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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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ITEM NUMBER
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Page
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PART I - Financial Information
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1.
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2.
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3.
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4.
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Part II
- Other Information
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1.
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1A.
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2.
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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 March 31,
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||||||
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2019
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2018
|
||||
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(In millions, except per-share amounts)
(Unaudited)
|
||||||
Revenue:
|
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|
||||
Premium revenue
|
$
|
3,952
|
|
|
$
|
4,323
|
|
Premium tax revenue
|
138
|
|
|
104
|
|
||
Health insurer fees reimbursed
|
—
|
|
|
61
|
|
||
Service revenue
|
—
|
|
|
134
|
|
||
Investment income and other revenue
|
29
|
|
|
24
|
|
||
Total revenue
|
4,119
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|
4,646
|
|
||
Operating expenses:
|
|
|
|
||||
Medical care costs
|
3,371
|
|
|
3,722
|
|
||
General and administrative expenses
|
302
|
|
|
352
|
|
||
Premium tax expenses
|
138
|
|
|
104
|
|
||
Health insurer fees
|
—
|
|
|
75
|
|
||
Depreciation and amortization
|
25
|
|
|
26
|
|
||
Restructuring costs
|
3
|
|
|
25
|
|
||
Cost of service revenue
|
—
|
|
|
120
|
|
||
Total operating expenses
|
3,839
|
|
|
4,424
|
|
||
Operating income
|
280
|
|
|
222
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|
||
Other expenses, net:
|
|
|
|
||||
Interest expense
|
23
|
|
|
33
|
|
||
Other (income) expenses, net
|
(3
|
)
|
|
10
|
|
||
Total other expenses, net
|
20
|
|
|
43
|
|
||
Income before income tax expense
|
260
|
|
|
179
|
|
||
Income tax expense
|
62
|
|
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72
|
|
||
Net income
|
$
|
198
|
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$
|
107
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|
||||
Net income per share:
|
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|
||||
Basic
|
$
|
3.19
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$
|
1.79
|
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Diluted
|
$
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2.99
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$
|
1.64
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|
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Three Months Ended March 31,
|
||||||
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2019
|
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2018
|
||||
|
(In millions)
(Unaudited)
|
||||||
Net income
|
$
|
198
|
|
|
$
|
107
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Unrealized investment gain (loss)
|
7
|
|
|
(7
|
)
|
||
Less: effect of income taxes
|
2
|
|
|
(1
|
)
|
||
Other comprehensive income (loss), net of tax
|
5
|
|
|
(6
|
)
|
||
Comprehensive income
|
$
|
203
|
|
|
$
|
101
|
|
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March 31,
2019 |
|
December 31,
2018 |
||||
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(Dollars in millions,
except per-share amounts)
|
||||||
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(Unaudited)
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|
||||
ASSETS
|
|||||||
Current assets:
|
|
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|
||||
Cash and cash equivalents
|
$
|
3,224
|
|
|
$
|
2,826
|
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Investments
|
1,508
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|
1,681
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|
||
Receivables
|
1,359
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|
1,330
|
|
||
Prepaid expenses and other current assets
|
124
|
|
|
149
|
|
||
Derivative asset
|
516
|
|
|
476
|
|
||
Total current assets
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6,731
|
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6,462
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Property, equipment, and capitalized software, net
|
376
|
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241
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|
||
Goodwill and intangible assets, net
|
185
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|
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190
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|
||
Restricted investments
|
100
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|
|
120
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|
||
Deferred income taxes
|
76
|
|
|
117
|
|
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Other assets
|
111
|
|
|
24
|
|
||
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$
|
7,579
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$
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7,154
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
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|
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Medical claims and benefits payable
|
$
|
1,995
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|
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$
|
1,961
|
|
Amounts due government agencies
|
932
|
|
|
967
|
|
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Accounts payable and accrued liabilities
|
444
|
|
|
390
|
|
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Deferred revenue
|
207
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|
|
211
|
|
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Current portion of long-term debt
|
198
|
|
|
241
|
|
||
Derivative liability
|
516
|
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|
476
|
|
||
Total current liabilities
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4,292
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|
|
4,246
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|
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Long-term debt
|
1,121
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|
1,020
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|
||
Finance lease liabilities
|
234
|
|
|
197
|
|
||
Other long-term liabilities
|
97
|
|
|
44
|
|
||
Total liabilities
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5,744
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|
5,507
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Stockholders’ equity:
|
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|
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Common stock, $0.001 par value, 150 million shares authorized; outstanding: 63 million shares at March 31, 2019 and 62 million shares at December 31, 2018
|
—
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—
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Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding
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—
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—
|
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Additional paid-in capital
|
543
|
|
|
643
|
|
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Accumulated other comprehensive loss
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(3
|
)
|
|
(8
|
)
|
||
Retained earnings
|
1,295
|
|
|
1,012
|
|
||
Total stockholders’ equity
|
1,835
|
|
|
1,647
|
|
||
|
$
|
7,579
|
|
|
$
|
7,154
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
|
Outstanding
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(In millions)
|
|||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||
Balance at December 31, 2018
|
62
|
|
|
$
|
—
|
|
|
$
|
643
|
|
|
$
|
(8
|
)
|
|
$
|
1,012
|
|
|
$
|
1,647
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
198
|
|
|
198
|
|
|||||
Adoption of new accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
85
|
|
|||||
Partial termination of 1.125% Warrants
|
—
|
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|||||
Other comprehensive gain, net
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Share-based compensation
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Balance at March 31, 2019
|
63
|
|
|
$
|
—
|
|
|
$
|
543
|
|
|
$
|
(3
|
)
|
|
$
|
1,295
|
|
|
$
|
1,835
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
|
Outstanding
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(In millions)
|
|||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||
Balance at December 31, 2017
|
60
|
|
|
$
|
—
|
|
|
$
|
1,044
|
|
|
$
|
(5
|
)
|
|
$
|
298
|
|
|
$
|
1,337
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
107
|
|
|||||
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
7
|
|
|
6
|
|
|||||
Exchange of 1.625% Convertible Notes
|
2
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Balance at March 31, 2018
|
62
|
|
|
$
|
—
|
|
|
$
|
1,153
|
|
|
$
|
(12
|
)
|
|
$
|
412
|
|
|
$
|
1,553
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
(Unaudited) |
||||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
198
|
|
|
$
|
107
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25
|
|
|
37
|
|
||
Deferred income taxes
|
15
|
|
|
(6
|
)
|
||
Share-based compensation
|
9
|
|
|
6
|
|
||
Amortization of convertible senior notes and finance lease liabilities
|
3
|
|
|
7
|
|
||
(Gain) loss on debt extinguishment
|
(3
|
)
|
|
10
|
|
||
Non-cash restructuring costs
|
—
|
|
|
17
|
|
||
Other, net
|
3
|
|
|
2
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(29
|
)
|
|
(83
|
)
|
||
Prepaid expenses and other current assets
|
20
|
|
|
(239
|
)
|
||
Medical claims and benefits payable
|
34
|
|
|
(163
|
)
|
||
Amounts due government agencies
|
(35
|
)
|
|
172
|
|
||
Accounts payable and accrued liabilities
|
(30
|
)
|
|
319
|
|
||
Deferred revenue
|
(4
|
)
|
|
130
|
|
||
Income taxes
|
43
|
|
|
78
|
|
||
Net cash provided by operating activities
|
249
|
|
|
394
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of investments
|
(185
|
)
|
|
(389
|
)
|
||
Proceeds from sales and maturities of investments
|
366
|
|
|
543
|
|
||
Purchases of property, equipment and capitalized software
|
(6
|
)
|
|
(4
|
)
|
||
Other, net
|
(4
|
)
|
|
(5
|
)
|
||
Net cash provided by investing activities
|
171
|
|
|
145
|
|
||
Financing activities:
|
|
|
|
||||
Repayment of principal amount of 1.125% Convertible Notes
|
(46
|
)
|
|
—
|
|
||
Cash paid for partial settlement of 1.125% Conversion Option
|
(115
|
)
|
|
—
|
|
||
Cash received for partial termination of 1.125% Call Option
|
115
|
|
|
—
|
|
||
Cash paid for partial termination of 1.125% Warrants
|
(103
|
)
|
|
—
|
|
||
Proceeds from borrowings under Term Loan
|
100
|
|
|
—
|
|
||
Other, net
|
1
|
|
|
(5
|
)
|
||
Net cash used in financing activities
|
(48
|
)
|
|
(5
|
)
|
||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
372
|
|
|
534
|
|
||
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period
|
2,926
|
|
|
3,290
|
|
||
Cash, cash equivalents, and restricted cash and cash equivalents at end of period
|
$
|
3,298
|
|
|
$
|
3,824
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
(Unaudited) |
||||||
Supplemental cash flow information:
|
|
|
|
||||
|
|
|
|
||||
Schedule of non-cash investing and financing activities:
|
|
|
|
||||
Common stock used for share-based compensation
|
$
|
(7
|
)
|
|
$
|
(5
|
)
|
|
|
|
|
||||
Details of change in fair value of derivatives, net:
|
|
|
|
||||
Gain on 1.125% Call Option
|
$
|
155
|
|
|
$
|
63
|
|
Loss on 1.125% Conversion Option
|
(155
|
)
|
|
(63
|
)
|
||
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 allocated to additional paid-in capital, net of income taxes
|
—
|
|
|
(23
|
)
|
||
Net increase to additional paid-in capital
|
$
|
—
|
|
|
$
|
108
|
|
•
|
The determination of medical claims and benefits payable of our Health Plans segment;
|
•
|
Health plans’ contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract;
|
•
|
Health plans’ quality incentives that allow us to recognize incremental revenue if certain quality standards are met;
|
•
|
Settlements under risk or savings sharing programs;
|
•
|
The assessment of long-lived and intangible assets, and goodwill for impairment;
|
•
|
The determination of reserves for potential absorption of claims unpaid by insolvent providers;
|
•
|
The determination of reserves for litigation outcomes;
|
•
|
The determination of valuation allowances for deferred tax assets; and
|
•
|
The determination of unrecognized tax benefits.
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Cash and cash equivalents
|
$
|
3,224
|
|
|
$
|
3,729
|
|
Restricted cash and cash equivalents
|
74
|
|
|
95
|
|
||
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows
|
$
|
3,298
|
|
|
$
|
3,824
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Maximum available quality incentive premium - current period
|
$
|
45
|
|
|
$
|
40
|
|
|
|
|
|
||||
Quality incentive premium revenue recognized in current period:
|
|
|
|
||||
Earned current period
|
$
|
26
|
|
|
$
|
24
|
|
Earned prior periods
|
20
|
|
|
11
|
|
||
Total
|
$
|
46
|
|
|
$
|
35
|
|
|
|
|
|
||||
Quality incentive premium revenue recognized as a percentage of total premium revenue
|
1.2
|
%
|
|
0.8
|
%
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In millions)
|
||||||
Medicaid program:
|
|
|
|
||||
Medical cost floors and corridors
|
$
|
98
|
|
|
$
|
103
|
|
Other amounts due to states
|
90
|
|
|
81
|
|
||
Marketplace program:
|
|
|
|
||||
Risk adjustment
|
568
|
|
|
466
|
|
||
Cost sharing reduction
|
—
|
|
|
183
|
|
||
Other
|
176
|
|
|
134
|
|
||
|
$
|
932
|
|
|
$
|
967
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions, except net income per share)
|
||||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
198
|
|
|
$
|
107
|
|
Denominator:
|
|
|
|
||||
Shares outstanding at the beginning of the period
|
62.1
|
|
|
59.3
|
|
||
Weighted-average number of shares issued:
|
|
|
|
||||
Exchange of 1.625% Convertible Notes
|
—
|
|
|
0.5
|
|
||
Denominator for basic net income per share
|
62.1
|
|
|
59.8
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
1.125% Warrants
(1)
|
3.5
|
|
|
4.4
|
|
||
1.625% Convertible Notes
|
—
|
|
|
0.7
|
|
||
Stock-based compensation
|
0.6
|
|
|
0.3
|
|
||
Denominator for diluted net income per share
|
66.2
|
|
|
65.2
|
|
||
|
|
|
|
||||
Net income per share:
(2)
|
|
|
|
||||
Basic
|
$
|
3.19
|
|
|
$
|
1.79
|
|
Diluted
|
$
|
2.99
|
|
|
$
|
1.64
|
|
|
|
|
|
||||
Potentially dilutive common shares excluded from calculations:
(1)
|
|
|
|
||||
Stock-based compensation
|
0.1
|
|
|
0.4
|
|
(1)
|
For more information and definitions regarding the
1.125%
Warrants, including partial termination transactions, 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 were not included in the computation of diluted net income per share because to do so would have been anti-dilutive.
|
(2)
|
Source data for calculations in thousands.
|
|
Total
|
|
Observable Inputs (Level 1)
|
|
Directly or Indirectly Observable Inputs (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
947
|
|
|
$
|
—
|
|
|
$
|
947
|
|
|
$
|
—
|
|
U.S. Treasury notes
|
168
|
|
|
—
|
|
|
168
|
|
|
—
|
|
||||
Government-sponsored enterprise securities (“GSEs”)
|
166
|
|
|
—
|
|
|
166
|
|
|
—
|
|
||||
Municipal securities
|
112
|
|
|
—
|
|
|
112
|
|
|
—
|
|
||||
Asset-backed securities
|
75
|
|
|
—
|
|
|
75
|
|
|
—
|
|
||||
Mortgage-backed securities
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Certificate of deposit
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Other
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Subtotal - current investments
|
1,508
|
|
|
—
|
|
|
1,508
|
|
|
—
|
|
||||
1.125% Call Option derivative asset
|
516
|
|
|
—
|
|
|
—
|
|
|
516
|
|
||||
Total assets
|
$
|
2,024
|
|
|
$
|
—
|
|
|
$
|
1,508
|
|
|
$
|
516
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Conversion Option derivative liability
|
$
|
516
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
516
|
|
Total liabilities
|
$
|
516
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
516
|
|
|
Total
|
|
Observable Inputs (Level 1)
|
|
Directly or Indirectly Observable Inputs (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,123
|
|
|
$
|
—
|
|
|
$
|
1,123
|
|
|
$
|
—
|
|
U.S. Treasury notes
|
181
|
|
|
—
|
|
|
181
|
|
|
—
|
|
||||
GSEs
|
163
|
|
|
—
|
|
|
163
|
|
|
—
|
|
||||
Municipal securities
|
114
|
|
|
—
|
|
|
114
|
|
|
—
|
|
||||
Asset-backed securities
|
82
|
|
|
—
|
|
|
82
|
|
|
—
|
|
||||
Certificates of deposit
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Other
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Subtotal - current investments
|
1,681
|
|
|
—
|
|
|
1,681
|
|
|
—
|
|
||||
1.125% Call Option derivative asset
|
476
|
|
|
—
|
|
|
—
|
|
|
476
|
|
||||
Total assets
|
$
|
2,157
|
|
|
$
|
—
|
|
|
$
|
1,681
|
|
|
$
|
476
|
|
|
|
|
|
|
|
|
|
||||||||
1.125% Conversion Option derivative liability
|
$
|
476
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
476
|
|
Total liabilities
|
$
|
476
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
476
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(In millions)
|
||||||||||||||
5.375% Notes
|
$
|
695
|
|
|
$
|
725
|
|
|
$
|
694
|
|
|
$
|
674
|
|
4.875% Notes
|
326
|
|
|
327
|
|
|
326
|
|
|
301
|
|
||||
1.125% Convertible Notes
(1),(2)
|
198
|
|
|
716
|
|
|
240
|
|
|
732
|
|
||||
Term Loan
|
100
|
|
|
100
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
1,319
|
|
|
$
|
1,868
|
|
|
$
|
1,260
|
|
|
$
|
1,707
|
|
(1)
|
The fair value of the 1.125% Conversion Option (the embedded cash conversion option), which is reflected in the fair value amounts presented above, amounted to
$516 million
and
$476 million
as of
March 31, 2019
, and
December 31, 2018
, respectively. See further discussion at Note
7
, “
Debt
,” and Note
8
, “
Derivatives
.”
|
(2)
|
For more information on debt repayments in the
first quarter of 2019
, refer to Note
7
, “
Debt
.”
|
|
March 31, 2019
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
Fair
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
949
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
947
|
|
U.S. Treasury notes
|
168
|
|
|
—
|
|
|
—
|
|
|
168
|
|
||||
GSEs
|
167
|
|
|
—
|
|
|
1
|
|
|
166
|
|
||||
Municipal securities
|
113
|
|
|
—
|
|
|
1
|
|
|
112
|
|
||||
Asset-backed securities
|
75
|
|
|
—
|
|
|
—
|
|
|
75
|
|
||||
Mortgage-backed securities
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
Certificates of deposit
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||
Other
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
|
$
|
1,512
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
1,508
|
|
|
December 31, 2018
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
Fair
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
|
(In millions)
|
||||||||||||||
Corporate debt securities
|
$
|
1,131
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
1,123
|
|
U.S. Treasury notes
|
181
|
|
|
—
|
|
|
—
|
|
|
181
|
|
||||
GSEs
|
164
|
|
|
—
|
|
|
1
|
|
|
163
|
|
||||
Municipal securities
|
115
|
|
|
—
|
|
|
1
|
|
|
114
|
|
||||
Asset-backed securities
|
83
|
|
|
—
|
|
|
1
|
|
|
82
|
|
||||
Certificates of deposit
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||
Other
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Total current investments
|
$
|
1,692
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
1,681
|
|
|
Amortized Cost
|
|
Estimated
Fair Value
|
||||
|
(In millions)
|
||||||
Due in one year or less
|
$
|
927
|
|
|
$
|
926
|
|
Due after one year through five years
|
550
|
|
|
547
|
|
||
Due after five years through ten years
|
12
|
|
|
12
|
|
||
Due after ten years
|
23
|
|
|
23
|
|
||
|
$
|
1,512
|
|
|
$
|
1,508
|
|
|
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
|
$
|
207
|
|
|
$
|
1
|
|
|
96
|
|
|
$
|
403
|
|
|
$
|
2
|
|
|
280
|
|
GSEs
|
—
|
|
|
—
|
|
|
—
|
|
|
122
|
|
|
1
|
|
|
71
|
|
||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
1
|
|
|
91
|
|
||||
|
$
|
207
|
|
|
$
|
1
|
|
|
96
|
|
|
$
|
612
|
|
|
$
|
4
|
|
|
442
|
|
|
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
|
$
|
509
|
|
|
$
|
3
|
|
|
285
|
|
|
$
|
412
|
|
|
$
|
5
|
|
|
298
|
|
GSEs
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|
1
|
|
|
76
|
|
||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
1
|
|
|
90
|
|
||||
Asset-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
1
|
|
|
52
|
|
||||
|
$
|
509
|
|
|
$
|
3
|
|
|
285
|
|
|
$
|
694
|
|
|
$
|
8
|
|
|
516
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In millions)
|
||||||
Fee-for-service claims incurred but not paid (“IBNP”)
|
$
|
1,411
|
|
|
$
|
1,562
|
|
Pharmacy payable
|
114
|
|
|
115
|
|
||
Capitation payable
|
59
|
|
|
52
|
|
||
Other
|
411
|
|
|
232
|
|
||
|
$
|
1,995
|
|
|
$
|
1,961
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Medical claims and benefits payable, beginning balance
|
$
|
1,961
|
|
|
$
|
2,192
|
|
Components of medical care costs related to:
|
|
|
|
||||
Current period
|
3,560
|
|
|
4,033
|
|
||
Prior periods
(1)
|
(189
|
)
|
|
(311
|
)
|
||
Total medical care costs
|
3,371
|
|
|
3,722
|
|
||
|
|
|
|
||||
Change in non-risk provider payables
|
171
|
|
|
45
|
|
||
|
|
|
|
||||
Payments for medical care costs related to:
|
|
|
|
||||
Current period
|
2,197
|
|
|
2,498
|
|
||
Prior periods
|
1,311
|
|
|
1,438
|
|
||
Total paid
|
3,508
|
|
|
3,936
|
|
||
Medical claims and benefits payable, ending balance
|
$
|
1,995
|
|
|
$
|
2,023
|
|
(1)
|
March 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of
$70 million
.
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(In millions)
|
||||||||||||||||||||||||||
5.375% Notes
|
$
|
700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
4.875% Notes
|
330
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
|||||||
1.125% Convertible Notes
|
206
|
|
|
206
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Term Loan
|
100
|
|
|
3
|
|
|
7
|
|
|
10
|
|
|
10
|
|
|
70
|
|
|
—
|
|
|||||||
|
$
|
1,336
|
|
|
$
|
209
|
|
|
$
|
7
|
|
|
$
|
710
|
|
|
$
|
10
|
|
|
$
|
70
|
|
|
$
|
330
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In millions)
|
||||||
Current portion of long-term debt:
|
|
|
|
||||
1.125% Convertible Notes, net of unamortized discount
|
$
|
199
|
|
|
$
|
241
|
|
Lease financing obligations
|
—
|
|
|
1
|
|
||
Debt issuance costs
|
(1
|
)
|
|
(1
|
)
|
||
|
$
|
198
|
|
|
$
|
241
|
|
Non-current portion of long-term debt:
|
|
|
|
||||
5.375% Notes
|
$
|
700
|
|
|
$
|
700
|
|
4.875% Notes
|
330
|
|
|
330
|
|
||
Term Loan
|
100
|
|
|
—
|
|
||
Debt issuance costs
|
(9
|
)
|
|
(10
|
)
|
||
|
$
|
1,121
|
|
|
$
|
1,020
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Contractual interest at coupon rate
|
$
|
1
|
|
|
$
|
2
|
|
Amortization of the discount
|
3
|
|
|
7
|
|
||
|
$
|
4
|
|
|
$
|
9
|
|
|
Balance Sheet Location
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
(In millions)
|
||||||
Derivative asset:
|
|
|
|
|
|
||||
1.125% Call Option
|
Current assets: Derivative asset
|
|
$
|
516
|
|
|
$
|
476
|
|
Derivative liability:
|
|
|
|
|
|
||||
1.125% Conversion Option
|
Current liabilities: Derivative liability
|
|
$
|
516
|
|
|
$
|
476
|
|
|
RSAs
|
|
PSAs
|
|
PSUs
|
|
Total
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||
Unvested balance, December 31, 2018
|
399,795
|
|
|
3,132
|
|
|
201,383
|
|
|
604,310
|
|
|
$
|
71.50
|
|
Granted
|
215,178
|
|
|
—
|
|
|
138,994
|
|
|
354,172
|
|
|
137.37
|
|
|
Vested
|
(119,994
|
)
|
|
(3,132
|
)
|
|
(10,528
|
)
|
|
(133,654
|
)
|
|
68.24
|
|
|
Forfeited
|
(14,220
|
)
|
|
—
|
|
|
(4,140
|
)
|
|
(18,360
|
)
|
|
74.03
|
|
|
Unvested balance, March 31, 2019
|
480,759
|
|
|
—
|
|
|
325,709
|
|
|
806,468
|
|
|
100.91
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Granted:
|
|
|
|
||||
RSAs
|
$
|
30
|
|
|
$
|
23
|
|
PSUs
|
18
|
|
|
14
|
|
||
|
$
|
48
|
|
|
$
|
37
|
|
Vested:
|
|
|
|
||||
RSAs
|
$
|
16
|
|
|
$
|
12
|
|
PSUs
|
2
|
|
|
—
|
|
||
PSAs
|
—
|
|
|
3
|
|
||
|
$
|
18
|
|
|
$
|
15
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Margin:
|
|
|
|
||||
Health Plans
|
$
|
581
|
|
|
$
|
601
|
|
Other
|
—
|
|
|
14
|
|
||
Total margin
|
581
|
|
|
615
|
|
||
Add: other operating revenues
(1)
|
167
|
|
|
189
|
|
||
Less: other operating expenses
(2)
|
(468
|
)
|
|
(582
|
)
|
||
Operating income
|
280
|
|
|
222
|
|
||
Other expenses, net
|
20
|
|
|
43
|
|
||
Income before income taxes
|
$
|
260
|
|
|
$
|
179
|
|
(1)
|
Other operating revenues include premium tax revenue, health insurer fees reimbursed, and investment income and other revenue.
|
(2)
|
Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, and restructuring costs.
|
|
Three Months Ended March 31, 2019
|
||
|
(In millions)
|
||
Operating lease cost
|
$
|
9
|
|
|
|
||
Finance lease cost:
|
|
||
Amortization of ROU assets
|
$
|
4
|
|
Interest on lease liabilities
|
4
|
|
|
Total finance lease cost
|
$
|
8
|
|
|
Three Months Ended March 31, 2019
|
||
|
(In millions)
|
||
Cash used in operating activities:
|
|
||
Operating leases
|
$
|
9
|
|
Finance leases
|
$
|
4
|
|
Cash used in financing activities:
|
|
||
Finance leases
|
$
|
1
|
|
ROU assets recognized in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
94
|
|
Finance leases
|
$
|
241
|
|
|
March 31, 2019
|
||
|
(Dollars in millions)
|
||
Operating leases
|
|
||
Other assets
|
$
|
83
|
|
|
|
||
Accounts payable and accrued liabilities
|
31
|
|
|
Other long-term liabilities
|
62
|
|
|
Total operating lease liabilities
|
$
|
93
|
|
|
|
||
Finance leases
|
|
||
Property, equipment, and capitalized software, net
|
$
|
237
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
7
|
|
Finance lease liabilities
|
234
|
|
|
Total finance lease liabilities
|
$
|
241
|
|
|
|
||
Weighted average remaining lease term
|
|
||
Operating leases
|
4 years
|
|
|
Finance leases
|
17 years
|
|
|
Weighted average discount rate
|
|
||
Operating leases
|
5.5
|
%
|
|
Finance leases
|
6.6
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
|
(In millions)
|
||||||
2019 (excluding the three months ended March 31, 2019)
|
$
|
27
|
|
|
$
|
16
|
|
2020
|
28
|
|
|
22
|
|
||
2021
|
18
|
|
|
22
|
|
||
2022
|
12
|
|
|
21
|
|
||
2023
|
9
|
|
|
21
|
|
||
Thereafter
|
9
|
|
|
311
|
|
||
Total lease payments
|
103
|
|
|
413
|
|
||
Less imputed interest
|
(10
|
)
|
|
(172
|
)
|
||
|
$
|
93
|
|
|
$
|
241
|
|
•
|
the numerous political, judicial and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare,” including the ultimate outcome on appeal of the Texas et al. v. U.S. et al. matter;
|
•
|
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 the success of any requests for proposal 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 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 corridor, 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, eligibility redeterminations, or enrollment backlogs related to the annual renewal of Medicaid coverage;
|
•
|
government audits, reviews, comment letters, 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 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 agreement 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 industry;
|
•
|
increases in government surcharges, taxes, and assessments;
|
•
|
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 March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in millions, except per-share amounts)
|
||||||
Premium revenue
|
$
|
3,952
|
|
|
$
|
4,323
|
|
Premium tax revenue
|
138
|
|
|
104
|
|
||
Health insurer fees reimbursed
|
—
|
|
|
61
|
|
||
Investment income and other revenue
|
29
|
|
|
24
|
|
||
|
|
|
|
||||
Medical care costs
|
3,371
|
|
|
3,722
|
|
||
General and administrative expenses
|
302
|
|
|
352
|
|
||
Premium tax expenses
|
138
|
|
|
104
|
|
||
Health insurer fees
|
—
|
|
|
75
|
|
||
Restructuring costs
|
3
|
|
|
25
|
|
||
|
|
|
|
||||
Operating income
|
280
|
|
|
222
|
|
||
Interest expense
|
23
|
|
|
33
|
|
||
Other (income) expenses, net
|
(3
|
)
|
|
10
|
|
||
Income tax expense
|
62
|
|
|
72
|
|
||
Net income
|
198
|
|
|
107
|
|
||
Net income per diluted share
|
$
|
2.99
|
|
|
$
|
1.64
|
|
|
|
|
|
||||
Operating Statistics:
|
|
|
|
||||
Ending total membership
|
3,393,000
|
|
|
4,061,000
|
|
||
MCR
(1)
|
85.3
|
%
|
|
86.1
|
%
|
||
G&A ratio
(2)
|
7.3
|
%
|
|
7.6
|
%
|
||
Premium tax ratio
(1)
|
3.4
|
%
|
|
2.3
|
%
|
||
Effective income tax expense rate
|
23.8
|
%
|
|
40.3
|
%
|
||
After-tax margin
(2)
|
4.8
|
%
|
|
2.3
|
%
|
(1)
|
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.
|
(2)
|
After-tax margin represents net income as a percentage of total revenue. G&A ratio represents general and administrative expenses as a percentage of total revenue.
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Amount
|
|
Per Diluted Share
(1)
|
|
Amount
|
|
Per Diluted Share
(1)
|
||||||||
|
|
||||||||||||||
Marketplace CSR subsidies, for 2017 dates of service
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
$
|
0.83
|
|
Restructuring costs
|
(3
|
)
|
|
(0.03
|
)
|
|
(25
|
)
|
|
(0.30
|
)
|
||||
Gain (loss) on debt extinguishment
|
3
|
|
|
0.03
|
|
|
(10
|
)
|
|
(0.15
|
)
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
0.38
|
|
(1)
|
Except for permanent differences between GAAP and tax (such as certain expenses that are not deductible for tax purposes), per diluted share amounts are generally calculated at the statutory income tax rate of 22.6% and 22% for the first quarter of 2019 and 2018, respectively
|
•
|
Ending the entitlement nature of Medicaid (and perhaps Medicare as well) by capping future increases in federal health spending for these programs, and shifting much more of the risk for health costs in the future to states and consumers;
|
•
|
Reversing the ACA’s expansion of Medicaid that enables states to cover low-income childless adults;
|
•
|
Changing Medicaid to a state block grant program, including potentially capping spending on a per-enrollee basis;
|
•
|
Requiring Medicaid beneficiaries to work; and
|
•
|
Limiting the amount of lifetime benefits for Medicaid beneficiaries.
|
•
|
Prohibiting the federal government from operating Marketplaces;
|
•
|
Eliminating the advanced premium tax credits, and cost sharing reductions for low income individuals who purchase their health insurance through the Marketplaces;
|
•
|
Expanding and encouraging the use of private health savings accounts;
|
•
|
Providing for insurance plans that offer fewer and less extensive health insurance benefits than under the ACA’s essential health benefits package, including broader use of catastrophic coverage plans, or short-term health insurance;
|
•
|
Establishing and funding high risk pools or reinsurance programs for individuals with chronic or high cost conditions; and
|
•
|
Allowing insurers to sell insurance across state lines.
|
|
March 31,
2019 |
|
December 31,
2018 |
|
March 31,
2018 |
|||
Ending Membership by Program:
|
|
|
|
|
|
|||
Temporary Assistance for Needy Families (“TANF”) and Children’s Health Insurance Program (“CHIP”)
|
2,016,000
|
|
|
2,295,000
|
|
|
2,435,000
|
|
Medicaid Expansion
|
596,000
|
|
|
660,000
|
|
|
662,000
|
|
Aged, Blind or Disabled (“ABD”)
|
352,000
|
|
|
406,000
|
|
|
411,000
|
|
Total Medicaid
|
2,964,000
|
|
|
3,361,000
|
|
|
3,508,000
|
|
Medicare-Medicaid Plan (“MMP”) – Integrated
(1)
|
56,000
|
|
|
54,000
|
|
|
56,000
|
|
Medicare Special Needs Plans (“Medicare”)
|
41,000
|
|
|
44,000
|
|
|
44,000
|
|
Total Medicare
|
97,000
|
|
|
98,000
|
|
|
100,000
|
|
Total Medicaid and Medicare
|
3,061,000
|
|
|
3,459,000
|
|
|
3,608,000
|
|
Marketplace
|
332,000
|
|
|
362,000
|
|
|
453,000
|
|
|
3,393,000
|
|
|
3,821,000
|
|
|
4,061,000
|
|
|
|
|
|
|
|
|||
Ending Membership by Health Plan:
|
|
|
|
|
|
|||
California
|
600,000
|
|
|
608,000
|
|
|
656,000
|
|
Florida
(2)
|
144,000
|
|
|
313,000
|
|
|
414,000
|
|
Illinois
|
219,000
|
|
|
224,000
|
|
|
151,000
|
|
Michigan
|
369,000
|
|
|
383,000
|
|
|
388,000
|
|
New Mexico
(2)
|
27,000
|
|
|
222,000
|
|
|
250,000
|
|
Ohio
|
295,000
|
|
|
302,000
|
|
|
328,000
|
|
Puerto Rico
|
207,000
|
|
|
252,000
|
|
|
316,000
|
|
South Carolina
|
126,000
|
|
|
120,000
|
|
|
117,000
|
|
Texas
|
377,000
|
|
|
423,000
|
|
|
476,000
|
|
Washington
|
815,000
|
|
|
781,000
|
|
|
779,000
|
|
Other
(3)
|
214,000
|
|
|
193,000
|
|
|
186,000
|
|
|
3,393,000
|
|
|
3,821,000
|
|
|
4,061,000
|
|
(1)
|
MMP members receive both Medicaid and Medicare coverage from Molina Healthcare.
|
(2)
|
As reported throughout 2018, our Medicaid contracts in New Mexico and in all but two regions in Florida terminated in late 2018 and early 2019. During 2019, we continue to serve Medicare and Marketplace members in both Florida and New Mexico, as well as Medicaid members in two regions in Florida.
|
(3)
|
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
6.2
|
|
|
$
|
1,173
|
|
|
$
|
189.36
|
|
|
$
|
1,022
|
|
|
$
|
165.05
|
|
|
87.2
|
%
|
|
$
|
151
|
|
Medicaid Expansion
|
1.8
|
|
|
664
|
|
|
369.62
|
|
|
594
|
|
|
330.45
|
|
|
89.4
|
|
|
70
|
|
|||||
ABD
|
1.1
|
|
|
1,167
|
|
|
1,068.43
|
|
|
1,042
|
|
|
953.48
|
|
|
89.2
|
|
|
125
|
|
|||||
Total Medicaid
|
9.1
|
|
|
3,004
|
|
|
330.75
|
|
|
2,658
|
|
|
292.60
|
|
|
88.5
|
|
|
346
|
|
|||||
MMP
|
0.2
|
|
|
388
|
|
|
2,355.29
|
|
|
333
|
|
|
2,026.83
|
|
|
86.1
|
|
|
55
|
|
|||||
Medicare
|
0.1
|
|
|
163
|
|
|
1,284.70
|
|
|
133
|
|
|
1,047.78
|
|
|
81.6
|
|
|
30
|
|
|||||
Total Medicare
|
0.3
|
|
|
551
|
|
|
1,889.47
|
|
|
466
|
|
|
1,600.84
|
|
|
84.7
|
|
|
85
|
|
|||||
Total Medicaid and Medicare
|
9.4
|
|
|
3,555
|
|
|
379.19
|
|
|
3,124
|
|
|
333.26
|
|
|
87.9
|
|
|
431
|
|
|||||
Marketplace
|
1.0
|
|
|
397
|
|
|
393.53
|
|
|
247
|
|
|
244.61
|
|
|
62.2
|
|
|
150
|
|
|||||
|
10.4
|
|
|
$
|
3,952
|
|
|
$
|
380.59
|
|
|
$
|
3,371
|
|
|
$
|
324.65
|
|
|
85.3
|
%
|
|
$
|
581
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
(2)
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
TANF and CHIP
|
7.4
|
|
|
$
|
1,373
|
|
|
$
|
185.14
|
|
|
$
|
1,272
|
|
|
$
|
171.56
|
|
|
92.7
|
%
|
|
$
|
101
|
|
Medicaid Expansion
|
2.0
|
|
|
752
|
|
|
372.75
|
|
|
641
|
|
|
317.46
|
|
|
85.2
|
|
|
111
|
|
|||||
ABD
|
1.2
|
|
|
1,254
|
|
|
1,014.23
|
|
|
1,155
|
|
|
934.55
|
|
|
92.1
|
|
|
99
|
|
|||||
Total Medicaid
|
10.6
|
|
|
3,379
|
|
|
316.69
|
|
|
3,068
|
|
|
287.56
|
|
|
90.8
|
|
|
311
|
|
|||||
MMP
|
0.2
|
|
|
357
|
|
|
2,137.88
|
|
|
305
|
|
|
1,824.21
|
|
|
85.3
|
|
|
52
|
|
|||||
Medicare
|
0.1
|
|
|
157
|
|
|
1,188.97
|
|
|
131
|
|
|
994.81
|
|
|
83.7
|
|
|
26
|
|
|||||
Total Medicare
|
0.3
|
|
|
514
|
|
|
1,718.61
|
|
|
436
|
|
|
1,457.75
|
|
|
84.8
|
|
|
78
|
|
|||||
Total Medicaid and Medicare
|
10.9
|
|
|
3,893
|
|
|
354.94
|
|
|
3,504
|
|
|
319.48
|
|
|
90.0
|
|
|
389
|
|
|||||
Marketplace
|
1.4
|
|
|
430
|
|
|
312.87
|
|
|
218
|
|
|
158.40
|
|
|
50.6
|
|
|
212
|
|
|||||
|
12.3
|
|
|
$
|
4,323
|
|
|
$
|
350.25
|
|
|
$
|
3,722
|
|
|
$
|
301.55
|
|
|
86.1
|
%
|
|
$
|
601
|
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
(2)
|
“MCR” represents medical costs as a percentage of premium revenue.
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.7
|
|
|
$
|
499
|
|
|
$
|
299.83
|
|
|
$
|
448
|
|
|
$
|
269.33
|
|
|
89.8
|
%
|
|
$
|
51
|
|
Florida
|
0.4
|
|
|
162
|
|
|
387.48
|
|
|
127
|
|
|
303.05
|
|
|
78.2
|
|
|
35
|
|
|||||
Illinois
|
0.7
|
|
|
227
|
|
|
348.04
|
|
|
185
|
|
|
282.70
|
|
|
81.2
|
|
|
42
|
|
|||||
Michigan
|
1.1
|
|
|
395
|
|
|
363.04
|
|
|
326
|
|
|
299.99
|
|
|
82.6
|
|
|
69
|
|
|||||
Ohio
|
0.9
|
|
|
590
|
|
|
659.09
|
|
|
537
|
|
|
600.07
|
|
|
91.0
|
|
|
53
|
|
|||||
Puerto Rico
|
0.6
|
|
|
102
|
|
|
165.02
|
|
|
90
|
|
|
145.38
|
|
|
88.1
|
|
|
12
|
|
|||||
South Carolina
|
0.4
|
|
|
136
|
|
|
363.14
|
|
|
115
|
|
|
308.87
|
|
|
85.1
|
|
|
21
|
|
|||||
Texas
|
0.6
|
|
|
599
|
|
|
902.56
|
|
|
532
|
|
|
801.53
|
|
|
88.8
|
|
|
67
|
|
|||||
Washington
|
2.4
|
|
|
614
|
|
|
258.41
|
|
|
586
|
|
|
246.69
|
|
|
95.5
|
|
|
28
|
|
|||||
Other
(1) (2)
|
0.6
|
|
|
231
|
|
|
370.26
|
|
|
178
|
|
|
285.13
|
|
|
77.0
|
|
|
53
|
|
|||||
|
9.4
|
|
|
$
|
3,555
|
|
|
$
|
379.19
|
|
|
$
|
3,124
|
|
|
$
|
333.26
|
|
|
87.9
|
%
|
|
$
|
431
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.8
|
|
|
$
|
494
|
|
|
$
|
272.61
|
|
|
$
|
412
|
|
|
$
|
227.31
|
|
|
83.4
|
%
|
|
$
|
82
|
|
Florida
|
1.0
|
|
|
382
|
|
|
351.58
|
|
|
345
|
|
|
317.41
|
|
|
90.3
|
|
|
37
|
|
|||||
Illinois
|
0.5
|
|
|
141
|
|
|
298.17
|
|
|
122
|
|
|
257.50
|
|
|
86.4
|
|
|
19
|
|
|||||
Michigan
|
1.1
|
|
|
376
|
|
|
336.64
|
|
|
331
|
|
|
296.19
|
|
|
88.0
|
|
|
45
|
|
|||||
New Mexico
(2)
|
0.7
|
|
|
319
|
|
|
466.17
|
|
|
310
|
|
|
453.30
|
|
|
97.2
|
|
|
9
|
|
|||||
Ohio
|
0.9
|
|
|
551
|
|
|
576.60
|
|
|
460
|
|
|
481.26
|
|
|
83.5
|
|
|
91
|
|
|||||
Puerto Rico
|
1.0
|
|
|
186
|
|
|
193.13
|
|
|
174
|
|
|
181.39
|
|
|
93.9
|
|
|
12
|
|
|||||
South Carolina
|
0.3
|
|
|
122
|
|
|
348.08
|
|
|
104
|
|
|
297.52
|
|
|
85.5
|
|
|
18
|
|
|||||
Texas
|
0.7
|
|
|
562
|
|
|
809.90
|
|
|
519
|
|
|
747.53
|
|
|
92.3
|
|
|
43
|
|
|||||
Washington
|
2.3
|
|
|
584
|
|
|
256.66
|
|
|
574
|
|
|
252.41
|
|
|
98.3
|
|
|
10
|
|
|||||
Other
(1)
|
0.6
|
|
|
176
|
|
|
314.93
|
|
|
153
|
|
|
273.36
|
|
|
86.8
|
|
|
23
|
|
|||||
|
10.9
|
|
|
$
|
3,893
|
|
|
$
|
354.94
|
|
|
$
|
3,504
|
|
|
$
|
319.48
|
|
|
90.0
|
%
|
|
$
|
389
|
|
(1)
|
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.
|
(2)
|
In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to our consolidated operating results.
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.1
|
|
|
$
|
56
|
|
|
$
|
342.00
|
|
|
$
|
33
|
|
|
$
|
201.46
|
|
|
58.9
|
%
|
|
$
|
23
|
|
Florida
|
0.2
|
|
|
61
|
|
|
421.17
|
|
|
26
|
|
|
177.31
|
|
|
42.1
|
|
|
35
|
|
|||||
Michigan
|
—
|
|
|
10
|
|
|
467.25
|
|
|
5
|
|
|
211.50
|
|
|
45.3
|
|
|
5
|
|
|||||
Ohio
|
—
|
|
|
30
|
|
|
853.87
|
|
|
15
|
|
|
448.51
|
|
|
52.5
|
|
|
15
|
|
|||||
Texas
|
0.6
|
|
|
148
|
|
|
306.36
|
|
|
109
|
|
|
226.36
|
|
|
73.9
|
|
|
39
|
|
|||||
Washington
|
—
|
|
|
47
|
|
|
711.60
|
|
|
29
|
|
|
435.90
|
|
|
61.3
|
|
|
18
|
|
|||||
Other
(1)
|
0.1
|
|
|
45
|
|
|
476.11
|
|
|
30
|
|
|
314.70
|
|
|
66.1
|
|
|
15
|
|
|||||
|
1.0
|
|
|
$
|
397
|
|
|
$
|
393.53
|
|
|
$
|
247
|
|
|
$
|
244.61
|
|
|
62.2
|
%
|
|
$
|
150
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months |
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
0.2
|
|
|
$
|
49
|
|
|
$
|
253.93
|
|
|
$
|
31
|
|
|
$
|
162.64
|
|
|
64.0
|
%
|
|
$
|
18
|
|
Florida
|
0.2
|
|
|
45
|
|
|
271.12
|
|
|
(16
|
)
|
|
(95.60
|
)
|
|
(35.3
|
)
|
|
61
|
|
|||||
Michigan
|
0.1
|
|
|
13
|
|
|
224.11
|
|
|
9
|
|
|
144.16
|
|
|
64.3
|
|
|
4
|
|
|||||
New Mexico
|
0.1
|
|
|
34
|
|
|
438.67
|
|
|
19
|
|
|
246.50
|
|
|
56.2
|
|
|
15
|
|
|||||
Ohio
|
0.1
|
|
|
26
|
|
|
403.44
|
|
|
17
|
|
|
262.87
|
|
|
65.2
|
|
|
9
|
|
|||||
Texas
|
0.7
|
|
|
229
|
|
|
308.74
|
|
|
146
|
|
|
196.89
|
|
|
63.8
|
|
|
83
|
|
|||||
Washington
|
—
|
|
|
39
|
|
|
526.36
|
|
|
30
|
|
|
405.40
|
|
|
77.0
|
|
|
9
|
|
|||||
Other
(2)
|
—
|
|
|
(5
|
)
|
|
NM
|
|
|
(18
|
)
|
|
NM
|
|
|
NM
|
|
13
|
|
||||||
|
1.4
|
|
|
$
|
430
|
|
|
$
|
312.87
|
|
|
$
|
218
|
|
|
$
|
158.40
|
|
|
50.6
|
%
|
|
$
|
212
|
|
(1)
|
“Other” includes the New Mexico, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results in 2019.
|
(2)
|
“Other” includes the Utah and Wisconsin health plans, where we did not participate in the Marketplace in 2018. Therefore, the ratios for 2018 periods are not meaningful (NM).
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
1.8
|
|
|
$
|
555
|
|
|
$
|
303.64
|
|
|
$
|
481
|
|
|
$
|
263.20
|
|
|
86.7
|
%
|
|
$
|
74
|
|
Florida
|
0.6
|
|
|
223
|
|
|
396.13
|
|
|
153
|
|
|
270.76
|
|
|
68.4
|
|
|
70
|
|
|||||
Illinois
|
0.7
|
|
|
227
|
|
|
348.04
|
|
|
185
|
|
|
282.70
|
|
|
81.2
|
|
|
42
|
|
|||||
Michigan
|
1.1
|
|
|
405
|
|
|
365.09
|
|
|
331
|
|
|
298.25
|
|
|
81.7
|
|
|
74
|
|
|||||
Ohio
|
0.9
|
|
|
620
|
|
|
666.41
|
|
|
552
|
|
|
594.38
|
|
|
89.2
|
|
|
68
|
|
|||||
Puerto Rico
|
0.6
|
|
|
102
|
|
|
165.02
|
|
|
90
|
|
|
145.38
|
|
|
88.1
|
|
|
12
|
|
|||||
South Carolina
|
0.4
|
|
|
136
|
|
|
363.14
|
|
|
115
|
|
|
308.87
|
|
|
85.1
|
|
|
21
|
|
|||||
Texas
|
1.2
|
|
|
747
|
|
|
651.67
|
|
|
641
|
|
|
559.49
|
|
|
85.9
|
|
|
106
|
|
|||||
Washington
|
2.4
|
|
|
661
|
|
|
270.72
|
|
|
615
|
|
|
251.83
|
|
|
93.0
|
|
|
46
|
|
|||||
Other
(1) (2)
|
0.7
|
|
|
276
|
|
|
384.08
|
|
|
208
|
|
|
288.99
|
|
|
75.2
|
|
|
68
|
|
|||||
|
10.4
|
|
|
$
|
3,952
|
|
|
$
|
380.59
|
|
|
$
|
3,371
|
|
|
$
|
324.65
|
|
|
85.3
|
%
|
|
$
|
581
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||||
|
Member
Months
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
MCR
|
|
Medical Margin
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
2.0
|
|
|
$
|
543
|
|
|
$
|
270.80
|
|
|
$
|
443
|
|
|
$
|
221.03
|
|
|
81.6
|
%
|
|
$
|
100
|
|
Florida
|
1.2
|
|
|
427
|
|
|
340.91
|
|
|
329
|
|
|
262.65
|
|
|
77.0
|
|
|
98
|
|
|||||
Illinois
|
0.5
|
|
|
141
|
|
|
298.17
|
|
|
122
|
|
|
257.50
|
|
|
86.4
|
|
|
19
|
|
|||||
Michigan
|
1.2
|
|
|
389
|
|
|
331.08
|
|
|
340
|
|
|
288.68
|
|
|
87.2
|
|
|
49
|
|
|||||
New Mexico
(2)
|
0.8
|
|
|
353
|
|
|
463.33
|
|
|
329
|
|
|
431.94
|
|
|
93.2
|
|
|
24
|
|
|||||
Ohio
|
1.0
|
|
|
577
|
|
|
565.62
|
|
|
477
|
|
|
467.41
|
|
|
82.6
|
|
|
100
|
|
|||||
Puerto Rico
|
1.0
|
|
|
186
|
|
|
193.13
|
|
|
174
|
|
|
181.39
|
|
|
93.9
|
|
|
12
|
|
|||||
South Carolina
|
0.3
|
|
|
122
|
|
|
348.08
|
|
|
104
|
|
|
297.52
|
|
|
85.5
|
|
|
18
|
|
|||||
Texas
|
1.4
|
|
|
791
|
|
|
551.28
|
|
|
665
|
|
|
463.37
|
|
|
84.1
|
|
|
126
|
|
|||||
Washington
|
2.3
|
|
|
623
|
|
|
265.20
|
|
|
604
|
|
|
257.25
|
|
|
97.0
|
|
|
19
|
|
|||||
Other
(1)
|
0.6
|
|
|
171
|
|
|
305.94
|
|
|
135
|
|
|
240.95
|
|
|
78.8
|
|
|
36
|
|
|||||
|
12.3
|
|
|
$
|
4,323
|
|
|
$
|
350.25
|
|
|
$
|
3,722
|
|
|
$
|
301.55
|
|
|
86.1
|
%
|
|
$
|
601
|
|
(1)
|
“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results.
|
(2)
|
In 2019, “Other” includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its 2019 results are not individually significant to our consolidated operating results.
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
|
(In millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
249
|
|
|
$
|
394
|
|
|
$
|
(145
|
)
|
Net cash provided by investing activities
|
171
|
|
|
145
|
|
|
26
|
|
|||
Net cash used in financing activities
|
(48
|
)
|
|
(5
|
)
|
|
(43
|
)
|
|||
Net increase in cash, cash equivalents, and restricted cash and cash equivalents
|
$
|
372
|
|
|
$
|
534
|
|
|
$
|
(162
|
)
|
Credit Facility Financial Covenants
|
Required Per Agreement
|
|
As of March 31, 2019
|
|
|
|
|
Net leverage ratio
|
<4.0x
|
|
1.0x
|
Interest coverage ratio
|
>3.5x
|
|
14.7x
|
•
|
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
first quarter of 2019
, to our disclosure reported in “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2018
.
|
•
|
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
.”
|
•
|
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
first quarter of 2019
, to our disclosure reported in “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2018
.
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly
Announced
Plans or
Programs
|
|
Approximate
Dollar Value
of Shares Authorized to Be Purchased Under the Plans or Programs
|
||||||
January 1 - January 31
|
1,011
|
|
|
$
|
133.04
|
|
|
—
|
|
|
$
|
—
|
|
February 1 - February 28
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
March 1 - March 31
|
48,228
|
|
|
$
|
137.88
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
49,239
|
|
|
$
|
137.78
|
|
|
—
|
|
|
|
(1)
|
During the
three months ended March 31, 2019
, we withheld
49,239
shares of common stock under our 2011 Equity Incentive Plan to settle employee income tax obligations.
|
Exhibit No.
|
|
Title
|
|
Method of Filing
|
|
|
|
|
|
|
Section 302 Certification of Chief Executive Officer
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Section 302 Certification of Chief Financial Officer
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
|
101.INS
|
|
XBRL Taxonomy Instance Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
MOLINA HEALTHCARE, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
Dated:
|
April 30, 2019
|
|
/s/ JOSEPH M. ZUBRETSKY
|
|
|
|
Joseph M. Zubretsky
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated:
|
April 30, 2019
|
|
/s/ THOMAS L. TRAN
|
|
|
|
Thomas L. Tran
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
Dated: April 30, 2019
|
|
/s/ Joseph M. Zubretsky
|
|
|
Joseph M. Zubretsky
|
|
|
Chief Executive Officer, President and Director
|
|
|
|
Dated: April 30, 2019
|
|
/s/ Thomas L. Tran
|
|
|
Thomas L. Tran
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
Dated: April 30, 2019
|
|
/s/ Joseph M. Zubretsky
|
|
|
Joseph M. Zubretsky
|
|
|
Chief Executive Officer, President and Director
|
|
|
|
Dated: April 30, 2019
|
|
/s/ Thomas L. Tran
|
|
|
Thomas L. Tran
|
|
|
Chief Financial Officer and Treasurer
|