Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 001-31719 MOLINA HEALTHCARE, INC. (Exact name of registrant as specified in its charter) (State ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-31719 MOLINA HEALTHCARE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Iden ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 001-31719 MOLINA HEALTHCARE, INC. (Exact name of registrant as specified in its charter) (S ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 001-31719 MOLINA HEALTHCARE, INC. (Exact name of registrant as specified in its charter) (State ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 001-31719 MOLINA HEALTHCARE, INC. (Exact name of registrant as specified in its charter) (State ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Molina Healthcare, a FORTUNE 500 company, provides managed healthcare services through Medicaid, Medicare, and Marketplace programs, serving approximately 4.0 million members across 18 states as of year-end 2020 [Overview](index=6&type=section&id=Item%201.%20Business%20-%20Overview) Molina Healthcare, a FORTUNE 500 company, specializes in government-sponsored healthcare services, serving 4.0 million members in 15 states, expanding to 18 states with acquisitions, and prioritizing organic growth and shareholder returns - As of December 31, 2020, Molina served approximately **4.0 million members** through its health plans in 15 states. The acquisition of Magellan Complete Care on the same day added about **200 thousand members**, expanding operations to 18 states[15](index=15&type=chunk) - Key 2020 achievements include the acquisition of Magellan Complete Care, Passport, and YourCare, representing over **$6 billion** in annualized premium revenues, and a capital structure overhaul with the issuance of **$1.5 billion** in senior notes and an increased **$1 billion** credit facility[18](index=18&type=chunk)[22](index=22&type=chunk) 2020 Financial Highlights | | 2020 | 2019 | | :--- | :--- | :--- | | | (Dollars in millions, except per-share amounts) | | | **Premium Revenue** | $18,299 | $16,208 | | **Total Revenue** | $19,423 | $16,829 | | **Medical Care Ratio (MCR)** | 86.5% | 85.8% | | **After-Tax Margin** | 3.5% | 4.4% | | **Net Income per Diluted Share** | $11.23 | $11.47 | Membership by Program (as of Dec 31) | Program | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Medicaid | 3,599 | 2,956 | | Medicare | 115 | 101 | | Marketplace | 318 | 274 | | **Total** | **4,032** | **3,331** | [Our Business Programs](index=9&type=section&id=Item%201.%20Business%20-%20Our%20Business%20Programs) Molina's business centers on three government-sponsored programs: Medicaid (73% of 2020 revenue), Medicare, and Marketplace, with active expansion and significant contracts in key states - Medicaid premium revenue constituted **73% of total revenue** in 2020. Contracts in California, Ohio, Texas, and Washington each accounted for **10% or more** of consolidated Medicaid premium revenue[35](index=35&type=chunk) - The company closed on the acquisition of Magellan Complete Care on December 31, 2020, adding approximately **200 thousand members** and operations in six states with total 2020 revenue of approximately **$2.9 billion**[42](index=42&type=chunk) - Molina operates Medicare-Medicaid Plans (MMPs) in six states (CA, IL, MI, OH, SC, TX) to coordinate care for dual-eligible individuals[51](index=51&type=chunk) - The company expects Marketplace enrollment to grow by approximately **25% to 400 thousand members** by the end of 2021, representing an estimated premium revenue growth of **$485 million**[60](index=60&type=chunk) - In 2020, the company received a **$128 million judgment** for Marketplace risk corridor claims from 2014-2016, which was recognized as a gain in the fourth quarter[63](index=63&type=chunk) [Basis for Premium Rates](index=13&type=section&id=Item%201.%20Business%20-%20Basis%20for%20Premium%20Rates) Premium rates for Molina's Medicaid, Medicare, and Marketplace programs are determined by fixed per-member per-month rates from states or CMS, or annually developed based on utilization and risk, subject to regulatory approval Consolidated Premium Revenue by Program (Year Ended Dec 31) | Program | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Medicaid | $14,265 | $12,466 | | Medicare | $2,512 | $2,243 | | Marketplace | $1,522 | $1,499 | | **Total** | **$18,299** | **$16,208** | - PMPM premium revenues for 2020 varied significantly by program: Medicaid ranged from **$190.00 to $1,560.00**, Medicare from **$1,060.00 to $3,150.00**, and Marketplace from **$310.00 to $590.00**[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) [COVID-19 Pandemic](index=13&type=section&id=Item%201.%20Business%20-%20COVID-19%20Pandemic) The COVID-19 pandemic negatively impacted 2020 earnings due to $564 million in premium refunds and direct care costs, despite reduced utilization, while federal support and suspended redeterminations led to significant Medicaid membership growth - The combination of COVID-related impacts netted to a significant negative impact on earnings in 2020[78](index=78&type=chunk) - In 2020, direct costs to care for COVID patients totaled **$205 million**. The effect of curtailed utilization, net of direct care costs, reduced medical care costs and increased pretax earnings by approximately **$420 million**[80](index=80&type=chunk) - The company recognized **$564 million** in retroactive premium refunds and related actions in 2020 due to reduced medical service demand from COVID-19[81](index=81&type=chunk) - Excluding acquisitions, Molina added approximately **415 thousand new Medicaid members** since March 31, 2020, largely due to the suspension of eligibility redeterminations during the public health emergency[84](index=84&type=chunk) [Legislative and Political Environment](index=15&type=section&id=Item%201.%20Business%20-%20Legislative%20and%20Political%20Environment) Molina operates in a dynamic legislative environment with significant uncertainties, including a pending Supreme Court decision on the ACA and risks of reduced Medicaid funding due to state budget pressures - A U.S. Supreme Court case challenging the constitutionality of the ACA was heard in November 2020, with a decision expected by June 2021. A ruling that the ACA is unconstitutional could have a material adverse effect on the business[89](index=89&type=chunk) - As of December 31, 2020, Molina served approximately **771 thousand Medicaid Expansion members** and **318 thousand Marketplace members**. In 2020, premium revenue from these members was **$4.9 billion**, contributing **$826 million** in Medical Margin[90](index=90&type=chunk) - The company faces risks from legislative proposals aimed at reducing Medicaid spending, such as capping federal health spending, reversing Medicaid expansion, or changing Medicaid to a state block grant program[88](index=88&type=chunk)[93](index=93&type=chunk) [Operations](index=16&type=section&id=Item%201.%20Business%20-%20Operations) Molina's operations focus on delivering high-quality, low-cost healthcare, with 13 health plans accredited by NCQA. The company contracts with a vast network of providers, primarily through fee-for-service, and outsources key functions like pharmacy benefit management and IT services - As of December 31, 2020, **13** of the company's health plans were accredited by the National Committee for Quality Assurance (NCQA)[92](index=92&type=chunk) Consolidated Medical Care Costs by Type (Year Ended Dec 31, 2020) | Type | Amount (in millions) | PMPM | % of Total | | :--- | :--- | :--- | :--- | | Fee-for-service | $11,590 | $261.30 | 73.3% | | Pharmacy | $2,012 | $45.37 | 12.7% | | Capitation | $1,459 | $32.88 | 9.2% | | Other | $759 | $17.10 | 4.8% | | **Total** | **$15,820** | **$356.65** | **100.0%** | - The company outsources pharmacy benefit management services and has partnered with a third-party vendor to manage key information technology services, including infrastructure operations and data centers[103](index=103&type=chunk)[109](index=109&type=chunk) [Competitive Conditions and Environment](index=19&type=section&id=Item%201.%20Business%20-%20Competitive%20Conditions%20and%20Environment) Molina Healthcare faces significant competition across all business lines, with major national players like Centene, UnitedHealth, and Anthem as primary competitors in Medicaid, Medicare, and Marketplace segments - Primary competitors in the Medicaid managed care industry include Centene Corporation, UnitedHealth Group Incorporated, Anthem, Inc., and Aetna Inc[114](index=114&type=chunk) - The Medicare market is highly competitive, with large competitors such as UnitedHealth Group Incorporated, Humana Inc., and Aetna Inc. holding significant market share[115](index=115&type=chunk) - The primary competitor for low-income Marketplace membership is Centene Corporation[117](index=117&type=chunk) [Regulation](index=20&type=section&id=Item%201.%20Business%20-%20Regulation) Molina's health plans are extensively regulated by state and federal laws, including HIPAA, HITECH, and fraud and abuse statutes, requiring strict compliance and minimum capital levels - The company is subject to HIPAA and HITECH regulations, which impose strict requirements for protecting patient health information and mandate data breach notifications[119](index=119&type=chunk) - As a recipient of federal and state funds, Molina is subject to fraud and abuse laws, including the False Claims Act, which allows for qui tam (whistleblower) lawsuits and can result in treble damages and exclusion from government programs[122](index=122&type=chunk)[124](index=124&type=chunk) - The company's health plans are licensed by state insurance or health departments and must maintain minimum statutory capital levels, which restricts their ability to pay dividends to the parent company[125](index=125&type=chunk)[126](index=126&type=chunk) [Human Capital](index=21&type=section&id=Item%201.%20Business%20-%20Human%20Capital) Molina Healthcare had approximately 10,500 employees at year-end 2020, with an additional 2,500 from acquisitions, and has implemented a workplace modernization program focusing on development, compensation, and diversity - As of December 31, 2020, the company had approximately **10,500 employees**, adding about **2,500** more from the Magellan Complete Care and Passport acquisitions effective January 1, 2021[126](index=126&type=chunk) - Recent human capital programs include a cash bonus plan for all non-executive employees, improved benefits, enhanced recognition programs, and a formal diversity, equity, and inclusion program[128](index=128&type=chunk) - The company offers a comprehensive benefits suite, including a **401(k) with a 100% match on the first 4%** contributed by the employee, and an employee stock purchase program[131](index=131&type=chunk)[132](index=132&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) Molina Healthcare faces significant risks across its industry, business operations, and general corporate functions, many heightened by the COVID-19 pandemic, including contract loss, integration challenges, and regulatory non-compliance [Risks Related to Our Industry](index=22&type=section&id=Item%201A.%20Risk%20Factors%20-%20Risks%20Related%20to%20Our%20Industry) The company's industry is fraught with risks, primarily stemming from the COVID-19 pandemic, political and judicial uncertainty surrounding the ACA, potential government funding cuts, and stringent privacy regulations - The COVID-19 pandemic continues to pose risks, including increased member medical costs, potential for states to pursue retroactive rate refunds, and financial stress on providers[137](index=137&type=chunk)[138](index=138&type=chunk) - A pending U.S. Supreme Court decision on the constitutionality of the ACA creates significant uncertainty, as an adverse ruling could materially harm the business[140](index=140&type=chunk) - State and federal budget deficits may lead to funding cuts for Medicaid, CHIP, or Medicare. In 2020, the company recognized **$564 million** in retroactive premium actions related to COVID-19, and future refunds are possible[141](index=141&type=chunk) - As a holding company, Molina depends on dividends from its regulated subsidiaries to meet debt obligations. In 2020, the parent company received **$635 million** in dividends from these subsidiaries. State regulators can restrict these payments, which could negatively affect liquidity[144](index=144&type=chunk) - Failure to comply with privacy regulations like HIPAA and the California Consumer Privacy Act (CCPA) could result in significant civil penalties, liability, and reputational harm[145](index=145&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Risks Related to Our Business](index=26&type=section&id=Item%201A.%20Risk%20Factors%20-%20Risks%20Related%20to%20Our%20Business) Molina's business faces substantial operational risks, including legal challenges to contracts, reliance on major state contracts, integration complexities of large acquisitions, cybersecurity threats, and the difficulty of accurately estimating medical claims liabilities - The company's Kentucky Medicaid contract award and its acquisition of Passport are subject to ongoing legal challenges, the outcome of which is unpredictable[160](index=160&type=chunk)[161](index=161&type=chunk) - The company's top four health plans in California, Ohio, Texas, and Washington generated approximately **63%** of consolidated Medicaid premium revenue in 2020. The loss or non-renewal of these contracts could materially reduce revenues[162](index=162&type=chunk) - The integration of acquired businesses like Magellan Complete Care, Passport, and the pending Affinity acquisition is complex and involves risks such as unforeseen expenses, employee retention issues, and difficulties integrating IT systems[167](index=167&type=chunk)[168](index=168&type=chunk) - A failure to accurately estimate incurred but not paid (IBNP) medical care costs could negatively impact results. The estimation process is based on numerous complex assumptions[174](index=174&type=chunk) - The company's profitability is highly sensitive to its medical care ratio (MCR). A **one-percentage-point increase** in the 2020 MCR (from **86.5% to 87.5%**) would have reduced diluted EPS from **$11.23 to approximately $8.88**[178](index=178&type=chunk) - As of December 31, 2020, the company had **$2.35 billion** of indebtedness outstanding and **$1 billion** available under its Revolving Credit Facility. This substantial debt could increase vulnerability to adverse economic conditions[198](index=198&type=chunk) [General Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors%20-%20General%20Risk%20Factors) The company faces general risks including high dependency on key executives, exposure to various legal actions, and significant disruption risk from natural disasters due to its Southern California headquarters - The business is highly dependent on the leadership of its CEO, Joseph M. Zubretsky, and other key executives[203](index=203&type=chunk) - The location of the corporate headquarters in Long Beach, California, exposes the company to significant disruption risk from major earthquakes or wildfires[205](index=205&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) Molina Healthcare owns and leases real properties to support its business operations, believing current facilities are adequate for near-term needs while continuously evaluating future requirements - The company owns and leases real properties for its operations and believes its current facilities are adequate for near-term needs[207](index=207&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) Molina Healthcare is involved in a significant legal dispute in Kentucky regarding the 2020 Medicaid managed care RFP awards, with competing health plans challenging the awards and Molina's acquisition of Passport members - Molina's Kentucky health plan is a defendant in consolidated legal actions brought by Anthem, UnitedHealthcare, and Humana challenging the state's Medicaid RFP awards and the allocation of Passport members to Molina[208](index=208&type=chunk)[209](index=209&type=chunk) - A temporary injunction allows Molina Healthcare of Kentucky to continue operating under its contract. The company is vigorously defending its position, but the outcome is uncertain[210](index=210&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Molina Healthcare's common stock trades on the NYSE; the company authorized a $500 million stock repurchase program in September 2020 and does not currently pay cash dividends, intending to retain future earnings for operations - In September 2020, the board authorized a new **$500 million** stock repurchase program extending through December 31, 2021[215](index=215&type=chunk) Q4 2020 Stock Repurchases | Period | Total Shares Purchased | Avg Price Paid | Shares Purchased (Public Program) | Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | Oct 1-31 | 1,000 | $188.27 | — | $500,000,000 | | Nov 1-30 | — | — | 323,000 | $432,000,000 | | Dec 1-31 | — | — | 443,000 | $341,000,000 | - The company has not paid cash dividends on its common stock to date and currently intends to retain future earnings to fund operations[217](index=217&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, Molina's total revenue grew 15% to $19.4 billion, driven by acquisitions and membership growth, despite a net negative earnings impact from COVID-19, while maintaining strong liquidity and strengthening its capital position [Overview and 2020 Highlights](index=38&type=section&id=Item%207.%20MD%26A%20-%20Overview%20and%202020%20Highlights) Molina Healthcare reported strong 2020 performance with total revenue increasing 15% to $19.4 billion, driven by membership growth and acquisitions, despite a net negative COVID-19 impact of $2.30 per diluted share due to premium refunds - Total revenue for 2020 was **$19.4 billion**, a **15% increase** from 2019, with net income per diluted share of **$11.23**[221](index=221&type=chunk) - The net effect of COVID-19 was estimated to decrease net income for 2020 by **$2.30 per diluted share** and increase the MCR by approximately **50 basis points**[221](index=221&type=chunk) - COVID-related impacts included a **$420 million decrease** in medical costs from utilization curtailment, offset by **$564 million** in premium refunds to states[220](index=220&type=chunk) - Membership grew by approximately **900 thousand** to **4.2 million**, with about half from acquisitions (Magellan, Passport, YourCare) and the rest from the suspension of Medicaid redeterminations[221](index=221&type=chunk) [Consolidated Results of Operations](index=40&type=section&id=Item%207.%20MD%26A%20-%20Consolidated%20Results%20of%20Operations) For 2020, net income was $673 million ($11.23/share), with premium revenue growing 13% to $18.3 billion, offset by COVID-related refunds, leading to an increased consolidated MCR of 86.5% and a higher effective tax rate - Premium revenue increased by **$2.1 billion (13%)** in 2020, primarily due to increased membership from acquisitions (YourCare, Passport) and the suspension of Medicaid redeterminations. This was net of a **$564 million reduction** for COVID-related premium refunds[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - The consolidated MCR increased to **86.5%** in 2020 from **85.8%** in 2019, with the net effect of COVID-19 contributing approximately **50 basis points** to the increase[230](index=230&type=chunk) - The company recognized a **$128 million gain** from a Marketplace risk corridor judgment for prior years (2014-2016), which was received in October 2020[234](index=234&type=chunk)[235](index=235&type=chunk) - The effective income tax rate increased to **30.0%** in 2020 from **24.2%** in 2019, primarily due to the non-deductible Health Insurer Fee (HIF), which was under a moratorium in 2019 and has been repealed for years after 2020[239](index=239&type=chunk)[232](index=232&type=chunk) [Reportable Segments Performance](index=41&type=section&id=Item%207.%20MD%26A%20-%20Reportable%20Segments%20Performance) The Health Plans segment's Medical Margin increased to $2.5 billion in 2020, with Medicaid margin growing by $307 million, while the Marketplace segment's margin fell sharply by $152 million due to a deteriorated MCR of 78.7% Medical Margin and MCR by Program (Year Ended Dec 31) | Program | Premium Revenue 2020 (M) | Medical Margin 2020 (M) | MCR 2020 | Premium Revenue 2019 (M) | Medical Margin 2019 (M) | MCR 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Medicaid | $14,265 | $1,804 | 87.4% | $12,466 | $1,497 | 88.0% | | Medicare | $2,512 | $351 | 86.0% | $2,243 | $330 | 85.3% | | Marketplace | $1,522 | $324 | 78.7% | $1,499 | $476 | 68.2% | | **Total** | **$18,299** | **$2,479** | **86.5%** | **$16,208** | **$2,303** | **85.8%** | - The Medicaid program's Medical Margin increased by **$307 million (21%)** in 2020, driven by revenue from membership growth and a **60 basis point improvement** in its MCR[255](index=255&type=chunk)[256](index=256&type=chunk) - The Marketplace MCR increased significantly to **78.7%** in 2020 from **68.2%** in 2019. This was caused by lower premium rates PMPM (due to competitive pricing) combined with higher medical costs PMPM from a higher acuity member mix and COVID-19 costs[262](index=262&type=chunk)[264](index=264&type=chunk) [Liquidity and Financial Condition](index=44&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Financial%20Condition) Molina maintained strong liquidity in 2020, with net cash from operations surging to $1.89 billion, enhancing financial flexibility through new senior notes and a revolving credit facility, and planning future acquisitions and stock repurchases Cash Flow Summary | Activity | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,890 | $427 | | Net cash used in investing activities | ($400) | ($293) | | Net cash provided by (used in) financing activities | $225 | ($552) | - Cash and investments at the parent company decreased to **$644 million** at year-end 2020 from **$997 million** in 2019, mainly due to cash used for acquisitions and stock repurchases, partially offset by net debt financing and dividends from subsidiaries[269](index=269&type=chunk) - Regulated subsidiaries held aggregate capital and surplus of approximately **$2.44 billion**, exceeding the minimum required amount of approximately **$1.54 billion** as of December 31, 2020[282](index=282&type=chunk)[496](index=496&type=chunk) - Future uses of liquidity include the pending acquisition of Affinity Health Plan for approximately **$380 million** and continued stock repurchases under a program with approximately **$219 million** remaining available as of February 11, 2021[292](index=292&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=Item%207.%20MD%26A%20-%20Critical%20Accounting%20Estimates) Molina's most critical accounting estimate is the incurred but not paid (IBNP) medical claims liability, requiring significant judgment based on actuarial methods and assumptions like completion factors and healthcare cost trends, with sensitivity analyses provided - The estimation of the IBNP liability is a critical accounting estimate requiring significant judgment. The most critical assumptions are estimated completion factors and the assumed healthcare cost trend[303](index=303&type=chunk) Sensitivity of Claims Liability to Completion Factor Changes (as of Dec 31, 2020) | Change in Estimated Completion Factors | (Decrease) Increase in Medical Claims and Benefits Payable (in millions) | | :--- | :--- | | (6)% | $491 | | (4)% | $327 | | (2)% | $164 | | 2% | ($164) | | 4% | ($327) | | 6% | ($491) | Sensitivity of Claims Liability to Medical Cost Trend Changes (as of Dec 31, 2020) | (Decrease) Increase in Trended PMPM Cost Estimates | (Decrease) Increase in Medical Claims and Benefits Payable (in millions) | | :--- | :--- | | (6)% | ($179) | | (4)% | ($120) | | (2)% | ($60) | | 2% | $60 | | 4% | $120 | | 6% | $179 | [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Molina Healthcare's primary market risk exposure is to interest rate changes, affecting its fixed-income investment portfolio and variable-rate borrowings, with a hypothetical 1% rate increase decreasing investment fair value by $39 million - The company's primary financial market risk is from changes in interest rates[318](index=318&type=chunk) - A hypothetical **1% increase** in market interest rates at December 31, 2020, would decrease the fair value of the company's fixed income investments by approximately **$39 million**[319](index=319&type=chunk) [Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the audited consolidated financial statements for Molina Healthcare, Inc. for the fiscal year ended December 31, 2020, detailing financial performance, position, and cash flows, with an unqualified auditor opinion [Consolidated Financial Statements](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%20-%20Consolidated%20Financial%20Statements) The consolidated financial statements for 2020 show total revenues of $19.4 billion, net income of $673 million, total assets of $9.5 billion, and strong cash flow from operations of $1.9 billion, with equity changes driven by net income and stock repurchases Consolidated Statement of Income Highlights (Year Ended Dec 31, 2020) | Metric | Amount (in millions) | | :--- | :--- | | Total Revenue | $19,423 | | Medical Care Costs | $15,820 | | Operating Income | $1,078 | | Net Income | $673 | | Diluted EPS | $11.23 | Consolidated Balance Sheet Highlights (as of Dec 31, 2020) | Metric | Amount (in millions) | | :--- | :--- | | Total Current Assets | $7,876 | | Total Assets | $9,532 | | Medical Claims and Benefits Payable | $2,696 | | Total Liabilities | $7,436 | | Total Stockholders' Equity | $2,096 | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31, 2020) | Metric | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $1,890 | | Net cash used in investing activities | ($400) | | Net cash provided by financing activities | $225 | [Notes to Consolidated Financial Statements](index=59&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%20-%20Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on business combinations (Magellan, Passport, YourCare), the $2.7 billion medical claims payable liability with $119 million favorable development, $2.15 billion in long-term debt, and regulatory capital requirements - The company closed on three business combinations in 2020: Magellan Complete Care (purchase consideration ~**$1.04 billion**), Passport Health Plan (**$66 million**), and YourCare Health Plan (**$42 million**)[398](index=398&type=chunk)[400](index=400&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk) - The liability for medical claims and benefits payable was **$2.7 billion** at year-end 2020. The company recognized **$119 million** in favorable prior-year claims development during 2020, primarily due to lower-than-expected utilization by Medicaid members[441](index=441&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk) - As of Dec 31, 2020, the company had **$2.15 billion** in principal debt outstanding, primarily consisting of senior notes due in 2022, 2028, and 2030[453](index=453&type=chunk) - The company's regulated subsidiaries are required to maintain minimum statutory capital. As of Dec 31, 2020, the required minimum was approximately **$1.54 billion** in aggregate, and the company was in excess of this requirement[496](index=496&type=chunk)[282](index=282&type=chunk) [Controls and Procedures](index=93&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2020, excluding recent acquisitions, with an unqualified auditor opinion on internal control effectiveness - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[528](index=528&type=chunk) - Management's assessment of internal control over financial reporting excluded the recently acquired Passport and Magellan Complete Care businesses, which in aggregate constituted **11% of total assets** and **3% of revenues** for the year[532](index=532&type=chunk) - Ernst & Young, LLP, the independent registered public accounting firm, issued an unqualified opinion on the company's internal control over financial reporting as of December 31, 2020[534](index=534&type=chunk)[537](index=537&type=chunk) [Other Information](index=99&type=section&id=Item%209B.%20Other%20Information) There is no information to be reported under this item - None[560](index=560&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=99&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required for this item, including details about directors, executive officers, and corporate governance matters, is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the registrant's Proxy Statement for the 2021 Annual Meeting of Stockholders[561](index=561&type=chunk) [Executive Compensation](index=99&type=section&id=Item%2011.%20Executive%20Compensation) Information required for this item, concerning executive compensation, is incorporated by reference from the "Executive Compensation" section of the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the registrant's Proxy Statement for the 2021 Annual Meeting of Stockholders[562](index=562&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information required for this item, regarding security ownership of certain beneficial owners and management, is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the registrant's Proxy Statement for the 2021 Annual Meeting of Stockholders[563](index=563&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=99&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required for this item, covering related party transactions and director independence, is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the registrant's Proxy Statement for the 2021 Annual Meeting of Stockholders[564](index=564&type=chunk) [Principal Accountant Fees and Services](index=99&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information required for this item, detailing fees paid to the independent registered public accounting firm, is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the registrant's Proxy Statement for the 2021 Annual Meeting of Stockholders[565](index=565&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=100&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed as part of the Form 10-K, with consolidated financial statements included and an index to all exhibits provided - The consolidated financial statements are included in the report. Financial statement schedules are omitted as they are inapplicable or the required information is included elsewhere[567](index=567&type=chunk) - An index to all exhibits filed with the report is provided[568](index=568&type=chunk)[571](index=571&type=chunk)

Molina Healthcare, Inc. (NYSE:MOH) Q4 2020 Results Conference Call February 11, 2021 8:00 AM ET Company Participants Julie Trudell - Senior Vice President of Investor Relations Joseph Zubretsky - President and Chief Executive Officer Thomas Tran - Chief Financial Officer Conference Call Participants Matthew Borsch - BMO Capital Markets Ricky Goldwasser - Morgan Stanley Robert Jones - Goldman Sachs Charles Rhyee - Cowen & Company Gary Taylor - JPMorgan Justin Lake - Wolfe Research Scott Fidel - Stephens Davi ...

Molina Healthcare, Inc. (NYSE:MOH) Q3 2020 Earnings Conference Call October 29, 2020 8:00 AM ET Company Participants Julie Trudell ??? Senior Vice President of Investor Relations Joe Zubretsky ??? President and Chief Executive Officer Tom Tran ??? Chief Financial Officer Conference Call Participants Matthew Borsch ??? BMO Capital Markets Kevin Fischbeck ??? Bank of America Justin Lake ??? Wolfe Research Dave Styblo ??? Jefferies Josh Raskin ??? Nephron Research Sarah James ??? Piper Sandler Scott Fidel ??? ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-31719 200 Oceangate, Suite 100 Long Beach, California 90802 (Address of principal executive offices) (Zip ...

Part I - Financial and Operational Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Molina Healthcare, Inc.'s unaudited consolidated financial statements as of June 30, 2020, show significant year-over-year growth in net income to $276 million for Q2 and $454 million for H1, with total assets increasing to $7.88 billion, reflecting operations across Health Plans and Other segments Consolidated Statements of Income Highlights (Unaudited) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $4,618 million | $4,193 million | $9,167 million | $8,312 million | | **Operating Income** | $424 million | $265 million | $698 million | $545 million | | **Net Income** | $276 million | $196 million | $454 million | $394 million | | **Diluted Net Income per Share** | $4.65 | $3.06 | $7.54 | $6.04 | Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $3,303 million | $2,452 million | | **Total Assets** | $7,876 million | $6,787 million | | **Total Liabilities** | $5,880 million | $4,827 million | | **Total Stockholders' Equity** | $1,996 million | $1,960 million | Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $749 million | $156 million | | **Net cash provided by (used in) investing activities** | $38 million | ($393) million | | **Net cash provided by (used in) financing activities** | $71 million | ($362) million | [Note 1. Organization and Basis of Presentation](index=8&type=section&id=Note%201.%20Organization%20and%20Basis%20of%20Presentation) Molina Healthcare provides managed healthcare services through its Health Plans and Other segments, serving approximately 3.6 million members as of June 30, 2020, while actively pursuing acquisitions like YourCare and Magellan Complete Care, winning new contracts in Kentucky, and exiting the Puerto Rico Medicaid program - The company operates through two segments: Health Plans and Other. The Health Plans segment served approximately **3.6 million members** in 14 states and Puerto Rico as of June 30, 2020[16](index=16&type=chunk)[17](index=17&type=chunk) - Recent strategic activities include: - **New York:** Completed the acquisition of YourCare Health Plan for **$42 million** on July 1, 2020 - **Kentucky:** Selected for a statewide Medicaid contract starting January 1, 2021, and agreed to acquire Passport Health Plan for approximately **$20 million** - **Magellan Complete Care:** Agreed to acquire the MCC line of business for approximately **$820 million**, expected to close by Q1 2021 - **Puerto Rico:** Exiting the Medicaid program upon contract expiration in October 2020[20](index=20&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk) [Note 2. Significant Accounting Policies](index=9&type=section&id=Note%202.%20Significant%20Accounting%20Policies) Key accounting policies include monthly premium revenue recognition with adjustments for MLR and risk, a Q2 2020 accrual of $75 million for COVID-19 related premium refunds, and an estimated $277 million liability for the reinstated 2020 Health Insurer Fee which increases the effective tax rate - Due to reduced medical service demand from COVID-19, the company accrued approximately **$75 million** in Q2 2020 for retroactive premium refunds and related actions to various states[39](index=39&type=chunk) Amounts Due Government Agencies (in millions) | Program | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Medicaid Program | $190 | $187 | | Medicare Program | $78 | $71 | | Marketplace Program | $597 | $406 | | **Total** | **$865** | **$664** | - The federal Health Insurer Fee (HIF) was reinstated for 2020, with an estimated liability of **$277 million**. This fee is not tax-deductible and increases the 2020 effective tax rate. The HIF is repealed for years after 2020[54](index=54&type=chunk) [Note 6. Medical Claims and Benefits Payable](index=18&type=section&id=Note%206.%20Medical%20Claims%20and%20Benefits%20Payable) Total medical claims and benefits payable increased to $1.960 billion at June 30, 2020, primarily due to higher fee-for-service claims IBNP, with favorable prior-year reserve development of $58 million in H1 2020, less than the $232 million in H1 2019 Medical Claims and Benefits Payable (in millions) | Category | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Fee-for-service claims IBNP | $1,432 | $1,406 | | Pharmacy payable | $132 | $126 | | Capitation payable | $74 | $55 | | Other | $322 | $267 | | **Total** | **$1,960** | **$1,854** | - Estimates for prior-year medical claims payable developed favorably by **$58 million** in the first six months of 2020. This was a smaller favorable development compared to the **$232 million** seen in the first six months of 2019[82](index=82&type=chunk) [Note 7. Debt](index=19&type=section&id=Note%207.%20Debt) Molina significantly restructured its debt in Q2 2020 by issuing $800 million in 4.375% Senior Notes to repay a $600 million term loan and expanding its revolving credit facility to $1.0 billion, resulting in total long-term debt of $1.812 billion as of June 30, 2020 - In June 2020, the company issued **$800 million** of 4.375% Notes due 2028. Proceeds were used to repay a **$600 million** term loan and for general corporate purposes[92](index=92&type=chunk) - A new credit agreement was established in June 2020, increasing the revolving credit facility to **$1.0 billion** from **$500 million** and terminating the previous term loan facility[85](index=85&type=chunk)[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported strong Q2 2020 results with $4.65 net income per diluted share, driven by an 8.0% premium revenue increase and lower MCR, with COVID-19 having a net positive impact on earnings, while the company strengthened its balance sheet and pursued strategic acquisitions and contract wins [Second Quarter 2020 Highlights](index=26&type=section&id=SECOND%20QUARTER%202020%20HIGHLIGHTS) Q2 2020 saw strong financial performance with $276 million net income ($4.65 per diluted share), supported by an 8.0% premium revenue increase and a lower consolidated MCR of 82.3%, with COVID-19 having a net positive impact on earnings estimated between $65 million and $100 million Q2 2020 Key Performance Metrics | Metric | Q2 2020 | Change vs. Q2 2019 | | :--- | :--- | :--- | | **Premium Revenue** | $4.4 billion | +8.0% | | **Consolidated MCR** | 82.3% | -330 bps | | **G&A Ratio** | 7.5% | -30 bps | | **After-tax Margin** | 6.0% | +130 bps | - The combined effects of COVID-19 are estimated to have increased net income by approximately **$65 million to $100 million**, or **$1.10 to $1.65 per diluted share**[123](index=123&type=chunk) [Health Plans Segment Analysis](index=29&type=section&id=HEALTH%20PLANS) The Health Plans segment, serving 3.6 million members, experienced a Medical Margin increase to $774 million in Q2 2020 due to lower MCR from reduced healthcare utilization during COVID-19, partially offset by premium refunds, while navigating uncertainties from the pandemic, the ACA Supreme Court case, and contract re-procurements - Total membership grew to **3.56 million** as of June 30, 2020, an increase of **151,000** in the quarter, primarily in the Medicaid program due to the suspension of member redeterminations during the pandemic[155](index=155&type=chunk)[177](index=177&type=chunk) Medical Margin by Program (in millions) | Program | Q2 2020 Medical Margin | Q2 2019 Medical Margin | Change | | :--- | :--- | :--- | :--- | | Medicaid | $553 | $364 | +52% | | Medicare | $125 | $84 | +49% | | Marketplace | $96 | $135 | -29% | | **Total** | **$774** | **$583** | **+33%** | - The company faces significant uncertainty from the pending Supreme Court decision on the ACA. As of June 30, 2020, ACA-related programs (Medicaid Expansion and Marketplace) accounted for nearly **1 million members** and **$2.4 billion** in revenue for the first half of the year[161](index=161&type=chunk) - The company is actively pursuing growth through acquisitions, including the pending **$820 million** purchase of Magellan Complete Care and the **$20 million** purchase of Passport Health Plan in Kentucky[164](index=164&type=chunk)[166](index=166&type=chunk) [Liquidity and Financial Condition](index=36&type=section&id=LIQUIDITY%20AND%20FINANCIAL%20CONDITION) Molina's financial condition strengthened with parent company cash and investments increasing to $1.17 billion at June 30, 2020, driven by new debt issuance and subsidiary dividends, offset by loan repayment and stock repurchases, maintaining sufficient liquidity for future acquisitions like Magellan Complete Care and Passport Health Plan - Cash, cash equivalents and investments at the parent company increased to **$1,166 million** as of June 30, 2020, from **$997 million** at December 31, 2019[202](index=202&type=chunk) - Net cash from operating activities was strong at **$749 million** for the first six months of 2020, a significant increase from **$156 million** in the prior-year period, due to better operating results and timing of government payments[210](index=210&type=chunk) - The company has available borrowing capacity of approximately **$1 billion** under its new revolving credit facility as of June 30, 2020[225](index=225&type=chunk) - Future uses of liquidity include funding the acquisitions of Magellan Complete Care (approx. **$820 million**) and Passport Health Plan (approx. **$20 million**), both of which will be funded with cash on hand[229](index=229&type=chunk)[230](index=230&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk, where a hypothetical 1% increase in market rates as of June 30, 2020, would decrease the fair value of its fixed-income investments by approximately $47 million, while declining rates would reduce future investment income - The company's main market risk is interest rate risk. A hypothetical and immediate **1% increase** in market interest rates would decrease the fair value of its fixed income investments by approximately **$47 million** as of June 30, 2020[235](index=235&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2020, the company's management, including the CEO and CFO, concluded that its disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period[237](index=237&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the second quarter of 2020[238](index=238&type=chunk) Part II - Other Information [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, accruing liabilities for probable and estimable losses, though the uncertain outcome of pending matters could negatively impact its financial position - The company is involved in legal actions in the ordinary course of business and has accrued for losses that are probable and estimable, though outcomes remain uncertain[239](index=239&type=chunk)[111](index=111&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant business risks, particularly from the unforeseeable full impact of the COVID-19 pandemic on health costs, state premium actions, and cybersecurity, alongside risks associated with its October 2020 exit from Puerto Rico's Medicaid program - The full impact of the COVID-19 pandemic on business, financial condition, and results of operations cannot be reasonably foreseen. Key risks include increased medical costs, retroactive state rate actions, potential disruption in state payments, and heightened cybersecurity threats[240](index=240&type=chunk)[241](index=241&type=chunk) - The company's exit from Puerto Rico's Medicaid program in October 2020 presents a risk. A failure to achieve an orderly transition could negatively impact financial results[241](index=241&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2020, the company did not repurchase shares under a publicly announced plan, which concluded in March, but withheld 2,568 common shares at an average price of $176.52 to satisfy employee income tax obligations for vested equity awards Issuer Purchases of Equity Securities (Q2 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30 | 136 | $133.48 | | May 1 - May 31 | 2,024 | $180.01 | | June 1 - June 30 | 408 | $173.58 | | **Total** | **2,568** | **$176.52** | - All shares purchased during the quarter were withheld to settle employee income tax obligations for vested awards under the 2019 Equity Incentive Plan. No shares were purchased under a publicly announced buyback program[242](index=242&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including agreements for the Magellan acquisition, the new credit agreement, and senior notes indenture, along with required CEO and CFO certifications and XBRL data files