|
|
15,519
|
|
|
15,509
|
|
|||||
Other expense, net
|
802
|
|
|
3,343
|
|
|
945
|
|
|
—
|
|
|
—
|
|
|||||
Total other expenses, net
|
57,613
|
|
|
55,414
|
|
|
17,714
|
|
|
15,519
|
|
|
15,509
|
|
|||||
Income from continuing operations before income taxes
|
135,304
|
|
|
81,146
|
|
|
23,379
|
|
|
120,302
|
|
|
81,128
|
|
|||||
Income tax expense
|
72,726
|
|
|
36,316
|
|
|
10,513
|
|
|
42,914
|
|
|
30,511
|
|
|||||
Income from continuing operations
|
62,578
|
|
|
44,830
|
|
|
12,866
|
|
|
77,388
|
|
|
50,617
|
|
|||||
(Loss) income from discontinued operations, net of tax (benefit) expense (2)
|
(355
|
)
|
|
8,099
|
|
|
(3,076
|
)
|
|
(56,570
|
)
|
|
4,353
|
|
|||||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
1.34
|
|
|
$
|
0.98
|
|
|
$
|
0.28
|
|
|
$
|
1.69
|
|
|
$
|
1.23
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.18
|
|
|
(0.07
|
)
|
|
(1.24
|
)
|
|
0.11
|
|
|||||
Basic net income per share
|
$
|
1.33
|
|
|
$
|
1.16
|
|
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
1.34
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
1.30
|
|
|
$
|
0.96
|
|
|
$
|
0.27
|
|
|
$
|
1.67
|
|
|
$
|
1.22
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.17
|
|
|
(0.06
|
)
|
|
(1.22
|
)
|
|
0.10
|
|
|||||
Diluted net income per share
|
$
|
1.29
|
|
|
$
|
1.13
|
|
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
46,935,000
|
|
|
45,717,000
|
|
|
46,380,000
|
|
|
45,756,000
|
|
|
41,174,000
|
|
|||||
Diluted
|
48,340,000
|
|
|
46,862,000
|
|
|
46,999,000
|
|
|
46,425,000
|
|
|
41,631,000
|
|
|||||
Operating Statistics, Continuing Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care ratio (3)
|
89.5
|
%
|
|
87.1
|
%
|
|
90.0
|
%
|
|
87.0
|
%
|
|
87.8
|
%
|
|||||
General and administrative expense ratio (4)
|
7.9
|
%
|
|
10.1
|
%
|
|
8.8
|
%
|
|
8.7
|
%
|
|
8.4
|
%
|
|||||
Premium tax ratio (5)
|
3.2
|
%
|
|
2.7
|
%
|
|
2.8
|
%
|
|
3.5
|
%
|
|
3.7
|
%
|
|||||
Members (6)
|
2,623,000
|
|
|
1,931,000
|
|
|
1,797,000
|
|
|
1,618,000
|
|
|
1,532,000
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,539,063
|
|
|
$
|
935,895
|
|
|
$
|
795,770
|
|
|
$
|
493,827
|
|
|
$
|
455,886
|
|
Total assets
|
4,477,215
|
|
|
3,002,937
|
|
|
1,934,822
|
|
|
1,652,146
|
|
|
1,509,214
|
|
|||||
Long-term debt, including current maturities (7)
|
905,389
|
|
|
784,862
|
|
|
262,939
|
|
|
218,126
|
|
|
164,014
|
|
|||||
Total liabilities
|
3,466,773
|
|
|
2,110,000
|
|
|
1,152,508
|
|
|
897,073
|
|
|
790,157
|
|
|||||
Stockholders’ equity
|
1,010,442
|
|
|
892,937
|
|
|
782,314
|
|
|
755,073
|
|
|
719,057
|
|
(1)
|
Service revenue and cost of service revenue represent revenue and costs generated by our Molina Medicaid Solutions segment. Because we acquired this business on May 1, 2010, results for the year ended December 31, 2010 include eight months of results for this segment.
|
(2)
|
As previously reported, in February 2012 the Division of Purchasing of the Missouri Office of Administration notified our Missouri health plan that it was not awarded a contract under the Missouri HealthNet Managed Care Request for Proposal; therefore, the Missouri health plan’s existing contract with the state expired without renewal on June 30, 2012. In connection with this notification, the Missouri health plan recorded a non-cash impairment charge of $64.6 million in the fourth quarter of 2011. Results relating to the Missouri health plan have been reported as discontinued operations for all periods presented. (Loss) income from discontinued operations is presented net of income tax (benefit) expense of $(203), $(9,912), $(1,238), $922, and $4,011, respectively.
|
(3)
|
Medical care ratio represents medical care costs as a percentage of premium revenue. The medical care ratio is a key operating indicator used to measure our performance in delivering efficient and cost effective health care services. Changes in the medical care ratio from period to period result from changes in Medicaid funding by the states, utilization of medical services, our ability to effectively manage costs, contract changes, and changes in accounting estimates related to incurred but not paid claims. See Item 7 in this Form 10-K, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," for further discussion.
|
(4)
|
General and administrative expense ratio represents such expenses as a percentage of total revenue.
|
(5)
|
Premium tax ratio represents such expenses as a percentage of premium revenue plus premium tax revenue.
|
(6)
|
Number of members at end of period.
|
(7)
|
Includes convertible senior notes, lease financing obligations, and other long-term debt.
|
•
|
Net income from continuing operations increased to
$62.6 million
in
2014
, from
$44.8 million
in
2013
due to increases in enrollment and revenue, and improved administrative cost efficiency; which offset higher medical costs and higher tax rates.
|
•
|
Strong enrollment growth across all of our programs combined with an 18% increase in premium revenue per member, generated almost
$3 billion
, or
46%
, more premium revenue in 2014 compared with 2013.
|
•
|
General and administrative expenses as a percentage of revenue declined to
7.9%
in 2014, versus
10.1%
in
2013
.
|
•
|
Medical care costs as a percentage of premium revenue increased to
89.5%
in 2014, from
87.1%
in 2013.
|
•
|
Debt financing transactions generated net cash of
$122.6 million
; such transactions both extended the maturity date and lowered the rate of our convertible senior notes previously due in 2014.
|
•
|
Medicaid Expansion.
In the states that have elected to participate, the ACA provides for the expansion of the Medicaid program to offer eligibility to nearly all low-income people under age 65 with incomes at or below 138% of the federal poverty line. Medicaid expansion membership phased in beginning January 1, 2014. Since that date, our health plans in California, Illinois, Michigan, New Mexico, Ohio, and Washington have begun participating in Medicaid expansion. At
December 31, 2014
our membership included approximately
385,000
Medicaid expansion members, or
15%
of total membership.
|
•
|
Marketplace
.
The ACA authorized the creation of Marketplace insurance exchanges, allowing individuals and small groups to purchase health insurance that is federally subsidized, effective January 1, 2014. We participate in the Marketplace in all of the states in which we operate, except Illinois and South Carolina. At
December 31, 2014
,
we had approximately
15,000
Marketplace members
, and that enrollment is expected to grow appreciably in 2015, particularly at our Florida health plan.
|
•
|
Medicare-Medicaid Plans
.
Policymakers at the federal and state levels are increasingly focused on the design and implementation of programs that improve the coordination of care for those who qualify to receive both Medicare and Medicaid services (the "dual eligible"), and to deliver services to the dual eligible in a more financially efficient manner. As a result of these efforts, 15 states have undertaken demonstration programs to integrate Medicare and Medicaid services for dual-eligible individuals. The health plans participating in such demonstrations are referred to as Medicare-Medicaid Plans (MMPs). Our MMPs in California, Illinois, and Ohio offered coverage beginning in 2014, and we expect to begin offering MMP coverage in South Carolina and Texas in the first quarter of 2015, and in Michigan in the second quarter of 2015.
|
|
Ending
|
|
PMPM Premiums
|
|||||||||||
|
Membership
|
|
Low
|
|
High
|
|
Consolidated
|
|||||||
Temporary Assistance for Needy Families (TANF), CHIP (1)
|
1,831,000
|
|
|
$
|
130.00
|
|
|
$
|
280.00
|
|
|
$
|
180.00
|
|
Medicaid Expansion
|
385,000
|
|
|
340.00
|
|
|
520.00
|
|
|
420.00
|
|
|||
Aged, Blind or Disabled (ABD)
|
325,000
|
|
|
320.00
|
|
|
1,580.00
|
|
|
900.00
|
|
|||
Medicare Special Needs Plans (Medicare)
|
49,000
|
|
|
970.00
|
|
|
1,480.00
|
|
|
1,180.00
|
|
|||
Medicare-Medicaid Plan (MMP) – Integrated (2)
|
18,000
|
|
|
1,510.00
|
|
|
3,240.00
|
|
|
1,970.00
|
|
|||
Marketplace
|
15,000
|
|
|
190.00
|
|
|
560.00
|
|
|
320.00
|
|
(1)
|
CHIP stands for Children's Health Insurance Program.
|
(2)
|
MMP members who receive both Medicaid and Medicare coverage from Molina Healthcare.
|
|
As of December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Ending Membership by Health Plan:
|
|
|
|
|
|
|||
California
|
531,000
|
|
|
368,000
|
|
|
336,000
|
|
Florida
|
164,000
|
|
|
89,000
|
|
|
73,000
|
|
Illinois
|
100,000
|
|
|
4,000
|
|
|
—
|
|
Michigan
|
242,000
|
|
|
213,000
|
|
|
220,000
|
|
New Mexico
|
212,000
|
|
|
168,000
|
|
|
91,000
|
|
Ohio
|
347,000
|
|
|
255,000
|
|
|
244,000
|
|
South Carolina (1)
|
118,000
|
|
|
—
|
|
|
—
|
|
Texas
|
245,000
|
|
|
252,000
|
|
|
282,000
|
|
Utah
|
83,000
|
|
|
86,000
|
|
|
87,000
|
|
Washington
|
497,000
|
|
|
403,000
|
|
|
418,000
|
|
Wisconsin
|
84,000
|
|
|
93,000
|
|
|
46,000
|
|
|
2,623,000
|
|
|
1,931,000
|
|
|
1,797,000
|
|
Ending Membership by Program:
|
|
|
|
|
|
|||
TANF/CHIP
|
1,831,000
|
|
|
1,624,000
|
|
|
1,517,000
|
|
Medicaid Expansion (2)
|
385,000
|
|
|
—
|
|
|
—
|
|
ABD
|
325,000
|
|
|
268,000
|
|
|
244,000
|
|
Medicare
|
49,000
|
|
|
39,000
|
|
|
36,000
|
|
MMP - Integrated
|
18,000
|
|
|
—
|
|
|
—
|
|
Marketplace (2)
|
15,000
|
|
|
—
|
|
|
—
|
|
|
2,623,000
|
|
|
1,931,000
|
|
|
1,797,000
|
|
(1)
|
Our South Carolina health plan began serving members under the state of South Carolina’s new full-risk Medicaid managed care program effective January 1, 2014.
|
(2)
|
Medicaid expansion membership phased in, and the Marketplace became available for consumers to access coverage, beginning January 1, 2014.
|
•
|
Fee-for-service expenses:
Nearly all hospital services and the majority of our primary care and physician specialist services and LTSS costs are paid on a fee-for-service basis. Under fee-for-service arrangements, we retain the financial responsibility for medical care provided and incur costs based on actual utilization of services. Such expenses are
|
•
|
Pharmacy expenses:
All drug, injectibles, and immunization costs paid through our pharmacy benefit manager are classified as pharmacy expenses. As noted above, drugs and injectibles not paid through our pharmacy benefit manager are included in fee-for-service costs, except in those limited instances where we capitate drug and injectible costs.
|
•
|
Capitation expenses:
Many of our primary care physicians and a small portion of our specialists and hospitals are paid on a capitated basis. Under capitation arrangements, we pay a fixed amount PMPM to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. Under capitated arrangements, we remain liable for the provision of certain health care services. Capitation payments are fixed in advance of the periods covered and are not subject to significant accounting estimates. These payments are expensed in the period the providers are obligated to provide services. The financial risk for pharmacy services for a small portion of our membership is delegated to capitated providers.
|
•
|
Direct delivery expenses:
All costs associated with our direct delivery of medical care are separately identified.
|
•
|
Other medical expenses:
All medically related administrative costs, certain provider incentive costs, reinsurance costs and other health care expenses are classified as other medical expenses. Medically related administrative costs include, for example, expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses. Salary and benefit costs are a substantial portion of these expenses. For the years ended
December 31, 2014
,
2013
, and
2012
, medically related administrative costs were
$262.6 million
,
$153.0 million
,
and
$125.2 million
,
respectively.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(Dollar amounts in thousands, except per-share data)
|
||||||||||
Net income per diluted share
|
$
|
1.30
|
|
|
$
|
0.96
|
|
|
$
|
0.27
|
|
Adjusted net income per diluted share
|
$
|
3.43
|
|
|
$
|
3.13
|
|
|
$
|
1.72
|
|
Premium revenue
|
$
|
9,022,511
|
|
|
$
|
6,179,170
|
|
|
$
|
5,544,121
|
|
Service revenue
|
$
|
210,051
|
|
|
$
|
204,535
|
|
|
$
|
187,710
|
|
Operating income
|
$
|
192,917
|
|
|
$
|
136,560
|
|
|
$
|
41,093
|
|
Net income
|
$
|
62,578
|
|
|
$
|
44,830
|
|
|
$
|
12,866
|
|
|
|
|
|
|
|
||||||
Total ending membership
|
2,623,000
|
|
|
1,931,000
|
|
|
1,797,000
|
|
|||
|
|
|
|
|
|
||||||
Premium revenue
|
93.3
|
%
|
|
93.8
|
%
|
|
93.7
|
%
|
|||
Service revenue
|
2.2
|
|
|
3.1
|
|
|
3.2
|
|
|||
Premium tax revenue
|
3.1
|
|
|
2.6
|
|
|
2.7
|
|
|||
Health insurer fee revenue
|
1.2
|
|
|
—
|
|
|
—
|
|
|||
Investment income
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||
Other revenue
|
0.1
|
|
|
0.4
|
|
|
0.3
|
|
|||
Total revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|||
|
|
|
|
|
|
||||||
Medical care ratio
|
89.5
|
%
|
|
87.1
|
%
|
|
90.0
|
%
|
|||
General and administrative expense ratio
|
7.9
|
%
|
|
10.1
|
%
|
|
8.8
|
%
|
|||
Premium tax ratio
|
3.2
|
%
|
|
2.7
|
%
|
|
2.8
|
%
|
|||
Operating income
|
2.0
|
%
|
|
2.1
|
%
|
|
0.7
|
%
|
|||
Net income
|
0.6
|
%
|
|
0.7
|
%
|
|
0.2
|
%
|
|||
Effective tax rate
|
53.8
|
%
|
|
44.8
|
%
|
|
45.0
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation, and amortization of intangible assets and capitalized software
|
113,715
|
|
|
93,866
|
|
|
78,764
|
|
|||
Interest expense
|
56,811
|
|
|
52,071
|
|
|
16,769
|
|
|||
Income tax expense
|
72,523
|
|
|
26,404
|
|
|
9,275
|
|
|||
EBITDA
|
$
|
305,272
|
|
|
$
|
225,270
|
|
|
$
|
114,598
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||||||||||||||
|
(In thousands, except diluted per-share amounts)
|
||||||||||||||||||||||
Net income, continuing operations
|
$
|
62,578
|
|
|
$
|
1.30
|
|
|
$
|
44,830
|
|
|
$
|
0.96
|
|
|
$
|
12,866
|
|
|
$
|
0.27
|
|
Adjustments, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation, and amortization of capitalized software
|
58,770
|
|
|
1.21
|
|
|
46,018
|
|
|
0.98
|
|
|
35,267
|
|
|
0.75
|
|
||||||
Amortization of convertible senior notes and lease financing obligations
|
17,249
|
|
|
0.36
|
|
|
14,377
|
|
|
0.31
|
|
|
3,714
|
|
|
0.08
|
|
||||||
Share-based compensation
|
14,288
|
|
|
0.29
|
|
|
24,501
|
|
|
0.52
|
|
|
14,556
|
|
|
0.31
|
|
||||||
Amortization of intangible assets
|
12,870
|
|
|
0.27
|
|
|
13,117
|
|
|
0.28
|
|
|
13,592
|
|
|
0.29
|
|
||||||
Change in fair value of derivatives
|
(10
|
)
|
|
—
|
|
|
3,580
|
|
|
0.08
|
|
|
817
|
|
|
0.02
|
|
||||||
Adjusted net income per diluted share, continuing operations
|
$
|
165,745
|
|
|
$
|
3.43
|
|
|
$
|
146,423
|
|
|
$
|
3.13
|
|
|
$
|
80,812
|
|
|
$
|
1.72
|
|
•
|
Much of our revenue growth has come from participation in Medicaid programs covering LTSS. Percentage profit margins for LTSS benefits are generally lower than percentage profit margins for acute medical benefits.
|
•
|
Increases to our base premiums in recent years have not kept pace with medical cost trends.
|
•
|
Lack of coordination in the design of profit caps and medical cost floors in some of our state Medicaid contracts is resulting in counterproductive outcomes. In some instances, givebacks due to profitable performance in one product cannot be offset against losses in other products.
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
||||||||||
Fee for service
|
$
|
5,672,483
|
|
|
$
|
202.87
|
|
|
70.2
|
%
|
|
$
|
3,611,529
|
|
|
$
|
160.43
|
|
|
67.1
|
%
|
Pharmacy
|
1,273,329
|
|
|
45.54
|
|
|
15.8
|
|
|
935,204
|
|
|
41.54
|
|
|
17.4
|
|
||||
Capitation
|
748,388
|
|
|
26.77
|
|
|
9.3
|
|
|
603,938
|
|
|
26.83
|
|
|
11.2
|
|
||||
Direct delivery
|
96,196
|
|
|
3.44
|
|
|
1.2
|
|
|
48,288
|
|
|
2.14
|
|
|
0.9
|
|
||||
Other
|
285,935
|
|
|
10.22
|
|
|
3.5
|
|
|
181,165
|
|
|
8.05
|
|
|
3.4
|
|
||||
|
$
|
8,076,331
|
|
|
$
|
288.84
|
|
|
100.0
|
%
|
|
$
|
5,380,124
|
|
|
$
|
238.99
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||||||
|
Member
Months (1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR (2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
5,630
|
|
|
$
|
1,523,084
|
|
|
$
|
270.51
|
|
|
$
|
1,268,937
|
|
|
$
|
225.37
|
|
|
83.3
|
%
|
|
$
|
254,147
|
|
Florida
|
1,104
|
|
|
439,107
|
|
|
397.79
|
|
|
419,422
|
|
|
379.95
|
|
|
95.5
|
|
|
19,685
|
|
|||||
Illinois
|
307
|
|
|
153,271
|
|
|
498.48
|
|
|
140,480
|
|
|
456.88
|
|
|
91.7
|
|
|
12,791
|
|
|||||
Michigan
|
2,802
|
|
|
780,896
|
|
|
278.68
|
|
|
660,790
|
|
|
235.81
|
|
|
84.6
|
|
|
120,106
|
|
|||||
New Mexico
|
2,471
|
|
|
1,075,330
|
|
|
435.17
|
|
|
995,626
|
|
|
402.92
|
|
|
92.6
|
|
|
79,704
|
|
|||||
Ohio
|
3,650
|
|
|
1,552,949
|
|
|
425.47
|
|
|
1,335,436
|
|
|
365.87
|
|
|
86.0
|
|
|
217,513
|
|
|||||
South Carolina
|
1,463
|
|
|
381,317
|
|
|
260.72
|
|
|
323,061
|
|
|
220.89
|
|
|
84.7
|
|
|
58,256
|
|
|||||
Texas
|
2,980
|
|
|
1,318,192
|
|
|
442.32
|
|
|
1,197,465
|
|
|
401.81
|
|
|
90.8
|
|
|
120,727
|
|
|||||
Utah
|
996
|
|
|
309,411
|
|
|
310.64
|
|
|
285,303
|
|
|
286.43
|
|
|
92.2
|
|
|
24,108
|
|
|||||
Washington
|
5,522
|
|
|
1,304,605
|
|
|
236.27
|
|
|
1,218,886
|
|
|
220.75
|
|
|
93.4
|
|
|
85,719
|
|
|||||
Wisconsin
|
1,036
|
|
|
156,229
|
|
|
150.87
|
|
|
135,557
|
|
|
130.91
|
|
|
86.8
|
|
|
20,672
|
|
|||||
Other
(3)
|
—
|
|
|
28,120
|
|
|
—
|
|
|
95,368
|
|
|
—
|
|
|
—
|
|
|
(67,248
|
)
|
|||||
|
27,961
|
|
|
$
|
9,022,511
|
|
|
$
|
322.68
|
|
|
$
|
8,076,331
|
|
|
$
|
288.84
|
|
|
89.5
|
%
|
|
$
|
946,180
|
|
|
Year Ended December 31, 2013
|
||||||||||||||||||||||||
|
Member
Months (1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR (2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,233
|
|
|
$
|
749,755
|
|
|
$
|
177.10
|
|
|
$
|
666,592
|
|
|
$
|
157.46
|
|
|
88.9
|
%
|
|
$
|
83,163
|
|
Florida
|
973
|
|
|
264,998
|
|
|
272.23
|
|
|
231,261
|
|
|
237.57
|
|
|
87.3
|
|
|
33,737
|
|
|||||
Illinois
|
7
|
|
|
8,121
|
|
|
1,201.34
|
|
|
7,869
|
|
|
1,164.10
|
|
|
96.9
|
|
|
252
|
|
|||||
Michigan
|
2,581
|
|
|
676,000
|
|
|
261.91
|
|
|
570,644
|
|
|
221.09
|
|
|
84.4
|
|
|
105,356
|
|
|||||
New Mexico
|
1,492
|
|
|
446,758
|
|
|
299.36
|
|
|
384,466
|
|
|
257.62
|
|
|
86.1
|
|
|
62,292
|
|
|||||
Ohio
|
3,007
|
|
|
1,098,795
|
|
|
365.44
|
|
|
924,675
|
|
|
307.53
|
|
|
84.2
|
|
|
174,120
|
|
|||||
South Carolina
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Texas
|
3,178
|
|
|
1,291,001
|
|
|
406.27
|
|
|
1,114,852
|
|
|
350.84
|
|
|
86.4
|
|
|
176,149
|
|
|||||
Utah
|
1,040
|
|
|
310,895
|
|
|
299.05
|
|
|
259,397
|
|
|
249.51
|
|
|
83.4
|
|
|
51,498
|
|
|||||
Washington
|
4,941
|
|
|
1,168,405
|
|
|
236.47
|
|
|
1,028,210
|
|
|
208.10
|
|
|
88.0
|
|
|
140,195
|
|
|||||
Wisconsin
|
1,060
|
|
|
143,465
|
|
|
135.40
|
|
|
114,340
|
|
|
107.91
|
|
|
79.7
|
|
|
29,125
|
|
|||||
Other
(3)
|
—
|
|
|
20,977
|
|
|
—
|
|
|
77,818
|
|
|
—
|
|
|
—
|
|
|
(56,841
|
)
|
|||||
|
22,512
|
|
|
$
|
6,179,170
|
|
|
$
|
274.48
|
|
|
$
|
5,380,124
|
|
|
$
|
238.99
|
|
|
87.1
|
%
|
|
$
|
799,046
|
|
(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.
|
(3)
|
"Other" medical care costs include primarily medically related administrative costs of the parent company, and direct delivery costs.
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(In thousands)
|
||||||
Service revenue before amortization
|
$
|
212,965
|
|
|
$
|
207,449
|
|
Amortization recorded as reduction of service revenue
|
(2,914
|
)
|
|
(2,914
|
)
|
||
Service revenue
|
210,051
|
|
|
204,535
|
|
||
Cost of service revenue
|
156,764
|
|
|
161,494
|
|
||
General and administrative costs
|
7,105
|
|
|
5,285
|
|
||
Amortization of customer relationship intangibles
|
3,355
|
|
|
5,127
|
|
||
Operating income
|
$
|
42,827
|
|
|
$
|
32,629
|
|
|
Year Ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
|
Amount
|
|
% of Total
Revenue
|
|
Amount
|
|
% of Total
Revenue
|
||||||
|
(Dollar amounts in thousands)
|
||||||||||||
Depreciation, and amortization of capitalized software, continuing operations
|
$
|
75,402
|
|
|
0.8
|
%
|
|
$
|
54,837
|
|
|
0.8
|
%
|
Amortization of intangible assets, continuing operations
|
17,515
|
|
|
0.2
|
|
|
17,906
|
|
|
0.3
|
|
||
Depreciation and amortization, continuing operations
|
92,917
|
|
|
1.0
|
|
|
72,743
|
|
|
1.1
|
|
||
Depreciation and amortization, discontinued operations
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||
Amortization recorded as reduction of service revenue
|
2,914
|
|
|
—
|
|
|
2,914
|
|
|
—
|
|
||
Amortization of capitalized software recorded as cost of service revenue
|
38,573
|
|
|
0.4
|
|
|
18,207
|
|
|
0.3
|
|
||
Depreciation and amortization reported in statement of cash flows
|
$
|
134,404
|
|
|
1.4
|
%
|
|
$
|
93,866
|
|
|
1.4
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of
Total |
|
Amount
|
|
PMPM
|
|
% of
Total
|
||||||||||
Fee for service
|
$
|
3,611,529
|
|
|
$
|
160.43
|
|
|
67.1
|
%
|
|
$
|
3,423,751
|
|
|
$
|
161.67
|
|
|
68.6
|
%
|
Pharmacy
|
935,204
|
|
|
41.54
|
|
|
17.4
|
|
|
835,830
|
|
|
39.47
|
|
|
16.7
|
|
||||
Capitation
|
603,938
|
|
|
26.83
|
|
|
11.2
|
|
|
552,136
|
|
|
26.07
|
|
|
11.1
|
|
||||
Direct delivery
|
48,288
|
|
|
2.14
|
|
|
0.9
|
|
|
33,920
|
|
|
1.60
|
|
|
0.7
|
|
||||
Other
|
181,165
|
|
|
8.05
|
|
|
3.4
|
|
|
145,551
|
|
|
6.87
|
|
|
2.9
|
|
||||
|
$
|
5,380,124
|
|
|
$
|
238.99
|
|
|
100.0
|
%
|
|
$
|
4,991,188
|
|
|
$
|
235.68
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2013
|
||||||||||||||||||||||||
|
Member
Months (2)
|
|
Premium Revenue (1)
|
|
Medical Care Costs (1)
|
|
MCR (3)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,233
|
|
|
$
|
749,755
|
|
|
$
|
177.10
|
|
|
$
|
666,592
|
|
|
$
|
157.46
|
|
|
88.9
|
%
|
|
$
|
83,163
|
|
Florida
|
973
|
|
|
264,998
|
|
|
272.23
|
|
|
231,261
|
|
|
237.57
|
|
|
87.3
|
|
|
33,737
|
|
|||||
Illinois
|
7
|
|
|
8,121
|
|
|
1,201.34
|
|
|
7,869
|
|
|
1,164.10
|
|
|
96.9
|
|
|
252
|
|
|||||
Michigan
|
2,581
|
|
|
676,000
|
|
|
261.91
|
|
|
570,644
|
|
|
221.09
|
|
|
84.4
|
|
|
105,356
|
|
|||||
New Mexico
|
1,492
|
|
|
446,758
|
|
|
299.36
|
|
|
384,466
|
|
|
257.62
|
|
|
86.1
|
|
|
62,292
|
|
|||||
Ohio
|
3,007
|
|
|
1,098,795
|
|
|
365.44
|
|
|
924,675
|
|
|
307.53
|
|
|
84.2
|
|
|
174,120
|
|
|||||
Texas
|
3,178
|
|
|
1,291,001
|
|
|
406.27
|
|
|
1,114,852
|
|
|
350.84
|
|
|
86.4
|
|
|
176,149
|
|
|||||
Utah
|
1,040
|
|
|
310,895
|
|
|
299.05
|
|
|
259,397
|
|
|
249.51
|
|
|
83.4
|
|
|
51,498
|
|
|||||
Washington
|
4,941
|
|
|
1,168,405
|
|
|
236.47
|
|
|
1,028,210
|
|
|
208.10
|
|
|
88.0
|
|
|
140,195
|
|
|||||
Wisconsin
|
1,060
|
|
|
143,465
|
|
|
135.40
|
|
|
114,340
|
|
|
107.91
|
|
|
79.7
|
|
|
29,125
|
|
|||||
Other
(4)
|
—
|
|
|
20,977
|
|
|
—
|
|
|
77,818
|
|
|
—
|
|
|
—
|
|
|
(56,841
|
)
|
|||||
|
22,512
|
|
|
$
|
6,179,170
|
|
|
$
|
274.48
|
|
|
$
|
5,380,124
|
|
|
$
|
238.99
|
|
|
87.1
|
%
|
|
$
|
799,046
|
|
|
Year Ended December 31, 2012
|
||||||||||||||||||||||||
|
Member
Months (2)
|
|
Premium Revenue (1)
|
|
Medical Care Costs (1)
|
|
MCR (3)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,177
|
|
|
$
|
665,600
|
|
|
$
|
159.36
|
|
|
$
|
606,494
|
|
|
$
|
145.20
|
|
|
91.1
|
%
|
|
$
|
59,106
|
|
Florida
|
850
|
|
|
228,832
|
|
|
269.36
|
|
|
195,226
|
|
|
229.80
|
|
|
85.3
|
|
|
33,606
|
|
|||||
Illinois
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Michigan
|
2,639
|
|
|
646,551
|
|
|
244.97
|
|
|
570,636
|
|
|
216.20
|
|
|
88.3
|
|
|
75,915
|
|
|||||
New Mexico
|
1,069
|
|
|
321,853
|
|
|
301.08
|
|
|
280,108
|
|
|
262.03
|
|
|
87.0
|
|
|
41,745
|
|
|||||
Ohio
|
3,065
|
|
|
1,095,137
|
|
|
357.36
|
|
|
970,504
|
|
|
316.69
|
|
|
88.6
|
|
|
124,633
|
|
|||||
Texas
|
3,245
|
|
|
1,233,621
|
|
|
380.18
|
|
|
1,155,433
|
|
|
356.08
|
|
|
93.7
|
|
|
78,188
|
|
|||||
Utah
|
1,026
|
|
|
298,392
|
|
|
290.78
|
|
|
245,671
|
|
|
239.41
|
|
|
82.3
|
|
|
52,721
|
|
|||||
Washington
|
4,600
|
|
|
974,712
|
|
|
211.91
|
|
|
845,733
|
|
|
183.87
|
|
|
86.8
|
|
|
128,979
|
|
|||||
Wisconsin
|
508
|
|
|
70,678
|
|
|
139.25
|
|
|
67,968
|
|
|
133.91
|
|
|
96.2
|
|
|
2,710
|
|
|||||
Other
(4)
|
—
|
|
|
8,745
|
|
|
—
|
|
|
53,415
|
|
|
—
|
|
|
—
|
|
|
(44,670
|
)
|
|||||
|
21,179
|
|
|
$
|
5,544,121
|
|
|
$
|
261.79
|
|
|
$
|
4,991,188
|
|
|
$
|
235.68
|
|
|
90.0
|
%
|
|
$
|
552,933
|
|
(1)
|
Premium revenue for our former Missouri health plan was
$0.2 million
and
$114.4 million
for the years ended
December 31, 2013
and
2012
, respectively. Medical care costs for the plan were
$1.5 million
and
$105.6 million
for the years ended
December 31, 2013
and
2012
, respectively. These amounts are excluded from the tables above because the results of this health plan are classified as discontinued operations.
|
(2)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
(3)
|
"MCR" represents medical costs as a percentage of premium revenue.
|
(4)
|
"Other" medical care costs include primarily medically related administrative costs of the parent company, and direct delivery costs.
|
|
Year Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(In thousands)
|
||||||
Service revenue before amortization
|
$
|
207,449
|
|
|
$
|
189,281
|
|
Amortization recorded as reduction of service revenue
|
(2,914
|
)
|
|
(1,571
|
)
|
||
Service revenue
|
204,535
|
|
|
187,710
|
|
||
Cost of service revenue
|
161,494
|
|
|
141,208
|
|
||
General and administrative costs
|
5,285
|
|
|
17,648
|
|
||
Amortization of customer relationship intangibles
|
5,127
|
|
|
5,127
|
|
||
Operating income
|
$
|
32,629
|
|
|
$
|
23,727
|
|
|
Year Ended December 31,
|
||||||||||||
|
2013
|
|
2012
|
||||||||||
|
Amount
|
|
% of Total
Revenue
|
|
Amount
|
|
% of Total
Revenue
|
||||||
|
(Dollar amounts in thousands)
|
||||||||||||
Depreciation, and amortization of capitalized software, continuing operations
|
$
|
54,837
|
|
|
0.8
|
%
|
|
$
|
42,938
|
|
|
0.7
|
%
|
Amortization of intangible assets, continuing operations
|
17,906
|
|
|
0.3
|
|
|
20,176
|
|
|
0.3
|
|
||
Depreciation and amortization, continuing operations
|
72,743
|
|
|
1.1
|
|
|
63,114
|
|
|
1.0
|
|
||
Depreciation and amortization, discontinued operations
|
2
|
|
|
—
|
|
|
590
|
|
|
—
|
|
||
Amortization recorded as reduction of service revenue
|
2,914
|
|
|
—
|
|
|
1,571
|
|
|
—
|
|
||
Amortization of capitalized software recorded as cost of service revenue
|
18,207
|
|
|
0.3
|
|
|
13,489
|
|
|
0.2
|
|
||
|
$
|
93,866
|
|
|
1.4
|
%
|
|
$
|
78,764
|
|
|
1.2
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
Change
|
||||||
|
(In thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
1,060,257
|
|
|
$
|
190,083
|
|
|
$
|
870,174
|
|
Net cash used in investing activities
|
(535,729
|
)
|
|
(543,311
|
)
|
|
7,582
|
|
|||
Net cash provided by financing activities
|
78,640
|
|
|
493,353
|
|
|
(414,713
|
)
|
|||
Net increase in cash and cash equivalents
|
$
|
603,168
|
|
|
$
|
140,125
|
|
|
$
|
463,043
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
|
(In thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
190,083
|
|
|
$
|
347,784
|
|
|
$
|
(157,701
|
)
|
Net cash used in investing activities
|
(543,311
|
)
|
|
(93,584
|
)
|
|
(449,727
|
)
|
|||
Net cash provided by financing activities
|
493,353
|
|
|
47,743
|
|
|
445,610
|
|
|||
Net increase in cash and cash equivalents
|
$
|
140,125
|
|
|
$
|
301,943
|
|
|
$
|
(161,818
|
)
|
•
|
$441.8 million
increase in amounts due to government agencies, due to a significant increase in amounts accrued for medical cost floor contract provisions primarily associated with our Medicaid expansion membership; and
|
•
|
$355.5 million
increase in medical claims and benefits payable due to significant membership growth in 2014.
|
|
HIF Reimbursement Recognized
|
|
Required HIF Reimbursement through Dec. 31, 2014
|
||||||||||||||||||||
|
Three Months Ended
|
|
Year Ended Dec. 31, 2014
|
|
|||||||||||||||||||
|
March 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
|
||||||||||||||
|
Gross (1)
|
||||||||||||||||||||||
California
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,616
|
|
Florida
|
1,416
|
|
|
1,473
|
|
|
1,487
|
|
|
1,459
|
|
|
5,835
|
|
|
5,835
|
|
||||||
Illinois
|
40
|
|
|
42
|
|
|
40
|
|
|
40
|
|
|
162
|
|
|
162
|
|
||||||
Michigan
|
—
|
|
|
—
|
|
|
8,011
|
|
|
2,663
|
|
|
10,674
|
|
|
17,471
|
|
||||||
New Mexico
|
—
|
|
|
—
|
|
|
—
|
|
|
11,322
|
|
|
11,322
|
|
|
11,322
|
|
||||||
Ohio
|
7,791
|
|
|
8,117
|
|
|
6,912
|
|
|
7,606
|
|
|
30,426
|
|
|
30,426
|
|
||||||
Texas
|
—
|
|
|
—
|
|
|
—
|
|
|
18,518
|
|
|
18,518
|
|
|
18,518
|
|
||||||
Utah
|
—
|
|
|
—
|
|
|
3,000
|
|
|
1,049
|
|
|
4,049
|
|
|
5,332
|
|
||||||
Washington
|
6,229
|
|
|
6,489
|
|
|
6,217
|
|
|
6,311
|
|
|
25,246
|
|
|
25,246
|
|
||||||
Wisconsin
|
1,080
|
|
|
1,126
|
|
|
1,372
|
|
|
1,193
|
|
|
4,771
|
|
|
4,771
|
|
||||||
Medicaid
|
16,556
|
|
|
17,247
|
|
|
27,039
|
|
|
50,161
|
|
|
111,003
|
|
|
130,699
|
|
||||||
Medicare
|
2,892
|
|
|
3,199
|
|
|
3,068
|
|
|
3,053
|
|
|
12,212
|
|
|
12,212
|
|
||||||
|
$
|
19,448
|
|
|
$
|
20,446
|
|
|
$
|
30,107
|
|
|
$
|
53,214
|
|
|
$
|
123,215
|
|
|
$
|
142,911
|
|
Recognized in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Health insurer fee revenue
|
$
|
18,696
|
|
|
$
|
19,662
|
|
|
$
|
29,427
|
|
|
$
|
51,699
|
|
|
$
|
119,484
|
|
|
|
||
Premium tax revenue
|
752
|
|
|
784
|
|
|
680
|
|
|
1,515
|
|
|
3,731
|
|
|
|
|||||||
|
$
|
19,448
|
|
|
$
|
20,446
|
|
|
$
|
30,107
|
|
|
$
|
53,214
|
|
|
$
|
123,215
|
|
|
|
(1)
|
Amounts in the table include the full economic impact of the excise tax including premium tax and the income tax effect.
|
•
|
Health Plans segment medical claims and benefits payable
(see discussion below).
|
•
|
Health Plans segment contractual provisions that may adjust or limit revenue or profit.
For a comprehensive discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Item 8 of this Form 10-K, Notes to Consolidated Financial Statements, in Note
2
, "
Significant Accounting Policies
."
|
•
|
Health Plans segment quality incentives.
For a comprehensive discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Item 8 of this Form 10-K, Notes to Consolidated Financial Statements, in Note
2
, "
Significant Accounting Policies
."
|
•
|
Molina Medicaid Solutions segment revenue and cost recognition.
For a comprehensive discussion of this topic, refer to Item 8 of this Form 10-K, Notes to Consolidated Financial Statements, in Note
2
, "
Significant Accounting Policies
."
|
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Fee-for-service claims incurred but not paid (IBNP)
|
$
|
870,429
|
|
|
$
|
424,173
|
|
|
$
|
377,614
|
|
Pharmacy payable
|
71,412
|
|
|
45,037
|
|
|
38,992
|
|
|||
Capitation payable
|
28,150
|
|
|
20,267
|
|
|
49,066
|
|
|||
Other (1)
|
230,531
|
|
|
180,310
|
|
|
28,858
|
|
|||
|
$
|
1,200,522
|
|
|
$
|
669,787
|
|
|
$
|
494,530
|
|
(1)
|
"Other" medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. As of
December 31, 2014
and
2013
, we recorded non-risk provider payables relating to such intermediary arrangements of approximately
$119.3 million
and
$151.3 million
, respectively.
|
Increase (Decrease) in Estimated Completion Factors
|
Increase (Decrease) in
Medical Claims and
Benefits Payable
|
||
(6)%
|
$
|
223,129
|
|
(4)%
|
148,753
|
|
|
(2)%
|
74,376
|
|
|
2%
|
(74,376
|
)
|
|
4%
|
(148,753
|
)
|
|
6%
|
(223,129
|
)
|
(Decrease) Increase in Trended Per member Per Month Cost Estimates
|
(Decrease) Increase in
Medical Claims and
Benefits Payable
|
||
(6)%
|
$
|
(135,631
|
)
|
(4)%
|
(90,421
|
)
|
|
(2)%
|
(45,210
|
)
|
|
2%
|
45,210
|
|
|
4%
|
90,421
|
|
|
6%
|
135,631
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(Dollars in thousands, except
per-member amounts)
|
||||||||||
Balances at beginning of period
|
$
|
669,787
|
|
|
$
|
494,530
|
|
|
$
|
402,476
|
|
Components of medical care costs related to:
|
|
|
|
|
|
||||||
Current period
|
8,122,885
|
|
|
5,434,443
|
|
|
5,136,055
|
|
|||
Prior periods
|
(45,979
|
)
|
|
(52,779
|
)
|
|
(39,295
|
)
|
|||
Total medical care costs
|
8,076,906
|
|
|
5,381,664
|
|
|
5,096,760
|
|
|||
|
|
|
|
|
|
||||||
Change in non-risk provider payables
|
(31,973
|
)
|
|
111,267
|
|
|
(7,004
|
)
|
|||
|
|
|
|
|
|
||||||
Payments for medical care costs related to:
|
|
|
|
|
|
||||||
Current period
|
7,064,427
|
|
|
4,932,195
|
|
|
4,689,395
|
|
|||
Prior periods
|
449,771
|
|
|
385,479
|
|
|
308,307
|
|
|||
Total paid
|
7,514,198
|
|
|
5,317,674
|
|
|
4,997,702
|
|
|||
Balances at end of period
|
$
|
1,200,522
|
|
|
$
|
669,787
|
|
|
$
|
494,530
|
|
|
|
|
|
|
|
||||||
Benefit from prior periods as a percentage of:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
6.9
|
%
|
|
10.7
|
%
|
|
9.8
|
%
|
|||
Premium revenue
|
0.5
|
%
|
|
0.9
|
%
|
|
0.7
|
%
|
|||
Medical care costs
|
0.6
|
%
|
|
1.0
|
%
|
|
0.8
|
%
|
|||
|
|
|
|
|
|
||||||
Claims Data:
|
|
|
|
|
|
||||||
Days in claims payable, fee for service
|
49
|
|
|
43
|
|
|
40
|
|
|||
Number of members at end of period
|
2,623,000
|
|
|
1,931,000
|
|
|
1,797,000
|
|
|||
Number of claims in inventory at end of period
|
307,700
|
|
|
145,800
|
|
|
122,700
|
|
|||
Billed charges of claims in inventory at end of period
|
$
|
718,500
|
|
|
$
|
276,500
|
|
|
$
|
255,200
|
|
Claims in inventory per member at end of period
|
0.12
|
|
|
0.08
|
|
|
0.07
|
|
|||
Billed charges of claims in inventory per member end of period
|
$
|
273.92
|
|
|
$
|
143.19
|
|
|
$
|
142.01
|
|
Number of claims received during the period
|
27,597,000
|
|
|
21,317,500
|
|
|
20,842,400
|
|
|||
Billed charges of claims received during the period
|
$
|
30,315,600
|
|
|
$
|
21,414,600
|
|
|
$
|
19,429,300
|
|
|
Total
|
|
2015
|
|
2016-2017
|
|
2018-2019
|
|
2020 and Beyond
|
||||||||||
Medical claims and benefits payable
|
$
|
1,200,522
|
|
|
$
|
1,200,522
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Principal amount of convertible senior notes (2)
|
851,551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
851,551
|
|
|||||
Amounts due government agencies
|
527,193
|
|
|
527,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Lease financing obligations
|
380,956
|
|
|
11,397
|
|
|
23,830
|
|
|
25,282
|
|
|
320,447
|
|
|||||
Interest on long-term debt
|
176,405
|
|
|
11,088
|
|
|
22,176
|
|
|
22,175
|
|
|
120,966
|
|
|||||
Operating leases
|
122,035
|
|
|
29,142
|
|
|
44,591
|
|
|
33,073
|
|
|
15,229
|
|
|||||
Lease financing obligations - related party
|
102,394
|
|
|
5,346
|
|
|
11,243
|
|
|
12,021
|
|
|
73,784
|
|
|||||
Purchase commitments
|
26,029
|
|
|
14,232
|
|
|
11,797
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
3,387,085
|
|
|
$
|
1,798,920
|
|
|
$
|
113,637
|
|
|
$
|
92,551
|
|
|
$
|
1,381,977
|
|
(1)
|
As of December 31, 2014
, we have recorded approximately $2.6 million of unrecognized tax benefits. The table does not contain this amount because we cannot reasonably estimate when or if such amount may be settled. For further information, refer to Item 8 of this Form 10-K, Notes to Consolidated Financial Statements, in Note
14
, "
Income Taxes
."
|
(2)
|
Represents the principal amounts due on our 1.125% Cash Convertible Senior Notes due 2020, and our 1.625% Convertible Senior Notes due 2044 (1.625% Notes). The 1.625% Notes have a contractual maturity date in 2044; however, on specified dates beginning in 2018 holders of the 1.625% Notes may require us to repurchase some or all of the 1.625% Notes, as described in Item 8 of this Form 10-K, Notes to Consolidated Financial Statements, in Note
12
, "
Long-Term Debt
."
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(Amounts in thousands,
except per-share data)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,539,063
|
|
|
$
|
935,895
|
|
Investments
|
1,019,462
|
|
|
703,052
|
|
||
Receivables
|
596,456
|
|
|
298,935
|
|
||
Income tax refundable
|
—
|
|
|
32,742
|
|
||
Deferred income taxes
|
39,532
|
|
|
26,556
|
|
||
Prepaid expenses and other current assets
|
50,884
|
|
|
42,484
|
|
||
Total current assets
|
3,245,397
|
|
|
2,039,664
|
|
||
Property, equipment, and capitalized software, net
|
340,778
|
|
|
292,083
|
|
||
Deferred contract costs
|
53,675
|
|
|
45,675
|
|
||
Intangible assets, net
|
89,273
|
|
|
98,871
|
|
||
Goodwill
|
271,964
|
|
|
230,738
|
|
||
Restricted investments
|
102,479
|
|
|
63,093
|
|
||
Derivative asset
|
329,323
|
|
|
186,351
|
|
||
Other assets
|
44,326
|
|
|
46,462
|
|
||
|
$
|
4,477,215
|
|
|
$
|
3,002,937
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Medical claims and benefits payable
|
$
|
1,200,522
|
|
|
$
|
669,787
|
|
Accounts payable and accrued liabilities
|
241,654
|
|
|
263,043
|
|
||
Amounts due government agencies
|
527,193
|
|
|
56,922
|
|
||
Deferred revenue
|
196,076
|
|
|
122,216
|
|
||
Income taxes payable
|
8,987
|
|
|
—
|
|
||
Current maturities of long-term debt
|
341
|
|
|
182,008
|
|
||
Total current liabilities
|
2,174,773
|
|
|
1,293,976
|
|
||
Convertible senior notes
|
704,097
|
|
|
416,368
|
|
||
Lease financing obligations
|
160,710
|
|
|
159,394
|
|
||
Lease financing obligations - related party
|
40,241
|
|
|
27,092
|
|
||
Deferred income taxes
|
24,271
|
|
|
580
|
|
||
Derivative liability
|
329,194
|
|
|
186,239
|
|
||
Other long-term liabilities
|
33,487
|
|
|
26,351
|
|
||
Total liabilities
|
3,466,773
|
|
|
2,110,000
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value; 150,000 shares authorized; outstanding: 49,727 shares at December 31, 2014 and 45,871 shares at December 31, 2013
|
50
|
|
|
46
|
|
||
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
396,059
|
|
|
340,848
|
|
||
Accumulated other comprehensive loss
|
(1,019
|
)
|
|
(1,086
|
)
|
||
Retained earnings
|
615,352
|
|
|
553,129
|
|
||
Total stockholders’ equity
|
1,010,442
|
|
|
892,937
|
|
||
|
$
|
4,477,215
|
|
|
$
|
3,002,937
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands, except per-share data)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Premium revenue
|
$
|
9,022,511
|
|
|
$
|
6,179,170
|
|
|
$
|
5,544,121
|
|
Service revenue
|
210,051
|
|
|
204,535
|
|
|
187,710
|
|
|||
Premium tax revenue
|
294,388
|
|
|
172,017
|
|
|
158,991
|
|
|||
Health insurer fee revenue
|
119,484
|
|
|
—
|
|
|
—
|
|
|||
Investment income
|
8,093
|
|
|
6,890
|
|
|
5,075
|
|
|||
Other revenue
|
12,074
|
|
|
26,322
|
|
|
18,312
|
|
|||
Total revenue
|
9,666,601
|
|
|
6,588,934
|
|
|
5,914,209
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Medical care costs
|
8,076,331
|
|
|
5,380,124
|
|
|
4,991,188
|
|
|||
Cost of service revenue
|
156,764
|
|
|
161,494
|
|
|
141,208
|
|
|||
General and administrative expenses
|
764,693
|
|
|
665,996
|
|
|
518,615
|
|
|||
Premium tax expenses
|
294,388
|
|
|
172,017
|
|
|
158,991
|
|
|||
Health insurer fee expenses
|
88,591
|
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
92,917
|
|
|
72,743
|
|
|
63,114
|
|
|||
Total operating expenses
|
9,473,684
|
|
|
6,452,374
|
|
|
5,873,116
|
|
|||
Operating income
|
192,917
|
|
|
136,560
|
|
|
41,093
|
|
|||
Other expenses, net:
|
|
|
|
|
|
||||||
Interest expense
|
56,811
|
|
|
52,071
|
|
|
16,769
|
|
|||
Other expense, net
|
802
|
|
|
3,343
|
|
|
945
|
|
|||
Total other expenses, net
|
57,613
|
|
|
55,414
|
|
|
17,714
|
|
|||
Income from continuing operations before income tax expense
|
135,304
|
|
|
81,146
|
|
|
23,379
|
|
|||
Income tax expense
|
72,726
|
|
|
36,316
|
|
|
10,513
|
|
|||
Income from continuing operations
|
62,578
|
|
|
44,830
|
|
|
12,866
|
|
|||
(Loss) income from discontinued operations, net of tax (benefit) expense of $(203), $(9,912), and $(1,238), respectively
|
(355
|
)
|
|
8,099
|
|
|
(3,076
|
)
|
|||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Basic net income per share:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.34
|
|
|
$
|
0.98
|
|
|
$
|
0.28
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.18
|
|
|
(0.07
|
)
|
|||
Basic net income per share
|
$
|
1.33
|
|
|
$
|
1.16
|
|
|
$
|
0.21
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1.30
|
|
|
$
|
0.96
|
|
|
$
|
0.27
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.17
|
|
|
(0.06
|
)
|
|||
Diluted net income per share
|
$
|
1.29
|
|
|
$
|
1.13
|
|
|
$
|
0.21
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
46,935
|
|
|
45,717
|
|
|
46,380
|
|
|||
Diluted
|
48,340
|
|
|
46,862
|
|
|
46,999
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized investment gain (loss)
|
108
|
|
|
(1,015
|
)
|
|
1,529
|
|
|||
Effect of income tax expense (benefit)
|
41
|
|
|
(386
|
)
|
|
581
|
|
|||
Other comprehensive income (loss), net of tax
|
67
|
|
|
(629
|
)
|
|
948
|
|
|||
Comprehensive income
|
$
|
62,290
|
|
|
$
|
52,300
|
|
|
$
|
10,738
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
|
|||||||||||||||
|
Outstanding
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||
Balance at January 1, 2012
|
45,815
|
|
|
$
|
46
|
|
|
$
|
266,022
|
|
|
$
|
(1,405
|
)
|
|
$
|
490,410
|
|
|
$
|
—
|
|
|
$
|
755,073
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,790
|
|
|
—
|
|
|
9,790
|
|
||||||
Other comprehensive income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
948
|
|
|
—
|
|
|
—
|
|
|
948
|
|
||||||
Purchase of treasury stock
|
(111
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|
(3,000
|
)
|
||||||
Share-based compensation
|
1,058
|
|
|
1
|
|
|
16,361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,362
|
|
||||||
Tax benefit from share-based compensation
|
—
|
|
|
—
|
|
|
3,141
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,141
|
|
||||||
Balance at December 31, 2012
|
46,762
|
|
|
47
|
|
|
285,524
|
|
|
(457
|
)
|
|
500,200
|
|
|
(3,000
|
)
|
|
782,314
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,929
|
|
|
—
|
|
|
52,929
|
|
||||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(629
|
)
|
|
—
|
|
|
—
|
|
|
(629
|
)
|
||||||
Purchase of treasury stock
|
(1,710
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,660
|
)
|
|
(52,662
|
)
|
||||||
Retirement of treasury stock
|
—
|
|
|
—
|
|
|
(55,660
|
)
|
|
—
|
|
|
—
|
|
|
55,660
|
|
|
—
|
|
||||||
Issuance of warrants
|
—
|
|
|
—
|
|
|
78,997
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78,997
|
|
||||||
Share-based compensation
|
819
|
|
|
1
|
|
|
30,385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,386
|
|
||||||
Tax benefit from share-based compensation
|
—
|
|
|
—
|
|
|
1,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,602
|
|
||||||
Balance at December 31, 2013
|
45,871
|
|
|
46
|
|
|
340,848
|
|
|
(1,086
|
)
|
|
553,129
|
|
|
—
|
|
|
892,937
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,223
|
|
|
—
|
|
|
62,223
|
|
||||||
Other comprehensive income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
||||||
Convertible senior notes transactions, including issuance costs
|
1,787
|
|
|
2
|
|
|
21,961
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,963
|
|
||||||
Share-based compensation
|
2,069
|
|
|
2
|
|
|
30,261
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,263
|
|
||||||
Tax benefit from share-based compensation
|
—
|
|
|
—
|
|
|
2,989
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,989
|
|
||||||
Balance at December 31, 2014
|
49,727
|
|
|
$
|
50
|
|
|
$
|
396,059
|
|
|
$
|
(1,019
|
)
|
|
$
|
615,352
|
|
|
$
|
—
|
|
|
$
|
1,010,442
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
134,404
|
|
|
93,866
|
|
|
78,764
|
|
|||
Deferred income taxes
|
(2,352
|
)
|
|
(31,047
|
)
|
|
(9,887
|
)
|
|||
Share-based compensation
|
21,727
|
|
|
28,694
|
|
|
20,018
|
|
|||
Amortization of convertible senior notes and lease financing obligations
|
27,379
|
|
|
22,820
|
|
|
5,942
|
|
|||
Gain on sale of subsidiary
|
—
|
|
|
—
|
|
|
(1,747
|
)
|
|||
Other, net
|
6,222
|
|
|
17,729
|
|
|
11,224
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(297,521
|
)
|
|
(149,253
|
)
|
|
18,216
|
|
|||
Prepaid expenses and other current assets
|
(19,517
|
)
|
|
(23,064
|
)
|
|
(8,958
|
)
|
|||
Medical claims and benefits payable
|
530,735
|
|
|
175,257
|
|
|
92,054
|
|
|||
Accounts payable and accrued liabilities
|
11,097
|
|
|
32,550
|
|
|
8,078
|
|
|||
Amounts due government agencies
|
470,271
|
|
|
28,446
|
|
|
15,267
|
|
|||
Deferred revenue
|
73,860
|
|
|
(19,582
|
)
|
|
90,851
|
|
|||
Income taxes
|
41,729
|
|
|
(39,262
|
)
|
|
18,172
|
|
|||
Net cash provided by operating activities
|
1,060,257
|
|
|
190,083
|
|
|
347,784
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(953,355
|
)
|
|
(770,083
|
)
|
|
(306,437
|
)
|
|||
Proceeds from sales and maturities of investments
|
632,800
|
|
|
399,595
|
|
|
298,006
|
|
|||
Purchases of equipment
|
(114,934
|
)
|
|
(98,049
|
)
|
|
(78,145
|
)
|
|||
Net cash paid in business combinations
|
(44,133
|
)
|
|
(61,521
|
)
|
|
—
|
|
|||
Increase in restricted investments
|
(33,661
|
)
|
|
(18,992
|
)
|
|
(2,647
|
)
|
|||
Proceeds from sale of subsidiary, net of cash surrendered
|
—
|
|
|
—
|
|
|
9,162
|
|
|||
Other, net
|
(22,446
|
)
|
|
5,739
|
|
|
(13,523
|
)
|
|||
Net cash used in investing activities
|
(535,729
|
)
|
|
(543,311
|
)
|
|
(93,584
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of convertible senior notes, net of financing costs paid
|
122,625
|
|
|
537,973
|
|
|
—
|
|
|||
Proceeds from sale-leaseback transactions
|
—
|
|
|
158,694
|
|
|
—
|
|
|||
Purchase of call option
|
—
|
|
|
(149,331
|
)
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
75,074
|
|
|
—
|
|
|||
Contingent consideration liabilities settled
|
(50,349
|
)
|
|
—
|
|
|
—
|
|
|||
Treasury stock purchases
|
—
|
|
|
(52,662
|
)
|
|
(3,000
|
)
|
|||
Principal payments on term loan
|
—
|
|
|
(47,471
|
)
|
|
(1,129
|
)
|
|||
Repayment of amount borrowed under credit facility
|
—
|
|
|
(40,000
|
)
|
|
(20,000
|
)
|
|||
Proceeds from employee stock plans
|
14,040
|
|
|
9,402
|
|
|
8,205
|
|
|||
Principal payments on convertible senior notes
|
(10,449
|
)
|
|
—
|
|
|
—
|
|
|||
Amount borrowed under credit facility
|
—
|
|
|
—
|
|
|
60,000
|
|
|||
Other, net
|
2,773
|
|
|
1,674
|
|
|
3,667
|
|
|||
Net cash provided by financing activities
|
78,640
|
|
|
493,353
|
|
|
47,743
|
|
|||
Net increase in cash and cash equivalents
|
603,168
|
|
|
140,125
|
|
|
301,943
|
|
|||
Cash and cash equivalents at beginning of period
|
935,895
|
|
|
795,770
|
|
|
493,827
|
|
|||
Cash and cash equivalents at end of period
|
$
|
1,539,063
|
|
|
$
|
935,895
|
|
|
$
|
795,770
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(Amounts in thousands)
|
||||||||||
|
(Unaudited)
|
||||||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Cash paid (received) during the period for:
|
|
|
|
|
|
||||||
Income taxes
|
$
|
30,413
|
|
|
$
|
95,240
|
|
|
$
|
(4,634
|
)
|
Interest
|
$
|
29,178
|
|
|
$
|
34,881
|
|
|
$
|
10,099
|
|
|
|
|
|
|
|
||||||
Schedule of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
3.75% Notes exchanged for 1.625% Notes
|
$
|
176,551
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Retirement of treasury stock
|
$
|
—
|
|
|
$
|
55,660
|
|
|
$
|
—
|
|
Increase in non-cash lease financing obligation - related party
|
$
|
13,841
|
|
|
$
|
27,211
|
|
|
$
|
—
|
|
Common stock used for stock-based compensation
|
$
|
(8,802
|
)
|
|
$
|
(7,711
|
)
|
|
$
|
(11,862
|
)
|
|
|
|
|
|
|
||||||
Details of business combinations:
|
|
|
|
|
|
||||||
Fair value of assets acquired
|
$
|
(52,057
|
)
|
|
$
|
(121,801
|
)
|
|
$
|
—
|
|
Fair value of contingent consideration liabilities incurred
|
—
|
|
|
59,948
|
|
|
—
|
|
|||
Payable to seller
|
7,924
|
|
|
—
|
|
|
—
|
|
|||
Escrow deposit
|
—
|
|
|
332
|
|
|
—
|
|
|||
Net cash paid in business combinations
|
$
|
(44,133
|
)
|
|
$
|
(61,521
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Details of change in fair value of derivatives, net:
|
|
|
|
|
|
||||||
Gain on 1.125% Call Option
|
$
|
142,972
|
|
|
$
|
37,020
|
|
|
$
|
—
|
|
Loss on 1.125% Notes Conversion Option
|
(142,955
|
)
|
|
(36,908
|
)
|
|
—
|
|
|||
Loss on 1.125% Warrants
|
—
|
|
|
(3,923
|
)
|
|
—
|
|
|||
Gain (loss) on interest rate swap
|
—
|
|
|
433
|
|
|
(1,307
|
)
|
|||
Change in fair value of derivatives, net
|
$
|
17
|
|
|
$
|
(3,378
|
)
|
|
$
|
(1,307
|
)
|
|
|
|
|
|
|
||||||
Details of sale of subsidiary:
|
|
|
|
|
|
||||||
Decrease in carrying value of assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,942
|
|
Decrease in carrying value of liabilities
|
—
|
|
|
—
|
|
|
(23,527
|
)
|
|||
Gain on sale
|
—
|
|
|
—
|
|
|
1,747
|
|
|||
Proceeds from sale of subsidiary, net of cash surrendered
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,162
|
|
•
|
Health plan contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract;
|
•
|
Health plan quality incentives that allow us to recognize incremental revenue if certain quality standards are met;
|
•
|
The determination of medical claims and benefits payable of our Health Plans segment;
|
•
|
The valuation of certain investments;
|
•
|
Settlements under risk or savings sharing programs;
|
•
|
The assessment of deferred contract costs, deferred revenue, long-lived and intangible assets, and goodwill for impairment;
|
•
|
The determination of professional and general liability claims, and reserves for potential absorption of claims unpaid by insolvent providers;
|
•
|
The determination of reserves for the outcome of litigation;
|
•
|
The determination of valuation allowances for deferred tax assets; and
|
•
|
The determination of unrecognized tax benefits.
|
•
|
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
|
•
|
Amortization of capitalized software is recorded within the heading "Cost of service revenue."
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Depreciation, and amortization of capitalized software, continuing operations
|
$
|
75,402
|
|
|
$
|
54,837
|
|
|
$
|
42,938
|
|
Amortization of intangible assets, continuing operations
|
17,515
|
|
|
17,906
|
|
|
20,176
|
|
|||
Depreciation and amortization, continuing operations
|
92,917
|
|
|
72,743
|
|
|
63,114
|
|
|||
Depreciation and amortization, discontinued operations
|
—
|
|
|
2
|
|
|
590
|
|
|||
Amortization recorded as reduction of service revenue
|
2,914
|
|
|
2,914
|
|
|
1,571
|
|
|||
Amortization of capitalized software recorded as cost of service revenue
|
38,573
|
|
|
18,207
|
|
|
13,489
|
|
|||
Depreciation and amortization reported in the statement of cash flows
|
$
|
134,404
|
|
|
$
|
93,866
|
|
|
$
|
78,764
|
|
•
|
The contract backlog intangible asset comprises all contractual cash flows anticipated to be received during the remaining contracted period for each specific contract relating to work that was performed prior to acquisition. Because each acquired contract constitutes a single revenue stream, amortization of the contract backlog intangible is recorded to contra-service revenue so that amortization is matched to any revenues associated with contract performance that occurred prior to the acquisition date. The contract backlog intangible asset is amortized on a
|
•
|
The customer relationship intangible asset comprises all contractual cash flows that are anticipated to be received during the option periods of each specific contract as well as anticipated renewals of those contracts. The customer relationship intangible is amortized on a straight-line basis for each specific contract over periods generally ranging from
four
to
nine
years.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
|
Amount
|
|
% of Total
|
|
Amount
|
|
% of Total
|
|
Amount
|
|
% of Total
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
California
|
$
|
1,523,084
|
|
|
16.9
|
%
|
|
$
|
749,755
|
|
|
12.1
|
%
|
|
$
|
665,600
|
|
|
12.0
|
%
|
Florida
|
439,107
|
|
|
4.9
|
|
|
264,998
|
|
|
4.3
|
|
|
228,832
|
|
|
4.1
|
|
|||
Illinois
|
153,271
|
|
|
1.7
|
|
|
8,121
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Michigan
|
780,896
|
|
|
8.7
|
|
|
676,000
|
|
|
11.0
|
|
|
646,551
|
|
|
11.7
|
|
|||
New Mexico
|
1,075,330
|
|
|
11.9
|
|
|
446,758
|
|
|
7.2
|
|
|
321,853
|
|
|
5.8
|
|
|||
Ohio
|
1,552,949
|
|
|
17.2
|
|
|
1,098,795
|
|
|
17.8
|
|
|
1,095,137
|
|
|
19.7
|
|
|||
South Carolina
|
381,317
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Texas
|
1,318,192
|
|
|
14.6
|
|
|
1,291,001
|
|
|
20.9
|
|
|
1,233,621
|
|
|
22.2
|
|
|||
Utah
|
309,411
|
|
|
3.4
|
|
|
310,895
|
|
|
5.0
|
|
|
298,392
|
|
|
5.4
|
|
|||
Washington
|
1,304,605
|
|
|
14.5
|
|
|
1,168,405
|
|
|
18.9
|
|
|
974,712
|
|
|
17.6
|
|
|||
Wisconsin
|
156,229
|
|
|
1.7
|
|
|
143,465
|
|
|
2.3
|
|
|
70,678
|
|
|
1.3
|
|
|||
Direct delivery
|
28,120
|
|
|
0.3
|
|
|
20,977
|
|
|
0.4
|
|
|
8,745
|
|
|
0.2
|
|
|||
|
$
|
9,022,511
|
|
|
100.0
|
%
|
|
$
|
6,179,170
|
|
|
100.0
|
%
|
|
$
|
5,544,121
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Maximum available quality incentive premium - current period
|
$
|
90,327
|
|
|
$
|
63,311
|
|
|
$
|
74,564
|
|
|
|
|
|
|
|
||||||
Amount of quality incentive premium revenue recognized in current period:
|
|
|
|
|
|
||||||
Earned current period
|
$
|
40,396
|
|
|
$
|
45,803
|
|
|
$
|
62,489
|
|
Earned prior periods
|
3,950
|
|
|
9,056
|
|
|
2,202
|
|
|||
Total
|
$
|
44,346
|
|
|
$
|
54,859
|
|
|
$
|
64,691
|
|
|
|
|
|
|
|
||||||
Total premium revenue recognized for state health plans with quality incentive premiums
|
$
|
7,083,660
|
|
|
$
|
2,980,019
|
|
|
$
|
2,721,289
|
|
•
|
Fee-for-service expenses:
Nearly all hospital services and the majority of our primary care and physician specialist services and LTSS costs are paid on a fee-for-service basis. Under fee-for-service arrangements, we retain the financial responsibility for medical care provided and incur costs based on actual utilization of services. Such expenses are recorded in the period in which the related services are dispensed. The costs of drugs administered in a physician or hospital setting that are not billed through our pharmacy benefit manager are included in fee-for-service costs.
|
•
|
Pharmacy expenses:
All drug, injectibles, and immunization costs paid through our pharmacy benefit manager are classified as pharmacy expenses. As noted above, drugs and injectibles not paid through our pharmacy benefit manager are included in fee-for-service costs, except in those limited instances where we capitate drug and injectible costs.
|
•
|
Capitation expenses:
Many of our primary care physicians and a small portion of our specialists and hospitals are paid on a capitated basis. Under capitation arrangements, we pay a fixed amount PMPM to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. Under capitated arrangements, we remain liable for the provision of certain health care services. Capitation payments are fixed in advance of the periods covered and are not subject to significant accounting estimates. These payments are expensed in the period the providers are obligated to provide services. The financial risk for pharmacy services for a small portion of our membership is delegated to capitated providers.
|
•
|
Direct delivery expenses:
All costs associated with our direct delivery of medical care are separately identified.
|
•
|
Other medical expenses:
All medically related administrative costs, certain provider incentive costs, reinsurance costs and other health care expenses are classified as other medical expenses. Medically related administrative costs include, for example, expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses. Salary and benefit costs are a substantial portion of these expenses. For the years ended
December 31, 2014
,
2013
, and
2012
, medically related administrative costs were
$262.6 million
,
$153.0 million
,
and
$125.2 million
,
respectively.
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
|||||||||||||||
Fee-for-service
|
$
|
5,672,483
|
|
|
$
|
202.87
|
|
|
70.2
|
%
|
|
$
|
3,611,529
|
|
|
$
|
160.43
|
|
|
67.1
|
%
|
|
$
|
3,423,751
|
|
|
$
|
161.67
|
|
|
68.6
|
%
|
Pharmacy
|
1,273,329
|
|
|
45.54
|
|
|
15.8
|
|
|
935,204
|
|
|
41.54
|
|
|
17.4
|
|
|
835,830
|
|
|
39.47
|
|
|
16.7
|
|
||||||
Capitation
|
748,388
|
|
|
26.77
|
|
|
9.3
|
|
|
603,938
|
|
|
26.83
|
|
|
11.2
|
|
|
552,136
|
|
|
26.07
|
|
|
11.1
|
|
||||||
Direct delivery
|
96,196
|
|
|
3.44
|
|
|
1.2
|
|
|
48,288
|
|
|
2.14
|
|
|
0.9
|
|
|
33,920
|
|
|
1.60
|
|
|
0.7
|
|
||||||
Other
|
285,935
|
|
|
10.22
|
|
|
3.5
|
|
|
181,165
|
|
|
8.05
|
|
|
3.4
|
|
|
145,551
|
|
|
6.87
|
|
|
2.9
|
|
||||||
Total
|
$
|
8,076,331
|
|
|
$
|
288.84
|
|
|
100.0
|
%
|
|
$
|
5,380,124
|
|
|
$
|
238.99
|
|
|
100.0
|
%
|
|
$
|
4,991,188
|
|
|
$
|
235.68
|
|
|
100.0
|
%
|
•
|
Each contract calls for the provision of its own specific set of services. While all contracts support the system of record for state MMIS, the actual services we provide vary significantly between contracts; and
|
•
|
The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our new contracts (commercial off-the-shelf technology solutions).
|
•
|
Transaction processing costs;
|
•
|
Employee costs incurred in performing transaction services;
|
•
|
Vendor costs incurred in performing transaction services;
|
•
|
Costs incurred in performing required monitoring of and reporting on contract performance;
|
•
|
Costs incurred in maintaining and processing member and provider eligibility; and
|
•
|
Costs incurred in communicating with members and providers.
|
|
December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
|
(In thousands)
|
|||||||
Shares outstanding at the beginning of the period
|
45,871
|
|
|
46,762
|
|
|
45,815
|
|
Weighted-average number of shares:
|
|
|
|
|
|
|||
Repurchased
|
—
|
|
|
(1,445
|
)
|
|
(2
|
)
|
Issued, 3.75% Notes and 3.75% Exchange (1)
|
566
|
|
|
—
|
|
|
—
|
|
Issued, share-based compensation
|
498
|
|
|
400
|
|
|
567
|
|
Denominator for basic net income per share
|
46,935
|
|
|
45,717
|
|
|
46,380
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|||
Share-based compensation
|
498
|
|
|
643
|
|
|
619
|
|
3.75% Notes and 3.75% Exchange (1)
|
907
|
|
|
502
|
|
|
—
|
|
Denominator for diluted net income per share
|
48,340
|
|
|
46,862
|
|
|
46,999
|
|
|
|
|
|
|
|
|||
Potentially dilutive common shares excluded from calculations (2):
|
|
|
|
|
|
|||
Stock options
|
—
|
|
|
51
|
|
|
87
|
|
1.125% Warrants
|
13,490
|
|
|
11,975
|
|
|
—
|
|
Restricted shares
|
—
|
|
|
—
|
|
|
304
|
|
(1)
|
For more information regarding the 3.75% Exchange and 3.75% Notes, refer to Note
12
, "
Long-Term Debt
."
|
(2)
|
Potentially dilutive shares issuable pursuant to certain of our employee stock options, 1.125% Warrants (defined in Note
13
, "
Derivative Financial Instruments
"), and 1.625% Notes (defined in Note
12
, "
Long-Term Debt
") were not included in the computation of diluted net income per share because to do so would have been anti-dilutive.
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
641,729
|
|
|
$
|
—
|
|
|
$
|
641,729
|
|
|
$
|
—
|
|
Municipal securities
|
127,045
|
|
|
—
|
|
|
127,045
|
|
|
—
|
|
||||
GSEs
|
122,269
|
|
|
122,269
|
|
|
—
|
|
|
—
|
|
||||
U.S. treasury notes
|
59,543
|
|
|
59,543
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
68,876
|
|
|
—
|
|
|
68,876
|
|
|
—
|
|
||||
Auction rate securities
|
4,847
|
|
|
—
|
|
|
—
|
|
|
4,847
|
|
||||
1.125% Call Option derivative asset
|
329,323
|
|
|
—
|
|
|
—
|
|
|
329,323
|
|
||||
Total assets measured at fair value on a recurring basis
|
$
|
1,353,632
|
|
|
$
|
181,812
|
|
|
$
|
837,650
|
|
|
$
|
334,170
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Notes Conversion Option derivative liability
|
$
|
329,194
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
329,194
|
|
Contingent consideration liability
|
500
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||
Total liabilities measured at fair value on a recurring basis
|
$
|
329,694
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
329,694
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
449,772
|
|
|
$
|
—
|
|
|
$
|
449,772
|
|
|
$
|
—
|
|
Municipal securities
|
113,330
|
|
|
—
|
|
|
113,330
|
|
|
—
|
|
||||
GSEs
|
68,817
|
|
|
68,817
|
|
|
—
|
|
|
—
|
|
||||
U.S. treasury notes
|
37,376
|
|
|
37,376
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
33,757
|
|
|
—
|
|
|
33,757
|
|
|
—
|
|
||||
Auction rate securities
|
10,898
|
|
|
—
|
|
|
—
|
|
|
10,898
|
|
||||
1.125% Call Option derivative asset
|
186,351
|
|
|
—
|
|
|
—
|
|
|
186,351
|
|
||||
Total assets measured at fair value on a recurring basis
|
$
|
900,301
|
|
|
$
|
106,193
|
|
|
$
|
596,859
|
|
|
$
|
197,249
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Notes Conversion Option derivative liability
|
$
|
186,239
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
186,239
|
|
Contingent consideration liabilities
|
57,548
|
|
|
—
|
|
|
—
|
|
|
57,548
|
|
||||
Total liabilities measured at fair value on a recurring basis
|
$
|
243,787
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
243,787
|
|
|
Changes in Level 3 Instruments
|
||||||||||
|
Auction Rate Securities
|
|
Derivatives, Net
|
|
Contingent Consideration Liabilities
|
||||||
|
(In thousands)
|
||||||||||
Balance at December 31, 2013
|
$
|
10,898
|
|
|
$
|
112
|
|
|
$
|
(57,548
|
)
|
Total gains for the period recognized in:
|
|
|
|
|
|
||||||
General and administrative expenses
|
—
|
|
|
—
|
|
|
6,699
|
|
|||
Other expense, net
|
—
|
|
|
17
|
|
|
—
|
|
|||
Other comprehensive income
|
249
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
(6,300
|
)
|
|
—
|
|
|
50,349
|
|
|||
Balance at December 31, 2014
|
$
|
4,847
|
|
|
$
|
129
|
|
|
$
|
(500
|
)
|
|
December 31, 2014
|
||||||||||||||||||
|
Carrying
|
|
Total
|
|
|
|
|
|
|
||||||||||
|
Amount
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
1.125% Notes
|
$
|
435,330
|
|
|
$
|
767,377
|
|
|
$
|
—
|
|
|
$
|
767,377
|
|
|
$
|
—
|
|
1.625% Notes
|
268,767
|
|
|
337,292
|
|
|
—
|
|
|
337,292
|
|
|
—
|
|
|||||
|
$
|
704,097
|
|
|
$
|
1,104,669
|
|
|
$
|
—
|
|
|
$
|
1,104,669
|
|
|
$
|
—
|
|
|
|
||||||||||||||||||
|
December 31, 2013
|
||||||||||||||||||
|
Carrying
|
|
Total
|
|
|
|
|
|
|
||||||||||
|
Amount
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
1.125% Notes
|
$
|
416,368
|
|
|
$
|
572,627
|
|
|
$
|
—
|
|
|
$
|
572,627
|
|
|
$
|
—
|
|
3.75% Notes
|
181,872
|
|
|
219,491
|
|
|
—
|
|
|
219,491
|
|
|
—
|
|
|||||
|
$
|
598,240
|
|
|
$
|
792,118
|
|
|
$
|
—
|
|
|
$
|
792,118
|
|
|
$
|
—
|
|
|
December 31, 2014
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
642,910
|
|
|
$
|
201
|
|
|
$
|
1,382
|
|
|
$
|
641,729
|
|
Municipal securities
|
127,185
|
|
|
129
|
|
|
269
|
|
|
127,045
|
|
||||
GSEs
|
122,317
|
|
|
34
|
|
|
82
|
|
|
122,269
|
|
||||
U.S. treasury notes
|
59,546
|
|
|
30
|
|
|
33
|
|
|
59,543
|
|
||||
Certificates of deposit
|
68,893
|
|
|
1
|
|
|
18
|
|
|
68,876
|
|
||||
Subtotal - current investments
|
1,020,851
|
|
|
395
|
|
|
1,784
|
|
|
1,019,462
|
|
||||
Auction rate securities
|
5,100
|
|
|
—
|
|
|
253
|
|
|
4,847
|
|
||||
|
$
|
1,025,951
|
|
|
$
|
395
|
|
|
$
|
2,037
|
|
|
$
|
1,024,309
|
|
|
December 31, 2013
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
450,162
|
|
|
$
|
442
|
|
|
$
|
832
|
|
|
$
|
449,772
|
|
Municipal securities
|
114,126
|
|
|
119
|
|
|
915
|
|
|
113,330
|
|
||||
GSEs
|
68,898
|
|
|
6
|
|
|
87
|
|
|
68,817
|
|
||||
U.S. treasury notes
|
37,360
|
|
|
44
|
|
|
28
|
|
|
37,376
|
|
||||
Certificates of deposit
|
33,756
|
|
|
2
|
|
|
1
|
|
|
33,757
|
|
||||
Subtotal - current investments
|
704,302
|
|
|
613
|
|
|
1,863
|
|
|
703,052
|
|
||||
Auction rate securities
|
11,400
|
|
|
—
|
|
|
502
|
|
|
10,898
|
|
||||
|
$
|
715,702
|
|
|
$
|
613
|
|
|
$
|
2,365
|
|
|
$
|
713,950
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
448,880
|
|
|
$
|
448,732
|
|
Due one year through five years
|
571,971
|
|
|
570,730
|
|
||
Due after ten years
|
5,100
|
|
|
4,847
|
|
||
|
$
|
1,025,951
|
|
|
$
|
1,024,309
|
|
|
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 thousands)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
379,034
|
|
|
$
|
1,151
|
|
|
265
|
|
|
$
|
28,668
|
|
|
$
|
231
|
|
|
10
|
|
Municipal securities
|
53,626
|
|
|
168
|
|
|
64
|
|
|
11,075
|
|
|
101
|
|
|
13
|
|
||||
GSEs
|
75,025
|
|
|
69
|
|
|
22
|
|
|
2,986
|
|
|
13
|
|
|
3
|
|
||||
U.S. treasury notes
|
19,199
|
|
|
33
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
12,591
|
|
|
18
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
—
|
|
|
4,847
|
|
|
253
|
|
|
6
|
|
||||
|
$
|
539,475
|
|
|
$
|
1,439
|
|
|
416
|
|
|
$
|
47,576
|
|
|
$
|
598
|
|
|
32
|
|
|
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 thousands)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
210,057
|
|
|
$
|
802
|
|
|
91
|
|
|
$
|
2,540
|
|
|
$
|
30
|
|
|
3
|
|
Municipal securities
|
30,715
|
|
|
398
|
|
|
49
|
|
|
31,091
|
|
|
517
|
|
|
39
|
|
||||
GSEs
|
53,308
|
|
|
87
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
U.S. treasury notes
|
12,037
|
|
|
28
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
414
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
—
|
|
|
10,898
|
|
|
502
|
|
|
15
|
|
||||
|
$
|
306,531
|
|
|
$
|
1,316
|
|
|
174
|
|
|
$
|
44,529
|
|
|
$
|
1,049
|
|
|
57
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(In thousands)
|
||||||
California
|
$
|
310,938
|
|
|
$
|
148,654
|
|
Florida
|
2,141
|
|
|
2,901
|
|
||
Illinois
|
31,594
|
|
|
5,773
|
|
||
Michigan
|
19,880
|
|
|
15,253
|
|
||
New Mexico
|
49,609
|
|
|
17,056
|
|
||
Ohio
|
45,187
|
|
|
43,969
|
|
||
South Carolina
|
4,134
|
|
|
—
|
|
||
Texas
|
29,348
|
|
|
9,736
|
|
||
Utah
|
6,389
|
|
|
10,953
|
|
||
Washington
|
42,848
|
|
|
13,455
|
|
||
Wisconsin
|
8,102
|
|
|
8,087
|
|
||
Direct delivery and other
|
11,295
|
|
|
2,463
|
|
||
Total Health Plans segment
|
561,465
|
|
|
278,300
|
|
||
Molina Medicaid Solutions segment
|
34,991
|
|
|
20,635
|
|
||
|
$
|
596,456
|
|
|
$
|
298,935
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
15,514
|
|
|
$
|
15,764
|
|
Building and improvements
|
195,405
|
|
|
165,670
|
|
||
Furniture and equipment
|
140,691
|
|
|
131,478
|
|
||
Capitalized software
|
266,782
|
|
|
187,105
|
|
||
|
618,392
|
|
|
500,017
|
|
||
Less: accumulated depreciation and amortization on building and improvements, furniture and equipment
|
(129,161
|
)
|
|
(103,918
|
)
|
||
Less: accumulated amortization for capitalized software
|
(148,453
|
)
|
|
(104,016
|
)
|
||
|
(277,614
|
)
|
|
(207,934
|
)
|
||
Property, equipment, and capitalized software, net
|
$
|
340,778
|
|
|
$
|
292,083
|
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
Balance
|
||||||
|
(In thousands)
|
||||||||||
Intangible assets:
|
|
|
|
|
|
||||||
Contract rights and licenses
|
$
|
182,228
|
|
|
$
|
105,613
|
|
|
$
|
76,615
|
|
Customer relationships
|
24,550
|
|
|
22,154
|
|
|
2,396
|
|
|||
Contract backlog
|
23,600
|
|
|
22,540
|
|
|
1,060
|
|
|||
Provider networks
|
18,401
|
|
|
9,199
|
|
|
9,202
|
|
|||
Balance at December 31, 2014
|
$
|
248,779
|
|
|
$
|
159,506
|
|
|
$
|
89,273
|
|
Intangible assets:
|
|
|
|
|
|
||||||
Contract rights and licenses
|
$
|
176,428
|
|
|
$
|
92,789
|
|
|
$
|
83,639
|
|
Customer relationships
|
24,550
|
|
|
18,801
|
|
|
5,749
|
|
|||
Contract backlog
|
23,600
|
|
|
19,624
|
|
|
3,976
|
|
|||
Provider networks
|
13,370
|
|
|
7,863
|
|
|
5,507
|
|
|||
Balance at December 31, 2013
|
$
|
237,948
|
|
|
$
|
139,077
|
|
|
$
|
98,871
|
|
|
December 31, 2013
|
|
Acquisitions
|
|
December 31, 2014
|
||||||
|
(In thousands)
|
||||||||||
Goodwill, gross
|
$
|
289,268
|
|
|
$
|
41,226
|
|
|
$
|
330,494
|
|
Accumulated impairment losses
|
(58,530
|
)
|
|
—
|
|
|
(58,530
|
)
|
|||
Goodwill, net
|
$
|
230,738
|
|
|
$
|
41,226
|
|
|
$
|
271,964
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(In thousands)
|
||||||
California
|
$
|
373
|
|
|
$
|
373
|
|
Florida
|
28,649
|
|
|
9,242
|
|
||
Illinois
|
311
|
|
|
310
|
|
||
Michigan
|
1,014
|
|
|
1,014
|
|
||
New Mexico
|
35,135
|
|
|
24,622
|
|
||
Ohio
|
12,719
|
|
|
9,080
|
|
||
South Carolina
|
6,040
|
|
|
310
|
|
||
Texas
|
3,500
|
|
|
3,500
|
|
||
Utah
|
3,601
|
|
|
3,301
|
|
||
Washington
|
151
|
|
|
151
|
|
||
Other
|
5,985
|
|
|
886
|
|
||
Total Health Plans segment
|
97,478
|
|
|
52,789
|
|
||
Molina Medicaid Solutions segment
|
5,001
|
|
|
10,304
|
|
||
|
$
|
102,479
|
|
|
$
|
63,093
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
101,017
|
|
|
$
|
101,022
|
|
Due one year through five years
|
1,462
|
|
|
1,462
|
|
||
|
$
|
102,479
|
|
|
$
|
102,484
|
|
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Fee-for-service claims incurred but not paid (IBNP)
|
$
|
870,429
|
|
|
$
|
424,173
|
|
|
$
|
377,614
|
|
Pharmacy payable
|
71,412
|
|
|
45,037
|
|
|
38,992
|
|
|||
Capitation payable
|
28,150
|
|
|
20,267
|
|
|
49,066
|
|
|||
Other
|
230,531
|
|
|
180,310
|
|
|
28,858
|
|
|||
|
$
|
1,200,522
|
|
|
$
|
669,787
|
|
|
$
|
494,530
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(Dollars in thousands)
|
||||||||||
Balances at beginning of period
|
$
|
669,787
|
|
|
$
|
494,530
|
|
|
$
|
402,476
|
|
Components of medical care costs related to:
|
|
|
|
|
|
||||||
Current period
|
8,122,885
|
|
|
5,434,443
|
|
|
5,136,055
|
|
|||
Prior periods
|
(45,979
|
)
|
|
(52,779
|
)
|
|
(39,295
|
)
|
|||
Total medical care costs
|
8,076,906
|
|
|
5,381,664
|
|
|
5,096,760
|
|
|||
|
|
|
|
|
|
||||||
Change in non-risk provider payables
|
(31,973
|
)
|
|
111,267
|
|
|
(7,004
|
)
|
|||
|
|
|
|
|
|
||||||
Payments for medical care costs related to:
|
|
|
|
|
|
||||||
Current period
|
7,064,427
|
|
|
4,932,195
|
|
|
4,689,395
|
|
|||
Prior periods
|
449,771
|
|
|
385,479
|
|
|
308,307
|
|
|||
Total paid
|
7,514,198
|
|
|
5,317,674
|
|
|
4,997,702
|
|
|||
Balances at end of period
|
$
|
1,200,522
|
|
|
$
|
669,787
|
|
|
$
|
494,530
|
|
•
|
The addition since January 1, 2014, of
385,000
members under Medicaid expansion in six of our health plans. Because these members are transitioning into managed care, and have different demographics than those of our legacy membership, we have little insight into their utilization of medical services. Additionally, as of December 31, 2014, we have relatively little medical claims payment history related to Medicaid expansion membership in Illinois, Michigan and Ohio because such members were enrolled in these states later in the year. Accordingly, our estimates of the claims liability for this population are subject to a higher degree of uncertainty.
|
•
|
The addition of approximately
6,000
to
8,000
members per month on a retroactive basis during the last several months of 2014 at our New Mexico health plan. Because we have no claims payment history for these members, our estimates of the claims liability for this population are subject to a higher degree of uncertainty. However, for these members, the state will reimburse the health plan for claims with dates of services during the retroactive period on a cost-plus basis (claims paid plus an administration fee).
|
•
|
The addition of new membership to our MMP and aged, blind or disabled (ABD) programs at several of our health plans whose benefits include a substantial amount of managed LTSS benefits. Because these are newer members with substantially different benefits than our legacy members, our estimates of the claims liability for this population are subject to a higher degree of uncertainty.
|
•
|
At our Ohio health plan, we entered new regions in the state, and a new product, ABD Kids, in July 2013. Since we did not have enough historical claims data to use the pattern of paid and incurred claims, we initially estimated the reserves for these new members by applying an estimated medical care ratio (MCR). This resulted in an overstatement of our reserve liability as of December 31, 2013.
|
•
|
At our Michigan health plan, we overestimated the impact of certain unpaid potentially high-dollar claims. In addition, we overestimated the impact of the flu season on the outpatient claims for November and December 2013, which caused an overestimation in our outpatient reserve liability as of December 31, 2013.
|
•
|
At our Washington health plan certain high-cost newborns, as well as other high-cost disabled members, were covered by the health plan effective July 1, 2012. At the end of 2012, we had limited claims history with which to estimate the claims liability of these members, and overstated the liability for such members.
|
•
|
At our New Mexico health plan, we overestimated the impact of certain high-dollar outstanding claim payments as of December 31, 2012.
|
•
|
At our Ohio health plan, we overestimated the impact of several potential high-dollar claims relating to our ABD members.
|
|
Total
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
||||||||||||||
1.125% Notes
|
$
|
550,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
550,000
|
|
1.625% Notes (1)
|
301,551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
301,551
|
|
|||||||
|
$
|
851,551
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
851,551
|
|
(1)
|
The 1.625% Notes have a contractual maturity date in 2044; however, on specified dates beginning in 2018 as described below, holders of the 1.625% Notes may require us to repurchase some or all of the 1.625% Notes, or we may redeem any or all of the 1.625% Notes.
|
•
|
during any calendar quarter commencing after the calendar quarter ending on
June 30, 2013
(and only during such calendar quarter), if the last reported sale price of the common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to
130%
of the conversion price on each applicable trading day;
|
•
|
during the
five
business day period immediately after any
five
consecutive trading day period (the measurement period) in which the trading price per
$1,000
principal amount of 1.125% Notes for each trading day of the measurement period was less than
98%
of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
|
•
|
upon the occurrence of specified corporate events; or
|
•
|
at any time on or after
July 15, 2019
until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per
$1,000
principal amount of 1.125% Notes, equal to the settlement amount, determined in the manner set forth in the indenture. We may not redeem the 1.125% Notes prior to the maturity date.
|
•
|
during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to
130%
of the conversion price on each applicable trading day;
|
•
|
during the
five
business day period after any
five
consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of 1.625% Notes for each trading day of the measurement period was less than
98%
of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
|
•
|
upon the occurrence of specified corporate events;
|
•
|
if we call any 1.625% Notes for redemption, at any time until the close of business on the business day immediately preceding the redemption date;
|
•
|
during the period from, and including, May 15, 2018 to the close of business on the business day immediately preceding August 19, 2018; or
|
•
|
at any time on or after February 15, 2044 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 1.625% Notes, in integral multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.
|
|
Principal Balance
|
|
Unamortized Discount
|
|
Net Carrying Amount
|
||||||
|
(In thousands)
|
||||||||||
December 31, 2014:
|
|
|
|
|
|
||||||
1.125% Notes
|
$
|
550,000
|
|
|
$
|
114,670
|
|
|
$
|
435,330
|
|
1.625% Notes
|
301,551
|
|
|
32,784
|
|
|
268,767
|
|
|||
|
$
|
851,551
|
|
|
$
|
147,454
|
|
|
$
|
704,097
|
|
December 31, 2013:
|
|
|
|
|
|
||||||
1.125% Notes
|
$
|
550,000
|
|
|
$
|
133,632
|
|
|
$
|
416,368
|
|
3.75% Notes
|
187,000
|
|
|
5,128
|
|
|
181,872
|
|
|||
|
$
|
737,000
|
|
|
$
|
138,760
|
|
|
$
|
598,240
|
|
|
Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Interest cost recognized for the period relating to the:
|
|
|
|
|
|
||||||
Contractual interest coupon rate
|
$
|
12,504
|
|
|
$
|
12,427
|
|
|
$
|
7,012
|
|
Amortization of the discount
|
26,064
|
|
|
22,103
|
|
|
5,942
|
|
|||
|
$
|
38,568
|
|
|
$
|
34,530
|
|
|
$
|
12,954
|
|
|
|
|
December 31,
|
||||||
|
Balance Sheet Location
|
|
2014
|
|
2013
|
||||
|
|
|
(In thousands)
|
||||||
Derivative asset:
|
|
|
|
|
|
||||
1.125% Call Option
|
Non-current assets: Derivative asset
|
|
$
|
329,323
|
|
|
$
|
186,351
|
|
|
|
|
|
|
|
||||
Derivative liability:
|
|
|
|
|
|
||||
1.125% Notes Conversion Option
|
Non-current liabilities: Derivative liability
|
|
$
|
329,194
|
|
|
$
|
186,239
|
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Statutory federal tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
0.4
|
|
|
(0.5
|
)
|
|
(9.2
|
)
|
Change in unrecognized tax benefits
|
(0.1
|
)
|
|
(3.7
|
)
|
|
0.7
|
|
Nondeductible health insurer fee (HIF)
|
22.9
|
|
|
—
|
|
|
—
|
|
Nondeductible compensation
|
(4.1
|
)
|
|
9.6
|
|
|
6.2
|
|
Nondeductible lobbying
|
(0.3
|
)
|
|
1.6
|
|
|
4.2
|
|
Nondeductible fair value of 1.125% Warrants
|
—
|
|
|
2.4
|
|
|
—
|
|
Change in fair value of contingent consideration liabilities
|
—
|
|
|
(0.3
|
)
|
|
4.8
|
|
Other
|
—
|
|
|
0.7
|
|
|
3.3
|
|
Effective tax rate
|
53.8
|
%
|
|
44.8
|
%
|
|
45.0
|
%
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(In thousands)
|
||||||
Accrued expenses
|
$
|
13,323
|
|
|
$
|
19,545
|
|
Reserve liabilities
|
2,487
|
|
|
1,712
|
|
||
State taxes
|
(134
|
)
|
|
(1,323
|
)
|
||
Other accrued medical costs
|
3,800
|
|
|
2,540
|
|
||
Net operating losses
|
27
|
|
|
27
|
|
||
Unrealized losses
|
444
|
|
|
380
|
|
||
Unearned premiums
|
21,749
|
|
|
10,543
|
|
||
Prepaid expenses
|
(5,920
|
)
|
|
(5,354
|
)
|
||
Basis in debt
|
(210
|
)
|
|
(2,162
|
)
|
||
Deferred compensation
|
5,252
|
|
|
2,087
|
|
||
Other, net
|
(244
|
)
|
|
(928
|
)
|
||
Valuation allowance
|
(1,042
|
)
|
|
(511
|
)
|
||
Deferred tax asset, net of valuation allowance — current
|
39,532
|
|
|
26,556
|
|
||
Reserve liabilities
|
2,017
|
|
|
1,909
|
|
||
State tax credit carryover
|
8,157
|
|
|
7,027
|
|
||
Net operating losses
|
3,138
|
|
|
2,326
|
|
||
Unrealized losses
|
181
|
|
|
286
|
|
||
Depreciation and amortization
|
(57,068
|
)
|
|
(40,433
|
)
|
||
Deferred compensation
|
4,405
|
|
|
3,404
|
|
||
Lease financing obligation
|
34,084
|
|
|
27,543
|
|
||
Basis in debt
|
(14,724
|
)
|
|
466
|
|
||
Other, net
|
(96
|
)
|
|
(24
|
)
|
||
Valuation allowance
|
(4,365
|
)
|
|
(3,084
|
)
|
||
Deferred tax liability, net of valuation allowance — long term
|
(24,271
|
)
|
|
(580
|
)
|
||
Net deferred income tax asset
|
$
|
15,261
|
|
|
$
|
25,976
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Gross unrecognized tax benefits at beginning of period
|
$
|
(8,030
|
)
|
|
$
|
(10,622
|
)
|
|
$
|
(10,712
|
)
|
Increases in tax positions for prior years
|
—
|
|
|
—
|
|
|
(441
|
)
|
|||
Decreases in tax positions for prior years
|
—
|
|
|
3,615
|
|
|
320
|
|
|||
Increases in tax positions for current year
|
(777
|
)
|
|
(2,084
|
)
|
|
—
|
|
|||
Decreases in tax positions for current year
|
—
|
|
|
886
|
|
|
—
|
|
|||
Settlements
|
5,960
|
|
|
—
|
|
|
—
|
|
|||
Lapse in statute of limitations
|
253
|
|
|
175
|
|
|
211
|
|
|||
Gross unrecognized tax benefits at end of period
|
$
|
(2,594
|
)
|
|
$
|
(8,030
|
)
|
|
$
|
(10,622
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
|
Pretax
Charges
|
|
Net-of-Tax
Amount
|
|
Pretax
Charges
|
|
Net-of-Tax
Amount
|
|
Pretax
Charges
|
|
Net-of-Tax
Amount
|
||||||||||||
Restricted stock and performance awards
|
$
|
18,535
|
|
|
$
|
11,936
|
|
|
$
|
26,116
|
|
|
$
|
22,489
|
|
|
$
|
18,106
|
|
|
$
|
12,943
|
|
Employee stock purchase plan and stock options
|
3,192
|
|
|
2,352
|
|
|
2,578
|
|
|
2,012
|
|
|
1,912
|
|
|
1,613
|
|
||||||
|
$
|
21,727
|
|
|
$
|
14,288
|
|
|
$
|
28,694
|
|
|
$
|
24,501
|
|
|
$
|
20,018
|
|
|
$
|
14,556
|
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Remaining
Contractual
term
|
|||||
|
|
|
|
|
(In thousands)
|
|
(Years)
|
|||||
Stock options outstanding as of December 31, 2013
|
379,221
|
|
|
$
|
24.14
|
|
|
|
|
|
||
Exercised
|
(122,523
|
)
|
|
24.93
|
|
|
|
|
|
|||
Stock options outstanding as of December 31, 2014
|
256,698
|
|
|
23.77
|
|
|
$
|
7,640
|
|
|
3.3
|
|
Stock options exercisable and expected to vest as of December 31, 2014
|
256,698
|
|
|
23.77
|
|
|
$
|
7,640
|
|
|
3.3
|
|
Exercisable as of December 31, 2014
|
221,698
|
|
|
22.26
|
|
|
$
|
6,932
|
|
|
2.5
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
Number
Outstanding
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Weighted-
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted-
Average
Exercise
Price
|
||||||
$19.11
|
46,148
|
|
|
1.1
|
|
$
|
19.11
|
|
|
46,148
|
|
|
$
|
19.11
|
|
$20.88
|
139,500
|
|
|
2.2
|
|
20.88
|
|
|
139,500
|
|
|
20.88
|
|
||
$22.86 – $34.82
|
71,050
|
|
|
6.9
|
|
32.46
|
|
|
36,050
|
|
|
31.66
|
|
||
|
256,698
|
|
|
|
|
|
|
221,698
|
|
|
|
•
|
The ongoing activities of the VIE—collecting and remitting interest and fees and NMTC compliance—were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the VIE;
|
•
|
Contractual arrangements obligate us to comply with NMTC rules and regulations and provide various other guarantees to Investment Fund and CDEs;
|
•
|
Wells Fargo lacks a material interest in the underling economics of the project; and
|
•
|
We are obligated to absorb losses of the VIE.
|
|
Lease Financing Obligations
|
|
Lease Financing Obligations - Related Party
|
|
Operating Leases
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
2015
|
$
|
11,397
|
|
|
$
|
5,346
|
|
|
$
|
29,142
|
|
|
$
|
45,885
|
|
2016
|
11,739
|
|
|
5,528
|
|
|
22,989
|
|
|
40,256
|
|
||||
2017
|
12,091
|
|
|
5,715
|
|
|
21,602
|
|
|
39,408
|
|
||||
2018
|
12,454
|
|
|
5,910
|
|
|
20,296
|
|
|
38,660
|
|
||||
2019
|
12,828
|
|
|
6,111
|
|
|
12,777
|
|
|
31,716
|
|
||||
Thereafter
|
320,447
|
|
|
73,784
|
|
|
15,229
|
|
|
409,460
|
|
||||
|
$
|
380,956
|
|
|
$
|
102,394
|
|
|
$
|
122,035
|
|
|
$
|
605,385
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Revenue, continuing operations:
|
|
|
|
|
|
||||||
Health Plans segment:
|
|
|
|
|
|
||||||
Premium revenue
|
$
|
9,022,511
|
|
|
$
|
6,179,170
|
|
|
$
|
5,544,121
|
|
Premium tax revenue
|
294,388
|
|
|
172,017
|
|
|
158,991
|
|
|||
Health insurer fee revenue
|
119,484
|
|
|
—
|
|
|
—
|
|
|||
Investment income
|
8,093
|
|
|
6,890
|
|
|
5,075
|
|
|||
Other revenue
|
12,074
|
|
|
26,322
|
|
|
18,312
|
|
|||
Molina Medicaid Solutions segment:
|
|
|
|
|
|
||||||
Service revenue
|
210,051
|
|
|
204,535
|
|
|
187,710
|
|
|||
|
$
|
9,666,601
|
|
|
$
|
6,588,934
|
|
|
$
|
5,914,209
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization reported in the consolidated statements of cash flows:
|
|
|
|
|
|
||||||
Health Plans segment
|
$
|
89,438
|
|
|
$
|
67,446
|
|
|
$
|
58,577
|
|
Molina Medicaid Solutions segment
|
44,966
|
|
|
26,420
|
|
|
20,187
|
|
|||
|
$
|
134,404
|
|
|
$
|
93,866
|
|
|
$
|
78,764
|
|
Income from continuing operations before income tax expense:
|
|
|
|
|
|
||||||
Health Plans segment
|
$
|
150,090
|
|
|
$
|
103,931
|
|
|
$
|
17,366
|
|
Molina Medicaid Solutions segment
|
42,827
|
|
|
32,629
|
|
|
23,727
|
|
|||
Operating income, continuing operations
|
192,917
|
|
|
136,560
|
|
|
41,093
|
|
|||
Other expenses, net
|
57,613
|
|
|
55,414
|
|
|
17,714
|
|
|||
|
$
|
135,304
|
|
|
$
|
81,146
|
|
|
$
|
23,379
|
|
|
As of December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Goodwill and intangible assets, net:
|
|
|
|
|
|
||||||
Health Plans segment
|
$
|
286,459
|
|
|
$
|
248,562
|
|
|
$
|
139,710
|
|
Molina Medicaid Solutions segment
|
74,778
|
|
|
81,047
|
|
|
89,089
|
|
|||
|
$
|
361,237
|
|
|
$
|
329,609
|
|
|
$
|
228,799
|
|
Total assets:
|
|
|
|
|
|
||||||
Health Plans segment
|
$
|
4,270,870
|
|
|
$
|
2,809,439
|
|
|
$
|
1,702,212
|
|
Molina Medicaid Solutions segment
|
206,345
|
|
|
193,498
|
|
|
232,610
|
|
|||
|
$
|
4,477,215
|
|
|
$
|
3,002,937
|
|
|
$
|
1,934,822
|
|
|
For The Quarter Ended
|
||||||||||||||
|
March 31,
2014 |
|
June 30,
2014 |
|
September 30, 2014
|
|
December 31,
2014 |
||||||||
|
(In thousands, except per-share data)
|
||||||||||||||
Premium revenue
|
$
|
1,940,337
|
|
|
$
|
2,167,142
|
|
|
$
|
2,316,759
|
|
|
$
|
2,598,273
|
|
Service revenue
|
53,630
|
|
|
50,232
|
|
|
52,557
|
|
|
53,632
|
|
||||
Operating income, Health Plans segment
|
14,019
|
|
|
21,986
|
|
|
29,874
|
|
|
84,211
|
|
||||
Operating income, Molina Medicaid Solutions segment
|
10,248
|
|
|
10,441
|
|
|
9,905
|
|
|
12,233
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
4,834
|
|
|
$
|
7,741
|
|
|
$
|
16,070
|
|
|
$
|
33,933
|
|
(Loss) income from discontinued operations
|
(336
|
)
|
|
70
|
|
|
52
|
|
|
(141
|
)
|
||||
Net income
|
$
|
4,498
|
|
|
$
|
7,811
|
|
|
$
|
16,122
|
|
|
$
|
33,792
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share (1):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
0.34
|
|
|
$
|
0.70
|
|
Diluted
|
$
|
0.09
|
|
|
$
|
0.16
|
|
|
$
|
0.33
|
|
|
$
|
0.69
|
|
|
For The Quarter Ended
|
||||||||||||||
|
March 31,
2013 |
|
June 30,
2013 (2) |
|
September 30, 2013
|
|
December 31,
2013 |
||||||||
|
(In thousands, except per-share data)
|
||||||||||||||
Premium revenue
|
$
|
1,497,433
|
|
|
$
|
1,501,729
|
|
|
$
|
1,584,656
|
|
|
$
|
1,595,352
|
|
Service revenue
|
49,756
|
|
|
49,672
|
|
|
51,100
|
|
|
54,007
|
|
||||
Operating income (loss), Health Plans segment
|
61,520
|
|
|
40,151
|
|
|
16,929
|
|
|
(14,669
|
)
|
||||
Operating income, Molina Medicaid Solutions segment
|
6,353
|
|
|
6,295
|
|
|
7,997
|
|
|
11,984
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
30,522
|
|
|
$
|
15,796
|
|
|
$
|
7,553
|
|
|
$
|
(9,041
|
)
|
(Loss) income from discontinued operations
|
(607
|
)
|
|
8,775
|
|
|
16
|
|
|
(85
|
)
|
||||
Net income (loss)
|
$
|
29,915
|
|
|
$
|
24,571
|
|
|
$
|
7,569
|
|
|
$
|
(9,126
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share (1):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.65
|
|
|
$
|
0.54
|
|
|
$
|
0.17
|
|
|
$
|
(0.20
|
)
|
Diluted
|
$
|
0.64
|
|
|
$
|
0.53
|
|
|
$
|
0.16
|
|
|
$
|
(0.20
|
)
|
(1)
|
Potentially dilutive shares issuable pursuant to our 1.125% Warrants and 1.625% Notes were not included in the computation of diluted net income per share, because to do so would have been anti-dilutive. Potentially dilutive shares issuable pursuant to our 3.75% Notes were not included in the computation of diluted net income per share for the quarter ended March 31, 2013, because to do so would have been anti-dilutive.
|
(2)
|
We abandoned our equity interests in the Missouri health plan during the second quarter of 2013, resulting in the recognition of a tax benefit of
$9.5 million
, which is reported in (loss) income from discontinued operations.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Management fees and other operating revenue
|
$
|
703,710
|
|
|
$
|
599,049
|
|
|
$
|
406,981
|
|
Investment income
|
2,218
|
|
|
2,768
|
|
|
550
|
|
|||
Total revenue
|
705,928
|
|
|
601,817
|
|
|
407,531
|
|
|||
Expenses:
|
|
|
|
|
|
|
|||||
Medical care costs
|
46,437
|
|
|
37,862
|
|
|
33,102
|
|
|||
General and administrative expenses
|
582,587
|
|
|
503,781
|
|
|
367,606
|
|
|||
Depreciation and amortization
|
72,995
|
|
|
51,562
|
|
|
38,794
|
|
|||
Total operating expenses
|
702,019
|
|
|
593,205
|
|
|
439,502
|
|
|||
Operating income (loss)
|
3,909
|
|
|
8,612
|
|
|
(31,971
|
)
|
|||
Interest expense
|
56,728
|
|
|
50,508
|
|
|
14,469
|
|
|||
Other expense
|
844
|
|
|
3,811
|
|
|
—
|
|
|||
Loss before income taxes and equity in net income of subsidiaries
|
(53,663
|
)
|
|
(45,707
|
)
|
|
(46,440
|
)
|
|||
Income tax benefit
|
(26,776
|
)
|
|
(15,455
|
)
|
|
(15,779
|
)
|
|||
Net loss before equity in net income of subsidiaries
|
(26,887
|
)
|
|
(30,252
|
)
|
|
(30,661
|
)
|
|||
Equity in net income of subsidiaries
|
89,110
|
|
|
83,181
|
|
|
40,451
|
|
|||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
62,223
|
|
|
$
|
52,929
|
|
|
$
|
9,790
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized investment gain (loss)
|
108
|
|
|
(1,015
|
)
|
|
1,529
|
|
|||
Effect of income tax expense (benefit)
|
41
|
|
|
(386
|
)
|
|
581
|
|
|||
Other comprehensive income (loss), net of tax
|
67
|
|
|
(629
|
)
|
|
948
|
|
|||
Comprehensive income
|
$
|
62,290
|
|
|
$
|
52,300
|
|
|
$
|
10,738
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(In thousands)
|
||||||||||
Operating activities:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
73,674
|
|
|
$
|
62,602
|
|
|
$
|
20,611
|
|
Investing activities:
|
|
|
|
|
|
|
|||||
Capital contributions to subsidiaries
|
(292,232
|
)
|
|
(166,112
|
)
|
|
(100,221
|
)
|
|||
Dividends received from subsidiaries
|
—
|
|
|
24,429
|
|
|
101,800
|
|
|||
Purchases of investments
|
(128,996
|
)
|
|
(362,927
|
)
|
|
(1,905
|
)
|
|||
Proceeds from sales and maturities of investments
|
263,479
|
|
|
97,713
|
|
|
4,067
|
|
|||
Proceeds from sale of subsidiary, net of cash surrendered
|
—
|
|
|
—
|
|
|
9,162
|
|
|||
Purchases of equipment
|
(93,610
|
)
|
|
(76,873
|
)
|
|
(61,813
|
)
|
|||
Change in amounts due to/from affiliates
|
16,054
|
|
|
(5,888
|
)
|
|
5,187
|
|
|||
Other, net
|
7,640
|
|
|
(6,175
|
)
|
|
(1,342
|
)
|
|||
Net cash used in investing activities
|
(227,665
|
)
|
|
(495,833
|
)
|
|
(45,065
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
|||||
Proceeds from issuance of convertible senior notes, net of financing costs paid
|
122,625
|
|
|
537,973
|
|
|
—
|
|
|||
Proceeds from sale-leaseback transactions
|
—
|
|
|
158,694
|
|
|
—
|
|
|||
Purchase of call option
|
—
|
|
|
(149,331
|
)
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
75,074
|
|
|
—
|
|
|||
Treasury stock repurchases
|
—
|
|
|
(52,662
|
)
|
|
(3,000
|
)
|
|||
Principal payment on term loan of subsidiary
|
—
|
|
|
(46,963
|
)
|
|
—
|
|
|||
Repayment of amount borrowed under credit facility
|
—
|
|
|
(40,000
|
)
|
|
(20,000
|
)
|
|||
Proceeds from employee stock plans
|
14,040
|
|
|
9,402
|
|
|
8,205
|
|
|||
Principal payments on convertible senior notes
|
(10,449
|
)
|
|
—
|
|
|
—
|
|
|||
Amount borrowed under credit facility
|
—
|
|
|
—
|
|
|
60,000
|
|
|||
Other, net
|
2,773
|
|
|
1,674
|
|
|
3,667
|
|
|||
Net cash provided by financing activities
|
128,989
|
|
|
493,861
|
|
|
48,872
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(25,002
|
)
|
|
60,630
|
|
|
24,418
|
|
|||
Cash and cash equivalents at beginning of year
|
99,698
|
|
|
39,068
|
|
|
14,650
|
|
|||
Cash and cash equivalents at end of year
|
$
|
74,696
|
|
|
$
|
99,698
|
|
|
$
|
39,068
|
|
|
/s/ ERNST & YOUNG LLP
|
Plan Category
|
Number of Securities to be
Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a)
|
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
|
|
Number of Securities
Remaining Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
(c)
|
|
||||
Equity compensation plans approved by security holders
|
256,698
|
|
(1)
|
$
|
23.77
|
|
|
4,529,223
|
|
(2)
|
(1)
|
Options to purchase shares of our common stock issued under the 2002 Equity Incentive Plan and 2011 Equity Incentive Plan. Further grants under the 2002 Equity Incentive Plan have been suspended.
|
(2)
|
Includes shares remaining available to issue under the 2011 Equity Incentive Plan, and the 2011 Employee Stock Purchase Plan.
|
(a)
|
The consolidated financial statements and exhibits listed below are filed as part of this report.
|
(1)
|
The financial statements included in Item 8 of this Form 10-K, Financial Statements and Supplementary Data, above are filed as part of this annual report.
|
(2)
|
Financial Statement Schedules
|
(3)
|
Exhibits
|
|
MOLINA HEALTHCARE, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Joseph M. Molina
|
|
|
|
Joseph M. Molina, M.D. (Dr. J. Mario Molina)
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Joseph M. Molina
|
|
Chairman of the Board, Chief Executive Officer, and President
|
|
February 26, 2015
|
Joseph M. Molina, M.D.
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ John C. Molina
|
|
Director, Chief Financial Officer, and Treasurer
|
|
February 26, 2015
|
John C. Molina, J.D.
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Joseph W. White
|
|
Chief Accounting Officer
|
|
February 26, 2015
|
Joseph W. White
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Garrey E. Carruthers
|
|
Director
|
|
February 26, 2015
|
Garrey E. Carruthers, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ Daniel Cooperman
|
|
Director
|
|
February 26, 2015
|
Daniel Cooperman
|
|
|
|
|
|
|
|
|
|
/s/ Charles Z. Fedak
|
|
Director
|
|
February 26, 2015
|
Charles Z. Fedak
|
|
|
|
|
|
|
|
|
|
/s/ Steven G. James
|
|
Director
|
|
February 26, 2015
|
Steven G. James
|
|
|
|
|
|
|
|
|
|
/s/ Frank E. Murray
|
|
Director
|
|
February 26, 2015
|
Frank E. Murray, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ Steven J. Orlando
|
|
Director
|
|
February 26, 2015
|
Steven J. Orlando
|
|
|
|
|
|
|
|
|
|
/s/ Ronna E. Romney
|
|
Director
|
|
February 26, 2015
|
Ronna E. Romney
|
|
|
|
|
|
|
|
|
|
/s/ John P. Szabo, Jr.
|
|
Director
|
|
February 26, 2015
|
John P. Szabo, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Dale B. Wolf
|
|
Director
|
|
February 26, 2015
|
Dale B. Wolf
|
|
|
|
|
|
|
|
|
|
Number
|
|
Description
|
|
Method of Filing
|
1.1
|
|
Purchase Agreement, dated as of February 11, 2013, among Molina Healthcare, Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representatives of the Initial Purchasers
|
|
Filed as Exhibit 1.1 to registrant's Form 8-K filed February 15, 2013.
|
2.1
|
|
Asset Purchase Agreement between Molina Healthcare, Inc. and Unisys Corporation dated as of January 18, 2010
|
|
Filed as Exhibit 2.1 to registrant's Form 8-K filed January 19, 2010.
|
3.1
|
|
Certificate of Incorporation
|
|
Filed as Exhibit 3.2 to registrant's Registration Statement on Form S-1 filed December 30, 2002.
|
3.2
|
|
Certificate of Amendment to Certificate of Incorporation
|
|
Filed as Exhibit 3.1 to registrant’s Form 8-K filed July 24, 2013.
|
3.3
|
|
Third Amended and Restated Bylaws of Molina Healthcare, Inc.
|
|
Filed as Exhibit 3.1 to registrant's Form 10-Q filed July 30, 2014.
|
4.1
|
|
Indenture, dated as of February 15, 2013, by and between Molina Healthcare, Inc. and U.S. Bank, National Association
|
|
Filed as Exhibit 4.1 to registrant's Form 8-K filed February 15, 2013.
|
4.2
|
|
Form of 1.125% Cash Convertible Senior Note due 2020
|
|
Included in Exhibit 4.1 to registrant's Form 8-K filed February 15, 2013.
|
4.3
|
|
Indenture, dated as of September 5, 2014, by and between Molina Healthcare, Inc. and U.S. Bank National Association
|
|
Filed as Exhibit 4.1 to registrant’s Form 8-K filed September 8, 2014.
|
4.4
|
|
Form of 1.625% Convertible Senior Note due 2044
|
|
Included in Exhibit 4.1 to registrant’s Form 8-K filed September 8, 2014.
|
4.5
|
|
Form of 1.625% Convertible Senior Notes Due 2044
Note Purchase Agreement, dated as of September 11, 2014, by and between Molina Healthcare, Inc. and certain institutional investors
|
|
Filed as Exhibit 10.1 to registrant’s Form 8-K filed September 12, 2014.
|
4.6
|
|
First Supplemental Indenture, dated as of September 16, 2014, by and between Molina Healthcare, Inc. and the U.S. Bank National Association
|
|
Filed as Exhibit 4.1 to registrant’s Form 8-K filed
September 17, 2014.
|
4.7
|
|
Form of 1.625% Convertible Senior Note due 2044
|
|
Included in Exhibit 4.1 to registrant’s Form 8-K filed September 17, 2014.
|
*10.1
|
|
2002 Equity Incentive Plan
|
|
Filed as Exhibit 10.13 to registrant's Form S-1 filed December 30, 2002.
|
*10.2
|
|
Molina Healthcare, Inc. Amended and Restated Deferred Compensation Plan (2013)
|
|
Filed as Exhibit 10.5 to registrant’s Form 10-K filed February 26, 2014.
|
*10.3
|
|
Amendment No. 1 to the Molina Healthcare, Inc.
Amended and Restated Deferred Compensation
Plan (2013)
|
|
Filed as Exhibit 10.6 to registrant’s Form 10-K filed February 26, 2014.
|
*10.4
|
|
Amendment No. 2 to the Molina Healthcare, Inc.
Amended and Restated Deferred Compensation Plan (2013)
|
|
Filed herewith.
|
*10.5
|
|
2011 Equity Incentive Plan
|
|
Filed as Exhibit 10.8 to registrant’s Form 10-K filed February 26, 2014.
|
Number
|
|
Description
|
|
Method of Filing
|
*10.6
|
|
2011 Employee Stock Purchase Plan
|
|
Filed herewith.
|
*10.7
|
|
Form of Restricted Stock Award Agreement (Executive Officer) under Molina Healthcare, Inc. Equity Incentive Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed August 9, 2005.
|
*10.8
|
|
Form of Restricted Stock Award Agreement (Outside Director) under Molina Healthcare, Inc. Equity Incentive Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed August 9, 2005.
|
*10.9
|
|
Form of Restricted Stock Award Agreement (Employee) under Molina Healthcare, Inc. Equity Incentive Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed August 9, 2005.
|
*10.10
|
|
Form of Stock Option Agreement under Equity Incentive Plan
|
|
Filed as Exhibit 10.3 to registrant's Form 10-K filed March 14, 2007.
|
*10.11
|
|
Amended and Restated Employment Agreement with J. Mario Molina, M.D. dated as of December 31, 2009
|
|
Filed as Exhibit 10.1 to registrant's Form 8-K filed January 7, 2010.
|
*10.12
|
|
Amended and Restated Employment Agreement with John C. Molina dated as of December 31, 2009
|
|
Filed as Exhibit 10.2 to registrant's Form 8-K filed January 7, 2010.
|
*10.13
|
|
Employment Agreement with Terry Bayer dated June 14, 2013
|
|
Filed as Exhibit 10.1 to registrant’s Form 8-K filed June 14, 2013.
|
*10.14
|
|
Employment Agreement with Joseph White dated June 14, 2013
|
|
Filed as Exhibit 10.2 to registrant’s Form 8-K filed June 14, 2013.
|
*10.15
|
|
Employment Agreement with Jeff Barlow, dated June 14, 2013
|
|
Filed as Exhibit 10.3 to registrant’s Form 8-K filed June 14, 2013.
|
*10.16
|
|
Amended and Restated Change in Control Agreement with Terry Bayer, dated as of December 31, 2009
|
|
Filed as Exhibit 10.4 to registrant's Form 8-K filed January 7, 2010.
|
*10.17
|
|
Amended and Restated Change in Control Agreement with Joseph W. White, dated as of December 31, 2009
|
|
Filed as Exhibit 10.6 to registrant's Form 8-K filed January 7, 2010.
|
*10.18
|
|
Change in Control Agreement with Jeff D. Barlow, dated as of September 18, 2012
|
|
Filed as Exhibit 10.16 to registrant’s Form 10-K filed February 28, 2013.
|
10.19
|
|
Form of Indemnification Agreement
|
|
Filed as Exhibit 10.14 to registrant's Form 10-K filed March 14, 2007.
|
10.20
|
|
Base Call Option Transaction Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch
|
|
Filed as Exhibit 10.1 to registrant's Form 8-K filed February 15, 2013.
|
10.21
|
|
Base Call Option Transaction Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.2 to registrant's Form 8-K filed February 15, 2013.
|
10.22
|
|
Base Warrants Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch
|
|
Filed as Exhibit 10.3 to registrant's Form 8-K filed February 15, 2013.
|
10.23
|
|
Base Warrants Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.4 to registrant's Form 8-K filed February 15, 2013.
|
10.24
|
|
Amendment to Base Call Option Transaction Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch
|
|
Filed as Exhibit 10.5 to registrant's Form 8-K filed February 15, 2013.
|
10.25
|
|
Amendment to Base Call Option Transaction Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.6 to registrant's Form 8-K filed February 15, 2013.
|
10.26
|
|
Additional Base Warrants Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch
|
|
Filed as Exhibit 10.7 to registrant's Form 8-K filed February 15, 2013.
|
10.27
|
|
Additional Base Warrants Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.8 to registrant's Form 8-K filed February 15, 2013.
|
Number
|
|
Description
|
|
Method of Filing
|
10.28
|
|
Amended and Restated Base Warrants Confirmation, dated as of April 22, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed May 3, 2013.
|
10.29
|
|
Amended and Restated Base Warrants Confirmation, dated as of April 22, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.2 to registrant's Form 10-Q filed May 3, 2013.
|
10.30
|
|
Additional Amended and Restated Base Warrants Confirmation, dated as of April 22, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch
|
|
Filed as Exhibit 10.3 to registrant's Form 10-Q filed May 3, 2013.
|
10.31
|
|
Additional Amended and Restated Base Warrants Confirmation, dated as of April 22, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.4 to registrant's Form 10-Q filed May 3, 2013.
|
10.32
|
|
Lease Agreement, dated as of February 27, 2013, by and between 6th & Pine Development, LLC and Molina Healthcare, Inc.
|
|
Filed as Exhibit 10.32 to registrant’s Form 10-K filed February 28, 2013.
|
10.33
|
|
First Amendment to Office Building Lease, effective as of
October 31, 2014, by and between 6
th
& Pine Development,
LLC and Molina Healthcare, Inc.
|
|
Filed as Exhibit 10.1 to registrant’s Form 8-K filed November 5, 2014.
|
10.34
|
|
Settlement Agreement entered into on October 30, 2013, by and between the Department of Health Care Services and Molina Healthcare of California and Molina Healthcare of California Partner Plan, Inc.
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed October 30, 2013.
|
10.35
|
|
Agreement of Purchase and Sale, dated as of June 12, 2013, by and between Molina Healthcare, Inc. and Molina Center, LLC, and AG Net Lease Acquisition Corp.
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed July 25, 2013.
|
10.36
|
|
Lease Agreement, dated as of June 13, 2013, by and between AGNL Clinic, L.P., and Molina Healthcare, Inc.
|
|
Filed as Exhibit 10.2 to registrant's Form 10-Q filed July 25, 2013.
|
10.37
|
|
Form of Exchange Agreement, dated August 11, 2014, by and between Molina Healthcare, Inc. and certain beneficial owners of Molina Healthcare, Inc.’s 3.75% Convertible Senior Notes due 2014
|
|
Filed as Exhibit 10.1 to registrant’s Form 8-K filed August 12, 2014.
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
Filed herewith.
|
21.1
|
|
List of subsidiaries
|
|
Filed herewith.
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
Filed herewith.
|
31.1
|
|
Section 302 Certification of Chief Executive Officer
|
|
Filed herewith.
|
31.2
|
|
Section 302 Certification of Chief Financial Officer
|
|
Filed herewith.
|
32.1
|
|
Certificate 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.
|
32.2
|
|
Certificate 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.
|
*
|
Management contract or compensatory plan or arrangement required to be filed (and/or incorporated by reference) as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K.
|
1.
|
Section 2.3.b. is deleted in its entirety and replaced in its stead with the following:
|
b.
|
A Participant must provide a separate Written Election for each subsequent Plan Year that specifies the dollar amount or percentage of Plan Year Compensation that Participant has determined to defer for each such Plan Year. Such Written Election is only effective for the Plan Year for which the election is made and if no Written Election to defer Plan Year Compensation is executed in relation to a subsequent Plan Year, no Plan Year Compensation will be deferred for such subsequent Plan Year. Any election of the amount of Plan Year Compensation to defer for a given Plan Year shall be irrevocable on and after the first day of the Plan Year for which the election was made.
|
c.
|
A Participant may change the investment vehicle(s) in which he desires to have that portion of his Account attributable to Plan Year Compensation and investment income invested and the percentage of his Account allocated to each investment vehicle by completing and submitting any form or forms required by the Company. Changes in investment vehicle(s) will be made as of the last business day of each month. The Participant must submit the completed form or forms with the requested changes to the Trustee on or before the twenty-fifth (25th) day of the current month (or the last business day immediately preceding the twenty-fifth of the month) for the changes to be made by the last business day of the current month. Changes requested on forms submitted after the twenty-fifth (25th) day of the current month will be made on the last business day of the following month.
|
d.
|
Notwithstanding the foregoing, the Trustee shall, at the direction of the Plan Committee, have the duty and authority to invest the trust assets and funds in accordance with the terms of the Trust Agreement, and all rights associated with the trust assets shall be exercised by the Trustee as designated by the Plan Committee and shall in no event be exercisable by or be settled upon Participants or their Beneficiaries.
|
e.
|
Participant may change the date or form of distribution by submitting a new Written Election to the Company, provided that the following conditions are met:
|
i.
|
That such election may not take effect until at least twelve (12) months after the date on which the election is made;
|
ii.
|
In the case of an election related to a payment other than a payment on account of death, disability or the occurrence of an financial hardship, such payment must be deferred for a period of not less than five (5) years from the date such payment would have otherwise been made, and
|
iii.
|
Any election related to a payment at a specified time or pursuant to a fixed schedule may not be made less than twelve (12) months prior to the date of the first scheduled payment.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
(Dollars in Thousands)
|
||||||||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes, continuing operations
|
$
|
135,304
|
|
|
$
|
81,146
|
|
|
$
|
23,379
|
|
|
$
|
120,302
|
|
|
$
|
81,128
|
|
Add fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, including amortization of debt discount and expense
|
56,811
|
|
|
52,071
|
|
|
16,769
|
|
|
15,519
|
|
|
15,509
|
|
|||||
Estimated interest portion of rental expense
|
5,180
|
|
|
3,922
|
|
|
2,865
|
|
|
2,542
|
|
|
4,522
|
|
|||||
Total fixed charges
|
61,991
|
|
|
55,993
|
|
|
19,634
|
|
|
18,061
|
|
|
20,031
|
|
|||||
Total earnings available for fixed charges
|
$
|
197,295
|
|
|
$
|
137,139
|
|
|
$
|
43,013
|
|
|
$
|
138,363
|
|
|
$
|
101,159
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges from above:
|
$
|
61,991
|
|
|
$
|
55,993
|
|
|
$
|
19,634
|
|
|
$
|
18,061
|
|
|
$
|
20,031
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
3.2
|
|
|
2.4
|
|
|
2.2
|
|
|
7.7
|
|
|
5.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total rent expense
|
$
|
32,375
|
|
|
$
|
24,510
|
|
|
$
|
20,462
|
|
|
$
|
23,110
|
|
|
$
|
25,124
|
|
Interest factor
|
16
|
%
|
|
16
|
%
|
|
14
|
%
|
|
11
|
%
|
|
18
|
%
|
|||||
Interest component of rental expense
|
$
|
5,180
|
|
|
$
|
3,922
|
|
|
$
|
2,865
|
|
|
$
|
2,542
|
|
|
$
|
4,522
|
|
Name
|
Jurisdiction of Incorporation
|
Molina Healthcare Data Center, Inc.
|
New Mexico
|
Molina Healthcare of Arizona, Inc.*
|
Arizona
|
Molina Healthcare of California
|
California
|
Molina Healthcare of California Partner Plan, Inc.
|
California
|
Molina Healthcare of Florida, Inc.
|
Florida
|
Molina Healthcare of Georgia, Inc.*
|
Georgia
|
Molina Healthcare of Illinois, Inc.
|
Illinois
|
Molina Healthcare of Maryland, Inc.*
|
Maryland
|
Molina Healthcare of Michigan, Inc.
|
Michigan
|
Molina Healthcare of Mississippi, Inc.*
|
Mississippi
|
Molina Healthcare of New Mexico, Inc.
|
New Mexico
|
Molina Healthcare of North Carolina, Inc.*
|
North Carolina
|
Molina Healthcare of Ohio, Inc.
|
Ohio
|
Molina Healthcare of Puerto Rico, Inc.
|
Puerto Rico
|
Molina Healthcare of South Carolina, Inc.
|
South Carolina
|
Molina Healthcare of Texas, Inc.
|
Texas
|
Molina Healthcare of Texas Insurance Company^
|
Texas
|
Molina Healthcare of Utah, Inc.
|
Utah
|
Molina Healthcare of Virginia, Inc.
|
Virginia
|
Molina Healthcare of Washington, Inc.
|
Washington
|
Molina Healthcare of Wisconsin, Inc.
|
Wisconsin
|
Molina Hospital Management, Inc.
|
California
|
Molina Information Systems, LLC, dba Molina Medicaid Solutions
|
California
|
Molina Medical Management, Inc.
|
California
|
Molina Pathways, LLC*
|
Delaware
|
Molina Pathways of Texas, Inc.+*
|
Texas
|
Molina Personal Care, Inc.+ *
|
Texas
|
Molina Personal Care of South Carolina, Inc.+*
|
South Carolina
|
Molina Youth Academy
|
California
|
*
|
Non-operational entity
|
^
|
Wholly owned subsidiary of Molina Healthcare of Texas, Inc.
|
+
|
Wholly owned subsidiary of Molina Pathways, LLC
|
|
|
|
|
|
|
|
/s/ Joseph M. Molina
|
|
|
|
Joseph M. Molina
|
|
|
|
Chief Executive Officer and President
|
|
|
|
|
|
|
|
/s/ John C. Molina
|
|
|
|
John C. Molina, J.D.
|
|
|
|
Chief Financial Officer and Treasurer
|
|
/s/ Joseph M. Molina
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Joseph M. Molina, M.D.
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Chief Executive Officer and President
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/s/ John C. Molina
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John C. Molina, J.D.
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Chief Financial Officer and Treasurer
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