MOLINA HEALTHCARE, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - MOLINA HEALTHCARE, INC. 8-K - MOLINA HEALTHCARE, INC.	a50800601.htm

Exhibit 99.1

Molina Healthcare Reports Fourth Quarter and Year-End 2013 Results

LONG BEACH, Calif.--(BUSINESS WIRE)--February 10, 2014--Molina Healthcare, Inc. (NYSE: MOH):

Full year 2013 net income per diluted share, continuing operations increased to $0.96, from $0.27 for 2012.
Full year 2013 adjusted net income per diluted share, continuing operations increased to $3.13, from $1.72 for 2012.
Full year 2013 total revenue of $6.6 billion, up 11% over 2012.
Aggregate membership up 7.5% over 2012.

Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter and year ended December 31, 2013. Net income from continuing operations for the year ended December 31, 2013, was $44.8 million, or $0.96 per diluted share, compared with net income from continuing operations of $12.9 million, or $0.27 per diluted share, for the year ended December 31, 2012. Net loss from continuing operations for the fourth quarter was $9.0 million, or $0.20 per diluted share, compared with net income from continuing operations of $26.2 million, or $0.55 per diluted share, for the quarter ended December 31, 2012.

“For Molina Healthcare, 2013 was a year of both opportunity and challenge,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “We laid the foundation for success in 2014 and beyond by increasing medical margins, securing Duals Demonstration contracts in five states, expanding our footprint into South Carolina, and building the robust administrative infrastructure we will need going forward.”

2014 Business Outlook

The Company will discuss its 2014 guidance, corporate strategy and business outlook at its Investor Day Conference webcast and presentation to be held on February 13, 2014, at the Le Parker Meridien Hotel in New York City.

Overview of Financial Results

Year Ended December 31, 2013, Compared with Year Ended December 31, 2012

Net income from continuing operations increased to $44.8 million in 2013, from $12.9 million in 2012 as a result of higher medical margin (measured as the excess of premium revenue over medical care costs). Higher medical margin was partially offset by increased administrative expenses related to the Company’s preparations for significant membership growth expected in 2014.

Premium revenue in 2013 increased 11% over 2012, due to a 6% increase in member months and a 5% increase in revenue per member per month (PMPM).

Excluding the Company’s Illinois health plan, which was not operational until 2013, eight of the Company’s nine other health plans reported higher medical margins in 2013 than in 2012. Consolidated medical margin increased by approximately 45% year over year. The Company’s consolidated medical care ratio (measured as medical care costs as a percentage of premium revenue) decreased to 87.1% in 2013 from 90.0% in 2012.

As the Company has previously discussed, general and administrative expenses increased to 10.1% of revenue in 2013 from 8.8% in 2012. Increased administrative expenses related to the anticipated membership growth represented approximately 2% of premium revenue, or $135 million during 2013.

Conference Call

The Company’s management will host a conference call and webcast to discuss its fourth quarter and year-end results at 5:00 p.m. Eastern time on Monday, February 10, 2014. The number to call for the interactive teleconference is (212) 231-2919. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Monday, February 10, 2014, through 6:00 p.m. on Tuesday, February 11, 2014, by dialing (800) 633-8284 and entering confirmation number 21703882. A live broadcast of Molina Healthcare’s conference call will be available on the Company’s website, www.molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program. The Company’s licensed health plans in California, Florida, Illinois, Michigan, New Mexico, Ohio, South Carolina, Texas, Utah, Washington, and Wisconsin currently serve approximately 2.1 million members, and its subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida. More information about Molina Healthcare is available at www.molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company’s plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those risks and uncertainties include, but are not limited to, the following:

uncertainties associated with the implementation of the Affordable Care Act, including the full grossed up reimbursement by states of the non-deductible health insurance industry federal excise tax, the expansion of Medicaid eligibility in the states that participate to previously uninsured populations unfamiliar with managed care, the implementation of state insurance marketplaces, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures, including the dual eligibles demonstration programs in California, Illinois, Michigan, Ohio, and South Carolina;
newly FDA-approved drugs such as sovaldi, olysio, and other drugs for hepatitis C or other medical conditions that are exorbitantly priced but not factored into the calculation of our capitated rates for 2014;
significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
management of our medical costs, including seasonal flu patterns and rates of utilization that are consistent with our expectations, and our ability to reduce over time the high medical costs commonly associated with new patient populations;
the accurate estimation of incurred but not paid medical costs across our health plans;
retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates or retroactive premium rate increases;
efforts by states to recoup previously paid amounts, including claims by the Washington Health Care Authority (HCA) that it overpaid our Washington health plan for certain claims related to psychotropic drugs and the Washington Community Options Program Entry System (COPES);
the success of our efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states, and our ability to increase our revenues consistent with our expectations;
the continuation and renewal of the government contracts of both our health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed;
government audits and reviews, and any fine, enrollment freeze, or monitoring program that may result therefrom;
changes with respect to our provider contracts and the loss of providers;
the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;
the interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures;
approval by state regulators of dividends and distributions by our health plan subsidiaries;
changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
high dollar claims related to catastrophic illness;
the favorable or unfavorable resolution of litigation, arbitration, or administrative proceedings;
the relatively small number of states in which we operate health plans;
our management of a portion of College Health Enterprises’ hospital in Long Beach, California;
the availability of adequate financing on acceptable terms to fund and capitalize our expansion and growth, repay our outstanding indebtedness at maturity and meet our liquidity needs, including the interest expense and other costs associated with such financing;
a state’s failure to renew its federal Medicaid waiver;
an inadvertent unauthorized disclosure of protected health information;
changes generally affecting the managed care or Medicaid management information systems industries;
increases in government surcharges, taxes, and assessments;
changes in general economic conditions, including unemployment rates;
increasing consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at www.sec.gov. Given these risks and uncertainties, we can provide no assurances that the Company’s forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by the Company’s forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of February 10, 2014, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.


	MOLINA HEALTHCARE, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended December 31,						Year Ended December 31,
		2013			2012			2013			2012
		(Amounts in thousands, except net (loss) income per share)
	Revenue:
	Premium revenue	$	1,595,352		$	1,477,384		$	6,179,170		$	5,544,121
	Premium tax revenue		44,411			38,038			172,017			158,991
	Service revenue		54,007			55,359			204,535			187,710
	Investment income		2,006			1,182			6,890			5,075
	Rental and other income		9,846			5,997			26,322			18,312
	Total revenue		1,705,622			1,577,960			6,588,934			5,914,209
	Operating expenses:
	Medical care costs		1,414,290			1,275,733			5,380,124			4,991,188
	Cost of service revenue		42,306			43,097			161,494			141,208
	General and administrative expenses		187,006			153,051			665,996			518,615
	Premium tax expenses		44,411			38,038			172,017			158,991
	Depreciation and amortization		20,294			16,198			72,743			63,114
	Total operating expenses		1,708,307			1,526,117			6,452,374			5,873,116
	Operating (loss) income		(2,685	)		51,843			136,560			41,093
	Other expenses (income):
	Interest expense		13,835			4,348			52,071			16,769
	Other (income) expense		(4	)		(325	)		3,343			945
	Total other expenses (income)		13,831			4,023			55,414			17,714
	(Loss) income from continuing operations before income taxes		(16,516	)		47,820			81,146			23,379
	Income tax (benefit) expense		(7,475	)		21,626			36,316			10,513
	(Loss) income from continuing operations		(9,041	)		26,194			44,830			12,866
	(Loss) income from discontinued operations ⁽¹⁾		(85	)		(551	)		8,099			(3,076	)
	Net (loss) income	$	(9,126	)	$	25,643		$	52,929		$	9,790

	Basic (loss) income per share:
	(Loss) income from continuing operations	$	(0.20	)	$	0.56		$	0.98		$	0.28
	(Loss) income from discontinued operations		–			(0.01	)		0.18			(0.07	)
	Basic net (loss) income per share	$	(0.20	)	$	0.55		$	1.16		$	0.21

	Diluted (loss) income per share:
	(Loss) income from continuing operations	$	(0.20	)	$	0.55		$	0.96		$	0.27
	(Loss) income from discontinued operations		–			(0.01	)		0.17			(0.06	)
	Diluted net (loss) income per share	$	(0.20	)	$	0.54		$	1.13		$	0.21

	Weighted average shares outstanding:
	Basic		45,725			46,617			45,717			46,380
	Diluted		45,725			47,143			46,862			46,999

	Operating Statistics, Continuing Operations:
	Medical care ratio ⁽²⁾		88.7	%		86.4	%		87.1	%		90.0	%
	Service revenue ratio ⁽³⁾		78.3	%		77.9	%		79.0	%		75.2	%
	General and administrative expense ratio ⁽⁴⁾		11.0	%		9.7	%		10.1	%		8.8	%
	Premium tax ratio ⁽²⁾		2.7	%		2.5	%		2.7	%		2.8	%
	Effective tax rate		45.3	%		45.2	%		44.8	%		45.0	%

__________
⁽¹⁾	(Loss) income from discontinued operations is net of income tax expense (benefit) of $134, $2,877, $(9,912), and $(1,238), respectively.
⁽²⁾	Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium taxes as a percentage of premium revenue plus premium tax revenue.
⁽³⁾	Service revenue ratio represents cost of service revenue as a percentage of service revenue.
⁽⁴⁾	Computed as a percentage of total revenue.


MOLINA HEALTHCARE, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS

	December 31,
	2013			2012
	(Amounts in thousands, except per-share data)
ASSETS
Current assets:
Cash and cash equivalents	$	935,895		$	795,770
Investments		703,052			342,845
Receivables		298,935			149,682
Income tax refundable		32,742			–
Deferred income taxes		26,556			32,443
Prepaid expenses and other current assets		42,484			28,386
Total current assets		2,039,664			1,349,126
Property, equipment, and capitalized software, net		292,083			221,443
Deferred contract costs		45,675			58,313
Intangible assets, net		98,871			77,711
Goodwill		230,738			151,088
Restricted investments		63,093			44,101
Auction rate securities		10,898			13,419
Derivative asset		186,351			–
Other assets		35,564			19,621
	$	3,002,937		$	1,934,822

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	669,787		$	494,530
Accounts payable and accrued liabilities		319,965			184,034
Deferred revenue		122,216			141,798
Income taxes payable		–			6,520
Current maturities of long-term debt		182,008			1,155
Total current liabilities		1,293,976			828,037
Convertible senior notes		416,368			175,468
Lease financing obligations		159,394			–
Lease financing obligations - related party		27,092			–
Other long-term debt		–			86,316
Deferred income taxes		580			37,900
Derivative liability		186,239			1,307
Other long-term liabilities		26,351			23,480
Total liabilities		2,110,000			1,152,508
Stockholders’ equity:
Common stock, $0.001 par value; 150,000 shares authorized; outstanding: 45,871 shares at December 31, 2013 and 46,762 shares at December 31, 2012		46			47
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding		–			–
Additional paid-in capital		340,848			285,524
Accumulated other comprehensive loss		(1,086	)		(457	)
Treasury stock, at cost; outstanding: 111 shares at December 31, 2012		–			(3,000	)
Retained earnings		553,129			500,200
Total stockholders’ equity		892,937			782,314
	$	3,002,937		$	1,934,822


MOLINA HEALTHCARE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR CONTINUING AND DISCONTINUED OPERATIONS

	Three Months Ended December 31,						Year Ended December 31,
	2013			2012			2013			2012
	(Amounts in thousands)
Operating activities:
Net (loss) income	$	(9,126	)	$	25,643		$	52,929		$	9,790
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		25,831			20,475			93,866			78,764
Deferred income taxes		7,395			(10,410	)		(31,047	)		(9,887	)
Stock-based compensation		8,040			4,570			28,694			20,018
Amortization of convertible senior notes and lease financing obligations		6,692			1,528			22,820			5,942
Amortization of premium/discount on investments		3,734			1,580			11,787			6,746
Amortization of deferred financing costs		650			264			3,692			1,089
Change in fair value of derivatives		(5	)		37			3,378			1,307
Change in fair value of contingent consideration liabilities		(2,400	)		–			(2,400	)		–
Loss on disposal of property and equipment		1,345			2,608			1,345			2,608
Tax deficiency from employee stock compensation		(1	)		(367	)		(73	)		(526	)
Gain on sale of subsidiary		–			–			–			(1,747	)
Changes in operating assets and liabilities:
Medical claims and benefits payable		37,081			(41,933	)		175,257			92,054
Receivables		(4,968	)		7,227			(149,253	)		18,216
Accounts payable and accrued liabilities		40,880			32,375			60,996			23,345
Income taxes		(38,250	)		40,050			(39,262	)		18,172
Prepaid expenses and other current assets		4,488			1,616			(23,064	)		(8,958	)
Deferred revenue		(2,172	)		(1,503	)		(19,582	)		90,851
Net cash provided by operating activities		79,214			83,760			190,083			347,784

Investing activities:
Purchases of investments		(142,130	)		(71,972	)		(770,083	)		(306,437	)
Sales and maturities of investments		171,795			84,341			399,595			298,006
Purchases of equipment		(33,623	)		(25,597	)		(98,049	)		(78,145	)
Net cash paid in business combinations		(3,837	)		–			(61,521	)		–
(Increase) decrease in restricted investments		2,132			387			(18,992	)		(2,647	)
(Increase) decrease in deferred contract costs		3,093			7,189			12,638			(11,610	)
Proceeds from sale of subsidiary, net of cash surrendered		–			–			–			9,162
Change in other noncurrent assets and liabilities		675			2,862			(6,899	)		(1,913	)
Net cash used in investing activities		(1,895	)		(2,790	)		(543,311	)		(93,584	)

Financing activities:
Proceeds from issuance of 1.125% Notes, net of deferred issuance costs		–			–			537,973			–
Proceeds from sale-leaseback transactions		–			–			158,694			–
Purchase of 1.125% Notes call option		–			–			(149,331	)		–
Proceeds from issuance of warrants		–			–			75,074			–
Treasury stock purchases		(2,662	)		(3,000	)		(52,662	)		(3,000	)
Principal payments on term loan		–			(283	)		(47,471	)		(1,129	)
Repayment of amounts borrowed under credit facility		–			–			(40,000	)		(20,000	)
Proceeds from employee stock plans		4,246			2,634			9,402			8,205
Excess tax benefits from employee stock compensation		436			(31	)		1,674			3,667
Amount borrowed under credit facility		–			–			–			60,000
Net cash provided by (used in) financing activities		2,020			(680	)		493,353			47,743
Net increase in cash and cash equivalents		79,339			80,290			140,125			301,943
Cash and cash equivalents at beginning of period		856,556			715,480			795,770			493,827
Cash and cash equivalents at end of period	$	935,895		$	795,770		$	935,895		$	795,770


MOLINA HEALTHCARE, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES

The Company uses two non-GAAP¹ financial measures as supplemental metrics in evaluating its financial performance, making financing and business decisions, and forecasting and planning for future periods. Management believes such measures are useful supplemental measures to investors in evaluating the Company’s performance, and when comparing the Company’s performance with the performance of other public companies in the health care industry. These non-GAAP financial measures should be considered as supplements to, and not as substitutes for or superior to, GAAP measures.

The first of these non-GAAP measures is earnings before interest, taxes, depreciation and amortization (EBITDA). The following table reconciles net income, which we believe to be the most comparable GAAP measure, to EBITDA.

	Three Months Ended December 31,					Year Ended December 31,
	2013			2012		2013		2012
	(Amounts in thousands)
Net (loss) income	$	(9,126	)	$	25,643	$	52,929	$	9,790
Adjustments:
Depreciation and amortization reported in the consolidated statements of cash flows		25,831			20,475		93,866		78,764
Interest expense		13,835			4,348		52,071		16,769
Income tax (benefit) expense		(7,341	)		24,503		26,404		9,275
EBITDA	$	23,199		$	74,969	$	225,270	$	114,598

The second of these non-GAAP measures is adjusted net income per share, continuing operations. The following table reconciles net income (loss) per diluted share, which the Company believes to be the most comparable GAAP measure, to adjusted net income per diluted share.

	Three Months Ended December 31,					Year Ended December 31,
	2013			2012		2013		2012
Net (loss) income per diluted share, continuing operations	$	(0.20	)	$	0.55	$	0.96	$	0.27
Adjustments, net of tax:
Depreciation, and amortization of capitalized software		0.28			0.20		0.98		0.75
Stock-based compensation		0.19			0.07		0.52		0.31
Amortization of convertible senior notes and lease financing obligations		0.09			0.02		0.31		0.08
Amortization of intangible assets		0.08			0.08		0.28		0.29
Change in fair value of derivatives		–			–		0.08		0.02
Adjusted net income per diluted share, continuing operations	$	0.44		$	0.92	$	3.13	$	1.72

¹GAAP stands for Generally Accepted Accounting Principles.


MOLINA HEALTHCARE, INC. UNAUDITED MEMBERSHIP DATA, CONTINUING OPERATIONS

	As of December 31,
	2013	2012	2011
Total Ending Membership by Health Plan:
California	368,000	336,000	355,000
Florida	89,000	73,000	69,000
Illinois	4,000	–	–
Michigan	213,000	220,000	222,000
New Mexico	168,000	91,000	88,000
Ohio	255,000	244,000	248,000
Texas	252,000	282,000	155,000
Utah	86,000	87,000	84,000
Washington	403,000	418,000	355,000
Wisconsin	93,000	46,000	42,000
	1,931,000	1,797,000	1,618,000
Total Ending Membership by State for the Medicare Advantage Plans:
California	8,800	7,700	6,900
Florida	600	900	800
Michigan	10,400	9,700	8,200
New Mexico	900	900	800
Ohio	500	300	200
Texas	2,800	1,500	700
Utah	8,300	8,200	8,400
Washington	7,100	6,500	5,000
	39,400	35,700	31,000
Total Ending Membership by State for the Aged, Blind or Disabled Population:
California	46,700	44,700	31,500
Florida	14,700	10,300	10,400
Illinois	4,000	–	–
Michigan	45,300	41,900	37,500
New Mexico	11,300	5,700	5,600
Ohio	32,000	28,200	29,100
Texas	90,200	95,900	63,700
Utah	9,700	9,000	8,500
Washington	33,000	30,000	4,800
Wisconsin	1,700	1,700	1,700
	288,600	267,400	192,800


	MOLINA HEALTHCARE, INC. UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN, CONTINUING OPERATIONS (In thousands except percentages and per-member per-month amounts)

		Three Months Ended December 31, 2013
		Member Months ⁽¹⁾	Premium Revenue				Medical Care Costs				MCR ⁽²⁾		Medical Margin
		Member Months ⁽¹⁾	Total		PMPM		Total		PMPM		MCR ⁽²⁾		Medical Margin
	California	1,101	$	196,805	$	178.70	$	169,278	$	153.71	86.0	%	$	27,527
	Florida	261		77,309		295.65		69,815		266.99	90.3			7,494
	Illinois ⁽³⁾	7		8,121		1,201.34		7,869		1,164.10	96.9			252
	Michigan	640		167,252		261.23		138,539		216.38	82.8			28,713
	New Mexico	508		147,991		291.16		132,465		260.62	89.5			15,526
	Ohio	773		278,916		360.85		236,409		305.86	84.8			42,507
	Texas	761		321,938		423.35		284,998		374.77	88.5			36,940
	Utah	259		73,903		285.88		66,136		255.84	89.5			7,767
	Washington	1,219		275,778		226.15		248,871		204.09	90.2			26,907
	Wisconsin	280		38,925		139.19		31,797		113.70	81.7			7,128
	Other ⁽⁴⁾	–		8,414		–		28,113		–	–			(19,699	)
		5,809	$	1,595,352	$	274.63	$	1,414,290	$	243.46	88.7	%	$	181,062


		Three Months Ended December 31, 2012
		Member Months ⁽¹⁾	Premium Revenue				Medical Care Costs				MCR ⁽²⁾		Medical Margin
		Member Months ⁽¹⁾	Total		PMPM		Total		PMPM		MCR ⁽²⁾		Medical Margin
	California	1,021	$	178,886	$	175.25	$	159,800	$	156.55	89.3	%	$	19,086
	Florida	218		57,892		266.06		48,965		225.04	84.6			8,927
	Michigan	656		166,453		253.54		151,230		230.35	90.9			15,223
	New Mexico	268		81,285		302.77		71,440		266.10	87.9			9,845
	Ohio	752		267,918		356.60		235,072		312.88	87.7			32,846
	Texas	856		341,244		398.69		265,391		310.07	77.8			75,853
	Utah	259		72,859		281.46		61,741		238.51	84.7			11,118
	Washington	1,248		290,246		232.56		253,335		202.99	87.3			36,911
	Wisconsin	134		18,469		138.66		13,107		98.41	71.0			5,362
	Other ⁽³⁾⁽⁴⁾	–		2,132		–		15,652		–	–			(13,520	)
		5,412	$	1,477,384	$	273.05	$	1,275,733	$	235.79	86.4	%	$	201,651
__________
⁽¹⁾	A member month is defined as the aggregate of each month’s ending membership for the period presented.
⁽²⁾	The MCR represents medical costs as a percentage of premium revenue.
⁽³⁾	The Illinois health plan’s results prior to October 1, 2013, were insignificant and reported in “Other.”
⁽⁴⁾	“Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.


	MOLINA HEALTHCARE, INC. UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN, CONTINUING OPERATIONS (In thousands except percentages and per-member per-month amounts)

		Year Ended December 31, 2013
		Member Months ⁽¹⁾	Premium Revenue				Medical Care Costs				MCR ⁽²⁾		Medical Margin
		Member Months ⁽¹⁾	Total		PMPM		Total		PMPM		MCR ⁽²⁾		Medical Margin
	California	4,233	$	749,755	$	177.10	$	666,592	$	157.46	88.9	%	$	83,163
	Florida	973		264,998		272.23		231,261		237.57	87.3			33,737
	Illinois ⁽³⁾	7		8,121		1,201.34		7,869		1,164.10	96.9			252
	Michigan	2,581		676,000		261.91		570,644		221.09	84.4			105,356
	New Mexico	1,492		446,758		299.36		384,466		257.62	86.1			62,292
	Ohio	3,007		1,098,795		365.44		924,675		307.53	84.2			174,120
	Texas	3,178		1,291,001		406.27		1,114,852		350.84	86.4			176,149
	Utah	1,040		310,895		299.05		259,397		249.51	83.4			51,498
	Washington	4,941		1,168,405		236.47		1,028,210		208.10	88.0			140,195
	Wisconsin	1,060		143,465		135.40		114,340		107.91	79.7			29,125
	Other ⁽⁴⁾	–		20,977		–		77,818		–	–			(56,841	)
		22,512	$	6,179,170	$	274.48	$	5,380,124	$	238.99	87.1	%	$	799,046


		Year Ended December 31, 2012
		Member Months ⁽¹⁾	Premium Revenue				Medical Care Costs				MCR ⁽²⁾		Medical Margin
		Member Months ⁽¹⁾	Total		PMPM		Total		PMPM		MCR ⁽²⁾		Medical Margin
	California	4,177	$	665,600	$	159.36	$	606,494	$	145.20	91.1	%	$	59,106
	Florida	850		228,832		269.36		195,226		229.80	85.3			33,606
	Michigan	2,639		646,551		244.97		570,636		216.20	88.3			75,915
	New Mexico	1,069		321,853		301.08		280,108		262.03	87.0			41,745
	Ohio	3,065		1,095,137		357.36		970,504		316.69	88.6			124,633
	Texas	3,245		1,233,621		380.18		1,155,433		356.08	93.7			78,188
	Utah	1,026		298,392		290.78		245,671		239.41	82.3			52,721
	Washington	4,600		974,712		211.91		845,733		183.87	86.8			128,979
	Wisconsin	508		70,678		139.25		67,968		133.91	96.2			2,710
	Other ⁽³⁾⁽⁴⁾	–		8,745		–		53,415		–	–			(44,670	)
		21,179	$	5,544,121	$	261.79	$	4,991,188	$	235.68	90.0	%	$	552,933

__________
⁽¹⁾	A member month is defined as the aggregate of each month’s ending membership for the period presented.
⁽²⁾	The MCR represents medical costs as a percentage of premium revenue.
⁽³⁾	The Illinois health plan’s results prior to October 1, 2013, were insignificant and reported in “Other.”
⁽⁴⁾	“Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.


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

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

	Three Months Ended December 31,
	2013						2012
	Amount		PMPM		% of Total		Amount		PMPM		% of Total
Fee for service	$	936,744	$	161.26	66.2	%	$	857,590	$	158.50	67.2	%
Pharmacy		243,301		41.88	17.2			229,826		42.48	18.0
Capitation		162,651		28.00	11.5			139,444		25.77	10.9
Direct delivery		20,549		3.54	1.5			8,694		1.61	0.7
Other		51,045		8.78	3.6			40,179		7.43	3.2
	$	1,414,290	$	243.46	100.0	%	$	1,275,733	$	235.79	100.0	%


	Year Ended December 31,
	2013						2012
	Amount		PMPM		% of Total		Amount		PMPM		% of Total
Fee for service	$	3,611,529	$	160.43	67.1	%	$	3,423,751	$	161.67	68.6	%
Pharmacy		935,204		41.54	17.4			835,830		39.47	16.7
Capitation		603,938		26.83	11.2			552,136		26.07	11.1
Direct delivery		48,288		2.14	0.9			33,920		1.60	0.7
Other		181,165		8.05	3.4			145,551		6.87	2.9
	$	5,380,124	$	238.99	100.0	%	$	4,991,188	$	235.68	100.0	%


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

		December 31, 2013		December 31, 2012
	Fee-for-service claims incurred but not paid (IBNP)	$	424,173	$	377,614
	Pharmacy payable		45,037		38,992
	Capitation payable		20,267		49,066
	Other ⁽¹⁾		180,310		28,858
		$	669,787	$	494,530
__________
⁽¹⁾	“Other” medical claims and benefits payable include amounts payable to certain providers for which the Company acts as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact the Company’s unaudited consolidated statements of operations. As of December 31, 2013, the Company had recorded non-risk provider payables of approximately $151.3 million.


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

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

	Three Months Ended December 31,						Year Ended December 31,
	2013			2012			2013			2012
	(Dollars in thousands, except per-member amounts)
Balances at beginning of period	$	632,706		$	536,463		$	494,530		$	402,476
Components of medical care costs related to:
Current period		1,455,385			1,350,043			5,434,443			5,136,055
Prior period		(41,142	)		(76,419	)		(52,779	)		(39,295	)
Total medical care costs		1,414,243			1,273,624			5,381,664			5,096,760

Change in non-risk provider payables		27,596			(5,691	)		111,267			(7,004	)

Payments for medical care costs related to:
Current period		1,017,300			979,963			4,932,195			4,689,395
Prior period		387,458			329,903			385,479			308,307
Total paid		1,404,758			1,309,866			5,317,674			4,997,702
Balances at end of period	$	669,787		$	494,530		$	669,787		$	494,530
Benefit from prior period as a percentage of:
Balance at beginning of period		6.5	%		14.2	%		10.7	%		9.8	%
Premium revenue, trailing twelve months		0.7	%		1.3	%		0.9	%		0.7	%
Medical care costs, trailing twelve months		0.8	%		1.5	%		1.0	%		0.8	%

Claims Data:
Days in claims payable, fee for service		43			40			43			40
Number of members at end of year		1,931,000			1,797,000			1,931,000			1,797,000
Number of claims in inventory at end of year		145,800			122,700			145,800			122,700
Billed charges of claims in inventory at end of year	$	276,500		$	255,200		$	276,500		$	255,200
Claims in inventory per member at end of year		0.08			0.07			0.08			0.07
Billed charges of claims in inventory per member at end of year	$	143.19		$	142.01		$	143.19		$	142.01
Number of claims received during the year		5,566,000			5,378,400			21,317,500			20,842,400
Billed charges of claims received during the year	$	5,565,600		$	5,089,600		$	21,414,600		$	19,429,300

CONTACT:
Molina Healthcare, Inc.
Juan José Orellana, 562-435-3666, ext. 111143
Investor Relations

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MOLINA HEALTHCARE, INC. Reports