MOH Molina Healthcare Inc

Molina Healthcare, Inc. (NYSE: MOH):

• Net loss of $4.59 per diluted share for the quarter.
• Medical care ratio excluding Marketplace declines to 88.8% from 90.9% in the third quarter of 2017.
• General and administrative expense ratio declines to 7.4% from 7.6% in the third quarter of 2017.
• Fourth quarter results include $356 million of impairment losses, restructuring and separation costs, and loss on debt extinguishment.
• Fourth quarter results include $53 million increased medical care costs for termination of cost sharing reduction (CSR) subsidy payments effective October 1, 2017, and other Marketplace reserve adjustments.
• 2018 preliminary guidance of $3.00 - $3.50 net income per diluted share and $3.23 - $3.73 adjusted net income per diluted share. Preliminary guidance has been developed with conservative views of medical cost trends, Marketplace pricing adequacy, and the ultimate outcome of numerous profit improvement initiatives. Preliminary guidance will be updated once the Company has the benefit of first quarter earnings and further insight into the execution of these profit improvement initiatives.

Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the fourth quarter and year ended December 31, 2017, and provided its preliminary guidance for fiscal year 2018.

“Our fourth quarter results are emblematic of the significant transition Molina is undertaking,” said Joe Zubretsky, president and CEO. “The disappointment of contract losses and related goodwill charges, continued restructuring costs, and catch up adjustments to unacceptable Marketplace results are legacies of the past. Looking forward, the core business results showed improvement quarter over quarter, and we took steps to strengthen the quality of the balance sheet, all of which serve as a solid platform to achieve our margin recovery and sustainability plan we outlined for investors last month. Medical cost control, administrative cost discipline, and capital strength remain at the fore of our plan.”

Fourth Quarter 2017 and Full Year Highlights

    Three Months Ended December 31,     Year Ended December 31, 2017     2016 2017     2016 (Dollar amounts in millions, except per-share amounts) Premium revenue $ 4,689 $ 4,190 $ 18,854 $ 16,445 Operating (loss) income $ (269 ) $ (6 ) $ (555 ) $ 306 Net (loss) income $ (262 ) $ (47 ) $ (512 ) $ 52 Net (loss) income per diluted share $ (4.59 ) $ (0.85 ) $ (9.07 ) $ 0.92   Diluted weighted average shares outstanding 57.1 55.6 56.5 56.3   Operating Statistics: Medical care ratio (1) 90.7 % 91.7 % 90.6 % 89.8 % G&A ratio (2) 7.4 % 7.9 % 8.0 % 7.8 % Premium tax ratio (1) 2.2 % 2.9 % 2.3 % 2.8 % Effective income tax (benefit) expense rate (17.2 )% 54.5 % (16.4 )% 74.8 % Net (loss) profit margin (2) (5.3 )% (1.0 )% (2.6 )% 0.3 % __________________   (1)   Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium tax expenses as a percentage of premium revenue plus premium tax revenue. (2) G&A ratio represents general and administrative expenses as a percentage of total revenue. Net (loss) profit margin represents net (loss) income as a percentage of total revenue.  

Summary of Significant Items Affecting 2017 Financial Results

    Three Months Ended December 31,     Year Ended December 31, (In millions, except per diluted share amounts) Amount    

Per DilutedShare (1)

Amount    

Per DilutedShare (1)

Termination of CSR subsidy payments for the fourth quarter of 2017 $ 73 $ 0.81 $ 73 $ 0.82 Marketplace adjustments for CSR subsidies, risk adjustment and medical loss ratio (MLR) floor liabilities for January through September 2017 dates of service 50 0.55 N/A N/A Marketplace adjustments related to risk adjustment, CSR subsidies, and other items for 2016 dates of service — — 47 0.52 Change in Marketplace premium deficiency reserve for 2017 dates of service (70 ) (0.77 ) (30 ) (0.33 ) Impairment losses 269 3.22 470 6.01 Restructuring and separation costs 73 0.81 234 2.86 Loss on debt extinguishment 14 0.24 14 0.24 Fee received for terminated Medicare acquisition   —     —     (75 )   (0.84 ) $ 409   $ 4.86   $ 733   $ 9.28   __________________   (1)   Amounts shown are before considering revaluation of related deferred tax assets as a result of the Tax Cuts and Jobs Act of 2017, as applicable, and which is described further below. Except for certain items that are not deductible for tax purposes, per diluted share amounts are generally calculated at a statutory income tax rate of 37%, which is in excess of the effective tax rate recorded in our consolidated statements of operations.  

Fourth Quarter 2017 Compared With Third Quarter 2017

Developments in our business during 2017 limit the value of comparisons to 2016 performance. The Company believes that the comparison of 2017 fourth quarter performance with 2017 third quarter performance provides the most meaningful context for fourth quarter results.

Loss before income tax benefit for the fourth quarter of 2017 was $316 million, compared with a loss before income tax benefit of $113 million for the third quarter of 2017. Net loss per diluted share was $4.59 for the fourth quarter of 2017 compared with net loss per diluted share of $1.70 reported for the third quarter of 2017.

Despite the loss reported for the quarter, the performance of core operations and overall administrative cost efficiency improved in the fourth quarter when compared with the third quarter of 2017.

Marketplace performance deteriorated due to normal seasonality and other matters discussed below. The Company has increased premium rates and reduced its Marketplace presence effective January 1, 2018 as part of its overall program to improve profitability.

Among the key developments affecting fourth quarter 2017 results were:

• The medical care ratio for the Company’s Medicaid and Medicare programs combined (“core operations”) declined to 88.8% in the fourth quarter of 2017, from 90.9% in the third quarter of 2017.
• The general and administrative expense ratio declined to 7.4% in the fourth quarter of 2017 from 7.6% in the third quarter of 2017.
• The decision by the federal government to cease payment of Marketplace CSR subsidies in the fourth quarter of 2017 increased loss before income tax benefit for the quarter by approximately $73 million ($0.81 per diluted share). Despite its decision to record a charge in the fourth quarter for this item, the Company believes that it is legally entitled to these federal payments and will pursue all available means to collect them.
• Increases to Marketplace risk transfer and CSR liabilities related to the first three quarters of 2017 increased loss before income tax benefit by approximately $50 million ($0.55 per diluted share) in the fourth quarter.
• The reduction of the Marketplace-related premium deficiency reserve to zero as of December 31, 2017 reduced loss before income tax benefit by $70 million ($0.77 per diluted share) in the fourth quarter.
• Non-cash goodwill and intangible asset impairment charges of $269 million ($3.22 per diluted share) were incurred at the Florida, Illinois, and New Mexico health plans in the fourth quarter.
• Approximately $73 million ($0.81 per diluted share) of restructuring costs were recognized in the fourth quarter.
• Approximately $14 million ($0.24 per diluted share) of non-cash costs were recognized in the fourth quarter in connection with the issuance of our common shares in exchange for $141 million face value of our 1.625% convertible senior notes.

Income Tax (Benefit) Expense

The revaluation of deferred tax assets in connection with the Tax Cuts and Jobs Act of 2017 resulted in $54 million additional income tax expense in the fourth quarter and year ended December 31, 2017 ($0.94 per diluted share and $0.95 per diluted share, respectively). In addition, the effective tax benefit for 2017 is less than the statutory tax benefit due to the relatively large amount of reported expenses that are not deductible for tax purposes, primarily relating to goodwill impairment losses and separation costs.

2018 Preliminary Guidance

The Company has offered guidance on a preliminary basis because of the inherent uncertainty around achievement and the timing of its numerous profit improvement initiatives. While those initiatives extend across the various dimensions of managed care fundamentals, many are in the early stages of development and implementation.

Therefore, the Company’s guidance should be viewed as a preliminary estimate of what it expects to achieve until the profit improvement initiatives manifest themselves in the earnings stream. Once it has the benefit of first quarter earnings and further insight into the execution of the profit improvement initiatives, the Company will be able to provide a firmer view of 2018 guidance.

To provide for an appropriate amount of execution risk, the Company’s preliminary guidance has been developed with appropriately conservative views of:

• Medical cost baseline in 2017;
• Medical cost trend for 2018;
• Potential rate increases and retained amounts of revenue at risk; and
• The turnaround of the Marketplace business until the achievement of the margins implicit in 2018 pricing is observed.

The following table summarizes 2018 Preliminary Guidance (1):

Premium revenue         ~ $17.5B Service revenue ~ $525M Premium tax revenue ~ $410M Health insurer fees reimbursed ~ $295M Investment income and other revenue         ~ $85M Total revenue ~ $18.8B Medical care costs ~ $15.6B Medical care ratio (2) ~ 89% Cost of service revenue ~ $480M General and administrative expenses ~ $1.4B G&A ratio (3) ~ 7.3% Premium tax expenses ~ $410M Health insurer fees ~ $310M Depreciation and amortization ~ $115M Interest expense and other income ~ $125M Income before income taxes $355M - $400M Net income $202M - $236M EBITDA (4) $632M - $676M Effective tax rate 41% - 43% Net profit margin (3) 1.1% - 1.3% Diluted weighted average shares ~ 67.3M Net income per share $3.00 - $3.50 Adjusted net income per share (4) $3.23 - $3.73 End-of-year Marketplace membership 303,000 End-of-year Non-Marketplace membership 3,738,000 __________________   (1)   All amounts are estimates; actual results may differ materially. See our risk factors as discussed in our Form 10-K and other filings and the statements below in this press release after the heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.” (2) Medical care ratio represents medical care costs as a percentage of premium revenue. (3) G&A expense ratio represents general and administrative expenses as a percentage of total revenue. Net profit margin represents net income as a percentage of total revenue. (4) See reconciliation of non-GAAP financial measures at the end of this release.  

Conference Call

Management will host a conference call and webcast to discuss Molina Healthcare’s fourth quarter and year-end 2017 results at 8:30 a.m. Eastern time on Tuesday, February 13, 2018. The number to call for the interactive teleconference is (888) 317-6003 and entering confirmation number 5278774. A telephonic replay of the conference call will be available through Tuesday, February 20, 2018, by dialing (877) 344-7529 and entering confirmation number 10116226. A live audio broadcast of Molina Healthcare’s conference call will be available on our website, 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 managed health care services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through our health plans operating in 13 states across the nation and in the Commonwealth of Puerto Rico, Molina serves approximately 4.5 million members. For more information about Molina Healthcare, please visit our website at molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding our 2018 preliminary guidance, as well as our plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the following:

• the success of our profit improvement and maintenance initiatives, including the timing and amounts of the benefits realized, and administrative savings achieved;
• the numerous political and market-based uncertainties associated with the Affordable Care Act (the “ACA”) or “Obamacare;”
• the market dynamics surrounding the ACA Marketplaces, including but not limited to uncertainties associated with risk transfer requirements, the potential for disproportionate enrollment of higher acuity members, the discontinuation of premium tax credits, the adequacy of agreed rates, and potential disruption associated with market withdrawal from Utah, Wisconsin, or other states;
• subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment/risk transfer, risk corridors, and reinsurance;
• effective management of our medical costs;
• our ability to predict with a reasonable degree of accuracy utilization rates, including utilization rates associated with seasonal flu patterns or other newly emergent diseases;
• significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
• the full reimbursement of the ACA health insurer fee, or HIF;
• the success of our efforts to retain existing government contracts, including those in Florida, New Mexico, Puerto Rico, Texas, and Washington, including the success of any protest filings;
• our ability to manage our operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of our care management initiatives;
• our ability to consummate and realize benefits from acquisitions or divestitures;
• our receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
• our ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
• the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit sharing arrangements, and risk adjustment provisions and requirements;
• our estimates of amounts owed for such cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions;
• the Medicaid expansion cost corridors in California, New Mexico, and Washington, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
• the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and our ability to recognize revenue amounts associated therewith;
• cyber-attacks or other privacy or data security incidents resulting in an inadvertent unauthorized disclosure of protected health information;
• the success of our health plan in Puerto Rico, including the resolution of the Puerto Rico debt crisis, payment of all amounts due under our Medicaid contract, the effect of the PROMESA law, the impact of Hurricane Maria and our efforts to better manage the health care costs of our Puerto Rico health plan;
• the success and renewal of our duals demonstration programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas;
• the accurate estimation of incurred but not reported or paid medical costs across our health plans;
• efforts by states to recoup previously paid and recognized premium amounts;
• complications, member confusion, or enrollment backlogs related to the annual renewal of Medicaid coverage;
• government audits and reviews, or potential investigations, and any fine, sanction, enrollment freeze, monitoring program, or premium recovery that may result therefrom;
• changes with respect to our provider contracts and the loss of providers;
• 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 resolution of litigation, arbitration, or administrative proceedings;
• the relatively small number of states in which we operate health plans, including the greater scale and revenues of our California, Ohio, Texas, and Washington health plans;
• 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;
• our failure to comply with the financial or other covenants in our credit agreement or the indentures governing our outstanding notes;
• the sufficiency of our funds on hand to pay the amounts due upon conversion or maturity of our outstanding notes;
• the failure of a state in which we operate to renew its federal Medicaid waiver;
• changes generally affecting the managed care or Medicaid management information systems industries;
• increases in government surcharges, taxes, and assessments, including but not limited to the deductibility of certain compensation costs;
• newly emergent viruses or widespread epidemics, public catastrophes or terrorist attacks, and associated public alarm;
• increasing competition and consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in our periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of our website or on the SEC’s website at sec.gov. Given these risks and uncertainties, we can give no assurances that our forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by our 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 our judgment as of February 12, 2018, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in our expectations.

 

MOLINA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

      Three Months Ended December 31,     Year Ended December 31, 2017     2016 2017     2016 (Dollar amounts in millions, except per-share amounts) Revenue: Premium revenue (1) $ 4,689 $ 4,190 $ 18,854 $ 16,445 Service revenue 131 131 521 539 Premium tax revenue 107 123 438 468 Health insurer fees reimbursed (1) — 81 — 292 Investment income and other revenue   22     9     70     38   Total revenue   4,949     4,534     19,883     17,782   Operating expenses: Medical care costs 4,251 3,844 17,073 14,774 Cost of service revenue 123 123 492 485 General and administrative expenses 367 359 1,594 1,393 Premium tax expenses 107 123 438 468 Health insurer fees — 54 — 217 Depreciation and amortization 28 37 137 139 Impairment losses 269 — 470 — Restructuring and separation costs   73     —     234     —   Total operating expenses   5,218     4,540     20,438     17,476   Operating (loss) income   (269 )   (6 )   (555 )   306   Other expenses, net: Interest expense 33 25 118 101 Other expense (income), net   14     —     (61 )   —   Total other expenses, net   47     25     57     101  

(Loss) income before income tax (benefit) expense

(316 ) (31 ) (612 ) 205 Income tax (benefit) expense   (54 )   16     (100 )   153   Net (loss) income $ (262 ) $ (47 ) $ (512 ) $ 52     Net (loss) income per diluted share $ (4.59 ) $ (0.85 ) $ (9.07 ) $ 0.92     Diluted weighted average shares outstanding   57.1     55.6     56.5     56.3     Operating Statistics: Medical care ratio 90.7 % 91.7 % 90.6 % 89.8 % G&A ratio 7.4 % 7.9 % 8.0 % 7.8 % Premium tax ratio 2.2 % 2.9 % 2.3 % 2.8 % Effective income tax (benefit) expense rate (17.2 )% 54.5 % (16.4 )% 74.8 % Net (loss) profit margin (5.3 )% (1.0 )% (2.6 )% 0.3 % __________________   (1)   The Centers for Medicare and Medicaid Services (CMS) incorporates the Health Insurer Fee in our Medicare and Marketplace premium rates. We have therefore reclassified such amounts to premium revenue, from health insurer fees reimbursed, for all applicable periods presented.    

MOLINA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

      December 31, 2017     2016

(In millions, except per-share data)

ASSETS Current assets: Cash and cash equivalents $ 3,186 $ 2,819 Investments 2,524 1,758 Restricted investments 169 — Receivables 871 974 Income taxes refundable 54 39 Prepaid expenses and other current assets 185 131 Derivative asset   522     267   Total current assets 7,511 5,988 Property, equipment, and capitalized software, net 342 454 Deferred contract costs 101 86 Intangible assets, net 69 140 Goodwill 186 620 Restricted investments 119 110 Deferred income taxes 103 10 Other assets   40     41   $ 8,471   $ 7,449   LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Medical claims and benefits payable $ 2,192 $ 1,929 Amounts due government agencies 1,542 1,202 Accounts payable and accrued liabilities 366 385 Deferred revenue 282 315 Current portion of long-term debt 653 472 Derivative liability   522     267   Total current liabilities 5,557 4,570 Long-term debt 1,318 975 Lease financing obligations 198 198 Deferred income taxes — 15 Other long-term liabilities   61     42   Total liabilities   7,134     5,800   Stockholders’ equity: Common stock, $0.001 par value; 150 shares authorized; outstanding: 60 at December 31, 2017 and 57 shares at December 31, 2016 — — Preferred stock, $0.001 par value; 20 shares authorized, no shares issued and outstanding — — Additional paid-in capital 1,044 841 Accumulated other comprehensive loss (5 ) (2 ) Retained earnings   298     810   Total stockholders’ equity   1,337     1,649   $ 8,471   $ 7,449      

MOLINA HEALTHCARE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

      Three Months Ended December 31,     Year Ended December 31, 2017     2016 2017     2016 (In millions) Operating activities: Net (loss) income $ (262 ) $ (47 ) $ (512 ) $ 52 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation and amortization 39 47 178 182 Impairment losses 269 — 470 — Deferred income taxes (26 ) 2 (94 ) 22 Share-based compensation, including accelerated share-based compensation 8 2 46 26 Non-cash restructuring charges 11 — 60 — Amortization of convertible senior notes and lease financing obligations 8 8 32 31 Loss on debt extinguishment 14 — 14 — Other, net 8 2 21 16 Changes in operating assets and liabilities: Receivables 131 79 103 (348 ) Prepaid expenses and other assets (3 ) 47 (56 ) (69 ) Medical claims and benefits payable (286 ) 58 263 226 Amounts due government agencies 219 (30 ) 341 473 Accounts payable and accrued liabilities (102 ) (5 ) (12 ) (4 ) Deferred revenue (187 ) (65 ) (34 ) 92 Income taxes   6     (58 )   (16 )   (26 ) Net cash (used in) provided by operating activities   (153 )   40     804     673   Investing activities: Purchases of investments (822 ) (485 ) (2,718 ) (1,929 ) Proceeds from sales and maturities of investments 233 454 1,771 1,966 Purchases of property, equipment, and capitalized software (1 ) (33 ) (86 ) (176 ) (Increase) decrease in restricted investments held-to-maturity (2 ) — (12 ) 4 Net cash paid in business combinations — — — (48 ) Other, net   (7 )   (7 )   (28 )   (19 ) Net cash used in investing activities   (599 )   (71 )   (1,073 )   (202 ) Financing activities: Proceeds from senior notes offering, net of issuance costs — — 325 — Proceeds from borrowings under credit facility — — 300 — Proceeds from employee stock plans 8 8 19 18 Cash paid for financing transaction fees (7 ) — (7 ) — Other, net   3     —     (1 )   1   Net cash provided by financing activities   4     8     636     19   Net (decrease) increase in cash and cash equivalents (748 ) (23 ) 367 490 Cash and cash equivalents at beginning of period   3,934     2,842     2,819     2,329   Cash and cash equivalents at end of period $ 3,186   $ 2,819   $ 3,186   $ 2,819      

MOLINA HEALTHCARE, INC.

UNAUDITED HEALTH PLANS SEGMENT MEMBERSHIP

      As of December 31, 2017     2016     2015 Ending Membership by Program: Temporary Assistance for Needy Families (TANF) and Children’s Health Insurance Program (CHIP) 2,457,000 2,536,000 2,312,000 Marketplace 815,000 526,000 205,000 Medicaid Expansion 668,000 673,000 557,000 Aged, Blind or Disabled (ABD) 412,000 396,000 366,000 Medicare-Medicaid Plan (MMP) - Integrated 57,000 51,000 51,000 Medicare Special Needs Plans 44,000 45,000 42,000 4,453,000 4,227,000 3,533,000 Ending Membership by Health Plan: California 746,000 683,000 620,000 Florida 625,000 553,000 440,000 Illinois 165,000 195,000 98,000 Michigan 398,000 391,000 328,000 New Mexico 253,000 254,000 231,000 New York 32,000 35,000 — Ohio 327,000 332,000 327,000 Puerto Rico 314,000 330,000 348,000 South Carolina 116,000 109,000 99,000 Texas 430,000 337,000 260,000 Utah 152,000 146,000 102,000 Washington 777,000 736,000 582,000 Wisconsin 118,000 126,000 98,000 4,453,000 4,227,000 3,533,000    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA

(In millions, except percentages and per-member per-month amounts)

      Three Months Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM TANF and CHIP 7.4 $ 1,369 $ 183.95 $ 1,250 $ 168.00 91.3 % $ 119 Medicaid Expansion 2.0 774 386.22 629 313.89 81.3 145 ABD 1.3   1,366 1,100.22   1,229 989.56 89.9   137   Total Medicaid 10.7   3,509 328.28   3,108 290.76 88.6   401   MMP 0.2 363 2,142.07 341 2,006.07 93.7 22 Medicare 0.1   152 1,155.15   124 948.16 82.1   28   Total Medicare 0.3   515 1,710.94   465 1,543.93 90.2   50   Excluding Marketplace 11.0 4,024 366.18 3,573 325.12 88.8 451 Marketplace 2.4   665 268.39   678 273.92 102.1   (13 ) 13.4 $ 4,689 $ 348.20 $ 4,251 $ 315.70 90.7 % $ 438       Three Months Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM TANF and CHIP 7.7 $ 1,404 $ 183.96 $ 1,304 $ 170.83 92.9 % $ 100 Medicaid Expansion 2.0 768 383.19 625 311.57 81.3 143 ABD 1.2   1,200 1,003.09   1,104 921.69 91.9   96   Total Medicaid 10.9   3,372 311.31   3,033 279.82 89.9   339   MMP 0.1 319 2,076.73 274 1,785.00 86.0 45 Medicare 0.1   150 1,114.69   130 966.81 86.7   20   Total Medicare 0.2   469 1,626.50   404 1,402.09 86.2   65   Excluding Marketplace 11.1 3,841 345.40 3,437 308.91 89.4 404 Marketplace 1.6   349 221.05   407 258.71 117.0   (58 ) 12.7 $ 4,190 $ 329.96 $ 3,844 $ 302.68 91.7 % $ 346   __________________   (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.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA

(In millions, except percentages and per-member per-month amounts)

      Year Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM TANF and CHIP 30.2 $ 5,554 $ 183.75 $ 5,111 $ 169.09 92.0 % $ 443 Medicaid Expansion 8.1 3,150 388.42 2,674 329.73 84.9 476 ABD 4.9   5,135 1,050.41   4,863 994.80 94.7   272 Total Medicaid 43.2   13,839 320.16   12,648 292.61 91.4   1,191 MMP 0.7 1,446 2,177.72 1,317 1,982.36 91.0 129 Medicare 0.5   601 1,143.63   493 939.67 82.2   108 Total Medicare 1.2   2,047 1,722.47   1,810 1,523.15 88.4   237 Excluding Marketplace 44.4 15,886 357.68 14,458 325.53 91.0 1,428 Marketplace 10.8   2,968 274.47   2,615 241.84 88.1   353 55.2 $ 18,854 $ 341.39 $ 17,073 $ 309.14 90.6 % $ 1,781     Year Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM TANF and CHIP 30.2 $ 5,403 $ 179.21 $ 4,950 $ 164.18 91.6 % $ 453 Medicaid Expansion 7.8 2,952 378.58 2,475 317.37 83.8 477 ABD 4.7   4,666 991.24   4,277 908.39 91.6   389 Total Medicaid 42.7   13,021 305.28   11,702 274.33 89.9   1,319 MMP 0.6 1,321 2,160.94 1,141 1,866.93 86.4 180 Medicare 0.5   558 1,063.44   515 981.36 92.3   43 Total Medicare 1.1   1,879 1,653.73   1,656 1,457.67 88.1   223 Excluding Marketplace 43.8 14,900 340.28 13,358 305.03 89.6 1,542 Marketplace 6.7   1,545 231.38   1,416 212.17 91.7   129 50.5 $ 16,445 $ 325.87 $ 14,774 $ 292.75 89.8 % $ 1,671 __________________   (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.      

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—NON-MARKETPLACE

(In millions, except percentages and per-member per-month amounts)

  Three Months Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM California 1.8 $ 621 $ 335.46 $ 531 $ 286.70 85.5 % $ 90 Florida 1.1 390 358.34 349 320.47 89.4 41 Illinois 0.5 146 294.68 146 295.25 100.2 — Michigan 1.1 383 339.23 325 287.60 84.8 58 New Mexico 0.7 325 465.52 279 400.84 86.1 46 New York (3) 0.1 46 465.75 42 432.25 92.8 4 Ohio 1.0 532 555.50 460 480.48 86.5 72 Puerto Rico 0.9 179 187.49 178 187.68 100.1 1 South Carolina 0.4 116 337.14 111 320.47 95.1 5 Texas 0.7 558 796.86 510 728.72 91.4 48 Utah 0.3 88 319.80 71 259.95 81.3 17 Washington 2.2 610 275.76 540 243.70 88.4 70 Wisconsin 0.2 30 162.36 27 139.38 85.9 3 Other (4) —   — —   4 — —   (4 ) 11.0 $ 4,024 $ 366.18 $ 3,573 $ 325.12 88.8 % $ 451       Three Months Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM California 1.9 $ 639 $ 342.41 $ 489 $ 261.60 76.4 % $ 150 Florida 1.1 374 348.59 335 312.59 89.7 39 Illinois 0.5 136 234.17 154 265.84 113.5 (18 ) Michigan 1.1 376 323.24 326 279.55 86.5 50 New Mexico 0.7 270 380.36 289 406.50 106.9 (19 ) New York (3) 0.1 50 460.08 49 451.09 98.0 1 Ohio 1.0 479 489.73 432 442.31 90.3 47 Puerto Rico 1.0 191 193.54 178 179.02 92.5 13 South Carolina 0.4 105 318.31 88 267.65 84.1 17 Texas 0.7 528 738.53 460 643.05 87.1 68 Utah 0.2 87 302.48 75 263.94 87.3 12 Washington 2.1 568 268.88 505 238.99 88.9 63 Wisconsin 0.3 34 166.56 28 131.60 79.0 6 Other (4) —   4 —   29 — —   (25 ) 11.1 $ 3,841 $ 345.40 $ 3,437 $ 308.91 89.4 % $ 404   __________________   (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 New York health plan was acquired on August 1, 2016. (4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—NON-MARKETPLACE

(In millions, except percentages and per-member per-month amounts)

      Year Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM California 7.4 $ 2,392 $ 321.46 $ 2,117 $ 284.53 88.5 % $ 275 Florida 4.3 1,522 350.15 1,461 335.97 96.0 61 Illinois 2.1 593 286.69 638 308.41 107.6 (45 ) Michigan 4.6 1,545 334.22 1,360 294.15 88.0 185 New Mexico 2.9 1,258 439.95 1,166 407.94 92.7 92 New York (3) 0.4 181 449.85 170 424.17 94.3 11 Ohio 3.9 2,130 544.98 1,894 484.66 88.9 236 Puerto Rico 3.8 732 190.13 691 179.65 94.5 41 South Carolina 1.4 445 328.41 412 304.04 92.6 33 Texas 2.8 2,150 769.82 1,978 708.20 92.0 172 Utah 1.1 355 316.44 290 258.96 81.8 65 Washington 8.9 2,445 275.64 2,143 241.55 87.6 302 Wisconsin 0.8 131 168.64 107 136.84 81.1 24 Other (4) —   7 —   31 — —   (24 ) 44.4 $ 15,886 $ 357.68 $ 14,458 $ 325.53 91.0 % $ 1,428       Year Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM California 7.4 $ 2,247 $ 304.83 $ 1,900 $ 257.72 84.5 % $ 347 Florida 4.1 1,348 329.58 1,227 299.94 91.0 121 Illinois 2.3 603 258.72 568 243.71 94.2 35 Michigan 4.7 1,517 324.18 1,339 286.00 88.2 178 New Mexico 2.8 1,245 440.63 1,162 411.30 93.3 83 New York (3) 0.2 82 446.72 79 431.73 96.6 3 Ohio 3.9 1,927 490.71 1,718 437.56 89.2 209 Puerto Rico 4.0 726 180.65 694 172.57 95.5 32 South Carolina 1.3 378 296.58 320 250.97 84.6 58 Texas 2.9 2,182 744.65 1,926 657.38 88.3 256 Utah 1.1 344 297.68 296 256.31 86.1 48 Washington 8.1 2,146 263.50 1,936 237.66 90.2 210 Wisconsin 1.0 142 165.95 106 123.44 74.4 36 Other (4) —   13 —   87 — —   (74 ) 43.8 $ 14,900 $ 340.28 $ 13,358 $ 305.03 89.6 % $ 1,542   __________________   (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 New York health plan was acquired on August 1, 2016. (4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—MARKETPLACE

(In millions, except percentages and per-member per-month amounts)

      Three Months Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM California 0.5 $ 68 $ 163.41 $ 75 $ 181.70 111.2 % $ (7 ) Florida 0.8 225 283.63 251 316.67 111.6 (26 ) Michigan 0.1 10 153.52 11 166.49 108.5 (1 ) New Mexico 0.1 28 387.65 22 291.42 75.2 6 Ohio — 18 355.81 17 317.65 89.3 1 Texas 0.5 146 242.38 166 276.16 113.9 (20 ) Utah 0.2 45 238.32 43 227.77 95.6 2 Washington 0.1 40 321.91 28 233.26 72.5 12 Wisconsin 0.1 85 505.67 67 401.16 79.3 18 Other (3) —   — —   (2 ) — —   2   2.4 $ 665 $ 268.39 $ 678   $ 273.92 102.1 % $ (13 )     Three Months Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM California 0.2 $ 26 $ 127.99 $ 55 $ 282.83 221.0 % $ (29 ) Florida 0.6 108 183.99 129 219.31 119.2 (21 ) Michigan — 3 285.50 1 204.16 71.6 2 New Mexico — 18 353.63 15 294.95 83.3 3 Ohio — 11 420.48 9 325.28 77.2 2 Texas 0.3 76 245.20 51 164.54 67.1 25 Utah 0.3 27 181.65 36 232.38 127.9 (9 ) Washington 0.1 18 239.89 31 424.83 177.0 (13 ) Wisconsin 0.1 62 366.22 82 479.24 130.9 (20 ) Other (3) —   — —   (2 ) — —   2   1.6 $ 349 $ 221.05 $ 407   $ 258.71 117.0 % $ (58 ) __________________   (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) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—MARKETPLACE

(In millions, except percentages and per-member per-month amounts)

      Year Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM California 1.7 $ 309 $ 185.88 $ 231 $ 138.61 74.6 % $ 78 Florida 3.6 1,046 293.35 1,009 283.17 96.5 37 Michigan 0.3 51 180.26 38 135.64 75.2 13 New Mexico 0.3 110 349.50 84 264.14 75.6 26 Ohio 0.2 86 363.24 81 340.44 93.7 5 Texas 2.6 663 250.08 517 195.20 78.1 146 Utah 0.9 180 215.93 178 213.33 98.8 2 Washington 0.5 163 317.39 156 304.74 96.0 7 Wisconsin 0.7 360 477.53 327 433.98 90.9 33 Other (3) —   — —   (6 ) — —   6   10.8 $ 2,968 $ 274.47 $ 2,615   $ 241.84 88.1 % $ 353       Year Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM California 0.8 $ 131 $ 166.01 $ 129 $ 164.35 99.0 % $ 2 Florida 2.6 590 228.65 538 208.53 91.2 52 Michigan — 10 232.88 6 154.32 66.3 4 New Mexico 0.2 60 287.37 47 223.85 77.9 13 Ohio 0.1 40 348.06 29 254.78 73.2 11 Texas 1.4 279 208.48 184 137.13 65.8 95 Utah 0.7 103 166.21 127 204.14 122.8 (24 ) Washington 0.3 76 272.48 79 284.87 104.5 (3 ) Wisconsin 0.6 256 363.54 282 399.51 109.9 (26 ) Other (3) —   — —   (5 ) — —   5   6.7 $ 1,545 $ 231.38 $ 1,416   $ 212.17 91.7 % $ 129   __________________   (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) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—TOTAL

(In millions, except percentages and per-member per-month amounts)

      Three Months Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM California 2.3 $ 689 $ 303.98 $ 606 $ 267.49 88.0 % $ 83 Florida 1.9 615 326.80 600 318.86 97.6 15 Illinois 0.5 146 294.68 146 295.25 100.2 — Michigan 1.2 393 329.50 336 281.26 85.4 57 New Mexico 0.8 353 458.22 301 390.58 85.2 52 New York (3) 0.1 46 465.75 42 432.25 92.8 4 Ohio 1.0 550 545.09 477 471.99 86.6 73 Puerto Rico 0.9 179 187.49 178 187.68 100.1 1 South Carolina 0.4 116 337.14 111 320.47 95.1 5 Texas 1.2 704 541.55 676 520.34 96.1 28 Utah 0.5 133 286.70 114 246.88 86.1 19 Washington 2.3 650 278.21 568 243.15 87.4 82 Wisconsin 0.3 115 324.48 94 263.00 81.1 21 Other (4) —   — —   2 — —   (2 ) 13.4 $ 4,689 $ 348.20 $ 4,251 $ 315.70 90.7 % $ 438       Three Months Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM California 2.1 $ 665 $ 321.74 $ 544 $ 263.64 81.9 % $ 121 Florida 1.7 482 290.53 464 279.69 96.3 18 Illinois 0.5 136 234.17 154 265.84 113.5 (18 ) Michigan 1.1 379 322.91 327 278.89 86.4 52 New Mexico 0.7 288 378.63 304 399.29 105.5 (16 ) New York (3) 0.1 50 460.08 49 451.09 98.0 1 Ohio 1.0 490 487.83 441 439.09 90.0 49 Puerto Rico 1.0 191 193.54 178 179.02 92.5 13 South Carolina 0.4 105 318.31 88 267.65 84.1 17 Texas 1.0 604 590.59 511 499.56 84.6 93 Utah 0.5 114 260.05 111 252.85 97.2 3 Washington 2.2 586 267.92 536 245.11 91.5 50 Wisconsin 0.4 96 256.93 110 288.94 112.5 (14 ) Other (4) —   4 —   27 — —   (23 ) 12.7 $ 4,190 $ 329.96 $ 3,844 $ 302.68 91.7 % $ 346   __________________   (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 New York health plan was acquired on August 1, 2016. (4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—TOTAL

(In millions, except percentages and per-member per-month amounts)

      Year Ended December 31, 2017

MemberMonths (1)

    Premium Revenue     Medical Care Costs     MCR (2)    

MedicalMargin

Total     PMPM Total     PMPM California 9.1 $ 2,701 $ 296.68 $ 2,348 $ 257.86 86.9 % $ 353 Florida 7.9 2,568 324.56 2,470 312.18 96.2 98 Illinois 2.1 593 286.69 638 308.41 107.6 (45 ) Michigan 4.9 1,596 325.43 1,398 285.11 87.6 198 New Mexico 3.2 1,368 430.97 1,250 393.67 91.3 118 New York (3) 0.4 181 449.85 170 424.17 94.3 11 Ohio 4.1 2,216 534.56 1,975 476.39 89.1 241 Puerto Rico 3.8 732 190.13 691 179.65 94.5 41 South Carolina 1.4 445 328.41 412 304.04 92.6 33 Texas 5.4 2,813 516.84 2,495 458.50 88.7 318 Utah 2.0 535 273.55 468 239.49 87.5 67 Washington 9.4 2,608 277.93 2,299 245.01 88.2 309 Wisconsin 1.5 491 320.71 434 283.14 88.3 57 Other (4) —   7 —   25 — —   (18 ) 55.2 $ 18,854 $ 341.39 $ 17,073 $ 309.14 90.6 % $ 1,781       Year Ended December 31, 2016

MemberMonths (1)

Premium Revenue Medical Care Costs MCR (2)

MedicalMargin

Total PMPM Total PMPM California 8.2 $ 2,378 $ 291.41 $ 2,029 $ 248.70 85.3 % $ 349 Florida 6.7 1,938 290.56 1,765 264.60 91.1 173 Illinois 2.3 603 258.72 568 243.71 94.2 35 Michigan 4.7 1,527 323.36 1,345 284.82 88.1 182 New Mexico 3.0 1,305 430.15 1,209 398.49 92.6 96 New York (3) 0.2 82 446.72 79 431.73 96.6 3 Ohio 4.0 1,967 486.66 1,747 432.36 88.8 220 Puerto Rico 4.0 726 180.65 694 172.57 95.5 32 South Carolina 1.3 378 296.58 320 250.97 84.6 58 Texas 4.3 2,461 576.69 2,110 494.41 85.7 351 Utah 1.8 447 251.63 423 238.03 94.6 24 Washington 8.4 2,222 263.80 2,015 239.21 90.7 207 Wisconsin 1.6 398 255.30 388 248.28 97.2 10 Other (4) —   13 —   82 — —   (69 ) 50.5 $ 16,445 $ 325.87 $ 14,774 $ 292.75 89.8 % $ 1,671   __________________   (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 New York health plan was acquired on August 1, 2016. (4) “Other” medical care costs include primarily medically related administrative costs at the parent company, and direct delivery costs.    

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA

(In millions, except percentages and per-member per-month amounts)

 

The following tables provide the details of our medical care costs for the periods indicated:

      Three Months Ended December 31, 2017     2016 Amount     PMPM    

% ofTotal

Amount     PMPM    

% ofTotal

Fee for service $ 3,052 $ 226.66 71.8 % $ 2,837 $ 223.43 73.8 % Pharmacy 659 48.88 15.4 592 46.57 15.4 Capitation 338 25.13 8.0 317 24.93 8.2 Direct delivery 11 0.80 0.3 23 1.80 0.6 Other   191   14.23 4.5     75   5.95 2.0   $ 4,251 $ 315.70 100.0 % $ 3,844 $ 302.68 100.0 %     Year Ended December 31, 2017 2016 Amount PMPM

% ofTotal

Amount PMPM

% ofTotal

Fee for service $ 12,682 $ 229.63 74.3 % $ 10,993 $ 217.84 74.4 % Pharmacy 2,563 46.40 15.0 2,213 43.84 15.0 Capitation 1,360 24.63 8.0 1,218 24.13 8.2 Direct delivery 73 1.33 0.4 78 1.55 0.5 Other   395   7.15 2.3     272   5.39 1.9   $ 17,073 $ 309.14 100.0 % $ 14,774 $ 292.75 100.0 %    

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

      December 31, 2017     2016 Fee-for-service claims incurred but not paid (IBNP) $ 1,717 $ 1,352 Pharmacy payable 112 112 Capitation payable 67 37 Other (1)   296   428 $ 2,192 $ 1,929 __________________   (1)   “Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various state agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of operations. As of December 31, 2017 and 2016, we had recorded non-risk provider payables of approximately $122 million and $225 million, respectively.    

MOLINA HEALTHCARE, INC.

UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE

(Dollars in millions, except per-member amounts)

Our claims liability includes a provision for adverse claims deviation 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. Our reserving methodology is consistently applied across all periods presented. The amounts displayed for “Components of medical care costs related to: Prior period” represent the amount by which our original estimate of claims and benefits payable at the beginning of the period was less (more) 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 for the periods indicated:

    Year Ended December 31, 2017     2016 Medical claims and benefits payable, beginning balance $ 1,929 $ 1,685 Components of medical care costs related to: Current period 17,037 14,966 Prior period   36     (192 ) Total medical care costs   17,073     14,774     Change in non-risk provider payables   (106 )   58   Payments for medical care costs related to: Current period 15,130 13,304 Prior period   1,574     1,284   Total paid   16,704     14,588   Medical claims and benefits payable, ending balance $ 2,192   $ 1,929     Benefit from prior period as a percentage of: Balance at beginning of period (1.9 )% 11.4 % Premium revenue, trailing twelve months (0.2 )% 1.2 % Medical care costs, trailing twelve months (0.2 )% 1.3 %   Days in claims payable, fee for service (1) 54 47 __________________   (1)   Claims payable includes primarily IBNP. Additionally, it includes certain fee-for-service payables reported in “Other” medical claims and benefits payable amounting to $99 million and $94 million, as of December 31, 2017 and 2016, respectively.    

MOLINA HEALTHCARE, INC.

UNAUDITED NON-GAAP FINANCIAL MEASURES

We use non-GAAP financial measures as supplemental metrics in evaluating our financial performance, making financing and business decisions, and forecasting and planning for future periods. For these reasons, management believes such measures are useful supplemental measures to investors in comparing our performance to 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. See further information regarding non-GAAP measures below the tables (in millions, except per diluted share amounts).

    Three Months Ended December 31,     Year Ended December 31, 2017     2016 2017     2016   Net (loss) income $(262 ) $(47 ) $(512 ) $52 Adjustments: Depreciation, and amortization of intangible assets and capitalized software 36 43 165 161 Interest expense 33 25 118 101 Income tax (benefit) expense (54 ) 16   (100 ) 153   EBITDA $(247 ) $37   $(329 ) $467       Three Months Ended December 31, Year Ended December 31, 2017 2016 2017

2016

  Amount    

PerDilutedshare

Amount    

PerDilutedshare

Amount    

PerDilutedshare

Amount

   

PerDilutedshare

Net (loss) income $ (262 ) $ (4.59 ) $ (47 ) $ (0.85 ) $ (512 ) $ (9.07 )

$

52

$ 0.92 Adjustment:

Amortization of intangible assets

 

6

0.11

8

0.16

30

0.55

32

0.57

Income tax effect (1)

 

(2

)  

(0.04

)  

(3

)  

(0.06

)  

(11

)  

(0.20

)  

(12

)

 

(0.21

)

Amortization of intangible assets, net of tax effect

 

4

   

0.07

   

5

   

0.10

   

19

   

0.35

   

20

    0.36   Adjusted net (loss) income $ (258 ) $ (4.52 ) $ (42 ) $ (0.75 ) $ (493 ) $ (8.72 )

$

72

  $ 1.28   __________________   (1)   Income tax effect of adjustment calculated at the blended federal and state statutory tax rate of 37%.  

The following are descriptions of the adjustments made to GAAP measures used to calculate the non-GAAP measures used in this news release:

Earnings before interest, taxes, depreciation and amortization (EBITDA): Net (loss) income (GAAP) less depreciation, and amortization of intangible assets and capitalized software, interest expense and income tax (benefit) expense. We believe that EBITDA is helpful in assessing our ability to meet the cash demands of our operating units.

Adjusted net (loss) income: Net (loss) income (GAAP) less amortization of intangible assets, net of income tax effect calculated at the statutory tax rate of 37%. We believe that adjusted net (loss) income is helpful in assessing our financial performance exclusive of the non-cash impact of the amortization of purchased intangibles.

Adjusted net (loss) income per diluted share: Adjusted net (loss) income divided by weighted average common shares outstanding on a fully diluted basis.

 

MOLINA HEALTHCARE, INC.

2018 PRELIMINARY GUIDANCE

 

Reconciliation of Non-GAAP Financial Measures(in millions, except per-share amounts)

      Low End     High End Net income $ 202 $ 236 Adjustments: Depreciation, and amortization of intangible assets and capitalized software 150 150 Interest expense 125 125 Income tax expense   155     165   EBITDA $ 632   $ 676         Low End High End Amount     Per share (2) Amount Per share (2) Net income $ 202 $ 3.00 $ 236 $ 3.50 Adjustments: Amortization of intangible assets 20 0.30 20 0.30 Income tax effect (1)   (5 )   (0.07 )   (5 )   (0.07 ) Amortization of intangible assets, net of tax effect   15     0.23     15     0.23   Adjusted net income $ 217   $ 3.23   $ 251   $ 3.73   __________________   (1)   Income tax effect calculated at the statutory tax rate of 22.5%. (2) Computation assumes 67.3 million diluted weighted average shares outstanding.

View source version on businesswire.com: http://www.businesswire.com/news/home/20180212006254/en/

Molina Healthcare, Inc.Ryan Kubota, 562-435-3666, ext. 119057Investor Relations