Molina Healthcare (MOH) 8-K Molina Healthcare Reports Second Quarter 2013 Results

Exhibit 99.1

Molina Healthcare Reports Second Quarter 2013 Results

LONG BEACH, Calif.--(BUSINESS WIRE)--July 25, 2013--Molina Healthcare, Inc. (NYSE: MOH):

• Net income per diluted share from continuing operations of $0.34 for the quarter versus a net loss of $0.71 per diluted share from continuing operations for the second quarter of 2012.
• Quarterly premium revenues rose to $1.5 billion, an 8% increase compared with the second quarter of 2012.
• Consolidated medical care ratio declined 830 basis points year over year to 86.2%.
• Sale-leaseback completed to raise $158 million.
• Assumption of Lovelace Community Health Plan’s contract in New Mexico expected to close by August 1, 2013.

Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the second quarter and six months ended June 30, 2013. Net income for the second quarter of 2013 rose to $24.6 million, or $0.53 per diluted share, versus a net loss of $37.3 million, or $0.80 per diluted share, for the second quarter of 2012. Net income per diluted share from continuing operations was $0.34, an increase of $1.05 per diluted share from continuing operations over the second quarter of 2012.

“Our operating performance during the second quarter remained strong. We continued to strengthen our capital position, and, in anticipation of the full implementation of health reform, we increased our capacity to serve a significant number of new members,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “We expect our previously announced transaction in New Mexico to accelerate our growth in that state beginning in the third quarter.”

Overview of Financial Results

Premium revenue for the second quarter of 2013 increased 8% over the second quarter of 2012, primarily due to membership growth in Washington and Wisconsin and rate increases in Texas and Washington in the second half of 2012.

The Company’s consolidated medical care ratio decreased to 86.2% in the second quarter of 2013 from 94.5% in the second quarter of 2012. The decline in the consolidated medical care ratio was the result of dramatically improved operating results in Texas combined with improved performance at most of the Company’s other health plans. Medical care ratios decreased in seven of the Company’s nine health plans, while medical margin (measured as the excess of premium revenue over medical care costs) increased in eight out of nine health plans.

General and administrative expenses increased to 10.1% of revenue in the second quarter of 2013 from 8.5% in the second quarter of 2012, primarily due to higher costs incurred as a result of the Company’s preparations for significant membership growth in 2014 and a litigation charge of $3.5 million related to the final settlement of a provider dispute.

Second quarter 2013 results include a one-time non-cash charge of $3.9 million related to warrants issued in conjunction with the Company’s convertible senior notes offering in February 2013. As originally issued, certain terms in the warrant agreements required that they be recorded as a derivative liability requiring mark-to-market accounting treatment. The warrants were reclassified to equity during the second quarter and there will be no further mark-to-market adjustments.

The Company previously reported that its Medicaid managed care contract with the state of Missouri expired without renewal on June 30, 2012. Effective June 30, 2013, the transition obligations associated with that contract terminated. Therefore, the Company has reclassified the results relating to the Missouri health plan to discontinued operations for all periods presented. These results are presented in a single line item, net of taxes, in the unaudited consolidated statements of operations. Additionally, the Company abandoned all of its equity interests in the Missouri health plan during the second quarter of 2013, resulting in the recognition of a tax benefit of approximately $9.5 million, which is also included in discontinued operations in the unaudited consolidated statements of operations.

Net Income Per Share Guidance

The Company expects net income per diluted share from continuing operations to be $1.55 for full year 2013 and net income per diluted share (including discontinued operations) to be $1.72 for full year 2013. The Company believes that its estimated net income per diluted share from continuing operations of $1.55 for full year 2013 is consistent with previously issued earnings per diluted share guidance of $1.55.

Conference Call

The Company’s management will host a conference call and webcast to discuss its second quarter results at 5:00 p.m. Eastern time on Thursday, July 25, 2013. The number to call for the interactive teleconference is (212) 231-2929. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Thursday, July 25, 2013, through 6:00 p.m. on Friday, July 26, 2013, by dialing (800) 633-8284 and entering confirmation number 21661283. A live broadcast of Molina Healthcare’s conference call will be available on the Company’s website, www.molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program. The Company’s licensed health plans in California, Florida, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.8 million members, and its subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company’s plans, expectations, and anticipated future events. Actual results could differ materially due to numerous known and unknown risks and uncertainties, including, without limitation, risk factors related to the following:

• uncertainties associated with the implementation of the Affordable Care Act, including the impact of the health insurance industry excise tax, the expansion of Medicaid eligibility in participating states to previously uninsured populations unfamiliar with managed care, the implementation of state insurance exchanges currently expected to become operational by October 1, 2013, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures, including the duals demonstration programs in California, Ohio, Michigan, and Texas;
• the success of our medical cost containment initiatives in Texas, and other risks associated with the expansion of our Texas health plan’s service areas in 2012;
• significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;
• management of our medical costs, including seasonal flu patterns and rates of utilization that are consistent with our expectations and our accruals for incurred but not reported medical costs;
• the success of our efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states, and our ability to increase our revenues consistent with our expectations;
• accurate estimation of incurred but not reported medical costs across our health plans;
• risks associated with the continued growth in new Medicaid and Medicare enrollees, and the development of actuarially sound rates with respect to such new enrollees, including duals;
• retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates;
• continuation and renewal of the government contracts of both our health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed;
• government audits and reviews, and any enrollment freeze or monitoring program that may result therefrom;
• changes with respect to our provider contracts and the loss of providers;
• the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;
• interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures;
• approval by state regulators of dividends and distributions by our health plan subsidiaries;
• changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
• high dollar claims related to catastrophic illness;
• the favorable resolution of litigation, arbitration, or administrative proceedings, including our pending litigation against the state of California related to rates paid to our California plan in earlier years that were not actuarially sound;
• restrictions and covenants in any future credit facility;
• the relatively small number of states in which we operate health plans;
• the availability of adequate financing to fund and capitalize our expansion and growth activities and to meet our liquidity needs, including the interest expense and other costs associated with such financing;
• a state’s failure to renew its federal Medicaid waiver;
• inadvertent unauthorized disclosure of protected health information;
• changes generally affecting the managed care or Medicaid management information systems industries;
• increases in government surcharges, taxes, and assessments;
• changes in general economic conditions, including unemployment rates; and
• increasing consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission. These reports can be accessed under the investor relations tab of the Company’s website or on the SEC’s website at www.sec.gov. Given these risks and uncertainties, we can give no assurances that the Company’s forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by the Company’s forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company’s judgment as of July 25, 2013, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.

MOLINA HEALTHCARE, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Amounts in thousands, except net income (loss) per share)
Revenue:
Premium revenue	$	1,501,729		$	1,394,049		$	2,999,162		$	2,620,656
Premium tax		46,883			38,354			83,883			80,540
Service revenue		49,672			41,724			99,428			83,929
Investment income		1,628			1,059			3,144			2,738
Rental and other income		5,922			3,977			10,616			8,236
Total revenue		1,605,834			1,479,163			3,196,233			2,796,099
Expenses:
Medical care costs		1,294,706			1,317,597			2,582,621			2,395,464
Cost of service revenue		39,305			30,613			79,075			61,107
General and administrative expenses		161,479			125,819			302,757			241,048
Premium tax expenses		46,883			38,354			83,883			80,540
Depreciation and amortization		17,015			16,210			33,578			31,058
Total expenses		1,559,388			1,528,593			3,081,914			2,809,217
Income (loss) from operations		46,446			(49,430	)		114,319			(13,118	)
Other expenses:
Interest expense		11,667			3,808			24,704			8,106
Other expense		3,502			1,086			3,371			1,086
Total other expenses		15,169			4,894			28,075			9,192
Income (loss) from continuing operations before income taxes		31,277			(54,324	)		86,244			(22,310	)
Income tax expense (benefit)		15,481			(21,267	)		39,926			(9,147	)
Income (loss) from continuing operations		15,796			(33,057	)		46,318			(13,163	)
Income (loss) from discontinued operations, net of tax benefit of $9,968, $4,502, $10,143, and $5,589, respectively		8,775			(4,249	)		8,168			(6,054	)
Net income (loss)	$	24,571		$	(37,306	)	$	54,486		$	(19,217	)
Basic income (loss) per share:
Income (loss) from continuing operations	$	0.35		$	(0.71	)	$	1.01		$	(0.29	)
Income (loss) from discontinued operations		0.19			(0.09	)		0.18			(0.13	)
Basic net income (loss) per share	$	0.54		$	(0.80	)	$	1.19		$	(0.42	)
Diluted income (loss) per share:
Income (loss) from continuing operations	$	0.34		$	(0.71	)	$	1.00		$	(0.29	)
Income (loss) from discontinued operations		0.19			(0.09	)		0.17			(0.13	)
Diluted net income (loss) per share	$	0.53		$	(0.80	)	$	1.17		$	(0.42	)
Weighted average shares outstanding:
Basic		45,446			46,355			45,712			46,176
Diluted		46,507			46,355			46,506			46,176
Operating Statistics, Continuing Operations:
Medical care ratio (1)		86.2	%		94.5	%		86.1	%		91.4	%
Service revenue ratio (2)		79.1	%		73.4	%		79.5	%		72.8	%
General and administrative expense ratio (3)		10.1	%		8.5	%		9.5	%		8.6	%
Premium tax ratio (1)		3.0	%		2.7	%		2.7	%		3.0	%
Effective tax rate		49.5	%		(39.1	%)		46.3	%		(41.0	%)
(1) Medical care ratio represents medical care costs as a percentage of premium revenue, net of premium taxes; premium tax ratio represents premium taxes as a percentage of premium revenue.
(2) Service revenue ratio represents cost of service revenue as a percentage of service revenue.
(3) Computed as a percentage of total revenue.

MOLINA HEALTHCARE, INC. CONSOLIDATED BALANCE SHEETS
	(Unaudited)
	June 30, 2013			Dec. 31, 2012
	(Amounts in thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	742,670		$	795,770
Investments		718,544			342,845
Receivables		213,776			149,682
Deferred income taxes		21,995			32,443
Prepaid expenses and other current assets		47,817			28,386
Total current assets		1,744,802			1,349,126
Property, equipment, and capitalized software, net		249,298			221,443
Deferred contract costs		51,319			58,313
Intangible assets, net		68,987			77,711
Goodwill and indefinite-lived intangible assets		153,152			151,088
Derivative asset		207,123			–
Restricted investments		56,935			44,101
Auction rate securities		12,527			13,419
Other assets		35,773			19,621
	$	2,579,916		$	1,934,822
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	465,487		$	494,530
Accounts payable and accrued liabilities		180,227			184,034
Deferred revenue		45,949			141,798
Income taxes payable		15,496			6,520
Current maturities of long-term debt		–			1,155
Total current liabilities		707,159			828,037
Convertible senior notes		585,825			175,468
Lease financing obligations		175,666			–
Other long-term debt		–			86,316
Derivative liability		207,017			1,307
Deferred income taxes		3,919			37,900
Other long-term liabilities		23,943			23,480
Total liabilities		1,703,529			1,152,508
Stockholders’ equity:
Common stock, $0.001 par value; 150,000 shares authorized; outstanding: 45,683 shares at June 30, 2013 and 46,762 shares at December 31, 2012		46			47
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding		–			–
Additional paid-in capital		324,360			285,524
Accumulated other comprehensive loss		(2,705	)		(457	)
Treasury stock, at cost; 111 shares at December 31, 2012		–			(3,000	)
Retained earnings		554,686			500,200
Total stockholders’ equity		876,387			782,314
	$	2,579,916		$	1,934,822

MOLINA HEALTHCARE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Amounts in thousands)
Operating activities:
Net income (loss)	$	24,571		$	(37,306	)	$	54,486		$	(19,217	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		22,108			19,671			43,907			38,010
Deferred income taxes		(22,139	)		(9,527	)		(22,155	)		(1,264	)
Stock-based compensation		7,729			5,146			12,150			9,812
Gain on sale of subsidiary		–			–			–			(1,747	)
Amortization of convertible senior notes		5,965			1,472			9,688			2,915
Change in fair value of derivatives		3,503			1,086			3,384			1,086
Amortization of premium/discount on investments		2,796			1,765			4,298			3,615
Amortization of deferred financing costs		1,118			257			2,366			515
Tax deficiency from employee stock compensation		4			(19	)		(38	)		(50	)
Changes in operating assets and liabilities:
Receivables		(63,525	)		61,247			(64,094	)		6,891
Prepaid expenses and other current assets		(11,292	)		(4,712	)		(22,856	)		(10,352	)
Medical claims and benefits payable		(25,658	)		69,705			(29,043	)		123,062
Accounts payable and accrued liabilities		14,879			11,814			(16,968	)		(22,982	)
Deferred revenue		(89,855	)		80,883			(95,849	)		125,426
Income taxes		552			(16,074	)		8,976			(19,737	)
Net cash (used in) provided by operating activities		(129,244	)		185,408			(111,748	)		235,983
Investing activities:
Purchases of equipment		(24,062	)		(19,796	)		(35,229	)		(33,301	)
Purchases of investments		(456,139	)		(56,149	)		(532,151	)		(144,348	)
Sales and maturities of investments		73,773			71,005			149,420			136,772
Proceeds from sale of subsidiary, net of cash surrendered		–			–			–			9,162
Change in deferred contract costs		2,494			(10,062	)		6,994			(23,055	)
Increase in restricted investments		(1,818	)		(1,661	)		(12,834	)		(2,154	)
Change in other noncurrent assets and liabilities		(7,468	)		(1,926	)		(8,012	)		(4,383	)
Net cash used in investing activities		(413,220	)		(18,589	)		(431,812	)		(61,307	)
Financing activities:
Proceeds from issuance of 1.125% Notes, net of deferred issuance costs		–			–			537,973			–
Proceeds from sale-leaseback transactions		158,694			–			158,694			–
Purchase of 1.125% Notes call option		–			–			(149,331	)		–
Proceeds from issuance of warrants		–			–			75,074			–
Treasury stock purchases		–			–			(50,000	)		–
Repayment of amounts borrowed under credit facility		–			(10,000	)		(40,000	)		(10,000	)
Amount borrowed under credit facility		–			50,000			–			60,000
Principal payments on term loan		(47,180	)		(272	)		(47,471	)		(573	)
Settlement of interest rate swap		(875	)		–			(875	)		–
Proceeds from employee stock plans		4,617			2,737			4,852			5,485
Excess tax benefits from employee stock compensation		367			85			1,544			3,677
Net cash provided by financing activities		115,623			42,550			490,460			58,589
Net (decrease) increase in cash and cash equivalents		(426,841	)		209,369			(53,100	)		233,265
Cash and cash equivalents at beginning of period		1,169,511			517,723			795,770			493,827
Cash and cash equivalents at end of period	$	742,670		$	727,092		$	742,670		$	727,092

MOLINA HEALTHCARE, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURE

The Company has included presentations of earnings before interest, taxes, depreciation and amortization (EBITDA) below. EBITDA is a non-GAAP financial measure and is reconciled to net income, which the Company believes to be the most comparable GAAP measure (GAAP stands for U.S. generally accepted accounting principles).

EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense and income tax expense. This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities; nor should EBITDA be considered in isolation from these GAAP measures of operating performance. Management uses EBITDA as a supplemental metric in evaluating the Company’s financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating the Company’s performance and the performance of other companies in the Company’s industry.

	Three Months Ended June 30,					Six Months Ended June 30,
	2013		2012			2013		2012
	(In thousands)
Net income (loss)	$	24,571	$	(37,306	)	$	54,486	$	(19,217	)
Add back:
Depreciation and amortization reported in the consolidated statements of cash flows		22,108		19,671			43,907		38,010
Interest expense		11,667		3,808			24,704		8,106
Provision for income taxes		5,513		(25,769	)		29,783		(14,736	)
EBITDA	$	63,859	$	(39,596	)	$	152,880	$	12,163

MOLINA HEALTHCARE, INC.
UNAUDITED DEPRECIATION AND AMORTIZATION DATA

Depreciation and amortization related to the Company’s Health Plans segment is all recorded in “Depreciation and amortization” in the consolidated statements of operations. Depreciation and amortization related to the Company’s Molina Medicaid Solutions segment is recorded within three different headings in the consolidated statements of operations as follows:

• Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and amortization;”

• Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service revenue;” and

• Depreciation is recorded within the heading “Cost of service revenue.”

The following table presents all depreciation and amortization recorded in the Company’s consolidated statements of operations, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue.

	Three Months Ended June 30,
	2013				2012
	Amount		% of Total Revenue		Amount		% of Total Revenue
	(Dollar amounts in thousands)
Depreciation and amortization of capitalized software, continuing operations	$	12,896	0.8	%	$	10,674	0.7	%
Amortization of intangible assets, continuing operations		4,119	0.3			5,536	0.4
Depreciation and amortization, continuing operations		17,015	1.1			16,210	1.1
Depreciation and amortization, discontinued operations		–	–			177	–
Amortization recorded as reduction of service revenue		728	–			153	–
Amortization of capitalized software recorded as cost of service revenue		4,365	0.3			3,131	0.2
	$	22,108	1.4	%	$	19,671	1.3	%
	Six Months Ended June 30,
	2013				2012
	Amount		% of Total Revenue		Amount		% of Total Revenue
	(Dollar amounts in thousands)
Depreciation and amortization of capitalized software, continuing operations	$	25,341	0.8	%	$	19,969	0.7	%
Amortization of intangible assets, continuing operations		8,237	0.3			11,089	0.4
Depreciation and amortization, continuing operations		33,578	1.1			31,058	1.1
Depreciation and amortization, discontinued operations		2	–			354	–
Amortization recorded as reduction of service revenue		1,457	–			306	–
Amortization of capitalized software recorded as cost of service revenue		8,870	0.3			6,292	0.2
	$	43,907	1.4	%	$	38,010	1.3	%

MOLINA HEALTHCARE, INC. UNAUDITED MEMBERSHIP DATA, CONTINUING OPERATIONS
	June 30, 2013	March 31, 2013	Dec. 31, 2012	June 30, 2012
Total Ending Membership by Health Plan:
California	355,000	332,000	336,000	350,000
Florida	81,000	75,000	73,000	70,000
Michigan	215,000	217,000	220,000	220,000
New Mexico	92,000	91,000	91,000	89,000
Ohio	240,000	242,000	244,000	260,000
Texas	266,000	274,000	282,000	301,000
Utah	87,000	87,000	87,000	86,000
Washington	413,000	416,000	418,000	356,000
Wisconsin	98,000	86,000	46,000	42,000
	1,847,000	1,820,000	1,797,000	1,774,000
Total Ending Membership by State for the Medicare Advantage Plans:
California	8,100	7,700	7,700	7,000
Florida	600	600	900	900
Michigan	9,500	9,200	9,700	8,900
New Mexico	900	900	900	900
Ohio	400	300	300	200
Texas	2,300	1,900	1,500	800
Utah	7,800	7,600	8,200	8,300
Washington	6,600	6,100	6,500	5,700
	36,200	34,300	35,700	32,700
Total Ending Membership by State for the Aged, Blind or Disabled Population:
California	45,400	44,600	44,700	41,100
Florida	11,200	10,400	10,300	10,400
Michigan	45,000	44,000	41,900	40,000
New Mexico	6,000	5,800	5,700	5,600
Ohio	28,000	28,200	28,200	29,600
Texas	92,000	94,200	95,900	111,000
Utah	9,400	9,200	9,000	8,800
Washington	31,700	31,300	30,000	4,400
Wisconsin	1,600	1,600	1,700	1,700
	270,300	269,300	267,400	252,600

MOLINA HEALTHCARE, INC. UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN, CONTINUING OPERATIONS (Amounts in thousands, except per member per month amounts)
	Three Months Ended June 30, 2013
	Member Months (1)	Premium Revenue				Medical Care Costs				MCR (3)		Medical Margin
		Total		PMPM		Total		PMPM
California	1,055	$	180,927	$	171.58	$	170,777	$	161.96	94.4	%	$	10,150
Florida	238		61,837		260.61		51,915		218.80	84.0			9,922
Michigan	648		167,485		258.40		141,859		218.86	84.7			25,626
New Mexico	275		84,449		307.20		68,253		248.28	80.8			16,196
Ohio	722		270,107		373.78		215,664		298.44	79.8			54,443
Texas	805		318,955		396.05		275,959		342.66	86.5			42,996
Utah	261		77,511		296.69		61,677		236.08	79.6			15,834
Washington	1,238		299,533		241.89		263,512		212.80	88.0			36,021
Wisconsin	293		37,740		128.79		31,185		106.43	82.6			6,555
Other (2)	–		3,185		–		13,905		–	–			(10,720	)
	5,535	$	1,501,729	$	271.30	$	1,294,706	$	233.91	86.2	%	$	207,023
	Three Months Ended June 30, 2012
	Member Months (1)	Premium Revenue				Medical Care Costs				MCR (3)		Medical Margin
		Total		PMPM		Total		PMPM
California	1,056	$	164,961	$	156.22	$	149,239	$	141.34	90.5	%	$	15,722
Florida	210		57,324		273.09		48,442		230.79	84.5			8,882
Michigan	662		162,727		245.84		141,682		214.04	87.1			21,045
New Mexico	266		80,449		302.45		67,836		255.03	84.3			12,613
Ohio	762		274,058		359.65		245,284		321.89	89.5			28,774
Texas	907		352,816		389.27		393,237		433.87	111.5			(40,421	)
Utah	259		76,911		297.00		63,419		244.90	82.5			13,492
Washington	1,068		203,675		190.67		174,045		162.93	85.5			29,630
Wisconsin	125		18,788		150.12		22,758		181.84	121.1			(3,970	)
Other (2)	–		2,340		–		11,655		–	–			(9,315	)
	5,315	$	1,394,049	$	262.32	$	1,317,597	$	247.90	94.5	%	$	76,452
(1) A member month is defined as the aggregate of each month’s ending membership for the period presented.
(2) “Other” medical care costs also include medically related administrative costs at the parent company.
(3) The MCR represents medical costs as a percentage of premium revenues, where premium revenue is reduced by premium tax expense.

MOLINA HEALTHCARE, INC. UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN, CONTINUING OPERATIONS (Amounts in thousands, except per member per month amounts)
	Six Months Ended June 30, 2013
	Member Months (1)	Premium Revenue				Medical Care Costs				MCR (3)		Medical Margin
		Total		PMPM		Total		PMPM
California	2,056	$	368,715	$	179.36	$	330,540	$	160.79	89.6	%	$	38,175
Florida	461		120,001		260.38		101,319		219.84	84.4			18,682
Michigan	1,300		334,042		256.96		288,607		222.01	86.4			45,435
New Mexico	549		168,449		307.08		140,402		255.95	83.3			28,047
Ohio	1,448		538,915		372.10		443,118		305.96	82.2			95,797
Texas	1,637		648,406		396.01		542,408		331.27	83.7			105,998
Utah	520		152,467		293.16		126,706		243.63	83.1			25,761
Washington	2,488		597,819		240.29		524,909		210.98	87.8			72,910
Wisconsin	493		64,864		131.53		54,849		111.22	84.6			10,015
Other (2)	–		5,484		–		29,763		–	–			(24,279	)
	10,952	$	2,999,162	$	273.85	$	2,582,621	$	235.81	86.1	%	$	416,541
	Six Months Ended June 30, 2012
	Member Months (1)	Premium Revenue				Medical Care Costs				MCR (3)		Medical Margin
		Total		PMPM		Total		PMPM
California	2,115	$	324,337	$	153.34	$	290,588	$	137.39	89.6	%	$	33,749
Florida	418		113,507		271.47		98,011		234.41	86.3			15,496
Michigan	1,327		322,593		243.11		275,893		207.92	85.5			46,700
New Mexico	532		159,722		300.37		134,947		253.78	84.5			24,775
Ohio	1,508		544,730		361.34		481,985		319.72	88.5			62,745
Texas	1,499		547,855		365.53		573,326		382.53	104.6			(25,471	)
Utah	511		152,049		297.29		121,300		237.17	79.8			30,749
Washington	2,135		415,469		194.59		355,470		166.49	85.6			59,999
Wisconsin	250		35,930		143.54		39,644		158.31	110.3			(3,714	)
Other (2)	–		4,464		–		24,300		–	–			(19,836	)
	10,295	$	2,620,656	$	254.55	$	2,395,464	$	232.68	91.4	%	$	225,192
(1) A member month is defined as the aggregate of each month’s ending membership for the period presented.
(2) “Other” medical care costs also include medically related administrative costs at the parent company.
(3) The MCR represents medical costs as a percentage of premium revenues, where premium revenue is reduced by premium tax expense.

MOLINA HEALTHCARE, INC.
UNAUDITED SELECTED FINANCIAL DATA
(Amounts in thousands, except per member per month amounts)
The following tables provide the details of the Company’s medical care costs from continuing operations for the periods indicated:
	Three Months Ended June 30,
	2013						2012
	Amount		PMPM		% of Total		Amount		PMPM		% of Total
Fee for service	$	879,865	$	158.96	68.0	%	$	925,039	$	174.04	70.2	%
Pharmacy		222,992		40.29	17.2			212,944		40.06	16.2
Capitation		138,409		25.00	10.7			136,376		25.66	10.3
Other		53,440		9.66	4.1			43,238		8.14	3.3
	$	1,294,706	$	233.91	100.0	%	$	1,317,597	$	247.90	100.0	%
	Six Months Ended June 30,
	2013						2012
	Amount		PMPM		% of Total		Amount		PMPM		% of Total
Fee for service	$	1,746,620	$	159.48	67.6	%	$	1,653,024	$	160.57	69.0	%
Pharmacy		454,830		41.53	17.6			386,181		37.51	16.1
Capitation		278,733		25.45	10.8			269,968		26.22	11.3
Other		102,438		9.35	4.0			86,291		8.38	3.6
	$	2,582,621	$	235.81	100.0	%	$	2,395,464	$	232.68	100.0	%

The following table provides the details of the Company’s medical claims and benefits payable as of the dates indicated:
	June 30, 2013		Dec. 31, 2012		June 30, 2012
Fee-for-service claims incurred but not paid (IBNP)	$	360,153	$	377,614	$	378,782
Capitation payable		47,474		49,066		79,739
Pharmacy		37,241		38,992		34,848
Other		20,619		28,858		32,169
	$	465,487	$	494,530	$	525,538

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

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

	Six Months Ended June 30,						Three Months Ended June 30						Year Ended Dec. 31, 2012
	2013			2012			2013			2012
	(Dollars in thousands, except per-member amounts)
Balances at beginning of period	$	494,530		$	402,476		$	491,145		$	455,833		$	402,476
Components of medical care costs related to:
Current period		2,647,083			2,544,922			1,345,592			1,377,084			5,136,055
Prior periods		(62,757	)		(36,357	)		(50,020	)		493			(39,295	)
Total medical care costs		2,584,326			2,508,565			1,295,572			1,377,577			5,096,760
Payments for medical care costs related to:
Current period		2,206,474			2,033,611			940,186			891,573			4,649,363
Prior periods		406,895			351,892			381,044			416,299			355,343
Total paid		2,613,369			2,385,503			1,321,230			1,307,872			5,004,706
Balances at end of period	$	465,487		$	525,538		$	465,487		$	525,538		$	494,530
Benefit from prior period as a percentage of:
Balance at beginning of period		12.7	%		9.0	%		10.2	%		(0.1	%)		9.8	%
Premium revenue, trailing twelve months		1.0	%		0.7	%		0.8	%		0.0	%		0.7	%
Medical care costs, trailing twelve months		1.2	%		0.8	%		1.0	%		0.0	%		0.8	%
Claims Data:
Days in claims payable, fee for service		38			44			38			44			40
Number of members at end of period		1,847,000			1,853,000			1,847,000			1,853,000			1,797,000
Number of claims in inventory at end of period		109,900			209,200			109,900			209,200			122,700
Billed charges of claims in inventory at end of period	$	200,400		$	324,500		$	200,400		$	324,500		$	255,200
Claims in inventory per member at end of period		0.06			0.11			0.06			0.11			0.07
Billed charges of claims in inventory per member at end of period	$	108.50		$	175.12		$	108.50		$	175.12		$	142.01
Number of claims received during the period		10,524,500			10,375,700			5,253,500			5,520,100			20,842,400
Billed charges of claims received during the period	$	10,477,900		$	9,388,700		$	5,307,200		$	5,051,800		$	19,429,300

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