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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-4204626
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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•
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Medicaid expansion
. As of February 27, 2013, among the states where we operate our health plans, the states of California, Florida, Michigan, New Mexico, Ohio, and Washington have indicated that they intend to participate in the Medicaid expansion; the states of Texas and Wisconsin have indicated that they do not intend to participate in the expansion; and the state of Utah is undecided. We believe there are significant opportunities to increase our revenues through the Medicaid expansion.
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Duals
. Nine million low-income elderly and disabled people in the United States are covered under both the Medicare and Medicaid programs. These beneficiaries, often called “dual eligibles” or simply “duals,” are more likely than other Medicare beneficiaries to be frail, live with multiple chronic conditions, and have functional and cognitive impairments. Policymakers at the federal and state level are developing initiatives for dual eligibles both to improve the coordination of their care, and to reduce spending for both Medicare and Medicaid. The Centers for Medicare and Medicaid Services, or CMS, has implemented several demonstrations designed to improve the coordination of care for dual eligibles and reduce spending under Medicare and Medicaid. These demonstrations include issuing contracts to 15 states to design a program to integrate Medicare and Medicaid services for dual eligibles in the state. Our health plans in California, Illinois, Michigan, Ohio, Texas, and Washington intend to take part in the duals demonstrations in those states. Beginning in September 2013, our California plan intends to serve duals in Riverside, San Bernardino and San Diego counties, and may participate with Health Net, Inc. for the duals contract in Los Angeles County. Our new Illinois plan will serve duals
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•
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Insurance marketplaces
. Under the ACA, insurance marketplaces will be online marketplaces organized on a state-by-state basis (although in many instances the insurance marketplace in a state will be operated by the federal government, and there could also be regional marketplaces where states combine their marketplace products). In the insurance marketplace, individuals and groups can purchase health insurance that in many instances will be federally subsidized (up to 400% of the federal poverty level by individual or family). We currently intend to participate in the insurance marketplaces in the states in which we operate our health plans. Our principal focus in participating in the marketplace is to capture the transition in membership that may result from a Medicaid member's income rising above the 138% level of the federal poverty line. By retaining that member in the marketplace, if the member's income subsequently declines, we will continuously serve that same member in all instances and not “lose” the member to another health plan. We endorse the so-called “bridge plan” as the best way to serve low-income persons who may qualify for coverage through the insurance marketplaces, and will be working with legislators and regulators during 2013 to advocate for the merits of the bridge plan.
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Provider Self Services.
Providers have the ability to access information regarding their members and claims. Key functionalities include "Check Member Eligibility," "View Claim," and "View/Submit Authorizations."
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Member Self Services.
Members can access information regarding their personal data, and can perform the following key functionalities: "View Benefits," "Request New ID Card," "Print Temporary ID Card," and "Request Change of Address/PCP."
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File Exchange Services.
Various trading partners — such as service partners, providers, vendors, management companies, and individual IPAs — are able to exchange data files (such as those that may be required by the Health Insurance Portability and Accountability Act of 1996, or HIPAA, or any other proprietary format) with us using the file exchange functionality.
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•
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Multi-Product Managed Care Organizations
— National and regional managed care organizations that have Medicaid members in addition to numerous commercial health plan and Medicare members.
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Medicaid HMOs
— National and regional managed care organizations that focus principally on providing health care services to Medicaid beneficiaries, many of which operate in only one city or state.
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Prepaid Health Plans
— Health plans that provide less comprehensive services on an at-risk basis or that provide benefit packages on a non-risk basis.
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Primary Care Case Management Programs
— Programs established by the states through contracts with primary care providers to provide primary care services to Medicaid beneficiaries, as well as to provide limited oversight of other services.
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establishes its own member eligibility standards;
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determines the type, amount, duration, and scope of services;
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sets the rate of payment for health care services; and
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administers its own program.
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We must measure provider access and availability in terms of the time needed to reach the doctor’s office using public transportation;
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Our quality improvement programs must emphasize member education and outreach and include measures designed to promote utilization of preventive services;
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We must have linkages with schools, city or county health departments, and other community-based providers of health care, to demonstrate our ability to coordinate all of the sources from which our members may receive care;
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We must be able to meet the needs of the disabled and others with special needs;
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Our providers and member service representatives must be able to communicate with members who do not speak English or who are deaf; and
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Our member handbook, newsletters, and other communications must be written at the prescribed reading level, and must be available in languages other than English.
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Establish the capability to receive and transmit electronically certain administrative health care transactions, like claims payments, in a standardized format;
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Afford privacy to patient health information; and
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Protect the privacy of patient health information through physical and electronic security measures.
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Risks associated with the health care excise tax.
One notable provision of the ACA is an excise tax that applies to most health plans, including both commercial health plans and Medicaid and/or Medicare managed care plans like Molina Healthcare. While characterized as a “fee” in the text of the ACA, the intent of Congress was to impose a broad-based health insurance industry excise tax, with the understanding that the tax could be passed on to consumers, most likely through slightly higher commercial insurance premiums. However, Medicaid is jointly paid for by the federal government and by state governments, so the cost of this excise tax, as it may be applied to Medicaid plans, will be passed on in the form of higher Medicaid costs and rates. In Medicaid and Medicare, capitated rates paid to managed care plans are required to be developed using generally accepted principles of actuarial soundness. Actuarial soundness requires that the full costs of doing business, including the costs of both federal and state taxes, be considered and factored into the applicable rate. Thus, for Medicaid and/or Medicare managed care plans like Molina Healthcare, Inc., the excise tax will be included in their capitated rates. Because of the novelty of this new tax, actuaries have never factored the tax into the development of capitated rates, an exercise which must be undertaken during 2013 and well in advance of the 2014 calendar year when the tax is scheduled to go into effect. Moreover, because the tax will be based on a health plan's market share as applied to a total excise tax base of $8 billion in 2014 (and rising thereafter), there is substantial uncertainty regarding the actual size of the tax assessment on Molina. Currently, we project that the excise tax assessment on Molina will be approximately $100 million. Since this amount is not deductible for income tax purposes under current law, and since our total net income for fiscal year 2011 was $20.8 million, and our net income for fiscal year 2012 was $9.8 million,
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Risks associated with the duals expansion.
Nine million low-income elderly and disabled people are covered under both the Medicare and Medicaid programs. These beneficiaries, often called “dual eligibles,” are more likely than other Medicare beneficiaries to be frail, live with multiple chronic conditions, and have functional and cognitive impairments. Medicare is their primary source of health insurance coverage, as it is for the nearly 50 million elderly and under-65 disabled beneficiaries in 2012. Medicaid supplements Medicare by paying for services not covered by Medicare, such as dental care and long-term care services and supports, and by helping to cover Medicare's premiums and cost-sharing requirements. Together, these two programs help to shield very low-income Medicare beneficiaries from potentially unaffordable out-of-pocket medical and long-term care costs. Policymakers at the federal and state level are increasingly developing initiatives for dual eligibles, both to improve the coordination of their care, and to reduce spending. The Centers for Medicare and Medicaid Services, or CMS, has implemented several demonstration projects designed to improve the coordination of care for dual eligibles and to reduce Medicare and Medicaid spending. These demonstrations include issuing contracts to 15 states to design a program to integrate Medicare and Medicaid services for dual eligibles in the relevant state. Our health plans in California, Illinois, Michigan, Ohio, Texas, and Washington intend to take part in the duals demonstrations in those states. Beginning in September 2013, our California plan intends to serve duals in Riverside, San Bernardino, and San Diego counties, and may participate with Health Net, Inc. for the duals contract in Los Angeles County. Our new Illinois plan will serve duals in Central Illinois beginning in 2014. Our Michigan plan will respond to a request for proposals to serve duals beginning in late 2013. Our Ohio plan will serve duals in three regions in southwestern Ohio (Dayton, Columbus and Cincinnati) beginning in late 2013. The state of Texas announced that it intends to cover duals through its existing Medicaid contracts beginning in 2014. Our Washington plan will respond to a request for proposals to serve duals also beginning in 2014.
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Risks associated with the Medicaid expansion.
Among other things, by January 1, 2014, in the states that elect to participate, the ACA provides that the Medicaid program will be greatly expanded to provide eligibility to nearly all low-income people under age 65 with incomes at or below 138% of the federal poverty line. As a result, millions of low-income adults without children who currently cannot qualify for coverage, as well as many low-income parents and, in some instances, children now covered through CHIP, will be made eligible for Medicaid. As of February 27, 2013, among the states where we operate our health plans, the states of California, Florida, Michigan, New Mexico, Ohio, and Washington have indicated that they intend to participate in the Medicaid expansion; the states of Texas and Wisconsin have indicated that they do not intend to participate in the expansion; and the state of Utah is undecided. In those states that participate in the expansion, our Medicaid membership is likely to grow appreciably. The new enrollees in our health plans will represent a population that is different from the population of Medicaid enrollees we have historically managed. In addition, such enrollees may be unfamiliar with managed care, and may have substantial pent-up demand for medical services that could result in greater than anticipated rates of utilization. All of the risk factors described above with regard to the duals demonstration programs apply equally to the Medicaid expansion.
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Risks associated with the insurance marketplaces
.
Under the ACA, insurance marketplaces will be online marketplaces organized on a state-by-state basis (although in many instances the insurance marketplace in a state will be operated by the federal government, and there could also be regional marketplaces where states combine their marketplace products).
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Risk associated with implementing regulations.
There are many parts of the ACA that will require further guidance in the form of regulations. Due to the breadth and complexity of the ACA, the lack of implementing regulations and interpretive guidance, and the phased-in nature of the ACA's implementation, the overall impact of the ACA on our business and on the health industry in general over the coming years is difficult to predict and not yet fully known.
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additional employees who are not familiar with our operations or our corporate culture,
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new provider networks which may operate on terms different from our existing networks,
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additional members who may decide to transfer to other health care providers or health plans,
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disparate information, claims processing, and record-keeping systems,
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internal controls and accounting policies, including those which require the exercise of judgment and complex estimation processes, such as estimates of claims incurred but not paid, accounting for goodwill, intangible assets, stock-based compensation, and income tax matters, and
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new regulatory schemes, relationships, practices, and compliance requirements.
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a staggered board of directors, so that it would take three successive annual meetings to replace all directors,
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prohibition of stockholder action by written consent,
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advance notice requirements for the submission by stockholders of nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a meeting, and
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the ability of our board of directors, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock.
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the implementation of the ACA and duals demonstration programs,
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state and federal budget pressures,
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changes in expectations as to our future financial performance or changes in financial estimates, if any, by us or by security analysts or investors,
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revisions in securities analysts' estimates,
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announcements by us or our competitors of significant acquisitions or dispositions, strategic partnerships, joint ventures, or capital commitments,
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announcements relating to our business or the business of our competitors,
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changes in government payment levels,
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adverse publicity regarding health maintenance organizations and other managed care organizations,
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government action regarding member eligibility,
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changes in state mandatory programs,
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conditions generally affecting the managed care industry or our provider networks,
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the success of our operating or acquisition strategy,
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the operating and stock price performance of other comparable companies in the health care industry,
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the termination of our Medicaid or CHIP contracts with state or county agencies, or subcontracts with other Medicaid managed care organizations that contract with such state or county agencies,
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regulatory or legislative change,
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general economic conditions, including unemployment rates, inflation, and interest rates, and
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the other factors set forth under “Risk factors” in this Annual Report on Form 10-K.
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Date Range
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High
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Low
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||||
2012
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First Quarter
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$
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36.83
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$
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22.25
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Second Quarter
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$
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35.37
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$
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17.63
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Third Quarter
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$
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27.73
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$
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21.62
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Fourth Quarter
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$
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29.82
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$
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21.74
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2011
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First Quarter
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$
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26.86
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$
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17.77
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Second Quarter
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$
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29.03
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$
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24.72
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Third Quarter
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$
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28.21
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$
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14.82
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Fourth Quarter
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$
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26.31
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$
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13.93
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Total Number
of Shares
Purchased (a)(b)
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Average Price
Paid per Share
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Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
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Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
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||||||
October 1 — October 31
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2,150
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$
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25.03
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—
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$
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—
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November 1 — November 30
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1,892
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$
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25.31
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—
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$
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—
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December 1 — December 31
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194,974
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$
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27.97
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—
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$
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—
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Total
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199,016
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$
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27.91
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—
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(a)
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During the three months ended December 31,
2012
, we repurchased shares of our common stock from certain Molina family trusts. Janet M. Watt is the sister, and her husband Lawrence B. Watt is the brother-in-law, of Dr. J. Mario Molina, the Company's Chief Executive Officer, and John Molina, the Company's Chief Financial Officer. Ms. Watt is the sole trustee of the Janet M. Watt Separate Property Trust dated 10/22/2007 (the “Separate Property Trust”) and a co-trustee with Lawrence B. Watt, of the Watt Family Trust dated 10/11/1996 (the “Family Trust” and together with the Separate Property Trust, the “Trusts”). On December 26, 2012, pursuant to a Stock Purchase Agreement between the Company and the Trusts, the Company purchased an aggregate of 110,988 shares of its common stock from the Trusts for an aggregate purchase price of $3,000,005.64, as follows: (i) 43,767 shares from the Family Trust for an aggregate purchase price of $ 1,183,022.01 and (ii) 67,221 shares from the Separate Property Trust for an aggregate purchase price of $1,816,983.63. The shares were purchased at a price per share of $27.03, representing the closing price per share of the Company's common stock on December 26, 2012, as reported by the New York Stock Exchange. The transaction was approved by the Company's board of directors. Other than these repurchases from the Trusts, we did not repurchase any shares of our common stock outside of our publicly announced repurchase program except shares of common stock withheld to settle our employees' income tax obligations described below.
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(b)
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During the quarter we withheld 88,028 shares of common stock under our 2002 Equity Incentive Plan and 2011 Equity Incentive Plan to settle our employees' income tax obligations.
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Plan Category
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Number of Securities to be
Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a)
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Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
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Number of Securities
Remaining Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
(c)
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Equity compensation plans approved by security holders
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414,061
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(1)
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$
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22.39
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6,537,592
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(2)
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(1)
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Options to purchase shares of our common stock issued under the 2002 Equity Incentive Plan. Further grants under the 2002 Equity Incentive Plan have been suspended.
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(2)
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Includes only shares remaining available to issue under the 2011 Equity Incentive Plan, and the 2011 Employee Stock Purchase Plan. Further grants under the 2002 Equity Incentive Plan and the 2002 Employee Stock Purchase Plan have been suspended.
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Name
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12/07
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12/08
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12/09
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12/10
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12/11
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12/12
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||||||||||||
Molina Healthcare, Inc.
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$
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100.00
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$
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45.50
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$
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59.10
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$
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71.96
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$
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86.55
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$
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104.88
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S&P 500
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100.00
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63.00
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79.67
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91.67
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93.61
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108.59
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||||||
Old Peer Group
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100.00
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44.97
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56.76
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63.52
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86.09
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87.78
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New Peer Group
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100.00
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48.44
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74.11
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83.64
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97.61
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109.47
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Year Ended December 31,
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||||||||||||||||||
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2012
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2011
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2010
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2009
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2008
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Statements of Income Data:
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Revenue:
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Premium revenue
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$
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5,826,491
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$
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4,603,407
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$
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3,989,909
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$
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3,660,207
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$
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3,091,240
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Service revenue (1)
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187,710
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160,447
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89,809
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—
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—
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|||||
Investment income
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5,188
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5,539
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6,259
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9,149
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21,126
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|||||
Rental income
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9,374
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547
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—
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—
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—
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|||||
Total revenue
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6,028,763
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4,769,940
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4,085,977
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3,669,356
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3,112,366
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|||||
Expenses:
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||||||||||
Medical care costs
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5,096,760
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3,859,994
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3,370,857
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3,176,236
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|
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2,621,312
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|
|||||
Cost of service revenue (1)
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141,208
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|
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143,987
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|
|
78,647
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|
|
—
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|
|
—
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|
|||||
General and administrative expenses
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532,627
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|
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415,932
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|
|
345,993
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|
|
276,027
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|
|
249,646
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|
|||||
Premium tax expenses
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158,991
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|
|
154,589
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|
|
139,775
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|
|
128,581
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|
|
100,165
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|
|||||
Depreciation and amortization
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63,704
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|
|
50,690
|
|
|
45,704
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|
|
38,110
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|
|
33,688
|
|
|||||
Total operating costs and expenses
|
5,993,290
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|
|
4,625,192
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|
|
3,980,976
|
|
|
3,618,954
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|
|
3,004,811
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|
|||||
Impairment of goodwill and intangible assets (2)
|
—
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|
|
(64,575
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)
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|
—
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|
|
—
|
|
|
—
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|
|||||
Gain on purchase of convertible senior notes
|
—
|
|
|
—
|
|
|
—
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|
|
1,532
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|
|
—
|
|
|||||
Operating income
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35,473
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|
|
80,173
|
|
|
105,001
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|
|
51,934
|
|
|
107,555
|
|
|||||
Other expenses (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
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16,769
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|
|
15,519
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|
|
15,509
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|
|
13,777
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|
|
13,231
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|
|||||
Other income
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(361
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)
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|
—
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|
|
—
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|
|
—
|
|
|
—
|
|
|||||
Total other expenses
|
16,408
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|
|
15,519
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|
|
15,509
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|
|
13,777
|
|
|
13,231
|
|
|||||
Income before income taxes
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19,065
|
|
|
64,654
|
|
|
89,492
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|
|
38,157
|
|
|
94,324
|
|
|||||
Provision for income taxes
|
9,275
|
|
|
43,836
|
|
|
34,522
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|
|
7,289
|
|
|
34,726
|
|
|||||
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
|
$
|
30,868
|
|
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$
|
59,598
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Net income per share:
|
|
|
|
|
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|
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|
||||||||||
Basic
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
1.34
|
|
|
$
|
0.80
|
|
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$
|
1.44
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Diluted
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
1.32
|
|
|
$
|
0.79
|
|
|
$
|
1.43
|
|
Weighted average number of common shares outstanding
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46,380,000
|
|
|
45,756,000
|
|
|
41,174,000
|
|
|
38,765,000
|
|
|
41,514,000
|
|
|||||
Weighted average number of common shares and potential dilutive common shares outstanding
|
46,999,000
|
|
|
46,425,000
|
|
|
41,631,000
|
|
|
38,976,000
|
|
|
41,658,000
|
|
|||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical care ratio (3)
|
89.9
|
%
|
|
86.8
|
%
|
|
87.6
|
%
|
|
89.9
|
%
|
|
87.6
|
%
|
|||||
General and administrative expense ratio (4)
|
8.8
|
%
|
|
8.7
|
%
|
|
8.5
|
%
|
|
7.5
|
%
|
|
8.0
|
%
|
|||||
Premium tax ratio (5)
|
2.8
|
%
|
|
3.5
|
%
|
|
3.6
|
%
|
|
3.6
|
%
|
|
3.3
|
%
|
|||||
Members (6)
|
1,797,000
|
|
|
1,697,000
|
|
|
1,613,000
|
|
|
1,455,000
|
|
|
1,256,000
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
795,770
|
|
|
$
|
493,827
|
|
|
$
|
455,886
|
|
|
$
|
469,501
|
|
|
$
|
387,162
|
|
Total assets
|
1,934,822
|
|
|
1,652,146
|
|
|
1,509,214
|
|
|
1,244,035
|
|
|
1,148,068
|
|
|||||
Long-term debt (including current maturities)
|
262,939
|
|
|
218,126
|
|
|
164,014
|
|
|
158,900
|
|
|
164,873
|
|
|||||
Total liabilities
|
1,152,508
|
|
|
897,073
|
|
|
790,157
|
|
|
701,297
|
|
|
616,306
|
|
|||||
Stockholders’ equity
|
782,314
|
|
|
755,073
|
|
|
719,057
|
|
|
542,738
|
|
|
531,762
|
|
(1)
|
Service revenue and cost of service revenue represent revenue and costs generated by our Molina Medicaid Solutions segment. Because we acquired this business on May 1, 2010, results for the year ended December 31, 2010 include eight months of results for this segment.
|
(2)
|
On February 17, 2012, the Division of Purchasing of the Missouri Office of Administration notified us that our Missouri health plan was not awarded a contract under the Missouri HealthNet Managed Care Request for Proposal; therefore, our Missouri health plan's existing contract with the state expired without renewal on June 30, 2012. In connection with this notification, we recorded a non-cash impairment charge of $64.6 million in the fourth quarter of 2011.
|
(3)
|
Medical care ratio represents medical care costs as a percentage of premium revenue, net of premium tax. We now compute the medical care ratio by dividing total medical care costs by premium revenue, net of premium taxes. Previously, we did not adjust premium revenue to remove the impact of premium taxes. We have made this change for all periods presented. The medical care ratio is a key operating indicator used to measure our performance in delivering efficient and cost effective health care services. Changes in the medical care ratio from period to period result from changes in Medicaid funding by the states, utilization of medical services, our ability to effectively manage costs, contract changes, and changes in accounting estimates related to incurred but not paid claims. See Item 7 —
Management’s Discussion and Analysis of Financial Condition and Results of Operations
for further discussion.
|
(4)
|
General and administrative expense ratio represents such expenses as a percentage of total revenue.
|
(5)
|
Premium tax ratio represents such expenses as a percentage of premium revenue, net of premium tax.
|
(6)
|
Number of members at end of period.
|
|
As of December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Total Ending Membership by Health Plan:
|
|
|
|
|
|
|||
California
|
336,000
|
|
|
355,000
|
|
|
344,000
|
|
Florida
|
73,000
|
|
|
69,000
|
|
|
61,000
|
|
Michigan
|
220,000
|
|
|
222,000
|
|
|
227,000
|
|
Missouri
(1)
|
—
|
|
|
79,000
|
|
|
81,000
|
|
New Mexico
|
91,000
|
|
|
88,000
|
|
|
91,000
|
|
Ohio
|
244,000
|
|
|
248,000
|
|
|
245,000
|
|
Texas
|
282,000
|
|
|
155,000
|
|
|
94,000
|
|
Utah
|
87,000
|
|
|
84,000
|
|
|
79,000
|
|
Washington
|
418,000
|
|
|
355,000
|
|
|
355,000
|
|
Wisconsin
|
46,000
|
|
|
42,000
|
|
|
36,000
|
|
Total
|
1,797,000
|
|
|
1,697,000
|
|
|
1,613,000
|
|
Total Ending Membership by State for our Medicare Advantage Plans:
|
|
|
|
|
|
|||
California
|
7,700
|
|
|
6,900
|
|
|
4,900
|
|
Florida
|
900
|
|
|
800
|
|
|
500
|
|
Michigan
|
9,700
|
|
|
8,200
|
|
|
6,300
|
|
New Mexico
|
900
|
|
|
800
|
|
|
600
|
|
Ohio
|
300
|
|
|
200
|
|
|
—
|
|
Texas
|
1,500
|
|
|
700
|
|
|
700
|
|
Utah
|
8,200
|
|
|
8,400
|
|
|
8,900
|
|
Washington
|
6,500
|
|
|
5,000
|
|
|
2,600
|
|
Total
|
35,700
|
|
|
31,000
|
|
|
24,500
|
|
Total Ending Membership by State for our Aged, Blind or Disabled Population:
|
|
|
|
|
|
|||
California
|
44,700
|
|
|
31,500
|
|
|
13,900
|
|
Florida
|
10,300
|
|
|
10,400
|
|
|
10,000
|
|
Michigan
|
41,900
|
|
|
37,500
|
|
|
31,700
|
|
New Mexico
|
5,700
|
|
|
5,600
|
|
|
5,700
|
|
Ohio
|
28,200
|
|
|
29,100
|
|
|
28,200
|
|
Texas
|
95,900
|
|
|
63,700
|
|
|
19,000
|
|
Utah
|
9,000
|
|
|
8,500
|
|
|
8,000
|
|
Washington
|
30,000
|
|
|
4,800
|
|
|
4,000
|
|
Wisconsin
|
1,700
|
|
|
1,700
|
|
|
1,700
|
|
Total
|
267,400
|
|
|
192,800
|
|
|
122,200
|
|
(1)
|
Our contract with the state of Missouri expired without renewal on June 30, 2012
|
•
|
Fee-for-service:
Physician providers paid on a fee-for-service basis are paid according to a fee schedule set by the state or by our contracts with these providers. Most hospitals are paid on a fee-for-service basis in a variety of ways, including per diem amounts, diagnostic-related groups or DRGs, percent of billed charges, and case rates. As discussed below, we also pay a small portion of hospitals on a capitated basis. We also have stop-loss agreements with the hospitals with which we contract. Under all fee-for-service arrangements, we retain the financial responsibility for medical care provided. Expenses related to fee-for-service contracts are recorded in the period in which the related services are dispensed. The costs of drugs administered in a physician or hospital setting that are not billed through our pharmacy benefit manager are included in fee-for-service costs.
|
•
|
Capitation:
Many of our primary care physicians and a small portion of our specialists and hospitals are paid on a capitated basis. Under capitation contracts, we typically pay a fixed PMPM payment to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. Under capitated contracts, we remain liable for the provision of certain health care services. Certain of our capitated contracts also contain incentive programs based on service delivery, quality of care, utilization management, and other criteria. Capitation payments are fixed in advance of the periods covered and are not subject to significant accounting estimates. These payments are expensed in the period the providers are obligated to provide services. The financial risk for pharmacy services for a small portion of our membership is delegated to capitated providers.
|
•
|
Pharmacy:
Pharmacy costs include all drug, injectibles, and immunization costs paid through our pharmacy benefit manager. As noted above, drugs and injectibles not paid through our pharmacy benefit manager are included in fee-for-service costs, except in those limited instances where we capitate drug and injectible costs.
|
•
|
Other:
Other medical care costs include medically related administrative costs, certain provider incentive costs, reinsurance cost, and other health care expense. Medically related administrative costs include, for example, expenses relating to health education, quality assurance, case management, disease management, and 24-hour on-call nurses. Salary and benefit costs are a substantial portion of these expenses. For the years ended
December 31, 2012
,
2011
, and
2010
, medically related administrative costs were approximately $127.5 million, $102.3 million, and $85.5 million, respectively.
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(Dollar amounts in thousands, except per-share data)
|
||||||||||
Earnings per diluted share
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
1.32
|
|
Premium revenue
|
$
|
5,826,491
|
|
|
$
|
4,603,407
|
|
|
$
|
3,989,909
|
|
Service revenue
|
$
|
187,710
|
|
|
$
|
160,447
|
|
|
$
|
89,809
|
|
Operating income
|
$
|
35,473
|
|
|
$
|
80,173
|
|
|
$
|
105,001
|
|
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
Total ending membership
|
1,797,000
|
|
|
1,697,000
|
|
|
1,613,000
|
|
|||
Premium revenue
|
96.6
|
%
|
|
96.5
|
%
|
|
97.6
|
%
|
|||
Service revenue
|
3.1
|
%
|
|
3.4
|
%
|
|
2.2
|
%
|
|||
Investment income
|
0.1
|
%
|
|
0.1
|
%
|
|
0.2
|
%
|
|||
Rental income
|
0.2
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Total revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|||
|
|
|
|
|
|
||||||
Medical care ratio (1)
|
89.9
|
%
|
|
86.8
|
%
|
|
87.6
|
%
|
|||
General and administrative expense ratio
|
8.8
|
%
|
|
8.7
|
%
|
|
8.5
|
%
|
|||
Premium tax ratio (1)
|
2.8
|
%
|
|
3.5
|
%
|
|
3.6
|
%
|
|||
Operating income
|
0.6
|
%
|
|
1.7
|
%
|
|
2.6
|
%
|
|||
Net income
|
0.2
|
%
|
|
0.4
|
%
|
|
1.3
|
%
|
|||
Effective tax rate
|
48.6
|
%
|
|
67.8
|
%
|
|
38.6
|
%
|
(1)
|
Medical care ratio represents medical care costs as a percentage of premium revenue, net of premium taxes; premium tax ratio represents premium taxes as a percentage of premium revenue, net of premium taxes.
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
Add back:
|
|
|
|
|
|
||||||
Depreciation and amortization reported in the consolidated statements of cash flows
|
78,764
|
|
|
74,383
|
|
|
60,765
|
|
|||
Interest expense
|
16,769
|
|
|
15,519
|
|
|
15,509
|
|
|||
Provision for income taxes
|
9,275
|
|
|
43,836
|
|
|
34,522
|
|
|||
EBITDA
(1)
|
$
|
114,598
|
|
|
$
|
154,556
|
|
|
$
|
165,766
|
|
(1)
|
EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense, and the provision for income taxes. This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities; nor should EBITDA be considered in isolation from these GAAP measures of operating performance.
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2012
|
|
2011
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
||||||||||
Fee for service
|
$
|
3,521,960
|
|
|
$
|
162.60
|
|
|
69.1
|
%
|
|
$
|
2,764,309
|
|
|
$
|
139.02
|
|
|
71.6
|
%
|
Capitation
|
557,087
|
|
|
25.72
|
|
|
10.9
|
|
|
518,835
|
|
|
26.09
|
|
|
13.4
|
|
||||
Pharmacy
|
835,830
|
|
|
38.59
|
|
|
16.4
|
|
|
418,007
|
|
|
21.02
|
|
|
10.8
|
|
||||
Other
|
181,883
|
|
|
8.39
|
|
|
3.6
|
|
|
158,843
|
|
|
8.00
|
|
|
4.2
|
|
||||
Total
|
$
|
5,096,760
|
|
|
$
|
235.30
|
|
|
100.0
|
%
|
|
$
|
3,859,994
|
|
|
$
|
194.13
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2012
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
Premium
Tax Expense
|
|
MCR Excluding Premium Tax Expense
(4)
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,177
|
|
|
$
|
671,489
|
|
|
$
|
160.77
|
|
|
$
|
606,494
|
|
|
$
|
145.20
|
|
|
$
|
5,697
|
|
|
91.1
|
%
|
Florida
|
850
|
|
|
228,828
|
|
|
269.36
|
|
|
195,226
|
|
|
229.80
|
|
|
(4
|
)
|
|
85.3
|
|
|||||
Michigan
|
2,639
|
|
|
658,741
|
|
|
249.59
|
|
|
570,636
|
|
|
216.20
|
|
|
12,190
|
|
|
88.3
|
|
|||||
Missouri
(2)
|
483
|
|
|
113,818
|
|
|
236.87
|
|
|
113,101
|
|
|
234.15
|
|
|
—
|
|
|
99.4
|
|
|||||
New Mexico
|
1,069
|
|
|
338,770
|
|
|
316.90
|
|
|
280,108
|
|
|
262.03
|
|
|
8,208
|
|
|
84.7
|
|
|||||
Ohio
|
3,065
|
|
|
1,187,422
|
|
|
387.48
|
|
|
970,504
|
|
|
316.69
|
|
|
92,285
|
|
|
88.6
|
|
|||||
Texas
|
3,245
|
|
|
1,255,722
|
|
|
386.99
|
|
|
1,155,433
|
|
|
356.08
|
|
|
22,101
|
|
|
93.7
|
|
|||||
Utah
|
1,026
|
|
|
298,392
|
|
|
290.78
|
|
|
245,671
|
|
|
239.41
|
|
|
—
|
|
|
82.3
|
|
|||||
Washington
|
4,600
|
|
|
992,748
|
|
|
215.83
|
|
|
845,733
|
|
|
183.87
|
|
|
18,036
|
|
|
86.8
|
|
|||||
Wisconsin
|
508
|
|
|
70,673
|
|
|
139.24
|
|
|
67,968
|
|
|
133.91
|
|
|
(5
|
)
|
|
96.2
|
|
|||||
Other
(3)
|
—
|
|
|
9,888
|
|
|
—
|
|
|
45,886
|
|
|
—
|
|
|
483
|
|
|
—
|
|
|||||
|
21,662
|
|
|
$
|
5,826,491
|
|
|
$
|
268.99
|
|
|
$
|
5,096,760
|
|
|
$
|
235.30
|
|
|
$
|
158,991
|
|
|
89.9
|
%
|
|
Year Ended December 31, 2011
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
Premium
Tax Expense
|
|
MCR Excluding Premium Tax Expense
(4)
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,190
|
|
|
$
|
575,176
|
|
|
$
|
137.27
|
|
|
$
|
493,419
|
|
|
$
|
117.75
|
|
|
$
|
7,499
|
|
|
86.9
|
%
|
Florida
|
788
|
|
|
203,945
|
|
|
258.70
|
|
|
187,358
|
|
|
237.66
|
|
|
41
|
|
|
91.9
|
|
|||||
Michigan
|
2,660
|
|
|
662,127
|
|
|
248.91
|
|
|
537,779
|
|
|
202.16
|
|
|
38,733
|
|
|
86.3
|
|
|||||
Missouri
(2)
|
959
|
|
|
229,584
|
|
|
239.38
|
|
|
195,832
|
|
|
204.19
|
|
|
—
|
|
|
85.3
|
|
|||||
New Mexico
|
1,074
|
|
|
345,732
|
|
|
321.94
|
|
|
277,338
|
|
|
258.25
|
|
|
9,285
|
|
|
82.4
|
|
|||||
Ohio
|
2,966
|
|
|
988,896
|
|
|
333.40
|
|
|
766,949
|
|
|
258.57
|
|
|
76,677
|
|
|
84.1
|
|
|||||
Texas
|
1,616
|
|
|
409,295
|
|
|
253.40
|
|
|
382,390
|
|
|
236.74
|
|
|
7,117
|
|
|
95.1
|
|
|||||
Utah
|
972
|
|
|
287,290
|
|
|
295.51
|
|
|
224,513
|
|
|
230.94
|
|
|
—
|
|
|
78.1
|
|
|||||
Washington
|
4,171
|
|
|
823,323
|
|
|
197.42
|
|
|
690,513
|
|
|
165.57
|
|
|
14,865
|
|
|
85.4
|
|
|||||
Wisconsin
|
488
|
|
|
69,596
|
|
|
142.56
|
|
|
64,346
|
|
|
131.81
|
|
|
44
|
|
|
92.5
|
|
|||||
Other
(3)
|
—
|
|
|
8,443
|
|
|
—
|
|
|
39,557
|
|
|
—
|
|
|
328
|
|
|
—
|
|
|||||
|
19,884
|
|
|
$
|
4,603,407
|
|
|
$
|
231.51
|
|
|
$
|
3,859,994
|
|
|
$
|
194.13
|
|
|
$
|
154,589
|
|
|
86.8
|
%
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
(2)
|
Our contract with the state of Missouri expired without renewal on June 30, 2012. The Missouri health plan's claims run-out activity subsequent to June 30, 2012, is reported in “Other.”
|
(3)
|
“Other” medical care costs also include medically related administrative costs of the parent company.
|
(4)
|
The “MCR Excluding Premium Tax Expense” represents medical costs as a percentage of premium revenues, where premium revenue is reduced by premium tax expense.
|
|
December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Days in claims payable: fee-for-service only
|
40 days
|
|
|
40 days
|
|
|
42 days
|
|
|||
Number of claims in inventory at end of period
|
122,700
|
|
|
111,100
|
|
|
143,600
|
|
|||
Billed charges of claims in inventory at end of period (in thousands)
|
$
|
255,200
|
|
|
$
|
207,600
|
|
|
$
|
218,900
|
|
|
Year Ended December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Service revenue before amortization
|
$
|
189,281
|
|
|
$
|
167,269
|
|
Amortization recorded as reduction of service revenue
|
(1,571
|
)
|
|
(6,822
|
)
|
||
Service revenue
|
187,710
|
|
|
160,447
|
|
||
Cost of service revenue
|
141,208
|
|
|
143,987
|
|
||
General and administrative costs
|
17,648
|
|
|
9,270
|
|
||
Amortization of customer relationship intangibles recorded as amortization
|
5,127
|
|
|
5,127
|
|
||
Operating income
|
$
|
23,727
|
|
|
$
|
2,063
|
|
•
|
Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and amortization;”
|
•
|
Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service revenue;” and
|
•
|
Depreciation is recorded within the heading “Cost of service revenue.”
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
|
2011
|
||||||||||
|
Amount
|
|
% of Total
Revenue
|
|
Amount
|
|
% of Total
Revenue
|
||||||
|
(Dollar amounts in thousands)
|
||||||||||||
Depreciation, and amortization of capitalized software
|
$
|
43,201
|
|
|
0.7
|
%
|
|
$
|
30,864
|
|
|
0.7
|
%
|
Amortization of intangible assets
|
20,503
|
|
|
0.3
|
|
|
19,826
|
|
|
0.4
|
|
||
Depreciation and amortization reported as such in the consolidated statements of income
|
63,704
|
|
|
1.0
|
|
|
50,690
|
|
|
1.1
|
|
||
Amortization recorded as reduction of service revenue
|
1,571
|
|
|
—
|
|
|
6,822
|
|
|
0.1
|
|
||
Amortization of capitalized software recorded as cost of service revenue
|
13,489
|
|
|
0.2
|
|
|
16,871
|
|
|
0.4
|
|
||
Total
|
$
|
78,764
|
|
|
1.2
|
%
|
|
$
|
74,383
|
|
|
1.6
|
%
|
•
|
In the fourth quarter of 2011, our New Mexico health plan entered into a contract amendment that more closely aligns the calculation of revenue with the methodology adopted under the Affordable Care Act. The contract amendment changed the calculation of the amount of revenue that may be recognized relative to medical costs, and resulted in the recognition of approximately $5.6 million of premium revenue which all related to periods prior to 2011.
|
•
|
Also in the fourth quarter of 2011, the addition of pharmacy benefits at our Ohio health plan effective October 1, 2011, increased premium revenue.
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2011
|
|
2010
|
||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
||||||||||
Fee for service
|
$
|
2,764,309
|
|
|
$
|
139.02
|
|
|
71.6
|
%
|
|
$
|
2,360,858
|
|
|
$
|
128.73
|
|
|
70.0
|
%
|
Capitation
|
518,835
|
|
|
26.09
|
|
|
13.4
|
|
|
555,487
|
|
|
30.29
|
|
|
16.5
|
|
||||
Pharmacy
|
418,007
|
|
|
21.02
|
|
|
10.8
|
|
|
325,935
|
|
|
17.77
|
|
|
9.7
|
|
||||
Other
|
158,843
|
|
|
8.00
|
|
|
4.2
|
|
|
128,577
|
|
|
7.01
|
|
|
3.8
|
|
||||
Total
|
$
|
3,859,994
|
|
|
$
|
194.13
|
|
|
100.0
|
%
|
|
$
|
3,370,857
|
|
|
$
|
183.80
|
|
|
100.0
|
%
|
|
Year Ended December 31, 2011
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
Premium
Tax Expense
|
|
MCR Excluding Premium Tax Expense
(4)
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,190
|
|
|
$
|
575,176
|
|
|
$
|
137.27
|
|
|
$
|
493,419
|
|
|
$
|
117.75
|
|
|
$
|
7,499
|
|
|
86.9
|
%
|
Florida
|
788
|
|
|
203,945
|
|
|
258.70
|
|
|
187,358
|
|
|
237.66
|
|
|
41
|
|
|
91.9
|
|
|||||
Michigan
|
2,660
|
|
|
662,127
|
|
|
248.91
|
|
|
537,779
|
|
|
202.16
|
|
|
38,733
|
|
|
86.3
|
|
|||||
Missouri
(2)
|
959
|
|
|
229,584
|
|
|
239.38
|
|
|
195,832
|
|
|
204.19
|
|
|
—
|
|
|
85.3
|
|
|||||
New Mexico
|
1,074
|
|
|
345,732
|
|
|
321.94
|
|
|
277,338
|
|
|
258.25
|
|
|
9,285
|
|
|
82.4
|
|
|||||
Ohio
|
2,966
|
|
|
988,896
|
|
|
333.40
|
|
|
766,949
|
|
|
258.57
|
|
|
76,677
|
|
|
84.1
|
|
|||||
Texas
|
1,616
|
|
|
409,295
|
|
|
253.40
|
|
|
382,390
|
|
|
236.74
|
|
|
7,117
|
|
|
95.1
|
|
|||||
Utah
|
972
|
|
|
287,290
|
|
|
295.51
|
|
|
224,513
|
|
|
230.94
|
|
|
—
|
|
|
78.1
|
|
|||||
Washington
|
4,171
|
|
|
823,323
|
|
|
197.42
|
|
|
690,513
|
|
|
165.57
|
|
|
14,865
|
|
|
85.4
|
|
|||||
Wisconsin
|
488
|
|
|
69,596
|
|
|
142.56
|
|
|
64,346
|
|
|
131.81
|
|
|
44
|
|
|
92.5
|
|
|||||
Other
(3)
|
—
|
|
|
8,443
|
|
|
—
|
|
|
39,557
|
|
|
—
|
|
|
328
|
|
|
—
|
|
|||||
|
19,884
|
|
|
$
|
4,603,407
|
|
|
$
|
231.51
|
|
|
$
|
3,859,994
|
|
|
$
|
194.13
|
|
|
$
|
154,589
|
|
|
86.8
|
%
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||
|
Member
Months
(1)
|
|
Premium Revenue
|
|
Medical Care Costs
|
|
Premium
Tax Expense
|
|
MCR Excluding Premium Tax Expenses
(4)
|
||||||||||||||||
|
|
Total
|
|
PMPM
|
|
Total
|
|
PMPM
|
|
|
|||||||||||||||
California
|
4,197
|
|
|
$
|
506,871
|
|
|
$
|
120.77
|
|
|
$
|
423,021
|
|
|
$
|
100.79
|
|
|
$
|
6,912
|
|
|
84.6
|
%
|
Florida
|
664
|
|
|
170,683
|
|
|
256.87
|
|
|
162,839
|
|
|
245.07
|
|
|
1
|
|
|
95.4
|
|
|||||
Michigan
|
2,708
|
|
|
630,134
|
|
|
232.66
|
|
|
527,596
|
|
|
194.80
|
|
|
39,187
|
|
|
89.3
|
|
|||||
Missouri
(2)
|
946
|
|
|
210,852
|
|
|
222.98
|
|
|
180,291
|
|
|
190.66
|
|
|
—
|
|
|
85.5
|
|
|||||
New Mexico
|
1,104
|
|
|
366,784
|
|
|
332.02
|
|
|
295,633
|
|
|
267.61
|
|
|
9,300
|
|
|
82.7
|
|
|||||
Ohio
|
2,817
|
|
|
860,324
|
|
|
305.42
|
|
|
680,802
|
|
|
241.69
|
|
|
67,358
|
|
|
85.9
|
|
|||||
Texas
|
708
|
|
|
188,716
|
|
|
266.72
|
|
|
162,714
|
|
|
229.97
|
|
|
3,251
|
|
|
87.7
|
|
|||||
Utah
|
921
|
|
|
258,076
|
|
|
280.27
|
|
|
235,576
|
|
|
255.84
|
|
|
—
|
|
|
91.3
|
|
|||||
Washington
|
4,141
|
|
|
758,849
|
|
|
183.27
|
|
|
636,617
|
|
|
153.75
|
|
|
13,513
|
|
|
85.4
|
|
|||||
Wisconsin
|
134
|
|
|
30,033
|
|
|
224.75
|
|
|
27,574
|
|
|
206.35
|
|
|
—
|
|
|
91.8
|
|
|||||
Other
(3)
|
—
|
|
|
8,587
|
|
|
—
|
|
|
38,194
|
|
|
—
|
|
|
253
|
|
|
—
|
|
|||||
|
18,340
|
|
|
$
|
3,989,909
|
|
|
$
|
217.56
|
|
|
$
|
3,370,857
|
|
|
$
|
183.80
|
|
|
$
|
139,775
|
|
|
87.6
|
%
|
(1)
|
A member month is defined as the aggregate of each month’s ending membership for the period presented.
|
(2)
|
Our contract with the state of Missouri expired without renewal on June 30, 2012.
|
(3)
|
“Other” medical care costs also include medically related administrative costs at the parent company.
|
(4)
|
The “MCR Excluding Premium Tax Expense” represents medical costs as a percentage of premium revenues, where premium revenue is reduced by premium tax expense.
|
|
Year Ended December 31, 2011
|
Eight Months Ended December 31, 2010
|
||||
|
(In thousands)
|
|||||
Service revenue before amortization
|
$
|
167,269
|
|
$
|
98,125
|
|
Amortization recorded as reduction of service revenue
|
(6,822
|
)
|
(8,316
|
)
|
||
Service revenue
|
160,447
|
|
89,809
|
|
||
Cost of service revenue
|
143,987
|
|
78,647
|
|
||
General and administrative costs
|
9,270
|
|
5,135
|
|
||
Amortization of customer relationship intangibles recorded as amortization
|
5,127
|
|
3,418
|
|
||
Operating income
|
$
|
2,063
|
|
$
|
2,609
|
|
|
Year Ended December 31,
|
||||||||||||
|
2011
|
|
2010
|
||||||||||
|
Amount
|
|
% of Total
Revenue
|
|
Amount
|
|
% of Total
Revenue
|
||||||
|
(Dollar amounts in thousands)
|
||||||||||||
Depreciation, and amortization of capitalized software
|
$
|
30,864
|
|
|
0.7
|
%
|
|
$
|
27,230
|
|
|
0.7
|
%
|
Amortization of intangible assets
|
19,826
|
|
|
0.4
|
|
|
18,474
|
|
|
0.4
|
|
||
Depreciation and amortization reported as such in the consolidated statements of income
|
50,690
|
|
|
1.1
|
|
|
45,704
|
|
|
1.1
|
|
||
Amortization recorded as reduction of service revenue
|
6,822
|
|
|
0.1
|
|
|
8,316
|
|
|
0.2
|
|
||
Amortization of capitalized software recorded as cost of service revenue
|
16,871
|
|
|
0.4
|
|
|
6,745
|
|
|
0.2
|
|
||
Total
|
$
|
74,383
|
|
|
1.6
|
%
|
|
$
|
60,765
|
|
|
1.5
|
%
|
•
|
Health plan contractual provisions that may limit revenue based upon the costs incurred or the profits realized under a specific contract;
|
•
|
Health plan quality incentives that allow us to recognize incremental revenue if certain quality standards are met;
|
•
|
The recognition of revenue and costs associated with contracts held by our Molina Medicaid Solutions segment; and;
|
•
|
The determination of medical claims and benefits payable.
|
•
|
California Health Plan Medical Cost Floors (Minimums):
A portion of certain premiums received by our California health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. We
|
•
|
Florida Health Plan Medical Cost Floor (Minimum) for Behavioral Health:
A portion of premiums received by our Florida health plan may be returned to the state if certain minimum amounts are not spent on defined behavioral health care costs. At both
December 31, 2012
and
December 31, 2011
, we had not recorded any liability under the terms of this contract provision since behavioral health expenses are not less than the contractual floor.
|
•
|
New Mexico Health Plan Medical Cost Floors (Minimums) and Administrative Cost and Profit Ceilings (Maximums):
Our contract with the state of New Mexico directs that a portion of premiums received may be returned to the state if certain minimum amounts are not spent on defined medical care costs, or if administrative costs or profit (as defined) exceed certain amounts. At both
December 31, 2012
, and
December 31, 2011
,
we had not recorded any liability under the terms of these contract provisions.
|
•
|
Texas Health Plan Profit Sharing:
Under our contract with the state of Texas, there is a profit-sharing agreement under which we pay a rebate to the state of Texas if our Texas health plan generates pretax income, as defined in the contract, above a certain specified percentage, as determined in accordance with a tiered rebate schedule. We are limited in the amount of administrative costs that we may deduct in calculating the rebate, if any. As a result of profits in excess of the amount we are allowed to fully retain, we accrued an aggregate liability of approximately
$3.2 million and $0.7 million
pursuant to our profit-sharing agreement with the state of Texas at
December 31, 2012
and
December 31, 2011
, respectively.
|
•
|
Washington Health Plan Medical Cost Floors (Minimums):
A portion of certain premiums received by our Washington health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. At both
December 31, 2012
, and
December 31, 2011
, we had not recorded any liability under the terms of this contract provision because medical expenses are not less than the contractual floor.
|
•
|
Medicare Revenue Risk Adjustment:
Based on member encounter data that we submit to CMS, our Medicare premiums are subject to retroactive adjustment for both member risk scores and member pharmacy cost experience for up to
two
years after the original year of service. This adjustment takes into account the acuity of each member’s medical needs relative to what was anticipated when premiums were originally set for that member. In the event that a member requires less acute medical care than was anticipated by the original premium amount, CMS may recover premium from us. In the event that a member requires more acute medical care than was anticipated by the original premium amount, CMS may pay us additional retroactive premium. A similar retroactive reconciliation is undertaken by CMS for our Medicare members’ pharmacy utilization. We estimate the amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ heath care utilization patterns and CMS practices. Based on our knowledge of member health care utilization patterns and expenses we have recorded a net receivable of approximately
$0.3 million and $5.0 million
for anticipated Medicare risk adjustment premiums at
December 31, 2012
, and
December 31, 2011
, respectively.
|
•
|
New Mexico Health Plan Quality Incentive Premiums:
Under our contract with the state of New Mexico, incremental revenue of up to
0.75%
of our total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care and administrative measures dictated by the state.
|
•
|
Ohio Health Plan Quality Incentive Premiums:
Under our contract with the state of Ohio, incremental revenue of up to
1%
of our total premium is earned if certain performance measures are met.
These performance measures are generally linked to various quality-of-care measures dictated by the state.
|
•
|
Texas Health Plan Quality Incentive Premiums:
Effective March 1, 2012, under our contract with the state of Texas, incremental revenue of up to
5%
of our total premium may be earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures established by the state.
|
•
|
Wisconsin Health Plan Quality Incentive Premiums:
Under our contract with the state of Wisconsin, effective beginning in 2011, up to
3.25%
of premium revenue is withheld by the state. The withheld premiums can be earned by the health plan by meeting certain performance measures. These performance measures are generally linked to various quality-of-care measures dictated by the state.
|
|
Year Ended December 31, 2012
|
||||||||||||||||||
|
Maximum
Available Quality
Incentive
Premium –
Current Year
|
|
Amount of
Current Year
Quality Incentive
Premium Revenue
Recognized
|
|
Amount of
Quality Incentive
Premium Revenue
Recognized from
Prior Year
|
|
Total Quality
Incentive
Premium Revenue
Recognized
|
|
Total Revenue
Recognized
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
New Mexico
|
$
|
2,244
|
|
|
$
|
1,889
|
|
|
$
|
643
|
|
|
$
|
2,532
|
|
|
$
|
338,770
|
|
Ohio
|
12,033
|
|
|
8,079
|
|
|
966
|
|
|
9,045
|
|
|
1,187,422
|
|
|||||
Texas
|
58,516
|
|
|
52,521
|
|
|
—
|
|
|
52,521
|
|
|
1,255,722
|
|
|||||
Wisconsin
|
1,771
|
|
|
—
|
|
|
593
|
|
|
593
|
|
|
70,673
|
|
|||||
|
$
|
74,564
|
|
|
$
|
62,489
|
|
|
$
|
2,202
|
|
|
$
|
64,691
|
|
|
$
|
2,852,587
|
|
|
Year Ended December 31, 2011
|
||||||||||||||||||
|
Maximum
Available Quality
Incentive
Premium –
Current Year
|
|
Amount of
Current Year
Quality Incentive
Premium Revenue
Recognized
|
|
Amount of
Quality Incentive
Premium Revenue
Recognized from
Prior Year
|
|
Total Quality
Incentive
Premium Revenue
Recognized
|
|
Total Revenue
Recognized
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
New Mexico
|
$
|
2,271
|
|
|
$
|
1,558
|
|
|
$
|
378
|
|
|
$
|
1,936
|
|
|
$
|
345,732
|
|
Ohio
|
10,212
|
|
|
8,363
|
|
|
3,501
|
|
|
11,864
|
|
|
988,896
|
|
|||||
Texas
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
409,295
|
|
|||||
Wisconsin
|
1,705
|
|
|
542
|
|
|
—
|
|
|
542
|
|
|
69,596
|
|
|||||
|
$
|
14,188
|
|
|
$
|
10,463
|
|
|
$
|
3,879
|
|
|
$
|
14,342
|
|
|
$
|
1,813,519
|
|
|
Year Ended December 31, 2010
|
||||||||||||||||||
|
Maximum
Available Quality
Incentive
Premium –
Current Year
|
|
Amount of
Current Year
Quality Incentive
Premium Revenue
Recognized
|
|
Amount of
Quality Incentive
Premium Revenue
Recognized from
Prior Year
|
|
Total Quality
Incentive Premium
Revenue
Recognized
|
|
Total Revenue
Recognized
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
New Mexico
|
$
|
2,581
|
|
|
$
|
1,311
|
|
|
$
|
579
|
|
|
$
|
1,890
|
|
|
$
|
366,784
|
|
Ohio
|
9,881
|
|
|
3,114
|
|
|
(1,248
|
)
|
|
1,866
|
|
|
860,324
|
|
|||||
Texas
|
1,771
|
|
|
1,771
|
|
|
—
|
|
|
1,771
|
|
|
188,716
|
|
|||||
|
$
|
14,233
|
|
|
$
|
6,196
|
|
|
$
|
(669
|
)
|
|
$
|
5,527
|
|
|
$
|
1,415,824
|
|
•
|
Each contract calls for the provision of its own specific set of services. While all contracts support the system of record for state MMIS, the actual services we provide vary significantly between contracts; and
|
•
|
The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our new contracts (commercial off-the-shelf technology solutions)
|
•
|
Transaction processing costs.
|
•
|
Employee costs incurred in performing transaction services.
|
•
|
Vendor costs incurred in performing transaction services.
|
•
|
Costs incurred in performing required monitoring of and reporting on contract performance.
|
•
|
Costs incurred in maintaining and processing member and provider eligibility.
|
•
|
Costs incurred in communicating with members and providers.
|
|
December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Fee-for-service claims incurred but not paid (IBNP)
|
$
|
377,614
|
|
|
$
|
301,020
|
|
|
$
|
275,259
|
|
Capitation payable
|
49,066
|
|
|
53,532
|
|
|
49,598
|
|
|||
Pharmacy
|
38,992
|
|
|
26,178
|
|
|
14,649
|
|
|||
Other
|
28,858
|
|
|
21,746
|
|
|
14,850
|
|
|||
|
$
|
494,530
|
|
|
$
|
402,476
|
|
|
$
|
354,356
|
|
(Decrease) Increase in Estimated Completion Factors
|
Increase (Decrease) in
Medical Claims and
Benefits Payable
|
||
(6)%
|
$
|
152,598
|
|
(4)%
|
101,732
|
|
|
(2)%
|
50,866
|
|
|
2%
|
(50,866
|
)
|
|
4%
|
(101,732
|
)
|
|
6%
|
(152,598
|
)
|
(Decrease) Increase in Trended Per member Per Month Cost Estimates
|
Increase (Decrease) in
Medical Claims and
Benefits Payable
|
||
(6)%
|
$
|
(75,312
|
)
|
(4)%
|
(50,208
|
)
|
|
(2)%
|
(25,104
|
)
|
|
2%
|
25,104
|
|
|
4%
|
50,208
|
|
|
6%
|
75,312
|
|
•
|
At our Washington health plan, we underestimated the amount of recoveries we would collect for certain high-cost newborn claims, resulting in an overestimation of reserves at year end.
|
•
|
At our Texas health plan, we overestimated the cost of new members in STAR+PLUS (the name of our ABD program in Texas), in the Dallas region.
|
•
|
In early 2011, the state of Michigan was delayed in the enrollment of newborns in managed care plans; the delay was resolved by mid-2011. This caused a large number of claims with older dates of service to be paid during late 2011, resulting in an artificial increase in the lag time for claims payment at our Michigan health plan. We adjusted reserves downward for this issue at December 31, 2011, but the adjustment did not capture all of the claims overestimation.
|
•
|
The overestimation of our liability for medical claims and benefits payable was partially offset by an underestimation of that liability at our Missouri health plan, as a result of the costs associated with an unusually large number of premature infants during the fourth quarter of 2011.
|
•
|
At our Ohio health plan, we overestimated the impact of a buildup in claims inventory.
|
•
|
At our California health plan, we overestimated the impact of the settlement of disputed provider claims.
|
•
|
At our New Mexico health plan, we underestimated the impact of a reduction in the outpatient facility fee schedule.
|
•
|
At our New Mexico health plan, we underestimated the degree to which cuts to the Medicaid fees schedule would reduce our liability as of December 31, 2009.
|
•
|
At our California health plan, we underestimated the extent to which various network restructuring, provider contracting, and medical management initiatives had reduced our medical care costs during the second half of 2009, thereby resulting in a lower liability at December 31, 2009.
|
•
|
Our Texas health plan membership nearly doubled effective March 1, 2012. In addition, effective March 1, 2012, we assumed inpatient medical liability for ABD members for which we were not previously responsible. Reserves for new coverage and new regions are now based on the newly developing claims lag patterns. While the lag patterns are now beginning to stabilize for the new membership and coverage, the true reserve liability continues to be more uncertain than usual.
|
•
|
Data published by the Centers for Disease Control, or CDC, indicated a significant increase in the percentage of office visits for influenza-like illnesses, or ILI, during December 2012. This indicated that the annual flu season was starting earlier than it had in most recent years. This was most noticeable in the southeast region of the country, but impacted other areas as well. Our leading indicators, including inpatient authorizations and overall pharmacy utilization, did not show as great an increase as we had expected based on the severity of the CDC's flu-related indices. However, we did see a significant increase in the use of prescription flu medication, especially in our Texas health plan. Therefore, we increased our reserves to account for expected additional utilization due to the early onset of the flu season.
|
•
|
Our California health plan has enrolled approximately 20,000 new ABD members since September 30, 2011, as a result of the mandatory assignment of ABD members to managed care plans effective July 1, 2011. These new members converted from a fee-for-service environment. Due to the relatively recent transition of these members to managed care, their utilization of medical services is less predictable than it is for many of our other members.
|
•
|
Prior to July 2012, it was the state of Washington's practice to disenroll certain sick newborns from the Healthy Options Medicaid managed care program and cover them under the Supplemental Security Income program, or SSI, instead. When this occurred, the health plan would reimburse the premiums received for that member back to the state and the state in turn reimbursed the health plan for the cost of care, usually retroactively to the date of birth. Effective July 1, 2012, the health plans now retain these members and cover them under a new ABD program entitled Healthy Options Blind and Disabled, or HOBD. The premium we receive from the state for the HOBD members is very high to cover
|
|
Year ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(Dollars in thousands, except
per-member amounts)
|
||||||||||
Balances at beginning of period
|
$
|
402,476
|
|
|
$
|
354,356
|
|
|
$
|
315,316
|
|
Balance of acquired subsidiary
|
—
|
|
|
—
|
|
|
3,228
|
|
|||
Components of medical care costs related to:
|
|
|
|
|
|
||||||
Current year
|
5,136,055
|
|
|
3,911,803
|
|
|
3,420,235
|
|
|||
Prior year
|
(39,295
|
)
|
|
(51,809
|
)
|
|
(49,378
|
)
|
|||
Total medical care costs
|
5,096,760
|
|
|
3,859,994
|
|
|
3,370,857
|
|
|||
Payments for medical care costs related to:
|
|
|
|
|
|
||||||
Current year
|
4,649,363
|
|
|
3,516,994
|
|
|
3,085,388
|
|
|||
Prior year
|
355,343
|
|
|
294,880
|
|
|
249,657
|
|
|||
Total paid
|
5,004,706
|
|
|
3,811,874
|
|
|
3,335,045
|
|
|||
Balances at end of year
|
$
|
494,530
|
|
|
$
|
402,476
|
|
|
$
|
354,356
|
|
Benefit from prior years as a percentage of:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
9.8
|
%
|
|
14.6
|
%
|
|
15.7
|
%
|
|||
Premium revenue
|
0.7
|
%
|
|
1.1
|
%
|
|
1.2
|
%
|
|||
Total medical care costs
|
0.8
|
%
|
|
1.3
|
%
|
|
1.5
|
%
|
|||
Claims Data
|
|
|
|
|
|
||||||
Days in claims payable, fee for service
|
40
|
|
|
40
|
|
|
42
|
|
|||
Number of members at end of period
|
1,797,000
|
|
|
1,697,000
|
|
|
1,613,000
|
|
|||
Number of claims in inventory at end of period
|
122,700
|
|
|
111,100
|
|
|
143,600
|
|
|||
Billed charges of claims in inventory at end of period
|
$
|
255,200
|
|
|
$
|
207,600
|
|
|
$
|
218,900
|
|
Claims in inventory per member at end of period
|
0.07
|
|
|
0.07
|
|
|
0.09
|
|
|||
Billed charges of claims in inventory per member end of period
|
$
|
142.01
|
|
|
$
|
122.33
|
|
|
$
|
135.71
|
|
Number of claims received during the period
|
20,842,400
|
|
|
17,207,500
|
|
|
14,554,800
|
|
|||
Billed charges of claims received during the period
|
$
|
19,429,300
|
|
|
$
|
14,306,500
|
|
|
$
|
11,686,100
|
|
|
Total
|
|
2013
|
|
2014-2015
|
|
2016-2017
|
|
2018 and Beyond
|
||||||||||
Medical claims and benefits payable
|
$
|
494,530
|
|
|
$
|
494,530
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Principal amount of long-term debt(1)
|
274,471
|
|
|
1,155
|
|
|
189,465
|
|
|
42,681
|
|
|
41,170
|
|
|||||
Operating leases
|
86,276
|
|
|
26,866
|
|
|
36,228
|
|
|
15,411
|
|
|
7,771
|
|
|||||
Interest on long-term debt
|
23,465
|
|
|
9,035
|
|
|
9,150
|
|
|
3,675
|
|
|
1,605
|
|
|||||
Purchase commitments
|
37,537
|
|
|
19,367
|
|
|
17,645
|
|
|
525
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
916,279
|
|
|
$
|
550,953
|
|
|
$
|
252,488
|
|
|
$
|
62,292
|
|
|
$
|
50,546
|
|
(1)
|
Represents the principal amount due on our 3.75% Convertible Senior Notes due 2014, our term loan due 2018, and the Credit Facility due 2016.
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(Amounts in thousands,
except per-share data)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
795,770
|
|
|
$
|
493,827
|
|
Investments
|
342,845
|
|
|
336,916
|
|
||
Receivables
|
149,682
|
|
|
167,898
|
|
||
Income tax refundable
|
—
|
|
|
11,679
|
|
||
Deferred income taxes
|
32,443
|
|
|
18,327
|
|
||
Prepaid expenses and other current assets
|
28,386
|
|
|
19,435
|
|
||
Total current assets
|
1,349,126
|
|
|
1,048,082
|
|
||
Property, equipment, and capitalized software, net
|
221,443
|
|
|
190,934
|
|
||
Deferred contract costs
|
58,313
|
|
|
54,582
|
|
||
Intangible assets, net
|
77,711
|
|
|
101,796
|
|
||
Goodwill and indefinite-lived intangible assets
|
151,088
|
|
|
153,954
|
|
||
Auction rate securities
|
13,419
|
|
|
16,134
|
|
||
Restricted investments
|
44,101
|
|
|
46,164
|
|
||
Receivable for ceded life and annuity contracts
|
—
|
|
|
23,401
|
|
||
Other assets
|
19,621
|
|
|
17,099
|
|
||
|
$
|
1,934,822
|
|
|
$
|
1,652,146
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Medical claims and benefits payable
|
$
|
494,530
|
|
|
$
|
402,476
|
|
Accounts payable and accrued liabilities
|
184,034
|
|
|
147,214
|
|
||
Deferred revenue
|
141,798
|
|
|
50,947
|
|
||
Income taxes payable
|
6,520
|
|
|
—
|
|
||
Current maturities of long-term debt
|
1,155
|
|
|
1,197
|
|
||
Total current liabilities
|
828,037
|
|
|
601,834
|
|
||
Long-term debt
|
261,784
|
|
|
216,929
|
|
||
Deferred income taxes
|
37,900
|
|
|
33,127
|
|
||
Liability for ceded life and annuity contracts
|
—
|
|
|
23,401
|
|
||
Other long-term liabilities
|
24,787
|
|
|
21,782
|
|
||
Total liabilities
|
1,152,508
|
|
|
897,073
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value; 80,000 shares authorized; outstanding:
|
47
|
|
|
46
|
|
||
46,762 shares at December 31, 2012 and 45,815 shares at December 31, 2011
|
|
|
|
||||
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
285,524
|
|
|
266,022
|
|
||
Accumulated other comprehensive loss
|
(457
|
)
|
|
(1,405
|
)
|
||
Treasury stock, at cost; 111 shares at December 31, 2012
|
(3,000
|
)
|
|
—
|
|
||
Retained earnings
|
500,200
|
|
|
490,410
|
|
||
Total stockholders’ equity
|
782,314
|
|
|
755,073
|
|
||
|
$
|
1,934,822
|
|
|
$
|
1,652,146
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands, except per-share data)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Premium revenue
|
$
|
5,826,491
|
|
|
$
|
4,603,407
|
|
|
$
|
3,989,909
|
|
Service revenue
|
187,710
|
|
|
160,447
|
|
|
89,809
|
|
|||
Investment income
|
5,188
|
|
|
5,539
|
|
|
6,259
|
|
|||
Rental income
|
9,374
|
|
|
547
|
|
|
—
|
|
|||
Total revenue
|
6,028,763
|
|
|
4,769,940
|
|
|
4,085,977
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Medical care costs
|
5,096,760
|
|
|
3,859,994
|
|
|
3,370,857
|
|
|||
Cost of service revenue
|
141,208
|
|
|
143,987
|
|
|
78,647
|
|
|||
General and administrative expenses
|
532,627
|
|
|
415,932
|
|
|
345,993
|
|
|||
Premium tax expenses
|
158,991
|
|
|
154,589
|
|
|
139,775
|
|
|||
Depreciation and amortization
|
63,704
|
|
|
50,690
|
|
|
45,704
|
|
|||
Total expenses
|
5,993,290
|
|
|
4,625,192
|
|
|
3,980,976
|
|
|||
Impairment of goodwill and intangible assets
|
—
|
|
|
(64,575
|
)
|
|
—
|
|
|||
Operating income
|
35,473
|
|
|
80,173
|
|
|
105,001
|
|
|||
Other expenses (income):
|
|
|
|
|
|
||||||
Interest expense
|
16,769
|
|
|
15,519
|
|
|
15,509
|
|
|||
Other income
|
(361
|
)
|
|
—
|
|
|
—
|
|
|||
Total other expenses (income)
|
16,408
|
|
|
15,519
|
|
|
15,509
|
|
|||
Income before income taxes
|
19,065
|
|
|
64,654
|
|
|
89,492
|
|
|||
Provision for income taxes
|
9,275
|
|
|
43,836
|
|
|
34,522
|
|
|||
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
1.34
|
|
Diluted
|
0.21
|
|
|
0.45
|
|
|
1.32
|
|
|||
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
46,380
|
|
|
45,756
|
|
|
41,174
|
|
|||
Diluted
|
46,999
|
|
|
46,425
|
|
|
41,631
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
||||||
Unrealized gain (loss) on investments
|
1,529
|
|
|
1,167
|
|
|
(613
|
)
|
|||
Total other comprehensive income (loss), before tax
|
1,529
|
|
|
1,167
|
|
|
(613
|
)
|
|||
Income tax expense (benefit) related to items of other comprehensive income
|
581
|
|
|
380
|
|
|
(233
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
948
|
|
|
787
|
|
|
(380
|
)
|
|||
Comprehensive income
|
$
|
10,738
|
|
|
$
|
21,605
|
|
|
$
|
54,590
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
78,764
|
|
|
74,383
|
|
|
60,765
|
|
|||
Deferred income taxes
|
(9,887
|
)
|
|
13,836
|
|
|
(4,092
|
)
|
|||
Stock-based compensation
|
20,018
|
|
|
17,052
|
|
|
9,531
|
|
|||
Non-cash interest on convertible senior notes
|
5,942
|
|
|
5,512
|
|
|
5,114
|
|
|||
Impairment of goodwill and intangible assets
|
—
|
|
|
64,575
|
|
|
—
|
|
|||
Change in fair value of interest rate swap
|
1,307
|
|
|
—
|
|
|
—
|
|
|||
Amortization of premium/discount on investments
|
6,746
|
|
|
7,242
|
|
|
2,029
|
|
|||
Amortization of deferred financing costs
|
1,089
|
|
|
2,818
|
|
|
1,780
|
|
|||
Gain on sale of subsidiary
|
(1,747
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on disposal of property and equipment
|
2,608
|
|
|
—
|
|
|
—
|
|
|||
Gain on acquisition
|
—
|
|
|
(1,676
|
)
|
|
—
|
|
|||
Unrealized gain on trading securities
|
—
|
|
|
—
|
|
|
(4,170
|
)
|
|||
Loss on rights agreement
|
—
|
|
|
—
|
|
|
3,807
|
|
|||
Tax deficiency from employee stock compensation
|
(526
|
)
|
|
(714
|
)
|
|
(968
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
18,216
|
|
|
352
|
|
|
(7,539
|
)
|
|||
Prepaid expenses and other current assets
|
(8,958
|
)
|
|
3,308
|
|
|
(12,034
|
)
|
|||
Medical claims and benefits payable
|
92,054
|
|
|
48,120
|
|
|
34,363
|
|
|||
Accounts payable and accrued liabilities
|
23,345
|
|
|
2,778
|
|
|
40,482
|
|
|||
Deferred revenue
|
90,851
|
|
|
(8,154
|
)
|
|
(41,899
|
)
|
|||
Income taxes
|
18,172
|
|
|
(24,855
|
)
|
|
19,258
|
|
|||
Net cash provided by operating activities
|
347,784
|
|
|
225,395
|
|
|
161,397
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of equipment
|
(78,145
|
)
|
|
(60,581
|
)
|
|
(48,538
|
)
|
|||
Purchases of investments
|
(306,437
|
)
|
|
(345,968
|
)
|
|
(302,842
|
)
|
|||
Sales and maturities of investments
|
298,006
|
|
|
302,667
|
|
|
223,077
|
|
|||
Net cash paid in business combinations
|
—
|
|
|
(84,253
|
)
|
|
(130,743
|
)
|
|||
Proceeds from sale of subsidiary, net of cash surrendered
|
9,162
|
|
|
—
|
|
|
—
|
|
|||
Increase in deferred contract costs
|
(11,610
|
)
|
|
(42,830
|
)
|
|
(29,319
|
)
|
|||
Increase in restricted investments
|
(2,647
|
)
|
|
(4,064
|
)
|
|
(5,566
|
)
|
|||
Change in other noncurrent assets and liabilities
|
(1,913
|
)
|
|
(1,898
|
)
|
|
5,108
|
|
|||
Net cash used in investing activities
|
(93,584
|
)
|
|
(236,927
|
)
|
|
(288,823
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Amount borrowed under term loan
|
—
|
|
|
48,600
|
|
|
—
|
|
|||
Amount borrowed under credit facility
|
60,000
|
|
|
—
|
|
|
105,000
|
|
|||
Proceeds from common stock offering, net of issuance costs
|
—
|
|
|
—
|
|
|
111,131
|
|
|||
Repayment of amount borrowed under credit facility
|
(20,000
|
)
|
|
—
|
|
|
(105,000
|
)
|
|||
Treasury stock purchases
|
(3,000
|
)
|
|
(7,000
|
)
|
|
—
|
|
|||
Credit facility fees paid
|
—
|
|
|
(1,125
|
)
|
|
(1,671
|
)
|
|||
Principal payments on term loan
|
(1,129
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from employee stock plans
|
8,205
|
|
|
7,347
|
|
|
4,056
|
|
|||
Excess tax benefits from employee stock compensation
|
3,667
|
|
|
1,651
|
|
|
295
|
|
|||
Net cash provided by financing activities
|
47,743
|
|
|
49,473
|
|
|
113,811
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
301,943
|
|
|
37,941
|
|
|
(13,615
|
)
|
|||
Cash and cash equivalents at beginning of period
|
493,827
|
|
|
455,886
|
|
|
469,501
|
|
|||
Cash and cash equivalents at end of period
|
$
|
795,770
|
|
|
$
|
493,827
|
|
|
$
|
455,886
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash (received) paid during the period for:
|
|
|
|
|
|
||||||
Income taxes
|
$
|
(4,634
|
)
|
|
$
|
54,663
|
|
|
$
|
18,299
|
|
Interest
|
$
|
10,099
|
|
|
$
|
11,399
|
|
|
$
|
10,951
|
|
Schedule of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Retirement of treasury stock
|
$
|
—
|
|
|
$
|
7,000
|
|
|
$
|
—
|
|
Retirement of common stock used for stock-based compensation
|
$
|
(11,862
|
)
|
|
$
|
(3,926
|
)
|
|
$
|
(2,316
|
)
|
Details of sale of subsidiary
|
|
|
|
|
|
||||||
Decrease in carrying value of assets
|
30,942
|
|
|
—
|
|
|
—
|
|
|||
Decrease in carrying value of liabilities
|
(23,527
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on sale
|
1,747
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of subsidiary, net of cash surrendered
|
9,162
|
|
|
—
|
|
|
—
|
|
|||
Details of business combinations:
|
|
|
|
|
|
||||||
Increase in fair value of assets acquired
|
$
|
—
|
|
|
$
|
(81,256
|
)
|
|
$
|
(159,916
|
)
|
(Decrease) increase in fair value of liabilities assumed
|
—
|
|
|
(1,045
|
)
|
|
24,450
|
|
|||
(Decrease) increase in payable to seller
|
—
|
|
|
(1,952
|
)
|
|
4,723
|
|
|||
Net cash paid in business combinations
|
$
|
—
|
|
|
$
|
(84,253
|
)
|
|
$
|
(130,743
|
)
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
|
|||||||||||||||
|
Outstanding
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||
Balance at January 1, 2010
|
38,410
|
|
|
$
|
38
|
|
|
$
|
129,890
|
|
|
$
|
(1,812
|
)
|
|
$
|
414,622
|
|
|
$
|
—
|
|
|
$
|
542,738
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,970
|
|
|
—
|
|
|
54,970
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(380
|
)
|
|
—
|
|
|
—
|
|
|
(380
|
)
|
||||||
Common stock issued, net of issuance costs
|
6,525
|
|
|
7
|
|
|
111,124
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111,131
|
|
||||||
Employee stock grants and employee stock purchase plans
|
528
|
|
|
—
|
|
|
11,271
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,271
|
|
||||||
Tax deficiency from employee stock compensation
|
—
|
|
|
—
|
|
|
(673
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(673
|
)
|
||||||
Balance at December 31, 2010
|
45,463
|
|
|
45
|
|
|
251,612
|
|
|
(2,192
|
)
|
|
469,592
|
|
|
—
|
|
|
719,057
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,818
|
|
|
—
|
|
|
20,818
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
787
|
|
|
—
|
|
|
—
|
|
|
787
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,000
|
)
|
|
(7,000
|
)
|
||||||
Retirement of treasury stock
|
(400
|
)
|
|
—
|
|
|
(7,000
|
)
|
|
—
|
|
|
—
|
|
|
7,000
|
|
|
—
|
|
||||||
Employee stock grants and employee stock plan purchases
|
752
|
|
|
1
|
|
|
20,473
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,474
|
|
||||||
Tax benefit from employee stock compensation
|
—
|
|
|
—
|
|
|
937
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
937
|
|
||||||
Balance at December 31, 2011
|
45,815
|
|
|
46
|
|
|
266,022
|
|
|
(1,405
|
)
|
|
490,410
|
|
|
—
|
|
|
755,073
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,790
|
|
|
—
|
|
|
9,790
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
948
|
|
|
—
|
|
|
—
|
|
|
948
|
|
||||||
Purchase of treasury stock
|
(111
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|
(3,000
|
)
|
||||||
Employee stock grants and employee stock plan purchases
|
1,058
|
|
|
1
|
|
|
16,361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,362
|
|
||||||
Tax benefit from employee stock compensation
|
—
|
|
|
—
|
|
|
3,141
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,141
|
|
||||||
Balance at December 31, 2012
|
46,762
|
|
|
$
|
47
|
|
|
$
|
285,524
|
|
|
$
|
(457
|
)
|
|
$
|
500,200
|
|
|
$
|
(3,000
|
)
|
|
$
|
782,314
|
|
•
|
Health plan contractual provisions that may limit revenue based upon the costs incurred or the profits realized under a specific contract;
|
•
|
Health plan quality incentives that allow us to recognize incremental revenue if certain quality standards are met;
|
•
|
The determination of medical claims and benefits payable of our Health Plans segment;
|
•
|
The valuation of certain investments;
|
•
|
Settlements under risk or savings sharing programs;
|
•
|
The assessment of deferred contract costs, deferred revenue, long-lived and intangible assets, and goodwill for impairment;
|
•
|
The determination of professional and general liability claims, and reserves for potential absorption of claims unpaid by insolvent providers;
|
•
|
The determination of reserves for the outcome of litigation;
|
•
|
The determination of valuation allowances for deferred tax assets; and
|
•
|
The determination of unrecognized tax benefits.
|
•
|
Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and amortization;”
|
•
|
Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service revenue;” and
|
•
|
Depreciation is recorded within the heading “Cost of service revenue.”
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(Dollar amounts in thousands)
|
||||||||||
Depreciation, and amortization of capitalized software
|
$
|
43,201
|
|
|
$
|
30,864
|
|
|
$
|
27,230
|
|
Amortization of intangible assets
|
20,503
|
|
|
19,826
|
|
|
18,474
|
|
|||
Depreciation and amortization reported as such in the consolidated statements of income
|
63,704
|
|
|
50,690
|
|
|
45,704
|
|
|||
Amortization recorded as reduction of service revenue
|
1,571
|
|
|
6,822
|
|
|
8,316
|
|
|||
Amortization of capitalized software recorded as cost of service revenue
|
13,489
|
|
|
16,871
|
|
|
6,745
|
|
|||
Total
|
$
|
78,764
|
|
|
$
|
74,383
|
|
|
$
|
60,765
|
|
•
|
The contract backlog intangible asset comprises all contractual cash flows anticipated to be received during the remaining contracted period for each specific contract relating to work that was performed prior to the acquisition. Because each
|
•
|
The customer relationship intangible asset comprises all contractual cash flows that are anticipated to be received during the option periods of each specific contract as well as anticipated renewals of those contracts. The customer relationship intangible is amortized on a straight-line basis for each specific contract over periods generally ranging from
four
to
nine
years.
|
(1)
|
Our contract with the state of Missouri expired without renewal on June 30, 2012.
|
•
|
California Health Plan Medical Cost Floors (Minimums):
A portion of certain premiums received by our California health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. We recorded a liability under the terms of these contract provisions of
$0.3 million
and
$1.0 million
at
December 31, 2012
, and
December 31, 2011
, respectively.
|
•
|
Florida Health Plan Medical Cost Floor (Minimum) for Behavioral Health:
A portion of premiums received by our Florida health plan may be returned to the state if certain minimum amounts are not spent on defined behavioral health care costs. At both
December 31, 2012
, and
December 31, 2011
, we had not recorded any liability under the terms of this contract provision since behavioral health expenses are not less than the contractual floor.
|
•
|
New Mexico Health Plan Medical Cost Floors (Minimums) and Administrative Cost and Profit Ceilings (Maximums):
Our contract with the state of New Mexico directs that a portion of premiums received may be returned to the state if certain minimum amounts are not spent on defined medical care costs, or if administrative costs or profit (as defined) exceed certain amounts. At both
December 31, 2012
, and
December 31, 2011
we had not recorded any liability under the terms of these contract provisions.
|
•
|
Texas Health Plan Profit Sharing:
Under our contract with the state of Texas, there is a profit-sharing agreement under which we pay a rebate to the state of Texas if our Texas health plan generates pretax income, as defined in the contract, above a certain specified percentage, as determined in accordance with a tiered rebate schedule. We are limited in the amount of administrative costs that we may deduct in calculating the rebate, if any. As a result of profits in excess of the amount we are allowed to fully retain, we accrued an aggregate liability of approximately
$3.2 million
and
$0.7 million
pursuant to our profit-sharing agreement with the state of Texas at
December 31, 2012
and
December 31, 2011
, respectively.
|
•
|
Washington Health Plan Medical Cost Floors (Minimums):
A portion of certain premiums received by our Washington health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. At both
December 31, 2012
, and
December 31, 2011
, we had not recorded any liability under the terms of this contract provision because medical expenses are not less than the contractual floor.
|
•
|
Medicare Revenue Risk Adjustment:
Based on member encounter data that we submit to CMS, our Medicare premiums are subject to retroactive adjustment for both member risk scores and member pharmacy cost experience for up to
2
years after the original year of service. This adjustment takes into account the acuity of each member’s medical needs relative to what was anticipated when premiums were originally set for that member. In the event that a member requires less acute medical care than was anticipated by the original premium amount, CMS may recover premium from us. In the event that a member requires more acute medical care than was anticipated by the original premium amount, CMS may pay us additional retroactive premium. A similar retroactive reconciliation is undertaken by CMS for our Medicare members’ pharmacy utilization. We estimate the amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ heath care utilization patterns and CMS practices. Based on our knowledge of member health care utilization patterns and expenses we have recorded a net receivable of approximately
$0.3 million
and
$5.0 million
for anticipated Medicare risk adjustment premiums at
December 31, 2012
and
December 31, 2011
, respectively.
|
•
|
New Mexico Health Plan Quality Incentive Premiums:
Under our contract with the state of New Mexico, incremental revenue of up to
0.75%
of our total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care and administrative measures dictated by the state.
|
•
|
Ohio Health Plan Quality Incentive Premiums:
Under our contract with the state of Ohio, incremental revenue of up to
1%
of our total premium is earned if certain performance measures are met.
These performance measures are generally linked to various quality-of-care measures dictated by the state.
|
•
|
Texas Health Plan Quality Incentive Premiums:
Effective March 1, 2012, under our contract with the state of Texas, incremental revenue of up to
5%
of our total premium may be earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures established by the state.
|
•
|
Wisconsin Health Plan Quality Incentive Premiums:
Under our contract with the state of Wisconsin, effective beginning in 2011, up to
3.25%
of premium revenue is withheld by the state. The withheld premiums can be earned by the health plan by meeting certain performance measures. These performance measures are generally linked to various quality-of-care measures dictated by the state.
|
|
Year Ended December 31, 2012
|
||||||||||||||||||
|
Maximum
Available Quality
Incentive
Premium –
Current Year
|
|
Amount of
Current Year
Quality Incentive
Premium Revenue
Recognized
|
|
Amount of
Quality Incentive
Premium Revenue
Recognized from
Prior Year
|
|
Total Quality
Incentive
Premium Revenue
Recognized
|
|
Total Revenue
Recognized
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
New Mexico
|
$
|
2,244
|
|
|
$
|
1,889
|
|
|
$
|
643
|
|
|
$
|
2,532
|
|
|
$
|
338,770
|
|
Ohio
|
12,033
|
|
|
8,079
|
|
|
966
|
|
|
9,045
|
|
|
1,187,422
|
|
|||||
Texas
|
58,516
|
|
|
52,521
|
|
|
—
|
|
|
52,521
|
|
|
1,255,722
|
|
|||||
Wisconsin
|
1,771
|
|
|
—
|
|
|
593
|
|
|
593
|
|
|
70,673
|
|
|||||
|
$
|
74,564
|
|
|
$
|
62,489
|
|
|
$
|
2,202
|
|
|
$
|
64,691
|
|
|
$
|
2,852,587
|
|
|
Year Ended December 31, 2011
|
||||||||||||||||||
|
Maximum
Available Quality
Incentive
Premium –
Current Year
|
|
Amount of
Current Year
Quality Incentive
Premium Revenue
Recognized
|
|
Amount of
Quality Incentive
Premium Revenue
Recognized from
Prior Year
|
|
Total Quality
Incentive
Premium Revenue
Recognized
|
|
Total Revenue
Recognized
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
New Mexico
|
$
|
2,271
|
|
|
$
|
1,558
|
|
|
$
|
378
|
|
|
$
|
1,936
|
|
|
$
|
345,732
|
|
Ohio
|
10,212
|
|
|
8,363
|
|
|
3,501
|
|
|
11,864
|
|
|
988,896
|
|
|||||
Texas
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
409,295
|
|
|||||
Wisconsin
|
1,705
|
|
|
542
|
|
|
—
|
|
|
542
|
|
|
69,596
|
|
|||||
|
$
|
14,188
|
|
|
$
|
10,463
|
|
|
$
|
3,879
|
|
|
$
|
14,342
|
|
|
$
|
1,813,519
|
|
|
Year Ended December 31, 2010
|
||||||||||||||||||
|
Maximum
Available Quality
Incentive
Premium –
Current Year
|
|
Amount of
Current Year
Quality Incentive
Premium Revenue
Recognized
|
|
Amount of
Quality Incentive
Premium Revenue
Recognized from
Prior Year
|
|
Total Quality
Incentive
Premium Revenue
Recognized
|
|
Total Revenue
Recognized
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
New Mexico
|
$
|
2,581
|
|
|
$
|
1,311
|
|
|
$
|
579
|
|
|
$
|
1,890
|
|
|
$
|
366,784
|
|
Ohio
|
9,881
|
|
|
3,114
|
|
|
(1,248
|
)
|
|
1,866
|
|
|
860,324
|
|
|||||
Texas
|
1,771
|
|
|
1,771
|
|
|
—
|
|
|
1,771
|
|
|
188,716
|
|
|||||
|
$
|
14,233
|
|
|
$
|
6,196
|
|
|
$
|
(669
|
)
|
|
$
|
5,527
|
|
|
$
|
1,415,824
|
|
•
|
Fee-for-service:
Physician providers paid on a fee-for-service basis are paid according to a fee schedule set by the state or by our contracts with these providers. Most hospitals are paid on a fee-for-service basis in a variety of ways, including per diem amounts, diagnostic-related groups, or DRGs, percent of billed charges, and case rates. As discussed below, we also pay a small portion of hospitals on a capitated basis. We also have stop-loss agreements with the hospitals with which we contract. Under all fee-for-service arrangements, we retain the financial responsibility for medical care provided. Expenses related to fee-for-service contracts are recorded in the period in which the related services are dispensed. The costs of drugs administered in a physician or hospital setting that are not billed through our pharmacy benefit manager are included in fee-for-service costs.
|
•
|
Capitation:
Many of our primary care physicians and a small portion of our specialists and hospitals are paid on a capitated basis. Under capitation contracts, we typically pay a fixed per-member per-month, or PMPM, payment to the provider without regard to the frequency, extent, or nature of the medical services actually furnished. Under capitated contracts, we remain liable for the provision of certain health care services. Certain of our capitated contracts also contain incentive programs based on service delivery, quality of care, utilization management, and other criteria. Capitation payments are fixed in advance of the periods covered and are not subject to significant accounting estimates. These payments are expensed in the period the providers are obligated to provide services. The financial risk for pharmacy services for a small portion of our membership is delegated to capitated providers.
|
•
|
Pharmacy:
Pharmacy costs include all drug, injectibles, and immunization costs paid through our pharmacy benefit manager. As noted above, drugs and injectibles not paid through our pharmacy benefit manager are included in fee-for-service costs, except in those limited instances where we capitate drug and injectible costs.
|
•
|
Other:
Other medical care costs include medically related administrative costs, certain provider incentive costs, reinsurance cost, and other health care expense. Medically related administrative costs include, for example, expenses relating to health education, quality assurance, case management, disease management, and 24-hour on-call nurses. Salary and benefit costs are a substantial portion of these expenses. For the years ended
December 31, 2012
,
2011
, and
2010
, medically related administrative costs were approximately
$127.5 million
,
$102.3 million
, and
$85.5 million
, respectively.
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||||||||||||||
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
|
Amount
|
|
PMPM
|
|
% of
Total
|
|||||||||||||||
Fee-for-service
|
$
|
3,521,960
|
|
|
$
|
162.60
|
|
|
69.1
|
%
|
|
$
|
2,764,309
|
|
|
$
|
139.02
|
|
|
71.6
|
%
|
|
$
|
2,360,858
|
|
|
$
|
128.73
|
|
|
70.0
|
%
|
Capitation
|
557,087
|
|
|
25.72
|
|
|
10.9
|
|
|
518,835
|
|
|
26.09
|
|
|
13.4
|
|
|
555,487
|
|
|
30.29
|
|
|
16.5
|
|
||||||
Pharmacy
|
835,830
|
|
|
38.59
|
|
|
16.4
|
|
|
418,007
|
|
|
21.02
|
|
|
10.8
|
|
|
325,935
|
|
|
17.77
|
|
|
9.7
|
|
||||||
Other
|
181,883
|
|
|
8.39
|
|
|
3.6
|
|
|
158,843
|
|
|
8.00
|
|
|
4.2
|
|
|
128,577
|
|
|
7.01
|
|
|
3.8
|
|
||||||
Total
|
$
|
5,096,760
|
|
|
$
|
235.30
|
|
|
100.0
|
%
|
|
$
|
3,859,994
|
|
|
$
|
194.13
|
|
|
100.0
|
%
|
|
$
|
3,370,857
|
|
|
$
|
183.80
|
|
|
100.0
|
%
|
•
|
Each contract calls for the provision of its own specific set of services. While all contracts support the system of record for state MMIS, the actual services we provide vary significantly between contracts; and
|
•
|
The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our new contracts (commercial off-the-shelf technology solutions)
.
|
•
|
Transaction processing costs.
|
•
|
Employee costs incurred in performing transaction services.
|
•
|
Vendor costs incurred in performing transaction services.
|
•
|
Costs incurred in performing required monitoring of and reporting on contract performance.
|
•
|
Costs incurred in maintaining and processing member and provider eligibility.
|
•
|
Costs incurred in communicating with members and providers.
|
|
December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
|
(In thousands)
|
|||||||
Shares outstanding at the beginning of the period
|
45,815
|
|
|
45,463
|
|
|
38,410
|
|
Weighted-average number of shares issued under equity offering
|
—
|
|
|
—
|
|
|
2,506
|
|
Weighted-average number of shares purchased
|
(2
|
)
|
|
(160
|
)
|
|
—
|
|
Weighted-average number of shares issued under employee stock plans
|
567
|
|
|
453
|
|
|
258
|
|
Denominator for basic earnings per share
|
46,380
|
|
|
45,756
|
|
|
41,174
|
|
Dilutive effect of employee stock options and stock grants(1)
|
619
|
|
|
669
|
|
|
457
|
|
Denominator for diluted earnings per share(2)
|
46,999
|
|
|
46,425
|
|
|
41,631
|
|
(1)
|
Options to purchase common shares are included in the calculation of diluted earnings per share when their exercise prices are below the average fair value of the common shares for each of the periods presented. For the years ended
December 31, 2012
,
2011
, and
2010
there were approximately
87,000
,
137,000
and
478,000
anti-dilutive weighted options, respectively. Restricted shares are included in the calculation of diluted earnings per share when their grant date fair values are below the average fair value of the common shares for each of the periods presented. For the year ended
December 31, 2012
, there were approximately
304,000
anti-dilutive restricted shares. For the years ended
December 31, 2011
and
2010
, anti-dilutive restricted shares were insignificant.
|
(2)
|
Potentially dilutive shares issuable pursuant to our convertible senior notes were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the years ended
December 31, 2012
,
2011
, and
2010
.
|
•
|
Level 1 — Observable inputs such as quoted prices in active markets:
Our Level 1 financial instruments recorded at fair value consist of investments including government-sponsored enterprise securities (GSEs) and U.S. treasury notes that are classified as current investments in the accompanying consolidated balance sheets. These financial instruments are actively traded and therefore the fair value for these securities is based on quoted market prices on one or more securities exchanges.
|
•
|
Level 2 — Inputs other than quoted prices in active markets that are either directly or indirectly observable:
Our Level 2 financial instruments recorded at fair value consist of investments including corporate debt securities, municipal securities, and certificates of deposit that are classified as current investments in the accompanying consolidated balance sheets, and an interest rate swap derivative recorded as a noncurrent liability. Our investments classified as Level 2 are traded frequently though not necessarily daily. Fair value for these investments is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets. Fair value for the interest rate swap derivative is based on forward LIBOR rates that are and will be observable at commonly
|
•
|
Level 3 — Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions:
Our Level 3 financial instruments recorded at fair value consist of non-current auction rate securities that are designated as available-for-sale, and are reported at fair value of
$13.4 million
(par value of
$14.7 million
) as of
December 31, 2012
. To estimate the fair value of these securities we use valuation data from our primary pricing source, a third party who provides a marketplace for illiquid assets with over 10,000 participants including global financial institutions, hedge funds, private equity funds, mutual funds, corporations and other institutional investors. This valuation data is based on a range of prices that represent indicative bids from potential buyers. To validate the reasonableness of the data, we compare these valuations to data from two other third-party pricing sources, which also provide a range of prices representing indicative bids from potential buyers. We have concluded that these estimates, given the lack of market available pricing, provide a reasonable basis for determining the fair value of the auction rate securities as of December 31, 2012.
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
191,008
|
|
|
$
|
—
|
|
|
$
|
191,008
|
|
|
$
|
—
|
|
GSEs
|
29,525
|
|
|
29,525
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
75,848
|
|
|
—
|
|
|
75,848
|
|
|
—
|
|
||||
U.S. treasury notes
|
35,740
|
|
|
35,740
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
13,419
|
|
|
—
|
|
|
—
|
|
|
13,419
|
|
||||
Certificates of deposit
|
10,724
|
|
|
—
|
|
|
10,724
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
356,264
|
|
|
$
|
65,265
|
|
|
$
|
277,580
|
|
|
$
|
13,419
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap liability
|
$
|
1,307
|
|
|
$
|
—
|
|
|
$
|
1,307
|
|
|
$
|
—
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
231,634
|
|
|
$
|
—
|
|
|
$
|
231,634
|
|
|
$
|
—
|
|
GSEs
|
33,949
|
|
|
33,949
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
47,313
|
|
|
—
|
|
|
47,313
|
|
|
—
|
|
||||
U.S. treasury notes
|
21,748
|
|
|
21,748
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
16,134
|
|
|
—
|
|
|
—
|
|
|
16,134
|
|
||||
Certificates of deposit
|
2,272
|
|
|
—
|
|
|
2,272
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
353,050
|
|
|
$
|
55,697
|
|
|
$
|
281,219
|
|
|
$
|
16,134
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Total
|
|
|
|
||||||||||
|
Value
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||
|
(In thousands)
|
||||||||||||||
Convertible senior notes
|
$
|
175,468
|
|
$
|
208,460
|
|
$
|
—
|
|
$
|
208,460
|
|
$
|
—
|
|
Credit facility
|
40,000
|
|
40,000
|
|
—
|
|
—
|
|
40,000
|
|
|||||
Term loan
|
47,471
|
|
47,471
|
|
—
|
|
—
|
|
47,471
|
|
|||||
|
$
|
262,939
|
|
$
|
295,931
|
|
$
|
—
|
|
$
|
208,460
|
|
$
|
87,471
|
|
|
|
||||||||||||||
|
December 31, 2011
|
||||||||||||||
|
Carrying
|
Total
|
|
|
|
||||||||||
|
Value
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||
|
(In thousands)
|
||||||||||||||
Convertible senior notes
|
$
|
169,526
|
|
$
|
192,049
|
|
$
|
—
|
|
$
|
192,049
|
|
$
|
—
|
|
Credit facility
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Term loan
|
48,600
|
|
48,600
|
|
—
|
|
—
|
|
48,600
|
|
|||||
|
$
|
218,126
|
|
$
|
240,649
|
|
$
|
—
|
|
$
|
192,049
|
|
$
|
48,600
|
|
|
December 31, 2012
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
190,545
|
|
|
$
|
528
|
|
|
$
|
65
|
|
|
$
|
191,008
|
|
GSEs
|
29,481
|
|
|
45
|
|
|
1
|
|
|
29,525
|
|
||||
Municipal securities
|
75,909
|
|
|
185
|
|
|
246
|
|
|
75,848
|
|
||||
U.S. treasury notes
|
35,700
|
|
|
42
|
|
|
2
|
|
|
35,740
|
|
||||
Auction rate securities
|
14,650
|
|
|
—
|
|
|
1,231
|
|
|
13,419
|
|
||||
Certificates of deposit
|
10,715
|
|
|
9
|
|
|
—
|
|
|
10,724
|
|
||||
|
$
|
357,000
|
|
|
$
|
809
|
|
|
$
|
1,545
|
|
|
$
|
356,264
|
|
|
December 31, 2011
|
||||||||||||||
|
Amortized
|
|
Gross
Unrealized
|
|
Estimated
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Corporate debt securities
|
$
|
231,407
|
|
|
$
|
442
|
|
|
$
|
215
|
|
|
$
|
231,634
|
|
GSEs
|
33,912
|
|
|
46
|
|
|
9
|
|
|
33,949
|
|
||||
Municipal securities
|
47,099
|
|
|
232
|
|
|
18
|
|
|
47,313
|
|
||||
U.S. treasury notes
|
21,627
|
|
|
121
|
|
|
—
|
|
|
21,748
|
|
||||
Auction rate securities
|
19,000
|
|
|
—
|
|
|
2,866
|
|
|
16,134
|
|
||||
Certificates of deposit
|
2,272
|
|
|
—
|
|
|
—
|
|
|
2,272
|
|
||||
|
$
|
355,317
|
|
|
$
|
841
|
|
|
$
|
3,108
|
|
|
$
|
353,050
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
195,986
|
|
|
$
|
196,201
|
|
Due one year through five years
|
146,364
|
|
|
146,644
|
|
||
Due after ten years
|
14,650
|
|
|
13,419
|
|
||
|
$
|
357,000
|
|
|
$
|
356,264
|
|
|
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 Securities
|
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total Number of Securities
|
||||||||||
|
(In thousands, except number of securities)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
44,457
|
|
|
$
|
65
|
|
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
GSEs
|
5,004
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
35,223
|
|
|
246
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
U.S. treasury notes
|
4,511
|
|
|
2
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
—
|
|
|
13,419
|
|
|
1,231
|
|
|
21
|
|
||||
Total temporarily impaired securities
|
$
|
89,195
|
|
|
$
|
314
|
|
|
72
|
|
|
$
|
13,419
|
|
|
$
|
1,231
|
|
|
21
|
|
|
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 Securities
|
|
Estimated
Fair
Value
|
|
Unrealized
Losses
|
|
Total Number of Securities
|
||||||||||
|
(In thousands, except number of securities)
|
||||||||||||||||||||
Corporate debt securities
|
$
|
72,766
|
|
|
$
|
215
|
|
|
47
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
GSEs
|
11,493
|
|
|
9
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
12,033
|
|
|
18
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
—
|
|
|
16,134
|
|
|
2,866
|
|
|
27
|
|
||||
Total temporarily impaired securities
|
$
|
96,292
|
|
|
$
|
242
|
|
|
64
|
|
|
$
|
16,134
|
|
|
$
|
2,866
|
|
|
27
|
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Health Plans segment:
|
|
|
|
||||
California
|
$
|
28,553
|
|
|
$
|
22,175
|
|
Michigan
|
12,873
|
|
|
8,864
|
|
||
Missouri
|
1,053
|
|
|
27,092
|
|
||
New Mexico
|
9,059
|
|
|
9,350
|
|
||
Ohio
|
40,980
|
|
|
27,458
|
|
||
Texas
|
7,459
|
|
|
1,608
|
|
||
Utah
|
3,359
|
|
|
2,825
|
|
||
Washington
|
17,587
|
|
|
15,006
|
|
||
Wisconsin
|
4,098
|
|
|
4,909
|
|
||
Others
|
2,077
|
|
|
2,489
|
|
||
Total Health Plans segment
|
127,098
|
|
|
121,776
|
|
||
Molina Medicaid Solutions segment
|
22,584
|
|
|
46,122
|
|
||
|
$
|
149,682
|
|
|
$
|
167,898
|
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
15,764
|
|
|
$
|
14,094
|
|
Building and improvements
|
124,163
|
|
|
109,789
|
|
||
Furniture and equipment
|
97,865
|
|
|
79,112
|
|
||
Capitalized software
|
154,708
|
|
|
116,389
|
|
||
|
392,500
|
|
|
319,384
|
|
||
Less: accumulated depreciation and amortization on building and improvements, furniture and equipment
|
(84,156
|
)
|
|
(65,518
|
)
|
||
Less: accumulated amortization for capitalized software
|
(86,901
|
)
|
|
(62,932
|
)
|
||
|
(171,057
|
)
|
|
(128,450
|
)
|
||
Property, equipment, and capitalized software, net
|
$
|
221,443
|
|
|
$
|
190,934
|
|
|
(In thousands)
|
||
2013
|
$
|
9,784
|
|
2014
|
9,954
|
|
|
2015
|
9,878
|
|
|
2016
|
8,054
|
|
|
2017
|
7,419
|
|
|
Thereafter
|
10,295
|
|
|
Total minimum future rentals
|
$
|
55,384
|
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
Balance
|
||||||
|
(In thousands)
|
||||||||||
Intangible assets:
|
|
|
|
|
|
||||||
Contract rights and licenses
|
$
|
135,932
|
|
|
$
|
81,376
|
|
|
$
|
54,556
|
|
Customer relationships
|
24,550
|
|
|
12,513
|
|
|
12,037
|
|
|||
Contract backlog
|
23,600
|
|
|
17,870
|
|
|
5,730
|
|
|||
Provider networks
|
11,990
|
|
|
6,602
|
|
|
5,388
|
|
|||
Balance at December 31, 2012
|
$
|
196,072
|
|
|
$
|
118,361
|
|
|
$
|
77,711
|
|
Intangible assets:
|
|
|
|
|
|
||||||
Contract rights and licenses
|
$
|
140,242
|
|
|
$
|
69,515
|
|
|
$
|
70,727
|
|
Customer relationships
|
24,550
|
|
|
8,546
|
|
|
16,004
|
|
|||
Contract backlog
|
23,600
|
|
|
15,139
|
|
|
8,461
|
|
|||
Provider networks
|
11,990
|
|
|
5,386
|
|
|
6,604
|
|
|||
Balance at December 31, 2011
|
$
|
200,382
|
|
|
$
|
98,586
|
|
|
$
|
101,796
|
|
|
December 31, 2011
|
|
Reductions
|
|
December 31, 2012
|
||||||
|
(In thousands)
|
||||||||||
Goodwill and indefinite-lived intangible assets, gross
|
$
|
212,484
|
|
|
$
|
(2,866
|
)
|
|
$
|
209,618
|
|
Accumulated impairment losses
|
(58,530
|
)
|
|
—
|
|
|
(58,530
|
)
|
|||
Goodwill and indefinite-lived intangible assets, net
|
$
|
153,954
|
|
|
$
|
(2,866
|
)
|
|
$
|
151,088
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
39,733
|
|
|
$
|
39,738
|
|
Due one year through five years
|
4,368
|
|
|
4,368
|
|
||
|
$
|
44,101
|
|
|
$
|
44,106
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(Dollars in thousands, except
per-member amounts)
|
||||||||||
Balances at beginning of period
|
$
|
402,476
|
|
|
$
|
354,356
|
|
|
$
|
315,316
|
|
Balance of acquired subsidiary
|
—
|
|
|
—
|
|
|
3,228
|
|
|||
Components of medical care costs related to:
|
|
|
|
|
|
||||||
Current period
|
5,136,055
|
|
|
3,911,803
|
|
|
3,420,235
|
|
|||
Prior period
|
(39,295
|
)
|
|
(51,809
|
)
|
|
(49,378
|
)
|
|||
Total medical care costs
|
5,096,760
|
|
|
3,859,994
|
|
|
3,370,857
|
|
|||
Payments for medical care costs related to:
|
|
|
|
|
|
||||||
Current period
|
4,649,363
|
|
|
3,516,994
|
|
|
3,085,388
|
|
|||
Prior period
|
355,343
|
|
|
294,880
|
|
|
249,657
|
|
|||
Total paid
|
5,004,706
|
|
|
3,811,874
|
|
|
3,335,045
|
|
|||
Balances at end of period
|
$
|
494,530
|
|
|
$
|
402,476
|
|
|
$
|
354,356
|
|
Benefit from prior period as a percentage of:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
9.8
|
%
|
|
14.6
|
%
|
|
15.7
|
%
|
|||
Premium revenue
|
0.7
|
%
|
|
1.1
|
%
|
|
1.2
|
%
|
|||
Total medical care costs
|
0.8
|
%
|
|
1.3
|
%
|
|
1.5
|
%
|
•
|
At our Washington health plan, we underestimated the amount of recoveries we would collect for certain high-cost newborn claims, resulting in an overestimation of reserves at year end.
|
•
|
At our Texas health plan, we overestimated the cost of new members in STAR+PLUS (the name of our ABD program in Texas), in the Dallas region.
|
•
|
In early 2011, the state of Michigan was delayed in the enrollment of newborns in managed care plans; the delay was resolved by mid-2011. This caused a large number of claims with older dates of service to be paid during late 2011, resulting in an artificial increase in the lag time for claims payment at our Michigan health plan. We adjusted reserves downward for this issue at December 31, 2011, but the adjustment did not capture all of the claims overestimation.
|
•
|
The overestimation of our liability for medical claims and benefits payable was partially offset by an underestimation of that liability at our Missouri health plan, as a result of the costs associated with an unusually large number of premature infants during the fourth quarter of 2011.
|
•
|
At our Ohio health plan, we overestimated the impact of a buildup in claims inventory.
|
•
|
At our California health plan, we overestimated the impact of the settlement of disputed provider claims.
|
•
|
At our New Mexico health plan, we underestimated the impact of a reduction in the outpatient facility fee schedule.
|
•
|
At our New Mexico health plan, we underestimated the degree to which cuts to the Medicaid fees schedule would reduce our liability as of December 31, 2009.
|
•
|
At our California health plan, we underestimated the extent to which various network restructuring, provider contracting, and medical management initiatives had reduced our medical care costs during the second half of 2009, thereby resulting in a lower liability at December 31, 2009.
|
•
|
Our Texas health plan membership nearly doubled effective March 1, 2012. In addition, effective March 1, 2012, we assumed inpatient medical liability for ABD members for which we were not previously responsible. Reserves for new coverage and new regions are now based on the newly developing claims lag patterns. While the lag patterns are now beginning to stabilize for the new membership and coverage, the true reserve liability continues to be more uncertain than usual.
|
•
|
Data published by the Centers for Disease Control, or CDC, indicated a significant increase in the percentage of office visits for influenza-like illnesses, or ILI, during December 2012. This indicated that the annual flu season was starting earlier than it had in most recent years. This was most noticeable in the southeast region of the country, but impacted other areas as well. Our leading indicators, including inpatient authorizations and overall pharmacy utilization, did not show as great an increase as we had expected based on the severity of the CDC's flu-related indices. However, we did see a significant increase in the use of prescription flu medication, especially in our Texas health plan. Therefore, we increased our reserves to account for expected additional utilization due to the early onset of the flu season.
|
•
|
Our California health plan has enrolled approximately 20,000 new ABD members since September 30, 2011, as a result of the mandatory assignment of ABD members to managed care plans effective July 1, 2011. These new members converted from a fee-for-service environment. Due to the relatively recent transition of these members to managed care, their utilization of medical services is less predictable than it is for many of our other members.
|
•
|
Prior to July 2012, it was the state of Washington's practice to disenroll certain sick newborns from the Healthy Options Medicaid managed care program and cover them under the Supplemental Security Income program, or SSI, instead. When this occurred, the health plan would reimburse the premiums received for that member back to the state and the state in turn reimbursed the health plan for the cost of care, usually retroactively to the date of birth. Effective July 1, 2012, the health plans now retain these members and cover them under a new ABD program entitled Healthy Options Blind and Disabled, or HOBD. The premium we receive from the state for the HOBD members is very high to cover the substantial cost of care. By December, we had enrolled approximately 26,000 members under HOBD. Because the program is relatively new, there is still some uncertainty as to the level of claims to be expected from these high-cost members.
|
|
Total
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Thereafter
|
||||||||||||||
Credit Facility
|
$
|
40,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Convertible senior notes
|
187,000
|
|
|
—
|
|
|
187,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Term loan
|
47,471
|
|
|
1,155
|
|
|
1,206
|
|
|
1,259
|
|
|
1,309
|
|
|
1,372
|
|
|
41,170
|
|
|||||||
|
$
|
274,471
|
|
|
$
|
1,155
|
|
|
$
|
188,206
|
|
|
$
|
1,259
|
|
|
$
|
41,309
|
|
|
$
|
1,372
|
|
|
$
|
41,170
|
|
•
|
During any fiscal quarter after our fiscal quarter ending December 31, 2007, if the closing sale price per share of our common stock, for each of at least
20
trading days during the period of
30
consecutive trading days ending on the last trading day of the previous fiscal quarter, is greater than or equal to
120%
of the conversion price per share of our common stock;
|
•
|
During the five business day period immediately following any five consecutive trading day period in which the trading price per one thousand dollar principal amount of the 3.75% Notes for each trading day of such period was less than
98%
of the product of the closing price per share of our common stock on such day and the conversion rate in effect on such day; or
|
•
|
Upon the occurrence of specified corporate transactions or other specified events.
|
•
|
An amount in cash (the “principal return”) equal to the sum of, for each of the
20
Volume-Weighted Average Price ("VWAP") trading days during the conversion period, the lesser of the daily conversion value for such VWAP trading day and fifty dollars (representing 1/20th of one thousand dollars); and
|
•
|
A number of shares based upon, for each of the
20
VWAP trading days during the conversion period, any excess of the daily conversion value above
fifty
dollars.
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Details of the liability component:
|
|
|
|
||||
Principal amount
|
$
|
187,000
|
|
|
$
|
187,000
|
|
Unamortized discount
|
(11,532
|
)
|
|
(17,474
|
)
|
||
Net carrying amount
|
$
|
175,468
|
|
|
$
|
169,526
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Interest cost recognized for the period relating to the:
|
|
|
|
|
|
||||||
Contractual interest coupon rate of 3.75%
|
$
|
7,012
|
|
|
$
|
7,012
|
|
|
$
|
7,012
|
|
Amortization of the discount on the liability component
|
5,942
|
|
|
5,512
|
|
|
5,114
|
|
|||
Total interest cost recognized
|
$
|
12,954
|
|
|
$
|
12,524
|
|
|
$
|
12,126
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
17,853
|
|
|
$
|
28,336
|
|
|
$
|
36,395
|
|
State
|
1,308
|
|
|
1,639
|
|
|
2,144
|
|
|||
Total current
|
19,161
|
|
|
29,975
|
|
|
38,539
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(6,300
|
)
|
|
14,028
|
|
|
(4,717
|
)
|
|||
State
|
(3,586
|
)
|
|
(167
|
)
|
|
700
|
|
|||
Total deferred
|
(9,886
|
)
|
|
13,861
|
|
|
(4,017
|
)
|
|||
Total provision for income taxes
|
$
|
9,275
|
|
|
$
|
43,836
|
|
|
$
|
34,522
|
|
|
Years Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Statutory federal tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
(7.8
|
)
|
|
1.5
|
|
|
2.1
|
|
Benefit for unrecognized tax benefits
|
(1.2
|
)
|
|
(0.6
|
)
|
|
(0.1
|
)
|
Nondeductible compensation
|
7.6
|
|
|
—
|
|
|
1.0
|
|
Nondeductible goodwill
|
—
|
|
|
31.7
|
|
|
—
|
|
Nondeductible lobbying
|
5.2
|
|
|
1.1
|
|
|
0.7
|
|
Purchase accounting adjustment
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
Change in fair value of contingent consideration
|
5.9
|
|
|
—
|
|
|
—
|
|
Other
|
3.9
|
|
|
0.6
|
|
|
(0.1
|
)
|
Effective tax rate
|
48.6
|
%
|
|
67.8
|
%
|
|
38.6
|
%
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Accrued expenses
|
$
|
15,381
|
|
|
$
|
14,541
|
|
Reserve liabilities
|
2,936
|
|
|
1,292
|
|
||
State taxes
|
(606
|
)
|
|
(396
|
)
|
||
Other accrued medical costs
|
2,518
|
|
|
2,051
|
|
||
Net operating losses
|
27
|
|
|
27
|
|
||
Unrealized gains
|
(283
|
)
|
|
(316
|
)
|
||
Unearned premiums
|
15,675
|
|
|
4,139
|
|
||
Prepaid expenses
|
(4,390
|
)
|
|
(3,032
|
)
|
||
Deferred compensation
|
1,611
|
|
|
—
|
|
||
Other, net
|
(426
|
)
|
|
21
|
|
||
Deferred tax asset, net of valuation allowance — current
|
32,443
|
|
|
18,327
|
|
||
Accrued expenses
|
—
|
|
|
223
|
|
||
Reserve liabilities
|
2,013
|
|
|
3,015
|
|
||
State tax credit carryover
|
4,149
|
|
|
2,609
|
|
||
Net operating losses
|
3,341
|
|
|
2,694
|
|
||
Unrealized losses
|
563
|
|
|
1,176
|
|
||
Depreciation and amortization
|
(44,198
|
)
|
|
(39,939
|
)
|
||
Deferred compensation
|
3,323
|
|
|
7,904
|
|
||
Debt basis
|
(5,410
|
)
|
|
(7,604
|
)
|
||
Other, net
|
702
|
|
|
(278
|
)
|
||
Valuation allowance
|
(2,383
|
)
|
|
(2,927
|
)
|
||
Deferred tax liability, net of valuation allowance — long term
|
(37,900
|
)
|
|
(33,127
|
)
|
||
Net deferred income tax liability
|
$
|
(5,457
|
)
|
|
$
|
(14,800
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Gross unrecognized tax benefits at beginning of period
|
$
|
(10,712
|
)
|
|
$
|
(10,962
|
)
|
|
$
|
(4,128
|
)
|
Increases in tax positions for prior years
|
(441
|
)
|
|
(137
|
)
|
|
(6,891
|
)
|
|||
Decreases in tax positions for prior years
|
320
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Lapse in statute of limitations
|
211
|
|
|
387
|
|
|
57
|
|
|||
Gross unrecognized tax benefits at end of period
|
$
|
(10,622
|
)
|
|
$
|
(10,712
|
)
|
|
$
|
(10,962
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
|
Pretax
Charges
|
|
Net-of-Tax
Amount
|
|
Pretax
Charges
|
|
Net-of-Tax
Amount
|
|
Pretax
Charges
|
|
Net-of-Tax
Amount
|
||||||||||||
Restricted share and performance unit awards
|
$
|
18,106
|
|
|
$
|
12,943
|
|
|
$
|
15,914
|
|
|
$
|
9,946
|
|
|
$
|
8,007
|
|
|
$
|
5,044
|
|
Stock options (including expense relating to our ESPP)
|
1,912
|
|
|
1,613
|
|
|
1,138
|
|
|
712
|
|
|
1,524
|
|
|
960
|
|
||||||
|
$
|
20,018
|
|
|
$
|
14,556
|
|
|
$
|
17,052
|
|
|
$
|
10,658
|
|
|
$
|
9,531
|
|
|
$
|
6,004
|
|
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Unvested balance as of December 31, 2011
|
1,435,882
|
|
|
$
|
18.97
|
|
Granted
|
511,557
|
|
|
31.71
|
|
|
Vested
|
(786,135
|
)
|
|
20.49
|
|
|
Forfeited
|
(174,727
|
)
|
|
22.53
|
|
|
Unvested balance as of December 31, 2012
|
986,577
|
|
|
23.74
|
|
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Remaining
Contractual
term
|
|||||
|
|
|
|
|
(In thousands)
|
|
(Years)
|
|||||
Outstanding as of December 31, 2011
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
|
213,022
|
|
|
33.59
|
|
|
|
|
|
|||
Vested
|
(210,880
|
)
|
|
33.58
|
|
|
$
|
6,066
|
|
|
|
|
Outstanding as of December 31, 2012
|
2,142
|
|
|
35.01
|
|
|
$
|
58
|
|
|
0.2
|
|
Performance and restricted units expected to vest as of December 31, 2012
|
2,142
|
|
|
35.01
|
|
|
$
|
58
|
|
|
0.2
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Remaining
Contractual
term
|
|||||
|
|
|
|
|
(In thousands)
|
|
(Years)
|
|||||
Stock options outstanding as of December 31, 2011
|
553,049
|
|
|
$
|
20.91
|
|
|
|
|
|
||
Granted
|
15,000
|
|
|
34.82
|
|
|
|
|
|
|||
Exercised
|
(153,238
|
)
|
|
18.27
|
|
|
|
|
|
|||
Forfeited
|
(750
|
)
|
|
22.37
|
|
|
|
|
|
|||
Stock options outstanding as of December 31, 2012
|
414,061
|
|
|
22.39
|
|
|
$
|
2,204
|
|
|
3.3
|
|
Stock options exercisable and expected to vest as of December 31, 2012
|
414,061
|
|
|
22.39
|
|
|
$
|
2,204
|
|
|
3.3
|
|
Exercisable as of December 31, 2012
|
399,061
|
|
|
21.93
|
|
|
$
|
2,204
|
|
|
3.1
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
Number
Outstanding
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Weighted-
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted-
Average
Exercise
Price
|
||||||
$16.89 – $19.11
|
137,161
|
|
|
2.5
|
|
$
|
18.46
|
|
|
137,161
|
|
|
$
|
18.46
|
|
$20.88
|
148,500
|
|
|
4.1
|
|
20.88
|
|
|
148,500
|
|
|
20.88
|
|
||
$22.86 – $34.82
|
128,400
|
|
|
3.3
|
|
28.35
|
|
|
113,400
|
|
|
27.49
|
|
||
|
414,061
|
|
|
|
|
|
|
399,061
|
|
|
|
•
|
an existing building, which comprises approximately
70,000
square feet of office space, and
|
•
|
a new building, which is expected to comprise approximately
120,000
square feet of office space.
|
•
|
The ongoing activities of the VIE-collecting and remitting interest and fees and NMTC compliance-were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the VIE;
|
•
|
Contractual arrangements obligate us to comply with NMTC rules and regulations and provide various other guarantees to Investment Fund and CDEs;
|
•
|
Wells Fargo lacks a material interest in the underling economics of the project; and
|
•
|
We are obligated to absorb losses of the VIE.
|
|
(In thousands)
|
||
2013
|
$
|
26,866
|
|
2014
|
21,420
|
|
|
2015
|
14,808
|
|
|
2016
|
8,472
|
|
|
2017
|
6,939
|
|
|
Thereafter
|
7,771
|
|
|
Total minimum lease payments
|
$
|
86,276
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Segment Information:
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Health Plans:
|
|
|
|
|
|
||||||
Premium revenue
|
$
|
5,826,491
|
|
|
$
|
4,603,407
|
|
|
$
|
3,989,909
|
|
Investment income
|
5,188
|
|
|
5,539
|
|
|
6,259
|
|
|||
Rental income
|
9,374
|
|
|
547
|
|
|
—
|
|
|||
Molina Medicaid Solutions:
|
|
|
|
|
|
||||||
Service revenue
|
187,710
|
|
|
160,447
|
|
|
89,809
|
|
|||
|
$
|
6,028,763
|
|
|
$
|
4,769,940
|
|
|
$
|
4,085,977
|
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
Health Plans
|
$
|
58,577
|
|
|
$
|
45,734
|
|
|
$
|
42,282
|
|
Molina Medicaid Solutions
|
20,187
|
|
|
28,649
|
|
|
18,483
|
|
|||
|
$
|
78,764
|
|
|
$
|
74,383
|
|
|
$
|
60,765
|
|
Operating Income:
|
|
|
|
|
|
||||||
Health Plans
|
$
|
11,746
|
|
|
$
|
78,110
|
|
|
$
|
102,392
|
|
Molina Medicaid Solutions
|
23,727
|
|
|
2,063
|
|
|
2,609
|
|
|||
Total operating income
|
35,473
|
|
|
80,173
|
|
|
105,001
|
|
|||
Interest expense
|
(16,769
|
)
|
|
(15,519
|
)
|
|
(15,509
|
)
|
|||
Other income
|
361
|
|
|
—
|
|
|
—
|
|
|||
Income before income taxes
|
$
|
19,065
|
|
|
$
|
64,654
|
|
|
$
|
89,492
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Goodwill and intangible assets, net:
|
|
|
|
||||
Health Plans
|
$
|
139,710
|
|
|
$
|
159,963
|
|
Molina Medicaid Solutions
|
89,089
|
|
|
95,787
|
|
||
|
$
|
228,799
|
|
|
$
|
255,750
|
|
Total assets:
|
|
|
|
||||
Health Plans
|
$
|
1,702,212
|
|
|
$
|
1,429,283
|
|
Molina Medicaid Solutions
|
232,610
|
|
|
222,863
|
|
||
|
$
|
1,934,822
|
|
|
$
|
1,652,146
|
|
|
For The Quarter Ended,
|
||||||||||||||
|
March 31, 2012
|
|
June 30, 2012
|
|
September 30, 2012
|
|
December 31,
2012 |
||||||||
|
(In thousands, except per-share data)
|
||||||||||||||
Premium revenue
|
$
|
1,327,449
|
|
|
$
|
1,492,272
|
|
|
$
|
1,488,718
|
|
|
$
|
1,518,052
|
|
Service revenue
|
42,205
|
|
|
41,724
|
|
|
48,422
|
|
|
55,359
|
|
||||
Operating income (loss)
|
33,420
|
|
|
(59,267
|
)
|
|
7,187
|
|
|
54,133
|
|
||||
Income (loss) before income taxes
|
29,122
|
|
|
(63,075
|
)
|
|
2,872
|
|
|
50,146
|
|
||||
Net income (loss)
|
18,089
|
|
|
(37,306
|
)
|
|
3,364
|
|
|
25,643
|
|
||||
Net income (loss) per share (2):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.39
|
|
|
$
|
(0.80
|
)
|
|
$
|
0.07
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.39
|
|
|
$
|
(0.80
|
)
|
|
$
|
0.07
|
|
|
$
|
0.54
|
|
|
For The Quarter Ended,
|
||||||||||||||
|
March 31, 2011
|
|
June 30, 2011
|
|
September 30, 2011
|
|
December 31,
2011(1) |
||||||||
|
(In thousands, except per-share data)
|
||||||||||||||
Premium revenue
|
$
|
1,081,438
|
|
|
$
|
1,128,770
|
|
|
$
|
1,138,230
|
|
|
$
|
1,254,969
|
|
Service revenue
|
36,674
|
|
|
36,888
|
|
|
37,728
|
|
|
49,157
|
|
||||
Operating income (loss)
|
31,300
|
|
|
31,410
|
|
|
33,566
|
|
|
(16,103
|
)
|
||||
Income (loss) before income taxes
|
27,697
|
|
|
27,727
|
|
|
29,186
|
|
|
(19,956
|
)
|
||||
Net income (loss)
|
17,388
|
|
|
17,440
|
|
|
18,950
|
|
|
(32,960
|
)
|
||||
Net income (loss) per share (2):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
0.41
|
|
|
$
|
(0.72
|
)
|
Diluted
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
0.41
|
|
|
$
|
(0.72
|
)
|
(1)
|
On February 17, 2012, the Division of Purchasing of the Missouri Office of Administration notified us that our Missouri health plan was not awarded a contract under the Missouri HealthNet Managed Care Request for Proposal; therefore, our Missouri health plan's existing contract with the state expired without renewal on June 30, 2012. In connection with this notification, we recorded a total non-cash impairment charge of
$64.6 million
in the fourth quarter of 2011, of which
$6.1 million
related to finite-lived intangible assets, and
$58.5 million
related to goodwill. The impairment charge comprised substantially all intangible assets relating to contract rights and licenses, and provider networks recorded at the time of our acquisition of the Missouri health plan in 2007. For the quarter ended December 31, 2011, the impairment charge reduced diluted earnings per share by
$1.34
.
|
(2)
|
Potentially dilutive shares issuable pursuant to our 2007 offering of convertible senior notes were not included in the computation of diluted net income per share because to do so would have been anti-dilutive for the years ended
December 31, 2012
, and
2011
.
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Management fees and other operating revenue
|
$
|
406,981
|
|
|
$
|
308,287
|
|
|
$
|
238,883
|
|
Investment income
|
550
|
|
|
81
|
|
|
1,153
|
|
|||
Total revenue
|
407,531
|
|
|
308,368
|
|
|
240,036
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
||||
Medical care costs
|
33,102
|
|
|
31,672
|
|
|
30,582
|
|
|||
General and administrative expenses
|
367,606
|
|
|
272,302
|
|
|
218,834
|
|
|||
Depreciation and amortization
|
38,794
|
|
|
31,355
|
|
|
27,166
|
|
|||
Total expenses
|
439,502
|
|
|
335,329
|
|
|
276,582
|
|
|||
Operating loss
|
(31,971
|
)
|
|
(26,961
|
)
|
|
(36,546
|
)
|
|||
Interest expense
|
14,469
|
|
|
14,958
|
|
|
15,500
|
|
|||
Loss before income taxes and equity in net income of subsidiaries
|
(46,440
|
)
|
|
(41,919
|
)
|
|
(52,046
|
)
|
|||
Income tax benefit
|
(15,779
|
)
|
|
(14,826
|
)
|
|
(16,936
|
)
|
|||
Net loss before equity in net income of subsidiaries
|
(30,661
|
)
|
|
(27,093
|
)
|
|
(35,110
|
)
|
|||
Equity in net income of subsidiaries
|
40,451
|
|
|
47,911
|
|
|
90,080
|
|
|||
Net income
|
$
|
9,790
|
|
|
$
|
20,818
|
|
|
$
|
54,970
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Operating activities:
|
|
|
|
|
|
||||||
Cash provided by operating activities
|
$
|
20,611
|
|
|
$
|
28,606
|
|
|
$
|
19,380
|
|
Investing activities:
|
|
|
|
|
|
|
|
||||
Net dividends from and capital contributions to subsidiaries
|
1,579
|
|
|
27,872
|
|
|
70,800
|
|
|||
Purchases of investments
|
(1,905
|
)
|
|
(2,020
|
)
|
|
(2,019
|
)
|
|||
Sales and maturities of investments
|
4,067
|
|
|
3,760
|
|
|
14,083
|
|
|||
Cash paid in business combinations
|
—
|
|
|
—
|
|
|
(139,762
|
)
|
|||
Proceeds from sale of subsidiary, net of cash surrendered
|
9,162
|
|
|
—
|
|
|
—
|
|
|||
Purchases of equipment
|
(61,813
|
)
|
|
(30,930
|
)
|
|
(40,419
|
)
|
|||
Changes in amounts due to and due from affiliates
|
5,187
|
|
|
(50,090
|
)
|
|
(5,723
|
)
|
|||
Change in other assets and liabilities
|
(1,342
|
)
|
|
(20,441
|
)
|
|
829
|
|
|||
Net cash used in investing activities
|
(45,065
|
)
|
|
(71,849
|
)
|
|
(102,211
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
|
||||
Proceeds from common stock offering, net of issuance costs
|
—
|
|
|
—
|
|
|
111,131
|
|
|||
Amount borrowed under credit facility
|
60,000
|
|
|
—
|
|
|
105,000
|
|
|||
Repayment of amount borrowed under credit facility
|
(20,000
|
)
|
|
—
|
|
|
(105,000
|
)
|
|||
Treasury stock repurchases
|
(3,000
|
)
|
|
(7,000
|
)
|
|
—
|
|
|||
Payment of credit facility fees
|
—
|
|
|
(1,125
|
)
|
|
(1,671
|
)
|
|||
Excess tax benefits from employee stock compensation
|
3,667
|
|
|
1,651
|
|
|
295
|
|
|||
Proceeds from exercise of stock options and employee stock plan purchases
|
8,205
|
|
|
7,347
|
|
|
4,056
|
|
|||
Net cash provided by financing activities
|
48,872
|
|
|
873
|
|
|
113,811
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
24,418
|
|
|
(42,370
|
)
|
|
30,980
|
|
|||
Cash and cash equivalents at beginning of year
|
14,650
|
|
|
57,020
|
|
|
26,040
|
|
|||
Cash and cash equivalents at end of year
|
$
|
39,068
|
|
|
$
|
14,650
|
|
|
$
|
57,020
|
|
•
|
an existing building, which comprises approximately
70,000
square feet of office space, and
|
•
|
a new building, which is expected to comprise approximately
120,000
square feet of office space.
|
•
|
an existing building located on the site and commonly known as the Independent Press Telegram building (the “Existing Building”), which the Landlord is required to substantially refurbish as part of Phase I of the Project. Upon completion of the refurbishment, the Existing Building is expected to contain approximately 70,000 square feet of office space and 15,000 square feet of storage space, and
|
•
|
a new building (the “New Building”), which the Landlord is required to construct as part of Phase II of the Project following the demolition of a building currently located on the site commonly known as the Meeker-Baker building. Upon completion of the construction, the New Building is expected to contain approximately 120,000 square feet of office space.
|
|
/s/ ERNST & YOUNG LLP
|
(a)
|
The consolidated financial statements and exhibits listed below are filed as part of this report.
|
(1)
|
The Company's consolidated financial statements, the notes thereto and the report of the Independent Registered Public Accounting Firm are on pages 64 through 108 of this Annual Report on Form 10-K and are incorporated by reference.
|
(2)
|
Financial Statement Schedules
|
(3)
|
Exhibits
|
Number
|
|
Description
|
|
Method of Filing
|
1.1
|
|
Purchase Agreement, dated as of February 11, 2013, among Molina Healthcare, Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representatives of the Initial Purchasers.
|
|
Filed as Exhibit 1.1 to registrant's Form 8-K filed February 15, 2013.
|
2.1
|
|
Asset Purchase Agreement between Molina Healthcare, Inc. and Unisys Corporation dated as of January 18, 2010
|
|
Filed as Exhibit 2.1 to registrant's Form 8-K filed January 19, 2010.
|
3.1
|
|
Certificate of Incorporation
|
|
Filed as Exhibit 3.2 to registrant's Registration Statement on Form S-1 filed December 30, 2002.
|
3.2
|
|
Amended and Restated Bylaws
|
|
Filed as Exhibit 3.2 to registrant's Form 8-K filed February 17, 2009.
|
4.1
|
|
Indenture dated as of October 11, 2008
|
|
Filed as Exhibit 4.1 to registrant's Form 8-K filed October 5, 2007.
|
4.2
|
|
First Supplemental Indenture dated as of October 11, 2008
|
|
Filed as Exhibit 4.2 to registrant's Form 8-K filed October 5, 2007.
|
4.3
|
|
Global Form of 3.75% Convertible Senior Note due 2014
|
|
Filed as Exhibit 4.3 to registrant's Form 8-K filed October 5, 2007.
|
4.4
|
|
Indenture, dated as of February 15, 2013, by and between Molina Healthcare, Inc. and U.S. Bank, National Association.
|
|
Filed as Exhibit 4.1 to registrant's Form 8-K filed February 15, 2013.
|
4.5
|
|
Form of 1.125% Cash Convertible Senior Note due 2020
|
|
Included in Exhibit 4.1 to registrant's Form 8-K filed February 15, 2013.
|
10.1
|
|
2000 Omnibus Stock and Incentive Plan
|
|
Filed as Exhibit 10.12 to registrant's Form S-1 filed December 30, 2002.
|
10.2
|
|
2002 Equity Incentive Plan
|
|
Filed as Exhibit 10.13 to registrant's Form S-1 filed December 30, 2002.
|
10.3
|
|
2002 Employee Stock Purchase Plan
|
|
Filed as Exhibit 10.14 to registrant's Form S-1 filed December 30, 2002.
|
10.4
|
|
2005 Molina Deferred Compensation Plan adopted November 6, 2006
|
|
Filed as Exhibit 10.4 to registrant's Form 10-Q filed November 9, 2006.
|
10.5
|
|
2005 Incentive Compensation Plan
|
|
Filed as Appendix A to registrant's Proxy Statement filed March 28, 2005.
|
10.6
|
|
2011 Equity Incentive Plan
|
|
Filed as Exhibit 10.2 to registrant's Form 8-K filed May 2, 2011.
|
10.7
|
|
2011 Employee Stock Purchase Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 8-K filed May 2, 2011.
|
10.8
|
|
Form of Restricted Stock Award Agreement (Executive Officer) under Molina Healthcare, Inc. Equity Incentive Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed August 9, 2005.
|
10.9
|
|
Form of Restricted Stock Award Agreement (Outside Director) under Molina Healthcare, Inc. Equity Incentive Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed August 9, 2005.
|
Number
|
|
Description
|
|
Method of Filing
|
10.10
|
|
Form of Restricted Stock Award Agreement (Employee) under Molina Healthcare, Inc. Equity Incentive Plan
|
|
Filed as Exhibit 10.1 to registrant's Form 10-Q filed August 9, 2005.
|
10.11
|
|
Form of Stock Option Agreement under Equity Incentive Plan
|
|
Filed as Exhibit 10.3 to registrant's Form 10-K filed March 14, 2007.
|
10.12
|
|
Amended and Restated Employment Agreement with J. Mario Molina, M.D. dated as of December 31, 2009
|
|
Filed as Exhibit 10.1 to registrant's Form 8-K filed January 7, 2010.
|
10.13
|
|
Amended and Restated Employment Agreement with John C. Molina dated as of December 31, 2009
|
|
Filed as Exhibit 10.2 to registrant's Form 8-K filed January 7, 2010.
|
10.14
|
|
Amended and Restated Change in Control Agreement with Terry Bayer, dated as of December 31, 2009
|
|
Filed as Exhibit 10.4 to registrant's Form 8-K filed January 7, 2010.
|
10.15
|
|
Amended and Restated Change in Control Agreement with Joseph W. White, dated as of December 31, 2009
|
|
Filed as Exhibit 10.6 to registrant's Form 8-K filed January 7, 2010.
|
10.16
|
|
Change in Control Agreement with Jeff D. Barlow, dated as of September 18, 2012
|
|
Filed herewith.
|
10.17
|
|
Form of Indemnification Agreement
|
|
Filed as Exhibit 10.14 to registrant's Form 10-K filed March 14, 2007.
|
10.18
|
|
Base Call Option Transaction Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch.
|
|
Filed as Exhibit 10.1 to registrant's Form 8-K filed February 15, 2013.
|
10.19
|
|
Base Call Option Transaction Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.2 to registrant's Form 8-K filed February 15, 2013.
|
10.20
|
|
Base Warrants Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch.
|
|
Filed as Exhibit 10.3 to registrant's Form 8-K filed February 15, 2013.
|
10.21
|
|
Base Warrants Confirmation, dated as of February 11, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.4 to registrant's Form 8-K filed February 15, 2013.
|
10.22
|
|
Amendment to Base Call Option Transaction Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch.
|
|
Filed as Exhibit 10.5 to registrant's Form 8-K filed February 15, 2013.
|
10.23
|
|
Amendment to Base Call Option Transaction Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.6 to registrant's Form 8-K filed February 15, 2013.
|
10.24
|
|
Additional Base Warrants Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank, National Association, London Branch.
|
|
Filed as Exhibit 10.7 to registrant's Form 8-K filed February 15, 2013.
|
10.25
|
|
Additional Base Warrants Confirmation, dated as of February 13, 2013, between Molina Healthcare, Inc. and Bank of America, N.A.
|
|
Filed as Exhibit 10.8 to registrant's Form 8-K filed February 15, 2013.
|
10.26
|
|
Term Loan Agreement, dated as of December 1, 2011, among Molina Center LLC, various lenders and East West Bank, as Administrative Agent
|
|
Filed as Exhibit 10.18 to registrant's From 10-K filed February 29, 2012.
|
10.27
|
|
Guaranty, dated as of December 1, 2011, by Molina Healthcare, Inc. in favor of East West Bank, as Administrative Agent
|
|
Filed as Exhibit 10.9 to registrant's Form 10-K filed February 29, 2012.
|
10.28
|
|
Environmental Indemnity, dated as of December 1, 2011, by Molina Center LLC and Molina Healthcare, Inc. for the benefit of certain lenders and East West Bank, as Administrative Agent
|
|
Filed as Exhibit 10.20 to registrant's Form 10-K filed February 29, 2012.
|
10.29
|
|
Purchase Agreement, dated as of October 11, 2011, between Molina Center LLC and 200 Oceangate, LLC
|
|
Filed as Exhibit 10.21 to registrant's Form 10-K filed February 29, 2012.
|
|
|
|
|
|
Number
|
|
Description
|
|
Method of Filing
|
10.30
|
|
First Amendment to Purchase Agreement, dated as of November 10, 2011, between Molina Center LLC and 200 Oceangate, LLC
|
|
Filed as Exhibit 10.22 to registrant's Form 10-K filed February 29, 2012.
|
10.31
|
|
Second Amendment to Purchase Agreement, dated as of November 30, 2011, between Molina Center LLC and 200 Oceangate, LLC
|
|
Filed as Exhibit 10.23 to registrant's Form 10-K filed February 29, 2012.
|
10.32
|
|
Lease Agreement, dated as of February 27, 2013, by and between 6th & Pine Development, LLC and Molina Healthcare, Inc.
|
|
Filed herewith.
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
Filed herewith.
|
21.1
|
|
List of subsidiaries
|
|
Filed herewith.
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
Filed herewith.
|
31.1
|
|
Section 302 Certification of Chief Executive Officer
|
|
Filed herewith.
|
31.2
|
|
Section 302 Certification of Chief Financial Officer
|
|
Filed herewith.
|
32.1
|
|
Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith.
|
32.2
|
|
Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith.
|
101.INS(1)
|
|
XBRL Taxonomy Instance Document
|
|
Filed herewith.
|
101.SCH(1)
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith.
|
101.CAL(1)
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith.
|
101.DEF(1)
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith.
|
101.LAB(1)
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith.
|
101.PRE(1)
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
MOLINA HEALTHCARE, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Joseph M. Molina
|
|
|
|
Joseph M. Molina, M.D. (Dr. J. Mario Molina)
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Joseph M. Molina
|
|
Chairman of the Board, Chief Executive Officer, and President
|
|
February 28, 2013
|
Joseph M. Molina, M.D.
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ John C. Molina
|
|
Director, Chief Financial Officer, and Treasurer
|
|
February 28, 2013
|
John C. Molina, J.D.
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Joseph W. White
|
|
Chief Accounting Officer
|
|
February 28, 2013
|
Joseph W. White, CPA, MBA
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Garrey E. Carruthers
|
|
Director
|
|
February 28, 2013
|
Garrey E. Carruthers, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ Charles Z. Fedak
|
|
Director
|
|
February 28, 2013
|
Charles Z. Fedak, CPA, MBA
|
|
|
|
|
|
|
|
|
|
/s/ Frank E. Murray
|
|
Director
|
|
February 28, 2013
|
Frank E. Murray, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ Steven Orlando
|
|
Director
|
|
February 28, 2013
|
Steven Orlando, CPA (inactive)
|
|
|
|
|
|
|
|
|
|
/s/ Ronna Romney
|
|
Director
|
|
February 28, 2013
|
Ronna Romney
|
|
|
|
|
|
|
|
|
|
/s/ John P. Szabo, Jr.
|
|
Director
|
|
February 28, 2013
|
John P. Szabo, Jr.
|
|
|
|
|
•
|
he should consult with an attorney prior to executing this release;
|
•
|
he has at least twenty-one (21) days within which to consider this release;
|
•
|
he has up to seven (7) days following the execution of this release by the parties to revoke the release; and
|
•
|
this release shall not be effective until such seven (7) day revocation period has expired.
|
(a)
|
Landlord: 6
th
& Pine Development, LLC,
a California limited liability company. |
(b)
|
Tenant:
Molina Healthcare, Inc.,
a Delaware corporation. |
(c)
|
Site and Project: That certain real property having the primary address of 604 Pine Avenue, Long Beach, California, as more particularly described on Exhibit “A-1” attached hereto (the “
Site
”). A site plan of the Buildings, the On-Site Parking and related common areas and amenities (collectively, the “
Project
”) is attached hereto as Exhibit “A-2.”
|
(d)
|
Existing Building: The office building located on the Site as of the date hereof and commonly known as the Press-Telegram Building, to be refurbished by Landlord pursuant to the terms of the Work Letter Agreement attached hereto as Exhibit “B” (the “
Work Letter
”).
|
(e)
|
New Building: The office building to be constructed by Landlord on the Site and in the general location of the office building commonly known as the Meeker-Baker Building, pursuant to the terms of the Work Letter; the Existing Building (as refurbished) and the New Building shall sometimes be collectively referred to as the “Buildings” and each, as a “Building.”
|
(f)
|
Premises: The entire Rentable Area of each Building. In addition to the Premises in each Building, Tenant has the exclusive right to use the On-Site Parking Spaces as provided in clause (u) below and Article 30.
|
(g)
|
Rentable Area of Existing Building: Subject to Section 1.2, approximately 89,702 rentable square feet (“
RSF
”), consisting of (i) approximately 70,110 RSF of office space , and (ii) approximately 19,592 RSF of subterranean storage space (the “
Storage Space
”).
|
(h)
|
Rentable Area of New Building: Subject to Section 1.2 of the Lease, approximately 120,000 RSF of office space.
|
(i)
|
Rentable Area of Premises: The total Rentable Area of the Existing Building and the New Building.
|
(j)
|
Scheduled Commencement Date(s): (i)
Existing Building
: June 1, 2013
.
(ii) New Building : November 1, 2014 . |
(k)
|
Term: (i)
Existing Building
: Approximately eleven (11) years, six (6) months from the Commencement Date of the Existing Building and ending on the Expiration Date, unless extended pursuant to Exhibit “J” attached hereto or earlier terminated as provided in the Lease.
|
(l)
|
Commencement Date(s): See Section 2.3.
|
(m)
|
Expiration Date: December 31, 2024, unless extended pursuant to Exhibit “J” attached hereto or earlier terminated as provided in the Lease.
|
(n)
|
Monthly Base Rent: (i)
Existing Building
. (A) For the period from the Commencement Date of the Existing Building through the date immediately preceding the first (1
st
) anniversary of the Commencement Date of the Existing Building, $2.70 per RSF for the Existing Building (excluding the Storage Space), and as increased by three point seven five percent (3.75%) per year on the first (1
st
) and each subsequent anniversary of the Commencement Date of the Existing Building (each such anniversary of the Commencement Date of the Existing Building being referred to herein as an “
Adjustment Date
”) thereafter through the end of the stated Term (subject to Exhibit “J” for the Extension Periods), and (B) for the period from the Commencement Date through the date immediately preceding the first Adjustment Date, $1.40 per RSF of the Storage Space, and as increased by three point seven five percent (3.75%) per year on the first (1
st
) and each subsequent Adjustment Date
|
(o)
|
Security Deposit: None.
|
(p)
|
Construction of Improvements: Landlord shall construct the Project, including the Tenant Improvements in the Existing Building and the New Building in accordance with the Work Letter.
|
(q)
|
Use: General business, executive, professional, corporate, and administrative office use only, and any other use only. Notwithstanding the foregoing, Landlord agrees that Tenant may use the Premises, in connection with its general business activities, for meeting, training and conference purposes, for the preparation, service and providing of food and beverages for the Tenant Parties (as defined below), for health club and childcare facilities for the Tenant Parties and others (as long as such use is primarily to provide a service or amenity to Tenant’s employees, staff and invitees), on‑site sale of logo and amenity type merchandise to employees, display, testing and demonstration events, in each case subject to the restrictions set forth in Article 5 and Applicable Laws.
|
(r)
|
Tenant’s Address for Notices: Molina Healthcare, Inc.
200 Oceangate, Suite 100 Long Beach, CA 90802 Attention: General Counsel With a copies to: |
(s)
|
Landlord’s Address for Notices: 6
th
& Pine Development, LLC
741 Atlantic Avenue Long Beach, CA 90813 Attention: 604 Pine Landlord With a copy to: 6 th & Pine Development, LLC 741 Atlantic Avenue Long Beach, CA 90813 Attention: Property Manager |
(t)
|
Landlord’s Broker: Cushman & Wakefield of California, Inc.
|
(u)
|
Parking: As further described in Article 30, a total of up to seven hundred and thirteen (713) parking spaces, to be comprised of (a) (i) for the period commencing on the Commencement Date for the Existing Building and ending on the date immediately preceding the Commencement Date for the New Building, sixty (60) On-Site Parking Spaces (as defined in Section 30.2 below), and (ii) for the period commencing on the Commencement Date for the New Building and continuing through the Expiration Date, two hundred thirteen (213) On-Site Parking Spaces, and (b) for the period commencing on the Commencement Date for the Existing Building and continuing through the Expiration Date, up to five hundred (500) Off-Site Parking Spaces (as defined in Section 30.3 below), in each case as more particularly described in, and to be made available to Tenant in accordance with the terms
|
(v)
|
Renewal Rights: See Exhibit “J” attached hereto.
|
(w)
|
Right of First Offer to Purchase: See Exhibit “I-1” attached hereto.
|
(x)
|
Option to Purchase: See Exhibit “I-2” attached hereto.
|
(y)
|
Base Year: Calendar Year 2015
|
(z)
|
Tenant’s Share: 100%
|
Bodily Injury and
Property Damage Liability |
$3,000,000 each occurrence
$3,000,000 annual aggregate |
Personal Injury Liability
|
$3,000,000 each occurrence
$3,000,000 annual aggregate 0% Insured’s participation |
Re:
|
Lease dated
, 2012 between 6
th
& Pine Development, LLC, a California limited liability company, Landlord, Molina Healthcare, Inc., a Delaware corporation, Tenant, concerning 604 Pine Avenue, Long Beach, California.
|
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
David C. Meckler
LATHAM & WATKINS LLP
650 Town Center Drive
Costa Mesa, California 92626-1925
|
|
1.
|
Lease
. Landlord and Tenant have entered into that certain unrecorded Office Building Lease – Full Service Gross – Single Tenant Building(s) dated [___________], 2013 (as amended to date and as the same may hereafter be amended, modified or supplemented from time to time in accordance with the terms thereof, collectively, the “
Lease
”), pursuant to which Landlord has leased and does hereby lease to Tenant, and Tenant has leased and does hereby lease from Landlord, the premises more particularly described in the Lease and consisting of certain real property more particularly described on
Exhibit “A”
attached hereto (the “
Premises
”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Lease.
|
2.
|
Term of Lease
. The fixed term of the Lease is scheduled to commence on [June 1, 2013]
[To be confirmed
], and expires on December 31, 2024, unless earlier terminated pursuant to the provisions of the Lease. Tenant has the option, subject to the terms of the Lease, to extend the term of the Lease by two (2) sequential renewal terms of five (5) years each.
|
3.
|
Rights to Purchase the Premises
. Tenant has a right of first offer to purchase the Premises (together with all appurtenant rights with respect thereto) for the first five (5) years of the term, and an option to purchase the Premises (together with all appurtenant rights with respect thereto) thereafter, in each case upon and subject to the terms and conditions set forth in the Lease (collectively, the “
Purchase Rights
”).
|
4.
|
Miscellaneous
. The purpose of this Memorandum is solely to give notice of the existence of the Lease, all the terms of which are incorporated herein by this reference, and the Purchase Rights contained therein. This Memorandum shall not modify or amend any of the provisions of the Lease, including the terms and conditions of any Purchase Rights contained therein.
|
“LESSOR”
6
th
& PINE DEVELOPMENT, LLC,
a California limited liability company By: Name:
Title:
|
“LESSEE”
MOLINA HEALTHCARE, INC.,
a Delaware corporation By: Name:
Title:
|
TO:
|
_____________________________________________________
|
RE:
|
_____________________________________________________
|
Date: ____________, 20__
|
_________________________________,
|
ARTICLE 1 - PREMISES
|
11
|
1.1
|
Lease of Premises 11
|
1.2
|
Measurement of the Premises 11
|
1.3
|
Right of First Offer to Purchase 12
|
1.4
|
Option to Purchase 12
|
ARTICLE 2 - TERM
|
12
|
2.1
|
Effective Date 12
|
2.2
|
Term of Lease 12
|
2.3
|
Delivery of Premises; Commencement Date(s) 12
|
2.4
|
Early Entry Into Premises 13
|
2.5
|
Notice of Commencement Date 13
|
2.6
|
Option to Terminate Because of Non‑Commencement or Completion 13
|
2.7
|
Options to Extend Term 14
|
ARTICLE 3 - RENT
|
14
|
3.1
|
Payment of Rent 14
|
3.2
|
Late Charge 15
|
ARTICLE 4 - Additional rent
|
15
|
4.1
|
General Terms 15
|
4.2
|
Procedure for Payment of Tenant’s Share of Direct Expenses 16
|
4.3
|
Definitions of Key Terms Relating to Additional Rent 17
|
4.4
|
Taxes and Other Charges for Which Tenant Is Directly Responsible 25
|
4.5
|
Landlord’s Books and Records 26
|
ARTICLE 5 - USE
|
27
|
5.1
|
Permitted Use 27
|
5.2
|
Restriction on Use 27
|
ARTICLE 6 - ALTERATIONS AND ADDITIONS
|
27
|
6.1
|
Tenant’s Rights to Make Alterations 27
|
6.2
|
Installation of Alterations 27
|
6.3
|
Tenant Improvements - Treatment at End of Lease 28
|
ARTICLE 7 - TENANT’S REPAIRS
|
29
|
ARTICLE 8 - NO LIENS BY TENANT
|
29
|
ARTICLE 9 - LANDLORD’S REPAIRS
|
30
|
ARTICLE 10 - BUILDING SERVICES
|
30
|
10.1
|
Standard Tenant Services 30
|
10.2
|
Overstandard Tenant Use 31
|
10.3
|
Interruption of Use 31
|
ARTICLE 11 - ASSIGNMENT AND SUBLETTING
|
32
|
11.1
|
Right to Assign, Sublease and Encumber 32
|
11.2
|
Procedure for Assignment and Sublease 32
|
11.3
|
Conditions Regarding Consent to Subleases 33
|
11.4
|
Affiliated Companies/Restructuring of Business Organization 33
|
11.5
|
Landlord’s Right to Assign 34
|
11.6
|
Occupancy By Others 34
|
ARTICLE 12 - LIMITATION ON LANDLORD’S LIABILITY; INDEMNIFICATION; INSURANCE
|
34
|
12.1
|
Limitation on Landlord’s Liability and Release 34
|
12.2
|
Indemnification 34
|
12.3
|
Insurance 35
|
12.4
|
Abatement of Rent/Limitations on Liability and Damages 37
|
12.5
|
Allocation of Insured Risks/Subrogation 38
|
ARTICLE 13 - DAMAGE OR DESTRUCTION
|
38
|
13.1
|
Loss Covered By Insurance 38
|
13.2
|
Loss Not Covered By Insurance 39
|
13.3
|
Destruction During Final Year 40
|
13.4
|
Destruction of Tenant’s Personal Property or Property of Tenant Parties 40
|
13.5
|
Exclusive Remedy 40
|
13.6
|
Option to Purchase 40
|
ARTICLE 14 - EMINENT DOMAIN
|
41
|
14.1
|
Permanent Taking - When Lease Can Be Terminated 41
|
14.2
|
Permanent Taking - When Lease Cannot Be Terminated 41
|
14.3
|
Temporary Taking 41
|
14.4
|
Exclusive Remedy 41
|
14.5
|
Release Upon Termination 41
|
ARTICLE 15 - DEFAULTS
|
42
|
15.1
|
Default by Tenant 42
|
15.2
|
Default by Landlord 42
|
ARTICLE 16 - LANDLORD’S REMEDIES AND RIGHTS
|
43
|
16.1
|
Termination of Lease 43
|
16.2
|
Continuation of Lease 43
|
16.3
|
Right of Entry 43
|
16.4
|
Right to Perform 44
|
16.5
|
Remedies Not Exclusive 44
|
16.6
|
Waiver of Redemption by Tenant 44
|
ARTICLE 17 - ATTORNEYS’ FEES
|
44
|
ARTICLE 18 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
|
44
|
18.1
|
Obligations of Tenant 44
|
18.2
|
Landlord’s Right to Assign 45
|
18.3
|
Attornment by Tenant 45
|
18.4
|
Non-Disturbance 45
|
ARTICLE 19 - [INTENTIONALLY DELETED]
|
45
|
ARTICLE 20 - HOLDING OVER
|
45
|
20.1
|
Surrender of Possession 45
|
ARTICLE 21 - INSPECTIONS AND ACCESS
|
46
|
21.1
|
Entry by Landlord 46
|
21.2
|
Secured Areas 46
|
ARTICLE 22 - NAME OF BUILDING
|
46
|
ARTICLE 23 - SURRENDER OF LEASE
|
46
|
ARTICLE 24 - WAIVER
|
46
|
ARTICLE 25 - SALE BY LANDLORD
|
47
|
ARTICLE 26 - NO LIGHT AND AIR EASEMENT
|
47
|
ARTICLE 27 - FORCE MAJEURE
|
47
|
ARTICLE 28 - ESTOPPEL CERTIFICATES
|
47
|
ARTICLE 29 - RIGHT TO PERFORMANCE
|
48
|
ARTICLE 30 - PARKING
|
48
|
30.1
|
Tenant Parking 48
|
30.2
|
On-Site Parking Spaces 48
|
30.3
|
Off-Site Parking Spaces 48
|
ARTICLE 31 - SECURITY SERVICES
|
51
|
ARTICLE 32 - NOTICES
|
51
|
ARTICLE 33 - SIGNAGE AND BUILDING IDENTITY
|
52
|
ARTICLE 34 - INTENTIONALLY DELETED
|
52
|
ARTICLE 35 - ROOF RIGHTS
|
52
|
ARTICLE 36 - SECURITY DEPOSIT
|
52
|
ARTICLE 37 - TENANT’S FINANCIAL STATEMENTS
|
53
|
ARTICLE 38 - MISCELLANEOUS
|
53
|
38.1
|
Authorization to Sign Lease 53
|
38.2
|
Entire Agreement 53
|
38.3
|
Separability and Survivability 53
|
38.4
|
Gender and Headings; Governing Law 53
|
38.5
|
Exhibits 54
|
38.6
|
Transportation System Management Program 54
|
38.7
|
Quiet Enjoyment 54
|
38.8
|
Recordation 54
|
38.9
|
Cumulative Remedies 54
|
38.10
|
Brokers 54
|
38.11
|
Hazardous Materials 55
|
38.12
|
Definitions of “Hazardous Material” and “Environmental Laws” 56
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
|
Civils
|
|
|
|
|
C0.01
|
Title Sheet
|
2/17/12
|
--
|
--
|
Kpff Consulting Engineers
|
C1.00
|
Site Plan
|
2/17/12
|
--
|
--
|
Kpff Consulting Engineers
|
C1.10
|
Erosion Control Plan
|
2/17/12
|
--
|
--
|
Kpff Consulting Engineers
|
C1.30
|
Grading & Drainage Plan
|
2/17/12
|
--
|
--
|
Kpff Consulting Engineers
|
C5.00
|
Civil Details
|
2/17/12
|
--
|
--
|
Kpff Consulting Engineers
|
|
Landscaping
|
|
|
|
|
L-1.0
|
Paving Details & Legend
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-1.1
|
Concrete Paver Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-1.2
|
Water Feature Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-1.3
|
Bench Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-2.0
|
Irrigation Notes
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-2.1
|
Landscape Irrigation Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-2.2
|
Landscape Irrigation Specifications & Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-2.3
|
Portable Planting Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-3.0
|
Planting Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
L-3.1
|
Tree Planting Details
|
8/21/12
|
4
|
12/10/12
|
Landscape Architecture Laboratory
|
|
Architectural
|
|
|
|
|
A1.0
|
Site Plan
|
8/21/12
|
6
|
2/6/13
|
GMA Architects, Inc.
|
A1.1
|
Architectural Site Details
|
8/21/12
|
6
|
2/6/13
|
GMA Architects, Inc.
|
A1.2
|
Architectural Site Details
|
8/21/12
|
5
|
1/22/13
|
GMA Architects, Inc.
|
A2.0
|
Basement Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A2.1
|
First Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A2.2
|
Second Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A2.3
|
Third Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A2.4
|
Fourth Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
A2.4A
|
Fourth Floor Mezzanine Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A2.5
|
Fifth Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A2.6
|
Overall Roof Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A5.1
|
Exterior Elevations
|
8/21/12
|
6
|
2/6/13
|
GMA Architects, Inc.
|
A5.2
|
Exterior Elevations
|
8/21/12
|
6
|
2/6/13
|
GMA Architects, Inc.
|
A5.3
|
Exterior Elevations
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A5.4
|
Window Types
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A5.5
|
Window Types
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A5.6
|
Window Types
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A5.7
|
Window Types
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A6.1
|
Exterior Wall Sections
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.1
|
Section Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.2
|
Section Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.3
|
Section Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.4
|
Section Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
A7.5
|
Roof Enlarged Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.6
|
Architectural Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.7
|
Architectural Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A7.8
|
Canopy Details
|
8/21/12
|
6
|
2/6/13
|
GMA Architects, Inc.
|
A7.9
|
Metal Panel Detail
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A8.1
|
Enlarged Stair Plans
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A8.2
|
Stair Sections
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A8.3
|
Stair Sections
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A8.4
|
Elevator Sections
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A8.5
|
Enlarged Elevation Plans
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A9.1
|
UL References
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
A9.2
|
UL References
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
|
Tenant Improvement Architectural
|
|
|
|
|
TT1.0
|
Title Sheet
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TT2.1
|
City General Notes
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TT2.2
|
Accessibility Notes
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TT3.1
|
Long Beach CalGreen Checklist
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TT3.2
|
Long Beach CalGreen Checklist
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TLS1.0
|
Basement Life Safety Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TLS1.1
|
1
st
Floor Life Safety Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TLS1.2
|
2
nd
Floor Life Safety Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TLS1.3
|
3
rd
Floor Life Safety Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TLS1.4
|
4th Floor Life Safety Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TLS1.5
|
5
th
Floor Life Safety Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA2.0
|
Basement Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
TA2.1
|
1
st
Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA2.2
|
2
nd
Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA2.3
|
3
rd
Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA2.4
|
4
th
Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA2.4B
|
1
st
Floor Ramp Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA2.5
|
5
th
Floor Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA3.1
|
1
st
Floor Reflected Ceiling Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA3.2
|
2
nd
Floor Reflected Ceiling Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA3.3
|
3
rd
Floor Reflected Ceiling Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA3.4
|
4
th
Floor Reflected Ceiling Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA3.4A
|
4
th
Floor Ceiling Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA3.5
|
5
th
Floor Reflected Ceiling Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.1
|
Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.2
|
Partition Types
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.3
|
Partition Types
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.3A
|
Partition Types – Shell
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.4
|
Doors and Details – Shell
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.5
|
Interior Door Schedule
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA4.6
|
Doors – Interior
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA5.1
|
Door Schedule
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA5.2
|
Door Details
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA 6.1
|
Restrooms
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA6.2
|
Restrooms
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA6.3
|
Restrooms
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA7.1
|
Millwork
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
TA7.2
|
Millwork
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA7.3
|
Millwork
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA7.4
|
Lobby Elevation
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA8.0
|
Finish Schedule
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA8.1
|
1
st
Floor Finish Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA8.2
|
2
nd
Floor Finish Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA8.3
|
3
rd
Floor Finish Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA8.4
|
4
th
Floor Finish Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
TA8.5
|
5
th
Floor Finish Plan
|
8/21/12
|
3
|
12/10/12
|
GMA Architects, Inc.
|
SK-1
|
TA2.1 Revision
|
10/17/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-2
|
TA3.1 Revision
|
10/17/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-3
|
A7.9 Revision
|
10/17/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-4
|
TA4.5 Revision
|
10/19/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-5
|
TA2.2 Revision
|
10/25/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-6
|
TA2.3 Revision
|
10/25/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-7
|
TA2.4 Revision
|
10/25/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-8
|
TA3.2 Revision
|
10/25/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-9
|
TA3.3 Revision
|
10/25/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-10
|
TA2.4 Revision
|
10/25/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-11
|
A2.4 Revision
|
11/12/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-12
|
A5.2 Revision
|
11/12/12
|
--
|
--
|
GMA Architects, Inc.
|
SK-13
|
A2.4 Revision
|
11/12/12
|
--
|
--
|
GMA Architects, Inc.
|
|
Structural
|
|
|
|
|
S0.01
|
General Notes
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S0.02
|
General Notes
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S0.03
|
General Notes
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.01
|
Typical Concrete Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.02
|
Typical Concrete Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.03
|
Typical Concrete Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.11
|
Typical Shearwall Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.12
|
Typical Shearwall Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
S1.13
|
Typical Shearwall Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.21
|
Typical Steel Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.22
|
Typical Steel Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.23
|
Typical Steel Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.31
|
Typical Metal Stud Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.32
|
Typical Metal Stud Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.33
|
Typical Metal Stud Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S1.41
|
Typical Stair Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S2.00
|
Basement/Foundation Plan
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S2.01
|
First Floor Framing Plan
|
8/21/12
|
6
|
12/21/12
|
Englekirk Structural Engineers
|
S2.02
|
Second Floor Framing Plan
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S2.03
|
Third Floor Framing Plan
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S2.04
|
Fourth Floor Framing Plan
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S2.05
|
Fifth Floor/Roof Framing Plan
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S2.06
|
Roof Framing Plan
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.01
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.02
|
Section and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.03
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.11
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.12
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.13
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.14
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S3.15
|
Sections and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S4.01
|
Bridge Elevation and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S4.02
|
Bridge Elevation and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
S4.03
|
Bridge Elevation and Details
|
8/21/12
|
5
|
12/10/12
|
Englekirk Structural Engineers
|
S5.01
|
Electrical / Trash Enclosure Elevations
|
8/21/12
|
8
|
1/31/13
|
Englekirk Structural Engineers
|
SK4
|
Sketch
|
10/30/12
|
--
|
--
|
Englekirk Structural Engineers
|
SSK 18
|
Sign Anchorage
|
12/18/12
|
--
|
--
|
Englekirk Structural Engineers
|
|
Mechanical
|
|
|
|
|
M-0.1
|
Cover Sheet
|
8/21/12
|
4
|
12/10/12
|
Icon Mechanical
|
M-1.0
|
Mechanical Basement Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-1.1
|
Mechanical First Floor Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-1.2
|
Mechanical Second Floor Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-1.3
|
Mechanical Third Floor Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-1.4
|
Mechanical Fourth Floor Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-1.5
|
Mechanical Fifth Floor & Roof Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-2.1
|
Mechanical First Floor Piping Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-2.2
|
Mechanical Second Floor Piping Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-2.3
|
Mechanical Third Floor Piping Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-2.4
|
Mechanical Fourth Floor Piping Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-2.5
|
Mechanical Fifth Floor & Roof Piping Plan
|
8/21/12
|
5
|
1/11/13
|
Icon Mechanical
|
M-4.1
|
Mechanical Details
|
8/21/12
|
4
|
12/10/12
|
Icon Mechanical
|
M-4.2
|
Mechanical Details
|
8/21/12
|
4
|
12/10/12
|
Icon Mechanical
|
M-6.1
|
Mechanical Schedules
|
8/21/12
|
4
|
12/10/12
|
Icon Mechanical
|
M-6.2
|
Mechanical Schedules
|
8/21/12
|
4
|
12/10/12
|
Icon Mechanical
|
|
Electrical
|
|
|
|
|
TE0.0
|
Title Sheet
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE0.1
|
Symbols, Notes, and Abbreviations
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE0.2
|
Title 24
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE0.3
|
Title 24
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE0.4
|
Title 24
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE0.5
|
Title 24
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE1.0
|
Site Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE2.0
|
Basement Floor Distribution Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE2.1
|
First Floor Distribution Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE2.2
|
Second Floor Distribution Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE2.3
|
Third Floor Distribution Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE2.4
|
Fourth Floor Distribution Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE2.5
|
Fifth Floor Distribution Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.0
|
Basement Floor Lighting Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.1
|
First Floor Lighting Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.2
|
Second Floor Lighting Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.3
|
Third Floor Lighting Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
TE3.4
|
Fourth Floor Lighting Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.5
|
Fifth Floor Lighting Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.6
|
Basement Floor Lighting Plan – Less than 50V
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.7
|
First Floor Lighting Plan – Less than 50V
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.8
|
Second Floor Lighting Plan – Less than 50V
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.9
|
Third Floor Lighting Plan – Less than 50V
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.10
|
Fourth Floor Lighting Plan – Less than 50V
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE3.11
|
Fifth Floor Lighting Plan – Less than 50V
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE4.0
|
Basement Floor Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE4.1
|
First Floor Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE4.2
|
Second Floor Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE4.3
|
Third Floor Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE4.4
|
Fourth Floor Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE4.5
|
Fifth Floor Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE5.0
|
Basement Floor HVAC Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE5.1
|
First Floor HVAC Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE5.2
|
Second Floor HVAC Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE5.3
|
Third Floor HVAC Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE5.4
|
Fourth Floor HVAC Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE5.5
|
Fifth Floor HVAC Power Plan
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE6.0
|
Enlarged Plans
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE6.1
|
Enlarged Plans
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE6.2
|
Elevation Plans
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE6.3
|
Enlarged Plans
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE7.0
|
Details
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE7.1
|
Details
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE7.2
|
Details
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE8.0
|
One Line Diagram
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE9.0
|
Schedules
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE9.1
|
Panel Schedules
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE9.2
|
Panel Schedules
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
TE9.3
|
Schedules
|
8/21/12
|
6
|
1/16/13
|
InPwr, Inc.
|
|
Plumbing
|
|
|
|
|
P0.1
|
Plumbing Legend, Schedules &Gen. Notes
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P2.0
|
Plumbing Basement Base Plan
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P2.1
|
Plumbing First Floor Plan
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P2.2
|
Plumbing Second Floor Plan
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
P2.3
|
Plumbing Third Floor Plan
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P2.4
|
Plumbing Fourth Floor Plan
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P2.5
|
Plumbing 5
th
Floor/4
th
Roof Plans
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P3.1
|
Plumbing Fifth Floor Roof Plan
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P4.1
|
Riser Diagrams
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
P4.2
|
Riser Diagrams
|
7/26/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
|
Tenant Improvement Plumbing
|
|
|
|
|
TP0.1
|
Plumbing Legend, Schedules &Gen. Notes
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP2.0
|
Plumbing Basement Floor Plan
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP2.1
|
Plumbing First Floor Plan
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP2.2
|
Plumbing Second Floor Plan
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP2.3
|
Plumbing Third Floor Plan
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP2.4
|
Plumbing Fourth Floor Plan
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP3.1
|
Plumbing Fifth Floor Roof Plan
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP4.1
|
Plumbing Partial Floor Plans
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP4.2
|
Plumbing Partial Floor Plans
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
TP5.1
|
Plumbing Riser Diagrams
|
5/21/12
|
5
|
12/10/12
|
Andersen Commercial Plumbing
|
|
Fire Protection
|
|
|
|
|
FP-1
|
Notes & Details
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-2
|
Site Plan / UG Details
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-3
|
Stand Pipe Details
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-4
|
Sections & Details
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-5
|
EQB Calcs & Details
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-6
|
Basement Piping Plan
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-7
|
1
st
Floor Piping Plan
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
FP-8
|
2
nd
Floor Piping Plan
|
4/25/12
|
4
|
12/10/12
|
Mr. Sprinkler Fire Protection
|
Dwg No.
|
Description
|
Issue
Date
|
Rev.
No.
|
Rev.
Date
|
Architect/Engineer
|
TCC-9
|
Central Plant I/O Points List
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-10
|
Central Plant I/O Points List Notes
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-11
|
Central Plant Control Panel TCP-1
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-12
|
AHU-1/CU-1 Schematic Drawing
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-13
|
AHU-1/CU-1 Wiring Diagram
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-14
|
AHU-1/CU-1 BAC 5802 I/O Points List & Notes
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-15
|
TCP-2 Control Panel
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-16
|
Valve Schedule
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
TCC-17
|
FTU & VAV Unit Schedule
|
9/19/12
|
1.4
|
1/11/13
|
Taycon-TMI, Inc.
|
+
|
Wholly owned subsidiary of Molina Healthcare of New Mexico, Inc.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
(Dollars in Thousands)
|
||||||||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
$
|
19,065
|
|
|
$
|
64,654
|
|
|
$
|
89,492
|
|
|
$
|
38,157
|
|
|
$
|
94,324
|
|
Add fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, including amortization of debt discount and expense
|
16,769
|
|
|
15,519
|
|
|
15,509
|
|
|
13,777
|
|
|
13,231
|
|
|||||
Estimated interest portion of rental expense
|
2,865
|
|
|
2,542
|
|
|
4,522
|
|
|
5,181
|
|
|
4,370
|
|
|||||
Total fixed charges
|
19,634
|
|
|
18,061
|
|
|
20,031
|
|
|
18,958
|
|
|
17,601
|
|
|||||
Total earnings available for fixed charges
|
$
|
38,699
|
|
|
$
|
82,715
|
|
|
$
|
109,523
|
|
|
$
|
57,115
|
|
|
$
|
111,925
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges from above:
|
$
|
19,634
|
|
|
$
|
18,061
|
|
|
$
|
20,031
|
|
|
$
|
18,958
|
|
|
$
|
17,601
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
2.0
|
|
|
4.6
|
|
|
5.5
|
|
|
3.0
|
|
|
6.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total rent expense
|
$
|
20,462
|
|
|
$
|
23,110
|
|
|
$
|
25,124
|
|
|
$
|
20,723
|
|
|
$
|
17,481
|
|
Interest factor
|
14
|
%
|
|
11
|
%
|
|
18
|
%
|
|
25
|
%
|
|
25
|
%
|
|||||
Interest component of rental expense
|
$
|
2,865
|
|
|
$
|
2,542
|
|
|
$
|
4,522
|
|
|
$
|
5,181
|
|
|
$
|
4,370
|
|
Name
|
Jurisdiction of Incorporation
|
Alliance for Community Health L.L.C
|
Missouri
|
American Family Care, Inc.
|
California
|
Molina Center LLC
|
Delaware
|
Molina Healthcare Data Center, Inc.
|
New Mexico
|
Molina Healthcare of California
|
California
|
Molina Healthcare of California Partner Plan, Inc.
|
California
|
Molina Healthcare of Florida, Inc.
|
Florida
|
Molina Healthcare of Illinois, Inc.
|
Illinois
|
Molina Healthcare of Michigan, Inc.
|
Michigan
|
Molina Healthcare of New Mexico, Inc.
|
New Mexico
|
Molina Healthcare of Ohio, Inc.
|
Ohio
|
Molina Healthcare of Texas, Inc.
|
Texas
|
Molina Healthcare of Texas Insurance Company*
|
Texas
|
Molina Healthcare of Utah, Inc.
|
Utah
|
Molina Healthcare of Virginia, Inc.
|
Virginia
|
Molina Healthcare of Washington, Inc.
|
Washington
|
Molina Healthcare of Wisconsin, Inc.
|
Wisconsin
|
Molina Information Systems, LLC, dba Molina Medicaid Solutions
|
California
|
*
|
Wholly owned subsidiary of Molina Healthcare of Texas, Inc.
|
|
|
|
|
|
|
|
/s/ Joseph M. Molina
|
|
|
|
Joseph M. Molina
|
|
|
|
Chief Executive Officer and President
|
|
|
|
|
|
|
|
/s/ John C. Molina
|
|
|
|
John C. Molina, J.D.
|
|
|
|
Chief Financial Officer and Treasurer
|
|
/s/ Joseph M. Molina
|
Joseph M. Molina, M.D.
|
Chief Executive Officer and President
|
|
|
|
|
|
|
|
/s/ John C. Molina
|
|
|
|
John C. Molina, J.D.
|
|
|
|
Chief Financial Officer and Treasurer
|