Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 28, 2013 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 30-Sep-13 | |
Document Fiscal Year Focus | 2013 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | moh | |
Entity Registrant Name | MOLINA HEALTHCARE INC | |
Entity Central Index Key | 1179929 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 45,760,400 |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $856,556 | $795,770 |
Investments | 735,151 | 342,845 |
Receivables | 293,967 | 149,682 |
Deferred income taxes | 30,480 | 32,443 |
Prepaid expenses and other current assets | 50,061 | 28,386 |
Total current assets | 1,966,215 | 1,349,126 |
Property, equipment, and capitalized software, net | 267,277 | 221,443 |
Deferred contract costs | 48,768 | 58,313 |
Intangible assets, net | 104,635 | 77,711 |
Goodwill and indefinite-lived intangible assets | 230,783 | 151,088 |
Derivative asset | 191,663 | 0 |
Restricted investments | 65,225 | 44,101 |
Auction rate securities | 11,674 | 13,419 |
Deferred income taxes | 3,090 | 0 |
Other assets | 35,736 | 19,621 |
Total Assets | 2,925,066 | 1,934,822 |
Current liabilities: | ||
Medical claims and benefits payable | 632,706 | 494,530 |
Accounts payable and accrued liabilities | 282,727 | 184,034 |
Deferred revenue | 124,388 | 141,798 |
Income taxes payable | 5,508 | 6,520 |
Current maturities of long-term debt | 109 | 1,155 |
Total current liabilities | 1,045,438 | 828,037 |
Convertible senior notes | 591,884 | 175,468 |
Lease financing obligations | 178,188 | 0 |
Other long-term debt | 0 | 86,316 |
Derivative liabilities | 191,556 | 1,307 |
Deferred income taxes | 0 | 37,900 |
Other long-term liabilities | 25,152 | 23,480 |
Total liabilities | 2,032,218 | 1,152,508 |
Stockholders’ equity: | ||
Common stock, $0.001 par value; 150,000 shares authorized; outstanding: 45,757 shares at September 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 | 0 | 0 |
Additional paid-in capital | 331,958 | 285,524 |
Accumulated other comprehensive loss | -1,411 | -457 |
Treasury stock, at cost; 111 shares at December 31, 2012 | 0 | -3,000 |
Retained earnings | 562,255 | 500,200 |
Total stockholders’ equity | 892,848 | 782,314 |
Total liabilities and stockholders' equity | $2,925,066 | $1,934,822 |
CONSOLIDATED_BALANCE_SHEETS_Un1
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 150,000,000 | 80,000,000 |
Common stock, shares outstanding | 45,757,000 | 46,762,000 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury Stock, Shares | 0 | 111,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenue: | ||||
Premium revenue | $1,584,656 | $1,448,600 | $4,583,818 | $4,066,737 |
Premium tax receipts | 43,723 | 37,894 | 127,606 | 120,953 |
Service revenue | 51,100 | 48,422 | 150,528 | 132,351 |
Investment income | 1,740 | 1,155 | 4,884 | 3,893 |
Rental and other income | 5,860 | 4,079 | 16,476 | 12,315 |
Total revenue | 1,687,079 | 1,540,150 | 4,883,312 | 4,336,249 |
Expenses: | ||||
Medical care costs | 1,383,213 | 1,319,991 | 3,965,834 | 3,715,455 |
Cost of service revenue | 40,113 | 37,004 | 119,188 | 98,111 |
General and administrative expenses | 176,233 | 127,035 | 478,990 | 365,564 |
Premium tax expenses | 43,723 | 37,894 | 127,606 | 120,953 |
Depreciation and amortization | 18,871 | 15,858 | 52,449 | 46,916 |
Total expenses | 1,662,153 | 1,537,782 | 4,744,067 | 4,346,999 |
Operating income (loss) | 24,926 | 2,368 | 139,245 | -10,750 |
Other expenses: | ||||
Interest expense | 13,532 | 4,315 | 38,236 | 12,421 |
Other (income) expense | -24 | 184 | 3,347 | 1,270 |
Total other expenses | 13,508 | 4,499 | 41,583 | 13,691 |
Income (loss) from continuing operations before income tax expense | 11,418 | -2,131 | 97,662 | -24,441 |
Income tax expense (benefit) | 3,865 | -1,966 | 43,791 | -11,113 |
Income (loss) from continuing operations | 7,553 | -165 | 53,871 | -13,328 |
Income (loss) from discontinued operations, net of tax expense (benefit) of $97, $1,474, $(10,046), and $(4,115), respectively | 16 | 3,529 | 8,184 | -2,525 |
Net income (loss) | $7,569 | $3,364 | $62,055 | ($15,853) |
Basic income (loss) per share: | ||||
Income (loss) from continuing operations | $0.17 | ($0.01) | $1.18 | ($0.29) |
Income (loss) from discontinued operations | $0 | $0.08 | $0.18 | ($0.05) |
Basic net income (loss) per share | $0.17 | $0.07 | $1.36 | ($0.34) |
Diluted income (loss) per share: | ||||
Income (loss) from continuing operations | $0.16 | ($0.01) | $1.15 | ($0.29) |
Income (loss) from discontinued operations | $0 | $0.08 | $0.18 | ($0.05) |
Diluted net income (loss) per share | $0.16 | $0.07 | $1.33 | ($0.34) |
Weighted average shares outstanding: | ||||
Basic (in shares) | 45,699 | 46,546 | 45,708 | 46,301 |
Diluted (in shares) | 47,062 | 46,880 | 46,767 | 46,301 |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Income Statement [Abstract] | ||||
Tax benefit from discontinued operations | $97 | $1,474 | ($10,046) | ($4,115) |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Statement of Partners' Capital [Abstract] | ||||
Net income (loss) | $7,569 | $3,364 | $62,055 | ($15,853) |
Other comprehensive income (loss): | ||||
Gross unrealized investment gain (loss) | 2,087 | 733 | -1,539 | 1,734 |
Effect of income taxes | 793 | 278 | -585 | 659 |
Other comprehensive income (loss), net of tax | 1,294 | 455 | -954 | 1,075 |
Comprehensive income (loss) | $8,863 | $3,819 | $61,101 | ($14,778) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Operating activities: | ||
Net income (loss) | $62,055,000 | ($15,853,000) |
Adjustments to reconcile net income (loss) to net cash change in operating activities: | ||
Depreciation and amortization | 68,035,000 | 58,289,000 |
Deferred income taxes | -38,442,000 | 523,000 |
Stock-based compensation | 20,654,000 | 15,448,000 |
Gain on sale of subsidiary | 0 | -1,747,000 |
Amortization of convertible senior notes and lease financing obligations | 16,128,000 | 4,414,000 |
Change in fair value of derivatives | 3,383,000 | 1,270,000 |
Amortization of premium/discount on investments | 8,053,000 | 5,166,000 |
Amortization of deferred financing costs | 3,042,000 | 825,000 |
Tax deficiency from employee stock compensation | -72,000 | -159,000 |
Changes in operating assets and liabilities: | ||
Receivables | -144,285,000 | 10,989,000 |
Prepaid expenses and other current assets | -27,552,000 | -10,574,000 |
Medical claims and benefits payable | 138,176,000 | 133,987,000 |
Accounts payable and accrued liabilities | 20,991,000 | -9,030,000 |
Deferred revenue | -17,410,000 | 92,354,000 |
Income taxes | -1,012,000 | -21,878,000 |
Net cash provided by operating activities | 111,744,000 | 264,024,000 |
Investing activities: | ||
Purchases of equipment | -64,426,000 | -52,548,000 |
Purchases of investments | -627,953,000 | -234,465,000 |
Sales and maturities of investments | 227,800,000 | 213,665,000 |
Proceeds from sale of subsidiary, net of cash surrendered | 0 | 9,162,000 |
Net cash paid in business combinations | -57,684,000 | 0 |
Change in deferred contract costs | 9,545,000 | -18,799,000 |
Increase in restricted investments | -21,124,000 | -3,034,000 |
Change in other non-current assets and liabilities | -7,574,000 | -4,775,000 |
Net cash used in investing activities | -541,416,000 | -90,794,000 |
Financing activities: | ||
Proceeds from issuance of 1.125% Notes, net of deferred financing costs | 537,973,000 | 0 |
Proceeds from sale-leaseback transactions | 158,694,000 | 0 |
Purchase of 1.125% Notes call option | -149,331,000 | 0 |
Proceeds from issuance of warrants | 75,074,000 | 0 |
Treasury stock purchases | -50,000,000 | 0 |
Repayment of amounts borrowed under credit facility | -40,000,000 | -20,000,000 |
Amount borrowed under credit facility | 0 | 60,000,000 |
Principal payments on term loan | -47,471,000 | -846,000 |
Settlement of interest rate swap | -875,000 | 0 |
Proceeds from employee stock plans | 5,156,000 | 5,571,000 |
Excess tax benefits from employee stock compensation | 1,238,000 | 3,698,000 |
Net cash provided by financing activities | 490,458,000 | 48,423,000 |
Net increase in cash and cash equivalents | 60,786,000 | 221,653,000 |
Cash and cash equivalents at beginning of period | 795,770,000 | 493,827,000 |
Cash and cash equivalents at end of period | 856,556,000 | 715,480,000 |
Supplemental cash flow information: | ||
Income taxes | 72,156,000 | 1,074,000 |
Interest | 28,035,000 | 5,663,000 |
Schedule of non-cash investing and financing activities: | ||
Retirement of treasury stock | 53,000,000 | 0 |
Common stock used for stock-based compensation | 6,667,000 | 9,852,000 |
Non-cash financing obligation for construction projects | 19,222,000 | 0 |
Details of business combinations: | ||
Fair value of assets acquired | 121,845,000 | 0 |
Fair value of contingent consideration liabilities incurred | -59,947,000 | 0 |
Payable to seller | -3,882,000 | 0 |
Escrow deposit | -332,000 | 0 |
Details of change in fair value of derivatives: | ||
Change in fair value of derivatives | -3,383,000 | -1,270,000 |
Details of sale of subsidiary: | ||
Decrease in carrying value of assets | 0 | 30,942,000 |
Decrease in carrying value of liabilities | 0 | -23,527,000 |
Gain on sale | 0 | 1,747,000 |
Proceeds from sale of subsidiary, net of cash surrendered | 0 | 9,162,000 |
Gain on 1.125% Call Option | ||
Details of change in fair value of derivatives: | ||
Change in fair value of derivatives | 42,332,000 | 0 |
Loss on embedded cash conversion option | ||
Details of change in fair value of derivatives: | ||
Change in fair value of derivatives | -42,225,000 | 0 |
Loss on 1.125% Warrants | ||
Details of change in fair value of derivatives: | ||
Change in fair value of derivatives | -3,923,000 | 0 |
Gain (loss) on interest rate swap | ||
Details of change in fair value of derivatives: | ||
Change in fair value of derivatives | $433,000 | ($1,270,000) |
Basis_of_Presentation_Notes
Basis of Presentation (Notes) | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
Organization and Operations | |
Molina Healthcare, Inc. 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. We report our financial performance based on two reportable segments: Health Plans and Molina Medicaid Solutions. | |
Our Health Plans segment comprises health plans in California, Florida, Illinois, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin, and includes our direct delivery business. As of September 30, 2013, these health plans served approximately 1.9 million members eligible for Medicaid, Medicare, and other government-sponsored health care programs for low-income families and individuals. The health plans are operated by our respective wholly owned subsidiaries in those states, each of which is licensed as a health maintenance organization, or HMO. Our direct delivery business consists of primary care community clinics in California, Florida, New Mexico, and Washington. | |
Our health plans’ state Medicaid contracts generally have terms of three to four years with annual adjustments to premium rates. These contracts typically contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause. Our health plan subsidiaries have generally been successful in retaining their contracts, but such contracts are subject to risk of loss when a state issues a new request for proposals (RFP) open to competitive bidding by other health plans. If one of our health plans is not a successful responsive bidder to a state RFP, its contract may be subject to non-renewal. | |
Our Molina Medicaid Solutions segment provides business processing and information technology development and administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida. | |
Market Updates - Health Plans Segment | |
California Health Plan Tentative Rate Settlement Agreement. In the third quarter of 2013, our California health plan reached a tentative settlement agreement with the California Department of Health Care Services (DHCS), conditioned on final government approvals. The tentative settlement agreement settles rate disputes initiated by our California health plan dating back to 2003 with respect to its participation in California’s Medicaid program, or Medi-Cal. | |
Under the terms of the tentative settlement agreement, DHCS has agreed to extend each of the California health plan’s existing Medi-Cal managed care contracts for an additional five years, including its contracts in San Diego, San Bernardino, Riverside, and Sacramento counties. In addition, effective January 1, 2014, the settlement establishes a settlement account applicable to the California health plan’s Medi-Cal, Seniors and Persons with Disabilities, and the dual eligibles pilot programs. The settlement account will be established with an initial balance of zero, and will be adjusted annually to reflect a calendar year deficit or surplus. A deficit or surplus will result to the extent the plan’s pre-tax margin is below or above a specified percentage, subject to further adjustment as specified in the settlement agreement. Cash settlement will occur after December 31, 2017. DHCS will make an interim partial settlement payment to us if it terminates early, without replacement, any of our Medi-Cal managed care contracts. Upon expiration of the settlement agreement, if the settlement account is in a deficit position, then DHCS will pay the amount of the deficit to us, subject to an alternative minimum payment amount. If the settlement account is in a surplus position, then no amount is owed to either party. The maximum amount that DHCS would pay to us under the terms of the settlement agreement is limited. See Note 18, "Subsequent Events," for further information. | |
We do not expect the tentative settlement agreement to impact our consolidated financial condition, cash flows, or results of operations for the year ending December 31, 2013. | |
Florida. On October 23, 2013, our Florida health plan and the Florida Agency for Health Care Administration (AHCA), agreed to a settlement under which our health plan will be awarded three contracts under the Florida Statewide Medicaid Managed Care Managed Medical Assistance Invitation to Negotiate. The three contracts are expected to commence in the second or third quarter of 2014. | |
On February 14, 2013, we announced that AHCA awarded our Florida health plan contracts in three regions under the Statewide Medicaid Managed Care Long-Term Care Program. As a result of the awards, we will now enter into a comprehensive pre-contracting assessment, with the program currently scheduled to commence on December 1, 2013. Under the program, we will provide long-term care benefits, including institutional and home and community-based services. | |
New Mexico. On August 1, 2013, our New Mexico health plan closed on its acquisition of the Lovelace Community Health Plan’s contract for the New Mexico Medicaid Salud! Program, under which Lovelace’s Medicaid members became Molina Healthcare Medicaid members and now receive their Medicaid managed services and benefits from our New Mexico health plan. Additionally, in the coming months we expect to add membership currently covered under New Mexico’s State Coverage Insurance (SCI) program with Lovelace. See Note 4, "Business Combinations," for further information. | |
On February 11, 2013, we announced that our New Mexico health plan was selected by the New Mexico Human Services Department (HSD) to participate in the new Centennial Care program. In addition to continuing to provide physical and acute health care services, under the new program our New Mexico health plan will expand its services to provide behavioral health and long-term care services. The selection of our New Mexico health plan was made by HSD pursuant to its RFP issued in August 2012. The operational start date for the program is currently scheduled for January 2014. | |
South Carolina. On July 26, 2013, we entered into an agreement with Community Health Solutions of America, Inc. (CHS) to acquire certain assets, including the rights to convert certain of CHS’ Medicaid members who will be covered by South Carolina’s full-risk Medicaid managed care program. See Note 4, "Business Combinations," for further information. | |
Market Updates - Molina Medicaid Solutions Segment | |
U.S. Virgin Islands and West Virginia. In 2012, Molina Medicaid Solutions of West Virginia secured a historic partnership with the United States Virgin Islands (USVI). The partnership involves processing the USVI’s Medicaid claims using West Virginia’s certified Medicaid management information system. On August 1, 2013 the system went live, marking the first MMIS for a U.S. Territory, and the first to be shared between two government agencies on a single business processing platform. | |
Louisiana. In 2011, Molina Medicaid Solutions received notice from the state of Louisiana that the state intended to award the contract for a replacement MMIS to a different vendor, CNSI. However, in March 2013, the state of Louisiana cancelled its contract award to CNSI. CNSI is currently challenging the contract cancellation. The state has informed us that we will continue to perform under our current contract until a successor is named. At such time as a new RFP may be issued, we intend to respond to the state's RFP. For the nine months ended September 30, 2013, our revenue under the Louisiana MMIS contract was approximately $31.1 million, or 20.7% of total service revenue. So long as our Louisiana MMIS contract continues, we expect to recognize approximately $40.0 million of service revenue annually under this contract. | |
Consolidation and Interim Financial Information | |
The consolidated financial statements include the accounts of Molina Healthcare, Inc., its subsidiaries and variable interest entities in which Molina Healthcare, Inc. is considered to be the primary beneficiary. Such variable interest entities are insignificant to our consolidated financial position and results of operations. In the opinion of management, all adjustments considered necessary for a fair presentation of the results as of the date and for the interim periods presented have been included; such adjustments consist of normal recurring adjustments. All significant intercompany balances and transactions have been eliminated. The consolidated results of operations for the current interim period are not necessarily indicative of the results for the entire year ending December 31, 2013. | |
The unaudited consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read or have access to our audited consolidated financial statements for the fiscal year ended December 31, 2012. Accordingly, certain disclosures that would substantially duplicate the disclosures contained in the December 31, 2012 audited consolidated financial statements have been omitted. These unaudited consolidated interim financial statements should be read in conjunction with our December 31, 2012 audited consolidated financial statements. | |
Presentation and Reclassifications | |
We previously reported that our 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, we have 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, we abandoned our 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. The Missouri health plan's revenues amounted to $0.2 million and $113.8 million for the nine months ended September 30, 2013 and 2012, respectively. | |
We have reclassified certain amounts in the 2012 consolidated balance sheet, and statements of operations and cash flows to conform to the 2013 presentation, including the presentation of premium tax receipts as a separate line item in the consolidated statements of operations. |
Significant_Accounting_Policie
Significant Accounting Policies (Notes) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies | |||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||
Premium Revenue – Health Plans Segment | ||||||||||||||||||||
Premium revenue is fixed in advance of the periods covered and, except as described below, is not generally subject to significant accounting estimates. Premium revenues are recognized in the month that members are entitled to receive health care services. | ||||||||||||||||||||
Certain components of premium revenue are subject to accounting estimates. The components of premium revenue subject to estimation fall into two categories: | ||||||||||||||||||||
(1) Contractual provisions that may limit revenue based upon the costs incurred or the profits realized under a specific contract: These are contractual provisions that require the health plan to return premiums to the extent that certain thresholds are not met. In some instances premiums are returned when medical costs fall below a certain percentage of gross premiums; or when administrative costs or profits exceed a certain percentage of gross premiums. In other instances, premiums are partially determined by the acuity of care provided to members (risk adjustment). To the extent that our expenses and profits change from the amounts previously reported (due to changes in estimates), our revenue earned for those periods will also change. In all of these instances, our revenue is only subject to estimate due to the fact that the thresholds themselves contain elements (expense or profit) that are subject to estimate. While we have adequate experience and data to make sound estimates of our expenses or profits, changes to those estimates may be necessary, which in turn would lead to changes in our estimates of revenue. In general, a change in estimate relating to expense or profit would offset any related change in estimate to premium, resulting in no or small impact to net income. The following contractual provisions fall into this category: | ||||||||||||||||||||
California Health Plan Medical Cost Floors (Minimums): A portion of certain premiums received by our California health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. We recorded a liability under the terms of these contract provisions of approximately $0.8 million and $0.3 million at September 30, 2013 and December 31, 2012, respectively. | ||||||||||||||||||||
Florida Health Plan Medical Cost Floor (Minimum): A portion of premiums received by our Florida health plan may be returned to the state if certain minimum amounts are not spent on defined behavioral health care costs (in all counties except Broward). A similar minimum expenditure is required for total health care costs in Broward county only. At both September 30, 2013 and December 31, 2012, we had not recorded any liability under the terms of these contract provisions. | ||||||||||||||||||||
New Mexico Health Plan Medical Cost Floors (Minimums) and Administrative Cost and Profit Ceilings (Maximums): Our contract with the state of New Mexico directs that a portion of premiums received may be returned to the state if certain minimum amounts are not spent on defined medical care costs, or if administrative costs or profit, as defined in the contract, exceed certain amounts. At both September 30, 2013 and December 31, 2012, we had not recorded any liability under the terms of these contract provisions. | ||||||||||||||||||||
Ohio Health Plan Medical Cost Floors (Minimums): Sanctions may be levied by the state if certain minimum amounts are not spent on defined medical care costs. These sanctions include the requirements to file a corrective action plan as well as an enrollment freeze. | ||||||||||||||||||||
Texas Health Plan Profit Sharing: Under our contract with the state of Texas, there is a profit-sharing agreement under which we pay a rebate to the state of Texas if our Texas health plan generates pretax income, as defined in the contract, above a certain specified percentage as determined in accordance with a tiered rebate schedule. We are limited in the amount of administrative costs that we may deduct in calculating the rebate, if any. As a result of profits in excess of the amount we are allowed to fully retain, we had accrued an aggregate liability of approximately $2.2 million and $3.2 million pursuant to our profit-sharing agreement with the state of Texas at September 30, 2013 and December 31, 2012, respectively. | ||||||||||||||||||||
Washington Health Plan Medical Cost Floors (Minimums): A portion of certain premiums received by our Washington health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. At September 30, 2013, we recorded a liability under the terms of these contract provisions of approximately $0.3 million. At December 31, 2012, we had not recorded any liability under the terms of this contract provision. | ||||||||||||||||||||
Medicare Revenue Risk Adjustment: Based on member encounter data that we submit to the Centers for Medicare and Medicaid Services (CMS), our Medicare premiums are subject to retroactive adjustment for both member risk scores and member pharmacy cost experience for up to two years after the original year of service. This adjustment takes into account the acuity of each member’s medical needs relative to what was anticipated when premiums were originally set for that member. In the event that a member requires less acute medical care than was anticipated by the original premium amount, CMS may recover premium from us. In the event that a member requires more acute medical care than was anticipated by the original premium amount, CMS may pay us additional retroactive premium. A similar retroactive reconciliation is undertaken by CMS for our Medicare members’ pharmacy utilization. We estimate the amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health care utilization patterns and CMS practices. Based on our knowledge of member health care utilization patterns and expenses we have recorded a net receivable of approximately $18.4 million and $0.3 million as of September 30, 2013 and December 31, 2012, respectively for anticipated Medicare risk adjustment premiums. | ||||||||||||||||||||
(2) Quality incentives that allow us to recognize incremental revenue if certain quality standards are met: These are contract provisions that allow us to earn additional premium revenue in certain states if we achieve certain quality-of-care or administrative measures. We estimate the amount of revenue that will ultimately be realized for the periods presented based on our experience and expertise in meeting the quality and administrative measures as well as our ongoing and current monitoring of our progress in meeting those measures. The amount of the revenue that we will realize under these contractual provisions is determinable based upon that experience. The following contractual provisions fall into this category: | ||||||||||||||||||||
New Mexico Health Plan Quality Incentive Premiums: Under our contract with the state of New Mexico, incremental revenue of up to 0.75% of our total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care and administrative measures dictated by the state. | ||||||||||||||||||||
Ohio Health Plan Quality Incentive Premiums: Under our contract with the state of Ohio, incremental revenue of up to 1% of our total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures dictated by the state. | ||||||||||||||||||||
Texas Health Plan Quality Incentive Premiums: Effective March 1, 2012, under our contract with the state of Texas, incremental revenue of up to 5% of our total premium may be earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures established by the state. | ||||||||||||||||||||
Wisconsin Health Plan Quality Incentive Premiums: Under our contract with the state of Wisconsin, incremental revenue of up to 3.25% of total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures dictated by the state. | ||||||||||||||||||||
The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the period presented and prior periods. Although the reasonably possible effects of a change in estimate related to quality incentive premium revenue as of September 30, 2013 are not known, we have no reason to believe that the adjustments to prior years noted below are not indicative of the potential future changes in our estimates as of September 30, 2013. | ||||||||||||||||||||
Three Months Ended September 30, 2013 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 906 | $ | 818 | $ | 2 | $ | 820 | $ | 130,318 | ||||||||||
Ohio | 3,080 | 976 | (52 | ) | 924 | 280,964 | ||||||||||||||
Texas | 15,744 | 15,744 | — | 15,744 | 320,657 | |||||||||||||||
Wisconsin | 1,209 | — | — | — | 39,676 | |||||||||||||||
$ | 20,939 | $ | 17,538 | $ | (50 | ) | $ | 17,488 | $ | 771,615 | ||||||||||
Three Months Ended September 30, 2012 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 560 | $ | 532 | $ | — | $ | 532 | $ | 80,846 | ||||||||||
Ohio | 2,824 | 1,412 | — | 1,412 | 282,489 | |||||||||||||||
Texas | 17,685 | 10,453 | — | 10,453 | 344,522 | |||||||||||||||
Wisconsin | 419 | — | 246 | 246 | 16,279 | |||||||||||||||
$ | 21,488 | $ | 12,397 | $ | 246 | $ | 12,643 | $ | 724,136 | |||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 2,079 | $ | 1,685 | $ | 159 | $ | 1,844 | $ | 298,767 | ||||||||||
Ohio | 9,049 | 3,115 | 501 | 3,616 | 819,879 | |||||||||||||||
Texas | 47,683 | 47,683 | 5,995 | 53,678 | 969,063 | |||||||||||||||
Wisconsin | 3,239 | — | 1,104 | 1,104 | 104,540 | |||||||||||||||
$ | 62,050 | $ | 52,483 | $ | 7,759 | $ | 60,242 | $ | 2,192,249 | |||||||||||
Nine Months Ended September 30, 2012 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 1,676 | $ | 1,350 | $ | 658 | $ | 2,008 | $ | 240,568 | ||||||||||
Ohio | 8,222 | 6,810 | 966 | 7,776 | 827,219 | |||||||||||||||
Texas | 41,687 | 30,487 | — | 30,487 | 892,377 | |||||||||||||||
Wisconsin | 1,284 | — | 492 | 492 | 52,209 | |||||||||||||||
$ | 52,869 | $ | 38,647 | $ | 2,116 | $ | 40,763 | $ | 2,012,373 | |||||||||||
Taxes Based on Premiums | ||||||||||||||||||||
Certain of our health plans are assessed a tax based on premium revenue collected. The premium revenues we receive from these states include the premium tax assessment. We have reported these taxes on a gross basis, included in premium tax receipts (within revenue), and premium tax expense (within expenses), in the consolidated statements of operations. Prior to the third quarter of 2013, premium tax receipts were included in premium revenue. The presentation change affected only premium revenue amounts previously reported, by reducing premium revenue for the amount now included in premium tax receipts. There is no effect on income from continuing operations, net income, or per-share amounts. This change was made to more clearly present the portion of premium revenue not available in the general operations of our health plans. All prior periods presented have been adjusted to conform to this presentation. | ||||||||||||||||||||
Service Revenue and Cost of Service Revenue — Molina Medicaid Solutions Segment | ||||||||||||||||||||
The payments received by our Molina Medicaid Solutions segment under its state contracts are based on the performance of multiple services. The first of these is the design, development and implementation (DDI) of a Medicaid management information system (MMIS). An additional service, following completion of DDI, is the operation of the MMIS under a business process outsourcing (BPO) arrangement. While providing BPO services (which include claims payment and eligibility processing), we also provide the state with other services including both hosting and support and maintenance. Our Molina Medicaid Solutions contracts may extend over a number of years, particularly in circumstances where we are delivering extensive and complex DDI services, such as the initial design, development and implementation of a complete MMIS. For example, the terms of our most recently implemented Molina Medicaid Solutions contracts (in Idaho and Maine) were each seven years in total, consisting of two years allocated for the delivery of DDI services, followed by five years for the performance of BPO services. We receive progress payments from the state during the performance of DDI services based upon the attainment of predetermined milestones. We receive a flat monthly payment for BPO services under our Idaho and Maine contracts. The terms of our other Molina Medicaid Solutions contracts – which primarily involve the delivery of BPO services with only minimal DDI activity (consisting of system enhancements) – are shorter in duration than our Idaho and Maine contracts. | ||||||||||||||||||||
We have evaluated our Molina Medicaid Solutions contracts to determine if such arrangements include a software element. Based on this evaluation, we have concluded that these arrangements do not include a software element. As such, we have concluded that our Molina Medicaid Solutions contracts are multiple-element service arrangements. | ||||||||||||||||||||
Additionally, we evaluate each required deliverable under our multiple-element service arrangements to determine whether it qualifies as a separate unit of accounting. Such evaluation is generally based on whether the deliverable has standalone value to the customer. The arrangement’s consideration that is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. In general, the consideration allocated to each unit of accounting is recognized as the related goods or services are delivered, limited to the consideration that is not contingent. | ||||||||||||||||||||
We have concluded that the various service elements in our Molina Medicaid Solutions contracts represent a single unit of accounting due to the fact that DDI, which is the only service performed in advance of the other services (all other services are performed over an identical period), does not have standalone value because our DDI services are not sold separately by any vendor and the customer could not resell our DDI services. Further, we have no objective and reliable evidence of fair value for any of the individual elements in these contracts, and at no point in the contract will we have objective and reliable evidence of fair value for the undelivered elements in the contracts. We lack objective and reliable evidence of the fair value of the individual elements of our Molina Medicaid Solutions contracts for the following reasons: | ||||||||||||||||||||
• | Each contract calls for the provision of its own specific set of services. While all contracts support the system of record for state MMIS, the actual services we provide vary significantly between contracts; and | |||||||||||||||||||
• | The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our new contracts (commercial off-the-shelf technology solutions). | |||||||||||||||||||
Because we have determined the services provided under our Molina Medicaid Solutions contracts represent a single unit of accounting and because we are unable to determine a pattern of performance of services during the contract period, we recognize all revenue (both the DDI and BPO elements) associated with such contracts on a straight-line basis over the period during which BPO, hosting, and support and maintenance services are delivered. As noted above, the period of performance of BPO services under our Idaho and Maine contracts is five years. Therefore, absent any contingencies as discussed in the following paragraph, we would recognize all revenue associated with those contracts over a period of five years. In cases where there is no DDI element associated with our contracts, BPO revenue is recognized on a monthly basis as specified in the applicable contract or contract extension. | ||||||||||||||||||||
Provisions specific to each contract may, however, lead us to modify this general principle. In those circumstances, the right of the state to refuse acceptance of services, as well as the related obligation to compensate us, may require us to delay recognition of all or part of our revenue until that contingency (the right of the state to refuse acceptance) has been removed. In those circumstances we defer recognition of any contingent revenue (whether DDI, BPO services, hosting, and support and maintenance services) until the contingency has been removed. These types of contingency features are present in our Maine and Idaho contracts. In those states, we deferred recognition of revenue until the contingencies were removed. | ||||||||||||||||||||
Costs associated with our Molina Medicaid Solutions contracts include software-related costs and other costs. With respect to software-related costs, we apply the guidance for internal-use software and capitalize external direct costs of materials and services consumed in developing or obtaining the software, and payroll and payroll-related costs associated with employees who are directly associated with and who devote time to the computer software project. With respect to all other direct costs, such costs are expensed as incurred, unless corresponding revenue is being deferred. If revenue is being deferred, direct costs relating to delivered service elements are deferred as well and are recognized on a straight-line basis over the period of revenue recognition, in a manner consistent with our recognition of revenue that has been deferred. Such direct costs can include: | ||||||||||||||||||||
•Transaction processing costs; | ||||||||||||||||||||
•Employee costs incurred in performing transaction services; | ||||||||||||||||||||
•Vendor costs incurred in performing transaction services; | ||||||||||||||||||||
•Costs incurred in performing required monitoring of and reporting on contract performance; | ||||||||||||||||||||
•Costs incurred in maintaining and processing member and provider eligibility; and | ||||||||||||||||||||
•Costs incurred in communicating with members and providers. | ||||||||||||||||||||
The recoverability of deferred contract costs associated with a particular contract is analyzed on a periodic basis using the undiscounted estimated cash flows of the whole contract over its remaining contract term. If such undiscounted cash flows are insufficient to recover the long-lived assets and deferred contract costs, the deferred contract costs are written down by the amount of the cash flow deficiency. If a cash flow deficiency remains after reducing the balance of the deferred contract costs to zero, any remaining long-lived assets are evaluated for impairment. Any such impairment recognized would equal the amount by which the carrying value of the long-lived assets exceeds the fair value of those assets. | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
The provision for income taxes is determined using an estimated annual effective tax rate, which is generally greater than the U.S. federal statutory rate primarily because of state taxes and non-deductible compensation under a provision of the Affordable Care Act that limits deductions claimed by health insurers on compensation earned after December 31, 2009 that is paid after December 31, 2012. The effective tax rate may be subject to fluctuations during the year as new information is obtained. Such information may affect the assumptions used to estimate the annual effective tax rate, including factors such as the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or derecognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where we conduct business. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, along with net operating loss and tax credit carryovers. | ||||||||||||||||||||
The total amount of unrecognized tax benefits was $12.5 million and $10.6 million as of September 30, 2013 and December 31, 2012, respectively. Approximately $10.5 million and $8.4 million of the unrecognized tax benefits recorded at September 30, 2013 and December 31, 2012, respectively, relate to a tax position claimed on a state refund claim that will not result in a cash payment for income taxes if our claim is denied. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $8.6 million and $7.4 million as of September 30, 2013 and December 31, 2012, respectively. We expect that during the next 12 months it is reasonably possible that unrecognized tax benefit liabilities may decrease by as much as $10.7 million due to the expiration of statute of limitations and the resolution to the state refund claim described above. | ||||||||||||||||||||
Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. As of September 30, 2013 and December 31, 2012, we had accrued $67,000 and $56,000, respectively, for the payment of interest and penalties. | ||||||||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||||||||
Income Taxes. In July 2013, the Financial Accounting Standards Board (FASB) issued guidance for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent one of these items is not available at the reporting date; the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, with early adoption permitted. The new guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date, with retrospective application permitted. We do not expect the adoption of this new guidance to have a material impact on our consolidated financial position, results of operations or cash flows. | ||||||||||||||||||||
Reclassifications Out of Accumulated Other Comprehensive Income. In February 2013, the FASB issued guidance for the reporting of amounts reclassified out of accumulated other comprehensive income. The new guidance requires entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. The new guidance does not change the current requirements for reporting net income or other comprehensive income in financial statements and is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this new guidance in 2013 did not impact our consolidated financial position, results of operations or cash flows. | ||||||||||||||||||||
Balance Sheet Offsetting. In December 2011, the FASB issued guidance for new disclosure requirements related to the nature of an entity’s rights of set-off and related arrangements associated with its financial instruments and derivative instruments. The new guidance is effective for annual reporting periods, and interim periods within those years, beginning on or after January 1, 2013. The adoption of this new guidance in 2013 did not impact our consolidated financial position, results of operations or cash flows. | ||||||||||||||||||||
Federal Premium-Based Assessment. In July 2011, the FASB issued guidance related to accounting for the fees to be paid by health insurers to the federal government under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (ACA). The ACA imposes an annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The fee will be imposed beginning in 2014 based on a company's share of the industry's net premiums written during the preceding calendar year. | ||||||||||||||||||||
The new guidance specifies that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The new guidance is effective for annual reporting periods beginning after December 31, 2013, when the fee initially becomes effective. As enacted, this federal premium-based assessment is non-deductible for income tax purposes, and is anticipated to be significant. It is yet undetermined how this premium-based assessment will be factored into the calculation of our premium rates, if at all. Accordingly, adoption of this guidance and the enactment of this assessment as currently written is expected to have a material impact on our financial position, results of operations, and cash flows in future periods. We estimate that the fee in 2014 will be approximately $100.0 million. | ||||||||||||||||||||
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants (AICPA), and the Securities and Exchange Commission (SEC) did not have, or are not believed by management to have, a material impact on our present or future consolidated financial statements. |
Net_Income_Per_Share_Notes
Net Income Per Share (Notes) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
Net Income (Loss) per Share | Net Income per Share | |||||||||||
The following table sets forth the calculation of the denominators used to compute basic and diluted net income per share: | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
(In thousands) | ||||||||||||
Shares outstanding at the beginning of the period | 45,683 | 46,527 | 46,762 | 45,815 | ||||||||
Weighted-average number of shares repurchased | — | — | (1,375 | ) | — | |||||||
Weighted-average number of shares issued | 16 | 19 | 321 | 486 | ||||||||
Denominator for basic net income (loss) per share | 45,699 | 46,546 | 45,708 | 46,301 | ||||||||
Dilutive effect of employee stock options and stock grants (1) | 453 | 334 | 532 | — | ||||||||
Dilutive effect of convertible senior notes | 910 | — | 527 | — | ||||||||
Denominator for diluted net income (loss) per share (2) | 47,062 | 46,880 | 46,767 | 46,301 | ||||||||
-1 | Unvested restricted shares are included in the calculation of diluted net income per share when their grant date fair values are below the average fair value of the common shares for each of the periods presented. Options to purchase common shares are included in the calculation of diluted net income per share when their exercise prices are below the average fair value of the common shares for each of the periods presented. For the three and nine months ended September 30, 2013 there were no anti-dilutive weighted restricted shares. For the three and nine months ended September 30, 2013 there were approximately 60,000 and 48,600 anti-dilutive weighted options, respectively. For the three months ended September 30, 2012, there were approximately 370,000 anti-dilutive weighted restricted shares and 125,000 anti-dilutive weighted options. Potentially dilutive unvested restricted shares and stock options were not included in the computation of diluted loss per share for the nine months ended September 30, 2012, because to do so would have been anti-dilutive. | |||||||||||
-2 | Potentially dilutive shares issuable pursuant to our 1.125% Warrants (defined in Note 11, "Long-Term Debt") were not included in the computation of diluted income per share for the three and nine month period ended September 30, 2013, because to do so would have been anti-dilutive. Potentially dilutive shares issuable pursuant to our 3.75% Notes (defined in Note 11, "Long-Term Debt") were not included in the computation of diluted loss per share for the three and nine month period ended September 30, 2012, because to do so would have been anti-dilutive. |
Business_Combinations_Notes
Business Combinations (Notes) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||
Business Combinations | Business Combinations | |||||||||||||||||
Health Plans Segment | ||||||||||||||||||
South Carolina. On July 26, 2013, we entered into an agreement with Community Health Solutions of America, Inc. (CHS) to acquire certain assets, including the rights to convert certain of CHS’ Medicaid members who will be covered by South Carolina’s full-risk Medicaid managed care program, consistent with our stated strategy to enter new markets. The conversion of such members is contingent on our successful receipt of an HMO license from the South Carolina Department of Insurance, the award to Molina Healthcare of a full-risk Medicaid managed care contract by the South Carolina Department of Health and Human Services, and the state's conversion to a full-risk Medicaid managed care program. Each of these three conditions is expected to be satisfied by January 2014. In connection with the agreement, we paid CHS $7.5 million on the closing date. We currently expect to convert approximately 130,000 members under the agreement, for a total estimated discounted purchase price of $65.0 million. The final purchase price will be settled when the member conversion has been completed. | ||||||||||||||||||
Because the number of members we will ultimately convert was unknown as of the July 26, 2013 acquisition date, $57.5 million of the purchase price represents contingent consideration for the number of members we expect to enroll in our health plan as a result of the conversion. The contingent consideration liability will be remeasured to fair value at each quarter until the contingency is resolved, with adjustments, if any, recorded to operations. The undiscounted amount we could be required to pay under this contingent consideration arrangement ranges from $7.5 million (which we paid on the closing date) to approximately $70 million. We expect most of the contingent consideration liability to be settled in the second quarter of 2014. | ||||||||||||||||||
We recorded $42.1 million in goodwill, which relates to future economic benefits arising from expected synergies achieved in the transaction. Such synergies include use of our existing infrastructure to support our health plan operations in South Carolina. We also recorded $22.9 million in intangible assets, as indicated in the table below. Accumulated amortization was immaterial as of September 30, 2013. We expect to record amortization of approximately $1.9 million per year in the years 2014 through 2018. | ||||||||||||||||||
New Mexico. Consistent with our stated strategy to expand within existing markets, on August 1, 2013, our New Mexico health plan closed on its acquisition of the Lovelace Community Health Plan’s contract for the New Mexico Medicaid Salud! Program, under which Lovelace’s Medicaid members became Molina Healthcare Medicaid members and now receive their Medicaid managed services and benefits from our New Mexico health plan. As part of this acquisition, we also expect to add membership currently covered under New Mexico’s State Coverage Insurance (SCI) program with Lovelace in the near future. Effective January 1, 2014, members in this program will ultimately be a) enrolled in the Centennial Care program as Medicaid members, or b) eligible to enroll in New Mexico’s health insurance marketplace. All members transferred from Lovelace will be able to continue with Molina Healthcare as the state transitions to the Centennial Care program. We expect the final purchase price for the acquisition to amount to approximately $53.5 million, of which $47.2 million was paid on the closing date. As of September 30, 2013, the New Mexico health plan's membership increased by approximately 80,000 members as a result of this transaction. | ||||||||||||||||||
Because the number of SCI members we will ultimately retain was unknown as of the August 1, 2013 acquisition date, $2.4 million of contingent consideration was recorded for this SCI membership as of September 30, 2013. We believe the contingent consideration amount may decrease as we learn more about how many SCI members we will retain, but is unlikely to increase. The contingent consideration liability will be remeasured to fair value at each quarter until the contingency is resolved, with adjustments, if any, recorded to operations. We expect that the contingency will be settled in the second quarter of 2014. | ||||||||||||||||||
We recorded $35.2 million in goodwill, which relates to future economic benefits arising from expected synergies achieved in the transaction. Such synergies include use of our existing infrastructure to support the added membership. We also recorded $18.3 million in intangible assets, as indicated in the table below. Accumulated amortization was immaterial as of September 30, 2013. We expect to record amortization of approximately $1.8 million per year in the years 2014 through 2018. | ||||||||||||||||||
Florida. On June 30, 2013, our Florida health plan acquired assets relating to the Statewide Medicaid Managed Care Long-Term Care Program from Neighborly Care Network, Inc. The final purchase price for this acquisition was $3.3 million. Accumulated amortization as September 30, 2013, and future amortization for this acquisition are immaterial. | ||||||||||||||||||
The following table presents assets acquired and the weighted average useful life for the major asset categories for the business combinations in 2013: | ||||||||||||||||||
Fair Value of Assets Acquired - Health Plans Segment | ||||||||||||||||||
Weighted average useful life | South Carolina | New Mexico | Florida | Total | ||||||||||||||
(Years) | (In thousands) | |||||||||||||||||
Membership conversion rights | 12 | $ | 21,800 | $ | — | $ | — | $ | 21,800 | |||||||||
Contract rights | 10.6 | — | 18,300 | — | 18,300 | |||||||||||||
Other finite-lived intangibles | 7.7 | 1,060 | — | 990 | 2,050 | |||||||||||||
Goodwill | — | 42,140 | 35,223 | 2,332 | 79,695 | |||||||||||||
$ | 65,000 | $ | 53,523 | $ | 3,322 | $ | 121,845 | |||||||||||
Acquisition costs relating to these transactions were immaterial individually and in the aggregate. The amounts recorded as goodwill represent intangible assets that do not qualify for separate recognition as identifiable intangible assets. The entire amounts recorded as goodwill are deductible for income tax purposes. Goodwill is not amortized, but is subject to an annual impairment test. |
ShareBased_Compensation_Notes
Share-Based Compensation (Notes) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation | |||||||||||||||
At September 30, 2013, we had employee equity incentives outstanding under two plans: (1) the 2011 Equity Incentive Plan; and (2) the 2002 Equity Incentive Plan (from which equity incentives are no longer awarded). | ||||||||||||||||
In March 2013, our named executive officers were granted restricted stock awards with performance conditions as follows: our chief executive officer was awarded 186,858 shares, our chief financial officer was awarded 93,429 shares, our chief operating officer was awarded 62,286 shares, our chief accounting officer was awarded 28,029 shares, and our general counsel was awarded 21,800 shares. These awards were apportioned into four equal increments, and will vest in accordance with the following four measures: (i) 1/4th will vest in equal 1/3rd increments over three years on March 1, 2014, March 1, 2015, and March 1, 2016; (ii) 1/4th will vest upon our achievement of three-year Total Stockholder Return (TSR) as determined by Institutional Shareholder Services Inc. (ISS) calculations for the three-year period ending December 31, 2013 equal to or greater than the 50th percentile within our ISS peer group; (iii) 1/4th shall vest upon our achievement of total revenue in any of the 2013, 2014, or 2015 fiscal years equal to or greater than $12 billion; and (iv) 1/4th shall vest upon our achievement of the three-year earnings before interest, taxes, depreciation and amortization (EBITDA) margin percentage for the three-year period ending December 31, 2013 equal to or greater than 2.5%. In the event the vesting conditions are not achieved, the awards shall lapse. As of September 30, 2013, such performance goals have not yet been met, but we do expect the awards to vest in full. | ||||||||||||||||
Charged to general and administrative expenses, total stock-based compensation expense was as follows for the three and nine month periods ended September 30, 2013 and 2012: | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Restricted stock and performance awards | $ | 7,634 | $ | 5,093 | $ | 18,593 | $ | 13,943 | ||||||||
Employee stock purchase plan and stock options | 870 | 543 | 2,061 | 1,505 | ||||||||||||
$ | 8,504 | $ | 5,636 | $ | 20,654 | $ | 15,448 | |||||||||
As of September 30, 2013, there was $28.0 million of total unrecognized compensation expense related to unvested restricted share awards, including those with performance conditions, which we expect to recognize over a remaining weighted-average period of 1.7 years. Also as of September 30, 2013, there was $0.6 million of total unrecognized compensation expense related to unvested stock options, which we expect to recognize over a weighted-average period of 2.3 years. | ||||||||||||||||
Restricted and performance stock activity for the nine months ended September 30, 2013 is summarized below: | ||||||||||||||||
Shares | Weighted | |||||||||||||||
Average | ||||||||||||||||
Grant Date | ||||||||||||||||
Fair Value | ||||||||||||||||
Unvested balance as of December 31, 2012 | 986,577 | $ | 23.74 | |||||||||||||
Granted - restricted stock | 587,706 | 32.15 | ||||||||||||||
Granted - performance stock | 456,174 | 30.8 | ||||||||||||||
Vested | (581,329 | ) | 24.72 | |||||||||||||
Forfeited | (31,500 | ) | 25.55 | |||||||||||||
Unvested balance as of September 30, 2013 | 1,417,628 | 29.06 | ||||||||||||||
The total fair value of restricted and performance awards granted during the nine months ended September 30, 2013 and 2012 was $33.3 million and $23.0 million, respectively. The total fair value of restricted awards, including those with performance conditions, vested during the nine months ended September 30, 2013 and 2012 was $19.3 million and $24.3 million, respectively. | ||||||||||||||||
The weighted-average grant date fair value per share of the performance awards with vesting conditions based on TSR, as described above, was $28.24. We estimated the fair value on the grant date using a Monte Carlo Simulation to project TSR over the performance period using correlations and volatilities of the ISS peer group. Additional inputs included a risk-free interest rate of 0.14%, dividend yield of 0%, and an expected life of 0.83 years. | ||||||||||||||||
Stock option activity for the nine months ended September 30, 2013 is summarized below: | ||||||||||||||||
Options | Weighted | Aggregate | Weighted | |||||||||||||
Average | Intrinsic | Average | ||||||||||||||
Exercise | Value | Remaining | ||||||||||||||
Price | Contractual | |||||||||||||||
term | ||||||||||||||||
(In thousands) | (Years) | |||||||||||||||
Outstanding as of December 31, 2012 | 414,061 | $ | 22.39 | |||||||||||||
Granted | 45,000 | 33.02 | ||||||||||||||
Exercised | (70,000 | ) | 20.11 | |||||||||||||
Forfeited | (300 | ) | 17.63 | |||||||||||||
Outstanding as of September 30, 2013 | 388,761 | 24.04 | $ | 4,495 | 3.6 | |||||||||||
Stock options exercisable and expected to vest as of September 30, 2013 | 388,761 | 24.04 | $ | 4,495 | 3.6 | |||||||||||
Exercisable as of September 30, 2013 | 333,761 | 22.5 | $ | 4,371 | 2.7 | |||||||||||
The weighted-average grant date fair value per share of stock options awarded to the new members of our board of directors during the nine months ended September 30, 2013 was $14.67. The weighted-average grant date fair value per share of the stock option awarded to the director appointed during 2012 was $13.97. We estimate the fair value of each stock option award on the grant date using the Black-Scholes option pricing model. To determine the fair values of these stock options we applied risk-free interest rates of 1.1% to 1.4%, expected volatilities of 41.3% to 43.0%, dividend yields of 0%, and expected lives of 6 years to 7 years. |
Fair_Value_Measurements_Notes
Fair Value Measurements (Notes) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||||||
Our consolidated balance sheets include the following financial instruments: cash and cash equivalents, investments, receivables, a derivative asset, trade accounts payable, medical claims and benefits payable, long-term debt, a derivative liability, contingent consideration, and other liabilities. We consider the carrying amounts of cash and cash equivalents, receivables, other current assets and current liabilities to approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization or payment. For our financial instruments measured at fair value on a recurring basis, we prioritize the inputs used in measuring fair value according to a three-tier fair value hierarchy as follows: | ||||||||||||||||||||
Level 1 — Observable Inputs | ||||||||||||||||||||
Our Level 1 financial instruments recorded at fair value consist of investments including government-sponsored enterprise securities (GSEs) and U.S. treasury notes that are classified as current investments in the accompanying consolidated balance sheets. These financial instruments are actively traded and therefore the fair value for these securities is based on quoted market prices on one or more securities exchanges. | ||||||||||||||||||||
Level 2 — Directly or Indirectly Observable Inputs | ||||||||||||||||||||
Our Level 2 financial instruments recorded at fair value consist of investments including corporate debt securities, municipal securities, and certificates of deposit that are classified as current investments in the accompanying consolidated balance sheets. Such investments are traded frequently though not necessarily daily. Fair value for these investments is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets. | ||||||||||||||||||||
Level 3 — Unobservable Inputs | ||||||||||||||||||||
Our Level 3 financial instruments recorded at fair value include non-current auction rate securities that are designated as available-for-sale, and are reported at fair value of $11.7 million (par value of $12.4 million) as of September 30, 2013. To estimate the fair value of these securities we use valuation data from our primary pricing source, a third party who provides a marketplace for illiquid assets with over 10,000 participants including global financial institutions, hedge funds, private equity funds, mutual funds, corporations and other institutional investors. This valuation data is based on a range of prices that represent indicative bids from potential buyers. To validate the reasonableness of the data, we compare these valuations to data from two other third-party pricing sources, which also provide a range of prices representing indicative bids from potential buyers. We have concluded that these estimates, given the lack of market available pricing, provide a reasonable basis for determining the fair value of the auction rate securities as of September 30, 2013. | ||||||||||||||||||||
Level 3 financial instruments also include derivative financial instruments comprising the 1.125% Call Option asset, and the embedded cash conversion option liability. These derivatives are not actively traded and are valued based on an option pricing model that uses observable and unobservable market data for inputs. Significant market data inputs used to determine fair value as of September 30, 2013 included our common stock price, time to maturity of the derivative instruments, the risk-free interest rate, and the implied volatility of our common stock. As described further in Note 11, “Long-Term Debt,” and Note 12, “Derivative Financial Instruments,” the 1.125% Call Option asset and the embedded cash conversion option liability were designed such that changes in their fair values would offset, with minimal impact to the consolidated statements of operations. Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such instruments is mitigated. | ||||||||||||||||||||
Additionally, Level 3 financial instruments include contingent consideration liabilities of $59.9 million, primarily relating to the acquisition in South Carolina as described in Note 4, "Business Combinations," and recorded to accounts payable and accrued liabilities in our consolidated balance sheets. We applied discounted cash flow analysis to determine the fair value of the contingent consideration liabilities. Significant unobservable inputs primarily related to the probability weighted present values of the purchase price estimates for the membership that could convert in the South Carolina acquisition. Such membership could range from zero to approximately 170,000 members, with a weighted average of approximately 130,000 members. | ||||||||||||||||||||
Our financial instruments measured at fair value on a recurring basis at September 30, 2013, were as follows: | ||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Corporate debt securities | $ | 467,060 | $ | — | $ | 467,060 | $ | — | ||||||||||||
GSEs | 74,951 | 74,951 | — | — | ||||||||||||||||
Municipal securities | 107,844 | — | 107,844 | — | ||||||||||||||||
U.S. treasury notes | 42,207 | 42,207 | — | — | ||||||||||||||||
Certificates of deposit | 43,089 | — | 43,089 | — | ||||||||||||||||
Auction rate securities | 11,674 | — | — | 11,674 | ||||||||||||||||
1.125% Call Option derivative asset | 191,663 | — | — | 191,663 | ||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 938,488 | $ | 117,158 | $ | 617,993 | $ | 203,337 | ||||||||||||
Embedded cash conversion option derivative liability | $ | 191,556 | $ | — | $ | — | $ | 191,556 | ||||||||||||
Contingent consideration liabilities | 59,947 | — | — | 59,947 | ||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 251,503 | $ | — | $ | — | $ | 251,503 | ||||||||||||
Our financial instruments measured at fair value on a recurring basis at December 31, 2012, were as follows: | ||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Corporate debt securities | $ | 191,008 | $ | — | $ | 191,008 | $ | — | ||||||||||||
GSEs | 29,525 | 29,525 | — | — | ||||||||||||||||
Municipal securities | 75,848 | — | 75,848 | — | ||||||||||||||||
U.S. treasury notes | 35,740 | 35,740 | — | — | ||||||||||||||||
Certificates of deposit | 10,724 | — | 10,724 | — | ||||||||||||||||
Auction rate securities | 13,419 | — | — | 13,419 | ||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 356,264 | $ | 65,265 | $ | 277,580 | $ | 13,419 | ||||||||||||
Interest rate swap derivative liability | $ | 1,307 | $ | — | $ | 1,307 | $ | — | ||||||||||||
The following tables present activity relating to our assets (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3): | ||||||||||||||||||||
Changes in Level 3 Instruments for the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Total | Auction Rate Securities | Derivatives, Net | Contingent Consideration | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance at December 31, 2012 | $ | 13,419 | $ | 13,419 | $ | — | $ | — | ||||||||||||
Net unrealized gains included in other comprehensive income | 505 | 505 | — | — | ||||||||||||||||
Net unrealized losses included in other expense | (3,382 | ) | — | (3,382 | ) | — | ||||||||||||||
Issuances | (75,074 | ) | — | (75,074 | ) | — | ||||||||||||||
Auction rate securities settlements and derivative re-designation | 76,747 | (2,250 | ) | 78,997 | — | |||||||||||||||
Acquisitions | (59,947 | ) | — | — | (59,947 | ) | ||||||||||||||
Balance at September 30, 2013 | $ | (47,732 | ) | $ | 11,674 | $ | 541 | $ | (59,947 | ) | ||||||||||
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at September 30, 2013 | $ | 397 | $ | 397 | $ | — | $ | — | ||||||||||||
Changes in Level 3 Instruments for the Year Ended December 31, 2012 | ||||||||||||||||||||
Total | Auction Rate Securities | Derivatives, Net | Contingent Consideration | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance at December 31, 2011 | $ | 16,134 | $ | 16,134 | $ | — | $ | — | ||||||||||||
Net unrealized gains included in other comprehensive income | 1,635 | 1,635 | — | — | ||||||||||||||||
Settlements | (4,350 | ) | (4,350 | ) | — | — | ||||||||||||||
Balance at December 31, 2012 | $ | 13,419 | $ | 13,419 | $ | — | $ | — | ||||||||||||
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at December 31, 2012 | $ | 1,059 | $ | 1,059 | $ | — | $ | — | ||||||||||||
Fair Value Measurements – Disclosure Only | ||||||||||||||||||||
The carrying amounts and estimated fair values of our long-term debt, as well as the applicable fair value hierarchy tiers, are contained in the tables below. Our convertible senior notes are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets. As described in greater detail Note 11, "Long-Term Debt," we recorded lease financing obligations in connection with sale-leaseback transactions executed in the first half of 2013. The lease financing obligations are classified as Level 3 financial instruments because certain inputs used to determine their fair value are unobservable, such as our incremental borrowing rate. Fair value for these obligations was determined using discounted cash flow analysis with an estimated incremental borrowing rate for debt with similar terms. The credit facility was repaid and terminated effective February 15, 2013, and the term loan was repaid in June 2013. | ||||||||||||||||||||
30-Sep-13 | ||||||||||||||||||||
Carrying | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Value | Fair Value | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||
1.125% Notes | $ | 411,659 | $ | 596,899 | $ | — | $ | 596,899 | $ | — | ||||||||||
3.75% Notes | 180,225 | 229,556 | — | 229,556 | — | |||||||||||||||
Lease financing obligations | 178,188 | 178,500 | — | — | 178,500 | |||||||||||||||
$ | 770,072 | $ | 1,004,955 | $ | — | $ | 826,455 | $ | 178,500 | |||||||||||
31-Dec-12 | ||||||||||||||||||||
Carrying | Total | |||||||||||||||||||
Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
3.75% Notes | $ | 175,468 | $ | 208,460 | $ | — | $ | 208,460 | $ | — | ||||||||||
Term loan | 47,471 | 47,471 | — | — | 47,471 | |||||||||||||||
Credit facility | 40,000 | 40,000 | — | — | 40,000 | |||||||||||||||
$ | 262,939 | $ | 295,931 | $ | — | $ | 208,460 | $ | 87,471 | |||||||||||
Investments_Notes
Investments (Notes) | 9 Months Ended | |||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||
Investments | Investments | |||||||||||||||||||||
The following tables summarize our investments as of the dates indicated: | ||||||||||||||||||||||
30-Sep-13 | ||||||||||||||||||||||
Amortized | Gross | Estimated | ||||||||||||||||||||
Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 467,785 | $ | 306 | $ | 1,031 | $ | 467,060 | ||||||||||||||
GSEs | 75,022 | 18 | 89 | 74,951 | ||||||||||||||||||
Municipal securities | 108,647 | 109 | 912 | 107,844 | ||||||||||||||||||
U.S. treasury notes | 42,159 | 67 | 19 | 42,207 | ||||||||||||||||||
Certificates of deposit | 43,087 | 3 | 1 | 43,089 | ||||||||||||||||||
Subtotal - current investments | 736,700 | 503 | 2,052 | 735,151 | ||||||||||||||||||
Auction rate securities | 12,400 | — | 726 | 11,674 | ||||||||||||||||||
$ | 749,100 | $ | 503 | $ | 2,778 | $ | 746,825 | |||||||||||||||
31-Dec-12 | ||||||||||||||||||||||
Amortized | Gross | Estimated | ||||||||||||||||||||
Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 190,545 | $ | 528 | $ | 65 | $ | 191,008 | ||||||||||||||
GSEs | 29,481 | 45 | 1 | 29,525 | ||||||||||||||||||
Municipal securities | 75,909 | 185 | 246 | 75,848 | ||||||||||||||||||
U.S. treasury notes | 35,700 | 42 | 2 | 35,740 | ||||||||||||||||||
Certificates of deposit | 10,715 | 9 | — | 10,724 | ||||||||||||||||||
Subtotal - current investments | 342,350 | 809 | 314 | 342,845 | ||||||||||||||||||
Auction rate securities | 14,650 | — | 1,231 | 13,419 | ||||||||||||||||||
$ | 357,000 | $ | 809 | $ | 1,545 | $ | 356,264 | |||||||||||||||
The contractual maturities of our investments as of September 30, 2013 are summarized below: | ||||||||||||||||||||||
Cost | Estimated | |||||||||||||||||||||
Fair Value | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Due in one year or less | $ | 406,330 | $ | 406,342 | ||||||||||||||||||
Due one year through five years | 330,370 | 328,809 | ||||||||||||||||||||
Due after ten years | 12,400 | 11,674 | ||||||||||||||||||||
$ | 749,100 | $ | 746,825 | |||||||||||||||||||
Gross realized gains and gross realized losses from sales of available-for-sale securities are calculated under the specific identification method and are included in investment income. Net realized investment gains for the three months ended September 30, 2013 and 2012 were $27,000 and $12,000, respectively. Net realized investment gains for the nine months ended September 30, 2013 and 2012 were $169,000 and $250,000, respectively. | ||||||||||||||||||||||
We monitor our investments for other-than-temporary impairment. For investments other than our auction rate securities, discussed below, we have determined that unrealized gains and losses at September 30, 2013 and December 31, 2012, are temporary in nature, because the change in market value for these securities has resulted from fluctuating interest rates, rather than a deterioration of the credit worthiness of the issuers. So long as we hold these securities to maturity, we are unlikely to experience gains or losses. In the event that we dispose of these securities before maturity, we expect that realized gains or losses, if any, will be immaterial. | ||||||||||||||||||||||
The following tables segregate those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a loss position for 12 months or more as of September 30, 2013. | ||||||||||||||||||||||
In a Continuous Loss Position | In a Continuous Loss Position | |||||||||||||||||||||
for Less than 12 Months | for 12 Months or More | |||||||||||||||||||||
Estimated | Unrealized | Total | Estimated | Unrealized | Total | |||||||||||||||||
Fair | Losses | Number of | Fair | Losses | Number of | |||||||||||||||||
Value | Securities | Value | Securities | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 254,351 | $ | 991 | 99 | $ | 5,580 | $ | 40 | 5 | ||||||||||||
Municipal securities | 60,428 | 736 | 68 | 12,424 | 176 | 29 | ||||||||||||||||
GSEs | 24,271 | 89 | 15 | — | — | — | ||||||||||||||||
U.S. treasury notes | 12,487 | 19 | 11 | — | — | — | ||||||||||||||||
Certificates of deposit | 415 | 1 | 2 | — | — | — | ||||||||||||||||
Auction rate securities | — | — | — | 11,674 | 726 | 17 | ||||||||||||||||
$ | 351,952 | $ | 1,836 | 195 | $ | 29,678 | $ | 942 | 51 | |||||||||||||
The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a loss position for 12 months or more as of December 31, 2012. | ||||||||||||||||||||||
In a Continuous Loss Position | In a Continuous Loss Position | |||||||||||||||||||||
for Less than 12 Months | for 12 Months or More | |||||||||||||||||||||
Estimated | Unrealized | Total | Estimated | Unrealized | Total | |||||||||||||||||
Fair | Losses | Number of | Fair | Losses | Number of | |||||||||||||||||
Value | Securities | Value | Securities | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 44,457 | $ | 65 | 23 | $ | — | $ | — | — | ||||||||||||
Municipal securities | 35,223 | 246 | 43 | — | — | — | ||||||||||||||||
GSEs | 5,004 | 1 | 1 | — | — | — | ||||||||||||||||
U.S. treasury notes | 4,511 | 2 | 5 | — | — | — | ||||||||||||||||
Auction rate securities | — | — | — | 13,419 | 1,231 | 21 | ||||||||||||||||
$ | 89,195 | $ | 314 | 72 | $ | 13,419 | $ | 1,231 | 21 | |||||||||||||
Auction Rate Securities | ||||||||||||||||||||||
Due to events in the credit markets, the auction rate securities held by us experienced failed auctions beginning in the first quarter of 2008, and such auctions have not resumed. Therefore, quoted prices in active markets have not been available since early 2008. Our investments in auction rate securities are collateralized by student loan portfolios guaranteed by the U.S. government, and the range of maturities for such securities is from 17 years to 33 years. Considering the relative insignificance of these securities when compared with our liquid assets and other sources of liquidity, we have no current intention of selling these securities nor do we expect to be required to sell these securities before a recovery in their cost basis. For this reason, and because the decline in the fair value of the auction rate securities was not due to the credit quality of the issuers, we do not consider the auction rate securities to be other-than-temporarily impaired at September 30, 2013. At the time of the first failed auctions during first quarter 2008, we held a total of $82.1 million in auction rate securities at par value; since that time, we have settled $69.7 million of these instruments at par value. | ||||||||||||||||||||||
For the nine months ended September 30, 2013 and 2012, we recorded pretax unrealized gains of $0.5 million and $1.4 million, respectively, to accumulated other comprehensive income for the changes in their fair value. Any future fluctuation in fair value related to these instruments that we deem to be temporary, including any recoveries of previous write-downs, would be recorded to accumulated other comprehensive income. If we determine that any future valuation adjustment was other-than-temporary, we would record a charge to earnings as appropriate. |
Receivables_Notes
Receivables (Notes) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Receivables [Abstract] | ||||||||
Receivables | Receivables | |||||||
Receivables consist primarily of amounts due from the various states in which we operate. Accounts receivable increased as of September 30, 2013, primarily due to certain intermediary arrangements with state agencies entered into in the third quarter of 2013. For further information on these arrangements, refer to Note 10, "Medical Claims and Benefits Payable." | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
(In thousands) | ||||||||
Health Plans segment: | ||||||||
California | $ | 130,718 | $ | 28,553 | ||||
Florida | 2,239 | 953 | ||||||
Michigan | 16,311 | 12,873 | ||||||
New Mexico | 14,091 | 9,059 | ||||||
Ohio | 79,200 | 40,980 | ||||||
Texas | 5,280 | 7,459 | ||||||
Utah | 10,375 | 3,359 | ||||||
Washington | 12,668 | 17,587 | ||||||
Wisconsin | 5,033 | 4,098 | ||||||
Other | 633 | 2,177 | ||||||
Total Health Plans segment | 276,548 | 127,098 | ||||||
Molina Medicaid Solutions segment | 17,419 | 22,584 | ||||||
$ | 293,967 | $ | 149,682 | |||||
Restricted_Investments_Notes
Restricted Investments (Notes) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||
Restricted Investments | Restricted Investments | |||||||
Pursuant to the regulations governing our Health Plans segment subsidiaries, we maintain statutory deposits and deposits required by state authorities in certificates of deposit and U.S. treasury securities. We also maintain restricted investments as protection against the insolvency of certain capitated providers. Additionally, in connection with the Molina Medicaid Solutions segment contracts with the states of Maine and Idaho, we maintain restricted investments as collateral for letters of credit. The following table presents the balances of restricted investments: | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
(In thousands) | ||||||||
California | $ | 373 | $ | 373 | ||||
Florida | 8,840 | 5,738 | ||||||
Michigan | 1,014 | 1,014 | ||||||
New Mexico | 24,620 | 15,915 | ||||||
Ohio | 9,081 | 9,082 | ||||||
Texas | 3,500 | 3,503 | ||||||
Utah | 3,308 | 3,126 | ||||||
Washington | 151 | 151 | ||||||
Other | 4,037 | 5,199 | ||||||
Total Health Plans segment | 54,924 | 44,101 | ||||||
Molina Medicaid Solutions segment | 10,301 | — | ||||||
$ | 65,225 | $ | 44,101 | |||||
The contractual maturities of our held-to-maturity restricted investments as of September 30, 2013 are summarized below. | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(In thousands) | ||||||||
Due in one year or less | $ | 59,633 | $ | 59,636 | ||||
Due one year through five years | 5,592 | 5,596 | ||||||
$ | 65,225 | $ | 65,232 | |||||
Medical_Claims_and_Benefits_Pa
Medical Claims and Benefits Payable (Notes) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Other Liabilities Disclosure [Abstract] | ||||||||||||
Medical Claims and Benefits Payable | Medical Claims and Benefits Payable | |||||||||||
As of September 30, 2013, 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 September 30, 2013, we recorded provider payables of approximately $64.1 million, and $69.7 million accounts receivable for new intermediary arrangements that began in the third quarter of 2013. | ||||||||||||
The following table presents the components of the change in our medical claims and benefits payable for the periods indicated. The amounts displayed for “Components of medical care costs related to: Prior periods” represent the amount by which our 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 for the periods indicated: | ||||||||||||
Nine Months Ended | Three Months Ended | Year Ended | ||||||||||
30-Sep-13 | 30-Sep-13 | 31-Dec-12 | ||||||||||
(Dollars in thousands) | ||||||||||||
Balances at beginning of period | $ | 494,530 | $ | 465,487 | $ | 402,476 | ||||||
Components of medical care costs related to: | ||||||||||||
Current period | 4,021,461 | 1,415,670 | 5,136,055 | |||||||||
Prior periods | (54,040 | ) | (32,575 | ) | (39,295 | ) | ||||||
Total medical care costs | 3,967,421 | 1,383,095 | 5,096,760 | |||||||||
Payments for medical care costs related to: | ||||||||||||
Current period | 3,410,689 | 851,025 | 4,649,363 | |||||||||
Prior periods | 418,556 | 364,851 | 355,343 | |||||||||
Total paid | 3,829,245 | 1,215,876 | 5,004,706 | |||||||||
Balances at end of period | $ | 632,706 | $ | 632,706 | $ | 494,530 | ||||||
Benefit from prior period as a percentage of: | ||||||||||||
Balance at beginning of period | 10.9 | % | 7 | % | 9.8 | % | ||||||
Premium revenue, trailing twelve months | 0.9 | % | 0.5 | % | 0.7 | % | ||||||
Medical care costs, trailing twelve months | 1 | % | 0.6 | % | 0.8 | % | ||||||
Assuming that our initial estimate of claims incurred but not paid (IBNP) is accurate, we believe that amounts ultimately paid out would generally be between 8% and 10% less than the liability recorded at the end of the period as a result of the inclusion in that liability of the allowance for adverse claims development and the accrued cost of settling those claims. Because the amount of our initial liability is merely an estimate (and therefore not perfectly accurate), we will always experience variability in that estimate as new information becomes available with the passage of time. Therefore, there can be no assurance that amounts ultimately paid out will fall within the range of 8% to 10% lower than the liability that was initially recorded. Furthermore, because our initial estimate of IBNP is derived from many factors, some of which are qualitative in nature rather than quantitative, we are seldom able to assign specific values to the reasons for a change in estimate - we only know when the circumstances for any one or more factors are out of the ordinary. | ||||||||||||
As indicated above, the amounts ultimately paid out on our liabilities in fiscal years 2013 and 2012 were less than what we had expected when we had established our reserves. For example, for the year ended December 31, 2012, the amounts ultimately paid out were less than the amount of the reserves we had established as of December 31, 2011 by 9.8%. While many related factors working in conjunction with one another determine the accuracy of our estimates, we are seldom able to quantify the impact that any single factor has on a change in estimate. In addition, given the variability inherent in the reserving process, we will only be able to identify specific factors if they represent a significant departure from expectations. As a result, we do not expect to be able to fully quantify the impact of individual factors on changes in estimates. | ||||||||||||
We recognized favorable prior period claims development in the amount of $54.0 million for the nine months ended September 30, 2013. This amount represents our estimate, as of September 30, 2013, of the extent to which our initial estimate of medical claims and benefits payable at December 31, 2012 was more than the amount that will ultimately be paid out in satisfaction of that liability. We believe the overestimation of our claims liability at December 31, 2012 was due primarily to the following factors: | ||||||||||||
• | At our Washington health plan prior to July 2012, certain high-cost newborns that were approved for supplemental security income (SSI) coverage by the state were retroactively dis-enrolled from our Healthy Options (TANF) coverage, and the health plan was reimbursed for the claims paid on behalf of these members. Starting July 1, 2012, these newborns, as well as other high-cost disabled members, are now covered by the health plan under the Healthy Options Blind and Disabled (HOBD) program. At the end of 2012, we had limited claims history with which to estimate the claims liability of the HOBD members, and as a result the liability for these high-cost members was overstated. | |||||||||||
• | At our New Mexico health plan, we overestimated the impact of certain high-dollar outstanding claim payments as of December 31, 2012. | |||||||||||
• | At our Ohio health plan, we overestimated the impact of several potential high-dollar claims relating to our aged, blind or disabled (ABD) members. | |||||||||||
We recognized favorable prior period claims development in the amount of $32.6 million for the three months ended September 30, 2013. This amount represents our estimate as of September 30, 2013, of the extent to which our initial estimate of medical claims and benefits payable at June 30, 2013 was more than the amount that will ultimately be paid out in satisfaction of that liability. This amount of favorable development was considerably less than we typically experience, and was significant enough to have a materially unfavorable impact upon our third quarter financial performance. We believe the overestimation of our claims liability at June 30, 2013 was due primarily to the following factors: | ||||||||||||
• | At our Ohio health plan, we overestimated the impact of several potential high-dollar claims relating to critically ill members. | |||||||||||
• | At our Michigan health plan, we underestimated the impact of future claims overpayment recoveries when establishing reserves at June 30, 2013. | |||||||||||
• | The overestimation of our liability for medical claims and benefits payable was partially offset by an underestimation of that liability at our Texas health plan as a result of the costs associated with an unusually large number of older claims. This anomaly was caused primarily by the payment of claims that were delayed as a result of hospital provider disputes that have been resolved. The underestimation of the liability at our Texas health plan was responsible for the relatively small amount of prior period development noted above. | |||||||||||
We recognized favorable prior period claims development in the amount of $37.7 million and $39.3 million for the nine months ended September 30, 2012, and the year ended December 31, 2012, respectively. This was primarily caused by the overestimation of our liability claims and medical benefits at December 31, 2011, as a result of the following factors: | ||||||||||||
• | At our Washington health plan, we underestimated the amount of recoveries we would collect for certain high-cost newborn claims, resulting in an overestimation of reserves at year end. | |||||||||||
• | At our Texas health plan, we overestimated the cost of new members in STAR+PLUS, in the Dallas region. | |||||||||||
• | The overestimation of our liability for medical claims and benefits payable was partially offset by an underestimation of that liability at our Missouri health plan, as a result of the costs associated with an unusually large number of premature infants during the fourth quarter of 2011. | |||||||||||
In estimating our claims liability at September 30, 2013, we adjusted our base calculation to take account of the following factors which we believe are reasonably likely to change our final claims liability amount: | ||||||||||||
• | At our Texas health plan, we have noted an unusually large number of older claims dated older than 12 months. This has caused some distortion in the claims lag pattern that we use to estimate the incurred claims. | |||||||||||
• | At our Michigan health plan, there were a large number of claim recoveries recorded in June 2013 due to overpayments that resulted from a system configuration issue. These recoveries impacted the completion factors used to estimate incurred claims. While we attempted to remove this distortion from the claims data to develop a more accurate reserve estimate, this type of correction in claims data adds a degree of uncertainty for the Michigan reserves as of September 30, 2013. | |||||||||||
• | Our New Mexico health plan acquired approximately 80,000 new members in August 2013 from another health plan. This acquisition roughly doubled the size of the membership in a single month. For the September 30, 2013 reserve calculation, we have assumed that these new members will incur costs at about the same rate as the New Mexico members that were previously enrolled. With only two months of paid claims for these new members, it is too soon to know whether that assumption is correct or not. | |||||||||||
The use of a consistent methodology in estimating our liability for claims and medical benefits payable minimizes the degree to which the under- or overestimation of that liability at the close of one period may affect consolidated results of operations in subsequent periods. In particular, the use of a consistent methodology should result in the replenishment of reserves during any given period in a manner that generally offsets the benefit of favorable prior period development in that period. Facts and circumstances unique to the estimation process at any single date, however, may still lead to a material impact on consolidated results of operations in subsequent periods. Any absence of adverse claims development (as well as the expensing through general and administrative expense of the costs to settle claims held at the start of the period) will lead to the recognition of a benefit from prior period claims development in the period subsequent to the date of the original estimate. In 2012, and for the nine months ended September 30, 2013, the absence of adverse development of the liability for claims and medical benefits payable at the close of the previous period resulted in the recognition of substantial favorable prior period development. In both years, however, the recognition of a benefit from prior period claims development did not have a material impact on our consolidated results of operations because the replenishment of reserves in the respective periods generally offset the benefit from the prior period. |
LongTerm_Debt_Notes
Long-Term Debt (Notes) | 9 Months Ended | |||||||||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt | |||||||||||||||||||||||||||
As of September 30, 2013, maturities of long-term debt for the years ending December 31 are as follows (in thousands): | ||||||||||||||||||||||||||||
Total | 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | ||||||||||||||||||||||
1.125% Notes | $ | 550,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 550,000 | ||||||||||||||
3.75% Notes | 187,000 | — | 187,000 | — | — | — | — | |||||||||||||||||||||
$ | 737,000 | $ | — | $ | 187,000 | $ | — | $ | — | $ | — | $ | 550,000 | |||||||||||||||
1.125% Cash Convertible Senior Notes due 2020 | ||||||||||||||||||||||||||||
On February 15, 2013, we settled the issuance of $550.0 million aggregate principal amount of 1.125% Cash Convertible Senior Notes due 2020 (the 1.125% Notes). This transaction included the initial issuance of $450.0 million on February 11, 2013, plus the exercise of the full amount of the $100.0 million over-allotment option on February 13, 2013. The aggregate net proceeds of the 1.125% Notes were $458.9 million, after payment of the net cost of the Call Spread Overlay described below and in Note 12, “Derivative Financial Instruments,” and transaction costs. Additionally, we used $50.0 million of the net proceeds to purchase shares of our common stock (see Note 13, “Stockholders' Equity”), and $40.0 million to repay the principal owed under our Credit Facility. | ||||||||||||||||||||||||||||
Interest on the 1.125% Notes is payable semiannually in arrears on January 15 and July 15 of each year, at a rate of 1.125% per annum, and commenced on July 15, 2013. The 1.125% Notes will mature on January 15, 2020 unless repurchased or converted in accordance with their terms prior to such date. | ||||||||||||||||||||||||||||
The 1.125% Notes are convertible only into cash, and not into shares of our common stock or any other securities. Holders may convert their 1.125% Notes solely into cash at their option at any time prior to the close of business on the business day immediately preceding July 15, 2019 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2013 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of 1.125% Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after July 15, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 1.125% Notes solely into cash at any time, regardless of the foregoing circumstances. Upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per $1,000 principal amount of 1.125% Notes, equal to the settlement amount, determined in the manner set forth in the indenture. | ||||||||||||||||||||||||||||
The initial conversion rate will be 24.5277 shares of our common stock per $1,000 principal amount of 1.125% Notes (equivalent to an initial conversion price of approximately $40.77 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, we will pay a cash make-whole premium by increasing the conversion rate for a holder who elects to convert its 1.125% Notes in connection with such a corporate event in certain circumstances. We may not redeem the 1.125% Notes prior to the maturity date, and no sinking fund is provided for the 1.125% Notes. | ||||||||||||||||||||||||||||
If we undergo a fundamental change (as defined in the indenture to the 1.125% Notes), holders may require us to repurchase for cash all or part of their 1.125% Notes at a repurchase price equal to 100% of the principal amount of the 1.125% Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The indenture provides for customary events of default, including cross acceleration to certain other indebtedness of ours, and our significant subsidiaries. | ||||||||||||||||||||||||||||
The 1.125% Notes are senior unsecured obligations, and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 1.125% Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. | ||||||||||||||||||||||||||||
The 1.125% Notes contain an embedded cash conversion option. We have determined that the embedded cash conversion option is a derivative financial instrument, required to be separated from the 1.125% Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the embedded cash conversion option transaction settles or expires. The initial fair value liability of the embedded cash conversion option was $149.3 million, which simultaneously reduced the carrying value of the 1.125% Notes (effectively an original issuance discount). For further discussion of the derivative financial instruments relating to the 1.125% Notes, refer to Note 12, “Derivative Financial Instruments.” | ||||||||||||||||||||||||||||
As noted above, the reduced carrying value on the 1.125% Notes resulted in a debt discount that is amortized to the 1.125% Notes' principal amount through the recognition of interest expense over the expected life of the debt. This has resulted in our recognition of interest expense on the 1.125% Notes at an effective rate approximating what we would have incurred had nonconvertible debt with otherwise similar terms been issued. The effective interest rate of the 1.125% Notes is 5.9%, which is imputed based on the amortization of the fair value of the embedded cash conversion option over the remaining term of the 1.125% Notes. As of September 30, 2013, we expect the 1.125% Notes to be outstanding until their January 15, 2020 maturity date, for a remaining amortization period of 6.3 years. The 1.125% Notes' if-converted value did not exceed their principal amount as of September 30, 2013. | ||||||||||||||||||||||||||||
Also in connection with the settlement of the 1.125% Notes, we paid approximately $16.9 million in transaction costs. Such costs have been allocated to the 1.125% Notes, the 1.125% Call Option (defined below) and the 1.125% Warrants (defined below) according to their relative fair values. The amount allocated to the 1.125% Notes, or $12.0 million, was capitalized and will be amortized over the term of the 1.125% Notes. The aggregate amount allocated to the 1.125% Call Option and 1.125% Warrants, or $4.9 million, was recorded to interest expense in the quarter ended March 31, 2013. | ||||||||||||||||||||||||||||
1.125% Notes Call Spread Overlay | ||||||||||||||||||||||||||||
Concurrent with the issuance of the 1.125% Notes, we entered into privately negotiated hedge transactions (collectively, the 1.125% Call Option) and warrant transactions (collectively, the 1.125% Warrants), with certain of the initial purchasers of the 1.125% Notes (the Counterparties). These transactions represent a Call Spread Overlay, whereby the cost of the 1.125% Call Option we purchased to cover the cash outlay upon conversion of the 1.125% Notes was reduced by the sales price of the 1.125% Warrants. Assuming full performance by the Counterparties (and 1.125% Warrants strike prices in excess of the conversion price of the 1.125% Notes), these transactions are intended to offset cash payments due upon any conversion of the 1.125% Notes. We used $149.3 million of the proceeds from the settlement of the 1.125% Notes to pay for the 1.125% Call Option, and simultaneously received $75.1 million for the sale of the 1.125% Warrants, for a net cash outlay of $74.2 million for the Call Spread Overlay. The 1.125% Call Option is a derivative financial instrument. Until April 22, 2013, the 1.125% Warrants were classified as derivative financial instruments; refer to Note 12, “Derivative Financial Instruments” for further discussion. | ||||||||||||||||||||||||||||
Aside from the initial payment of a premium to the Counterparties of $149.3 million for the 1.125% Call Option, we will not be required to make any cash payments to the Counterparties under the 1.125% Call Option, and will be entitled to receive from the Counterparties an amount of cash, generally equal to the amount by which the market price per share of common stock exceeds the strike price of the 1.125% Call Options during the relevant valuation period. The strike price under the 1.125% Call Option is initially equal to the conversion price of the 1.125% Notes. Additionally, if the market value per share of our common stock exceeds the strike price of the 1.125% Warrants on any trading day during the 160 trading day measurement period under the 1.125% Warrants, we will be obligated to issue to the Counterparties a number of shares equal in value to the product of the amount by which such market value exceeds such strike price and 1/160th of the aggregate number of shares of our common stock underlying the 1.125% Warrants, subject to a share delivery cap. We will not receive any additional proceeds if the 1.125% Warrants are exercised. Pursuant to the 1.125% Warrants, we issued 13,490,236 warrants with a strike price of $53.8475 per share. The number of warrants and the strike price are subject to adjustment under certain circumstances. | ||||||||||||||||||||||||||||
3.75% Convertible Senior Notes due 2014 | ||||||||||||||||||||||||||||
We had $187.0 million of 3.75% Convertible Senior Notes due 2014 (the 3.75% Notes) outstanding as of September 30, 2013 and December 31, 2012. The 3.75% Notes rank equally in right of payment with our existing and future senior indebtedness. The 3.75% Notes are convertible into cash and, under certain circumstances, shares of our common stock. The initial conversion rate is 31.9601 shares of our common stock per one thousand dollar principal amount of the 3.75% Notes. This represents an initial conversion price of approximately $31.29 per share of our common stock. In addition, if certain corporate transactions that constitute a change of control occur prior to maturity, we will increase the conversion rate in certain circumstances. | ||||||||||||||||||||||||||||
Because the 3.75% Notes have cash settlement features, we have allocated the proceeds from their issuance between a liability component and an equity component. The reduced carrying value on the 3.75% Notes resulted in a debt discount that is amortized back to the 3.75% Notes' principal amount through the recognition of non-cash interest expense over the expected life of the debt. This has resulted in our recognition of interest expense on the 3.75% Notes at an effective rate approximating what we would have incurred had nonconvertible debt with otherwise similar terms had been issued. The effective interest rate of the 3.75% Notes is 7.5%, principally based on the seven-year U.S. Treasury note rate as of the October 2007 issuance date, plus an appropriate credit spread. As of September 30, 2013, we expect the 3.75% Notes to be outstanding until their October 1, 2014 maturity date, for a remaining amortization period of 12 months. As of September 30, 2013, the 3.75% Notes’ if-converted value exceeded their principal amount by approximately $30 million. The 3.75% Notes' if-converted value did not exceed their principal amount as of December 31, 2012. At September 30, 2013, the equity component of the 3.75% Notes, net of the impact of deferred taxes, was $24.0 million. | ||||||||||||||||||||||||||||
The principal amounts, unamortized discount and net carrying amounts of the convertible senior notes were as follows: | ||||||||||||||||||||||||||||
Principal Balance | Unamortized Discount | Net Carrying Amount | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
September 30, 2013: | ||||||||||||||||||||||||||||
1.125% Notes | $ | 550,000 | $ | 138,341 | $ | 411,659 | ||||||||||||||||||||||
3.75% Notes | 187,000 | 6,775 | 180,225 | |||||||||||||||||||||||||
$ | 737,000 | $ | 145,116 | $ | 591,884 | |||||||||||||||||||||||
December 31, 2012: | ||||||||||||||||||||||||||||
3.75% Notes | $ | 187,000 | $ | 11,532 | $ | 175,468 | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Interest cost recognized for the period relating to the: | ||||||||||||||||||||||||||||
Contractual interest coupon rate | $ | 3,300 | $ | 1,753 | $ | 9,127 | $ | 5,259 | ||||||||||||||||||||
Amortization of the discount | 6,059 | 1,499 | 15,747 | 4,414 | ||||||||||||||||||||||||
Total interest cost recognized | $ | 9,359 | $ | 3,252 | $ | 24,874 | $ | 9,673 | ||||||||||||||||||||
Lease Financing Obligations | ||||||||||||||||||||||||||||
On June 12, 2013 we entered into a sale-leaseback transaction for the sale and contemporaneous leaseback of two properties, including the Molina Center located in Long Beach, California, and the building that houses our Ohio health plan located in Columbus, Ohio. We sold the two properties for $158.6 million in the aggregate. Due to our continuing involvement with these leased properties, the sale did not qualify for sale-leaseback accounting treatment and we remain the "accounting owner" of the properties. The carrying values of these properties, including the related intangible assets, amounted to $78.3 million in the aggregate as of September 30, 2013. These assets continue to be included in our consolidated balance sheets, and also continue to be depreciated and amortized over their remaining useful lives. The sales price of $158.6 million was recorded as a lease financing obligation, which is amortized over the 25-year lease term such that there will be no gain or loss recorded if the lease is not extended at the end of its term. Payments under the lease adjust the lease financing obligation, and the imputed interest is recorded to interest expense in our consolidated statements of operations. Transaction costs associated with this transaction, amounting to $3.5 million, have been deferred and will be amortized over the initial lease term. Future minimum rental income on noncancelable leases from third party tenants of these properties, as reported in our December 31, 2012 Form 10-K, is now considered to be sublease rental income, and continues to be reported in rental income in our consolidated statements of operations. The future minimum rental income previously reported as of December 31, 2012 is consistent with our expected sublease rental income as of September 30, 2013. For information regarding the future minimum lease obligation, refer to Note 15, “Commitments and Contingencies.” | ||||||||||||||||||||||||||||
As described and defined in further detail in Note 16, "Related Party Transactions," we entered into a lease for office space in February 2013 consisting of two office buildings then under construction. We have concluded that we are the accounting owner of the construction projects because of our continuing involvement in those projects. Therefore, we have recorded $18.9 million to property, equipment and capitalized software, net, in the accompanying consolidated balance sheet as of September 30, 2013, which represents the total cost, including imputed interest, incurred by the Landlord thus far in the construction projects. As of September 30, 2013, the aggregate amount recorded to lease financing obligations for the construction projects amounted to $19.2 million. Payments under the lease adjust the lease financing obligation, and the imputed interest is recorded to interest expense in our consolidated statements of operations. In addition to the capitalization of the costs incurred by the Landlord, we impute and record rent expense relating to the ground leases for the property sites. Such rent expense is computed based on the fair value of the land and our incremental borrowing rate, and was immaterial for the nine months ended September 30, 2013. For information regarding the future minimum lease obligation, refer to Note 15, “Commitments and Contingencies.” | ||||||||||||||||||||||||||||
Term Loan | ||||||||||||||||||||||||||||
In December 2011, our wholly owned subsidiary, Molina Center LLC, entered into a term loan agreement with various lenders and East West Bank to borrow $48.6 million to finance a portion of the purchase price for the Molina Center, located in Long Beach, California. On June 13, 2013, we repaid the principal balance outstanding under the term loan on that date with proceeds we received in the sale-leaseback transaction described above. | ||||||||||||||||||||||||||||
Credit Facility | ||||||||||||||||||||||||||||
On February 15, 2013, we used $40.0 million of the net proceeds from the offering of the 1.125% Notes to repay all of the outstanding indebtedness under our $170 million revolving Credit Facility, with various lenders and U.S. Bank National Association, as Line of Credit Issuer, Swing Line Lender, and Administrative Agent. As of December 31, 2012, there was $40.0 million outstanding under the Credit Facility. | ||||||||||||||||||||||||||||
We terminated the Credit Facility in connection with the closing of the offering and sale of the 1.125% Notes. Two letters of credit in the aggregate principal amount of $10.3 million that reduced the amount available for borrowing under the Credit Facility as of December 31, 2012, were transferred to direct issue letters of credit with another financial institution. Such direct issue letters of credit are collateralized by restricted investments. |
Derivative_Financial_Instrumen
Derivative Financial Instruments (Notes) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||
Derivative Instruments Disclosure | Derivative Financial Instruments | |||||||||||||||
The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the consolidated balance sheets: | ||||||||||||||||
Balance Sheet Location | 30-Sep-13 | |||||||||||||||
(In thousands) | ||||||||||||||||
Derivative asset: | ||||||||||||||||
1.125% Call Option | Non-current assets: Derivative asset | $ | 191,663 | |||||||||||||
Derivative liability: | ||||||||||||||||
Embedded cash conversion option | Non-current liabilities: Derivative liability | $ | 191,556 | |||||||||||||
Our derivative financial instruments do not qualify for hedge treatment, therefore the change in fair value of these instruments is recognized immediately in our consolidated statements of operations, in other expense. The following table summarizes the gains (losses) recorded in the periods presented: | ||||||||||||||||
Three Months Ended September 30, | Nine months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Derivative gains (losses): | ||||||||||||||||
1.125% Call Option | $ | (15,460 | ) | $ | — | $ | 42,332 | $ | — | |||||||
Embedded cash conversion option | 15,461 | — | (42,225 | ) | — | |||||||||||
1.125% Warrants | — | — | (3,923 | ) | — | |||||||||||
Interest rate swap | — | (184 | ) | 433 | (1,270 | ) | ||||||||||
$ | 1 | $ | (184 | ) | $ | (3,383 | ) | $ | (1,270 | ) | ||||||
1.125% Notes Call Spread Overlay | ||||||||||||||||
As described in Note 11, "Long-Term Debt," we entered into a Call Spread Overlay, whereby the cost of the 1.125% Call Option we purchased to cover the cash outlay upon conversion of the debentures was reduced by the sales price of the 1.125% Warrants. Assuming full performance by the Counterparties (and 1.125% Warrants strike prices in excess of the conversion price of the 1.125% Notes), these transactions are intended to offset cash payments due upon any conversion of the 1.125% Notes. | ||||||||||||||||
The 1.125% Call Option, which is indexed to our common stock, is a derivative asset that requires mark-to-market accounting treatment due to the cash settlement features until the 1.125% Call Option settles or expires. The 1.125% Call Option is measured and reported at fair value on a recurring basis, within Level 3 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the 1.125% Call Option, refer to Note 6, “Fair Value Measurements.” | ||||||||||||||||
Until April 22, 2013, the 1.125% Warrants were recorded as a derivative liability that required mark-to-market accounting treatment due to certain terms in the 1.125% Warrants that prevented such instruments being considered to be indexed in our common stock. Effective April 22, 2013, we entered into amended and restated warrant confirmations with the Counterparties to clarify these terms, such that 1.125% Warrants are no longer considered to be derivative instruments, and have been recorded to additional paid-in capital. In the second quarter of 2013, we recorded a loss of $3.9 million for the change in fair value of the 1.125% Warrants from February 15, 2013 to April 22, 2013. | ||||||||||||||||
Embedded Cash Conversion Option | ||||||||||||||||
The embedded cash conversion option within the 1.125% Notes is required to be separated from the 1.125% Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the cash conversion option settles or expires. The initial fair value liability of the embedded cash conversion option was $149.3 million, which simultaneously reduced the carrying value of the 1.125% Notes (effectively an original issuance discount). The embedded cash conversion option is measured and reported at fair value on a recurring basis, within Level 3 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the embedded cash conversion option, refer to Note 6, “Fair Value Measurements.” | ||||||||||||||||
Interest Rate Swap | ||||||||||||||||
In May 2012, we entered into a $42.5 million notional amount interest rate swap agreement, with an effective date of March 1, 2013. On June 14, 2013, we settled the interest rate swap for $0.9 million. |
Stockholders_Equity_Notes
Stockholders' Equity (Notes) | 9 Months Ended |
Sep. 30, 2013 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity |
Stockholders' equity increased $110.5 million during the nine months ended September 30, 2013. The increase was primarily due to the $79.0 million reclassification of the 1.125% Warrants to additional paid-in capital, net income of $62.1 million, and $19.1 million related to employee stock transactions, partially offset by $50.0 million in repurchases of our common stock, as described in further detail below. | |
Common Shares Authorized. On May 1, 2013, our stockholders approved an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 80,000,000 to 150,000,000. | |
1.125% Warrants. As described in Note 12, "Derivative Financial Instruments," we reclassified the 1.125% Warrants to additional paid-in capital during the second quarter of 2013, resulting in a $79.0 million increase to stockholders' equity. If the market value per share of our common stock exceeds the strike price of the 1.125% Warrants on any trading day during the 160 trading day measurement period under the 1.125% Warrants, we will be obligated to issue to the Counterparties a number of shares equal in value to the product of the amount by which such market value exceeds such strike price and 1/160th of the aggregate number of shares of our common stock underlying the 1.125% Warrants, subject to a share delivery cap. We will not receive any additional proceeds if the 1.125% Warrants are exercised. Pursuant to the 1.125% Warrants, we issued 13,490,236 warrants with a strike price of $53.8475 per share. The number of warrants and the strike price are subject to adjustment under certain circumstances. The 1.125% Warrants could separately have a dilutive effect to the extent that the market value per share of our common stock (as measured under the terms of the warrant transactions) exceeds the applicable strike price of the 1.125% Warrants. | |
Securities Repurchases and Repurchase Program. In connection with the issuance and settlement of the 1.125% Notes, we used a portion of the net proceeds from the offering to repurchase $50 million of our common stock in negotiated transactions with institutional investors in the offering, concurrently with the pricing of the offering. On February 12, 2013, we repurchased a total of 1,624,959 shares at $30.77 per share, which was our closing stock price on that date. | |
Effective as of September 30, 2013, our board of directors authorized the repurchase of up to $50 million in aggregate of our common stock. Stock repurchases under this program may be made through open-market and/or privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. This newly authorized repurchase program extends through December 31, 2014, and replaces in its entirety, the $75 million repurchase program adopted by the board of directors on February 13, 2013. | |
Shelf Registration Statement. In May 2012, we filed an automatic shelf registration statement on Form S-3 with the SEC covering the issuance of an indeterminate number of our securities, including common stock, warrants, or debt securities. We may publicly offer securities from time to time at prices and terms to be determined at the time of the offering. | |
Stock Plans. In connection with the plans described in Note 5, “Stock-Based Compensation,” we issued approximately 620,000 shares of common stock, net of shares used to settle employees’ income tax obligations, for the nine months ended September 30, 2013. |
Segment_Reporting_Notes
Segment Reporting (Notes) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||
Segment Reporting | Segment Reporting | |||||||||||||||
We report our financial performance based on two reportable segments: Health Plans and Molina Medicaid Solutions. Our reportable segments are consistent with how we manage the business and view the markets we serve. Our Health Plans segment consists of our state health plans and also includes our direct delivery business. Our state health plans represent operating segments that have been aggregated for reporting purposes because they share similar economic characteristics. | ||||||||||||||||
Our Molina Medicaid Solutions segment provides design, development, implementation; business process outsourcing solutions; hosting services; and information technology support services to state Medicaid agencies. | ||||||||||||||||
We rely on an internal management reporting process that provides segment information to the operating income level for purposes of making financial decisions and allocating resources. The accounting policies of the segments are the same as those described in Note 2, “Significant Accounting Policies.” The cost of services shared between the Health Plans and Molina Medicaid Solutions segments is charged to the Health Plans segment. | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Revenue from continuing operations: | ||||||||||||||||
Health Plans: | ||||||||||||||||
Premium revenue | $ | 1,584,656 | $ | 1,448,600 | $ | 4,583,818 | $ | 4,066,737 | ||||||||
Premium tax receipts | 43,723 | 37,894 | 127,606 | 120,953 | ||||||||||||
Investment income | 1,740 | 1,155 | 4,884 | 3,893 | ||||||||||||
Rental and other income | 5,860 | 4,079 | 16,476 | 12,315 | ||||||||||||
Molina Medicaid Solutions: | ||||||||||||||||
Service revenue | 51,100 | 48,422 | 150,528 | 132,351 | ||||||||||||
$ | 1,687,079 | $ | 1,540,150 | $ | 4,883,312 | $ | 4,336,249 | |||||||||
Depreciation and amortization reported in the consolidated statements of cash flows: | ||||||||||||||||
Health Plans | $ | 17,545 | $ | 14,753 | $ | 48,467 | $ | 43,600 | ||||||||
Molina Medicaid Solutions | 6,583 | 5,526 | 19,568 | 14,689 | ||||||||||||
$ | 24,128 | $ | 20,279 | $ | 68,035 | $ | 58,289 | |||||||||
Operating income (loss) from continuing operations: | ||||||||||||||||
Health Plans | $ | 16,929 | $ | (5,788 | ) | $ | 118,600 | $ | (33,957 | ) | ||||||
Molina Medicaid Solutions | 7,997 | 8,156 | 20,645 | 23,207 | ||||||||||||
Total operating income (loss) from continuing operations | 24,926 | 2,368 | 139,245 | (10,750 | ) | |||||||||||
Interest expense | 13,532 | 4,315 | 38,236 | 12,421 | ||||||||||||
Other (income) expense | (24 | ) | 184 | 3,347 | 1,270 | |||||||||||
Income (loss) from continuing operations before | ||||||||||||||||
income taxes | $ | 11,418 | $ | (2,131 | ) | $ | 97,662 | $ | (24,441 | ) | ||||||
September 30, | December 31, | |||||||||||||||
2013 | 2012 | |||||||||||||||
(In thousands) | ||||||||||||||||
Goodwill and intangible assets, net: | ||||||||||||||||
Health Plans | $ | 252,360 | $ | 139,710 | ||||||||||||
Molina Medicaid Solutions | 83,058 | 89,089 | ||||||||||||||
$ | 335,418 | $ | 228,799 | |||||||||||||
Total assets: | ||||||||||||||||
Health Plans | $ | 2,748,724 | $ | 1,702,212 | ||||||||||||
Molina Medicaid Solutions | 176,342 | 232,610 | ||||||||||||||
$ | 2,925,066 | $ | 1,934,822 | |||||||||||||
Goodwill and intangible assets increased in the Health Plans segment due to acquisitions that occurred in the third quarter of 2013. See Note 4, "Business Combinations," for further information. |
Commitments_and_Contingencies_
Commitments and Contingencies (Notes) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | Commitments and Contingencies | |||
Sale-Leaseback Transactions | ||||
As described in Note 11, "Long-Term Debt," we entered into sale-leaseback transactions that have been classified as lease financing obligations. For the transaction entered into in June 2013, the initial lease term is 25 years, with five five-year renewal options. For the transaction relating to the construction project completed in June 2013, the initial lease term is 11.5 years, with two five-year renewal options. We expect future minimum lease payments under these leases, for the three months ended December 31, 2013, to be $3.3 million. Future minimum lease payments due under these leases beginning January 1, 2014 are as follows: | ||||
(In thousands) | ||||
2014 | $ | 14,395 | ||
2015 | 18,277 | |||
2016 | 18,877 | |||
2017 | 19,496 | |||
2018 | 20,137 | |||
Thereafter | 385,813 | |||
Total minimum lease payments | $ | 476,995 | ||
Legal Proceedings | ||||
The health care and business process outsourcing industries are subject to numerous laws and regulations of federal, state, and local governments. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. Penalties associated with violations of these laws and regulations include significant fines and penalties, exclusion from participating in publicly funded programs, and the repayment of previously billed and collected revenues. | ||||
We are involved in legal actions in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which are not covered by insurance. We have accrued liabilities for certain matters for which we deem the loss to be both probable and estimable. Although we believe that our estimates of such losses are reasonable, these estimates could change as a result of further developments of these matters. The outcome of legal actions is inherently uncertain and such pending matters for which accruals have not been established have not progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss, if any. While it is not possible to accurately predict or determine the eventual outcomes of these items, an adverse determination in one or more of these pending matters could have a material adverse effect on our consolidated financial position, results of operations, or cash flows. | ||||
Provider Claims | ||||
Many of our medical contracts are complex in nature and may be subject to differing interpretations regarding amounts due for the provision of various services. Such differing interpretations have led certain medical providers to pursue us for additional compensation. The claims made by providers in such circumstances often involve issues of contract compliance, interpretation, payment methodology, and intent. These claims often extend to services provided by the providers over a number of years. | ||||
Various providers have contacted us seeking additional compensation for claims that we believe to have been settled. These matters, when finally concluded and determined, will not, in our opinion, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. | ||||
Regulatory Capital and Dividend Restrictions | ||||
Our health plans, which are operated by our respective wholly owned subsidiaries in those states, are subject to state laws and regulations that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state. Such state laws and regulations also restrict the timing, payment, and amount of dividends and other distributions that may be paid to us as the sole stockholder. To the extent our subsidiaries must comply with these regulations, they may not have the financial flexibility to transfer funds to us. The net assets in these subsidiaries (after intercompany eliminations) which may not be transferable to us in the form of loans, advances, or cash dividends was $601.1 million at September 30, 2013, and $549.7 million at December 31, 2012. Because of the statutory restrictions that inhibit the ability of our health plans to transfer net assets to us, the amount of retained earnings readily available to pay dividends to our stockholders is generally limited to cash, cash equivalents and investments held by the parent company – Molina Healthcare, Inc. Such cash, cash equivalents and investments amounted to $472.1 million and $46.9 million as of September 30, 2013 and December 31, 2012, respectively. | ||||
The National Association of Insurance Commissioners, or NAIC, adopted rules effective December 31, 1998, which, if implemented by the states, set minimum capitalization requirements for insurance companies, HMOs, and other entities bearing risk for health care coverage. The requirements take the form of risk-based capital (RBC) rules. Illinois, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin have adopted these rules, which may vary from state to state. California and Florida have not adopted NAIC risk-based capital requirements for HMOs and have not formally given notice of their intention to do so. Such requirements, if adopted by California and Florida, may increase the minimum capital required for those states. | ||||
As of September 30, 2013, our health plans had aggregate statutory capital and surplus of approximately $637.0 million compared with the required minimum aggregate statutory capital and surplus of approximately $362.2 million. All of our health plans were in compliance with the minimum capital requirements at September 30, 2013. We have the ability and commitment to provide additional capital to each of our health plans when necessary to ensure that statutory capital and surplus continue to meet regulatory requirements. |
Related_Party_Transactions_Not
Related Party Transactions (Notes) | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
Leased Office Buildings | |
On February 27, 2013, we entered into a lease (the Lease) with 6th & Pine Development, LLC (the Landlord) for office space located in Long Beach, California. The Lease consists of two office buildings, one of which is under construction. The building which comprises approximately 90,000 square feet of office and storage space (Building A) was completed in June 2013; immediately following its completion, we occupied Building A and commenced lease payments. The second building (Building B) is expected to comprise approximately 120,000 square feet of office space. | |
The term of the Lease with respect to Building A commenced on June 6, 2013, and the term of the Lease with respect to Building B is expected to commence on November 1, 2014. The initial term of the Lease with respect to both buildings expires on December 31, 2024, subject to two options to extend the term for a period of five years each. Initial annual rent for Building A is approximately $2.6 million, and initial annual rent for Building B is expected to be approximately $4.0 million. Rent will increase 3.75% per year through the initial term. Rent during the extension terms will be the greater of then-current rent or fair market rent. | |
The principal members of the Landlord are John C. Molina, our chief financial officer and a director of the Company, and his wife. In addition, in connection with the development of the buildings being leased, the Landlord has pledged shares of common stock in the Company he holds as trustee. Dr. J. Mario Molina, our chief executive officer and chairman of the board of directors, holds a partial interest in such shares as trust beneficiary. | |
Medical Services | |
We have an equity investment in a medical service provider that provides certain vision services to our members; we account for this investment under the equity method of accounting. For the three months ended September 30, 2013 and 2012, we paid $8.2 million and $7.0 million, respectively, for medical service fees to this provider. For the nine months ended September 30, 2013 and 2012, we paid $24.6 million and $20.6 million, respectively, for medical service fees to this provider. |
Variable_Interest_Entities_Not
Variable Interest Entities (Notes) | 9 Months Ended | |
Sep. 30, 2013 | ||
Variable Interest Entities [Abstract] | ||
Variable Interest Entities | Variable Interest Entities | |
Joseph M. Molina M.D., Professional Corporations | ||
The Joseph M. Molina, M.D. Professional Corporations (JMMPC) were created in 2012 to further advance our direct delivery business. JMMPC's sole shareholder is Dr. J. Mario Molina, our Chairman of the Board, President and Chief Executive Officer. Dr. Molina is paid no salary and receives no dividends in connection with his work for, or ownership of, JMMPC. JMMPC provides outpatient professional medical services to the general public for routine non-life threatening, outpatient health care needs. Substantially all of the individuals served by JMMPC are members of our health plans. JMMPC does not have agreements to provide professional medical services with any other entities. | ||
Our wholly owned subsidiary, American Family Care, Inc. (AFC), has entered into services agreements with JMMPC to provide clinic facilities, clinic administrative support staff, patient scheduling services and medical supplies to JMMPC. The services agreements were designed such that JMMPC will not operate at a loss, ensuring the availability of quality care and access for our health plan members. The services agreements provide that the administrative fees charged to JMMPC by AFC are reviewed annually to assure the achievement of this goal. | ||
Our California, Florida, New Mexico and Washington health plans have entered into primary care capitation agreements with JMMPC. These agreements also direct our health plans to fund JMMPC's operating deficits, or receive JMMPC's operating surpluses, based on a monthly reconciliation. Because the AFC services agreements described above mitigate the likelihood of significant operating deficits or surpluses, such monthly reconciliation amounts are insignificant. | ||
We have determined that JMMPC is a variable interest entity, or VIE, and that we are its primary beneficiary. We have reached this conclusion under the power and benefits criterion model according to GAAP. Specifically, we have the power to direct the activities that most significantly affect JMMPC's economic performance, and the obligation to absorb losses or right to receive benefits that are potentially significant to the VIE, under the agreements described above. Because we are its primary beneficiary, we have consolidated JMMPC. JMMPC's assets may be used to settle only JMMPC's obligations, and JMMPC's creditors have no recourse to the general credit of Molina Healthcare, Inc. As of September 30, 2013, JMMPC had total assets of $5.6 million, comprising primarily cash and equivalents, and total liabilities of $5.3 million, comprising primarily accrued payroll and employee benefits. | ||
Our maximum exposure to loss as a result of our involvement with JMMPC is limited to the amounts needed to fund JMMPC's ongoing payroll and employee benefits. We believe that such loss exposure will be immaterial to our consolidated operating results and cash flows for the foreseeable future. We provided an initial cash infusion of $0.3 million to JMMPC in the first quarter of 2012 to fund its start-up operations. | ||
New Markets Tax Credit | ||
During the fourth quarter of 2011, our New Mexico data center subsidiary entered into a financing transaction with Wells Fargo Community Investment Holdings, LLC, or Wells Fargo, its wholly owned subsidiary New Mexico Healthcare Data Center Investment Fund, LLC, or Investment Fund, and certain of Wells Fargo's affiliated Community Development Entities, or CDEs, in connection with our participation in the federal government's New Markets Tax Credit Program, or NMTC. The NMTC was established by Congress in 2000 to facilitate new or increased investments in businesses and real estate projects in low-income communities. The NMTC attracts investment capital to low-income communities by permitting investors to receive a tax credit against their federal income tax return in exchange for equity investments in specialized financial institutions, called CDEs, which provide financing to qualified active businesses operating in low-income communities. The credit amounts to 39% of the original investment amount and is claimed over a period of seven years (five percent for each of the first three years, and six percent for each of the remaining four years). The investment in the CDE cannot be redeemed before the end of the seven-year period. | ||
In the fourth quarter of 2011, as a result of a series of simultaneous financing transactions, Wells Fargo contributed capital of $5.9 million to the Investment Fund, and Molina Healthcare, Inc. loaned the principal amount of $15.5 million to the Investment Fund. The Investment Fund then contributed the proceeds to certain CDEs, which, in turn, loaned the proceeds of $20.9 million to our New Mexico data center subsidiary. Wells Fargo will be entitled to claim the NMTC while we effectively received net loan proceeds equal to Wells Fargo's contribution to the Investment Fund, or approximately $5.9 million. Additionally, financing costs incurred in structuring the arrangement amounting to $1.2 million were deferred and will be recognized as expense over the term of the loans. This transaction also includes a put/call feature that becomes enforceable at the end of the seven-year compliance period. Wells Fargo may exercise its put option or we can exercise the call, both of which will serve to transfer the debt obligation to us. Incremental costs to maintain the structure during the compliance period will be recognized as incurred. | ||
We have determined that the financing arrangement with Investment Fund and CDEs is a VIE, and that we are the primary beneficiary of the VIE. We reached this conclusion based on the following: | ||
• | The ongoing activities of the VIE-collecting and remitting interest and fees and NMTC compliance-were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the VIE; | |
• | Contractual arrangements obligate us to comply with NMTC rules and regulations and provide various other guarantees to Investment Fund and CDEs; | |
• | Wells Fargo lacks a material interest in the underling economics of the project; and | |
• | We are obligated to absorb losses of the VIE. | |
Because we are the primary beneficiary of the VIE, we have included it in our consolidated financial statements. Wells Fargo's contribution of $5.9 million is included in cash at December 31, 2012 and the offsetting Wells Fargo's interest in the financing arrangement is included in other liabilities in the accompanying consolidated balance sheets. | ||
As described above, this transaction also includes a put/call provision whereby we may be obligated or entitled to repurchase Wells Fargo's interest in the Investment Fund. The value attributed to the put/call is nominal. The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code and applicable U.S. Treasury regulations. We are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in Wells Fargo's projected tax benefits not being realized and, therefore, require us to indemnify Wells Fargo for any loss or recapture of NMTCs related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations. We do not anticipate any credit recaptures will be required in connection with this arrangement. |
Subsequent_Events_Notes
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
California Health Plan Rate Settlement Agreement | |
On October 30, 2013, we finalized the California health plan tentative rate settlement agreement, as described in Note 1, "Basis of Presentation." In connection with this agreement, a deficit or surplus will result to the extent the plan’s pre-tax margin is below or above 3.25%, subject to further adjustment as specified in the settlement agreement. Such settlement amount shall be based on 75% of the plan’s revenue in 2014; and 50% of the plan’s revenue in each subsequent year of the settlement agreement. The maximum amount that DHCS would pay to us under the terms of the settlement agreement is $40 million. Additionally, DHCS agreed to enter into a Medi-Cal managed care contract with the California health plan for the Imperial County with an original term of five years and extension through October 31, 2023. The foregoing description of the settlement agreement is qualified in its entirety by reference to the Settlement Agreement which is filed as Exhibit 10.1 to this report and is incorporated herein by reference. | |
Hospital Management Service Agreement | |
On October 9, 2013, we entered into a 10-year agreement with College Health Enterprises (CHE) to perform certain medical and administrative management services for CHE's hospital in Long Beach, California. Under the agreement, we will assume financial benefit and risk for a number of acute care beds at the hospital. We believe that this arrangement will improve hospital access for our members in the Long Beach, California area, and will also enhance our overall direct delivery strategy. As with any new start up activity, we may incur losses while we modify various business operations during the initial months of the management services agreement. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 9 Months Ended | |
Sep. 30, 2013 | ||
Accounting Policies [Abstract] | ||
Consolidation and Interim Financial Information | Consolidation and Interim Financial Information | |
The consolidated financial statements include the accounts of Molina Healthcare, Inc., its subsidiaries and variable interest entities in which Molina Healthcare, Inc. is considered to be the primary beneficiary. Such variable interest entities are insignificant to our consolidated financial position and results of operations. In the opinion of management, all adjustments considered necessary for a fair presentation of the results as of the date and for the interim periods presented have been included; such adjustments consist of normal recurring adjustments. All significant intercompany balances and transactions have been eliminated. The consolidated results of operations for the current interim period are not necessarily indicative of the results for the entire year ending December 31, 2013. | ||
The unaudited consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read or have access to our audited consolidated financial statements for the fiscal year ended December 31, 2012. Accordingly, certain disclosures that would substantially duplicate the disclosures contained in the December 31, 2012 audited consolidated financial statements have been omitted. These unaudited consolidated interim financial statements should be read in conjunction with our December 31, 2012 audited consolidated financial statements. | ||
Premium Revenue – Health Plans Segment | Premium Revenue – Health Plans Segment | |
Premium revenue is fixed in advance of the periods covered and, except as described below, is not generally subject to significant accounting estimates. Premium revenues are recognized in the month that members are entitled to receive health care services. | ||
Certain components of premium revenue are subject to accounting estimates. The components of premium revenue subject to estimation fall into two categories: | ||
(1) Contractual provisions that may limit revenue based upon the costs incurred or the profits realized under a specific contract: These are contractual provisions that require the health plan to return premiums to the extent that certain thresholds are not met. In some instances premiums are returned when medical costs fall below a certain percentage of gross premiums; or when administrative costs or profits exceed a certain percentage of gross premiums. In other instances, premiums are partially determined by the acuity of care provided to members (risk adjustment). To the extent that our expenses and profits change from the amounts previously reported (due to changes in estimates), our revenue earned for those periods will also change. In all of these instances, our revenue is only subject to estimate due to the fact that the thresholds themselves contain elements (expense or profit) that are subject to estimate. While we have adequate experience and data to make sound estimates of our expenses or profits, changes to those estimates may be necessary, which in turn would lead to changes in our estimates of revenue. In general, a change in estimate relating to expense or profit would offset any related change in estimate to premium, resulting in no or small impact to net income. The following contractual provisions fall into this category: | ||
California Health Plan Medical Cost Floors (Minimums): A portion of certain premiums received by our California health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. We recorded a liability under the terms of these contract provisions of approximately $0.8 million and $0.3 million at September 30, 2013 and December 31, 2012, respectively. | ||
Florida Health Plan Medical Cost Floor (Minimum): A portion of premiums received by our Florida health plan may be returned to the state if certain minimum amounts are not spent on defined behavioral health care costs (in all counties except Broward). A similar minimum expenditure is required for total health care costs in Broward county only. At both September 30, 2013 and December 31, 2012, we had not recorded any liability under the terms of these contract provisions. | ||
New Mexico Health Plan Medical Cost Floors (Minimums) and Administrative Cost and Profit Ceilings (Maximums): Our contract with the state of New Mexico directs that a portion of premiums received may be returned to the state if certain minimum amounts are not spent on defined medical care costs, or if administrative costs or profit, as defined in the contract, exceed certain amounts. At both September 30, 2013 and December 31, 2012, we had not recorded any liability under the terms of these contract provisions. | ||
Ohio Health Plan Medical Cost Floors (Minimums): Sanctions may be levied by the state if certain minimum amounts are not spent on defined medical care costs. These sanctions include the requirements to file a corrective action plan as well as an enrollment freeze. | ||
Texas Health Plan Profit Sharing: Under our contract with the state of Texas, there is a profit-sharing agreement under which we pay a rebate to the state of Texas if our Texas health plan generates pretax income, as defined in the contract, above a certain specified percentage as determined in accordance with a tiered rebate schedule. We are limited in the amount of administrative costs that we may deduct in calculating the rebate, if any. As a result of profits in excess of the amount we are allowed to fully retain, we had accrued an aggregate liability of approximately $2.2 million and $3.2 million pursuant to our profit-sharing agreement with the state of Texas at September 30, 2013 and December 31, 2012, respectively. | ||
Washington Health Plan Medical Cost Floors (Minimums): A portion of certain premiums received by our Washington health plan may be returned to the state if certain minimum amounts are not spent on defined medical care costs. At September 30, 2013, we recorded a liability under the terms of these contract provisions of approximately $0.3 million. At December 31, 2012, we had not recorded any liability under the terms of this contract provision. | ||
Medicare Revenue Risk Adjustment: Based on member encounter data that we submit to the Centers for Medicare and Medicaid Services (CMS), our Medicare premiums are subject to retroactive adjustment for both member risk scores and member pharmacy cost experience for up to two years after the original year of service. This adjustment takes into account the acuity of each member’s medical needs relative to what was anticipated when premiums were originally set for that member. In the event that a member requires less acute medical care than was anticipated by the original premium amount, CMS may recover premium from us. In the event that a member requires more acute medical care than was anticipated by the original premium amount, CMS may pay us additional retroactive premium. A similar retroactive reconciliation is undertaken by CMS for our Medicare members’ pharmacy utilization. We estimate the amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health care utilization patterns and CMS practices. Based on our knowledge of member health care utilization patterns and expenses we have recorded a net receivable of approximately $18.4 million and $0.3 million as of September 30, 2013 and December 31, 2012, respectively for anticipated Medicare risk adjustment premiums. | ||
(2) Quality incentives that allow us to recognize incremental revenue if certain quality standards are met: These are contract provisions that allow us to earn additional premium revenue in certain states if we achieve certain quality-of-care or administrative measures. We estimate the amount of revenue that will ultimately be realized for the periods presented based on our experience and expertise in meeting the quality and administrative measures as well as our ongoing and current monitoring of our progress in meeting those measures. The amount of the revenue that we will realize under these contractual provisions is determinable based upon that experience. The following contractual provisions fall into this category: | ||
New Mexico Health Plan Quality Incentive Premiums: Under our contract with the state of New Mexico, incremental revenue of up to 0.75% of our total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care and administrative measures dictated by the state. | ||
Ohio Health Plan Quality Incentive Premiums: Under our contract with the state of Ohio, incremental revenue of up to 1% of our total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures dictated by the state. | ||
Texas Health Plan Quality Incentive Premiums: Effective March 1, 2012, under our contract with the state of Texas, incremental revenue of up to 5% of our total premium may be earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures established by the state. | ||
Wisconsin Health Plan Quality Incentive Premiums: Under our contract with the state of Wisconsin, incremental revenue of up to 3.25% of total premium is earned if certain performance measures are met. These performance measures are generally linked to various quality-of-care measures dictated by the state. | ||
Taxes Based on Premiums | Taxes Based on Premiums | |
Certain of our health plans are assessed a tax based on premium revenue collected. The premium revenues we receive from these states include the premium tax assessment. We have reported these taxes on a gross basis, included in premium tax receipts (within revenue), and premium tax expense (within expenses), in the consolidated statements of operations. Prior to the third quarter of 2013, premium tax receipts were included in premium revenue. The presentation change affected only premium revenue amounts previously reported, by reducing premium revenue for the amount now included in premium tax receipts. There is no effect on income from continuing operations, net income, or per-share amounts. This change was made to more clearly present the portion of premium revenue not available in the general operations of our health plans. All prior periods presented have been adjusted to conform to this presentation. | ||
Service Revenue and Cost of Service Revenue — Molina Medicaid Solutions Segment | Service Revenue and Cost of Service Revenue — Molina Medicaid Solutions Segment | |
The payments received by our Molina Medicaid Solutions segment under its state contracts are based on the performance of multiple services. The first of these is the design, development and implementation (DDI) of a Medicaid management information system (MMIS). An additional service, following completion of DDI, is the operation of the MMIS under a business process outsourcing (BPO) arrangement. While providing BPO services (which include claims payment and eligibility processing), we also provide the state with other services including both hosting and support and maintenance. Our Molina Medicaid Solutions contracts may extend over a number of years, particularly in circumstances where we are delivering extensive and complex DDI services, such as the initial design, development and implementation of a complete MMIS. For example, the terms of our most recently implemented Molina Medicaid Solutions contracts (in Idaho and Maine) were each seven years in total, consisting of two years allocated for the delivery of DDI services, followed by five years for the performance of BPO services. We receive progress payments from the state during the performance of DDI services based upon the attainment of predetermined milestones. We receive a flat monthly payment for BPO services under our Idaho and Maine contracts. The terms of our other Molina Medicaid Solutions contracts – which primarily involve the delivery of BPO services with only minimal DDI activity (consisting of system enhancements) – are shorter in duration than our Idaho and Maine contracts. | ||
We have evaluated our Molina Medicaid Solutions contracts to determine if such arrangements include a software element. Based on this evaluation, we have concluded that these arrangements do not include a software element. As such, we have concluded that our Molina Medicaid Solutions contracts are multiple-element service arrangements. | ||
Additionally, we evaluate each required deliverable under our multiple-element service arrangements to determine whether it qualifies as a separate unit of accounting. Such evaluation is generally based on whether the deliverable has standalone value to the customer. The arrangement’s consideration that is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. In general, the consideration allocated to each unit of accounting is recognized as the related goods or services are delivered, limited to the consideration that is not contingent. | ||
We have concluded that the various service elements in our Molina Medicaid Solutions contracts represent a single unit of accounting due to the fact that DDI, which is the only service performed in advance of the other services (all other services are performed over an identical period), does not have standalone value because our DDI services are not sold separately by any vendor and the customer could not resell our DDI services. Further, we have no objective and reliable evidence of fair value for any of the individual elements in these contracts, and at no point in the contract will we have objective and reliable evidence of fair value for the undelivered elements in the contracts. We lack objective and reliable evidence of the fair value of the individual elements of our Molina Medicaid Solutions contracts for the following reasons: | ||
• | Each contract calls for the provision of its own specific set of services. While all contracts support the system of record for state MMIS, the actual services we provide vary significantly between contracts; and | |
• | The nature of the MMIS installed varies significantly between our older contracts (proprietary mainframe systems) and our new contracts (commercial off-the-shelf technology solutions). | |
Because we have determined the services provided under our Molina Medicaid Solutions contracts represent a single unit of accounting and because we are unable to determine a pattern of performance of services during the contract period, we recognize all revenue (both the DDI and BPO elements) associated with such contracts on a straight-line basis over the period during which BPO, hosting, and support and maintenance services are delivered. As noted above, the period of performance of BPO services under our Idaho and Maine contracts is five years. Therefore, absent any contingencies as discussed in the following paragraph, we would recognize all revenue associated with those contracts over a period of five years. In cases where there is no DDI element associated with our contracts, BPO revenue is recognized on a monthly basis as specified in the applicable contract or contract extension. | ||
Provisions specific to each contract may, however, lead us to modify this general principle. In those circumstances, the right of the state to refuse acceptance of services, as well as the related obligation to compensate us, may require us to delay recognition of all or part of our revenue until that contingency (the right of the state to refuse acceptance) has been removed. In those circumstances we defer recognition of any contingent revenue (whether DDI, BPO services, hosting, and support and maintenance services) until the contingency has been removed. These types of contingency features are present in our Maine and Idaho contracts. In those states, we deferred recognition of revenue until the contingencies were removed. | ||
Costs associated with our Molina Medicaid Solutions contracts include software-related costs and other costs. With respect to software-related costs, we apply the guidance for internal-use software and capitalize external direct costs of materials and services consumed in developing or obtaining the software, and payroll and payroll-related costs associated with employees who are directly associated with and who devote time to the computer software project. With respect to all other direct costs, such costs are expensed as incurred, unless corresponding revenue is being deferred. If revenue is being deferred, direct costs relating to delivered service elements are deferred as well and are recognized on a straight-line basis over the period of revenue recognition, in a manner consistent with our recognition of revenue that has been deferred. Such direct costs can include: | ||
•Transaction processing costs; | ||
•Employee costs incurred in performing transaction services; | ||
•Vendor costs incurred in performing transaction services; | ||
•Costs incurred in performing required monitoring of and reporting on contract performance; | ||
•Costs incurred in maintaining and processing member and provider eligibility; and | ||
•Costs incurred in communicating with members and providers. | ||
The recoverability of deferred contract costs associated with a particular contract is analyzed on a periodic basis using the undiscounted estimated cash flows of the whole contract over its remaining contract term. If such undiscounted cash flows are insufficient to recover the long-lived assets and deferred contract costs, the deferred contract costs are written down by the amount of the cash flow deficiency. If a cash flow deficiency remains after reducing the balance of the deferred contract costs to zero, any remaining long-lived assets are evaluated for impairment. Any such impairment recognized would equal the amount by which the carrying value of the long-lived assets exceeds the fair value of those assets. | ||
Income Taxes | Income Taxes | |
The provision for income taxes is determined using an estimated annual effective tax rate, which is generally greater than the U.S. federal statutory rate primarily because of state taxes and non-deductible compensation under a provision of the Affordable Care Act that limits deductions claimed by health insurers on compensation earned after December 31, 2009 that is paid after December 31, 2012. The effective tax rate may be subject to fluctuations during the year as new information is obtained. Such information may affect the assumptions used to estimate the annual effective tax rate, including factors such as the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or derecognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where we conduct business. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, along with net operating loss and tax credit carryovers. | ||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | |
Income Taxes. In July 2013, the Financial Accounting Standards Board (FASB) issued guidance for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent one of these items is not available at the reporting date; the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, with early adoption permitted. The new guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date, with retrospective application permitted. We do not expect the adoption of this new guidance to have a material impact on our consolidated financial position, results of operations or cash flows. | ||
Reclassifications Out of Accumulated Other Comprehensive Income. In February 2013, the FASB issued guidance for the reporting of amounts reclassified out of accumulated other comprehensive income. The new guidance requires entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. The new guidance does not change the current requirements for reporting net income or other comprehensive income in financial statements and is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this new guidance in 2013 did not impact our consolidated financial position, results of operations or cash flows. | ||
Balance Sheet Offsetting. In December 2011, the FASB issued guidance for new disclosure requirements related to the nature of an entity’s rights of set-off and related arrangements associated with its financial instruments and derivative instruments. The new guidance is effective for annual reporting periods, and interim periods within those years, beginning on or after January 1, 2013. The adoption of this new guidance in 2013 did not impact our consolidated financial position, results of operations or cash flows. | ||
Federal Premium-Based Assessment. In July 2011, the FASB issued guidance related to accounting for the fees to be paid by health insurers to the federal government under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (ACA). The ACA imposes an annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The fee will be imposed beginning in 2014 based on a company's share of the industry's net premiums written during the preceding calendar year. | ||
The new guidance specifies that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The new guidance is effective for annual reporting periods beginning after December 31, 2013, when the fee initially becomes effective. As enacted, this federal premium-based assessment is non-deductible for income tax purposes, and is anticipated to be significant. It is yet undetermined how this premium-based assessment will be factored into the calculation of our premium rates, if at all. Accordingly, adoption of this guidance and the enactment of this assessment as currently written is expected to have a material impact on our financial position, results of operations, and cash flows in future periods. We estimate that the fee in 2014 will be approximately $100.0 million. | ||
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants (AICPA), and the Securities and Exchange Commission (SEC) did not have, or are not believed by management to have, a material impact on our present or future consolidated financial statements. |
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||
Quality incentive premium revenue recognized | The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the period presented and prior periods. Although the reasonably possible effects of a change in estimate related to quality incentive premium revenue as of September 30, 2013 are not known, we have no reason to believe that the adjustments to prior years noted below are not indicative of the potential future changes in our estimates as of September 30, 2013. | |||||||||||||||||||
Three Months Ended September 30, 2013 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 906 | $ | 818 | $ | 2 | $ | 820 | $ | 130,318 | ||||||||||
Ohio | 3,080 | 976 | (52 | ) | 924 | 280,964 | ||||||||||||||
Texas | 15,744 | 15,744 | — | 15,744 | 320,657 | |||||||||||||||
Wisconsin | 1,209 | — | — | — | 39,676 | |||||||||||||||
$ | 20,939 | $ | 17,538 | $ | (50 | ) | $ | 17,488 | $ | 771,615 | ||||||||||
Three Months Ended September 30, 2012 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 560 | $ | 532 | $ | — | $ | 532 | $ | 80,846 | ||||||||||
Ohio | 2,824 | 1,412 | — | 1,412 | 282,489 | |||||||||||||||
Texas | 17,685 | 10,453 | — | 10,453 | 344,522 | |||||||||||||||
Wisconsin | 419 | — | 246 | 246 | 16,279 | |||||||||||||||
$ | 21,488 | $ | 12,397 | $ | 246 | $ | 12,643 | $ | 724,136 | |||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 2,079 | $ | 1,685 | $ | 159 | $ | 1,844 | $ | 298,767 | ||||||||||
Ohio | 9,049 | 3,115 | 501 | 3,616 | 819,879 | |||||||||||||||
Texas | 47,683 | 47,683 | 5,995 | 53,678 | 969,063 | |||||||||||||||
Wisconsin | 3,239 | — | 1,104 | 1,104 | 104,540 | |||||||||||||||
$ | 62,050 | $ | 52,483 | $ | 7,759 | $ | 60,242 | $ | 2,192,249 | |||||||||||
Nine Months Ended September 30, 2012 | ||||||||||||||||||||
Maximum | Amount of | Amount of | Total Quality | Total Premium Revenue | ||||||||||||||||
Available Quality | Current Year | Quality Incentive | Incentive | Recognized | ||||||||||||||||
Incentive | Quality Incentive | Premium Revenue | Premium Revenue | |||||||||||||||||
Premium - | Premium Revenue | Recognized from | Recognized | |||||||||||||||||
Current Year | Recognized | Prior Year | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
New Mexico | $ | 1,676 | $ | 1,350 | $ | 658 | $ | 2,008 | $ | 240,568 | ||||||||||
Ohio | 8,222 | 6,810 | 966 | 7,776 | 827,219 | |||||||||||||||
Texas | 41,687 | 30,487 | — | 30,487 | 892,377 | |||||||||||||||
Wisconsin | 1,284 | — | 492 | 492 | 52,209 | |||||||||||||||
$ | 52,869 | $ | 38,647 | $ | 2,116 | $ | 40,763 | $ | 2,012,373 | |||||||||||
Net_Income_Per_Share_Table
Net Income Per Share (Table) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
Summary of denominators for the computation of basic and diluted net income (loss) per share | The following table sets forth the calculation of the denominators used to compute basic and diluted net income per share: | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
(In thousands) | ||||||||||||
Shares outstanding at the beginning of the period | 45,683 | 46,527 | 46,762 | 45,815 | ||||||||
Weighted-average number of shares repurchased | — | — | (1,375 | ) | — | |||||||
Weighted-average number of shares issued | 16 | 19 | 321 | 486 | ||||||||
Denominator for basic net income (loss) per share | 45,699 | 46,546 | 45,708 | 46,301 | ||||||||
Dilutive effect of employee stock options and stock grants (1) | 453 | 334 | 532 | — | ||||||||
Dilutive effect of convertible senior notes | 910 | — | 527 | — | ||||||||
Denominator for diluted net income (loss) per share (2) | 47,062 | 46,880 | 46,767 | 46,301 | ||||||||
-1 | Unvested restricted shares are included in the calculation of diluted net income per share when their grant date fair values are below the average fair value of the common shares for each of the periods presented. Options to purchase common shares are included in the calculation of diluted net income per share when their exercise prices are below the average fair value of the common shares for each of the periods presented. For the three and nine months ended September 30, 2013 there were no anti-dilutive weighted restricted shares. For the three and nine months ended September 30, 2013 there were approximately 60,000 and 48,600 anti-dilutive weighted options, respectively. For the three months ended September 30, 2012, there were approximately 370,000 anti-dilutive weighted restricted shares and 125,000 anti-dilutive weighted options. Potentially dilutive unvested restricted shares and stock options were not included in the computation of diluted loss per share for the nine months ended September 30, 2012, because to do so would have been anti-dilutive. | |||||||||||
-2 | Potentially dilutive shares issuable pursuant to our 1.125% Warrants (defined in Note 11, "Long-Term Debt") were not included in the computation of diluted income per share for the three and nine month period ended September 30, 2013, because to do so would have been anti-dilutive. Potentially dilutive shares issuable pursuant to our 3.75% Notes (defined in Note 11, "Long-Term Debt") were not included in the computation of diluted loss per share for the three and nine month period ended September 30, 2012, because to do so would have been anti-dilutive |
Business_Combinations_Tables
Business Combinations (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||
Schedule of Fair Value of Assets Acquired | The following table presents assets acquired and the weighted average useful life for the major asset categories for the business combinations in 2013: | |||||||||||||||||
Fair Value of Assets Acquired - Health Plans Segment | ||||||||||||||||||
Weighted average useful life | South Carolina | New Mexico | Florida | Total | ||||||||||||||
(Years) | (In thousands) | |||||||||||||||||
Membership conversion rights | 12 | $ | 21,800 | $ | — | $ | — | $ | 21,800 | |||||||||
Contract rights | 10.6 | — | 18,300 | — | 18,300 | |||||||||||||
Other finite-lived intangibles | 7.7 | 1,060 | — | 990 | 2,050 | |||||||||||||
Goodwill | — | 42,140 | 35,223 | 2,332 | 79,695 | |||||||||||||
$ | 65,000 | $ | 53,523 | $ | 3,322 | $ | 121,845 | |||||||||||
ShareBased_Compensation_Tables
Share-Based Compensation (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||
Stock based compensation expense | Charged to general and administrative expenses, total stock-based compensation expense was as follows for the three and nine month periods ended September 30, 2013 and 2012: | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Restricted stock and performance awards | $ | 7,634 | $ | 5,093 | $ | 18,593 | $ | 13,943 | ||||||||
Employee stock purchase plan and stock options | 870 | 543 | 2,061 | 1,505 | ||||||||||||
$ | 8,504 | $ | 5,636 | $ | 20,654 | $ | 15,448 | |||||||||
Restricted share activity | Restricted and performance stock activity for the nine months ended September 30, 2013 is summarized below: | |||||||||||||||
Shares | Weighted | |||||||||||||||
Average | ||||||||||||||||
Grant Date | ||||||||||||||||
Fair Value | ||||||||||||||||
Unvested balance as of December 31, 2012 | 986,577 | $ | 23.74 | |||||||||||||
Granted - restricted stock | 587,706 | 32.15 | ||||||||||||||
Granted - performance stock | 456,174 | 30.8 | ||||||||||||||
Vested | (581,329 | ) | 24.72 | |||||||||||||
Forfeited | (31,500 | ) | 25.55 | |||||||||||||
Unvested balance as of September 30, 2013 | 1,417,628 | 29.06 | ||||||||||||||
Stock option activity | Stock option activity for the nine months ended September 30, 2013 is summarized below: | |||||||||||||||
Options | Weighted | Aggregate | Weighted | |||||||||||||
Average | Intrinsic | Average | ||||||||||||||
Exercise | Value | Remaining | ||||||||||||||
Price | Contractual | |||||||||||||||
term | ||||||||||||||||
(In thousands) | (Years) | |||||||||||||||
Outstanding as of December 31, 2012 | 414,061 | $ | 22.39 | |||||||||||||
Granted | 45,000 | 33.02 | ||||||||||||||
Exercised | (70,000 | ) | 20.11 | |||||||||||||
Forfeited | (300 | ) | 17.63 | |||||||||||||
Outstanding as of September 30, 2013 | 388,761 | 24.04 | $ | 4,495 | 3.6 | |||||||||||
Stock options exercisable and expected to vest as of September 30, 2013 | 388,761 | 24.04 | $ | 4,495 | 3.6 | |||||||||||
Exercisable as of September 30, 2013 | 333,761 | 22.5 | $ | 4,371 | 2.7 | |||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||
Fair value of assets measured on recurring basis | Our financial instruments measured at fair value on a recurring basis at September 30, 2013, were as follows: | |||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Corporate debt securities | $ | 467,060 | $ | — | $ | 467,060 | $ | — | ||||||||||||
GSEs | 74,951 | 74,951 | — | — | ||||||||||||||||
Municipal securities | 107,844 | — | 107,844 | — | ||||||||||||||||
U.S. treasury notes | 42,207 | 42,207 | — | — | ||||||||||||||||
Certificates of deposit | 43,089 | — | 43,089 | — | ||||||||||||||||
Auction rate securities | 11,674 | — | — | 11,674 | ||||||||||||||||
1.125% Call Option derivative asset | 191,663 | — | — | 191,663 | ||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 938,488 | $ | 117,158 | $ | 617,993 | $ | 203,337 | ||||||||||||
Embedded cash conversion option derivative liability | $ | 191,556 | $ | — | $ | — | $ | 191,556 | ||||||||||||
Contingent consideration liabilities | 59,947 | — | — | 59,947 | ||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 251,503 | $ | — | $ | — | $ | 251,503 | ||||||||||||
Our financial instruments measured at fair value on a recurring basis at December 31, 2012, were as follows: | ||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Corporate debt securities | $ | 191,008 | $ | — | $ | 191,008 | $ | — | ||||||||||||
GSEs | 29,525 | 29,525 | — | — | ||||||||||||||||
Municipal securities | 75,848 | — | 75,848 | — | ||||||||||||||||
U.S. treasury notes | 35,740 | 35,740 | — | — | ||||||||||||||||
Certificates of deposit | 10,724 | — | 10,724 | — | ||||||||||||||||
Auction rate securities | 13,419 | — | — | 13,419 | ||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 356,264 | $ | 65,265 | $ | 277,580 | $ | 13,419 | ||||||||||||
Interest rate swap derivative liability | $ | 1,307 | $ | — | $ | 1,307 | $ | — | ||||||||||||
Fair value of assets measured on recurring basis using unobservable inputs | The following tables present activity relating to our assets (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3): | |||||||||||||||||||
Changes in Level 3 Instruments for the Nine Months Ended September 30, 2013 | ||||||||||||||||||||
Total | Auction Rate Securities | Derivatives, Net | Contingent Consideration | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance at December 31, 2012 | $ | 13,419 | $ | 13,419 | $ | — | $ | — | ||||||||||||
Net unrealized gains included in other comprehensive income | 505 | 505 | — | — | ||||||||||||||||
Net unrealized losses included in other expense | (3,382 | ) | — | (3,382 | ) | — | ||||||||||||||
Issuances | (75,074 | ) | — | (75,074 | ) | — | ||||||||||||||
Auction rate securities settlements and derivative re-designation | 76,747 | (2,250 | ) | 78,997 | — | |||||||||||||||
Acquisitions | (59,947 | ) | — | — | (59,947 | ) | ||||||||||||||
Balance at September 30, 2013 | $ | (47,732 | ) | $ | 11,674 | $ | 541 | $ | (59,947 | ) | ||||||||||
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at September 30, 2013 | $ | 397 | $ | 397 | $ | — | $ | — | ||||||||||||
Changes in Level 3 Instruments for the Year Ended December 31, 2012 | ||||||||||||||||||||
Total | Auction Rate Securities | Derivatives, Net | Contingent Consideration | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance at December 31, 2011 | $ | 16,134 | $ | 16,134 | $ | — | $ | — | ||||||||||||
Net unrealized gains included in other comprehensive income | 1,635 | 1,635 | — | — | ||||||||||||||||
Settlements | (4,350 | ) | (4,350 | ) | — | — | ||||||||||||||
Balance at December 31, 2012 | $ | 13,419 | $ | 13,419 | $ | — | $ | — | ||||||||||||
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at December 31, 2012 | $ | 1,059 | $ | 1,059 | $ | — | $ | — | ||||||||||||
Schedule of fair value, asset and liabilities measured on recurring basis - disclosure only | The carrying amounts and estimated fair values of our long-term debt, as well as the applicable fair value hierarchy tiers, are contained in the tables below. Our convertible senior notes are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets. As described in greater detail Note 11, "Long-Term Debt," we recorded lease financing obligations in connection with sale-leaseback transactions executed in the first half of 2013. The lease financing obligations are classified as Level 3 financial instruments because certain inputs used to determine their fair value are unobservable, such as our incremental borrowing rate. Fair value for these obligations was determined using discounted cash flow analysis with an estimated incremental borrowing rate for debt with similar terms. The credit facility was repaid and terminated effective February 15, 2013, and the term loan was repaid in June 2013. | |||||||||||||||||||
30-Sep-13 | ||||||||||||||||||||
Carrying | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Value | Fair Value | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||
1.125% Notes | $ | 411,659 | $ | 596,899 | $ | — | $ | 596,899 | $ | — | ||||||||||
3.75% Notes | 180,225 | 229,556 | — | 229,556 | — | |||||||||||||||
Lease financing obligations | 178,188 | 178,500 | — | — | 178,500 | |||||||||||||||
$ | 770,072 | $ | 1,004,955 | $ | — | $ | 826,455 | $ | 178,500 | |||||||||||
31-Dec-12 | ||||||||||||||||||||
Carrying | Total | |||||||||||||||||||
Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
3.75% Notes | $ | 175,468 | $ | 208,460 | $ | — | $ | 208,460 | $ | — | ||||||||||
Term loan | 47,471 | 47,471 | — | — | 47,471 | |||||||||||||||
Credit facility | 40,000 | 40,000 | — | — | 40,000 | |||||||||||||||
$ | 262,939 | $ | 295,931 | $ | — | $ | 208,460 | $ | 87,471 | |||||||||||
Investments_Tables
Investments (Tables) | 9 Months Ended | |||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||
Investments | The following tables summarize our investments as of the dates indicated: | |||||||||||||||||||||
30-Sep-13 | ||||||||||||||||||||||
Amortized | Gross | Estimated | ||||||||||||||||||||
Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 467,785 | $ | 306 | $ | 1,031 | $ | 467,060 | ||||||||||||||
GSEs | 75,022 | 18 | 89 | 74,951 | ||||||||||||||||||
Municipal securities | 108,647 | 109 | 912 | 107,844 | ||||||||||||||||||
U.S. treasury notes | 42,159 | 67 | 19 | 42,207 | ||||||||||||||||||
Certificates of deposit | 43,087 | 3 | 1 | 43,089 | ||||||||||||||||||
Subtotal - current investments | 736,700 | 503 | 2,052 | 735,151 | ||||||||||||||||||
Auction rate securities | 12,400 | — | 726 | 11,674 | ||||||||||||||||||
$ | 749,100 | $ | 503 | $ | 2,778 | $ | 746,825 | |||||||||||||||
31-Dec-12 | ||||||||||||||||||||||
Amortized | Gross | Estimated | ||||||||||||||||||||
Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 190,545 | $ | 528 | $ | 65 | $ | 191,008 | ||||||||||||||
GSEs | 29,481 | 45 | 1 | 29,525 | ||||||||||||||||||
Municipal securities | 75,909 | 185 | 246 | 75,848 | ||||||||||||||||||
U.S. treasury notes | 35,700 | 42 | 2 | 35,740 | ||||||||||||||||||
Certificates of deposit | 10,715 | 9 | — | 10,724 | ||||||||||||||||||
Subtotal - current investments | 342,350 | 809 | 314 | 342,845 | ||||||||||||||||||
Auction rate securities | 14,650 | — | 1,231 | 13,419 | ||||||||||||||||||
$ | 357,000 | $ | 809 | $ | 1,545 | $ | 356,264 | |||||||||||||||
Contractual maturities of investments | The contractual maturities of our investments as of September 30, 2013 are summarized below: | |||||||||||||||||||||
Cost | Estimated | |||||||||||||||||||||
Fair Value | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
Due in one year or less | $ | 406,330 | $ | 406,342 | ||||||||||||||||||
Due one year through five years | 330,370 | 328,809 | ||||||||||||||||||||
Due after ten years | 12,400 | 11,674 | ||||||||||||||||||||
$ | 749,100 | $ | 746,825 | |||||||||||||||||||
Schedule of available for sale securities continuous unrealized loss position | The following tables segregate those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a loss position for 12 months or more as of September 30, 2013. | |||||||||||||||||||||
In a Continuous Loss Position | In a Continuous Loss Position | |||||||||||||||||||||
for Less than 12 Months | for 12 Months or More | |||||||||||||||||||||
Estimated | Unrealized | Total | Estimated | Unrealized | Total | |||||||||||||||||
Fair | Losses | Number of | Fair | Losses | Number of | |||||||||||||||||
Value | Securities | Value | Securities | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 254,351 | $ | 991 | 99 | $ | 5,580 | $ | 40 | 5 | ||||||||||||
Municipal securities | 60,428 | 736 | 68 | 12,424 | 176 | 29 | ||||||||||||||||
GSEs | 24,271 | 89 | 15 | — | — | — | ||||||||||||||||
U.S. treasury notes | 12,487 | 19 | 11 | — | — | — | ||||||||||||||||
Certificates of deposit | 415 | 1 | 2 | — | — | — | ||||||||||||||||
Auction rate securities | — | — | — | 11,674 | 726 | 17 | ||||||||||||||||
$ | 351,952 | $ | 1,836 | 195 | $ | 29,678 | $ | 942 | 51 | |||||||||||||
The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a loss position for 12 months or more as of December 31, 2012. | ||||||||||||||||||||||
In a Continuous Loss Position | In a Continuous Loss Position | |||||||||||||||||||||
for Less than 12 Months | for 12 Months or More | |||||||||||||||||||||
Estimated | Unrealized | Total | Estimated | Unrealized | Total | |||||||||||||||||
Fair | Losses | Number of | Fair | Losses | Number of | |||||||||||||||||
Value | Securities | Value | Securities | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Corporate debt securities | $ | 44,457 | $ | 65 | 23 | $ | — | $ | — | — | ||||||||||||
Municipal securities | 35,223 | 246 | 43 | — | — | — | ||||||||||||||||
GSEs | 5,004 | 1 | 1 | — | — | — | ||||||||||||||||
U.S. treasury notes | 4,511 | 2 | 5 | — | — | — | ||||||||||||||||
Auction rate securities | — | — | — | 13,419 | 1,231 | 21 | ||||||||||||||||
$ | 89,195 | $ | 314 | 72 | $ | 13,419 | $ | 1,231 | 21 | |||||||||||||
Receivables_Tables
Receivables (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Receivables [Abstract] | ||||||||
Summary of Accounts Receivable | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
(In thousands) | ||||||||
Health Plans segment: | ||||||||
California | $ | 130,718 | $ | 28,553 | ||||
Florida | 2,239 | 953 | ||||||
Michigan | 16,311 | 12,873 | ||||||
New Mexico | 14,091 | 9,059 | ||||||
Ohio | 79,200 | 40,980 | ||||||
Texas | 5,280 | 7,459 | ||||||
Utah | 10,375 | 3,359 | ||||||
Washington | 12,668 | 17,587 | ||||||
Wisconsin | 5,033 | 4,098 | ||||||
Other | 633 | 2,177 | ||||||
Total Health Plans segment | 276,548 | 127,098 | ||||||
Molina Medicaid Solutions segment | 17,419 | 22,584 | ||||||
$ | 293,967 | $ | 149,682 | |||||
Restricted_Investments_Tables
Restricted Investments (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||
Summary of restricted investments by health plan | The following table presents the balances of restricted investments: | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
(In thousands) | ||||||||
California | $ | 373 | $ | 373 | ||||
Florida | 8,840 | 5,738 | ||||||
Michigan | 1,014 | 1,014 | ||||||
New Mexico | 24,620 | 15,915 | ||||||
Ohio | 9,081 | 9,082 | ||||||
Texas | 3,500 | 3,503 | ||||||
Utah | 3,308 | 3,126 | ||||||
Washington | 151 | 151 | ||||||
Other | 4,037 | 5,199 | ||||||
Total Health Plans segment | 54,924 | 44,101 | ||||||
Molina Medicaid Solutions segment | 10,301 | — | ||||||
$ | 65,225 | $ | 44,101 | |||||
Contractual maturities of our held-to-maturity restricted investments | The contractual maturities of our held-to-maturity restricted investments as of September 30, 2013 are summarized below. | |||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(In thousands) | ||||||||
Due in one year or less | $ | 59,633 | $ | 59,636 | ||||
Due one year through five years | 5,592 | 5,596 | ||||||
$ | 65,225 | $ | 65,232 | |||||
Medical_Claims_and_Benefits_Pa1
Medical Claims and Benefits Payable (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Other Liabilities Disclosure [Abstract] | ||||||||||||
Components of change in medical claims and benefits payable | The following table shows the components of the change in medical claims and benefits payable from continuing and discontinued operations for the periods indicated: | |||||||||||
Nine Months Ended | Three Months Ended | Year Ended | ||||||||||
30-Sep-13 | 30-Sep-13 | 31-Dec-12 | ||||||||||
(Dollars in thousands) | ||||||||||||
Balances at beginning of period | $ | 494,530 | $ | 465,487 | $ | 402,476 | ||||||
Components of medical care costs related to: | ||||||||||||
Current period | 4,021,461 | 1,415,670 | 5,136,055 | |||||||||
Prior periods | (54,040 | ) | (32,575 | ) | (39,295 | ) | ||||||
Total medical care costs | 3,967,421 | 1,383,095 | 5,096,760 | |||||||||
Payments for medical care costs related to: | ||||||||||||
Current period | 3,410,689 | 851,025 | 4,649,363 | |||||||||
Prior periods | 418,556 | 364,851 | 355,343 | |||||||||
Total paid | 3,829,245 | 1,215,876 | 5,004,706 | |||||||||
Balances at end of period | $ | 632,706 | $ | 632,706 | $ | 494,530 | ||||||
Benefit from prior period as a percentage of: | ||||||||||||
Balance at beginning of period | 10.9 | % | 7 | % | 9.8 | % | ||||||
Premium revenue, trailing twelve months | 0.9 | % | 0.5 | % | 0.7 | % | ||||||
Medical care costs, trailing twelve months | 1 | % | 0.6 | % | 0.8 | % |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | |||||||||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | As of September 30, 2013, maturities of long-term debt for the years ending December 31 are as follows (in thousands): | |||||||||||||||||||||||||||
Total | 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | ||||||||||||||||||||||
1.125% Notes | $ | 550,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 550,000 | ||||||||||||||
3.75% Notes | 187,000 | — | 187,000 | — | — | — | — | |||||||||||||||||||||
$ | 737,000 | $ | — | $ | 187,000 | $ | — | $ | — | $ | — | $ | 550,000 | |||||||||||||||
Long term debt | The principal amounts, unamortized discount and net carrying amounts of the convertible senior notes were as follows: | |||||||||||||||||||||||||||
Principal Balance | Unamortized Discount | Net Carrying Amount | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
September 30, 2013: | ||||||||||||||||||||||||||||
1.125% Notes | $ | 550,000 | $ | 138,341 | $ | 411,659 | ||||||||||||||||||||||
3.75% Notes | 187,000 | 6,775 | 180,225 | |||||||||||||||||||||||||
$ | 737,000 | $ | 145,116 | $ | 591,884 | |||||||||||||||||||||||
December 31, 2012: | ||||||||||||||||||||||||||||
3.75% Notes | $ | 187,000 | $ | 11,532 | $ | 175,468 | ||||||||||||||||||||||
Debt instruments interest cost recognized | ||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Interest cost recognized for the period relating to the: | ||||||||||||||||||||||||||||
Contractual interest coupon rate | $ | 3,300 | $ | 1,753 | $ | 9,127 | $ | 5,259 | ||||||||||||||||||||
Amortization of the discount | 6,059 | 1,499 | 15,747 | 4,414 | ||||||||||||||||||||||||
Total interest cost recognized | $ | 9,359 | $ | 3,252 | $ | 24,874 | $ | 9,673 | ||||||||||||||||||||
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the consolidated balance sheets: | |||||||||||||||
Balance Sheet Location | 30-Sep-13 | |||||||||||||||
(In thousands) | ||||||||||||||||
Derivative asset: | ||||||||||||||||
1.125% Call Option | Non-current assets: Derivative asset | $ | 191,663 | |||||||||||||
Derivative liability: | ||||||||||||||||
Embedded cash conversion option | Non-current liabilities: Derivative liability | $ | 191,556 | |||||||||||||
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | Our derivative financial instruments do not qualify for hedge treatment, therefore the change in fair value of these instruments is recognized immediately in our consolidated statements of operations, in other expense. The following table summarizes the gains (losses) recorded in the periods presented: | |||||||||||||||
Three Months Ended September 30, | Nine months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Derivative gains (losses): | ||||||||||||||||
1.125% Call Option | $ | (15,460 | ) | $ | — | $ | 42,332 | $ | — | |||||||
Embedded cash conversion option | 15,461 | — | (42,225 | ) | — | |||||||||||
1.125% Warrants | — | — | (3,923 | ) | — | |||||||||||
Interest rate swap | — | (184 | ) | 433 | (1,270 | ) | ||||||||||
$ | 1 | $ | (184 | ) | $ | (3,383 | ) | $ | (1,270 | ) | ||||||
Segment_Reporting_Tables
Segment Reporting (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||
Operating segment information | The cost of services shared between the Health Plans and Molina Medicaid Solutions segments is charged to the Health Plans segment. | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Revenue from continuing operations: | ||||||||||||||||
Health Plans: | ||||||||||||||||
Premium revenue | $ | 1,584,656 | $ | 1,448,600 | $ | 4,583,818 | $ | 4,066,737 | ||||||||
Premium tax receipts | 43,723 | 37,894 | 127,606 | 120,953 | ||||||||||||
Investment income | 1,740 | 1,155 | 4,884 | 3,893 | ||||||||||||
Rental and other income | 5,860 | 4,079 | 16,476 | 12,315 | ||||||||||||
Molina Medicaid Solutions: | ||||||||||||||||
Service revenue | 51,100 | 48,422 | 150,528 | 132,351 | ||||||||||||
$ | 1,687,079 | $ | 1,540,150 | $ | 4,883,312 | $ | 4,336,249 | |||||||||
Depreciation and amortization reported in the consolidated statements of cash flows: | ||||||||||||||||
Health Plans | $ | 17,545 | $ | 14,753 | $ | 48,467 | $ | 43,600 | ||||||||
Molina Medicaid Solutions | 6,583 | 5,526 | 19,568 | 14,689 | ||||||||||||
$ | 24,128 | $ | 20,279 | $ | 68,035 | $ | 58,289 | |||||||||
Operating income (loss) from continuing operations: | ||||||||||||||||
Health Plans | $ | 16,929 | $ | (5,788 | ) | $ | 118,600 | $ | (33,957 | ) | ||||||
Molina Medicaid Solutions | 7,997 | 8,156 | 20,645 | 23,207 | ||||||||||||
Total operating income (loss) from continuing operations | 24,926 | 2,368 | 139,245 | (10,750 | ) | |||||||||||
Interest expense | 13,532 | 4,315 | 38,236 | 12,421 | ||||||||||||
Other (income) expense | (24 | ) | 184 | 3,347 | 1,270 | |||||||||||
Income (loss) from continuing operations before | ||||||||||||||||
income taxes | $ | 11,418 | $ | (2,131 | ) | $ | 97,662 | $ | (24,441 | ) | ||||||
September 30, | December 31, | |||||||||||||||
2013 | 2012 | |||||||||||||||
(In thousands) | ||||||||||||||||
Goodwill and intangible assets, net: | ||||||||||||||||
Health Plans | $ | 252,360 | $ | 139,710 | ||||||||||||
Molina Medicaid Solutions | 83,058 | 89,089 | ||||||||||||||
$ | 335,418 | $ | 228,799 | |||||||||||||
Total assets: | ||||||||||||||||
Health Plans | $ | 2,748,724 | $ | 1,702,212 | ||||||||||||
Molina Medicaid Solutions | 176,342 | 232,610 | ||||||||||||||
$ | 2,925,066 | $ | 1,934,822 | |||||||||||||
Commitments_and_Contingencies_1
Commitments and Contingencies (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Schedule of future minimum lease payments for sale leaseback | Future minimum lease payments due under these leases beginning January 1, 2014 are as follows: | |||
(In thousands) | ||||
2014 | $ | 14,395 | ||
2015 | 18,277 | |||
2016 | 18,877 | |||
2017 | 19,496 | |||
2018 | 20,137 | |||
Thereafter | 385,813 | |||
Total minimum lease payments | $ | 476,995 | ||
Basis_of_Presentation_Details
Basis of Presentation (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Feb. 14, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Oct. 23, 2013 | |
Segment | Segment | Louisianna Medicaid Management Information Systems | California Health Plan | Florida Health Plan | Missouri Health Plan | Missouri Health Plan | Subsequent Event | |||
Customer | Customer | Health Care Organization, Premium Revenue | California Department of Health Care Services | Florida Agency for Health Care Administration | Florida Health Plan | |||||
Region | Florida Agency for Health Care Administration | |||||||||
Contract | ||||||||||
Basis Of Presentation [Line Items] | ||||||||||
Number of reportable segments | 2 | 2 | ||||||||
Number of members eligible for the health care programs | 1,900,000 | 1,900,000 | ||||||||
Minimum Medicaid contract term | 3 years | |||||||||
Maximum Medicaid contract term | 4 years | |||||||||
Extension term to contractual agreement | 5 years | |||||||||
Number of contracts awarded under Florida Statewide Medicaid Managed Care Managed Medical Assistance Invitation to Negotiate | 3 | |||||||||
Number of regions with awarded contract | 3 | |||||||||
Premium revenue | $1,584,656,000 | $1,448,600,000 | $4,583,818,000 | $4,066,737,000 | $31,100,000 | $200,000 | $113,800,000 | |||
Percentage of concentration risk (in percent) | 20.70% | |||||||||
Expected annual service revenue under the contract | 40,000,000 | |||||||||
Tax benefit from stock abandon | $9,500,000 |
Significant_Accounting_Policie3
Significant Accounting Policies (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Number of categories for component of premium revenue | 2 | |
Medicare revenue risk adjustment maximum year after the original year of service | 2 years | |
Anticipated Medicare risk adjustment premiums | $18.40 | $0.30 |
Estimated Federal premium assessment fees in 2014 | 100 | |
California Health Plan | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Liability recorded related to profit sharing agreement | 0.8 | 0.3 |
Texas Health Plan | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Liability recorded related to profit sharing agreement | 2.2 | 3.2 |
Percentage of additional incremental revenue earned | 5.00% | |
Washington Health Plan | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Liability recorded related to profit sharing agreement | $0.30 | |
New Mexico Health Plan | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Percentage of incremental revenue earned maximum | 0.75% | |
Ohio Heath Plan | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Percentage of incremental revenue earned maximum | 1.00% | |
Wisconsin Health Plan | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Percentage of incremental revenue earned maximum | 3.25% | |
Business Process Outsourcing (BPO) | Molina Medicaid Solutions | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Period of performance of BPO services under Idaho and Maine contracts | 5 years |
Significant_Accounting_Policie4
Significant Accounting Policies Quality Incentive Premium Revenue Recognized (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Maximum Available Quality Incentive Premium - Current Year | $20,939 | $21,488 | $62,050 | $52,869 |
Amount of Current Year Quality Incentive Premium Revenue Recognized | 17,538 | 12,397 | 52,483 | 38,647 |
Amount of Quality Incentive Premium Revenue Recognized from Prior Year | -50 | 246 | 7,759 | 2,116 |
Total Quality Incentive Premium Revenue Recognized | 17,488 | 12,643 | 60,242 | 40,763 |
Total Revenue Recognized | 1,584,656 | 1,448,600 | 4,583,818 | 4,066,737 |
New Mexico Health Plan | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Maximum Available Quality Incentive Premium - Current Year | 906 | 560 | 2,079 | 1,676 |
Amount of Current Year Quality Incentive Premium Revenue Recognized | 818 | 532 | 1,685 | 1,350 |
Amount of Quality Incentive Premium Revenue Recognized from Prior Year | 2 | 0 | 159 | 658 |
Total Quality Incentive Premium Revenue Recognized | 820 | 532 | 1,844 | 2,008 |
Total Revenue Recognized | 130,318 | 80,846 | 298,767 | 240,568 |
Ohio Heath Plan | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Maximum Available Quality Incentive Premium - Current Year | 3,080 | 2,824 | 9,049 | 8,222 |
Amount of Current Year Quality Incentive Premium Revenue Recognized | 976 | 1,412 | 3,115 | 6,810 |
Amount of Quality Incentive Premium Revenue Recognized from Prior Year | -52 | 0 | 501 | 966 |
Total Quality Incentive Premium Revenue Recognized | 924 | 1,412 | 3,616 | 7,776 |
Total Revenue Recognized | 280,964 | 282,489 | 819,879 | 827,219 |
Texas Health Plan | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Maximum Available Quality Incentive Premium - Current Year | 15,744 | 17,685 | 47,683 | 41,687 |
Amount of Current Year Quality Incentive Premium Revenue Recognized | 15,744 | 10,453 | 47,683 | 30,487 |
Amount of Quality Incentive Premium Revenue Recognized from Prior Year | 0 | 0 | 5,995 | 0 |
Total Quality Incentive Premium Revenue Recognized | 15,744 | 10,453 | 53,678 | 30,487 |
Total Revenue Recognized | 320,657 | 344,522 | 969,063 | 892,377 |
Wisconsin Health Plan | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Maximum Available Quality Incentive Premium - Current Year | 1,209 | 419 | 3,239 | 1,284 |
Amount of Current Year Quality Incentive Premium Revenue Recognized | 0 | 0 | 0 | 0 |
Amount of Quality Incentive Premium Revenue Recognized from Prior Year | 0 | 246 | 1,104 | 492 |
Total Quality Incentive Premium Revenue Recognized | 0 | 246 | 1,104 | 492 |
Total Revenue Recognized | 39,676 | 16,279 | 104,540 | 52,209 |
New Mexico Ohio Texas Wisconsin Health Plan | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Total Revenue Recognized | $771,615 | $724,136 | $2,192,249 | $2,012,373 |
Significant_Accounting_Policie5
Significant Accounting Policies Income Taxes (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | ||
Total unrecognized tax benefits | $12,500,000 | $10,600,000 |
Unrecognized tax benefits state refund claims | 10,500,000 | 8,400,000 |
Unrecognized tax benefits that would impact effective tax rate | 8,600,000 | 7,400,000 |
Possible decrease in unrecognized tax benefit liabilities during the next 12 months | 10,700,000 | |
Interest and penalties accrued related to unrecognized tax benefits | $67,000 | $56,000 |
Net_Income_Per_Share_Summary_o
Net Income Per Share Summary of Denominators for Computation of Basic and Diluted Earnings Per Share (Detail) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Shares outstanding at the beginning of the period | 45,683,000 | 46,527,000 | 46,762,000 | 45,815,000 | ||||
Weighted-average number of shares repurchased | 0 | 0 | -1,375,000 | 0 | ||||
Weighted-average number of shares issued | 16,000 | 19,000 | 321,000 | 486,000 | ||||
Denominator for basic net income per share | 45,699,000 | 46,546,000 | 45,708,000 | 46,301,000 | ||||
Dilutive effect of employee stock options and stock grants (1) | 453,000 | [1] | 334,000 | [1] | 532,000 | [1] | 0 | [1] |
Dilutive effect of convertible senior notes | 910,000 | 0 | 527,000 | 0 | ||||
Denominator for diluted net income per share (2) | 47,062,000 | [2] | 46,880,000 | [2] | 46,767,000 | [2] | 46,301,000 | [2] |
Restricted Stock | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Antidilutive Securities | 370,000 | |||||||
Employee Stock Option | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Antidilutive Securities | 60,000 | 125,000 | 48,600 | |||||
[1] | Unvested restricted shares are included in the calculation of diluted net income per share when their grant date fair values are below the average fair value of the common shares for each of the periods presented. Options to purchase common shares are included in the calculation of diluted net income per share when their exercise prices are below the average fair value of the common shares for each of the periods presented. For the three and nine months ended September 30, 2013 there were no anti-dilutive weighted restricted shares. For the three and nine months ended September 30, 2013 there were approximately 60,000 and 48,600 anti-dilutive weighted options, respectively. For the three months ended September 30, 2012, there were approximately 370,000 anti-dilutive weighted restricted shares and 125,000 anti-dilutive weighted options. Potentially dilutive unvested restricted shares and stock options were not included in the computation of diluted loss per share for the nine months ended September 30, 2012, because to do so would have been anti-dilutive. | |||||||
[2] | Potentially dilutive shares issuable pursuant to our 1.125% Warrants (defined in Note 11, "Long-Term Debt") were not included in the computation of diluted income per share for the three and nine month period ended September 30, 2013, because to do so would have been anti-dilutive. Potentially dilutive shares issuable pursuant to our 3.75% Notes (defined in Note 11, "Long-Term Debt") were not included in the computation of diluted loss per share for the three and nine month period ended September 30, 2012, because to do so would have been anti-dilutive. |
Business_Combinations_Details
Business Combinations (Details) (USD $) | 9 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Jul. 26, 2013 | Sep. 30, 2013 | Jul. 26, 2013 | Aug. 01, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | |
South Carolina Health Plan | South Carolina Health Plan | South Carolina Health Plan | New Mexico Health Plan | New Mexico Health Plan | New Mexico Health Plan | Florida Health Plan | |||
Community Healthy Solutions of America, Inc. | Community Healthy Solutions of America, Inc. | Number of Member Conversion | Lovelace Community Health Plan | Lovelace Community Health Plan | Number of Member Conversion | Statewid Medicaid Managed Care Long-Term Care Program | |||
Customer | member | Community Healthy Solutions of America, Inc. | member | Lovelace Community Health Plan | |||||
Business Acquisition [Line Items] | |||||||||
Payment made on the closing date | $57,684,000 | $0 | $7,500,000 | $47,200,000 | |||||
Expected members to be converted | 130,000 | 130,000 | |||||||
Total estimated purchase price | 65,000,000 | 53,500,000 | 3,300,000 | ||||||
Amount of purchase price that is contingent on members conversion | 57,500,000 | 2,400,000 | |||||||
Minimum contingent consideration arrangement payment | 7,500,000 | ||||||||
Maximum contingent consideration arrangement payment | 70,000,000 | ||||||||
Goodwill recorded | 42,100,000 | 35,200,000 | |||||||
Intangible assets recorded | 22,900,000 | 18,300,000 | |||||||
Expected future amortization in the year 2014 | 1,900,000 | 1,800,000 | |||||||
Expected future amortization in the year 2015 | 1,900,000 | 1,800,000 | |||||||
Expected future amortization in the year 2016 | 1,900,000 | 1,800,000 | |||||||
Expected future amortization in the year 2017 | 1,900,000 | 1,800,000 | |||||||
Expected future amortization in the year 2018 | $1,900,000 | $1,800,000 | |||||||
Additional members expect to be added in coming months | 80,000 |
Business_Combinations_FiniteLi
Business Combinations Finite-Lived Intangible Assets Acquired (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | 2013 Business Acquisitions | South Carolina Health Plan | New Mexico Health Plan | Florida Health Plan | Membership conversion rights | Membership conversion rights | Membership conversion rights | Membership conversion rights | Membership conversion rights | Contract rights | Contract rights | Contract rights | Contract rights | Contract rights | Other finite-lived intangibles | Other finite-lived intangibles | Other finite-lived intangibles | Other finite-lived intangibles | Other finite-lived intangibles | ||
Community Healthy Solutions of America, Inc. | Lovelace Community Health Plan | Statewid Medicaid Managed Care Long-Term Care Program | 2013 Business Acquisitions | South Carolina Health Plan | New Mexico Health Plan | Florida Health Plan | 2013 Business Acquisitions | South Carolina Health Plan | New Mexico Health Plan | Florida Health Plan | 2013 Business Acquisitions | South Carolina Health Plan | New Mexico Health Plan | Florida Health Plan | |||||||
Community Healthy Solutions of America, Inc. | Lovelace Community Health Plan | Statewid Medicaid Managed Care Long-Term Care Program | Community Healthy Solutions of America, Inc. | Lovelace Community Health Plan | Statewid Medicaid Managed Care Long-Term Care Program | Community Healthy Solutions of America, Inc. | Lovelace Community Health Plan | Statewid Medicaid Managed Care Long-Term Care Program | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||
Fair Value of Assets Acquired - Weighted average useful life | 12 years 0 months | 10 years 7 months | 7 years 8 months 12 days | ||||||||||||||||||
Fair Value of Assets Acquired | $21,800 | $21,800 | $0 | $0 | $18,300 | $0 | $18,300 | $0 | $2,050 | $1,060 | $0 | $990 | |||||||||
Goodwill and indefinite-lived intangible assets | 230,783 | 151,088 | 79,695 | 42,140 | 35,223 | 2,332 | |||||||||||||||
Recognized identifiable assets acquired | $121,845 | $65,000 | $53,523 | $3,322 |
ShareBased_Compensation_Detail
Share-Based Compensation (Details) (USD $) | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Plan | Performance Units | Performance Units | Performance Units | Restricted Stock | Employee Stock Option | Performance Restricted Stock with Vesting Options | Minimum | Maximum | March 2013 Grant | March 2013 Grant | March 2013 Grant | March 2013 Grant | March 2013 Grant | March 2013 Grant | |||
New Board Members | Performance Units | Performance Units | Performance Units | Performance Units | Performance Units | Performance Units | |||||||||||
Chief Executive Officer | Chief Financial Officer | Chief Operating Officer | Chief Accounting Officer | Officer | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||
Number of employee equity incentives plans | 2 | ||||||||||||||||
Shares awarded | 186,858 | 93,429 | 62,286 | 28,029 | 21,800 | ||||||||||||
Percentage vesting over three years | 25.00% | ||||||||||||||||
Percentage vesting upon achievement of three-year Total Stockholder Return | 25.00% | ||||||||||||||||
Percentage vesting upon achievement of total revenue | 25.00% | ||||||||||||||||
Percentage vesting upon achievement of the three-year EBITDA | 25.00% | ||||||||||||||||
Minimum operating revenue for vesting of awards | $12,000,000,000 | ||||||||||||||||
Minimum EBITDA percentage for vesting of awards | 2.50% | ||||||||||||||||
Unrecognized compensation expense | 28,000,000 | 600,000 | |||||||||||||||
Weighted average period | 1 year 8 months 18 days | ||||||||||||||||
Weighted-average period of unvested stock options to be recognized | 2 years 3 months 18 days | ||||||||||||||||
Fair value of restricted and performance stock awards granted | 33,300,000 | 23,000,000 | |||||||||||||||
Total fair value of restricted shares vested | $19,300,000 | $24,300,000 | |||||||||||||||
Weighted-average grant date fair value per share of performance awards with vesting conditions | $30.80 | $32.15 | $28.24 | ||||||||||||||
Weighted-average grant date fair value per share | $33.02 | $13.97 | $14.67 | ||||||||||||||
Fair value assumptions, risk-free interest rate (in percent) | 0.14% | ||||||||||||||||
Fair value assumptions, dividend yield (in percent) | 0.00% | ||||||||||||||||
Fair value assumptions, expected term (in years) | 9 months 29 days | 6 years | 7 years | ||||||||||||||
Fair value assumptions, risk-free interest rates (in percent) | 1.10% | 1.40% | |||||||||||||||
Fair value assumptions, expected volatilities (in percent) | 41.30% | 43.00% |
ShareBased_Compensation_StockB
Share-Based Compensation Stock-Based Compensation Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $8,504 | $5,636 | $20,654 | $15,448 |
Performance Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 7,634 | 5,093 | 18,593 | 13,943 |
Employee stock purchase plan and stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $870 | $543 | $2,061 | $1,505 |
ShareBased_Compensation_Restri
Share-Based Compensation Restricted Share Activity (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Beginning Balance, Shares | 986,577 |
Vested, Shares | -581,329 |
Forfeited, Shares | -31,500 |
Ending Balance, Shares | 1,417,628 |
Begining Balance, Weighted Average Grant Date Fair Value | $23.74 |
Vested, Weighted Average Grant Date Fair Value | $24.72 |
Forfeited, Weighted Average Grant Date Fair Value | $25.55 |
Ending Balance, Weighted Average Grant Date Fair Value | $29.06 |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Granted, Shares | 587,706 |
Granted, Weighted Average Grant Date Fair Value | $32.15 |
Performance Units | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Granted, Shares | 456,174 |
Granted, Weighted Average Grant Date Fair Value | $30.80 |
ShareBased_Compensation_Stock_
Share-Based Compensation Stock Option Activity (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding beginning balance, Options | 414,061 | |
Granted, Options | 45,000 | |
Exercised, Options | -70,000 | |
Forfeited, Options | -300 | |
Outstanding ending balance, Options | 388,761 | 414,061 |
Stock options exercisable and expected to vest ending balance, Options | 388,761 | |
Exercisable ending balance, Options | 333,761 | |
Weighted Average Exercise Price | ||
Outstanding beginning balance, Weighted average exercise price | $22.39 | |
Weighted average grant date fair value, Granted | $33.02 | $13.97 |
Exercised, Weighted average exercise price | $20.11 | |
Forfeited, Weighted average exercise price | $17.63 | |
Outstanding ending balance, Weighted average exercise price | $24.04 | $22.39 |
Stock options exercisable and expected to vest ending balance, Weighted average exercise price | $24.04 | |
Exercisable ending balance, Weighted average exercise price | $22.50 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | ||
Outstanding beginning balance, Average intrinsic value | ||
Granted, Average intrinsic value | ||
Exercised, Average intrinsic value | ||
Forfeited, Average intrinsic value | ||
Aggregate intrinsic value, Outstanding ending balance | 4,495 | |
Stock options exercisable and expected to vest ending balance, Average intrinsic value | 4,495 | |
Exercisable ending balance, Average intrinsic value | $4,371 | |
Outstanding ending balance, Weighted average remaining contractual term | 3 years 7 months | |
Stock options exercisable and expected to vest ending balance, Weighted average remaining contractual term | 3 years 7 months | |
Exercisable ending balance, Weighted average remaining contractual term | 2 years 8 months |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 0 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||
Feb. 15, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 26, 2013 | |
Auction rate securities | Cash Convertible Senior Notes due 2020 | Fair Value, Inputs, Level 3 | Number of Member Conversion | Minimum | Maximum | Community Healthy Solutions of America, Inc. | Community Healthy Solutions of America, Inc. | ||||
Participant | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Fair Value, Inputs, Level 3 | Fair Value, Inputs, Level 3 | South Carolina Health Plan | South Carolina Health Plan | |||||
Fair Value, Measurements, Recurring | Fair Value, Measurements, Recurring | Fair Value, Measurements, Recurring | member | Customer | |||||||
member | member | ||||||||||
Schedule of Available-for-sale Securities [Line Items] | |||||||||||
Fair value of investments | $746,825,000 | $356,264,000 | $11,700,000 | ||||||||
Par value of auction rate securities sold | 12,400,000 | ||||||||||
Fair value valuation data pool of participants | 10,000 | ||||||||||
Derivative, warrants liability, percentage rate | 1.13% | ||||||||||
Contingent consideration liabilities relating to the acquisitions | $59,947,000 | $59,947,000 | |||||||||
Expected members to be converted | 0 | 170,000 | 130,000 | 130,000 | |||||||
Debt maturity date | 15-Feb-13 | 15-Jan-20 |
Fair_Value_Measurements_Fair_V
Fair Value Measurements Fair Value of Financial Instruments on Recurring Basis (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $191,556 | $1,307 |
Fair Value, Measurements, Recurring | Total Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 938,488 | 356,264 |
Contingent consideration | 59,947 | |
Total liability measured at fair value on a recurring basis | 251,503 | |
Fair Value, Measurements, Recurring | Total Fair Value | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 467,060 | 191,008 |
Fair Value, Measurements, Recurring | Total Fair Value | GSEs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 74,951 | 29,525 |
Fair Value, Measurements, Recurring | Total Fair Value | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 107,844 | 75,848 |
Fair Value, Measurements, Recurring | Total Fair Value | U.S. treasury notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 42,207 | 35,740 |
Fair Value, Measurements, Recurring | Total Fair Value | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 43,089 | 10,724 |
Fair Value, Measurements, Recurring | Total Fair Value | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 11,674 | 13,419 |
Fair Value, Measurements, Recurring | Total Fair Value | 1.125% Call Option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 191,663 | |
Fair Value, Measurements, Recurring | Total Fair Value | Embedded conversion option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 191,556 | |
Fair Value, Measurements, Recurring | Total Fair Value | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liability measured at fair value on a recurring basis | 1,307 | |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 117,158 | 65,265 |
Contingent consideration | 0 | |
Total liability measured at fair value on a recurring basis | 0 | |
Fair Value, Measurements, Recurring | Level 1 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | GSEs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 74,951 | 29,525 |
Fair Value, Measurements, Recurring | Level 1 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | U.S. treasury notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 42,207 | 35,740 |
Fair Value, Measurements, Recurring | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | 1.125% Call Option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | |
Fair Value, Measurements, Recurring | Level 1 | Embedded conversion option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 0 | |
Fair Value, Measurements, Recurring | Level 1 | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liability measured at fair value on a recurring basis | 0 | |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 617,993 | 277,580 |
Contingent consideration | 0 | |
Total liability measured at fair value on a recurring basis | 0 | |
Fair Value, Measurements, Recurring | Level 2 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 467,060 | 191,008 |
Fair Value, Measurements, Recurring | Level 2 | GSEs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 107,844 | 75,848 |
Fair Value, Measurements, Recurring | Level 2 | U.S. treasury notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 43,089 | 10,724 |
Fair Value, Measurements, Recurring | Level 2 | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | 1.125% Call Option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | |
Fair Value, Measurements, Recurring | Level 2 | Embedded conversion option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 0 | |
Fair Value, Measurements, Recurring | Level 2 | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liability measured at fair value on a recurring basis | 1,307 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 203,337 | 13,419 |
Contingent consideration | 59,947 | |
Total liability measured at fair value on a recurring basis | 251,503 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | GSEs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | U.S. treasury notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 11,674 | 13,419 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | 1.125% Call Option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 191,663 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Embedded conversion option derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 191,556 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liability measured at fair value on a recurring basis | $0 |
Fair_Value_Measurements_Fair_V1
Fair Value Measurements Fair Value of Assets Measured on Recurring Basis Using Unobservable Inputs (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | $13,419 | $16,134 |
Net unrealized gains included in other comprehensive income | 505 | 1,635 |
Net unrealized gains (losses) included in other expense | -3,382 | |
Issuances | -75,074 | |
Settlements and derivative redesignation | 76,747 | -4,350 |
Acquisitions | -59,947 | |
Ending Balance | -47,732 | 13,419 |
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at the end of period | 397 | 1,059 |
Auction rate securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | 13,419 | 16,134 |
Net unrealized gains included in other comprehensive income | 505 | 1,635 |
Net unrealized gains (losses) included in other expense | 0 | |
Issuances | 0 | |
Settlements and derivative redesignation | -2,250 | -4,350 |
Acquisitions | 0 | |
Ending Balance | 11,674 | 13,419 |
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at the end of period | 397 | 1,059 |
Derivative | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | 0 | 0 |
Net unrealized gains included in other comprehensive income | 0 | 0 |
Net unrealized gains (losses) included in other expense | -3,382 | |
Issuances | -75,074 | |
Settlements and derivative redesignation | 78,997 | 0 |
Acquisitions | 0 | |
Ending Balance | 541 | 0 |
The amount of total unrealized gains for the period included in other comprehensive income attributable to the change in accumulated other comprehensive losses relating to assets still held at the end of period | 0 | 0 |
Accrued Liabilities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Acquisitions | -59,947 | |
Ending Balance | ($59,947) |
Fair_Value_Measurements_Detail1
Fair Value Measurements Details of Long-Term Debt (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $0 | $0 |
Level 1 | Cash Convertible Senior Notes due 2020 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Level 1 | Convertible Senior Notes due 2014 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | 0 |
Level 1 | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Level 1 | Lease financing obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Level 1 | Credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 826,455 | 208,460 |
Level 2 | Cash Convertible Senior Notes due 2020 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 596,899 | |
Level 2 | Convertible Senior Notes due 2014 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 229,556 | 208,460 |
Level 2 | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Level 2 | Lease financing obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Level 2 | Credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Fair Value, Inputs, Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 178,500 | 87,471 |
Fair Value, Inputs, Level 3 | Cash Convertible Senior Notes due 2020 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | |
Fair Value, Inputs, Level 3 | Convertible Senior Notes due 2014 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | 0 |
Fair Value, Inputs, Level 3 | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 47,471 | |
Fair Value, Inputs, Level 3 | Lease financing obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 178,500 | |
Fair Value, Inputs, Level 3 | Credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 40,000 | |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 770,072 | 262,939 |
Carrying Value | Cash Convertible Senior Notes due 2020 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 411,659 | |
Carrying Value | Convertible Senior Notes due 2014 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 180,225 | 175,468 |
Carrying Value | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 47,471 | |
Carrying Value | Lease financing obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 178,188 | |
Carrying Value | Credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 40,000 | |
Total Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 1,004,955 | 295,931 |
Total Fair Value | Cash Convertible Senior Notes due 2020 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 596,899 | |
Total Fair Value | Convertible Senior Notes due 2014 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 229,556 | 208,460 |
Total Fair Value | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 47,471 | |
Total Fair Value | Lease financing obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 178,500 | |
Total Fair Value | Credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $40,000 |
Investments_Details
Investments (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 66 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Dec. 31, 2012 | Mar. 31, 2008 | Sep. 30, 2013 | Sep. 30, 2013 | |
Auction rate securities | Auction rate securities | Auction rate securities | Auction rate securities | Auction rate securities | Auction rate securities | Auction rate securities | ||||||
Minimum | Maximum | |||||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||||||
Realized investment gains (losses) | $27,000 | $12,000 | $169,000 | $250,000 | ||||||||
Maturity period of securities | 17 years | 33 years | ||||||||||
Auction rate securities at par value | 746,825,000 | 746,825,000 | 356,264,000 | 11,674,000 | 13,419,000 | 82,100,000 | ||||||
Auction rate securities at par value, settled | 69,700,000 | |||||||||||
Pretax unrealized gains | $2,087,000 | $733,000 | ($1,539,000) | $1,734,000 | $500,000 | $1,400,000 |
Investments_Summary_of_Investm
Investments Summary of Investments (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Mar. 31, 2008 |
In Thousands, unless otherwise specified | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | $749,100 | $357,000 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 503 | 809 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 2,778 | 1,545 | |
Estimated Fair Value | 746,825 | 356,264 | |
Subtotal - current investments | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 736,700 | 342,350 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 503 | 809 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 2,052 | 314 | |
Estimated Fair Value | 735,151 | 342,845 | |
Corporate debt securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 467,785 | 190,545 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 306 | 528 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 1,031 | 65 | |
Estimated Fair Value | 467,060 | 191,008 | |
GSEs | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 75,022 | 29,481 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 18 | 45 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 89 | 1 | |
Estimated Fair Value | 74,951 | 29,525 | |
Municipal securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 108,647 | 75,909 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 109 | 185 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 912 | 246 | |
Estimated Fair Value | 107,844 | 75,848 | |
U.S. treasury notes | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 42,159 | 35,700 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 67 | 42 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 19 | 2 | |
Estimated Fair Value | 42,207 | 35,740 | |
Certificates of deposit | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 43,087 | 10,715 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 3 | 9 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 1 | 0 | |
Estimated Fair Value | 43,089 | 10,724 | |
Auction rate securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 12,400 | 14,650 | |
Available For Sale Securities, Gross Unrealized Gain, Accumulated In Investments | 0 | 0 | |
Available-for-sale Securities, Gross Unrealized Loss, Accumulated In Investments | 726 | 1,231 | |
Estimated Fair Value | $11,674 | $13,419 | $82,100 |
Investments_Contractual_Maturi
Investments Contractual Maturities of Investments (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Investments, Debt and Equity Securities [Abstract] | |
Due in one year or less, Cost | $406,330 |
Due one year through five years, Cost | 330,370 |
Due after ten years, Cost | 12,400 |
Total, Amortized Cost | 749,100 |
Due in one year or less, Estimated Fair Value | 406,342 |
Due one year through five years, Estimated Fair Value | 328,809 |
Due after ten years, Estimated Fair Value | 11,674 |
Total, Estimated Fair Value | $746,825 |
Investments_AvailableforSale_I
Investments Available-for-Sale Investments (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | Security | Security |
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | $351,952 | $89,195 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 1,836 | 314 |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 195 | 72 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 29,678 | 13,419 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | 942 | 1,231 |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 51 | 21 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | 254,351 | 44,457 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 991 | 65 |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 99 | 23 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 5,580 | 0 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | 40 | 0 |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 5 | 0 |
Municipal securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | 60,428 | 35,223 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 736 | 246 |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 68 | 43 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 12,424 | 0 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | 176 | 0 |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 29 | 0 |
GSEs | ||
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | 24,271 | 5,004 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 89 | 1 |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 15 | 1 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 0 | 0 |
U.S. treasury notes | ||
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | 12,487 | 4,511 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 19 | 2 |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 11 | 5 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 0 | 0 |
Auction rate securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | 0 | 0 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 0 | 0 |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 11,674 | 13,419 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | 726 | 1,231 |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 17 | 21 |
Certificates of deposit | ||
Schedule of Available-for-sale Securities [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | 415 | |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | 1 | |
In a Continuous Loss Position for Less than 12 Months, Total Number of Securities | 2 | |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | 0 | |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | $0 | |
In a Continuous Loss Position for 12 Months or More, Total Number of Securities | 0 |
Receivables_Summary_of_Account
Receivables Summary of Accounts Receivable (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | $276,548 | $127,098 |
Total receivables | 293,967 | 149,682 |
California Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 130,718 | 28,553 |
Florida Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 2,239 | 953 |
Michigan Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 16,311 | 12,873 |
New Mexico Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 14,091 | 9,059 |
Ohio Heath Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 79,200 | 40,980 |
Texas Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 5,280 | 7,459 |
Utah Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 10,375 | 3,359 |
Washington Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 12,668 | 17,587 |
Wisconsin Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 5,033 | 4,098 |
Other Health Plan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Health Plans segment: | 633 | 2,177 |
Molina Medicaid Solutions Segment | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total receivables | $17,419 | $22,584 |
Restricted_Investments_Summary
Restricted Investments Summary of Restricted Investments by Health Plan (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | $65,225 | $44,101 |
California Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 373 | 373 |
Florida Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 8,840 | 5,738 |
Michigan Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 1,014 | 1,014 |
New Mexico Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 24,620 | 15,915 |
Ohio Heath Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 9,081 | 9,082 |
Texas Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 3,500 | 3,503 |
Utah Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 3,308 | 3,126 |
Washington Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 151 | 151 |
Other Health Plan | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 4,037 | 5,199 |
Long Term Restricted Investments | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | 54,924 | 44,101 |
Molina Medicaid Solutions | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments by health plan | $10,301 | $0 |
Restricted_Investments_Contrac
Restricted Investments Contractual Maturities of Our Held-to-Maturity Restricted Investments (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Investments, Debt and Equity Securities [Abstract] | |
Amortized Cost, Due in one year or less | $59,633 |
Amortized Cost, Due one year through five years | 5,592 |
Amortized Cost, Total | 65,225 |
Estimated Fair Value, Due in one year or less | 59,636 |
Estimated Fair Value, Due one year through five years | 5,596 |
Estimated Fair Value, Total | $65,232 |
Medical_Claims_and_Benefits_Pa2
Medical Claims and Benefits Payable Components of Change in Medical Claims and Benefits Payable (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 |
Insurance Claims [Roll Forward] | |||||||
Balances at beginning of period | $465,487 | $494,530 | $402,476 | $402,476 | |||
Components of medical care costs related to: | |||||||
Current period | 1,415,670 | 4,021,461 | 5,136,055 | ||||
Prior periods | -32,575 | -54,040 | -37,700 | -39,295 | |||
Total medical care costs | 1,383,095 | 3,967,421 | 5,096,760 | ||||
Payments for medical care costs related to: | |||||||
Current period | 851,025 | 3,410,689 | 4,649,363 | ||||
Prior periods | 364,851 | 418,556 | 355,343 | ||||
Total paid | 1,215,876 | 3,829,245 | 5,004,706 | ||||
Balances at end of period | $632,706 | $402,476 | $632,706 | $494,530 | $402,476 | ||
Benefit from prior period as a percentage of: | |||||||
Balance at beginning of period | 7.00% | 9.80% | 10.90% | 9.80% | |||
Premium revenue, trailing twelve months | 0.50% | 0.90% | 0.70% | ||||
Medical care costs, trailing twelve months | 0.60% | 1.00% | 0.80% |
Medical_Claims_and_Benefits_Pa3
Medical Claims and Benefits Payable (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | ||||||
Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 30, 2013 | |
Minimum | Maximum | Lovelace Community Health Plan | ||||||||
New Mexico Health Plan | ||||||||||
member | ||||||||||
Insurance Claims [Line Items] | ||||||||||
Medical claims and benefits payable | $64,100,000 | $64,100,000 | ||||||||
Medical claims and benefits receivables | 69,700,000 | 69,700,000 | ||||||||
Percentage of liability for unpaid claims not paid out | 8.00% | 10.00% | ||||||||
Policy holder benefits prior percentage | 7.00% | 9.80% | 10.90% | 9.80% | ||||||
Benefit from prior period claims development | 54,000,000 | |||||||||
Prior year components of incurred medical care costs | ($32,575,000) | ($54,040,000) | ($37,700,000) | ($39,295,000) | ||||||
Number of new members added | 80,000 |
LongTerm_Debt_Maturities_of_Lo
Long-Term Debt Maturities of Long-Term Debt (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Schedule of Maturities of Long-term Debt [Line Items] | |
Total | $737,000 |
2013 | 0 |
2014 | 187,000 |
2015 | 0 |
2016 | 0 |
2017 | 0 |
Thereafter | 550,000 |
Cash Convertible Senior Notes due 2020 | |
Schedule of Maturities of Long-term Debt [Line Items] | |
Total | 550,000 |
2013 | 0 |
2014 | 0 |
2015 | 0 |
2016 | 0 |
2017 | 0 |
Thereafter | 550,000 |
Convertible Senior Notes due 2014 | |
Schedule of Maturities of Long-term Debt [Line Items] | |
Total | 187,000 |
2013 | 0 |
2014 | 187,000 |
2015 | 0 |
2016 | 0 |
2017 | 0 |
Thereafter | $0 |
LongTerm_Debt_Schedule_of_Long
Long-Term Debt Schedule of Long-Term Debt (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Details of the liability component: | ||
Principal Balance | $737,000 | |
Unamortized Discount | 145,116 | |
Net Carrying Amount | 591,884 | |
Cash Convertible Senior Notes due 2020 | ||
Details of the liability component: | ||
Principal Balance | 550,000 | |
Unamortized Discount | 138,341 | |
Net Carrying Amount | 411,659 | |
Convertible Senior Notes due 2014 | ||
Details of the liability component: | ||
Principal Balance | 187,000 | 187,000 |
Unamortized Discount | 6,775 | 11,532 |
Net Carrying Amount | $180,225 | $175,468 |
LongTerm_Debt_Debt_Instrument_
Long-Term Debt Debt Instrument Interest Cost Recognized (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Interest cost recognized for the period relating to the: | ||||
Contractual interest coupon rate | $3,300 | $1,753 | $9,127 | $5,259 |
Amortization of the discount | 6,059 | 1,499 | 15,747 | 4,414 |
Total interest cost recognized | $9,359 | $3,252 | $24,874 | $9,673 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | |||||||||||
Feb. 15, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Feb. 11, 2013 | Feb. 15, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Feb. 13, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Feb. 11, 2013 | Sep. 30, 2013 | Jun. 12, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Cash Convertible Senior Notes due 2020 | Cash Convertible Senior Notes due 2020 | Cash Convertible Senior Notes due 2020 | Cash Convertible Senior Notes due 2020 | Cash Convertible Senior Notes due 2020 | Cash Convertible Senior Notes due 2020 | Cash Convertible Senior Notes due 2020 | Convertible Senior Notes due 2014 | Convertible Senior Notes due 2014 | Embedded cash conversion option | Embedded cash conversion option | Term loan | June 2013 Transactions | June 2013 Transactions | February 2013 Transactions | ||||||
days | Semi-annual Interest, First Payment | Semi-annual Interest, Second Payment | Cash Convertible Senior Notes due 2020 | property | Construction projects | |||||||||||||||
Convertible Debt [Abstract] | ||||||||||||||||||||
Aggregate principal amount of convertible senior notes | $550,000,000 | $187,000,000 | ||||||||||||||||||
Debt instrument issuance date | 11-Feb-13 | 15-Feb-13 | ||||||||||||||||||
Proceeds from issuance of long-term debt | 537,973,000 | 0 | 450,000,000 | |||||||||||||||||
Over-allotment option amount | 100,000,000 | |||||||||||||||||||
Over-allotment option exercise date | 13-Feb-13 | |||||||||||||||||||
Aggregate net proceeds amount | 149,300,000 | 458,900,000 | ||||||||||||||||||
Net proceeds used to repurchase shares of common stock | 50,000,000 | 50,000,000 | 0 | 50,000,000 | ||||||||||||||||
Net proceeds amount used to repay the principal of credit facility | 40,000,000 | |||||||||||||||||||
Frequency of periodic payment on Senior Notes | 1/15/13 | 7/15/13 | ||||||||||||||||||
Percentage of contractual interest rate | 1.13% | 1.13% | 3.75% | |||||||||||||||||
Interest payment commencement date | 15-Jul-13 | |||||||||||||||||||
Latest call date for convertible Senior Notes | 15-Jul-19 | |||||||||||||||||||
Earliest call date for convertible Senior Notes | 30-Jun-13 | |||||||||||||||||||
Threshold trading days for convertible Senior Notes | 20 | |||||||||||||||||||
Threshold consecutive trading days for convertible Senior Notes | 30 days | |||||||||||||||||||
Threshold percentage of stock price trigger for convertible Senior Notes | 130.00% | |||||||||||||||||||
Percentage of last reported sale of common stock | 98.00% | |||||||||||||||||||
Senior notes conversion ratio | 24.5277 | 31.9601 | ||||||||||||||||||
Conversion price per share of common stock | $40.77 | $40.77 | $31.29 | |||||||||||||||||
Repurchase price of the principal amount of Senior Notes | 100.00% | |||||||||||||||||||
Fair value liability of the embedded cash conversion option | 149,300,000 | 149,300,000 | ||||||||||||||||||
Senior note effective interest rate | 5.90% | 5.90% | 7.50% | |||||||||||||||||
Senior Notes maturity date | 15-Feb-13 | 15-Jan-20 | ||||||||||||||||||
Senior notes amortization period | 6 years 3 months 15 days | 12 months | ||||||||||||||||||
Payments of debt issuance costs | 16,900,000 | |||||||||||||||||||
Deferred finance costs capitalized | 12,000,000 | 12,000,000 | 3,500,000 | |||||||||||||||||
Debt finance costs expensed | 4,900,000 | |||||||||||||||||||
Senior Notes [Abstract] | ||||||||||||||||||||
Net proceeds used to pay for Call Option | 149,331,000 | 0 | ||||||||||||||||||
Proceeds from issuance of warrants | 75,074,000 | 0 | ||||||||||||||||||
Net cash outlay | 74,200,000 | 74,200,000 | ||||||||||||||||||
Trading days measurement period | 160 days | |||||||||||||||||||
Warrants issued | 13,490,236 | |||||||||||||||||||
Warrant, strike price per share | 53.8475 | 53.8475 | ||||||||||||||||||
Maturity period based on US government securities | 7 years | |||||||||||||||||||
Senior notes debt maturity date | 1-Oct-14 | |||||||||||||||||||
Convertible debt, if-converted value in excess of principal | 30,000,000 | |||||||||||||||||||
Convertible debt carrying amount of equity component | 24,000,000 | |||||||||||||||||||
Sale Leaseback Transaction, Net Book Value [Abstract] | ||||||||||||||||||||
Number of sale leaseback properties | 2 | |||||||||||||||||||
Carrying value of properties | 78,300,000 | |||||||||||||||||||
Proceeds from sale-leaseback transactions | 158,694,000 | 0 | 158,600,000 | |||||||||||||||||
Sale leaseback transaction term of lease | 25 years | 25 years | ||||||||||||||||||
Property, equipment, and capitalized software, net | 267,277,000 | 267,277,000 | 221,443,000 | 18,900,000 | ||||||||||||||||
Lease financing obligations | 19,200,000 | |||||||||||||||||||
Principal amount | 737,000,000 | 737,000,000 | 550,000,000 | 550,000,000 | 187,000,000 | 187,000,000 | 48,600,000 | |||||||||||||
Repayments of Lines of Credit | 40,000,000 | |||||||||||||||||||
Maximum borrowing capacity under the revolving credit facility | 170,000,000 | 170,000,000 | ||||||||||||||||||
Line of credit principal outstanding | 40,000,000 | |||||||||||||||||||
Letters of Credit Outstanding, Amount | $10,300,000 |
Derivative_Financial_Instrumen2
Derivative Financial Instruments Fair Value on Consolidated Balance Sheets (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Non-current asset | 1.125% Call Option | |
Derivative [Line Items] | |
Derivative assets | $191,663 |
Non-current liabilities | Embedded cash conversion option | |
Derivative [Line Items] | |
Derivative liabilities | $191,556 |
Derivative_Financial_Instrumen3
Derivative Financial Instruments Gain (Loss) on Statement of Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | ($3,383) | ($1,270) | ||
1.125% Call Option | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | 42,332 | 0 | ||
Embedded cash conversion option | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | -42,225 | 0 | ||
1.125% Warrants | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | -3,923 | 0 | ||
Interest rate swap | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | 433 | -1,270 | ||
Other Income | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | 1 | -184 | -3,383 | -1,270 |
Other Income | 1.125% Call Option | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | -15,460 | 0 | 42,332 | 0 |
Other Income | Embedded cash conversion option | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | 15,461 | 0 | -42,225 | 0 |
Other Income | 1.125% Warrants | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | 0 | 0 | -3,923 | 0 |
Other Income | Interest rate swap | ||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||
Change in fair value of derivatives | $0 | ($184) | $433 | ($1,270) |
Derivative_Financial_Instrumen4
Derivative Financial Instruments (Details) (USD $) | 0 Months Ended | 9 Months Ended | 3 Months Ended | |||
Jun. 14, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | 31-May-12 | |
Embedded cash conversion option | Interest rate swap derivative | Not Designated as Hedging Instrument | ||||
Interest rate swap derivative | ||||||
Derivative [Line Items] | ||||||
Loss on 1.125% Warrants | $3,900,000 | |||||
Fair value liability of the embedded cash conversion option | 149,300,000 | |||||
Notional amount interest rate swap | 42,500,000 | |||||
Interest rate swap inception date | 1-Mar-13 | |||||
Settlement amount of interest rate swap | $900,000 | $875,000 | $0 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2013 | Feb. 12, 2013 | Feb. 13, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | 1-May-13 | Dec. 31, 2012 | |
Stockholders' Equity Note [Abstract] | |||||||||
Increase in stockholders' equity | $110,500,000 | ||||||||
Increase due to reclassification of warrants to additional paid-in capital | 79,000,000 | 79,000,000 | |||||||
Trading days measurement period | 160 days | ||||||||
Net Income (Loss) Attributable to Parent | 7,569,000 | 3,364,000 | 62,055,000 | -15,853,000 | |||||
Change in Stockholders' equity related to employee stock transactions | 19,100,000 | ||||||||
Repurchases of our common stock | 50,000,000 | ||||||||
Common stock, shares authorized | 150,000,000 | 150,000,000 | 150,000,000 | 150,000,000 | 80,000,000 | ||||
Warrants issued | 13,490,236 | ||||||||
Warrant, strike price per share | 53.8475 | 53.8475 | 53.8475 | ||||||
Payments for repurchase of common stock | 50,000,000 | 50,000,000 | 0 | ||||||
Shares of stock repurchased | 1,624,959 | ||||||||
Average price per share of the stock repurchase | $30.77 | ||||||||
Authorized repurchase amount | $50,000,000 | $75,000,000 | |||||||
Number of common stock issued | 620,000 |
Segment_Reporting_Details
Segment Reporting (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Segment | Segment | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 2 | 2 |
Segment_Reporting_Schedule_of_
Segment Reporting Schedule of Operating Segment Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Health Plans: | |||||
Premium revenue | $1,584,656 | $1,448,600 | $4,583,818 | $4,066,737 | |
Premium tax receipts | 43,723 | 37,894 | 127,606 | 120,953 | |
Investment income | 1,740 | 1,155 | 4,884 | 3,893 | |
Rental and other income | 5,860 | 4,079 | 16,476 | 12,315 | |
Molina Medicaid Solutions: | |||||
Service revenue | 51,100 | 48,422 | 150,528 | 132,351 | |
Total revenue | 1,687,079 | 1,540,150 | 4,883,312 | 4,336,249 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 24,128 | 20,279 | 68,035 | 58,289 | |
Operating income (loss) from continuing operations: | |||||
Health Plans | 24,926 | 2,368 | 139,245 | -10,750 | |
Interest expense | 13,532 | 4,315 | 38,236 | 12,421 | |
Other (income) expense | -24 | 184 | 3,347 | 1,270 | |
Income (loss) before income taxes | 11,418 | -2,131 | 97,662 | -24,441 | |
Goodwill and intangible assets, net: | |||||
Goodwill and intangible assets, net | 335,418 | 335,418 | 228,799 | ||
Total assets: | |||||
Total assets | 2,925,066 | 2,925,066 | 1,934,822 | ||
Health Plans | |||||
Health Plans: | |||||
Premium revenue | 1,584,656 | 1,448,600 | 4,583,818 | 4,066,737 | |
Premium tax receipts | 43,723 | 37,894 | 127,606 | 120,953 | |
Investment income | 1,740 | 1,155 | 4,884 | 3,893 | |
Rental and other income | 5,860 | 4,079 | 16,476 | 12,315 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 17,545 | 14,753 | 48,467 | 43,600 | |
Operating income (loss) from continuing operations: | |||||
Health Plans | 16,929 | -5,788 | 118,600 | -33,957 | |
Goodwill and intangible assets, net: | |||||
Goodwill and intangible assets, net | 252,360 | 252,360 | 139,710 | ||
Total assets: | |||||
Total assets | 2,748,724 | 2,748,724 | 1,702,212 | ||
Molina Medicaid Solutions | |||||
Molina Medicaid Solutions: | |||||
Service revenue | 51,100 | 48,422 | 150,528 | 132,351 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 6,583 | 5,526 | 19,568 | 14,689 | |
Operating income (loss) from continuing operations: | |||||
Health Plans | 7,997 | 8,156 | 20,645 | 23,207 | |
Goodwill and intangible assets, net: | |||||
Goodwill and intangible assets, net | 83,058 | 83,058 | 89,089 | ||
Total assets: | |||||
Total assets | $176,342 | $176,342 | $232,610 |
Commitments_and_Contingencies_2
Commitments and Contingencies Sale Leaseback Transaction (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Option | |
Sale Leaseback Transaction [Line Items] | |
Sale leaseback transaction term of lease | 25 years |
Number of five-year renewal options | 5 |
Minimum lease payments remainder of fiscal year | $3,300 |
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract] | |
2014 | 14,395 |
2015 | 18,277 |
2016 | 18,877 |
2017 | 19,496 |
2018 | 20,137 |
Thereafter | 385,813 |
Total minimum lease payments | $476,995 |
Contstruction project | |
Sale Leaseback Transaction [Line Items] | |
Sale leaseback transaction term of lease | 11 years 6 months |
Number of five-year renewal options | 2 |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Commitments and Contingencies Disclosure [Abstract] | ||
Net assets of subsidiaries subject to restrictions | $601.10 | $549.70 |
Restricted cash and investments | 472.1 | 46.9 |
Aggregate statutory capital and surplus | 637 | |
Required minimum statutory capital surplus | $362.20 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Feb. 27, 2013 | Sep. 30, 2013 | Feb. 27, 2013 | Sep. 30, 2013 | Feb. 27, 2013 | |
6th & Pine Development, LLC | Property Subject to Operating Lease | Property Subject to Operating Lease | Property Subject to Operating Lease | Property Subject to Operating Lease | Property Subject to Operating Lease | Property Subject to Operating Lease | |||||
6th & Pine Development, LLC | 6th & Pine Development, LLC | Building A | Building A | Building B | Building B | ||||||
property | 6th & Pine Development, LLC | 6th & Pine Development, LLC | 6th & Pine Development, LLC | 6th & Pine Development, LLC | |||||||
sqft | Option | ||||||||||
sqft | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of office buildings leased | 2 | ||||||||||
Number of office building lease that is under construction | 1 | ||||||||||
Area of office and storage space | 90,000 | 120,000 | |||||||||
Lease commencement date | 6-Jun-13 | 1-Nov-14 | |||||||||
Lease expiration date | 31-Dec-24 | ||||||||||
Number of extension option | 2 | ||||||||||
Additional extension lease term | 5 years | ||||||||||
Initial annual rental expense | $2,600,000 | $4,000,000 | |||||||||
Annual rental increase percentage | 0.0375 | ||||||||||
Payments for medical services fees to related party | $8,200,000 | $7,000,000 | $24,600,000 | $20,600,000 |
Variable_Interest_Entities_Det
Variable Interest Entities (Details) (Variable Interest Entity, Primary Beneficiary, USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2012 | Sep. 30, 2013 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Total carrying amount of assets | $5.60 | |
Total amount of liabilities | 5.3 | |
Initial cash infusion provided | $0.30 |
Variable_Interest_Entities_New
Variable Interest Entities New Markets Tax Credit (Details) (New Mexico Data Center, USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2012 |
New Mexico Data Center | ||
Related Party Transaction [Line Items] | ||
Tax credit percentage of original investment amount | 39.00% | |
Years in which tax credit to be claimed | 7 years | |
Tax credit percent for each of the first three years | 5.00% | |
Tax credit percent for each of the remaining four years | 6.00% | |
Investment cannot be redeemed before the end of seven-year period | 7 years | |
Principal amount loaned to the Investment Fund | $15.50 | |
Proceeds loaned to related party | 20.9 | |
Capital contribution by Wells Fargo | 5.9 | 5.9 |
Deferred finance costs capitalized | $1.20 | |
Tax credit recapture percentage | 100.00% | |
Tax credit recapture period | 7 years |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event, USD $) | 1 Months Ended | |
Oct. 30, 2013 | Oct. 30, 2013 | |
California Department of Health Care Services | College Health Enterprises | |
California Health Plan | ||
Subsequent Event [Line Items] | ||
Pre-tax margin percentage benchmark on settlement account | 3.25% | |
Settlement amount based on 75% of plan's revenue in 2014 | 75.00% | |
Settlement amount based on 50% of plan's revenue in each subsequent year of the settlement agreement | 50.00% | |
Maximum settlement receivable amount | $40,000,000 | |
Contractual term | 5 years | 10 years |