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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-4204626
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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200 Oceangate, Suite 100
Long Beach, California
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90802
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
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¨
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ITEM NUMBER
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Page
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PART I - Financial Information
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1.
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||
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2.
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||
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3.
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||
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4.
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||
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Part II
- Other Information
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1.
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||
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1A.
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||
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2.
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||
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3.
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Defaults Upon Senior Securities
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Not Applicable.
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4.
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Mine Safety Disclosures
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Not Applicable.
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5.
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Other Information
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Not Applicable.
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6.
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||
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2018
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2017
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2018
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2017
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||||||||
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(In millions, except per-share data)
(Unaudited)
|
||||||||||||||
Revenue:
|
|
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|
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|
||||||||
Premium revenue
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$
|
4,514
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|
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$
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4,740
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|
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$
|
8,837
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|
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$
|
9,388
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Service revenue
|
127
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|
|
129
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|
|
261
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|
|
260
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|
||||
Premium tax revenue
|
106
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|
|
114
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|
|
210
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|
|
225
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|
||||
Health insurer fees reimbursed
|
104
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—
|
|
|
165
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|
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—
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|
||||
Investment income and other revenue
|
32
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|
|
16
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|
|
56
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|
|
30
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|
||||
Total revenue
|
4,883
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|
|
4,999
|
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9,529
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9,903
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||||
Operating expenses:
|
|
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||||||||
Medical care costs
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3,850
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|
|
4,491
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7,572
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8,602
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||||
Cost of service revenue
|
118
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|
|
124
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|
|
238
|
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246
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|
||||
General and administrative expenses
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335
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|
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405
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687
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844
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|
||||
Premium tax expenses
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106
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114
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|
|
210
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|
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225
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|
||||
Health insurer fees
|
99
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|
|
—
|
|
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174
|
|
|
—
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|
||||
Depreciation and amortization
|
25
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37
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|
|
51
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|
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76
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|
||||
Impairment losses
|
—
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72
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—
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72
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|
||||
Restructuring and separation costs
|
8
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43
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33
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43
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|
||||
Total operating expenses
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4,541
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|
5,286
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8,965
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10,108
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||||
Operating income (loss)
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342
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|
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(287
|
)
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564
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(205
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)
|
||||
Other expenses (income), net:
|
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||||||||
Interest expense
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32
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27
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65
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53
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|
||||
Other expense (income), net
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5
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—
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15
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(75
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)
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||||
Total other expenses (income), net
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37
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27
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80
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(22
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)
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||||
Income (loss) before income tax expense (benefit)
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305
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(314
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)
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484
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(183
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)
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||||
Income tax expense (benefit)
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103
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(84
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)
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175
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(30
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)
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||||
Net income (loss)
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$
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202
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|
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$
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(230
|
)
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$
|
309
|
|
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$
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(153
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)
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||||||||
Net income (loss) per share:
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||||||||
Basic
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$
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3.29
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$
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(4.10
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)
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$
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5.10
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$
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(2.74
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)
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Diluted
|
$
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3.02
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$
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(4.10
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)
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$
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4.68
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$
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(2.74
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)
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2018
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2017
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2018
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2017
|
||||||||
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(Amounts in millions)
(Unaudited)
|
||||||||||||||
Net income (loss)
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$
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202
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$
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(230
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)
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$
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309
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$
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(153
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)
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Other comprehensive income (loss):
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||||||||
Unrealized investment gain (loss)
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1
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—
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(6
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)
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1
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||||
Less: effect of income taxes
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(1
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)
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—
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(1
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)
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—
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|
||||
Other comprehensive income (loss), net of tax
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2
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—
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(5
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)
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1
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|
||||
Comprehensive income (loss)
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$
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204
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$
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(230
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)
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$
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304
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|
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$
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(152
|
)
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|
June 30,
2018 |
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December 31,
2017 |
||||
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(Amounts in millions,
except per-share data)
|
||||||
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(Unaudited)
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|
||||
ASSETS
|
|||||||
Current assets:
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|
||||
Cash and cash equivalents
|
$
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3,392
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$
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3,186
|
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Investments
|
2,176
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2,524
|
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Restricted investments
|
80
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|
|
169
|
|
||
Receivables
|
1,148
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|
|
871
|
|
||
Prepaid expenses and other current assets
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344
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|
|
239
|
|
||
Derivative asset
|
657
|
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|
522
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|
||
Assets held for sale
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230
|
|
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—
|
|
||
Total current assets
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8,027
|
|
|
7,511
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|
||
Property, equipment, and capitalized software, net
|
276
|
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342
|
|
||
Goodwill and intangible assets, net
|
201
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255
|
|
||
Restricted investments
|
117
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|
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119
|
|
||
Deferred income taxes
|
114
|
|
|
103
|
|
||
Other assets
|
28
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|
|
141
|
|
||
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$
|
8,763
|
|
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$
|
8,471
|
|
|
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|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Medical claims and benefits payable
|
$
|
1,920
|
|
|
$
|
2,192
|
|
Amounts due government agencies
|
1,746
|
|
|
1,542
|
|
||
Accounts payable and accrued liabilities
|
754
|
|
|
366
|
|
||
Deferred revenue
|
193
|
|
|
282
|
|
||
Current portion of long-term debt
|
484
|
|
|
653
|
|
||
Derivative liability
|
657
|
|
|
522
|
|
||
Liabilities held for sale
|
66
|
|
|
—
|
|
||
Total current liabilities
|
5,820
|
|
|
5,557
|
|
||
Long-term debt
|
1,019
|
|
|
1,318
|
|
||
Lease financing obligations
|
198
|
|
|
198
|
|
||
Other long-term liabilities
|
68
|
|
|
61
|
|
||
Total liabilities
|
7,105
|
|
|
7,134
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value, 150 shares authorized; outstanding: 62 shares at June 30, 2018 and 60 shares at December 31, 2017
|
—
|
|
|
—
|
|
||
Preferred stock, $0.001 par value; 20 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,055
|
|
|
1,044
|
|
||
Accumulated other comprehensive loss
|
(11
|
)
|
|
(5
|
)
|
||
Retained earnings
|
614
|
|
|
298
|
|
||
Total stockholders’ equity
|
1,658
|
|
|
1,337
|
|
||
|
$
|
8,763
|
|
|
$
|
8,471
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
|
Outstanding
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(In millions)
|
|||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||
Balance at January 1, 2018
|
60
|
|
|
$
|
—
|
|
|
$
|
1,044
|
|
|
$
|
(5
|
)
|
|
$
|
298
|
|
|
$
|
1,337
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309
|
|
|
309
|
|
|||||
Adoption of Topic 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|||||
Adoption of ASU 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|||||
Partial termination of 1.125% Warrants
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|||||
1.625% Convertible Notes exchange transaction
|
2
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Balance at June 30, 2018
|
62
|
|
|
$
|
—
|
|
|
$
|
1,055
|
|
|
$
|
(11
|
)
|
|
$
|
614
|
|
|
$
|
1,658
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(Amounts in millions)
(Unaudited) |
||||||
Operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
309
|
|
|
$
|
(153
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
73
|
|
|
96
|
|
||
Impairment losses
|
—
|
|
|
72
|
|
||
Deferred income taxes
|
(6
|
)
|
|
(41
|
)
|
||
Share-based compensation
|
13
|
|
|
35
|
|
||
Non-cash restructuring costs
|
17
|
|
|
—
|
|
||
Amortization of convertible senior notes and lease financing obligations
|
13
|
|
|
16
|
|
||
Loss on debt extinguishment
|
15
|
|
|
—
|
|
||
Other, net
|
4
|
|
|
7
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(315
|
)
|
|
(32
|
)
|
||
Prepaid expenses and other current assets
|
(181
|
)
|
|
(38
|
)
|
||
Medical claims and benefits payable
|
(267
|
)
|
|
148
|
|
||
Amounts due government agencies
|
205
|
|
|
642
|
|
||
Accounts payable and accrued liabilities
|
349
|
|
|
(18
|
)
|
||
Deferred revenue
|
(42
|
)
|
|
(32
|
)
|
||
Income taxes
|
127
|
|
|
(30
|
)
|
||
Net cash provided by operating activities
|
314
|
|
|
672
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of investments
|
(914
|
)
|
|
(1,636
|
)
|
||
Proceeds from sales and maturities of investments
|
1,335
|
|
|
874
|
|
||
Purchases of property, equipment and capitalized software
|
(14
|
)
|
|
(60
|
)
|
||
Other, net
|
(9
|
)
|
|
(24
|
)
|
||
Net cash provided by (used in) investing activities
|
398
|
|
|
(846
|
)
|
||
Financing activities:
|
|
|
|
||||
Repayment of credit facility
|
(300
|
)
|
|
—
|
|
||
Repayment of 1.125% Convertible Notes
|
(89
|
)
|
|
—
|
|
||
Cash paid for partial settlement of 1.125% Conversion Option
|
(134
|
)
|
|
—
|
|
||
Cash received for partial termination of 1.125% Call Option
|
134
|
|
|
—
|
|
||
Cash paid for partial termination of 1.125% Warrants
|
(113
|
)
|
|
—
|
|
||
Proceeds from senior notes offerings, net of issuance costs
|
—
|
|
|
325
|
|
||
Other, net
|
(1
|
)
|
|
8
|
|
||
Net cash (used in) provided by financing activities
|
(503
|
)
|
|
333
|
|
||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
209
|
|
|
159
|
|
||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
3,290
|
|
|
2,912
|
|
||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
3,499
|
|
|
$
|
3,071
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(Amounts in millions)
(Unaudited) |
||||||
Supplemental cash flow information:
|
|
|
|
||||
|
|
|
|
||||
Schedule of non-cash investing and financing activities:
|
|
|
|
||||
Common stock used for share-based compensation
|
$
|
(6
|
)
|
|
$
|
(21
|
)
|
|
|
|
|
||||
Details of change in fair value of derivatives, net:
|
|
|
|
||||
Gain on 1.125% Call Option
|
$
|
135
|
|
|
$
|
173
|
|
Loss on 1.125% Conversion Option
|
(135
|
)
|
|
(173
|
)
|
||
Change in fair value of derivatives, net
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
1.625% Convertible Notes exchange transaction:
|
|
|
|
||||
Common stock issued in exchange for 1.625% Convertible Notes
|
$
|
131
|
|
|
$
|
—
|
|
Component of 1.625% Convertible Notes allocated to additional paid-in capital, net of income taxes
|
(23
|
)
|
|
—
|
|
||
Net increase to additional paid-in capital
|
$
|
108
|
|
|
$
|
—
|
|
•
|
Income taxes refundable with “Prepaid expenses and other current assets;”
|
•
|
Income taxes payable with “Accounts payable and accrued liabilities;”
|
•
|
Goodwill, and intangible assets, net to a single line; and
|
•
|
Deferred contract costs with “Other assets.”
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Cash and cash equivalents
|
$
|
3,392
|
|
|
$
|
2,979
|
|
Restricted cash and cash equivalents
|
98
|
|
|
92
|
|
||
Cash and cash equivalents reported in assets held for sale
|
9
|
|
|
—
|
|
||
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows
|
$
|
3,499
|
|
|
$
|
3,071
|
|
1)
|
Contractual Provisions That May Adjust or Limit Revenue or Profit:
|
•
|
Medical Cost Floors (Minimums), and Medical Cost Corridors:
A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded a liability under the terms of such contract provisions of
$144 million
and
$135 million
at
June 30, 2018
and
December 31, 2017
, respectively. Approximately
$97 million
and
$96 million
of the liability accrued at
June 30, 2018
and
December 31, 2017
, respectively, relates to our participation in Medicaid Expansion programs. Refer to Note
12
, “
Commitments and Contingencies
,” for further information regarding the California Medicaid Expansion program.
|
•
|
Retroactive Premium Adjustments:
State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, rather than in the months of service to which the retroactive adjustment applies.
|
•
|
Minimum MLR:
Federal regulations have established a minimum annual medical loss ratio (Minimum MLR) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations.
|
•
|
Risk adjustment:
Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score, and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score. We estimate our ultimate premium based on insurance policy year-to-date experience, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of operations. As of
June 30, 2018
, and December 31, 2017, the Marketplace risk adjustment payable amounted to
$1,159 million
and
$912 million
, respectively. Refer to Note
12
, “
Commitments and Contingencies
,” for further information regarding recent developments in the Marketplace risk adjustment program.
|
•
|
Minimum MLR:
The Affordable Care Act (ACA) has established a Minimum MLR of
80%
for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations.
|
2)
|
Quality Incentives:
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Maximum available quality incentive premium - current period
|
$
|
47
|
|
|
$
|
39
|
|
|
$
|
87
|
|
|
$
|
77
|
|
Quality incentive premium revenue recognized in current period:
|
|
|
|
|
|
|
|
||||||||
Earned current period
|
$
|
34
|
|
|
$
|
29
|
|
|
$
|
58
|
|
|
$
|
48
|
|
Earned prior periods
|
12
|
|
|
1
|
|
|
23
|
|
|
6
|
|
||||
Total
|
$
|
46
|
|
|
$
|
30
|
|
|
$
|
81
|
|
|
54
|
|
|
|
|
|
|
|
|
|
|
||||||||
Quality incentive premium revenue recognized as a percentage of total premium revenue
|
1.0
|
%
|
|
0.6
|
%
|
|
0.9
|
%
|
|
0.6
|
%
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Receivables:
|
|
|
|
||||
Molina Medicaid Solutions
|
$
|
34
|
|
|
$
|
30
|
|
Other
|
40
|
|
|
44
|
|
||
Deferred contract costs (contract assets) – Molina Medicaid Solutions
|
109
|
|
|
101
|
|
||
Deferred revenue (contract liabilities) – Molina Medicaid Solutions
|
39
|
|
|
49
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions, except net income per share)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
202
|
|
|
$
|
(230
|
)
|
|
$
|
309
|
|
|
$
|
(153
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Shares outstanding at the beginning of the period
|
61
|
|
|
56
|
|
|
59
|
|
|
56
|
|
||||
Weighted-average number of shares issued:
|
|
|
|
|
|
|
|
||||||||
1.625% Exchange
(1)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Denominator for basic net income per share
|
61
|
|
|
56
|
|
|
61
|
|
|
56
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
1.625% Convertible Notes
(1)
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
1.125% Warrants
(1)
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Denominator for diluted net income per share
|
67
|
|
|
56
|
|
|
66
|
|
|
56
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share:
(2)
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
3.29
|
|
|
$
|
(4.10
|
)
|
|
$
|
5.10
|
|
|
$
|
(2.74
|
)
|
Diluted
|
$
|
3.02
|
|
|
$
|
(4.10
|
)
|
|
$
|
4.68
|
|
|
$
|
(2.74
|
)
|
|
|
|
|
|
|
|
|
||||||||
Potentially dilutive common shares excluded from calculations:
|
|
|
|
|
|
|
|
||||||||
1.125% Warrants
(1)
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
(1)
|
For more information and definitions regarding the
1.625%
Exchange and the
1.625%
Convertible Notes, refer to Note
7
, “
Debt
.” For more information regarding the
1.125%
Warrants, refer to Note
9
, “
Stockholders' Equity
.” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method. Certain potentially dilutive common shares issuable are not included in the computation of diluted net income (loss) per share because to do so would be anti-dilutive. For the three and six months ended June 30, 2017, the 1.125% Warrants were not included in diluted shares outstanding because to do so would have been anti-dilutive.
|
(2)
|
Source data for calculations in thousands.
|
|
Total
|
|
Quoted Market Prices (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,382
|
|
|
$
|
—
|
|
|
$
|
1,382
|
|
|
$
|
—
|
|
U.S. treasury notes
|
330
|
|
|
330
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities (GSEs)
|
207
|
|
|
207
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
136
|
|
|
—
|
|
|
136
|
|
|
—
|
|
||||
Asset-backed securities
|
99
|
|
|
—
|
|
|
99
|
|
|
—
|
|
||||
Certificate of deposit
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||
Other
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Subtotal - current investments
|
2,176
|
|
|
537
|
|
|
1,639
|
|
|
—
|
|
||||
Corporate debt securities
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
||||
U.S. treasury notes
|
25
|
|
|
25
|
|
|
—
|
|
|
—
|
|
||||
Subtotal - current restricted investments
|
80
|
|
|
25
|
|
|
55
|
|
|
—
|
|
||||
1.125% Call Option derivative asset
|
657
|
|
|
—
|
|
|
—
|
|
|
657
|
|
||||
Total assets
|
$
|
2,913
|
|
|
$
|
562
|
|
|
$
|
1,694
|
|
|
$
|
657
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Conversion Option derivative liability
|
$
|
657
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
657
|
|
Total liabilities
|
$
|
657
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
657
|
|
|
Total
|
|
Quoted Market Prices (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,588
|
|
|
$
|
—
|
|
|
$
|
1,588
|
|
|
$
|
—
|
|
U.S. treasury notes
|
388
|
|
|
388
|
|
|
—
|
|
|
—
|
|
||||
GSEs
|
253
|
|
|
253
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
141
|
|
|
—
|
|
|
141
|
|
|
—
|
|
||||
Asset-backed securities
|
117
|
|
|
—
|
|
|
117
|
|
|
—
|
|
||||
Certificates of deposit
|
37
|
|
|
—
|
|
|
37
|
|
|
—
|
|
||||
Subtotal - current investments
|
2,524
|
|
|
641
|
|
|
1,883
|
|
|
—
|
|
||||
Corporate debt securities
|
101
|
|
|
—
|
|
|
101
|
|
|
—
|
|
||||
U.S. treasury notes
|
68
|
|
|
68
|
|
|
—
|
|
|
—
|
|
||||
Subtotal - current restricted investments
|
169
|
|
|
68
|
|
|
101
|
|
|
—
|
|
||||
1.125% Call Option derivative asset
|
522
|
|
|
—
|
|
|
—
|
|
|
522
|
|
||||
Total assets
|
$
|
3,215
|
|
|
$
|
709
|
|
|
$
|
1,984
|
|
|
$
|
522
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Conversion Option derivative liability
|
$
|
522
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
522
|
|
Total liabilities
|
$
|
522
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
522
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(In millions)
|
||||||||||||||
5.375% Notes
|
$
|
693
|
|
|
$
|
706
|
|
|
$
|
692
|
|
|
$
|
730
|
|
1.125% Convertible Notes
(1)
|
420
|
|
|
1,099
|
|
|
496
|
|
|
1,052
|
|
||||
4.875% Notes
|
326
|
|
|
320
|
|
|
325
|
|
|
329
|
|
||||
1.625% Convertible Notes
|
63
|
|
|
107
|
|
|
157
|
|
|
220
|
|
||||
Credit Facility
|
—
|
|
|
—
|
|
|
300
|
|
|
300
|
|
||||
|
$
|
1,502
|
|
|
$
|
2,232
|
|
|
$
|
1,970
|
|
|
$
|
2,631
|
|
(1)
|
The fair value of the 1.125% Conversion Option (the embedded cash conversion option) amounted to
$657 million
and
$522 million
as of
June 30, 2018
, and
December 31, 2017
, respectively. See further discussion at Note
7
, “
Debt
,” and Note
8
, “
Derivatives
.”
|
|
June 30, 2018
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
Fair
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,390
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
1,382
|
|
U.S. treasury notes
|
331
|
|
|
—
|
|
|
1
|
|
|
330
|
|
||||
GSEs
|
209
|
|
|
—
|
|
|
2
|
|
|
207
|
|
||||
Municipal securities
|
138
|
|
|
—
|
|
|
2
|
|
|
136
|
|
||||
Asset backed securities
|
100
|
|
|
—
|
|
|
1
|
|
|
99
|
|
||||
Certificates of deposit
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||
Other
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Subtotal - current investments
|
2,190
|
|
|
—
|
|
|
14
|
|
|
2,176
|
|
||||
Corporate debt securities
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||
U.S. treasury notes
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||
Subtotal - current restricted investments
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||
|
$
|
2,270
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
2,256
|
|
|
December 31, 2017
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
Fair
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,591
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
1,588
|
|
U.S. treasury notes
|
389
|
|
|
—
|
|
|
1
|
|
|
388
|
|
||||
GSEs
|
255
|
|
|
—
|
|
|
2
|
|
|
253
|
|
||||
Municipal securities
|
142
|
|
|
—
|
|
|
1
|
|
|
141
|
|
||||
Asset-backed securities
|
117
|
|
|
—
|
|
|
—
|
|
|
117
|
|
||||
Certificates of deposit
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||
Subtotal - current investments
|
2,531
|
|
|
1
|
|
|
8
|
|
|
2,524
|
|
||||
Corporate debt securities
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
||||
U.S. treasury notes
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
||||
Subtotal - current restricted investments
|
169
|
|
|
—
|
|
|
—
|
|
|
169
|
|
||||
|
$
|
2,700
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
2,693
|
|
|
Amortized Cost
|
|
Estimated
Fair Value
|
||||
|
(In millions)
|
||||||
Due in one year or less
|
$
|
1,356
|
|
|
$
|
1,354
|
|
Due after one year through five years
|
914
|
|
|
902
|
|
||
|
$
|
2,270
|
|
|
$
|
2,256
|
|
|
In a Continuous Loss Position
for Less than 12 Months
|
|
In a Continuous Loss Position
for 12 Months or More
|
||||||||||||||||||
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
959
|
|
|
$
|
7
|
|
|
535
|
|
|
$
|
116
|
|
|
$
|
1
|
|
|
72
|
|
U.S. Treasury notes
|
224
|
|
|
1
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
GSEs
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
2
|
|
|
56
|
|
||||
Municipal securities
|
81
|
|
|
1
|
|
|
79
|
|
|
40
|
|
|
1
|
|
|
52
|
|
||||
Asset backed securities
|
90
|
|
|
1
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
1,354
|
|
|
$
|
10
|
|
|
725
|
|
|
$
|
269
|
|
|
$
|
4
|
|
|
180
|
|
|
In a Continuous Loss Position
for Less than 12 Months
|
|
In a Continuous Loss Position
for 12 Months or More
|
||||||||||||||||||
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total
Number of
Positions
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
1,297
|
|
|
$
|
3
|
|
|
561
|
|
|
$
|
94
|
|
|
$
|
1
|
|
|
69
|
|
U.S. Treasury Notes
|
470
|
|
|
1
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
GSEs
|
173
|
|
|
1
|
|
|
69
|
|
|
95
|
|
|
1
|
|
|
47
|
|
||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
1
|
|
|
48
|
|
||||
|
$
|
1,940
|
|
|
$
|
5
|
|
|
719
|
|
|
$
|
227
|
|
|
$
|
3
|
|
|
164
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Fee-for-service claims incurred but not paid (IBNP)
|
$
|
1,510
|
|
|
$
|
1,717
|
|
Pharmacy payable
|
116
|
|
|
112
|
|
||
Capitation payable
|
49
|
|
|
67
|
|
||
Other
|
245
|
|
|
296
|
|
||
|
$
|
1,920
|
|
|
$
|
2,192
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(Dollars in millions)
|
||||||
Medical claims and benefits payable, beginning balance
|
$
|
2,192
|
|
|
$
|
1,929
|
|
Components of medical care costs related to:
|
|
|
|
||||
Current period
|
7,794
|
|
|
8,633
|
|
||
Prior periods
|
(222
|
)
|
|
(31
|
)
|
||
Total medical care costs
|
7,572
|
|
|
8,602
|
|
||
|
|
|
|
||||
Change in non-risk provider payables
|
56
|
|
|
(114
|
)
|
||
|
|
|
|
||||
Payments for medical care costs related to:
|
|
|
|
||||
Current period
|
6,248
|
|
|
6,883
|
|
||
Prior periods
|
1,652
|
|
|
1,457
|
|
||
Total paid
|
7,900
|
|
|
8,340
|
|
||
Medical claims and benefits payable, ending balance
|
$
|
1,920
|
|
|
$
|
2,077
|
|
•
|
Across all of our health plans, the inventory of unpaid claims increased significantly during the first half of 2017, then decreased in the last half of 2017 and into 2018. Changes in claims inventories impact the timing between date of service and the date of claim payment, increasing the volatility of our liability estimates.
|
•
|
In June 2018, our Puerto Rico health plan implemented state prescribed claim billing requirements to ensure more accurate claims submissions. The billing requirements were more stringent and caused a significant number of claim denials. Although we expect providers to ultimately submit updated claims with
|
•
|
At our Florida health plan, a new clinical service system was implemented in the first quarter of 2018. This system impacted the reporting of inpatient authorizations used in our development of claims liabilities, which makes our liability estimates subject to more than the usual amount of uncertainty.
|
•
|
We recently implemented a new process for increased quality review of claims payments in nine of our health plans. While we do not anticipate this new process will impact the percentage of claims paid within the timely turnaround requirements, we believe it will have a minor impact on the timing of some paid claims. For this reason, our liability estimates in the nine health plans are subject to more than the usual amount of uncertainty.
|
•
|
The impact of the provision for adverse claims deviation and the accrued cost of settling claims as discussed above. Because we re-establish the provision for adverse claims deviation and the accrued cost of settling claims on a consistent basis every quarter, the impact of this item on the first half of 2018 results was minimal.
|
•
|
Across all of our health plans, the inventory of unpaid claims increased significantly during the first half of 2017, then decreased in the last half of 2017. In hindsight, the impact of the changes in claims processing timing reduced our liabilities more than we had anticipated.
|
•
|
December 2017 data from The Centers for Disease Control and Prevention indicated widespread influenza activity in several states in which we operate health plans. The additional liabilities established in consideration of increased claims related to a more severe influenza season turned out to be higher than our actual experience.
|
•
|
In establishing our liability at December 31, 2017, we anticipated an increase in the utilization of medical services by Marketplace members concerned about the future of their healthcare coverage as a result of uncertainties related to high premium increases and issuer exits. This induced demand did not materialize to the degree we expected.
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Current portion of long-term debt:
|
|
|
|
||||
1.125% Convertible Notes, net of unamortized discount
|
$
|
422
|
|
|
$
|
499
|
|
1.625% Convertible Notes, net of unamortized discount
|
63
|
|
|
157
|
|
||
Lease financing obligations
|
1
|
|
|
1
|
|
||
Debt issuance costs
|
(2
|
)
|
|
(4
|
)
|
||
|
484
|
|
|
653
|
|
||
Non-current portion of long-term debt:
|
|
|
|
||||
5.375% Notes
|
700
|
|
|
700
|
|
||
4.875% Notes
|
330
|
|
|
330
|
|
||
Credit Facility
|
—
|
|
|
300
|
|
||
Debt issuance costs
|
(11
|
)
|
|
(12
|
)
|
||
|
1,019
|
|
|
1,318
|
|
||
Lease financing obligations
|
198
|
|
|
198
|
|
||
|
$
|
1,701
|
|
|
$
|
2,169
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Contractual interest at coupon rate
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
6
|
|
Amortization of the discount
|
6
|
|
|
8
|
|
|
13
|
|
|
16
|
|
||||
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
17
|
|
|
$
|
22
|
|
•
|
Any future debt and/or equity transactions including term loans, but excluding any Credit Facility drawing (excluding transactions with proceeds used for working capital purposes and acquisition financings up to
$300 million
); and
|
•
|
On August 20, 2018 (the first put date for the 1.625% Convertible Notes), the Bridge Credit Agreement shall permanently be reduced by the greater of
$150 million
; and the principal amount of the 1.625% Convertible Notes that are exchanged into equity or otherwise defeased on or prior to that date.
|
•
|
On or prior to August 20, 2018, to:
|
◦
|
Redeem, repurchase, repay, tender for, or acquire for value all or any portion of our 1.625% Convertible Notes, defined and discussed further below, or to satisfy the cash portion of any consideration due upon any conversion of the 1.625% Convertible Notes and/or
|
◦
|
Pay any interest due on all or any portion of the 4.875% Notes.
|
•
|
On or after August 20, 2018, to repurchase all or any portion of the 1.625% Convertible Notes that we are obligated to repurchase; and
|
•
|
Subsequent to August 20, 2018 (or such earlier date in the event that there are no longer any 1.625% Convertible Notes outstanding), in any other manner not otherwise prohibited in the indenture governing the 4.875% Notes.
|
|
Balance Sheet Location
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
(In millions)
|
||||||
Derivative asset:
|
|
|
|
|
|
||||
1.125% Call Option
|
Current assets: Derivative asset
|
|
$
|
657
|
|
|
$
|
522
|
|
Derivative liability:
|
|
|
|
|
|
||||
1.125% Conversion Option
|
Current liabilities: Derivative liability
|
|
$
|
657
|
|
|
$
|
522
|
|
|
Restricted Stock Awards
|
|
Performance Stock Awards
|
|
Performance Stock Units
|
|
Total
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||
Unvested balance, December 31, 2017
|
401,804
|
|
|
84,762
|
|
|
91,828
|
|
|
578,394
|
|
|
$
|
58.35
|
|
Granted
|
346,491
|
|
|
—
|
|
|
211,969
|
|
|
558,460
|
|
|
73.43
|
|
|
Vested
|
(183,595
|
)
|
|
(32,929
|
)
|
|
—
|
|
|
(216,524
|
)
|
|
57.04
|
|
|
Forfeited
|
(124,690
|
)
|
|
(48,701
|
)
|
|
(101,320
|
)
|
|
(274,711
|
)
|
|
63.38
|
|
|
Unvested balance, June 30, 2018
|
440,010
|
|
|
3,132
|
|
|
202,477
|
|
|
645,619
|
|
|
69.69
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Granted:
|
|
|
|
||||
Restricted stock awards
|
$
|
25
|
|
|
$
|
19
|
|
Performance stock units
|
16
|
|
|
16
|
|
||
|
$
|
41
|
|
|
$
|
35
|
|
Vested:
|
|
|
|
||||
Restricted stock awards
|
$
|
14
|
|
|
$
|
20
|
|
Performance stock awards
|
3
|
|
|
15
|
|
||
Performance stock units
|
—
|
|
|
9
|
|
||
|
$
|
17
|
|
|
$
|
44
|
|
•
|
Streamlining of our organizational structure to eliminate redundant layers of management, consolidate regional support services, and other staff reductions to improve efficiency and the speed and quality of decision making;
|
•
|
Re-design of core operating processes such as provider payment, utilization management, quality monitoring and improvement, and information technology, to achieve more effective and cost-efficient outcomes;
|
•
|
Remediation of high-cost provider contracts and enhancement of high quality, cost-effective networks;
|
•
|
Restructuring, including selective exits, of direct delivery operations; and
|
•
|
Partnering with the lowest-cost, most effective vendors.
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||||||||
|
|
Write-offs of Current and Long-lived Assets
|
|
Consulting Fees
|
|
Contract Termination Costs
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Health Plans
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||||||||
|
|
Write-offs of Current and Long-lived Assets
|
|
Consulting Fees
|
|
Contract Termination Costs
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Health Plans
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
7
|
|
Other
|
5
|
|
|
20
|
|
|
1
|
|
|
—
|
|
|
26
|
|
|||||
|
$
|
5
|
|
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
33
|
|
|
Three Months and Six Months Ended June 30, 2017
|
||||||||||||||||||||||
|
Separation Costs - Former Executives
|
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||||||||||
|
|
|
Write-offs of Current and Long-lived Assets
|
|
Consulting Fees
|
|
Contract Termination Costs
|
|
|||||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Other
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
Separation Costs - Former Executives
|
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||||||||||
|
|
|
Write-offs of Current and Long-lived Assets
|
|
Consulting Fees
|
|
Contract Termination Costs
|
|
|||||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Health Plans
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
32
|
|
|
$
|
80
|
|
Molina Medicaid Solutions
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Other
|
36
|
|
|
39
|
|
|
57
|
|
|
45
|
|
|
2
|
|
|
179
|
|
||||||
|
$
|
36
|
|
|
$
|
72
|
|
|
$
|
80
|
|
|
$
|
45
|
|
|
$
|
34
|
|
|
$
|
267
|
|
|
Separation Costs - Former Executives
|
|
One-Time Termination Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Accrued as of December 31, 2017
|
$
|
2
|
|
|
$
|
11
|
|
|
$
|
35
|
|
|
$
|
48
|
|
Adjustments
|
—
|
|
|
(1
|
)
|
|
8
|
|
|
7
|
|
||||
Charges
|
—
|
|
|
6
|
|
|
2
|
|
|
8
|
|
||||
Cash payments
|
(2
|
)
|
|
(15
|
)
|
|
(13
|
)
|
|
(30
|
)
|
||||
Accrued as of June 30, 2018
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
32
|
|
|
$
|
33
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Total revenue:
|
|
|
|
|
|
|
|
||||||||
Health Plans
|
$
|
4,752
|
|
|
$
|
4,868
|
|
|
$
|
9,261
|
|
|
$
|
9,639
|
|
Molina Medicaid Solutions
|
48
|
|
|
47
|
|
|
99
|
|
|
93
|
|
||||
Other
|
83
|
|
|
84
|
|
|
169
|
|
|
171
|
|
||||
Consolidated
|
$
|
4,883
|
|
|
$
|
4,999
|
|
|
$
|
9,529
|
|
|
$
|
9,903
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Gross margin:
|
|
|
|
|
|
|
|
||||||||
Health Plans
|
$
|
664
|
|
|
$
|
249
|
|
|
$
|
1,265
|
|
|
$
|
786
|
|
Molina Medicaid Solutions
|
4
|
|
|
4
|
|
|
12
|
|
|
8
|
|
||||
Other
|
5
|
|
|
1
|
|
|
11
|
|
|
6
|
|
||||
Total gross margin
|
673
|
|
|
254
|
|
|
1,288
|
|
|
800
|
|
||||
Add: other operating revenues
(1)
|
242
|
|
|
130
|
|
|
431
|
|
|
255
|
|
||||
Less: other operating expenses
(2)
|
(573
|
)
|
|
(671
|
)
|
|
(1,155
|
)
|
|
(1,260
|
)
|
||||
Operating income (loss)
|
342
|
|
|
(287
|
)
|
|
564
|
|
|
(205
|
)
|
||||
Other expenses (income), net
|
37
|
|
|
27
|
|
|
80
|
|
|
(22
|
)
|
||||
Income (loss) before income taxes
|
$
|
305
|
|
|
$
|
(314
|
)
|
|
$
|
484
|
|
|
$
|
(183
|
)
|
(1)
|
Other operating revenues include premium tax revenue, health insurer fees reimbursed, and investment income and other revenue.
|
(2)
|
Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, impairment losses, and restructuring and separation costs.
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
261
|
|
|
$
|
49
|
|
|
$
|
4,834
|
|
|
$
|
(261
|
)
|
|
$
|
4,883
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
3
|
|
|
—
|
|
|
3,847
|
|
|
—
|
|
|
3,850
|
|
|||||
Cost of service revenue
|
—
|
|
|
44
|
|
|
74
|
|
|
—
|
|
|
118
|
|
|||||
General and administrative expenses
|
252
|
|
|
3
|
|
|
341
|
|
|
(261
|
)
|
|
335
|
|
|||||
Premium tax expenses
|
—
|
|
|
—
|
|
|
106
|
|
|
—
|
|
|
106
|
|
|||||
Health insurer fees
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
|||||
Depreciation and amortization
|
18
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
25
|
|
|||||
Restructuring and separation costs
|
(1
|
)
|
|
—
|
|
|
9
|
|
|
—
|
|
|
8
|
|
|||||
Total operating expenses
|
272
|
|
|
47
|
|
|
4,483
|
|
|
(261
|
)
|
|
4,541
|
|
|||||
Operating (loss) income
|
(11
|
)
|
|
2
|
|
|
351
|
|
|
—
|
|
|
342
|
|
|||||
Interest expense
|
31
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
32
|
|
|||||
Other expenses, net
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
(Loss) income before income taxes
|
(47
|
)
|
|
2
|
|
|
350
|
|
|
—
|
|
|
305
|
|
|||||
Income tax expense
|
1
|
|
|
1
|
|
|
101
|
|
|
—
|
|
|
103
|
|
|||||
Net (loss) income before equity in net earnings (losses) of subsidiaries
|
(48
|
)
|
|
1
|
|
|
249
|
|
|
—
|
|
|
202
|
|
|||||
Equity in net earnings (losses) of subsidiaries
|
250
|
|
|
(1
|
)
|
|
—
|
|
|
(249
|
)
|
|
—
|
|
|||||
Net income
|
$
|
202
|
|
|
$
|
—
|
|
|
$
|
249
|
|
|
$
|
(249
|
)
|
|
$
|
202
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Net income
|
$
|
202
|
|
|
$
|
—
|
|
|
$
|
249
|
|
|
$
|
(249
|
)
|
|
$
|
202
|
|
Other comprehensive gain, net of tax
|
2
|
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
2
|
|
|||||
Comprehensive income
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
251
|
|
|
$
|
(251
|
)
|
|
$
|
204
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
289
|
|
|
$
|
51
|
|
|
$
|
4,952
|
|
|
$
|
(293
|
)
|
|
$
|
4,999
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
3
|
|
|
—
|
|
|
4,488
|
|
|
—
|
|
|
4,491
|
|
|||||
Cost of service revenue
|
—
|
|
|
43
|
|
|
81
|
|
|
—
|
|
|
124
|
|
|||||
General and administrative expenses
|
258
|
|
|
7
|
|
|
433
|
|
|
(293
|
)
|
|
405
|
|
|||||
Premium tax expenses
|
—
|
|
|
—
|
|
|
114
|
|
|
—
|
|
|
114
|
|
|||||
Depreciation and amortization
|
25
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
37
|
|
|||||
Impairment losses
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
72
|
|
|||||
Restructuring and separation costs
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|||||
Total operating expenses
|
329
|
|
|
50
|
|
|
5,200
|
|
|
(293
|
)
|
|
5,286
|
|
|||||
Operating (loss) income
|
(40
|
)
|
|
1
|
|
|
(248
|
)
|
|
—
|
|
|
(287
|
)
|
|||||
Interest expense
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||
(Loss) income before income taxes
|
(67
|
)
|
|
1
|
|
|
(248
|
)
|
|
—
|
|
|
(314
|
)
|
|||||
Income tax benefit
|
(14
|
)
|
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
(84
|
)
|
|||||
Net (loss) income before equity in net losses of subsidiaries
|
(53
|
)
|
|
1
|
|
|
(178
|
)
|
|
—
|
|
|
(230
|
)
|
|||||
Equity in net losses of subsidiaries
|
(177
|
)
|
|
(64
|
)
|
|
—
|
|
|
241
|
|
|
—
|
|
|||||
Net loss
|
$
|
(230
|
)
|
|
$
|
(63
|
)
|
|
$
|
(178
|
)
|
|
$
|
241
|
|
|
$
|
(230
|
)
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Net loss
|
$
|
(230
|
)
|
|
$
|
(63
|
)
|
|
$
|
(178
|
)
|
|
$
|
241
|
|
|
$
|
(230
|
)
|
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Comprehensive loss
|
$
|
(230
|
)
|
|
$
|
(63
|
)
|
|
$
|
(178
|
)
|
|
$
|
241
|
|
|
$
|
(230
|
)
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
594
|
|
|
$
|
101
|
|
|
$
|
9,426
|
|
|
$
|
(592
|
)
|
|
$
|
9,529
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
7
|
|
|
—
|
|
|
7,565
|
|
|
—
|
|
|
7,572
|
|
|||||
Cost of service revenue
|
—
|
|
|
87
|
|
|
151
|
|
|
—
|
|
|
238
|
|
|||||
General and administrative expenses
|
519
|
|
|
7
|
|
|
753
|
|
|
(592
|
)
|
|
687
|
|
|||||
Premium tax expenses
|
—
|
|
|
—
|
|
|
210
|
|
|
—
|
|
|
210
|
|
|||||
Health insurer fees
|
—
|
|
|
—
|
|
|
174
|
|
|
—
|
|
|
174
|
|
|||||
Depreciation and amortization
|
36
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
51
|
|
|||||
Restructuring and separation costs
|
25
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
33
|
|
|||||
Total operating expenses
|
587
|
|
|
94
|
|
|
8,876
|
|
|
(592
|
)
|
|
8,965
|
|
|||||
Operating income
|
7
|
|
|
7
|
|
|
550
|
|
|
—
|
|
|
564
|
|
|||||
Interest expense
|
64
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
65
|
|
|||||
Other expenses, net
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
(Loss) income before income taxes
|
(72
|
)
|
|
7
|
|
|
549
|
|
|
—
|
|
|
484
|
|
|||||
Income tax expense
|
10
|
|
|
2
|
|
|
163
|
|
|
—
|
|
|
175
|
|
|||||
Net (loss) income before equity in net earnings (losses of subsidiaries
|
(82
|
)
|
|
5
|
|
|
386
|
|
|
—
|
|
|
309
|
|
|||||
Equity in net earnings (losses) of subsidiaries
|
391
|
|
|
(4
|
)
|
|
—
|
|
|
(387
|
)
|
|
—
|
|
|||||
Net income
|
$
|
309
|
|
|
$
|
1
|
|
|
$
|
386
|
|
|
$
|
(387
|
)
|
|
$
|
309
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Net income
|
$
|
309
|
|
|
$
|
1
|
|
|
$
|
386
|
|
|
$
|
(387
|
)
|
|
$
|
309
|
|
Other comprehensive loss, net of tax
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
5
|
|
|
(5
|
)
|
|||||
Comprehensive income
|
$
|
304
|
|
|
$
|
1
|
|
|
$
|
381
|
|
|
$
|
(382
|
)
|
|
$
|
304
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
630
|
|
|
$
|
99
|
|
|
$
|
9,809
|
|
|
$
|
(635
|
)
|
|
$
|
9,903
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care costs
|
7
|
|
|
—
|
|
|
8,595
|
|
|
—
|
|
|
8,602
|
|
|||||
Cost of service revenue
|
—
|
|
|
85
|
|
|
161
|
|
|
—
|
|
|
246
|
|
|||||
General and administrative expenses
|
555
|
|
|
14
|
|
|
910
|
|
|
(635
|
)
|
|
844
|
|
|||||
Premium tax expenses
|
—
|
|
|
—
|
|
|
225
|
|
|
—
|
|
|
225
|
|
|||||
Depreciation and amortization
|
52
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
76
|
|
|||||
Impairment losses
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
72
|
|
|||||
Restructuring and separation costs
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|||||
Total operating expenses
|
657
|
|
|
99
|
|
|
9,987
|
|
|
(635
|
)
|
|
10,108
|
|
|||||
Operating loss
|
(27
|
)
|
|
—
|
|
|
(178
|
)
|
|
—
|
|
|
(205
|
)
|
|||||
Interest expense
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||
Other income, net
|
(75
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|||||
Loss before income taxes
|
(5
|
)
|
|
—
|
|
|
(178
|
)
|
|
—
|
|
|
(183
|
)
|
|||||
Income tax expense (benefit)
|
17
|
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(30
|
)
|
|||||
Net loss before equity in net losses of subsidiaries
|
(22
|
)
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(153
|
)
|
|||||
Equity in net losses of subsidiaries
|
(131
|
)
|
|
(66
|
)
|
|
—
|
|
|
197
|
|
|
—
|
|
|||||
Net loss
|
$
|
(153
|
)
|
|
$
|
(66
|
)
|
|
$
|
(131
|
)
|
|
$
|
197
|
|
|
$
|
(153
|
)
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Net loss
|
$
|
(153
|
)
|
|
$
|
(66
|
)
|
|
$
|
(131
|
)
|
|
$
|
197
|
|
|
$
|
(153
|
)
|
Other comprehensive income, net of tax
|
1
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|||||
Comprehensive loss
|
$
|
(152
|
)
|
|
$
|
(66
|
)
|
|
$
|
(130
|
)
|
|
$
|
196
|
|
|
$
|
(152
|
)
|
|
June 30, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
235
|
|
|
$
|
2
|
|
|
$
|
3,155
|
|
|
$
|
—
|
|
|
$
|
3,392
|
|
Investments
|
105
|
|
|
—
|
|
|
2,071
|
|
|
—
|
|
|
2,176
|
|
|||||
Restricted investments
|
80
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|||||
Receivables
|
2
|
|
|
—
|
|
|
1,146
|
|
|
—
|
|
|
1,148
|
|
|||||
Due from (to) affiliates
|
68
|
|
|
(6
|
)
|
|
(62
|
)
|
|
—
|
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
62
|
|
|
—
|
|
|
282
|
|
|
—
|
|
|
344
|
|
|||||
Derivative asset
|
657
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
657
|
|
|||||
Assets held for sale
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|||||
Total current assets
|
1,209
|
|
|
226
|
|
|
6,592
|
|
|
—
|
|
|
8,027
|
|
|||||
Property, equipment, and capitalized software, net
|
196
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
276
|
|
|||||
Goodwill and intangible assets, net
|
14
|
|
|
—
|
|
|
187
|
|
|
—
|
|
|
201
|
|
|||||
Restricted investments
|
—
|
|
|
—
|
|
|
117
|
|
|
—
|
|
|
117
|
|
|||||
Investment in subsidiaries, net
|
2,761
|
|
|
76
|
|
|
—
|
|
|
(2,837
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
33
|
|
|
—
|
|
|
99
|
|
|
(18
|
)
|
|
114
|
|
|||||
Other assets
|
39
|
|
|
—
|
|
|
5
|
|
|
(16
|
)
|
|
28
|
|
|||||
|
$
|
4,252
|
|
|
$
|
302
|
|
|
$
|
7,080
|
|
|
$
|
(2,871
|
)
|
|
$
|
8,763
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical claims and benefits payable
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1,918
|
|
|
$
|
—
|
|
|
$
|
1,920
|
|
Amounts due government agencies
|
—
|
|
|
—
|
|
|
1,746
|
|
|
—
|
|
|
1,746
|
|
|||||
Accounts payable and accrued liabilities
|
211
|
|
|
—
|
|
|
543
|
|
|
—
|
|
|
754
|
|
|||||
Deferred revenue
|
—
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
|||||
Current portion of long-term debt
|
484
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
484
|
|
|||||
Derivative liability
|
657
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
657
|
|
|||||
Liabilities held for sale
|
—
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|||||
Total current liabilities
|
1,354
|
|
|
66
|
|
|
4,400
|
|
|
—
|
|
|
5,820
|
|
|||||
Long-term debt
|
1,217
|
|
|
—
|
|
|
16
|
|
|
(16
|
)
|
|
1,217
|
|
|||||
Deferred income taxes
|
—
|
|
|
18
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
23
|
|
|
1
|
|
|
44
|
|
|
—
|
|
|
68
|
|
|||||
Total liabilities
|
2,594
|
|
|
85
|
|
|
4,460
|
|
|
(34
|
)
|
|
7,105
|
|
|||||
Total stockholders’ equity
|
1,658
|
|
|
217
|
|
|
2,620
|
|
|
(2,837
|
)
|
|
1,658
|
|
|||||
|
$
|
4,252
|
|
|
$
|
302
|
|
|
$
|
7,080
|
|
|
$
|
(2,871
|
)
|
|
$
|
8,763
|
|
|
December 31, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
504
|
|
|
$
|
28
|
|
|
$
|
2,654
|
|
|
$
|
—
|
|
|
$
|
3,186
|
|
Investments
|
192
|
|
|
—
|
|
|
2,332
|
|
|
—
|
|
|
2,524
|
|
|||||
Restricted investments
|
169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|||||
Receivables
|
2
|
|
|
30
|
|
|
839
|
|
|
—
|
|
|
871
|
|
|||||
Due from (to) affiliates
|
148
|
|
|
(6
|
)
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
103
|
|
|
14
|
|
|
138
|
|
|
(16
|
)
|
|
239
|
|
|||||
Derivative asset
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|||||
Total current assets
|
1,640
|
|
|
66
|
|
|
5,821
|
|
|
(16
|
)
|
|
7,511
|
|
|||||
Property, equipment, and capitalized software, net
|
223
|
|
|
33
|
|
|
86
|
|
|
—
|
|
|
342
|
|
|||||
Goodwill and intangible assets, net
|
15
|
|
|
43
|
|
|
197
|
|
|
—
|
|
|
255
|
|
|||||
Restricted investments
|
—
|
|
|
—
|
|
|
119
|
|
|
—
|
|
|
119
|
|
|||||
Investment in subsidiaries, net
|
2,306
|
|
|
82
|
|
|
—
|
|
|
(2,388
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
17
|
|
|
—
|
|
|
101
|
|
|
(15
|
)
|
|
103
|
|
|||||
Other assets
|
32
|
|
|
103
|
|
|
7
|
|
|
(1
|
)
|
|
141
|
|
|||||
|
$
|
4,233
|
|
|
$
|
327
|
|
|
$
|
6,331
|
|
|
$
|
(2,420
|
)
|
|
$
|
8,471
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical claims and benefits payable
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
2,189
|
|
|
$
|
—
|
|
|
$
|
2,192
|
|
Amounts due government agencies
|
—
|
|
|
1
|
|
|
1,541
|
|
|
—
|
|
|
1,542
|
|
|||||
Accounts payable and accrued liabilities
|
178
|
|
|
40
|
|
|
148
|
|
|
—
|
|
|
366
|
|
|||||
Deferred revenue
|
—
|
|
|
49
|
|
|
233
|
|
|
—
|
|
|
282
|
|
|||||
Current portion of long-term debt
|
653
|
|
|
—
|
|
|
16
|
|
|
(16
|
)
|
|
653
|
|
|||||
Derivative liability
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|||||
Total current liabilities
|
1,356
|
|
|
90
|
|
|
4,127
|
|
|
(16
|
)
|
|
5,557
|
|
|||||
Long-term debt
|
1,516
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,516
|
|
|||||
Deferred income taxes
|
—
|
|
|
15
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
24
|
|
|
2
|
|
|
36
|
|
|
(1
|
)
|
|
61
|
|
|||||
Total liabilities
|
2,896
|
|
|
107
|
|
|
4,163
|
|
|
(32
|
)
|
|
7,134
|
|
|||||
Total stockholders’ equity
|
1,337
|
|
|
220
|
|
|
2,168
|
|
|
(2,388
|
)
|
|
1,337
|
|
|||||
|
$
|
4,233
|
|
|
$
|
327
|
|
|
$
|
6,331
|
|
|
$
|
(2,420
|
)
|
|
$
|
8,471
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
49
|
|
|
$
|
9
|
|
|
$
|
256
|
|
|
$
|
—
|
|
|
$
|
314
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of investments
|
(136
|
)
|
|
—
|
|
|
(778
|
)
|
|
—
|
|
|
(914
|
)
|
|||||
Proceeds from sales and maturities of investments
|
303
|
|
|
—
|
|
|
1,032
|
|
|
—
|
|
|
1,335
|
|
|||||
Purchases of property, equipment and capitalized software
|
(9
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
(14
|
)
|
|||||
Capital contributions to subsidiaries
|
(117
|
)
|
|
—
|
|
|
117
|
|
|
—
|
|
|
—
|
|
|||||
Dividends from subsidiaries
|
60
|
|
|
(10
|
)
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|||||
Change in amounts due to/from affiliates
|
75
|
|
|
1
|
|
|
(76
|
)
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
—
|
|
|
(14
|
)
|
|
5
|
|
|
—
|
|
|
(9
|
)
|
|||||
Net cash provided (used in) by investing activities
|
176
|
|
|
(26
|
)
|
|
248
|
|
|
—
|
|
|
398
|
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of credit facility
|
(300
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|||||
Repayment of 1.125% Convertible Notes
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|||||
Cash paid for partial settlement of 1.125% Conversion Option
|
(134
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(134
|
)
|
|||||
Cash received for partial termination of 1.125% Call Option
|
134
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
134
|
|
|||||
Cash paid for partial termination of 1.125% Warrants
|
(113
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|||||
Other, net
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Net cash used in financing activities
|
(503
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(503
|
)
|
|||||
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents
|
(278
|
)
|
|
(17
|
)
|
|
504
|
|
|
—
|
|
|
209
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
513
|
|
|
28
|
|
|
2,749
|
|
|
—
|
|
|
3,290
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
235
|
|
|
$
|
11
|
|
|
$
|
3,253
|
|
|
$
|
—
|
|
|
$
|
3,499
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent Guarantor
|
|
Other Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
90
|
|
|
$
|
44
|
|
|
$
|
538
|
|
|
$
|
—
|
|
|
$
|
672
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of investments
|
(330
|
)
|
|
—
|
|
|
(1,306
|
)
|
|
—
|
|
|
(1,636
|
)
|
|||||
Proceeds from sales and maturities of investments
|
127
|
|
|
—
|
|
|
747
|
|
|
—
|
|
|
874
|
|
|||||
Purchases of property, equipment and capitalized software
|
(45
|
)
|
|
(9
|
)
|
|
(6
|
)
|
|
—
|
|
|
(60
|
)
|
|||||
Capital contributions to subsidiaries
|
(238
|
)
|
|
2
|
|
|
236
|
|
|
—
|
|
|
—
|
|
|||||
Dividends from subsidiaries
|
120
|
|
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
—
|
|
|||||
Change in amounts due to/from affiliates
|
(34
|
)
|
|
2
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
—
|
|
|
(13
|
)
|
|
(11
|
)
|
|
—
|
|
|
(24
|
)
|
|||||
Net cash used in investing activities
|
(400
|
)
|
|
(18
|
)
|
|
(428
|
)
|
|
—
|
|
|
(846
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from senior notes offerings, net of issuance costs
|
325
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
325
|
|
|||||
Other, net
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Net cash provided by financing activities
|
333
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
333
|
|
|||||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
23
|
|
|
26
|
|
|
110
|
|
|
—
|
|
|
159
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
86
|
|
|
6
|
|
|
2,820
|
|
|
—
|
|
|
2,912
|
|
|||||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
109
|
|
|
$
|
32
|
|
|
$
|
2,930
|
|
|
$
|
—
|
|
|
$
|
3,071
|
|
•
|
the success of the Company’s profit improvement and maintenance initiatives, including the timing and amounts of the benefits realized, and administrative and medical cost savings achieved;
|
•
|
the numerous political and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare;”
|
•
|
the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk adjustment requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, and the adequacy of agreed rates;
|
•
|
subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment;
|
•
|
effective management of the Company’s medical costs;
|
•
|
the Company’s ability to predict with a reasonable degree of accuracy utilization rates, including utilization rates associated with seasonal flu patterns or other newly emergent diseases;
|
•
|
significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
|
•
|
the full reimbursement of the ACA health insurer fee, or HIF;
|
•
|
the success of the Company’s efforts to retain existing or awarded government contracts, including those in New Mexico and Texas, and those for Regions 8 and 11 in Florida, including the success of any protest filings or defenses;
|
•
|
the Company’s ability to manage its operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of its care management initiatives;
|
•
|
the Company’s ability to consummate and realize benefits from divestitures and acquisitions, including the timely closing of the MMS divestiture;
|
•
|
the Company’s receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
|
•
|
the Company’s ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
|
•
|
the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit sharing arrangements, and risk adjustment provisions and requirements;
|
•
|
the Company’s estimates of amounts owed for such cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions;
|
•
|
the Medicaid expansion medical cost corridors in California, New Mexico, and Washington, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
|
•
|
the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and the Company’s ability to recognize revenue amounts associated therewith;
|
•
|
cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
|
•
|
the success of the Company’s health plan in Puerto Rico, including the resolution of the debt crisis and the effect of the PROMESA law, and the impact of any future significant weather events;
|
•
|
the success and renewal of the Company’s duals demonstration programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas;
|
•
|
the accurate estimation of incurred but not reported or paid medical costs across the Company’s health plans;
|
•
|
efforts by states to recoup previously paid and recognized premium amounts;
|
•
|
complications, member confusion, or enrollment backlogs related to the annual renewal of Medicaid coverage;
|
•
|
government audits and reviews, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
|
•
|
changes with respect to the Company’s provider contracts and the loss of providers;
|
•
|
approval by state regulators of dividends and distributions by the Company’s health plan subsidiaries;
|
•
|
changes in funding under the Company’s contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
|
•
|
high dollar claims related to catastrophic illness;
|
•
|
the favorable resolution of litigation, arbitration, or administrative proceedings, including litigation involving the ACA to which we ourselves are not a direct party;
|
•
|
the relatively small number of states in which we operate health plans, including the greater scale and revenues of the Company’s California, Ohio, Texas, and Washington health plans;
|
•
|
the availability of adequate financing on acceptable terms to fund and capitalize the Company’s expansion and growth, repay the Company’s outstanding indebtedness at maturity and meet its liquidity needs, including the interest expense and other costs associated with such financing;
|
•
|
the Company’s failure to comply with the financial or other covenants in its credit agreements or the indentures governing its outstanding notes;
|
•
|
the sufficiency of the Company’s funds on hand to pay the amounts due upon conversion or maturity of its outstanding notes;
|
•
|
the failure of a state in which we operate to renew its federal Medicaid waiver;
|
•
|
changes generally affecting the managed care or Medicaid management information systems industries;
|
•
|
increases in government surcharges, taxes, and assessments, including but not limited to the deductibility of certain compensation costs;
|
•
|
newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
|
•
|
the unexpected loss of the leadership of one or more of our senior executives;
and
|
•
|
increasing competition and consolidation in the Medicaid industry
;
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions, except per-share amounts)
|
||||||||||||||
Ending total membership
|
4.1
|
|
|
4.7
|
|
|
4.1
|
|
|
4.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Premium revenue
|
$
|
4,514
|
|
|
$
|
4,740
|
|
|
$
|
8,837
|
|
|
$
|
9,388
|
|
Health Plans segment medical margin
(1)
|
$
|
664
|
|
|
$
|
249
|
|
|
$
|
1,265
|
|
|
$
|
786
|
|
Operating income (loss)
|
$
|
342
|
|
|
$
|
(287
|
)
|
|
$
|
564
|
|
|
$
|
(205
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
202
|
|
|
$
|
(230
|
)
|
|
$
|
309
|
|
|
$
|
(153
|
)
|
Net income (loss) per diluted share
|
$
|
3.02
|
|
|
$
|
(4.10
|
)
|
|
$
|
4.68
|
|
|
$
|
(2.74
|
)
|
Diluted weighted average shares outstanding
|
66.7
|
|
|
56.2
|
|
|
66.0
|
|
|
56.1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted net income (loss) per diluted share*
|
$
|
3.08
|
|
|
$
|
(4.01
|
)
|
|
$
|
4.80
|
|
|
$
|
(2.55
|
)
|
EBITDA*
|
$
|
370
|
|
|
$
|
(243
|
)
|
|
$
|
616
|
|
|
$
|
(40
|
)
|
|
|
|
|
|
|
|
|
||||||||
Operating Statistics:
|
|
|
|
|
|
|
|
||||||||
MCR
(2)
|
85.3
|
%
|
|
94.8
|
%
|
|
85.7
|
%
|
|
91.6
|
%
|
||||
G&A ratio
(3)
|
6.9
|
%
|
|
8.1
|
%
|
|
7.2
|
%
|
|
8.5
|
%
|
||||
Premium tax ratio
(2)
|
2.3
|
%
|
|
2.4
|
%
|
|
2.3
|
%
|
|
2.3
|
%
|
||||
Effective income tax rate
|
33.8
|
%
|
|
26.8
|
%
|
|
36.2
|
%
|
|
16.0
|
%
|
||||
Net profit (loss) margin
(3)
|
4.1
|
%
|
|
(4.6
|
)%
|
|
3.2
|
%
|
|
(1.5
|
)%
|
(1)
|
Medical margin is equal to premium revenue minus medical care costs.
|
(2)
|
MCR represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue.
|
(3)
|
G&A ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue.
|
•
|
In May 2018, our Washington health plan was selected by the Washington State Health Care Authority (HCA) to enter into a managed care contract for the eight remaining regions of the state’s Apple Health Integrated Managed Care program, in addition to the two regions previously awarded to us. We were selected by HCA for the following regions: Greater Columbia, King, North Sound, Pierce, and Spokane beginning January 1, 2019; and Salish, Thurston-Mason, and Great Rivers beginning January 1, 2020. As of June 30, 2018, we served approximately
742,000
Medicaid members in Washington, which represented premium revenue of
$1,083 million
for the
six months ended June 30, 2018
.
|
•
|
In June 2018, our Florida health plan was awarded comprehensive Medicaid Managed Care contracts by the Florida Agency for Health Care Administration (AHCA) in Regions 8 and 11 of the Florida Statewide Medicaid Managed Care Invitation to Negotiate. As of June 30, 2018, we served approximately
96,000
Medicaid members
|
•
|
In July 2018, our Puerto Rico health plan was selected by the Puerto Rico Health Insurance Administration to be one of the organizations to administer the Commonwealth’s new Medicaid Managed Care contract. Services under the new contract, currently expected to begin on November 1, 2018, would cover the entire island. The base contract runs for a period of three years with an optional one year extension. As of June 30, 2018, we served approximately
326,000
Medicaid members in the East and Southwest regions of Puerto Rico, which represented premium revenue of
$370 million
for the
six months ended June 30, 2018
.
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||
|
Amount
|
|
Per Diluted Share
(1)
|
|
Amount
|
|
Per Diluted Share
(1)
|
||||||||
|
(In millions, except per diluted share amounts)
|
||||||||||||||
Marketplace risk adjustment, for 2017 dates of service
|
$
|
79
|
|
|
$
|
0.92
|
|
|
$
|
56
|
|
|
$
|
0.66
|
|
Marketplace cost sharing reduction (CSR) subsidies, for 2017 dates of service
|
6
|
|
|
0.07
|
|
|
76
|
|
|
0.90
|
|
||||
Restructuring costs
|
(8
|
)
|
|
(0.10
|
)
|
|
(33
|
)
|
|
(0.39
|
)
|
||||
Loss on debt extinguishment
|
(5
|
)
|
|
(0.06
|
)
|
|
(15
|
)
|
|
(0.21
|
)
|
||||
|
$
|
72
|
|
|
$
|
0.83
|
|
|
$
|
84
|
|
|
$
|
0.96
|
|
|
Three Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||
|
Amount
|
|
Per Diluted Share
(1)
|
|
Amount
|
|
Per Diluted Share
(1)
|
||||||||
|
(In millions, except per diluted share amounts)
|
||||||||||||||
Impairment losses
|
$
|
(72
|
)
|
|
$
|
(1.01
|
)
|
|
$
|
(72
|
)
|
|
$
|
(1.02
|
)
|
Losses at behavioral health subsidiary exclusive of impairment
|
(8
|
)
|
|
(0.09
|
)
|
|
(12
|
)
|
|
(0.14
|
)
|
||||
Medical care costs related to prior year dates of service that were in excess of historical expectations
|
(85
|
)
|
|
(0.95
|
)
|
|
(74
|
)
|
|
(0.84
|
)
|
||||
Marketplace adjustments related to risk adjustment, CSR, and other items for 2016 dates of service
|
(44
|
)
|
|
(0.49
|
)
|
|
(47
|
)
|
|
(0.53
|
)
|
||||
Marketplace premium deficiency reserve for 2017 dates of service
|
(78
|
)
|
|
(0.87
|
)
|
|
(70
|
)
|
|
(0.79
|
)
|
||||
Restructuring and separation costs
|
(43
|
)
|
|
(0.68
|
)
|
|
(43
|
)
|
|
(0.68
|
)
|
||||
Fee received for terminated acquisition
|
—
|
|
|
—
|
|
|
75
|
|
|
0.84
|
|
||||
|
$
|
(330
|
)
|
|
$
|
(4.09
|
)
|
|
$
|
(243
|
)
|
|
$
|
(3.16
|
)
|
(1)
|
Except for certain items that are not deductible for tax purposes, per diluted share amounts are generally calculated at the statutory income tax rates of 22% for 2018, and 37% for 2017.
|
|
|
|
|
|
|
Premium Revenue
|
|
|
|
|
|||
|
|
|
|
Membership as of
|
|
Six Months Ended
|
|
Anticipated
|
|||||
State Health Plan
|
|
Medicaid Program(s)
|
|
June 30, 2018
|
|
June 30, 2018
|
|
Award Date
|
|
Effective Date
|
|||
Texas
|
|
ABD, MMP
|
|
99,000
|
|
|
$
|
966
|
|
|
Q2 2019
|
|
6/1/2020
|
Texas
|
|
TANF, CHIP
|
|
127,000
|
|
|
159
|
|
|
Q1 2019
|
|
1/1/2020
|
•
|
Ending the entitlement nature of Medicaid by capping future increases in federal health spending for these programs, and shifting more of the risk for health costs in the future to states and consumers;
|
•
|
Reversing the ACA’s expansion of Medicaid that enables states to cover low-income childless adults;
|
•
|
Changing Medicaid to a state block grant program, including potentially capping spending on a per-enrollee
|
•
|
Requiring Medicaid beneficiaries to work;
|
•
|
Limiting the amount of lifetime benefits for Medicaid beneficiaries; and
|
•
|
Numerous other potential changes and reforms.
|
•
|
Exited the Utah and Wisconsin Marketplaces. We are currently evaluating the re-entry into these markets in 2019;
|
•
|
Reduced the scope of our Washington state Marketplace participation;
|
•
|
Increased premiums averaging 58%;
|
•
|
Mitigated our exposure to uncertainties relating to cost share reduction (CSR) funding and reconciliation; and
|
•
|
Adjusted broker commissions to market rates.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Health Plans segment medical margin
(1)
|
$
|
664
|
|
|
$
|
249
|
|
|
$
|
1,265
|
|
|
$
|
786
|
|
Molina Medicaid Solutions segment service margin
(2)
|
4
|
|
|
4
|
|
|
12
|
|
|
8
|
|
||||
Other segment service margin
(2)
|
5
|
|
|
1
|
|
|
11
|
|
|
6
|
|
||||
|
673
|
|
|
254
|
|
|
$
|
1,288
|
|
|
$
|
800
|
|
||
|
|
|
|
|
|
|
|
||||||||
Health Plans segment medical care ratio
|
85.3
|
%
|
|
94.8
|
%
|
|
85.7
|
%
|
|
91.6
|
%
|
(1)
|
Represents premium revenue minus medical care costs.
|
(2)
|
Represents service revenue minus cost of service revenue.
|
|
June 30,
2018 |
|
December 31,
2017 |
|
June 30,
2017 |
|||
Ending Membership by Program:
|
|
|
|
|
|
|||
Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP)
|
2,464,000
|
|
|
2,457,000
|
|
|
2,517,000
|
|
Medicaid Expansion
|
675,000
|
|
|
668,000
|
|
|
678,000
|
|
Aged, Blind or Disabled (ABD)
|
415,000
|
|
|
412,000
|
|
|
408,000
|
|
Total Medicaid
|
3,554,000
|
|
|
3,537,000
|
|
|
3,603,000
|
|
Medicare-Medicaid Plan (MMP) – Integrated
(1)
|
55,000
|
|
|
57,000
|
|
|
54,000
|
|
Medicare Special Needs Plans (Medicare)
|
45,000
|
|
|
44,000
|
|
|
44,000
|
|
Total Medicare
|
100,000
|
|
|
101,000
|
|
|
98,000
|
|
Total Medicaid and Medicare
|
3,654,000
|
|
|
3,638,000
|
|
|
3,701,000
|
|
Marketplace
|
409,000
|
|
|
815,000
|
|
|
949,000
|
|
|
4,063,000
|
|
|
4,453,000
|
|
|
4,650,000
|
|
|
|
|
|
|
|
|||
Ending Membership by Health Plan:
|
|
|
|
|
|
|||
California
|
639,000
|
|
|
746,000
|
|
|
766,000
|
|
Florida
|
398,000
|
|
|
625,000
|
|
|
672,000
|
|
Illinois
|
219,000
|
|
|
165,000
|
|
|
163,000
|
|
Michigan
|
397,000
|
|
|
398,000
|
|
|
414,000
|
|
New Mexico
|
241,000
|
|
|
253,000
|
|
|
266,000
|
|
Ohio
|
320,000
|
|
|
327,000
|
|
|
351,000
|
|
Puerto Rico
|
326,000
|
|
|
314,000
|
|
|
322,000
|
|
South Carolina
|
114,000
|
|
|
116,000
|
|
|
112,000
|
|
Texas
|
450,000
|
|
|
430,000
|
|
|
465,000
|
|
Washington
|
776,000
|
|
|
777,000
|
|
|
788,000
|
|
Other
(2)
|
183,000
|
|
|
302,000
|
|
|
331,000
|
|
|
4,063,000
|
|
|
4,453,000
|
|
|
4,650,000
|
|
(1)
|
MMP members receive both Medicaid and Medicare coverage from Molina Healthcare.
|
(2)
|
“Other” includes the Idaho, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.
|
|
PMPM Premiums
|
||||||||||
|
Low
|
|
High
|
|
Consolidated
|
||||||
TANF and CHIP
|
$
|
120.00
|
|
|
$
|
330.00
|
|
|
$
|
190.00
|
|
Medicaid Expansion
|
320.00
|
|
|
500.00
|
|
|
370.00
|
|
|||
ABD
|
530.00
|
|
|
1,510.00
|
|
|
1,020.00
|
|
|||
MMP – Integrated
|
1,360.00
|
|
|
3,180.00
|
|
|
2,180.00
|
|
|||
Medicare
|
690.00
|
|
|
1,300.00
|
|
|
1,180.00
|
|
|||
Marketplace
|
250.00
|
|
|
650.00
|
|
|
370.00
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
7.5
|
|
|
$
|
1,393
|
|
|
$
|
186.18
|
|
|
$
|
1,205
|
|
|
$
|
161.13
|
|
|
86.5
|
%
|
|
$
|
188
|
|
Medicaid Expansion
|
2.1
|
|
|
761
|
|
|
372.04
|
|
|
676
|
|
|
330.83
|
|
|
88.9
|
|
|
85
|
|
|||||
ABD
|
1.3
|
|
|
1,288
|
|
|
1,033.34
|
|
|
1,209
|
|
|
969.27
|
|
|
93.8
|
|
|
79
|
|
|||||
Total Medicaid
|
10.9
|
|
|
3,442
|
|
|
319.52
|
|
|
3,090
|
|
|
286.89
|
|
|
89.8
|
|
|
352
|
|
|||||
MMP
|
0.1
|
|
|
367
|
|
|
2,224.30
|
|
|
313
|
|
|
1,893.91
|
|
|
85.1
|
|
|
54
|
|
|||||
Medicare
|
0.2
|
|
|
157
|
|
|
1,168.40
|
|
|
133
|
|
|
989.33
|
|
|
84.7
|
|
|
24
|
|
|||||
Total Medicare
|
0.3
|
|
|
524
|
|
|
1,751.49
|
|
|
446
|
|
|
1,488.85
|
|
|
85.0
|
|
|
78
|
|
|||||
Total Medicaid and Medicare
|
11.2
|
|
|
3,966
|
|
|
358.23
|
|
|
3,536
|
|
|
319.37
|
|
|
89.2
|
|
|
430
|
|
|||||
Marketplace
|
1.2
|
|
|
548
|
|
|
440.93
|
|
|
314
|
|
|
253.04
|
|
|
57.4
|
|
|
234
|
|
|||||
|
12.4
|
|
|
$
|
4,514
|
|
|
$
|
366.57
|
|
|
$
|
3,850
|
|
|
$
|
312.68
|
|
|
85.3
|
%
|
|
$
|
664
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
7.6
|
|
|
$
|
1,391
|
|
|
$
|
182.47
|
|
|
$
|
1,315
|
|
|
$
|
172.48
|
|
|
94.5
|
%
|
|
$
|
76
|
|
Medicaid Expansion
|
2.1
|
|
|
786
|
|
|
383.07
|
|
|
689
|
|
|
335.26
|
|
|
87.5
|
|
|
97
|
|
|||||
ABD
|
1.2
|
|
|
1,285
|
|
|
1,053.89
|
|
|
1,245
|
|
|
1,020.85
|
|
|
96.9
|
|
|
40
|
|
|||||
Total Medicaid
|
10.9
|
|
|
3,462
|
|
|
317.79
|
|
|
3,249
|
|
|
298.10
|
|
|
93.8
|
|
|
213
|
|
|||||
MMP
|
0.1
|
|
|
361
|
|
|
2,217.44
|
|
|
333
|
|
|
2,050.20
|
|
|
92.5
|
|
|
28
|
|
|||||
Medicare
|
0.2
|
|
|
148
|
|
|
1,126.14
|
|
|
126
|
|
|
963.34
|
|
|
85.5
|
|
|
22
|
|
|||||
Total Medicare
|
0.3
|
|
|
509
|
|
|
1,730.91
|
|
|
459
|
|
|
1,565.65
|
|
|
90.5
|
|
|
50
|
|
|||||
Total Medicaid and Medicare
|
11.2
|
|
|
3,971
|
|
|
354.87
|
|
|
3,708
|
|
|
331.36
|
|
|
93.4
|
|
|
263
|
|
|||||
Marketplace
|
2.8
|
|
|
769
|
|
|
267.37
|
|
|
783
|
|
|
272.37
|
|
|
101.9
|
|
|
(14
|
)
|
|||||
|
14.0
|
|
|
$
|
4,740
|
|
|
$
|
336.98
|
|
|
$
|
4,491
|
|
|
$
|
319.29
|
|
|
94.8
|
%
|
|
$
|
249
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
14.9
|
|
|
$
|
2,766
|
|
|
$
|
185.66
|
|
|
$
|
2,477
|
|
|
$
|
166.32
|
|
|
89.6
|
%
|
|
$
|
289
|
|
Medicaid Expansion
|
4.1
|
|
|
1,513
|
|
|
372.39
|
|
|
1,317
|
|
|
324.19
|
|
|
87.1
|
|
|
196
|
|
|||||
ABD
|
2.5
|
|
|
2,542
|
|
|
1,023.83
|
|
|
2,364
|
|
|
951.99
|
|
|
93.0
|
|
|
178
|
|
|||||
Total Medicaid
|
21.5
|
|
|
6,821
|
|
|
318.11
|
|
|
6,158
|
|
|
287.22
|
|
|
90.3
|
|
|
663
|
|
|||||
MMP
|
0.3
|
|
|
724
|
|
|
2,180.86
|
|
|
618
|
|
|
1,858.87
|
|
|
85.2
|
|
|
106
|
|
|||||
Medicare
|
0.3
|
|
|
314
|
|
|
1,178.58
|
|
|
264
|
|
|
992.05
|
|
|
84.2
|
|
|
50
|
|
|||||
Total Medicare
|
0.6
|
|
|
1,038
|
|
|
1,735.05
|
|
|
882
|
|
|
1,473.30
|
|
|
84.9
|
|
|
156
|
|
|||||
Total Medicaid and Medicare
|
22.1
|
|
|
7,859
|
|
|
356.59
|
|
|
7,040
|
|
|
319.43
|
|
|
89.6
|
|
|
819
|
|
|||||
Marketplace
|
2.6
|
|
|
978
|
|
|
373.67
|
|
|
532
|
|
|
203.34
|
|
|
54.4
|
|
|
446
|
|
|||||
|
24.7
|
|
|
$
|
8,837
|
|
|
$
|
358.40
|
|
|
$
|
7,572
|
|
|
$
|
307.11
|
|
|
85.7
|
%
|
|
$
|
1,265
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
15.3
|
|
|
$
|
2,793
|
|
|
$
|
182.58
|
|
|
$
|
2,619
|
|
|
$
|
171.25
|
|
|
93.8
|
%
|
|
$
|
174
|
|
Medicaid Expansion
|
4.1
|
|
|
1,603
|
|
|
390.88
|
|
|
1,378
|
|
|
335.88
|
|
|
85.9
|
|
|
225
|
|
|||||
ABD
|
2.4
|
|
|
2,481
|
|
|
1,030.68
|
|
|
2,375
|
|
|
986.54
|
|
|
95.7
|
|
|
106
|
|
|||||
Total Medicaid
|
21.8
|
|
|
6,877
|
|
|
315.39
|
|
|
6,372
|
|
|
292.22
|
|
|
92.7
|
|
|
505
|
|
|||||
MMP
|
0.3
|
|
|
705
|
|
|
2,152.75
|
|
|
640
|
|
|
1,954.15
|
|
|
90.8
|
|
|
65
|
|
|||||
Medicare
|
0.3
|
|
|
286
|
|
|
1,097.36
|
|
|
243
|
|
|
933.20
|
|
|
85.0
|
|
|
43
|
|
|||||
Total Medicare
|
0.6
|
|
|
991
|
|
|
1,685.72
|
|
|
883
|
|
|
1,502.36
|
|
|
89.1
|
|
|
108
|
|
|||||
Total Medicaid and Medicare
|
22.4
|
|
|
7,868
|
|
|
351.35
|
|
|
7,255
|
|
|
323.98
|
|
|
92.2
|
|
|
613
|
|
|||||
Marketplace
|
5.7
|
|
|
1,520
|
|
|
264.77
|
|
|
1,347
|
|
|
234.62
|
|
|
88.6
|
|
|
173
|
|
|||||
|
28.1
|
|
|
$
|
9,388
|
|
|
$
|
333.68
|
|
|
$
|
8,602
|
|
|
$
|
305.74
|
|
|
91.6
|
%
|
|
$
|
786
|
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
(2)
|
“MCR” represents medical costs as a percentage of premium revenue.
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.8
|
|
|
$
|
517
|
|
|
$
|
289.80
|
|
|
$
|
441
|
|
|
$
|
247.36
|
|
|
85.4
|
%
|
|
$
|
76
|
|
Florida
|
1.2
|
|
|
377
|
|
|
353.81
|
|
|
362
|
|
|
339.31
|
|
|
95.9
|
|
|
15
|
|
|||||
Illinois
|
0.6
|
|
|
203
|
|
|
311.60
|
|
|
170
|
|
|
261.59
|
|
|
84.0
|
|
|
33
|
|
|||||
Michigan
|
1.2
|
|
|
388
|
|
|
342.45
|
|
|
331
|
|
|
292.20
|
|
|
85.3
|
|
|
57
|
|
|||||
New Mexico
|
0.7
|
|
|
313
|
|
|
469.88
|
|
|
290
|
|
|
435.36
|
|
|
92.7
|
|
|
23
|
|
|||||
Ohio
|
1.0
|
|
|
535
|
|
|
571.08
|
|
|
482
|
|
|
514.57
|
|
|
90.1
|
|
|
53
|
|
|||||
Puerto Rico
|
0.9
|
|
|
184
|
|
|
188.26
|
|
|
165
|
|
|
168.20
|
|
|
89.3
|
|
|
19
|
|
|||||
South Carolina
|
0.4
|
|
|
123
|
|
|
350.22
|
|
|
107
|
|
|
304.20
|
|
|
86.9
|
|
|
16
|
|
|||||
Texas
|
0.7
|
|
|
576
|
|
|
835.66
|
|
|
510
|
|
|
740.55
|
|
|
88.6
|
|
|
66
|
|
|||||
Washington
|
2.2
|
|
|
571
|
|
|
252.61
|
|
|
526
|
|
|
232.49
|
|
|
92.0
|
|
|
45
|
|
|||||
Other
(1)
|
0.5
|
|
|
179
|
|
|
322.99
|
|
|
152
|
|
|
274.59
|
|
|
85.0
|
|
|
27
|
|
|||||
|
11.2
|
|
|
$
|
3,966
|
|
|
$
|
358.23
|
|
|
$
|
3,536
|
|
|
$
|
319.37
|
|
|
89.2
|
%
|
|
$
|
430
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.9
|
|
|
$
|
598
|
|
|
$
|
318.89
|
|
|
$
|
539
|
|
|
$
|
287.36
|
|
|
90.1
|
%
|
|
$
|
59
|
|
Florida
|
1.1
|
|
|
380
|
|
|
347.20
|
|
|
370
|
|
|
337.92
|
|
|
97.3
|
|
|
10
|
|
|||||
Illinois
|
0.5
|
|
|
149
|
|
|
289.51
|
|
|
174
|
|
|
336.76
|
|
|
116.3
|
|
|
(25
|
)
|
|||||
Michigan
|
1.1
|
|
|
390
|
|
|
333.26
|
|
|
358
|
|
|
305.40
|
|
|
91.6
|
|
|
32
|
|
|||||
New Mexico
|
0.8
|
|
|
321
|
|
|
443.13
|
|
|
311
|
|
|
428.58
|
|
|
96.7
|
|
|
10
|
|
|||||
Ohio
|
1.0
|
|
|
529
|
|
|
536.90
|
|
|
489
|
|
|
496.41
|
|
|
92.5
|
|
|
40
|
|
|||||
Puerto Rico
|
0.9
|
|
|
179
|
|
|
184.28
|
|
|
189
|
|
|
194.42
|
|
|
105.5
|
|
|
(10
|
)
|
|||||
South Carolina
|
0.4
|
|
|
111
|
|
|
326.57
|
|
|
102
|
|
|
304.14
|
|
|
93.1
|
|
|
9
|
|
|||||
Texas
|
0.7
|
|
|
524
|
|
|
752.01
|
|
|
473
|
|
|
679.43
|
|
|
90.3
|
|
|
51
|
|
|||||
Washington
|
2.2
|
|
|
618
|
|
|
276.90
|
|
|
546
|
|
|
244.58
|
|
|
88.3
|
|
|
72
|
|
|||||
Other
(1)
|
0.6
|
|
|
172
|
|
|
294.15
|
|
|
157
|
|
|
268.91
|
|
|
91.4
|
|
|
15
|
|
|||||
|
11.2
|
|
|
$
|
3,971
|
|
|
$
|
354.87
|
|
|
$
|
3,708
|
|
|
$
|
331.36
|
|
|
93.4
|
%
|
|
$
|
263
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
3.6
|
|
|
$
|
1,011
|
|
|
$
|
281.14
|
|
|
$
|
853
|
|
|
$
|
237.26
|
|
|
84.4
|
%
|
|
$
|
158
|
|
Florida
|
2.2
|
|
|
759
|
|
|
352.68
|
|
|
707
|
|
|
328.26
|
|
|
93.1
|
|
|
52
|
|
|||||
Illinois
|
1.1
|
|
|
344
|
|
|
305.94
|
|
|
292
|
|
|
259.87
|
|
|
84.9
|
|
|
52
|
|
|||||
Michigan
|
2.3
|
|
|
764
|
|
|
339.56
|
|
|
662
|
|
|
294.19
|
|
|
86.6
|
|
|
102
|
|
|||||
New Mexico
|
1.4
|
|
|
632
|
|
|
468.00
|
|
|
600
|
|
|
444.44
|
|
|
95.0
|
|
|
32
|
|
|||||
Ohio
|
1.9
|
|
|
1,086
|
|
|
573.87
|
|
|
942
|
|
|
497.75
|
|
|
86.7
|
|
|
144
|
|
|||||
Puerto Rico
|
1.9
|
|
|
370
|
|
|
190.68
|
|
|
339
|
|
|
174.74
|
|
|
91.6
|
|
|
31
|
|
|||||
South Carolina
|
0.7
|
|
|
245
|
|
|
349.15
|
|
|
211
|
|
|
300.87
|
|
|
86.2
|
|
|
34
|
|
|||||
Texas
|
1.4
|
|
|
1,138
|
|
|
822.72
|
|
|
1,029
|
|
|
744.05
|
|
|
90.4
|
|
|
109
|
|
|||||
Washington
|
4.5
|
|
|
1,155
|
|
|
254.64
|
|
|
1,100
|
|
|
242.48
|
|
|
95.2
|
|
|
55
|
|
|||||
Other
(1)
|
1.1
|
|
|
355
|
|
|
318.94
|
|
|
305
|
|
|
273.97
|
|
|
85.9
|
|
|
50
|
|
|||||
|
22.1
|
|
|
$
|
7,859
|
|
|
$
|
356.59
|
|
|
$
|
7,040
|
|
|
$
|
319.43
|
|
|
89.6
|
%
|
|
$
|
819
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
3.7
|
|
|
$
|
1,170
|
|
|
$
|
313.76
|
|
|
$
|
1,023
|
|
|
$
|
274.42
|
|
|
87.5
|
%
|
|
$
|
147
|
|
Florida
|
2.2
|
|
|
744
|
|
|
343.29
|
|
|
722
|
|
|
333.23
|
|
|
97.1
|
|
|
22
|
|
|||||
Illinois
|
1.1
|
|
|
310
|
|
|
282.66
|
|
|
354
|
|
|
322.63
|
|
|
114.1
|
|
|
(44
|
)
|
|||||
Michigan
|
2.3
|
|
|
772
|
|
|
330.34
|
|
|
690
|
|
|
295.02
|
|
|
89.3
|
|
|
82
|
|
|||||
New Mexico
|
1.5
|
|
|
629
|
|
|
432.98
|
|
|
610
|
|
|
419.65
|
|
|
96.9
|
|
|
19
|
|
|||||
Ohio
|
2.0
|
|
|
1,049
|
|
|
532.35
|
|
|
951
|
|
|
482.73
|
|
|
90.7
|
|
|
98
|
|
|||||
Puerto Rico
|
1.9
|
|
|
362
|
|
|
185.40
|
|
|
354
|
|
|
181.24
|
|
|
97.8
|
|
|
8
|
|
|||||
South Carolina
|
0.7
|
|
|
216
|
|
|
321.85
|
|
|
200
|
|
|
298.79
|
|
|
92.8
|
|
|
16
|
|
|||||
Texas
|
1.4
|
|
|
1,051
|
|
|
751.94
|
|
|
962
|
|
|
687.96
|
|
|
91.5
|
|
|
89
|
|
|||||
Washington
|
4.4
|
|
|
1,223
|
|
|
275.05
|
|
|
1,081
|
|
|
243.18
|
|
|
88.4
|
|
|
142
|
|
|||||
Other
(1)
|
1.2
|
|
|
342
|
|
|
291.93
|
|
|
308
|
|
|
262.97
|
|
|
90.1
|
|
|
34
|
|
|||||
|
22.4
|
|
|
$
|
7,868
|
|
|
$
|
351.35
|
|
|
$
|
7,255
|
|
|
$
|
323.98
|
|
|
92.2
|
%
|
|
$
|
613
|
|
(1)
|
“Other” includes the Idaho, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.2
|
|
|
$
|
73
|
|
|
$
|
426.16
|
|
|
$
|
21
|
|
|
$
|
117.92
|
|
|
27.7
|
%
|
|
$
|
52
|
|
Florida
|
0.1
|
|
|
100
|
|
|
698.31
|
|
|
38
|
|
|
269.86
|
|
|
38.6
|
|
|
62
|
|
|||||
Michigan
|
—
|
|
|
15
|
|
|
288.67
|
|
|
7
|
|
|
146.97
|
|
|
50.9
|
|
|
8
|
|
|||||
New Mexico
|
—
|
|
|
31
|
|
|
418.82
|
|
|
18
|
|
|
247.06
|
|
|
59.0
|
|
|
13
|
|
|||||
Ohio
|
—
|
|
|
31
|
|
|
518.64
|
|
|
23
|
|
|
381.46
|
|
|
73.6
|
|
|
8
|
|
|||||
Texas
|
0.7
|
|
|
222
|
|
|
330.12
|
|
|
160
|
|
|
238.72
|
|
|
72.3
|
|
|
62
|
|
|||||
Washington
|
0.2
|
|
|
56
|
|
|
787.80
|
|
|
41
|
|
|
572.48
|
|
|
72.7
|
|
|
15
|
|
|||||
Other
(1)
|
—
|
|
|
20
|
|
|
NM
|
|
|
6
|
|
|
NM
|
|
|
NM
|
|
14
|
|
||||||
|
1.2
|
|
|
$
|
548
|
|
|
$
|
440.93
|
|
|
$
|
314
|
|
|
$
|
253.04
|
|
|
57.4
|
%
|
|
$
|
234
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.5
|
|
|
$
|
81
|
|
|
$
|
186.90
|
|
|
$
|
67
|
|
|
$
|
154.23
|
|
|
82.5
|
%
|
|
$
|
14
|
|
Florida
|
0.9
|
|
|
269
|
|
|
284.60
|
|
|
317
|
|
|
336.78
|
|
|
118.3
|
|
|
(48
|
)
|
|||||
Michigan
|
0.1
|
|
|
16
|
|
|
204.15
|
|
|
10
|
|
|
135.89
|
|
|
66.6
|
|
|
6
|
|
|||||
New Mexico
|
—
|
|
|
31
|
|
|
367.98
|
|
|
23
|
|
|
266.91
|
|
|
72.5
|
|
|
8
|
|
|||||
Ohio
|
—
|
|
|
24
|
|
|
377.94
|
|
|
27
|
|
|
404.20
|
|
|
106.9
|
|
|
(3
|
)
|
|||||
Texas
|
0.7
|
|
|
177
|
|
|
247.49
|
|
|
129
|
|
|
180.92
|
|
|
73.1
|
|
|
48
|
|
|||||
Washington
|
0.2
|
|
|
44
|
|
|
317.42
|
|
|
49
|
|
|
359.87
|
|
|
113.4
|
|
|
(5
|
)
|
|||||
Other
(1)
|
0.4
|
|
|
127
|
|
|
304.00
|
|
|
161
|
|
|
383.02
|
|
|
126.0
|
|
|
(34
|
)
|
|||||
|
2.8
|
|
|
$
|
769
|
|
|
$
|
267.37
|
|
|
$
|
783
|
|
|
$
|
272.37
|
|
|
101.9
|
%
|
|
$
|
(14
|
)
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.4
|
|
|
$
|
122
|
|
|
$
|
334.47
|
|
|
$
|
52
|
|
|
$
|
141.73
|
|
|
42.4
|
%
|
|
$
|
70
|
|
Florida
|
0.3
|
|
|
145
|
|
|
468.36
|
|
|
22
|
|
|
73.13
|
|
|
15.6
|
|
|
123
|
|
|||||
Michigan
|
0.1
|
|
|
28
|
|
|
254.69
|
|
|
16
|
|
|
145.49
|
|
|
57.1
|
|
|
12
|
|
|||||
New Mexico
|
0.1
|
|
|
65
|
|
|
429.19
|
|
|
37
|
|
|
246.77
|
|
|
57.5
|
|
|
28
|
|
|||||
Ohio
|
0.1
|
|
|
57
|
|
|
458.48
|
|
|
40
|
|
|
319.53
|
|
|
69.7
|
|
|
17
|
|
|||||
Texas
|
1.4
|
|
|
451
|
|
|
318.93
|
|
|
306
|
|
|
216.83
|
|
|
68.0
|
|
|
145
|
|
|||||
Washington
|
0.2
|
|
|
95
|
|
|
653.89
|
|
|
71
|
|
|
486.90
|
|
|
74.5
|
|
|
24
|
|
|||||
Other
(1)
|
—
|
|
|
15
|
|
|
NM
|
|
|
(12
|
)
|
|
NM
|
|
|
NM
|
|
27
|
|
||||||
|
2.6
|
|
|
$
|
978
|
|
|
$
|
373.67
|
|
|
$
|
532
|
|
|
$
|
203.34
|
|
|
54.4
|
%
|
|
$
|
446
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.9
|
|
|
$
|
153
|
|
|
$
|
185.68
|
|
|
$
|
93
|
|
|
$
|
112.20
|
|
|
60.4
|
%
|
|
$
|
60
|
|
Florida
|
1.9
|
|
|
561
|
|
|
288.81
|
|
|
523
|
|
|
269.48
|
|
|
93.3
|
|
|
38
|
|
|||||
Michigan
|
0.2
|
|
|
27
|
|
|
177.12
|
|
|
17
|
|
|
116.21
|
|
|
65.6
|
|
|
10
|
|
|||||
New Mexico
|
0.1
|
|
|
53
|
|
|
317.10
|
|
|
42
|
|
|
249.90
|
|
|
78.8
|
|
|
11
|
|
|||||
Ohio
|
0.1
|
|
|
45
|
|
|
356.20
|
|
|
44
|
|
|
339.26
|
|
|
95.2
|
|
|
1
|
|
|||||
Texas
|
1.4
|
|
|
334
|
|
|
235.07
|
|
|
242
|
|
|
171.07
|
|
|
72.8
|
|
|
92
|
|
|||||
Washington
|
0.3
|
|
|
81
|
|
|
310.26
|
|
|
95
|
|
|
362.78
|
|
|
116.9
|
|
|
(14
|
)
|
|||||
Other
(1)
|
0.8
|
|
|
266
|
|
|
313.77
|
|
|
291
|
|
|
342.88
|
|
|
109.3
|
|
|
(25
|
)
|
|||||
|
5.7
|
|
|
$
|
1,520
|
|
|
$
|
264.77
|
|
|
$
|
1,347
|
|
|
$
|
234.62
|
|
|
88.6
|
%
|
|
$
|
173
|
|
(1)
|
“Other” includes the Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results. We terminated Marketplace operations at these plans effective January 1, 2018, so the ratios for 2018 periods are not meaningful (NM).
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
2.0
|
|
|
$
|
590
|
|
|
$
|
301.73
|
|
|
$
|
462
|
|
|
$
|
236.04
|
|
|
78.2
|
%
|
|
$
|
128
|
|
Florida
|
1.3
|
|
|
477
|
|
|
394.38
|
|
|
400
|
|
|
331.13
|
|
|
84.0
|
|
|
77
|
|
|||||
Illinois
|
0.6
|
|
|
203
|
|
|
311.60
|
|
|
170
|
|
|
261.59
|
|
|
84.0
|
|
|
33
|
|
|||||
Michigan
|
1.2
|
|
|
403
|
|
|
340.08
|
|
|
338
|
|
|
285.78
|
|
|
84.0
|
|
|
65
|
|
|||||
New Mexico
|
0.7
|
|
|
344
|
|
|
464.90
|
|
|
308
|
|
|
416.99
|
|
|
89.7
|
|
|
36
|
|
|||||
Ohio
|
1.0
|
|
|
566
|
|
|
567.96
|
|
|
505
|
|
|
506.66
|
|
|
89.2
|
|
|
61
|
|
|||||
Puerto Rico
|
0.9
|
|
|
184
|
|
|
188.26
|
|
|
165
|
|
|
168.20
|
|
|
89.3
|
|
|
19
|
|
|||||
South Carolina
|
0.4
|
|
|
123
|
|
|
350.22
|
|
|
107
|
|
|
304.20
|
|
|
86.9
|
|
|
16
|
|
|||||
Texas
|
1.4
|
|
|
798
|
|
|
585.50
|
|
|
670
|
|
|
492.23
|
|
|
84.1
|
|
|
128
|
|
|||||
Washington
|
2.4
|
|
|
627
|
|
|
268.84
|
|
|
567
|
|
|
242.80
|
|
|
90.3
|
|
|
60
|
|
|||||
Other
(1)
|
0.5
|
|
|
199
|
|
|
360.90
|
|
|
158
|
|
|
285.65
|
|
|
79.1
|
|
|
41
|
|
|||||
|
12.4
|
|
|
$
|
4,514
|
|
|
$
|
366.57
|
|
|
$
|
3,850
|
|
|
$
|
312.68
|
|
|
85.3
|
%
|
|
$
|
664
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
2.4
|
|
|
$
|
679
|
|
|
$
|
294.09
|
|
|
$
|
606
|
|
|
$
|
262.34
|
|
|
89.2
|
%
|
|
$
|
73
|
|
Florida
|
2.0
|
|
|
649
|
|
|
318.21
|
|
|
687
|
|
|
337.39
|
|
|
106.0
|
|
|
(38
|
)
|
|||||
Illinois
|
0.5
|
|
|
149
|
|
|
289.51
|
|
|
174
|
|
|
336.76
|
|
|
116.3
|
|
|
(25
|
)
|
|||||
Michigan
|
1.2
|
|
|
406
|
|
|
325.38
|
|
|
368
|
|
|
295.06
|
|
|
90.7
|
|
|
38
|
|
|||||
New Mexico
|
0.8
|
|
|
352
|
|
|
435.34
|
|
|
334
|
|
|
411.83
|
|
|
94.6
|
|
|
18
|
|
|||||
Ohio
|
1.0
|
|
|
553
|
|
|
527.14
|
|
|
516
|
|
|
490.75
|
|
|
93.1
|
|
|
37
|
|
|||||
Puerto Rico
|
0.9
|
|
|
179
|
|
|
184.28
|
|
|
189
|
|
|
194.42
|
|
|
105.5
|
|
|
(10
|
)
|
|||||
South Carolina
|
0.4
|
|
|
111
|
|
|
326.57
|
|
|
102
|
|
|
304.14
|
|
|
93.1
|
|
|
9
|
|
|||||
Texas
|
1.4
|
|
|
701
|
|
|
495.93
|
|
|
602
|
|
|
426.41
|
|
|
86.0
|
|
|
99
|
|
|||||
Washington
|
2.4
|
|
|
662
|
|
|
279.21
|
|
|
595
|
|
|
251.16
|
|
|
90.0
|
|
|
67
|
|
|||||
Other
(1)
|
1.0
|
|
|
299
|
|
|
298.29
|
|
|
318
|
|
|
316.89
|
|
|
106.2
|
|
|
(19
|
)
|
|||||
|
14.0
|
|
|
$
|
4,740
|
|
|
$
|
336.98
|
|
|
$
|
4,491
|
|
|
$
|
319.29
|
|
|
94.8
|
%
|
|
$
|
249
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4.0
|
|
|
$
|
1,133
|
|
|
$
|
286.07
|
|
|
$
|
905
|
|
|
$
|
228.44
|
|
|
79.9
|
%
|
|
$
|
228
|
|
Florida
|
2.5
|
|
|
904
|
|
|
367.18
|
|
|
729
|
|
|
296.29
|
|
|
80.7
|
|
|
175
|
|
|||||
Illinois
|
1.1
|
|
|
344
|
|
|
305.94
|
|
|
292
|
|
|
259.87
|
|
|
84.9
|
|
|
52
|
|
|||||
Michigan
|
2.4
|
|
|
792
|
|
|
335.59
|
|
|
678
|
|
|
287.23
|
|
|
85.6
|
|
|
114
|
|
|||||
New Mexico
|
1.5
|
|
|
697
|
|
|
464.11
|
|
|
637
|
|
|
424.58
|
|
|
91.5
|
|
|
60
|
|
|||||
Ohio
|
2.0
|
|
|
1,143
|
|
|
566.77
|
|
|
982
|
|
|
486.79
|
|
|
85.9
|
|
|
161
|
|
|||||
Puerto Rico
|
1.9
|
|
|
370
|
|
|
190.68
|
|
|
339
|
|
|
174.74
|
|
|
91.6
|
|
|
31
|
|
|||||
South Carolina
|
0.7
|
|
|
245
|
|
|
349.15
|
|
|
211
|
|
|
300.87
|
|
|
86.2
|
|
|
34
|
|
|||||
Texas
|
2.8
|
|
|
1,589
|
|
|
567.95
|
|
|
1,335
|
|
|
477.43
|
|
|
84.1
|
|
|
254
|
|
|||||
Washington
|
4.7
|
|
|
1,250
|
|
|
267.01
|
|
|
1,171
|
|
|
250.05
|
|
|
93.6
|
|
|
79
|
|
|||||
Other
(1)
|
1.1
|
|
|
370
|
|
|
333.35
|
|
|
293
|
|
|
263.24
|
|
|
79.0
|
|
|
77
|
|
|||||
|
24.7
|
|
|
$
|
8,837
|
|
|
$
|
358.40
|
|
|
$
|
7,572
|
|
|
$
|
307.11
|
|
|
85.7
|
%
|
|
$
|
1,265
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4.6
|
|
|
$
|
1,323
|
|
|
$
|
290.56
|
|
|
$
|
1,116
|
|
|
$
|
245.02
|
|
|
84.3
|
%
|
|
$
|
207
|
|
Florida
|
4.1
|
|
|
1,305
|
|
|
317.53
|
|
|
1,245
|
|
|
303.09
|
|
|
95.5
|
|
|
60
|
|
|||||
Illinois
|
1.1
|
|
|
310
|
|
|
282.66
|
|
|
354
|
|
|
322.63
|
|
|
114.1
|
|
|
(44
|
)
|
|||||
Michigan
|
2.5
|
|
|
799
|
|
|
321.10
|
|
|
707
|
|
|
284.24
|
|
|
88.5
|
|
|
92
|
|
|||||
New Mexico
|
1.6
|
|
|
682
|
|
|
421.11
|
|
|
652
|
|
|
402.27
|
|
|
95.5
|
|
|
30
|
|
|||||
Ohio
|
2.1
|
|
|
1,094
|
|
|
521.57
|
|
|
995
|
|
|
473.95
|
|
|
90.9
|
|
|
99
|
|
|||||
Puerto Rico
|
1.9
|
|
|
362
|
|
|
185.40
|
|
|
354
|
|
|
181.24
|
|
|
97.8
|
|
|
8
|
|
|||||
South Carolina
|
0.7
|
|
|
216
|
|
|
321.85
|
|
|
200
|
|
|
298.79
|
|
|
92.8
|
|
|
16
|
|
|||||
Texas
|
2.8
|
|
|
1,385
|
|
|
491.46
|
|
|
1,204
|
|
|
427.48
|
|
|
87.0
|
|
|
181
|
|
|||||
Washington
|
4.7
|
|
|
1,304
|
|
|
276.99
|
|
|
1,176
|
|
|
249.79
|
|
|
90.2
|
|
|
128
|
|
|||||
Other
(1)
|
2.0
|
|
|
608
|
|
|
301.11
|
|
|
599
|
|
|
296.58
|
|
|
98.5
|
|
|
9
|
|
|||||
|
28.1
|
|
|
$
|
9,388
|
|
|
$
|
333.68
|
|
|
$
|
8,602
|
|
|
$
|
305.74
|
|
|
91.6
|
%
|
|
$
|
786
|
|
(1)
|
“Other” includes the Idaho, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
||||||||||
Fee for service
|
$
|
2,861
|
|
|
$
|
232.40
|
|
|
74.4
|
%
|
|
$
|
3,348
|
|
|
$
|
238.04
|
|
|
74.5
|
%
|
Pharmacy
|
567
|
|
|
46.05
|
|
|
14.7
|
|
|
650
|
|
|
46.23
|
|
|
14.5
|
|
||||
Capitation
|
282
|
|
|
22.89
|
|
|
7.3
|
|
|
356
|
|
|
25.29
|
|
|
7.9
|
|
||||
Other
|
140
|
|
|
11.34
|
|
|
3.6
|
|
|
137
|
|
|
9.73
|
|
|
3.1
|
|
||||
|
$
|
3,850
|
|
|
$
|
312.68
|
|
|
100.0
|
%
|
|
$
|
4,491
|
|
|
$
|
319.29
|
|
|
100.0
|
%
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of Total
|
|
Amount
|
|
PMPM
|
|
% of Total
|
||||||||||
Fee for service
|
$
|
5,606
|
|
|
$
|
227.38
|
|
|
74.1
|
%
|
|
$
|
6,434
|
|
|
$
|
228.68
|
|
|
74.8
|
%
|
Pharmacy
|
1,150
|
|
|
46.66
|
|
|
15.2
|
|
|
1,266
|
|
|
45.00
|
|
|
14.7
|
|
||||
Capitation
|
594
|
|
|
24.09
|
|
|
7.8
|
|
|
680
|
|
|
24.17
|
|
|
7.9
|
|
||||
Other
|
222
|
|
|
8.98
|
|
|
2.9
|
|
|
222
|
|
|
7.89
|
|
|
2.6
|
|
||||
|
$
|
7,572
|
|
|
$
|
307.11
|
|
|
100.0
|
%
|
|
$
|
8,602
|
|
|
$
|
305.74
|
|
|
100.0
|
%
|
|
|
|
Six Months Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
|
(In millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
314
|
|
|
$
|
672
|
|
|
$
|
(358
|
)
|
Net cash provided by (used in) investing activities
|
398
|
|
|
(846
|
)
|
|
1,244
|
|
|||
Net cash (used in) provided by financing activities
|
(503
|
)
|
|
333
|
|
|
(836
|
)
|
|||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
$
|
209
|
|
|
$
|
159
|
|
|
$
|
50
|
|
•
|
$300 million
repayment the Credit Facility;
|
•
|
$89 million
repayment of the 1.125% Convertible Notes;
|
•
|
$134 million
cash paid for partial settlement of the 1.125% Conversion Option; and
|
•
|
$113 million
cash paid for partial termination of the 1.125% Warrants.
|
Credit Facility Financial Covenants
|
Required Per Agreement
|
|
As of June 30, 2018
|
|
|
|
|
Net leverage ratio
|
<4.0x
|
|
1.4x
|
Interest coverage ratio
|
>3.5x
|
|
9.7x
|
Estimated Savings Expected to be Realized by Reportable Segment
|
|
Health Plans
|
|
Other
|
|
Total
|
|
|
(In millions)
|
||||
General and administrative expenses
|
|
$65
|
|
$92 to $152
|
|
$157 to $217
|
Medical care costs
|
|
$126 to $166
|
|
$17
|
|
$143 to $183
|
|
|
$191 to $231
|
|
$109 to $169
|
|
$300 to $400
|
•
|
1.625% Convertible Notes.
On July 11, 2018, we announced notice of our election to redeem the remaining
$64 million
aggregate principal amount of the 1.625% Convertible Notes on August 20, 2018 (the Redemption Date). Pursuant to the terms of the indenture, the 1.625% Convertible Notes will be redeemed for cash equal to 100% of the principal amount plus accrued and unpaid interest to, but excluding the Redemption Date (the Redemption Price).
|
•
|
1.125% Convertible Notes. The principal amount of our 1.125% Convertible Notes is convertible into cash prior to its maturity date under certain circumstances, one of which relates to the closing price of our common stock over a specified period. We refer to this conversion trigger as the stock price trigger. The stock price trigger for the 1.125% Notes is $53.00 per share. The 1.125% Convertible Notes met this trigger in the quarter ended
June 30, 2018
, and are convertible to cash through at least September 30, 2018. Because the 1.125% Convertible Notes may be converted into cash within 12 months, the
$420 million
carrying amount is reported in current portion of long-term debt as of
June 30, 2018
. If conversion requests are received, the settlement of the notes must be paid in cash pursuant to the terms of the relevant indentures. We have sufficient available cash, combined with borrowing capacity available under our Credit Facility and Bridge Credit Agreement, to fund conversions should they occur.
|
•
|
Health Plans segment medical claims and benefits payable
. Refer to Notes to Consolidated Financial Statements, Note
6
, “
Medical Claims and Benefits Payable
,” for a table that presents the components of the change in medical claims and benefits payable, and for additional information regarding the factors used to determine our changes in estimates for all periods presented in the accompanying consolidated financial statements. Other than the discussion as noted above, there have been no significant changes during the
six months ended June 30, 2018
, to our disclosure reported in “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
•
|
Health Plans segment contractual provisions that may adjust or limit revenue or profit
. For a discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Notes to Consolidated Financial Statements, Note
2
, “
Significant Accounting Policies
.”
|
•
|
Health Plans segment quality incentives
. For a discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Notes to Consolidated Financial Statements, Note
2
, “
Significant Accounting Policies
.”
|
•
|
Goodwill and intangible assets, net.
There have been no significant changes during the
six months ended June 30, 2018
, to our disclosure reported in “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
|
(In millions)
|
||||||||||||||
Net income (loss)
|
$
|
202
|
|
|
$
|
(230
|
)
|
|
$
|
309
|
|
|
$
|
(153
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation, and amortization of intangible assets and capitalized software
|
33
|
|
|
44
|
|
|
67
|
|
|
90
|
|
||||
Interest expense
|
32
|
|
|
27
|
|
|
65
|
|
|
53
|
|
||||
Income tax expense (benefit)
|
103
|
|
|
(84
|
)
|
|
175
|
|
|
(30
|
)
|
||||
EBITDA*
|
$
|
370
|
|
|
$
|
(243
|
)
|
|
$
|
616
|
|
|
$
|
(40
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||||||||||||||||||
|
(In millions, except diluted per-share amounts)
|
||||||||||||||||||||||||||||||
Net income (loss)
|
$
|
202
|
|
|
$
|
3.02
|
|
|
$
|
(230
|
)
|
|
$
|
(4.10
|
)
|
|
$
|
309
|
|
|
$
|
4.68
|
|
|
$
|
(153
|
)
|
|
$
|
(2.74
|
)
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of intangible assets
|
5
|
|
|
0.08
|
|
|
8
|
|
|
0.14
|
|
|
10
|
|
|
0.16
|
|
|
17
|
|
|
0.30
|
|
||||||||
Income tax effect
(1)
|
(1
|
)
|
|
(0.02
|
)
|
|
(3
|
)
|
|
(0.05
|
)
|
|
(2
|
)
|
|
(0.04
|
)
|
|
(6
|
)
|
|
(0.11
|
)
|
||||||||
Amortization of intangible assets, net of tax effect
|
4
|
|
|
0.06
|
|
|
5
|
|
|
0.09
|
|
|
8
|
|
|
0.12
|
|
|
11
|
|
|
0.19
|
|
||||||||
Adjusted net income (loss)*
|
$
|
206
|
|
|
$
|
3.08
|
|
|
$
|
(225
|
)
|
|
$
|
(4.01
|
)
|
|
$
|
317
|
|
|
$
|
4.80
|
|
|
$
|
(142
|
)
|
|
$
|
(2.55
|
)
|
(1)
|
Income tax effect of adjustments calculated at the blended federal and state statutory tax rates of 22% and 37% for 2018 and 2017, respectively.
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly
Announced
Plans or
Programs
|
|
Approximate
Dollar Value
of Shares Authorized to Be Purchased Under the Plans or Programs
|
||||||
April 1 - April 30
|
2,528
|
|
|
$
|
81.18
|
|
|
—
|
|
|
$
|
—
|
|
May 1 - May 31
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
June 1 - June 30
|
4,096
|
|
|
$
|
85.46
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
6,624
|
|
|
$
|
83.83
|
|
|
—
|
|
|
|
(1)
|
During the
three months ended June 30, 2018
, we withheld
6,624
shares of common stock under our 2011 Equity Incentive Plan to settle employee income tax obligations.
|
Exhibit No.
|
|
Title
|
|
Method of Filing
|
|
|
|
|
|
|
Purchase and Sale Agreement, dated as of June 26, 2018, by and between Molina Healthcare, Inc. and DXC Technology Company*
|
|
Filed as Exhibit 2.1 to registrant’s Form 8-K filed June 27, 2018.
|
|
|
|
|
|
|
|
Fifth Amended and Restated Bylaws of Molina Healthcare, Inc.
|
|
Filed as Exhibit 3.1 to registrant’s Form 8-K filed May 7, 2018.
|
|
|
|
|
|
|
|
Offer Letter, dated May 4, 2018, by and between Molina Healthcare, Inc. and Thomas L. Tran.
|
|
Filed as Exhibit 10.1 to registrant’s Form 8-K filed May 24, 2018.
|
|
|
|
|
|
|
|
Molina Healthcare, Inc. Amended and Restated Deferred Compensation Plan (2018)
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Section 302 Certification of Chief Executive Officer
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Section 302 Certification of Chief Financial Officer
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
|
101.INS
|
|
XBRL Taxonomy Instance Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
MOLINA HEALTHCARE, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
Dated:
|
August 1, 2018
|
|
/s/ JOSEPH M. ZUBRETSKY
|
|
|
|
Joseph M. Zubretsky
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated:
|
August 1, 2018
|
|
/s/ THOMAS L. TRAN
|
|
|
|
Thomas L. Tran
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
1.
|
Definitions. Whenever used in this Plan, the following words and phrases shall have the meaning set forth below, unless a different meaning is expressly provided or plainly required by the context in which the words or phrases are used:
|
1.1.
|
Beneficiary means a person designated by a Participant to receive Plan benefits in the event of the Participant's death.
|
1.2.
|
Board means the Board of Directors of the Company and its successors.
|
1.3.
|
Change in Control means, a Change in Ownership, a Change in the Effective Control, a Change in Assets or a termination of the Plan and distribution of compensation deferred hereunder within twelve (12) months after any of the foregoing events. For purposes of this Section, "Company" shall include (i) the company for which a Participant is performing services at the time of the Change in Control, (ii) the company liable for the payment of the deferred compensation (or all companies liable if more than one company is liable), or a company that is a majority shareholder of a company identified in
|
a.
|
Change in Ownership means the acquisition of stock by any one person or persons acting in concert (a "group") of the Company, that when added to the stock of the person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. The acquisition of additional stock by any person or group who are already considered to own more than 50% of the stock of the Company shall not constitute a change in ownership of the Company. An increase in the percentage of stock owned by any person or group, as result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section.
|
b.
|
Change in the Effective Control means the occurrence of any of the following events, despite the fact that the Company has not undergone a Change in Ownership as described above:
|
i.
|
The acquisition by any person or group (or acquisition during the 12-month period ending on the date of the most recent acquisition by such person or persons) of ownership of stock of the Company possessing 35% or more of the total voting power of the stock, except if such acquisition is the result of a change in "record ownership" and not a change in "beneficial ownership;"
|
ii.
|
The replacement of a majority of the Company's board of directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's board of directors prior to the date of the appointment or election; or
|
iii
|
A transaction between the Company and another company resulting in a Change in Control.
|
iv.
|
Provided that this section shall not apply to the acquisition of additional control of the Company by any person or group, if that person or group is considered to effectively control the Company prior to the acquisition
|
c.
|
Change in Assets means the acquisition by any person or group (or acquisition during the 12-month period ending on the date of the most recent acquisition by such person or persons) of assets from the Company, that have a total gross fair market value equal to, or more than, 40% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions. A transfer of assets by the Company will not be treated as a Change in Assets if the assets are transferred to any of the following (determined immediately after the transfer):
|
i.
|
A shareholder of the Company (as determined, immediately before the asset transfer) in exchange for or with respect to its stock;
|
ii.
|
An entity, 50% or more of the total value or voting power of which is owned directly or indirectly by the Company;
|
iii.
|
A person or group that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or
|
iv.
|
An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in (iii).
|
1.4.
|
Company means MOLINA HEALTHCARE, INC., a Delaware corporation.
|
1.5.
|
Company Stock means shares of stock issued by the Company.
|
1.6.
|
Disability or Disabled means with respect to a Participant (i) the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) the receipt of income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company or a Subsidiary, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.
|
1.7.
|
The original Effective Date of this Plan means January 1, 2005. The Effective Date of this Restatement shall mean January 1, 2018.
|
1.8.
|
Key Employee means an employee of the Company or a Subsidiary, who is (A) a member of a select group of management or highly compensated employees within the meaning of §2520.104-23 of the Department of Labor ERISA Regulations, (B) projected to receive Plan Year Compensation (base pay plus bonus), plus amounts deferred to any 401(k) plan, deferred compensation plan, or cafeteria plan maintained by the Company, of $200,000 or more and (C) designated by the Plan Committee as a Key Employee.
|
1.9.
|
Participant means (A) a Key Employee who timely files a Written Election pursuant to Section 2.3, below, and (B) a former Employee who, at the time of his Separation from Service, death, or Disability, retains, or whose beneficiary retains, benefits earned under the Plan in accordance with its terms. A Participant is considered an Active Participant in the Plan (even if the Participant no longer satisfies the requirements of Section 1.8(B) but subject to the right of the Company’s Chief Executive Officer to no longer designate such employee as a Key Employee) until the Participant separates from service under the terms of this Plan.
|
1.10.
|
Plan means the Molina Healthcare, Inc. Amended and Restated Deferred Compensation Plan (2018) evidenced by this document and the Trust Agreement previously established in connection herewith.
|
1.11.
|
Plan Committee means the individuals appointed by the Board from time to time to administer the Plan as provided herein.
|
1.12.
|
Plan Year means the calendar year.
|
1.13.
|
Plan Year Compensation means the total taxable income (other than Share Awards) paid to an Active Participant by the Company or a Subsidiary during any Plan Year, or portion thereof in which he is a Participant in this Plan, as reflected on a Key Employee's form W-2.
|
1.14.
|
Separation from Service. A separation from service with the Company or a Subsidiary, provided such separation constitutes a “separation from service” under Treasury Regulation Section 1.409A-1(h).
|
1.15.
|
Share Awards means shares of Company Stock which are awarded to a Participant as an employee by the Company or a Subsidiary.
|
1.16.
|
Specified Employee means a "key employee" of the Company (taking into account the Subsidiaries), as defined in section 416(i) of the Code without regard to paragraph five (5) thereof.
|
1.17.
|
Subsidiary means any entity in which the Company owns not less than 80% of the outstanding voting interests.
|
1.18.
|
Trust Agreement means the grantor trust established in connection with this Plan between the Company as grantor and the Trustee.
|
1.19.
|
Trustee means Union Bank of California and any successor institutional trustee named to succeed such Trustee under the terms of the Trust Agreement established in connection with this Plan.
|
1.20.
|
Unforeseeable Financial Emergency means: (i) an illness or accident of the Participant or beneficiary, the Participant's or beneficiary's spouse, or the Participant's or beneficiary's dependent; (ii) the loss of the Participant's or beneficiary's property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or beneficiary. Determination of whether a Participant has incurred an Unforeseeable Financial Emergency shall be made by the Plan Committee, in accordance with the requirements of Section 409A of the Code and any guidance issued thereunder.
|
2.1.
|
Eligibility. An employee of the Company or a Subsidiary is eligible to participate in this Plan upon meeting the criteria for Key Employee specified in Section 1.8. Any Key Employee who was a Participant in the Original Plan and who continued in the employ of the Company or a Subsidiary on the effective date of the Restatement will continue to be a Participant in this Plan, subject to the right of the Company's Chief Executive Officer to no longer designate such employee as a Key Employee thereafter.
|
2.2.
|
Entry Date. An employee of the Company or a Subsidiary who met the eligibility requirement specified in Section 2.1 as of the Effective Date of this Plan Restatement is a Participant in the Plan as of the Effective Date. Newly eligible employees of the Company or a Subsidiary who have met the enrollment requirements under Section 2.3 of the Plan shall commence participation in the Plan within thirty (30) days of their date of hire. An employee of the Company or a Subsidiary who meets the eligibility requirements specified in Section 2.1 but fails to meet the requirements in accordance with Section 2.3 within the period required, shall become a Participant in this Plan on the first day of the next Plan Year following submission of a Written Election form as specified in Section 2.3.
|
2.3.
|
Written Election by Participant. As a condition to participation in the Plan, each newly eligible Employee shall complete, sign and return to the Plan Committee a Written Election within thirty (30) days after the date the Participant becomes eligible to participate in the Plan. Annual enrollment shall be in December each year for the following Plan Year. Each Participant shall submit a Written Election prior to the first day of the Plan Year in which he or she will be a Participant.
|
a.
|
Such Written Election shall be made on the form presented to the Participant by the Plan Committee and shall set forth:
|
i.
|
his election to participate in this Plan under the terms hereof;
|
ii.
|
the amount of Plan Year Compensation the Participant has determined to defer under the Plan for the Plan Year, pursuant to Section 3.1 below;
|
iii.
|
the investment vehicles into which the Participant desires to have his Account attributable to deferral of Plan Year Compensation invested, as provided in Section 3.5 below, and the percentage of such Account allocated to each elected investment vehicle;
|
iv.
|
the date on which his benefit is to be distributed which is the earliest of: (a) the date specified for an In-Service Withdrawal; (b) an Unforeseeable Financial Emergency; (c) the later of (i) when he separates from service with the Company or a Subsidiary for any reason or (ii) a date subsequent to his termination of employment specified by the Participant;
|
v.
|
the form in which his benefit is to be distributed upon an In-Service Withdrawal, Separation from Service, Disability or death.
|
b.
|
A Participant must provide a separate Written Election for each subsequent Plan Year that specifies the percentage of the 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 the Participant desires to have that portion of the Participant’s Account attributable to Plan Year Compensation and investment income invested and the percentage of the Participant’s 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 applicable business day (or as soon as practicable thereafter) following the date that the change is requested.
|
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.
|
A 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 a 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.
|
iv.
|
Such election may be made among the payment options set forth in Section 5.4.
|
2.4.
|
Duration of Participation. Any Key Employee who has become a Participant at any time shall remain a Participant, even though he is no longer an Active Participant, until his entire benefit under the terms of the Plan has been paid to him (or to his Beneficiary in the event of his death), at which time he ceases to be a Participant.
|
2.5.
|
Maintenance of Records. The annual Designation of Participants by the Plan Committee shall be maintained in the corporate minute book. The Written Elections by Participants shall be maintained in the corporate records with all other files pertaining to this Plan by the Plan Committee.
|
3.1
|
Participant Contributions. A Participant may elect to defer a portion of (i) up to 75% of Plan Year Compensation constituting base pay and (ii) up to 100% of all other Plan Year Compensation eligible for deferral under this Plan (including bonus pay). For a Participant’s initial Plan Year of participation, the minimum deferral percentage for base pay and bonus pay must be 3% for each such component. For succeeding years of participation, a Participant may not defer an amount less than the minimum percentage established from year to year by the Plan Committee. A written election must be submitted, pursuant to the terms of Section 2.3, specifying the percentage of Plan Year Compensation constituting base pay the Participant has chosen to defer. A separate written election must be submitted, pursuant to the terms of Section 2.3, specifying the percentage of all other Plan Year Compensation eligible for deferral under this Plan (including bonus pay) the Participant has chosen to defer. Once a Participant’s contributions for a Plan Year reach the Participant’s elected percentage, such Participant shall not be allowed to defer additional portions of such Participant’s Plan Year Compensation for the remainder of the Plan Year. Any amounts in excess of the Participant’s elected percentage inadvertently deferred shall be refunded to the Participant as soon as practicable.
|
3.2.
|
Company Contributions. The Company may, subject to the sole discretion of its Board of Directors, make contributions for the Participants, reserving the right to discriminate among the Participants in the amount or percentage of contributions made in any Plan Year.
|
3.3.
|
Allocation of Participant Contributions. All amounts which a Participant elects to defer under the terms of this Plan shall be allocated to his Account as of the last business day of each month. Each such Participant Deferral Account shall be credited with earnings as provided in Section 3.5 below.
|
3.4.
|
Allocation of Company Contributions. Any amounts contributed by the Company on behalf of a Participant under Section 3.2 above shall be allocated to the Company Contribution Account of each Participant. Each such Company Contribution Account shall be credited with earnings as provided in Section 3.5 below.
|
3.5
|
Credited Earnings. The Account of each Participant (which includes such Participant’s Participant Deferral Account established under Section 3.1 and such Participant’s Company Contribution Account established under Section 3.2) shall be credited as of each applicable business day with the actual earnings on the investments allocated to the Participant’s Account.
|
3.6.
|
Funding. The assets of the Plan shall be held under the Trust Agreement (a "grantor trust") designated in Section 8. As such, the Plan is intended to be an unfunded plan for purposes of the requirements of ERISA and the Code.
|
4.
|
Vesting of Accounts. The Participant Deferral Accounts and the Company Contribution Account of each Participant shall be 100% vested in such Participant at all times.
|
5.1.
|
Separation from Service Benefit. A Participant's Separation from Service Benefit is the unpaid balance of his Accounts which equals the total of all contributions made by the Participant and the Company allocated to his Account and all earnings credited to his Account in accordance with the terms of the Plan and the Trust Agreement, less any distributions already paid.
|
5.2.
|
Disability Benefit. If a Participant becomes Disabled as defined in Section 1.6 above, the Company will pay his Separation from Service Benefit, calculated under Section 5.1, in the applicable form elected by the Participant in his Written Election.
|
5.3.
|
Death Benefit.
|
a.
|
If a Participant dies after a distribution has commenced or if the Company has not purchased a life insurance contract in connection with the Participant's Separation from Service Benefit, the Company will continue the payments of such distribution otherwise due to the Participant to his designated Beneficiary, in the applicable form elected by the Participant in his Written Election.
|
b.
|
If a Participant dies while still employed by the Company or a Subsidiary and the Company has purchased a life insurance contract in connection with such Participant's Separation from Service Benefit, the Company will pay the Participant's designated Beneficiary the greatest of: (i) twice the Participant’s base salary upon initial eligibility for the Plan; (ii) $500,000; or (iii) if the Participant was a Participant prior to January 1, 2018, the amount specified under the Plan prior to such date, in the applicable form elected by the Participant in his Written Election.
|
5.4.
|
In-Service Withdrawal. A Participant may designate a year in the future for receipt of an In-Service Withdrawal with respect to the Participant's contribution for a given Plan Year. Such withdrawal may be paid while the Participant remains employed with the Company or a Subsidiary. Initial designations made with respect to the 2018 Plan Year in accordance with Section 2.3(a)(iv) (as may be subsequently modified under Section 2.3(b)) shall include Credited Earnings attributable to such Participant Contribution. The In-Service Withdrawal will be paid in a lump sum unless the Participant elects to receive substantially equal annual installments from two (2) to five (5) years, commencing no earlier than three (3) years after the Plan Year during which such Participant Contributions are made; provided, however, that a Participant may make a subsequent deferral election with respect to any initial In-Service Withdrawal election made under this Plan subject to the following requirements:
|
a.
|
the Participant must deliver to the Company a written election not later than twelve (12) months prior to the date the payment is scheduled to be paid;
|
b.
|
the payments that are subject to the election must be delayed at least five (5) years from the date the payments would have otherwise been made; and
|
c.
|
the election will not take effect until at least twelve (12) months after the election is made.
|
5.5.
|
Unforeseeable Financial Emergency Benefit. A Participant may request a portion of his Separation from Service Benefit as an Unforeseeable Financial Emergency Benefit at any time by providing the Plan Committee, to its satisfaction, with a written request, proof of an Unforeseeable Financial Emergency, and proof that all other financial resources have been explored and utilized to: (i) receive a partial or full payout from the Plan and/or (ii) suspend any deferrals required to be made by a Participant. The amount of an Unforeseeable Financial Emergency Benefit shall be limited to the lesser of the amount needed for the financial hardship or such Participant's Separation from Service Benefit. If a Participant receives a distribution as a result of an Unforeseeable Financial Emergency, such Participant may not participate in the Plan during the Plan Year following the year of the hardship distribution.
|
6.1.
|
Form of Benefits. The Company shall pay benefits in the form associated with Type of Benefit elected by the Participant, and, to the extent a Type of Benefit may be distributed in various forms, the Company shall pay benefits in the form elected by the Participant. The forms of benefits associated with the Types of Benefits are the following:
|
a.
|
Separation from Service Benefit, Disability Benefit, and Death Benefit shall be paid in (i) one lump sum; (ii) 5 yearly installments; (iii) 10 yearly installments; or (iv) 15 yearly installments;
|
b.
|
In-Service Withdrawal shall be paid as provided in Section 5.4 above; and
|
c.
|
Unforeseeable Financial Emergency Benefit shall be paid in one lump sum.
|
6.2.
|
Commencement of Payments. The Company will pay, or begin to pay, the Types of Benefits under this Plan to the Participant in accordance with the following:
|
a.
|
Separation from Service Benefit, Disability Benefit, and Death Benefit payments shall commence no later than sixty-five (65) days following the date on which the Participant retires, terminates service, becomes disabled, or dies;
|
b.
|
In-Service Withdrawal payments shall commence on the date designated by the Participant on his Written Election pursuant to Section 2.3, provided that such payments are from Participant Contributions that have been in such Participant's Participant Deferral Account for at least two years;
|
c.
|
Unforeseeable Financial Emergency Benefit payments shall commence no later than sixty-five (65) days after a request for an Unforeseeable Financial Emergency Benefit is approved by the Plan Committee.
|
6.3.
|
Domestic Relations Order. In the event the Plan Committee receives a Domestic Relations Order from a potential Alternate Payee, the Plan Committee shall notify the Participant whose benefit is the subject of such order and provide him/her with information concerning the Plan's procedures for administering Qualified Domestic Relations Orders ("QDROs"). Unless and until the order is set aside, the following provisions shall apply:
|
a.
|
The Plan Committee shall within a reasonable time determine whether the order is a QDRO and shall notify the Participant whose benefit is the subject of the order, of its determination. The Plan Committee may designate a representative to carry out its duties under this provision.
|
b.
|
Nothing in this Section shall be deemed to allow payment under a QDRO to an Alternate Payee of any benefit which would violate Section 409A of the Code and the regulations thereunder.
|
c.
|
QDRO definitions. For purposes of Section 6.3 the following definitions and rules shall apply:
|
i.
|
Alternate Payee means any spouse, former spouse, child or other dependent of a Participant who is recognized by a QDRO as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant.
|
ii.
|
Domestic Relations Order means any judgment, decree, or order (including approval of a property settlement agreement) which:
|
(1)
|
relates to the provision of child support, alimony payments, or marital property rights to a spouse, child, or other dependent of a Participant; and
|
(2)
|
is made pursuant to a state domestic relations law (including a community property law).
|
iii.
|
Qualified Domestic Relations Order means any Domestic Relations Order meeting the requirements for a Qualified Domestic Relations Order under Code section 414(p), which satisfies any additional criteria under policies established by the Plan Committee.
|
6.4
|
Limited Cashout. Notwithstanding any Written Election made by the Participant, if, upon the Participant’s Separation from Service, such Participant’s accrued benefit under the Plan (and any other deferred compensation plan required to be aggregated with this Plan) does not exceed the then-current limit under Section 402(g)(1)(B) of the Code, the Company shall immediately distribute such Participant’s accrued benefit under the Plan in a single lump sum payment to the Participant (or the Beneficiary, if the Participant is deceased), provided that such distribution results in a termination and complete liquidation of such Participant’s interest under the Plan (and any other deferred compensation plan required to be aggregated by this Plan).
|
7.1.
|
Amendment. The Company reserves the right to amend the Plan at any time by resolution of the Plan Committee. The Plan Committee will determine the effective date of any such amendment. The amendment may not deprive any Participant or Beneficiary of any portion of a benefit under the terms of this Plan at the time of the amendment.
|
7.2.
|
Termination of Plan. The Company reserves the right to terminate the Plan under the following circumstances:
|
a.
|
The Plan Committee may resolve to terminate the Plan provided that:
|
i.
|
all arrangements of the same type (account balance plans, nonaccount balance plans, separation pay plans or other arrangements) are terminated with respect to all participants;
|
ii
|
no payments other than those otherwise payable under the terms of the Plan absent a termination of the Plan are made within twelve (12) months of the termination of the arrangement;
|
iii.
|
all payments are made within twenty-four (24) moths of the termination of the arrangement; and
|
iv.
|
the Company does not adopt a new arrangement that would be aggregated with any terminated arrangement under the plan aggregation rules at any time for a period of five years following the date of termination of the arrangement.
|
b.
|
The Plan Committee may terminate the Plan and make payments to the Participants at any time during the twelve (12) months following a change in control of the corporation;
|
c.
|
A corporate dissolution taxed under Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(l)(A), provided that the amounts deferred under the Plan are included in the Participants' gross incomes by the latest of:
|
i.
|
the calendar year in which the Plan termination occurs,
|
ii.
|
the calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or
|
iii.
|
the first calendar year in which the payment is administratively practicable.
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7.3.
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Change in Control. In the event of a Change in Control, the Company shall, as soon as possible, but in no event later than ten days after the Change in Control, notify the Trustee, and the Trustee or its agent shall immediately calculate the Separation from Service Benefit of each affected Participant and distribute such amounts to the Participant or Beneficiary in a lump sum as soon as administratively feasible after the Change in Control, but in no event later than the last day of the year in which the Change in Control occurs. If the Company fails to notify the Trustee as specified in this section, the Trustee may act upon notification of the "Change of Control" obtained in an alternate manner. The Trustee shall incur no liability to any person for any action taken pursuant to such notification and in conformity with the terms of the Plan.
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8.
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Benefits Not Funded. Participants and Beneficiaries have the status of unsecured creditors of the Company, and the Plan constitutes a mere promise by the Company to make benefit payments in the future. A Participant's or Beneficiary's interest in the Plan is an unsecured claim against the general assets of the Company, and neither the Participant nor a Beneficiary has any right against the account until the Plan has distributed the benefit. All amounts credited to an account are the general assets of the Company and may be disposed of or used by the Company in such manner as it determines.
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9.1.
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Plan Committee. The Plan shall be administered by the Plan Committee. The Plan Committee shall have full authority and power to administer and construe the Plan, subject to applicable requirements of law. Without limiting the generality of the foregoing, the Plan Committee shall have the powers indicated in the foregoing Sections of the Plan and the following additional powers and duties:
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a.
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To make and enforce such rules and regulations as it deems necessary or proper for the administration of the Plan;
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b.
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To interpret the Plan and to decide all questions concerning the Plan;
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c.
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To determine the amount and the recipient of any payments to be made under the Plan;
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d.
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To designate and value any investments deemed held in the Accounts; and
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e.
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To make all other determinations and to take all other steps necessary or advisable for the administration of the Plan.
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9.2.
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Delegation of Duties. The Plan Committee may delegate such of its duties and may engage such experts and other persons as it deems appropriate in connection with administering the Plan. The Plan Committee shall be fully protected in any action taken, in good faith, in reliance upon any opinions or reports furnished them by any such experts or other persons.
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9.3.
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Indemnification of Committee. The Company agrees to indemnify and to defend to the fullest extent permitted by law any person serving as a member of the Plan Committee, and each employee of the Company or any of its affiliates appointed by the Plan Committee to carry out duties under this Plan, against all liabilities, damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Company) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.
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9.4.
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Liability. To the extent permitted by law, neither the Plan Committee nor any other person shall incur any liability for any acts or for any failure to act except for liability arising out of such person's own willful misconduct or willful breach of the Plan.
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9.5.
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Claims Review Procedure.
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a.
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A claim for benefits may be filed, in writing, with the Plan Committee. A written disposition of a claim shall be furnished to the claimant within a reasonable time after the claim for benefits is filed. In the event a claim for benefits is denied, the Plan Committee shall provide the claimant with the reasons for denial.
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b.
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A claimant whose claim for benefits was denied may file for a review of such denial, with the Plan Committee, no later than 60 days after he has received written notification of the denial.
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c.
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The Plan Committee shall give a request for review a full and fair review. If the claim for benefits is denied upon completion of a full and fair review, notice of such denial shall be provided to the claimant within 60 days after the Plan Committee's receipt of such written claim for review. This 60-day period may be extended in the event of special circumstances. Such special circumstances shall be communicated to the claimant in writing within the 60-day period. If there is an extension, a decision shall be made as soon as possible, but not later than 120 days after receipt by the Plan Committee of such claim for review.
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d.
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If benefits are provided or administered by an insurance company, insurance service, or other similar organization which is subject to regulation under the insurance laws of a state, the claims procedure relating to these benefits may provide for review. If so, that company, service, or organization will be the entity to which claims are addressed.
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10.1.
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Designation of Beneficiary. Each Participant shall designate, in writing, prior to the date he first becomes a Participant in the Plan, one or more beneficiaries to receive his benefit under the provisions of Section 5.3. The Participant shall file the written designation with the Plan Committee. The Participant may revoke a previous beneficiary designation by filing a new written beneficiary designation with the Plan Committee.
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10.2.
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Benefits Not Assignable. The rights of each Participant are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or any Beneficiary. Neither the Participant nor Beneficiary may assign, transfer or pledge the benefits under this Plan. Any attempt to assign, transfer or pledge a Participant's benefits under this Plan is void.
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10.3.
|
Benefit. This Plan constitutes an agreement between the Company and each of the Participants which is binding upon and inures to the Company, its successors and assigns and upon the Participant and his heirs and legal representatives.
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10.4.
|
Headings. The headings of the Articles and Sections of this Plan are included for purposes of convenience only, and shall not affect the construction or interpretation of any of it provisions.
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10.5.
|
Notices. All notices, requests, demands, and other communications under this Plan shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified (return receipt requested), postage prepaid, and properly addressed to the last known address to each party as set forth on the first page thereof. Any party may change its address for purposes of this Section by giving the other parties written notice of the new address in the manner set forth above.
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10.6.
|
No Loans. The Plan does not permit any loans to be made to any Participant or Beneficiary.
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10.7.
|
Gender Usage. The use of the masculine gender includes the feminine gender for all purposes of this Plan.
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10.8.
|
Expenses. Costs of administration of the Plan shall be paid by the Company.
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|
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Dated: August 1, 2018
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|
/s/ Joseph M. Zubretsky
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|
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Joseph M. Zubretsky
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|
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Chief Executive Officer, President and Director
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Dated: August 1, 2018
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/s/ Thomas L. Tran
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|
|
Thomas L. Tran
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|
|
Chief Financial Officer and Treasurer
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|
|
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Dated: August 1, 2018
|
|
/s/ Joseph M. Zubretsky
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|
|
Joseph M. Zubretsky
|
|
|
Chief Executive Officer, President and Director
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|
|
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Dated: August 1, 2018
|
|
/s/ Thomas L. Tran
|
|
|
Thomas L. Tran
|
|
|
Chief Financial Officer and Treasurer
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