Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MOLINA HEALTHCARE INC | |
Entity Central Index Key | 0001179929 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Trading Symbol | moh | |
Entity Common Stock, Shares Outstanding | 62,619,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue: | ||
Premium revenue | $ 3,952 | $ 4,323 |
Premium tax revenue | 138 | 104 |
Health insurer fees reimbursed | 0 | 61 |
Service revenue | 0 | 134 |
Investment income and other revenue | 29 | 24 |
Total revenue | 4,119 | 4,646 |
Operating expenses: | ||
General and administrative expenses | 302 | 352 |
Premium tax expenses | 138 | 104 |
Health insurer fees | 0 | 75 |
Depreciation and amortization | 25 | 26 |
Restructuring costs | 3 | 25 |
Total operating expenses | 3,839 | 4,424 |
Operating income | 280 | 222 |
Other expenses, net: | ||
Interest expense | 23 | 33 |
Other (income) expenses, net | (3) | 10 |
Total other expenses, net | 20 | 43 |
Income before income tax expense | 260 | 179 |
Income tax expense | 62 | 72 |
Net income | $ 198 | $ 107 |
Net income per share: | ||
Basic (in dollars per share) | $ 3.19 | $ 1.79 |
Diluted (in dollars per share) | $ 2.99 | $ 1.64 |
Health Care, Premium | ||
Operating expenses: | ||
Cost of revenue | $ 3,371 | $ 3,722 |
Technology Service | ||
Operating expenses: | ||
Cost of revenue | $ 0 | $ 120 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 198 | $ 107 |
Other comprehensive income (loss): | ||
Unrealized investment gain (loss) | 7 | (7) |
Less: effect of income taxes | 2 | (1) |
Other comprehensive income (loss), net of tax | 5 | (6) |
Comprehensive income | $ 203 | $ 101 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,224 | $ 2,826 |
Investments | 1,508 | 1,681 |
Receivables | 1,359 | 1,330 |
Prepaid expenses and other current assets | 124 | 149 |
Derivative asset | 516 | 476 |
Total current assets | 6,731 | 6,462 |
Property, equipment, and capitalized software, net | 376 | 241 |
Goodwill and intangible assets, net | 185 | 190 |
Restricted investments | 100 | 120 |
Deferred income taxes | 76 | 117 |
Other assets | 111 | 24 |
Total assets | 7,579 | 7,154 |
Current liabilities: | ||
Medical claims and benefits payable | 1,995 | 1,961 |
Amounts due government agencies | 932 | 967 |
Accounts payable and accrued liabilities | 444 | 390 |
Deferred revenue | 207 | 211 |
Current portion of long-term debt | 198 | 241 |
Derivative liability | 516 | 476 |
Total current liabilities | 4,292 | 4,246 |
Long-term debt | 1,121 | 1,020 |
Finance lease liabilities | 234 | 197 |
Other long-term liabilities | 97 | 44 |
Total liabilities | 5,744 | 5,507 |
Stockholders’ equity: | ||
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 63 million shares at March 31, 2019 and 62 million shares at December 31, 2018 | 0 | 0 |
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 543 | 643 |
Accumulated other comprehensive loss | (3) | (8) |
Retained earnings | 1,295 | 1,012 |
Total stockholders’ equity | 1,835 | 1,647 |
Total liabilities and stockholders' equity | $ 7,579 | $ 7,154 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares outstanding (in shares) | 63,000,000 | 62,000,000 |
Preferred stock, par value (usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings |
Beginning Balance (in shares) at Dec. 31, 2017 | 59.3 | 60 | |||
Beginning Balance at Dec. 31, 2017 | $ 1,337 | $ 0 | $ 1,044 | $ (5) | $ 298 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 107 | 107 | |||
Exchange of 1.625% Convertible Notes (in shares) | 2 | ||||
Exchange of 1.625% Convertible Notes | 108 | 108 | |||
Other comprehensive gain (loss), net | (6) | (6) | |||
Share-based compensation | 1 | 1 | |||
Ending Balance (in shares) at Mar. 31, 2018 | 62 | ||||
Ending Balance at Mar. 31, 2018 | $ 1,553 | $ 0 | 1,153 | (12) | 412 |
Beginning Balance (in shares) at Dec. 31, 2018 | 62.1 | 62 | |||
Beginning Balance at Dec. 31, 2018 | $ 1,647 | $ 0 | 643 | (8) | 1,012 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 198 | 198 | |||
Partial termination of 1.125% Warrants | (103) | (103) | |||
Exchange of 1.625% Convertible Notes | 0 | ||||
Other comprehensive gain (loss), net | 5 | 5 | |||
Share-based compensation (in shares) | 1 | ||||
Share-based compensation | 3 | 3 | |||
Ending Balance (in shares) at Mar. 31, 2019 | 63 | ||||
Ending Balance at Mar. 31, 2019 | $ 1,835 | $ 0 | $ 543 | $ (3) | $ 1,295 |
CONSOLIDATED STATEMENT OF STO_2
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Parenthetical) | Mar. 31, 2019 |
Convertible Notes | 1.625% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 1.625% |
1.125% Warrants | |
Debt Instrument [Line Items] | |
Stated percentage of warrants | 1.125% |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities: | ||
Net income | $ 198 | $ 107 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 25 | 37 |
Deferred income taxes | 15 | (6) |
Share-based compensation | 9 | 6 |
Non-cash restructuring costs | 0 | 17 |
Amortization of convertible senior notes and finance lease liabilities | 3 | 7 |
(Gain) loss on debt extinguishment | (3) | 10 |
Other, net | 3 | 2 |
Changes in operating assets and liabilities: | ||
Receivables | (29) | (83) |
Prepaid expenses and other current assets | 20 | (239) |
Medical claims and benefits payable | 34 | (163) |
Amounts due government agencies | (35) | 172 |
Accounts payable and accrued liabilities | (30) | 319 |
Deferred revenue | (4) | 130 |
Income taxes | 43 | 78 |
Net cash provided by operating activities | 249 | 394 |
Investing activities: | ||
Purchases of investments | (185) | (389) |
Proceeds from sales and maturities of investments | 366 | 543 |
Purchases of property, equipment and capitalized software | (6) | (4) |
Other, net | (4) | (5) |
Net cash provided by investing activities | 171 | 145 |
Financing activities: | ||
Repayment of principal amount of 1.125% Convertible Notes | (46) | 0 |
Cash paid for partial settlement of 1.125% Conversion Option | (115) | 0 |
Cash received for partial termination of 1.125% Call Option | 115 | 0 |
Cash paid for partial termination of 1.125% Warrants | (103) | 0 |
Proceeds from borrowings under Term Loan | 100 | 0 |
Other, net | 1 | (5) |
Net cash used in financing activities | (48) | (5) |
Net increase in cash, cash equivalents, and restricted cash and cash equivalents | 372 | 534 |
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period | 2,926 | 3,290 |
Cash, cash equivalents, and restricted cash and cash equivalents at end of period | 3,298 | 3,824 |
Schedule of non-cash investing and financing activities: | ||
Common stock used for share-based compensation | (7) | (5) |
Details of change in fair value of derivatives, net: | ||
Change in fair value of derivatives, net | 0 | 0 |
1.625% Convertible Notes exchange transaction: | ||
Common stock issued in exchange for 1.625% Convertible Notes | 0 | 131 |
Component allocated to additional paid-in capital, net of income taxes | 0 | (23) |
Net increase to additional paid-in capital | 0 | 108 |
1.125% Call Option | ||
Details of change in fair value of derivatives, net: | ||
Change in fair value of derivatives, net | 155 | 63 |
1.125% Conversion Option | ||
Financing activities: | ||
Cash received for partial termination of 1.125% Call Option | 115 | |
Details of change in fair value of derivatives, net: | ||
Change in fair value of derivatives, net | $ (155) | $ (63) |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | Mar. 31, 2019 |
1.125% Call Option | |
Percentage of contractual interest rate on derivative | 1.125% |
1.125% Conversion Option | |
Percentage of contractual interest rate on derivative | 1.125% |
Convertible Notes | 1.625% Notes | |
Percentage of contractual interest rate | 1.625% |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Organization and Operations Molina Healthcare, Inc. provides managed health care services under the Medicaid and Medicare programs and through the insurance marketplaces (the “Marketplace”). We currently have two reportable segments: our Health Plans segment and our Other segment. We manage the vast majority of our operations through our Health Plans segment. The Other segment includes the historical results of the Medicaid management information systems (“MMIS”) and behavioral health subsidiaries that were sold in the fourth quarter of 2018, as well as certain corporate amounts not allocated to the Health Plans segment. Prior to the fourth quarter of 2018, the MMIS subsidiary was reported as a stand-alone segment. The Health Plans segment consists of health plans operating in 14 states and the Commonwealth of Puerto Rico. As of March 31, 2019 , these health plans served approximately 3.4 million members eligible for Medicaid, Medicare, and other government-sponsored health care programs for low-income families and individuals including Marketplace members, most of whom receive government subsidies for premiums. The health plans are generally operated by our respective wholly owned subsidiaries in those states, each of which is licensed as a health maintenance organization (“HMO”). Our health plans’ state Medicaid contracts generally have terms of three to five years. 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. Such contracts are subject to risk of loss in states that issue requests for proposal (“RFPs”) 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 not be renewed. In addition to contract renewal, our state Medicaid contracts may be periodically amended to include or exclude certain health benefits (such as pharmacy services, behavioral health services, or long-term care services); populations such as the aged, blind or disabled; and regions or service areas. Consolidation and Interim Financial Information The consolidated financial statements include the accounts of Molina Healthcare, Inc., and its subsidiaries. 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 three months ended March 31, 2019 , are not necessarily indicative of the results for the entire year ending December 31, 2019 . 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, 2018 . Accordingly, certain disclosures that would substantially duplicate the disclosures contained in our December 31, 2018 , audited consolidated financial statements have been omitted. These unaudited consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements for the fiscal year ended December 31, 2018 . Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Principal areas requiring the use of estimates include: • The determination of medical claims and benefits payable of our Health Plans segment; • Health plans’ contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract; • Health plans’ quality incentives that allow us to recognize incremental revenue if certain quality standards are met; • Settlements under risk or savings sharing programs; • The assessment of long-lived and intangible assets, and goodwill for impairment; • The determination of reserves for potential absorption of claims unpaid by insolvent providers; • The determination of reserves for litigation outcomes; • The determination of valuation allowances for deferred tax assets; and • The determination of unrecognized tax benefits. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term, highly liquid investments that are both readily convertible into known amounts of cash and have a maturity of three months or less on the date of purchase. The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in non-current “Restricted investments” in the accompanying consolidated balance sheets. March 31, 2019 2018 (In millions) Cash and cash equivalents $ 3,224 $ 3,729 Restricted cash and cash equivalents 74 95 Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows $ 3,298 $ 3,824 Premium Revenue 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, and premiums collected in advance are deferred. Certain components of premium revenue are subject to accounting estimates and fall into the following categories: Contractual Provisions That May Adjust or Limit Revenue or Profit Medicaid Program Medical Cost Floors (Minimums), and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded a liability under the terms of such contract provisions of $98 million and $103 million at March 31, 2019 and December 31, 2018 , respectively. Approximately $87 million of the liability accrued at both March 31, 2019 and December 31, 2018 , relates to our participation in Medicaid Expansion programs. In certain circumstances, the health plans may receive additional premiums if amounts spent on medical care costs exceed a defined maximum threshold. Receivables relating to such provisions were insignificant at March 31, 2019 and December 31, 2018 . Profit Sharing and Profit Ceiling. Our contracts with certain states contain profit-sharing or profit ceiling provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any. Liabilities for profits in excess of the amount we are allowed to retain under these provisions were insignificant at March 31, 2019 and December 31, 2018 . Retroactive Premium Adjustments. State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, rather than in the months of service to which the retroactive adjustment applies. Medicare Program Risk Adjusted Premiums: Our Medicare premiums are subject to retroactive increase or decrease based on the health status of our Medicare members (as measured by member risk score). We estimate our members’ risk scores and the related amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health status, risk scores and CMS practices. Consolidated balance sheet amounts related to anticipated Medicare risk adjusted premiums and Medicare Part D settlements were insignificant at March 31, 2019 and December 31, 2018 . Minimum MLR. The Affordable Care Act (“ACA”) has established a minimum annual medical loss ratio (Minimum MLR) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of income. The amounts payable for the Medicare Minimum MLR was not significant at March 31, 2019 and December 31, 2018 . Marketplace Program Risk adjustment. Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score (risk adjustment payable), and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score (risk adjustment receivable). We estimate our ultimate premium based on insurance policy year-to-date experience, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of income. As of March 31, 2019 , and December 31, 2018 , the Marketplace risk adjustment payable amounted to $568 million and $466 million , respectively. As of March 31, 2019 , and December 31, 2018 , the Marketplace risk adjustment receivable amounted to $51 million and $34 million , respectively. Minimum MLR. The ACA has established a Minimum MLR of 80% for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of income. Aggregate balance sheet amounts related to the Minimum MLR were insignificant at March 31, 2019 and December 31, 2018 . Quality Incentives At many of our health plans, revenue ranging from approximately 1% to 4% of certain health plan premiums is earned only if certain performance measures are met. The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the periods presented and prior periods. Although the reasonably possible effects of a change in estimate related to quality incentive premium revenue as of March 31, 2019 , 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 March 31, 2019 . Three Months Ended March 31, 2019 2018 (In millions) Maximum available quality incentive premium - current period $ 45 $ 40 Quality incentive premium revenue recognized in current period: Earned current period $ 26 $ 24 Earned prior periods 20 11 Total $ 46 $ 35 Quality incentive premium revenue recognized as a percentage of total premium revenue 1.2 % 0.8 % A summary of the categories of amounts due government agencies is as follows: March 31, December 31, (In millions) Medicaid program: Medical cost floors and corridors $ 98 $ 103 Other amounts due to states 90 81 Marketplace program: Risk adjustment 568 466 Cost sharing reduction — 183 Other 176 134 $ 932 $ 967 Medical Care Costs Marketplace Program In the first quarter of 2018, we recognized a benefit of approximately $70 million in reduced medical care costs related to 2017 dates of service as a result of the federal government’s confirmation that the reconciliation of 2017 Marketplace cost sharing reduction (“CSR”) subsidies would be performed on an annual basis. In the fourth quarter of 2017, we had assumed a nine-month reconciliation of this item pending confirmation of the time period to which the 2017 reconciliation would be applied. Leases Right-of-use (“ROU”) assets represent our right to use the underlying assets over the lease term, and lease liabilities represent our obligation to make lease payments arising from the related leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease terms may include options to extend or terminate the lease when we believe it is reasonably certain that we will exercise such options. Operating lease ROU assets are reported in other assets, and operating lease liabilities are reported in accounts payable and accrued liabilities (current), and other long-term liabilities (non-current) in our consolidated balance sheets. Finance lease ROU assets are reported in property, equipment, and capitalized software, and finance lease liabilities are reported in accounts payable and accrued liabilities (current), and finance lease liabilities (non-current) in our consolidated balance sheets. Because most of our leases do not provide an implicit interest rate, we generally use our incremental borrowing rate to determine the present value of lease payments. Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term, and the related ROU assets and liabilities are reduced to the present value of the remaining lease payments at the end of each period. Finance lease payments reduce finance lease liabilities, the related ROU assets are amortized on a straight-line basis over the lease term, and interest expense is recognized using the effective interest method. Short-term leases (with a term of 12 months or less) are not recorded as ROU assets or liabilities in the consolidated balance sheets. We account for lease and non-lease components as a single lease component. For certain leases that represent a portfolio of similar assets, such as a fleet of vehicles, we apply a portfolio approach to account for the related operating lease ROU assets and liabilities, rather than account for such assets and liabilities on an individual basis. A nominal number of our lease agreements include rental payments that adjust periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. For further information regarding our adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), see Recent Accounting Pronouncements Adopted, below. Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, receivables, and restricted investments. Our investments and a portion of our cash equivalents are managed by professional portfolio managers operating under documented investment guidelines. Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. Our investments consist primarily of investment-grade debt securities with a maximum maturity of 10 years. Restricted investments are invested principally in certificates of deposit and U.S. Treasury securities. Concentration of credit risk with respect to accounts receivable is generally limited because our payors consist principally of the governments of each state in which our health plan subsidiaries operate. Income Taxes The provision for income taxes is determined using an estimated annual effective tax rate, which generally differs from the U.S. federal statutory rate primarily because of state taxes, nondeductible expenses such as the Health Insurer Fee (“HIF”), certain compensation, and other general and administrative expenses. The effective tax rate will not be impacted by HIF in 2019 given the 2019 HIF moratorium. 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 projected pretax earnings, the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or the reversal of the recognition 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 Adopted Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Topic 842, which was subsequently modified by several ASUs issued in 2017 and 2018. Topic 842 was issued to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet. Most prominent among the changes in Topic 842 is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. In addition, Topic 842’s disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Topic 842’s transition provisions are applied using a modified retrospective approach under which entities may not retrospectively adjust any periods prior to the earliest comparative period presented, or at the beginning of the period of adoption, whichever is later. Entities may elect whether to apply the transition provisions, including disclosure requirements, at the beginning of the earliest comparative period presented or on the adoption date. We adopted Topic 842 effective January 1, 2019, and have elected to apply the transition provisions as of January 1, 2019. Accordingly, we recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings on January 1, 2019. In addition, we elected the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. As indicated in the accompanying consolidated statements of stockholders’ equity, the cumulative effect adjustment was an increase of $85 million to retained earnings, relating primarily to the transition provisions for sale-leaseback arrangements that did not qualify for sale treatment. Accordingly, such arrangements for certain office buildings were de-recognized and recorded as finance lease ROU assets and lease liabilities. The difference between the de-recognized assets and lease financing obligations resulted in an increase to retained earnings. The recognition of these arrangements as finance lease ROU assets and lease liabilities will not materially impact our consolidated results of operations throughout the terms of the leases. See Note 13 , “ Leases ,” for the required disclosures under Topic 842, including the amount and location of the ROU assets and lease liabilities recognized. Software Licenses. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We early adopted ASU 2018-15 effective January 1, 2019, using the prospective method , with no material impact to our financial condition, results of operations or cash flows. Adoption of this guidance may be significant to us in the future depending on the extent to which we use cloud computing arrangements that qualify as service contracts. Recent Accounting Pronouncements Not Yet Adopted Credit Losses. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments . Rather than generally recognizing credit losses when it is probable that the loss has been incurred, the revised guidance requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount companies expect to collect over the instrument’s contractual life. ASU 2016-13 is effective beginning January 1, 2020, and must be adopted as a cumulative effect adjustment to retained earnings; early adoption is permitted. We are in the early stages of evaluating the effect of this guidance. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not have, nor does management expect such pronouncements to have, a significant impact on our present or future consolidated financial statements. |
Net Income per Share
Net Income per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net Income per Share The following table sets forth the calculation of basic and diluted net income per share: Three Months Ended March 31, 2019 2018 (In millions, except net income per share) Numerator: Net income $ 198 $ 107 Denominator: Shares outstanding at the beginning of the period 62.1 59.3 Weighted-average number of shares issued: Exchange of 1.625% Convertible Notes — 0.5 Denominator for basic net income per share 62.1 59.8 Effect of dilutive securities: 1.125% Warrants (1) 3.5 4.4 1.625% Convertible Notes — 0.7 Stock-based compensation 0.6 0.3 Denominator for diluted net income per share 66.2 65.2 Net income per share: (2) Basic $ 3.19 $ 1.79 Diluted $ 2.99 $ 1.64 Potentially dilutive common shares excluded from calculations: (1) Stock-based compensation 0.1 0.4 ______________________________ (1) For more information and definitions regarding the 1.125% Warrants, including partial termination transactions, refer to Note 9 , “ Stockholders' Equity .” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method. Certain potentially dilutive common shares issuable were not included in the computation of diluted net income per share because to do so would have been anti-dilutive. (2) Source data for calculations in thousands. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We consider the carrying amounts of current assets and current liabilities (not including derivatives and the current portion of long-term debt) 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 the three-tier fair value hierarchy. For a description of the methods and assumptions that we use to a) estimate the fair value; and b) determine the classification according to the fair value hierarchy for each financial instrument, see Note 4, “Fair Value Measurements,” in our 2018 Annual Report on Form 10-K. Derivative financial instruments include the 1.125% Call Option derivative asset and the 1.125% Conversion Option derivative liability (see Note 8 “ Derivatives ,” for definitions and further information). 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 March 31, 2019 , included the price of our common stock, the time to maturity of the derivative instruments, the risk-free interest rate, and the implied volatility of our common stock. The 1.125% Call Option derivative asset and the 1.125% Conversion Option derivative liability were designed such that changes in their fair values would offset, with minimal impact to the consolidated statements of income. Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such derivative instruments is mitigated. The net changes in fair value of Level 3 financial instruments were insignificant to our results of income for the three months ended March 31, 2019 . Our financial instruments measured at fair value on a recurring basis at March 31, 2019 , were as follows: Total Observable Inputs (Level 1) Directly or Indirectly Observable Inputs (Level 2) Unobservable Inputs (Level 3) (In millions) Corporate debt securities $ 947 $ — $ 947 $ — U.S. Treasury notes 168 — 168 — Government-sponsored enterprise securities (“GSEs”) 166 — 166 — Municipal securities 112 — 112 — Asset-backed securities 75 — 75 — Mortgage-backed securities 23 — 23 — Certificate of deposit 14 — 14 — Other 3 — 3 — Subtotal - current investments 1,508 — 1,508 — 1.125% Call Option derivative asset 516 — — 516 Total assets $ 2,024 $ — $ 1,508 $ 516 1.125% Conversion Option derivative liability $ 516 $ — $ — $ 516 Total liabilities $ 516 $ — $ — $ 516 Our financial instruments measured at fair value on a recurring basis at December 31, 2018 , were as follows: Total Observable Inputs (Level 1) Directly or Indirectly Observable Inputs (Level 2) Unobservable Inputs (Level 3) (In millions) Corporate debt securities $ 1,123 $ — $ 1,123 $ — U.S. Treasury notes 181 — 181 — GSEs 163 — 163 — Municipal securities 114 — 114 — Asset-backed securities 82 — 82 — Certificates of deposit 14 — 14 — Other 4 — 4 — Subtotal - current investments 1,681 — 1,681 — 1.125% Call Option derivative asset 476 — — 476 Total assets $ 2,157 $ — $ 1,681 $ 476 1.125% Conversion Option derivative liability $ 476 $ — $ — $ 476 Total liabilities $ 476 $ — $ — $ 476 Fair Value Measurements – Disclosure Only The carrying amounts and estimated fair values of our notes payable are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted market prices for similar securities in active markets or quoted prices for identical securities in inactive markets. The carrying amount and estimated fair value of the Term Loan is classified as a Level 3 financial instrument, because certain inputs used to determine its fair value are not observable. As of March 31, 2019, the carrying amount of the Term Loan approximates fair value because its interest rate is a variable rate that approximates rates currently available to us. March 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value (In millions) 5.375% Notes $ 695 $ 725 $ 694 $ 674 4.875% Notes 326 327 326 301 1.125% Convertible Notes (1),(2) 198 716 240 732 Term Loan 100 100 — — $ 1,319 $ 1,868 $ 1,260 $ 1,707 ______________________ (1) The fair value of the 1.125% Conversion Option (the embedded cash conversion option), which is reflected in the fair value amounts presented above, amounted to $516 million and $476 million as of March 31, 2019 , and December 31, 2018 , respectively. See further discussion at Note 7 , “ Debt ,” and Note 8 , “ Derivatives .” (2) For more information on debt repayments in the first quarter of 2019 , refer to Note 7 , “ Debt .” |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available-for-Sale Investments We consider all of our investments classified as current assets to be available-for-sale. The following tables summarize our investments as of the dates indicated: March 31, 2019 Amortized Gross Unrealized Estimated Fair Cost Gains Losses Value (In millions) Corporate debt securities $ 949 $ 1 $ 3 $ 947 U.S. Treasury notes 168 — — 168 GSEs 167 — 1 166 Municipal securities 113 — 1 112 Asset-backed securities 75 — — 75 Mortgage-backed securities 23 — — 23 Certificates of deposit 14 — — 14 Other 3 — — 3 $ 1,512 $ 1 $ 5 $ 1,508 December 31, 2018 Amortized Gross Unrealized Estimated Fair Cost Gains Losses Value (In millions) Corporate debt securities $ 1,131 $ — $ 8 $ 1,123 U.S. Treasury notes 181 — — 181 GSEs 164 — 1 163 Municipal securities 115 — 1 114 Asset-backed securities 83 — 1 82 Certificates of deposit 14 — — 14 Other 4 — — 4 Total current investments $ 1,692 $ — $ 11 $ 1,681 The contractual maturities of our available-for-sale investments as of March 31, 2019 are summarized below: Amortized Cost Estimated Fair Value (In millions) Due in one year or less $ 927 $ 926 Due after one year through five years 550 547 Due after five years through ten years 12 12 Due after ten years 23 23 $ 1,512 $ 1,508 Gross realized gains and losses from sales of available-for-sale securities are calculated under the specific identification method and are included in investment income. Gross realized investment gains and losses for the three months ended March 31, 2019 and 2018 , were insignificant. We have determined that unrealized losses at March 31, 2019 , and December 31, 2018 , 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 creditworthiness of the issuers. So long as we maintain the intent and ability to hold these securities to maturity, we are unlikely to experience losses. In the event that we dispose of these securities before maturity, we expect that realized losses, if any, will be insignificant. 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 continuous loss position for 12 months or more as of March 31, 2019 : In a Continuous Loss Position for Less than 12 Months In a Continuous Loss Position for 12 Months or More Estimated Fair Value Unrealized Losses Total Number of Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 207 $ 1 96 $ 403 $ 2 280 GSEs — — — 122 1 71 Municipal securities — — — 87 1 91 $ 207 $ 1 96 $ 612 $ 4 442 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 continuous loss position for 12 months or more as of December 31, 2018 : In a Continuous Loss Position for Less than 12 Months In a Continuous Loss Position for 12 Months or More Estimated Fair Value Unrealized Losses Total Number of Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 509 $ 3 285 $ 412 $ 5 298 GSEs — — — 127 1 76 Municipal securities — — — 87 1 90 Asset-backed securities — — — 68 1 52 $ 509 $ 3 285 $ 694 $ 8 516 Held-to-Maturity Investments Pursuant to the regulations governing our Health Plans segment subsidiaries, we maintain statutory deposits and deposits required by government authorities primarily in certificates of deposit and U.S. Treasury securities. We also maintain restricted investments as protection against the insolvency of certain capitated providers. The use of these funds is limited as required by regulations in the various states in which we operate, or as needed in the event of insolvency of capitated providers. Therefore, such investments are reported as non-current “Restricted investments” in the accompanying consolidated balance sheets. We have the ability to hold these restricted investments until maturity, and as a result, we would not expect the value of these investments to decline significantly due to a sudden change in market interest rates. Our held-to-maturity restricted investments are carried at amortized cost, which approximates fair value. Such investments amounted to $100 million at March 31, 2019 , and mature in one year or less. |
Medical Claims and Benefits Pay
Medical Claims and Benefits Payable | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Medical Claims and Benefits Payable | Medical Claims and Benefits Payable The following table provides the details of our medical claims and benefits payable as of the dates indicated. March 31, December 31, (In millions) Fee-for-service claims incurred but not paid (“IBNP”) $ 1,411 $ 1,562 Pharmacy payable 114 115 Capitation payable 59 52 Other 411 232 $ 1,995 $ 1,961 “Other” medical claims and benefits payable includes amounts payable to certain providers for which we act as an intermediary on behalf of various government agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. Non-risk provider payables amounted to $278 million and $107 million as of March 31, 2019 and December 31, 2018 , respectively. The following table presents the components of the change in our medical claims and benefits payable for the periods indicated. The amounts presented for “Components of medical care costs related to: Prior periods” represent the amounts by which our original estimate of medical claims and benefits payable at the beginning of the period were more than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. Three Months Ended March 31, 2019 2018 (In millions) Medical claims and benefits payable, beginning balance $ 1,961 $ 2,192 Components of medical care costs related to: Current period 3,560 4,033 Prior periods (1) (189 ) (311 ) Total medical care costs 3,371 3,722 Change in non-risk provider payables 171 45 Payments for medical care costs related to: Current period 2,197 2,498 Prior periods 1,311 1,438 Total paid 3,508 3,936 Medical claims and benefits payable, ending balance $ 1,995 $ 2,023 _______________________ (1) March 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $70 million . Our estimates of medical claims and benefits payable recorded at December 31, 2018, and 2017 developed favorably by approximately $189 million and $311 million as of March 31, 2019, and 2018, respectively. The favorable prior year development recognized in the first quarter of 2019 , was primarily due to lower than expected utilization of medical services by our Medicaid and Marketplace members and improved operating performance. Consequently, the ultimate costs recognized in 2019, as claims payment were processed, was lower than our original estimates in 2018. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt As of March 31, 2019 , contractual maturities of debt were as follows. All amounts represent the principal amounts of the debt instruments outstanding. Total 2020 2021 2022 2023 2024 Thereafter (In millions) 5.375% Notes $ 700 $ — $ — $ 700 $ — $ — $ — 4.875% Notes 330 — — — — — 330 1.125% Convertible Notes 206 206 — — — — — Term Loan 100 3 7 10 10 70 — $ 1,336 $ 209 $ 7 $ 710 $ 10 $ 70 $ 330 All of our debt is held at the parent, which is reported, for segment purposes, in the Other segment. The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets: March 31, December 31, (In millions) Current portion of long-term debt: 1.125% Convertible Notes, net of unamortized discount $ 199 $ 241 Lease financing obligations — 1 Debt issuance costs (1 ) (1 ) $ 198 $ 241 Non-current portion of long-term debt: 5.375% Notes $ 700 $ 700 4.875% Notes 330 330 Term Loan 100 — Debt issuance costs (9 ) (10 ) $ 1,121 $ 1,020 Interest cost recognized relating to our convertible senior notes for the periods presented was as follows: Three Months Ended March 31, 2019 2018 (In millions) Contractual interest at coupon rate $ 1 $ 2 Amortization of the discount 3 7 $ 4 $ 9 Credit Agreement We are party to a Credit Agreement, which provides for an unsecured delayed draw term loan facility described below (the “Term Loan”), and an unsecured $500 million revolving credit facility (the “Credit Facility”). Borrowings under our Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case the applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, we are required to pay a quarterly commitment fee. The Credit Agreement contains customary non-financial and financial covenants, including a net leverage ratio and an interest coverage ratio. As of March 31, 2019 , we were in compliance with all financial and non-financial covenants under the Credit Agreement and other long-term debt. Effective as of the date of the Sixth Amendment to the Credit Agreement described below, there are no guarantors as parties to the Credit Agreement. In January 2019, we entered into a Sixth Amendment to the Credit Agreement that provided for a delayed draw term loan facility in an aggregate principal amount of $600 million , under which we may request up to ten advances, each in a minimum principal amount of $50 million , until July 31, 2020. The Term Loan will amortize in quarterly installments, commencing on September 30, 2020, equal to the principal amount of the Term Loan outstanding multiplied by rates ranging from 1.25% to 2.50% (depending on the applicable fiscal quarter) for each fiscal quarter. The Term Loan expires on January 31, 2024; therefore, any remaining outstanding balance under the Term Loan will be due and payable on that date. As of March 31, 2019 , $100 million was outstanding under the Term Loan. Each advance under the Term Loan results in a permanent reduction to its borrowing capacity; therefore, our borrowing capacity under the Term Loan as of March 31, 2019 , was $500 million . The Credit Facility expires on January 31, 2022; therefore, any amounts outstanding under the Credit Facility will be due and payable on that date. As of March 31, 2019 , no amounts were outstanding under the Credit Facility, and outstanding letters of credit amounting to $2 million reduced our borrowing capacity under the Credit Facility to $498 million . 5.375% Notes due 2022 We had $700 million aggregate principal amount of senior notes (the “ 5.375% Notes”) outstanding as of March 31, 2019 , which are due November 15, 2022, unless earlier redeemed. Interest on the 5.375% Notes at a rate of 5.375% per annum is payable semiannually in arrears on May 15 and November 15. The 5.375% Notes contain customary non-financial covenants and change in control provisions. 4.875% Notes due 2025 We had $330 million aggregate principal amount of senior notes (the “ 4.875% Notes”) outstanding as of March 31, 2019 , which are due June 15, 2025, unless earlier redeemed. Interest on the 4.875% Notes at a rate of 4.875% per annum is payable semiannually in arrears on June 15 and December 15. The 4.875% Notes contain customary non-financial covenants and change of control provisions. 1.125% Cash Convertible Senior Notes due 2020 In the first quarter of 2019, we entered into a privately negotiated note purchase agreement with certain holders of our outstanding 1.125% cash convertible senior notes due January 15, 2020 (the “1.125% Convertible Notes”), pursuant to which we repaid $46 million aggregate principal amount, or $44 million aggregate carrying amount, of the 1.125% Convertible Notes. In addition, we paid $115 million to settle the 1.125% Convertible Notes’ embedded cash conversion option feature at fair value (which is a derivative liability we refer to as the “1.125% Conversion Option”). In the three months ended March 31, 2019, we recorded a gain on debt extinguishment of $3 million for the 1.125% Convertible Notes purchase (net of accelerated original issuance discount amortization), primarily relating to a favorable mark to market valuation on the partial termination of the Call Spread Overlay executed in connection with the related debt extinguishment. This gain is reported in “Other (income) expenses, net” in the accompanying consolidated statements of income. No common shares were issued in connection with the transaction. In connection with the 1.125% Convertible Notes purchases, we also entered into privately negotiated agreements in the first quarter of 2019, to partially terminate the Call Spread Overlay, defined and further discussed in Note 8 , “ Derivatives ,” and Note 9 , “ Stockholders' Equity .” The net cash proceeds from the Call Spread Overlay partial termination transactions partially offset the cash paid to settle the 1.125% Convertible Notes. Following the transaction described above, we had $206 million aggregate principal amount of the 1.125% Convertible Notes outstanding at March 31, 2019 . Interest at a rate of 1.125% per annum is payable semiannually in arrears on January 15 and July 15. The 1.125% Convertible Notes are convertible only into cash, and not into shares of our common stock or any other securities. The initial conversion rate is 24.5277 shares of our common stock per $1,000 principal amount, or approximately $40.77 per share of our common stock. Upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per $1,000 principal amount, equal to the settlement amount, determined in the manner set forth in the indenture. We may not redeem the 1.125% Convertible Notes prior to the maturity date. The 1.125% Convertible Notes are convertible by the holders within one year of the current balance sheet date until they mature; therefore, they are reported in current portion of long-term debt. Concurrent with the issuance of the 1.125% Convertible Notes in 2013, the 1.125% Conversion Option was separated from the 1.125% Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of income until the 1.125% Conversion Option fully settles or expires. This initial liability simultaneously reduced the carrying value of the 1.125% Convertible Notes’ principal amount (effectively an original issuance discount), which is amortized to the principal amount through the recognition of non-cash interest expense over the expected life of the debt. The effective interest rate of 6% approximates the interest rate we would have incurred had we issued nonconvertible debt with otherwise similar terms. As of March 31, 2019 , the 1.125% Convertible Notes had a remaining amortization period of less than one year, and their ‘if-converted’ value exceeded their principal amount by approximately $456 million and $581 million as of March 31, 2019 and December 31, 2018 , respectively. Cross-Default Provisions The indentures governing the 4.875% Notes, the 5.375% Notes and the 1.125% Convertible Notes contain cross-default provisions that are triggered upon default by us or any of our subsidiaries on any indebtedness in excess of the amount specified in the applicable indenture. Subsequent Events 1.125% Convertible Notes . In April 2019, we entered into privately negotiated note purchase agreements with certain holders of our outstanding 1.125% Convertible Notes. Under these agreements, we repaid $128 million aggregate principal amount, or approximately $123 million aggregate carrying amount, of the 1.125% Convertible Notes. In addition, we paid $332 million to settle the 1.125% Convertible Notes’ embedded cash conversion option feature at fair value. Credit Agreement . We drew down an additional $120 million under the Term Loan in April 2019, further reducing borrowing capacity by that amount permanently. |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the accompanying consolidated balance sheets: Balance Sheet Location March 31, December 31, (In millions) Derivative asset: 1.125% Call Option Current assets: Derivative asset $ 516 $ 476 Derivative liability: 1.125% Conversion Option Current liabilities: Derivative liability $ 516 $ 476 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 income, and reported in “Other (income) expenses, net.” Gains and losses for our derivative financial instruments are presented individually in the accompanying consolidated statements of cash flows, “Supplemental cash flow information.” 1.125% Convertible Notes Call Spread Overlay. Concurrent with the issuance of the 1.125% Convertible Notes in 2013, 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% Convertible Notes (the Counterparties). We refer to these transactions collectively as the Call Spread Overlay. Under the Call Spread Overlay, the cost of the 1.125% Call Option we purchased to cover the cash outlay upon conversion of the 1.125% Convertible Notes was reduced by proceeds from the sale 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% Convertible Notes), these transactions are intended to offset cash payments in excess of the principal amount of the 1.125% Convertible Notes due upon any conversion of such notes. In the first quarter of 2019, in connection with the 1.125% Convertible Notes purchases (described in Note 7 , “ Debt ”), we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the first quarter of 2019, this resulted in our receipt of $115 million for the settlement of the 1.125% Call Option (which is a derivative asset), and the payment of $103 million for the partial termination of the 1.125% Warrants, for an aggregate net cash receipt of $12 million from the Counterparties. 1.125% Call Option. 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 cash settlement features until the 1.125% Call Option settles or expires. For further discussion of the inputs used to determine the fair value of the 1.125% Call Option, refer to Note 4 , “ Fair Value Measurements .” 1.125% Conversion Option. The embedded cash conversion option within the 1.125% Convertible Notes is accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of income until the cash conversion option settles or expires. For further discussion of the inputs used to determine the fair value of the 1.125% Conversion Option, refer to Note 4 , “ Fair Value Measurements .” As of March 31, 2019 , the 1.125% Call Option and the 1.125% Conversion Option were classified as a current asset and current liability, respectively, because the 1.125% Convertible Notes may be converted within twelve months of March 31, 2019 , as described in Note 7 , “ Debt .” |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders' Equity 1.125% Warrants In connection with the Call Spread Overlay transaction described in Note 8 , “ Derivatives ,” in 2013, we issued 13.5 million warrants with a strike price of $53.8475 per share. Under certain circumstances, beginning in April 2020, if the price of our common stock exceeds the strike price of the 1.125% Warrants, we will be obligated to issue shares of our common stock subject to a share delivery cap. The 1.125% Warrants could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the 1.125% Warrants. Refer to Note 3 , “ Net Income per Share ,” for dilution information for the periods presented. We will not receive any additional proceeds if the 1.125% Warrants are exercised. Following the transactions described below, 5.1 million of the 1.125% Warrants remain outstanding. As described in Note 8 , “ Derivatives ,” in the first quarter of 2019, we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the first quarter of 2019, we paid $103 million to the Counterparties for the termination of 1.1 million of the 1.125% Warrants outstanding, which resulted in a reduction of additional paid-in-capital for the same amount. Subsequent Event In April 2019, we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. Pursuant to these transactions, we paid $298 million to the Counterparties for the termination of 3.1 million of the 1.125% Warrants outstanding, which resulted in a reduction of additional paid-in-capital for the same amount. Share-Based Compensation In connection with our employee stock plans, approximately 84,000 shares of common stock vested or were purchased, net of shares used to settle employees’ income tax obligations, during the three months ended March 31, 2019 . Share-based compensation is generally recorded to “General and administrative expenses” in the accompanying consolidated statements of income. Total share-based compensation expense for the three months ended March 31, 2019 and 2018, amounted to $9 million and $6 million , respectively. As of March 31, 2019 , there was $71 million of total unrecognized compensation expense related to unvested restricted stock awards (“RSAs”), and performance stock units (“PSUs”), which we expect to recognize over a remaining weighted-average period of 2.9 years and 2.3 years , respectively. This unrecognized compensation cost assumes an estimated forfeiture rate of 14.1% for non-executive employees as of March 31, 2019 . Also as of March 31, 2019 , there was $8 million of total unrecognized compensation expense related to unvested stock options, which we expect to recognize over a weighted-average period of 1.5 years . No stock options were granted or exercised in the three months ended March 31, 2019 . Activity for RSAs, performance stock awards (“PSAs”) and PSUs, for the three months ended March 31, 2019 , is summarized below: RSAs PSAs PSUs Total Weighted Average Grant Date Fair Value Unvested balance, December 31, 2018 399,795 3,132 201,383 604,310 $ 71.50 Granted 215,178 — 138,994 354,172 137.37 Vested (119,994 ) (3,132 ) (10,528 ) (133,654 ) 68.24 Forfeited (14,220 ) — (4,140 ) (18,360 ) 74.03 Unvested balance, March 31, 2019 480,759 — 325,709 806,468 100.91 The aggregate fair values of RSAs, PSAs and PSUs granted and vested are presented in the following table: Three Months Ended March 31, 2019 2018 (In millions) Granted: RSAs $ 30 $ 23 PSUs 18 14 $ 48 $ 37 Vested: RSAs $ 16 $ 12 PSUs 2 — PSAs — 3 $ 18 $ 15 |
Restructuring Costs
Restructuring Costs | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs Restructuring costs are reported by the same name in the accompanying consolidated statements of income. IT Restructuring Plan Management is focused on a margin recovery plan that includes identification and implementation of various profit improvement initiatives. To that end, we began a plan to restructure our information technology department (the “IT Restructuring Plan”) in 2018. In early 2019, we have entered into services agreements with Infosys Limited under which Infosys manages certain of our information technology services. We expect to complete the IT Restructuring Plan by the end of 2019, incurring cumulative total costs of approximately $15 million in the Other segment. This total has decreased compared with the $20 million reported in the 2018 Form 10-K due to more of our IT employees transitioned to Infosys than originally contemplated, resulting in lower one-time termination benefit costs. As of March 31, 2019, we had incurred cumulative restructuring costs under the IT Restructuring Plan of $11 million , including $7 million of one-time termination benefits and $4 million of other restructuring costs (consulting fees). As of December 31, 2018, there was $6 million accrued under the IT Restructuring Plan, primarily for one-time termination benefits that require cash settlement. In the first quarter of 2019, we incurred $2 million of other restructuring costs, and paid $2 million to settle one-time termination benefits and $1 million to settle other restructuring costs. As of March 31, 2019, there was $5 million accrued under the IT Restructuring Plan. 2017 Restructuring Plan As of December 31, 2018, we had $18 million of accrued liabilities for the 2017 Restructuring Plan. In the first quarter of 2019 , we incurred $1 million of restructuring costs for adjustments to previously recorded lease contract termination costs implemented pursuant to the restructuring and profitability improvement plan approved by our Board in June 2017 (the “2017 Restructuring Plan”), and paid $3 million to settle one-time termination and lease contract termination costs. As of March 31, 2019 , there was $16 million accrued for lease contract termination costs under the 2017 Restructuring Plan. We expect to continue to settle these liabilities through 2025, unless the leases are terminated sooner. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segments | Segments We currently have two reportable segments: our Health Plans segment and our Other segment. Our reportable segments are consistent with how we currently manage the business and view the markets we serve. Description of Earnings Measures for Reportable Segments Margin is the appropriate earnings measure for our reportable segments, based on how our chief operating decision maker currently reviews results, assesses performance, and allocates resources. Margin for our Health Plans segment is referred to as “Medical margin,” which represents the amount earned by the segments after medical costs are deducted from premium revenue. The medical care ratio represents the amount of medical care costs as a percentage of premium revenue, and is one of the key metrics used to assess the performance of the segments. Therefore, the underlying medical margin is the most important measure of earnings reviewed by the chief operating decision maker. The following table presents total revenue by segment. Inter-segment revenue was insignificant for all periods presented. Three Months Ended March 31, 2019 2018 (In millions) Total revenue: Health Plans $ 4,117 $ 4,509 Other 2 137 Consolidated $ 4,119 $ 4,646 The following table reconciles margin by segment to consolidated income before income taxes: Three Months Ended March 31, 2019 2018 (In millions) Margin: Health Plans $ 581 $ 601 Other — 14 Total margin 581 615 Add: other operating revenues (1) 167 189 Less: other operating expenses (2) (468 ) (582 ) Operating income 280 222 Other expenses, net 20 43 Income before income taxes $ 260 $ 179 ______________________ (1) Other operating revenues include premium tax revenue, health insurer fees reimbursed, and investment income and other revenue. (2) Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, and restructuring costs. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings The health care industry is subject to numerous laws and regulations of federal, state, and local governments. Penalties associated with violations of these laws and regulations include significant fines, exclusion from participating in publicly funded programs, and the repayment of previously collected revenues. In the ordinary course of business we are involved in legal actions, 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 reasonably estimable, but the outcome of legal actions is inherently uncertain and our estimates of such losses could change as a result of further developments of these matters. For certain pending matters, accruals have not been established because such matters have not progressed sufficiently through discovery or factual development to enable us to reasonably estimate a range of possible loss. 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. Steamfitters Local 449 Pension Plan v. Molina Healthcare, Inc., et al. On October 5, 2018, the Steamfitters Local 449 Pension Plan filed its first amended class action securities complaint in the Central District Court of California against the Company and its former executive officers, J. Mario Molina, John C. Molina, Terry P. Bayer, and Rick Hopfer, Case 2:18-cv-03579. The amended complaint purports to seek recovery on behalf of all persons or entities who purchased Molina common stock between October 31, 2014, and August 2, 2017, for alleged violations under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The plaintiff alleges the defendants misled investors regarding the scalability of the Company’s administrative infrastructure during the identified class period. On December 13, 2018, the Court granted the Company’s motion to dismiss in its entirety and closed the case. On January 9, 2019, plaintiffs appealed to the United States Court of Appeals for the Ninth Circuit. The Company believes it has meritorious defenses to the alleged claims and intends to defend the matter vigorously. At this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations, or cash flows. States’ Budgets Nearly all of our premium revenues come from the joint federal and state funding of the Medicaid and Children’s Health Insurance Program (“CHIP”) programs. The states and Commonwealth in which we operate our health plans regularly face significant budgetary pressures. |
Leases Leases
Leases Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases As discussed in Note 2 , “ Significant Accounting Policies ,” we elected the Topic 842 transition provision that allows entities to continue to apply the legacy guidance in Topic 840, Leases , including its disclosure requirements, in the comparative periods presented in the year of adoption. Accordingly, the Topic 842 disclosures below are presented as of and for the three-month period ended March 31, 2019 , only. We are a party to operating and finance leases primarily for our corporate and health plan offices. Our operating leases have remaining lease terms up to 10 years , some of which include options to extend the leases for up to 10 years . Our finance leases have remaining lease terms of 3 to 19 years , some of which include options to extend the leases for up to 25 years . The components of lease expense were as follows: Three Months Ended March 31, 2019 (In millions) Operating lease cost $ 9 Finance lease cost: Amortization of ROU assets $ 4 Interest on lease liabilities 4 Total finance lease cost $ 8 Supplemental consolidated cash flow information related to leases follows: Three Months Ended March 31, 2019 (In millions) Cash used in operating activities: Operating leases $ 9 Finance leases $ 4 Cash used in financing activities: Finance leases $ 1 ROU assets recognized in exchange for lease obligations: Operating leases $ 94 Finance leases $ 241 Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows: March 31, 2019 (Dollars in millions) Operating leases Other assets $ 83 Accounts payable and accrued liabilities 31 Other long-term liabilities 62 Total operating lease liabilities $ 93 Finance leases Property, equipment, and capitalized software, net $ 237 Accounts payable and accrued liabilities $ 7 Finance lease liabilities 234 Total finance lease liabilities $ 241 Weighted average remaining lease term Operating leases 4 years Finance leases 17 years Weighted average discount rate Operating leases 5.5 % Finance leases 6.6 % Maturities of lease liabilities as of March 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2019 (excluding the three months ended March 31, 2019) $ 27 $ 16 2020 28 22 2021 18 22 2022 12 21 2023 9 21 Thereafter 9 311 Total lease payments 103 413 Less imputed interest (10 ) (172 ) $ 93 $ 241 |
Leases | Leases As discussed in Note 2 , “ Significant Accounting Policies ,” we elected the Topic 842 transition provision that allows entities to continue to apply the legacy guidance in Topic 840, Leases , including its disclosure requirements, in the comparative periods presented in the year of adoption. Accordingly, the Topic 842 disclosures below are presented as of and for the three-month period ended March 31, 2019 , only. We are a party to operating and finance leases primarily for our corporate and health plan offices. Our operating leases have remaining lease terms up to 10 years , some of which include options to extend the leases for up to 10 years . Our finance leases have remaining lease terms of 3 to 19 years , some of which include options to extend the leases for up to 25 years . The components of lease expense were as follows: Three Months Ended March 31, 2019 (In millions) Operating lease cost $ 9 Finance lease cost: Amortization of ROU assets $ 4 Interest on lease liabilities 4 Total finance lease cost $ 8 Supplemental consolidated cash flow information related to leases follows: Three Months Ended March 31, 2019 (In millions) Cash used in operating activities: Operating leases $ 9 Finance leases $ 4 Cash used in financing activities: Finance leases $ 1 ROU assets recognized in exchange for lease obligations: Operating leases $ 94 Finance leases $ 241 Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows: March 31, 2019 (Dollars in millions) Operating leases Other assets $ 83 Accounts payable and accrued liabilities 31 Other long-term liabilities 62 Total operating lease liabilities $ 93 Finance leases Property, equipment, and capitalized software, net $ 237 Accounts payable and accrued liabilities $ 7 Finance lease liabilities 234 Total finance lease liabilities $ 241 Weighted average remaining lease term Operating leases 4 years Finance leases 17 years Weighted average discount rate Operating leases 5.5 % Finance leases 6.6 % Maturities of lease liabilities as of March 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2019 (excluding the three months ended March 31, 2019) $ 27 $ 16 2020 28 22 2021 18 22 2022 12 21 2023 9 21 Thereafter 9 311 Total lease payments 103 413 Less imputed interest (10 ) (172 ) $ 93 $ 241 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Consolidation And Interim Financial Information | Consolidation and Interim Financial Information The consolidated financial statements include the accounts of Molina Healthcare, Inc., and its subsidiaries. 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 three months ended March 31, 2019 , are not necessarily indicative of the results for the entire year ending December 31, 2019 . 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, 2018 . Accordingly, certain disclosures that would substantially duplicate the disclosures contained in our December 31, 2018 , audited consolidated financial statements have been omitted. These unaudited consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements for the fiscal year ended December 31, 2018 . |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Principal areas requiring the use of estimates include: • The determination of medical claims and benefits payable of our Health Plans segment; • Health plans’ contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract; • Health plans’ quality incentives that allow us to recognize incremental revenue if certain quality standards are met; • Settlements under risk or savings sharing programs; • The assessment of long-lived and intangible assets, and goodwill for impairment; • The determination of reserves for potential absorption of claims unpaid by insolvent providers; • The determination of reserves for litigation outcomes; • The determination of valuation allowances for deferred tax assets; and • The determination of unrecognized tax benefits. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term, highly liquid investments that are both readily convertible into known amounts of cash and have a maturity of three months or less on the date of purchase. The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in non-current “Restricted investments” in the accompanying consolidated balance sheets. |
Revenue Recognition | Premium Revenue 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, and premiums collected in advance are deferred. Certain components of premium revenue are subject to accounting estimates and fall into the following categories: Contractual Provisions That May Adjust or Limit Revenue or Profit Medicaid Program Medical Cost Floors (Minimums), and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded a liability under the terms of such contract provisions of $98 million and $103 million at March 31, 2019 and December 31, 2018 , respectively. Approximately $87 million of the liability accrued at both March 31, 2019 and December 31, 2018 , relates to our participation in Medicaid Expansion programs. In certain circumstances, the health plans may receive additional premiums if amounts spent on medical care costs exceed a defined maximum threshold. Receivables relating to such provisions were insignificant at March 31, 2019 and December 31, 2018 . Profit Sharing and Profit Ceiling. Our contracts with certain states contain profit-sharing or profit ceiling provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any. Liabilities for profits in excess of the amount we are allowed to retain under these provisions were insignificant at March 31, 2019 and December 31, 2018 . Retroactive Premium Adjustments. State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, rather than in the months of service to which the retroactive adjustment applies. Medicare Program Risk Adjusted Premiums: Our Medicare premiums are subject to retroactive increase or decrease based on the health status of our Medicare members (as measured by member risk score). We estimate our members’ risk scores and the related amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health status, risk scores and CMS practices. Consolidated balance sheet amounts related to anticipated Medicare risk adjusted premiums and Medicare Part D settlements were insignificant at March 31, 2019 and December 31, 2018 . Minimum MLR. The Affordable Care Act (“ACA”) has established a minimum annual medical loss ratio (Minimum MLR) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of income. The amounts payable for the Medicare Minimum MLR was not significant at March 31, 2019 and December 31, 2018 . Marketplace Program Risk adjustment. Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score (risk adjustment payable), and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score (risk adjustment receivable). We estimate our ultimate premium based on insurance policy year-to-date experience, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of income. As of March 31, 2019 , and December 31, 2018 , the Marketplace risk adjustment payable amounted to $568 million and $466 million , respectively. As of March 31, 2019 , and December 31, 2018 , the Marketplace risk adjustment receivable amounted to $51 million and $34 million , respectively. Minimum MLR. The ACA has established a Minimum MLR of 80% for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of income. Aggregate balance sheet amounts related to the Minimum MLR were insignificant at March 31, 2019 and December 31, 2018 . |
Leases | Leases Right-of-use (“ROU”) assets represent our right to use the underlying assets over the lease term, and lease liabilities represent our obligation to make lease payments arising from the related leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease terms may include options to extend or terminate the lease when we believe it is reasonably certain that we will exercise such options. Operating lease ROU assets are reported in other assets, and operating lease liabilities are reported in accounts payable and accrued liabilities (current), and other long-term liabilities (non-current) in our consolidated balance sheets. Finance lease ROU assets are reported in property, equipment, and capitalized software, and finance lease liabilities are reported in accounts payable and accrued liabilities (current), and finance lease liabilities (non-current) in our consolidated balance sheets. Because most of our leases do not provide an implicit interest rate, we generally use our incremental borrowing rate to determine the present value of lease payments. Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term, and the related ROU assets and liabilities are reduced to the present value of the remaining lease payments at the end of each period. Finance lease payments reduce finance lease liabilities, the related ROU assets are amortized on a straight-line basis over the lease term, and interest expense is recognized using the effective interest method. Short-term leases (with a term of 12 months or less) are not recorded as ROU assets or liabilities in the consolidated balance sheets. We account for lease and non-lease components as a single lease component. For certain leases that represent a portfolio of similar assets, such as a fleet of vehicles, we apply a portfolio approach to account for the related operating lease ROU assets and liabilities, rather than account for such assets and liabilities on an individual basis. A nominal number of our lease agreements include rental payments that adjust periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. For further information regarding our adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), see Recent Accounting Pronouncements Adopted, below. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, receivables, and restricted investments. Our investments and a portion of our cash equivalents are managed by professional portfolio managers operating under documented investment guidelines. Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. Our investments consist primarily of investment-grade debt securities with a maximum maturity of 10 years. Restricted investments are invested principally in certificates of deposit and U.S. Treasury securities. Concentration of credit risk with respect to accounts receivable is generally limited because our payors consist principally of the governments of each state in which our health plan subsidiaries operate. |
Income Taxes | Income Taxes The provision for income taxes is determined using an estimated annual effective tax rate, which generally differs from the U.S. federal statutory rate primarily because of state taxes, nondeductible expenses such as the Health Insurer Fee (“HIF”), certain compensation, and other general and administrative expenses. The effective tax rate will not be impacted by HIF in 2019 given the 2019 HIF moratorium. 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 projected pretax earnings, the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or the reversal of the recognition 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 Adopted Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Topic 842, which was subsequently modified by several ASUs issued in 2017 and 2018. Topic 842 was issued to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet. Most prominent among the changes in Topic 842 is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. In addition, Topic 842’s disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Topic 842’s transition provisions are applied using a modified retrospective approach under which entities may not retrospectively adjust any periods prior to the earliest comparative period presented, or at the beginning of the period of adoption, whichever is later. Entities may elect whether to apply the transition provisions, including disclosure requirements, at the beginning of the earliest comparative period presented or on the adoption date. We adopted Topic 842 effective January 1, 2019, and have elected to apply the transition provisions as of January 1, 2019. Accordingly, we recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings on January 1, 2019. In addition, we elected the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. As indicated in the accompanying consolidated statements of stockholders’ equity, the cumulative effect adjustment was an increase of $85 million to retained earnings, relating primarily to the transition provisions for sale-leaseback arrangements that did not qualify for sale treatment. Accordingly, such arrangements for certain office buildings were de-recognized and recorded as finance lease ROU assets and lease liabilities. The difference between the de-recognized assets and lease financing obligations resulted in an increase to retained earnings. The recognition of these arrangements as finance lease ROU assets and lease liabilities will not materially impact our consolidated results of operations throughout the terms of the leases. See Note 13 , “ Leases ,” for the required disclosures under Topic 842, including the amount and location of the ROU assets and lease liabilities recognized. Software Licenses. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We early adopted ASU 2018-15 effective January 1, 2019, using the prospective method , with no material impact to our financial condition, results of operations or cash flows. Adoption of this guidance may be significant to us in the future depending on the extent to which we use cloud computing arrangements that qualify as service contracts. Recent Accounting Pronouncements Not Yet Adopted Credit Losses. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments . Rather than generally recognizing credit losses when it is probable that the loss has been incurred, the revised guidance requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount companies expect to collect over the instrument’s contractual life. ASU 2016-13 is effective beginning January 1, 2020, and must be adopted as a cumulative effect adjustment to retained earnings; early adoption is permitted. We are in the early stages of evaluating the effect of this guidance. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not have, nor does management expect such pronouncements to have, a significant impact on our present or future consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Restricted Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in non-current “Restricted investments” in the accompanying consolidated balance sheets. March 31, 2019 2018 (In millions) Cash and cash equivalents $ 3,224 $ 3,729 Restricted cash and cash equivalents 74 95 Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows $ 3,298 $ 3,824 |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in non-current “Restricted investments” in the accompanying consolidated balance sheets. March 31, 2019 2018 (In millions) Cash and cash equivalents $ 3,224 $ 3,729 Restricted cash and cash equivalents 74 95 Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows $ 3,298 $ 3,824 |
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 periods presented and prior periods. Although the reasonably possible effects of a change in estimate related to quality incentive premium revenue as of March 31, 2019 , 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 March 31, 2019 . Three Months Ended March 31, 2019 2018 (In millions) Maximum available quality incentive premium - current period $ 45 $ 40 Quality incentive premium revenue recognized in current period: Earned current period $ 26 $ 24 Earned prior periods 20 11 Total $ 46 $ 35 Quality incentive premium revenue recognized as a percentage of total premium revenue 1.2 % 0.8 % |
Amounts due to government agencies | A summary of the categories of amounts due government agencies is as follows: March 31, December 31, (In millions) Medicaid program: Medical cost floors and corridors $ 98 $ 103 Other amounts due to states 90 81 Marketplace program: Risk adjustment 568 466 Cost sharing reduction — 183 Other 176 134 $ 932 $ 967 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 basic and diluted net income per share: Three Months Ended March 31, 2019 2018 (In millions, except net income per share) Numerator: Net income $ 198 $ 107 Denominator: Shares outstanding at the beginning of the period 62.1 59.3 Weighted-average number of shares issued: Exchange of 1.625% Convertible Notes — 0.5 Denominator for basic net income per share 62.1 59.8 Effect of dilutive securities: 1.125% Warrants (1) 3.5 4.4 1.625% Convertible Notes — 0.7 Stock-based compensation 0.6 0.3 Denominator for diluted net income per share 66.2 65.2 Net income per share: (2) Basic $ 3.19 $ 1.79 Diluted $ 2.99 $ 1.64 Potentially dilutive common shares excluded from calculations: (1) Stock-based compensation 0.1 0.4 ______________________________ (1) For more information and definitions regarding the 1.125% Warrants, including partial termination transactions, refer to Note 9 , “ Stockholders' Equity .” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method. Certain potentially dilutive common shares issuable were not included in the computation of diluted net income per share because to do so would have been anti-dilutive. (2) Source data for calculations in thousands. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value of assets measured on recurring basis | Our financial instruments measured at fair value on a recurring basis at March 31, 2019 , were as follows: Total Observable Inputs (Level 1) Directly or Indirectly Observable Inputs (Level 2) Unobservable Inputs (Level 3) (In millions) Corporate debt securities $ 947 $ — $ 947 $ — U.S. Treasury notes 168 — 168 — Government-sponsored enterprise securities (“GSEs”) 166 — 166 — Municipal securities 112 — 112 — Asset-backed securities 75 — 75 — Mortgage-backed securities 23 — 23 — Certificate of deposit 14 — 14 — Other 3 — 3 — Subtotal - current investments 1,508 — 1,508 — 1.125% Call Option derivative asset 516 — — 516 Total assets $ 2,024 $ — $ 1,508 $ 516 1.125% Conversion Option derivative liability $ 516 $ — $ — $ 516 Total liabilities $ 516 $ — $ — $ 516 Our financial instruments measured at fair value on a recurring basis at December 31, 2018 , were as follows: Total Observable Inputs (Level 1) Directly or Indirectly Observable Inputs (Level 2) Unobservable Inputs (Level 3) (In millions) Corporate debt securities $ 1,123 $ — $ 1,123 $ — U.S. Treasury notes 181 — 181 — GSEs 163 — 163 — Municipal securities 114 — 114 — Asset-backed securities 82 — 82 — Certificates of deposit 14 — 14 — Other 4 — 4 — Subtotal - current investments 1,681 — 1,681 — 1.125% Call Option derivative asset 476 — — 476 Total assets $ 2,157 $ — $ 1,681 $ 476 1.125% Conversion Option derivative liability $ 476 $ — $ — $ 476 Total liabilities $ 476 $ — $ — $ 476 |
Schedule of fair value, asset and liabilities measured on recurring basis - disclosure only | The carrying amounts and estimated fair values of our notes payable are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted market prices for similar securities in active markets or quoted prices for identical securities in inactive markets. The carrying amount and estimated fair value of the Term Loan is classified as a Level 3 financial instrument, because certain inputs used to determine its fair value are not observable. As of March 31, 2019, the carrying amount of the Term Loan approximates fair value because its interest rate is a variable rate that approximates rates currently available to us. March 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value (In millions) 5.375% Notes $ 695 $ 725 $ 694 $ 674 4.875% Notes 326 327 326 301 1.125% Convertible Notes (1),(2) 198 716 240 732 Term Loan 100 100 — — $ 1,319 $ 1,868 $ 1,260 $ 1,707 ______________________ (1) The fair value of the 1.125% Conversion Option (the embedded cash conversion option), which is reflected in the fair value amounts presented above, amounted to $516 million and $476 million as of March 31, 2019 , and December 31, 2018 , respectively. See further discussion at Note 7 , “ Debt ,” and Note 8 , “ Derivatives .” (2) For more information on debt repayments in the first quarter of 2019 , refer to Note 7 , “ Debt .” |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 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 continuous loss position for 12 months or more as of March 31, 2019 : In a Continuous Loss Position for Less than 12 Months In a Continuous Loss Position for 12 Months or More Estimated Fair Value Unrealized Losses Total Number of Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 207 $ 1 96 $ 403 $ 2 280 GSEs — — — 122 1 71 Municipal securities — — — 87 1 91 $ 207 $ 1 96 $ 612 $ 4 442 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 continuous loss position for 12 months or more as of December 31, 2018 : In a Continuous Loss Position for Less than 12 Months In a Continuous Loss Position for 12 Months or More Estimated Fair Value Unrealized Losses Total Number of Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 509 $ 3 285 $ 412 $ 5 298 GSEs — — — 127 1 76 Municipal securities — — — 87 1 90 Asset-backed securities — — — 68 1 52 $ 509 $ 3 285 $ 694 $ 8 516 The following tables summarize our investments as of the dates indicated: March 31, 2019 Amortized Gross Unrealized Estimated Fair Cost Gains Losses Value (In millions) Corporate debt securities $ 949 $ 1 $ 3 $ 947 U.S. Treasury notes 168 — — 168 GSEs 167 — 1 166 Municipal securities 113 — 1 112 Asset-backed securities 75 — — 75 Mortgage-backed securities 23 — — 23 Certificates of deposit 14 — — 14 Other 3 — — 3 $ 1,512 $ 1 $ 5 $ 1,508 December 31, 2018 Amortized Gross Unrealized Estimated Fair Cost Gains Losses Value (In millions) Corporate debt securities $ 1,131 $ — $ 8 $ 1,123 U.S. Treasury notes 181 — — 181 GSEs 164 — 1 163 Municipal securities 115 — 1 114 Asset-backed securities 83 — 1 82 Certificates of deposit 14 — — 14 Other 4 — — 4 Total current investments $ 1,692 $ — $ 11 $ 1,681 |
Contractual maturities of investments | The contractual maturities of our available-for-sale investments as of March 31, 2019 are summarized below: Amortized Cost Estimated Fair Value (In millions) Due in one year or less $ 927 $ 926 Due after one year through five years 550 547 Due after five years through ten years 12 12 Due after ten years 23 23 $ 1,512 $ 1,508 |
Medical Claims and Benefits P_2
Medical Claims and Benefits Payable (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of liability for unpaid claims and claims adjustment expense | The following table provides the details of our medical claims and benefits payable as of the dates indicated. March 31, December 31, (In millions) Fee-for-service claims incurred but not paid (“IBNP”) $ 1,411 $ 1,562 Pharmacy payable 114 115 Capitation payable 59 52 Other 411 232 $ 1,995 $ 1,961 |
Components of change in medical claims and benefits payable | The following table presents the components of the change in our medical claims and benefits payable for the periods indicated. The amounts presented for “Components of medical care costs related to: Prior periods” represent the amounts by which our original estimate of medical claims and benefits payable at the beginning of the period were more than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. Three Months Ended March 31, 2019 2018 (In millions) Medical claims and benefits payable, beginning balance $ 1,961 $ 2,192 Components of medical care costs related to: Current period 3,560 4,033 Prior periods (1) (189 ) (311 ) Total medical care costs 3,371 3,722 Change in non-risk provider payables 171 45 Payments for medical care costs related to: Current period 2,197 2,498 Prior periods 1,311 1,438 Total paid 3,508 3,936 Medical claims and benefits payable, ending balance $ 1,995 $ 2,023 _______________________ (1) March 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $70 million . |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of maturities of long-term debt | As of March 31, 2019 , contractual maturities of debt were as follows. All amounts represent the principal amounts of the debt instruments outstanding. Total 2020 2021 2022 2023 2024 Thereafter (In millions) 5.375% Notes $ 700 $ — $ — $ 700 $ — $ — $ — 4.875% Notes 330 — — — — — 330 1.125% Convertible Notes 206 206 — — — — — Term Loan 100 3 7 10 10 70 — $ 1,336 $ 209 $ 7 $ 710 $ 10 $ 70 $ 330 |
Long term debt | The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets: March 31, December 31, (In millions) Current portion of long-term debt: 1.125% Convertible Notes, net of unamortized discount $ 199 $ 241 Lease financing obligations — 1 Debt issuance costs (1 ) (1 ) $ 198 $ 241 Non-current portion of long-term debt: 5.375% Notes $ 700 $ 700 4.875% Notes 330 330 Term Loan 100 — Debt issuance costs (9 ) (10 ) $ 1,121 $ 1,020 |
Interest Costs | Interest cost recognized relating to our convertible senior notes for the periods presented was as follows: Three Months Ended March 31, 2019 2018 (In millions) Contractual interest at coupon rate $ 1 $ 2 Amortization of the discount 3 7 $ 4 $ 9 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 accompanying consolidated balance sheets: Balance Sheet Location March 31, December 31, (In millions) Derivative asset: 1.125% Call Option Current assets: Derivative asset $ 516 $ 476 Derivative liability: 1.125% Conversion Option Current liabilities: Derivative liability $ 516 $ 476 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Restricted share activity | Activity for RSAs, performance stock awards (“PSAs”) and PSUs, for the three months ended March 31, 2019 , is summarized below: RSAs PSAs PSUs Total Weighted Average Grant Date Fair Value Unvested balance, December 31, 2018 399,795 3,132 201,383 604,310 $ 71.50 Granted 215,178 — 138,994 354,172 137.37 Vested (119,994 ) (3,132 ) (10,528 ) (133,654 ) 68.24 Forfeited (14,220 ) — (4,140 ) (18,360 ) 74.03 Unvested balance, March 31, 2019 480,759 — 325,709 806,468 100.91 The aggregate fair values of RSAs, PSAs and PSUs granted and vested are presented in the following table: Three Months Ended March 31, 2019 2018 (In millions) Granted: RSAs $ 30 $ 23 PSUs 18 14 $ 48 $ 37 Vested: RSAs $ 16 $ 12 PSUs 2 — PSAs — 3 $ 18 $ 15 |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Operating segment information | The following table presents total revenue by segment. Inter-segment revenue was insignificant for all periods presented. Three Months Ended March 31, 2019 2018 (In millions) Total revenue: Health Plans $ 4,117 $ 4,509 Other 2 137 Consolidated $ 4,119 $ 4,646 The following table reconciles margin by segment to consolidated income before income taxes: Three Months Ended March 31, 2019 2018 (In millions) Margin: Health Plans $ 581 $ 601 Other — 14 Total margin 581 615 Add: other operating revenues (1) 167 189 Less: other operating expenses (2) (468 ) (582 ) Operating income 280 222 Other expenses, net 20 43 Income before income taxes $ 260 $ 179 ______________________ (1) Other operating revenues include premium tax revenue, health insurer fees reimbursed, and investment income and other revenue. (2) Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, and restructuring costs. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease Cost | The components of lease expense were as follows: Three Months Ended March 31, 2019 (In millions) Operating lease cost $ 9 Finance lease cost: Amortization of ROU assets $ 4 Interest on lease liabilities 4 Total finance lease cost $ 8 Supplemental consolidated cash flow information related to leases follows: Three Months Ended March 31, 2019 (In millions) Cash used in operating activities: Operating leases $ 9 Finance leases $ 4 Cash used in financing activities: Finance leases $ 1 ROU assets recognized in exchange for lease obligations: Operating leases $ 94 Finance leases $ 241 |
Supplemental Lease Information | Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows: March 31, 2019 (Dollars in millions) Operating leases Other assets $ 83 Accounts payable and accrued liabilities 31 Other long-term liabilities 62 Total operating lease liabilities $ 93 Finance leases Property, equipment, and capitalized software, net $ 237 Accounts payable and accrued liabilities $ 7 Finance lease liabilities 234 Total finance lease liabilities $ 241 Weighted average remaining lease term Operating leases 4 years Finance leases 17 years Weighted average discount rate Operating leases 5.5 % Finance leases 6.6 % |
Operating Lease Maturities | Maturities of lease liabilities as of March 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2019 (excluding the three months ended March 31, 2019) $ 27 $ 16 2020 28 22 2021 18 22 2022 12 21 2023 9 21 Thereafter 9 311 Total lease payments 103 413 Less imputed interest (10 ) (172 ) $ 93 $ 241 |
Finance Lease Maturities | March 31, 2019 (Dollars in millions) Operating leases Other assets $ 83 Accounts payable and accrued liabilities 31 Other long-term liabilities 62 Total operating lease liabilities $ 93 Finance leases Property, equipment, and capitalized software, net $ 237 Accounts payable and accrued liabilities $ 7 Finance lease liabilities 234 Total finance lease liabilities $ 241 Weighted average remaining lease term Operating leases 4 years Finance leases 17 years Weighted average discount rate Operating leases 5.5 % Finance leases 6.6 % Maturities of lease liabilities as of March 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2019 (excluding the three months ended March 31, 2019) $ 27 $ 16 2020 28 22 2021 18 22 2022 12 21 2023 9 21 Thereafter 9 311 Total lease payments 103 413 Less imputed interest (10 ) (172 ) $ 93 $ 241 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) member in Millions | 3 Months Ended |
Mar. 31, 2019memberStateSegment | |
Basis Of Presentation [Line Items] | |
Number of reportable segments (in segment) | Segment | 2 |
Health Plans | |
Basis Of Presentation [Line Items] | |
Number of states in which entity operates (in state) | State | 14 |
Number of members eligible for the health care programs, approximately (in member) | member | 3.4 |
Minimum contract terms | 3 years |
Maximum contract terms | 5 years |
Significant Accounting Polici_4
Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 3,224 | $ 2,826 | $ 3,729 | |
Restricted cash and cash equivalents | 74 | 95 | ||
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the statements of cash flows | $ 3,298 | $ 2,926 | $ 3,824 | $ 3,290 |
Significant Accounting Polici_5
Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Jan. 01, 2018 | |
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Medical cost floors and corridors | $ 98 | $ 103 | ||
Amounts due government agencies | 932 | 967 | ||
Risk adjustment payable | 568 | 466 | ||
Risk adjustment receivable | $ 51 | 34 | ||
Maturity period | 10 years | |||
Restricted cash and cash equivalents | $ 74 | $ 95 | ||
Medicaid Expansion | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Amounts due government agencies | $ 87 | $ 87 | ||
CMS Subsidies | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Operating expense | $ 70 | |||
ASU 2014-09 | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Adoption of ASU | $ 6 | |||
ASU 2014-09 | Retained Earnings | ||||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||||
Adoption of ASU | $ 7 |
Significant Accounting Polici_6
Significant Accounting Policies - Quality Incentive Premium Revenue Recognized (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Maximum available quality incentive premium - current period | $ 45 | $ 40 |
Quality incentive premium revenue recognized in current period: | ||
Earned current period | 26 | 24 |
Earned prior periods | 20 | 11 |
Total | $ 46 | $ 35 |
Quality incentive premium revenue recognized as a percentage of total premium revenue | 1.20% | 0.80% |
Minimum | Select Health Plans | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Percentage of additional incremental revenue earned | 1.00% | |
Maximum | Select Health Plans | ||
Schedule of Premium Revenue by Health Plan Type [Line Items] | ||
Percentage of additional incremental revenue earned | 4.00% |
Significant Accounting Polici_7
Significant Accounting Policies - Amounts Due To Government Agencies (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Medical cost floors and corridors | $ 98 | $ 103 |
Other amounts due to states | 90 | 81 |
Risk adjustment | 568 | 466 |
Cost sharing reduction | 0 | 183 |
Other | 176 | 134 |
Medical Premium Liability Due To Agency | $ 932 | $ 967 |
Net Income per Share (Detail)
Net Income per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | ||||
Net income | $ 198 | $ 107 | ||
Denominator: | ||||
Shares outstanding at the beginning of the period (in shares) | 62.1 | 59.3 | ||
Exchange of 1.625% Notes (in shares) | 0 | 0.5 | ||
Denominator for basic net income per share (in shares) | 62.1 | 59.8 | ||
Effect of dilutive securities: | ||||
1.125% Warrants (in shares) | 3.5 | 4.4 | ||
1.625% Notes (in shares) | 0 | 0.7 | ||
Stock-based compensation (in shares) | 0.6 | 0.3 | ||
Denominator for diluted net income per share (in shares) | 66.2 | 65.2 | ||
Net income per share: | ||||
Basic (in dollars per share) | $ 3.19 | $ 1.79 | ||
Diluted (in dollars per share) | $ 2.99 | $ 1.64 | ||
Potentially dilutive common shares excluded from calculations: (1) | ||||
Stock-based compensation (in shares) | 0.1 | 0.4 | ||
1.125% Warrants | ||||
Potentially dilutive common shares excluded from calculations: (1) | ||||
Stated percentage of warrants | 1.125% | |||
1.625% Notes | ||||
Potentially dilutive common shares excluded from calculations: (1) | ||||
Stated percentage of warrants | 1.625% |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Mar. 31, 2019 |
1.125% Call Option | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Percentage of contractual interest rate on derivative | 1.125% |
1.125% Conversion Option | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Percentage of contractual interest rate on derivative | 1.125% |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Instruments on Recurring Basis (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | $ 2,024 | $ 2,157 |
Total liability measured at fair value on a recurring basis | 516 | 476 |
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 | 947 | 1,123 |
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 | 168 | 181 |
Government-sponsored enterprise securities (“GSEs”) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 166 | 163 |
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 | 112 | 114 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 75 | 82 |
Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 23 | |
Certificate 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 | 14 | 14 |
Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 3 | 4 |
Subtotal - current investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 1,508 | 1,681 |
1.125% Call Option derivative asset | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 516 | 476 |
1.125% Conversion Option derivative liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
1.125% Conversion Option derivative liability | 516 | 476 |
Observable Inputs (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 | 0 | 0 |
Total liability measured at fair value on a recurring basis | 0 | 0 |
Observable Inputs (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 |
Observable Inputs (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 | 0 | 0 |
Observable Inputs (Level 1) | Government-sponsored enterprise securities (“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 |
Observable Inputs (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 |
Observable Inputs (Level 1) | Asset-backed 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 |
Observable Inputs (Level 1) | Mortgage-backed 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 | |
Observable Inputs (Level 1) | Certificate 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 |
Observable Inputs (Level 1) | Other | ||
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 |
Observable Inputs (Level 1) | Subtotal - current investments | ||
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 |
Observable Inputs (Level 1) | 1.125% Call Option derivative asset | ||
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 |
Observable Inputs (Level 1) | 1.125% Conversion Option derivative liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
1.125% Conversion Option derivative liability | 0 | 0 |
Directly or Indirectly Observable Inputs (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 | 1,508 | 1,681 |
Total liability measured at fair value on a recurring basis | 0 | 0 |
Directly or Indirectly Observable Inputs (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 | 947 | 1,123 |
Directly or Indirectly Observable Inputs (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 | 168 | 181 |
Directly or Indirectly Observable Inputs (Level 2) | Government-sponsored enterprise securities (“GSEs”) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 166 | 163 |
Directly or Indirectly Observable Inputs (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 | 112 | 114 |
Directly or Indirectly Observable Inputs (Level 2) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 75 | 82 |
Directly or Indirectly Observable Inputs (Level 2) | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 23 | |
Directly or Indirectly Observable Inputs (Level 2) | Certificate 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 | 14 | 14 |
Directly or Indirectly Observable Inputs (Level 2) | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 3 | 4 |
Directly or Indirectly Observable Inputs (Level 2) | Subtotal - current investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 1,508 | 1,681 |
Directly or Indirectly Observable Inputs (Level 2) | 1.125% Call Option derivative asset | ||
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 |
Directly or Indirectly Observable Inputs (Level 2) | 1.125% Conversion Option derivative liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
1.125% Conversion Option derivative liability | 0 | 0 |
Unobservable 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 | 516 | 476 |
Total liability measured at fair value on a recurring basis | 516 | 476 |
Unobservable 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 |
Unobservable 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 |
Unobservable Inputs (Level 3) | Government-sponsored enterprise securities (“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 |
Unobservable 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 |
Unobservable Inputs (Level 3) | Asset-backed 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 |
Unobservable Inputs (Level 3) | Mortgage-backed 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 | |
Unobservable Inputs (Level 3) | Certificate 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 |
Unobservable Inputs (Level 3) | Other | ||
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 |
Unobservable Inputs (Level 3) | Subtotal - current investments | ||
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 |
Unobservable Inputs (Level 3) | 1.125% Call Option derivative asset | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value on a recurring basis | 516 | 476 |
Unobservable Inputs (Level 3) | 1.125% Conversion Option derivative liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
1.125% Conversion Option derivative liability | $ 516 | $ 476 |
Fair Value Measurements - Detai
Fair Value Measurements - Details of Long-Term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 06, 2017 |
1.125% Convertible Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Percentage of contractual interest rate on Notes | 1.125% | ||
Senior Notes | 5.375% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Percentage of contractual interest rate on Notes | 5.375% | ||
Senior Notes | 4.875% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Percentage of contractual interest rate on Notes | 4.875% | 4.875% | |
Convertible Notes | 1.125% Convertible Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Percentage of contractual interest rate on Notes | 1.125% | 1.125% | |
Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | $ 1,319 | $ 1,260 | |
Carrying Amount | Senior Notes | 5.375% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 695 | 694 | |
Carrying Amount | Senior Notes | 4.875% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 326 | 326 | |
Carrying Amount | Convertible Notes | 1.125% Convertible Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 198 | 240 | |
Carrying Amount | Credit Facility | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 100 | 0 | |
Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 1,868 | 1,707 | |
Fair Value | Senior Notes | 5.375% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 725 | 674 | |
Fair Value | Senior Notes | 4.875% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 327 | 301 | |
Fair Value | Convertible Notes | 1.125% Convertible Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 716 | 732 | |
Fair Value | Credit Facility | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | 100 | 0 | |
Current liabilities: Derivative liability | 1.125% Conversion Option | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | $ 516 | $ 476 |
Investments - Summary of Invest
Investments - Summary of Investments (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 1,512 | |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | 5 | |
Estimated Fair Value | 1,508 | |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 949 | $ 1,131 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | 3 | 8 |
Estimated Fair Value | 947 | 1,123 |
U.S. Treasury notes | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 168 | 181 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 168 | 181 |
GSEs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 167 | 164 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 1 | 1 |
Estimated Fair Value | 166 | 163 |
Municipal securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 113 | 115 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 1 | 1 |
Estimated Fair Value | 112 | 114 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 75 | 83 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 1 |
Estimated Fair Value | 75 | 82 |
Mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 23 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | 23 | |
Certificate of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 14 | 14 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 14 | 14 |
Other | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 3 | 4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 3 | 4 |
Subtotal - current investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,692 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 11 | |
Estimated Fair Value | $ 1,681 |
Investments - Contractual Matur
Investments - Contractual Maturities of Investments (Details) $ in Millions | Mar. 31, 2019USD ($) |
Amortized Cost | |
Due in one year or less | $ 927 |
Due after one year through five years | 550 |
Due after five years through ten years | 12 |
Due after ten years | 23 |
Amortized Cost | 1,512 |
Estimated Fair Value | |
Due in one year or less | 926 |
Due after one year through five years | 547 |
Due after five years through ten years | 12 |
Due after ten years | 23 |
Estimated Fair Value | $ 1,508 |
Investments - Available-for-Sal
Investments - Available-for-Sale Investments (Details) $ in Millions | Mar. 31, 2019USD ($)Security | Dec. 31, 2018USD ($)Security |
Debt Securities, Available-for-sale [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | $ 207 | $ 509 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | $ 1 | $ 3 |
In a Continuous Loss Position for Less than 12 Months, Number of Positions (in security) | Security | 96 | 285 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | $ 612 | $ 694 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | $ 4 | $ 8 |
In a Continuous Loss Position for 12 Months or More, Number of Positions (in security) | Security | 442 | 516 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | $ 207 | $ 509 |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | $ 1 | $ 3 |
In a Continuous Loss Position for Less than 12 Months, Number of Positions (in security) | Security | 96 | 285 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | $ 403 | $ 412 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | $ 2 | $ 5 |
In a Continuous Loss Position for 12 Months or More, Number of Positions (in security) | Security | 280 | 298 |
GSEs | ||
Debt Securities, Available-for-sale [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, Number of Positions (in security) | Security | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | $ 122 | $ 127 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | $ 1 | $ 1 |
In a Continuous Loss Position for 12 Months or More, Number of Positions (in security) | Security | 71 | 76 |
Municipal securities | ||
Debt Securities, Available-for-sale [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, Number of Positions (in security) | Security | 0 | 0 |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | $ 87 | $ 87 |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | $ 1 | $ 1 |
In a Continuous Loss Position for 12 Months or More, Number of Positions (in security) | Security | 91 | 90 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
In a Continuous Loss Position for Less than 12 Months, Estimated Fair Value | $ 0 | |
In a Continuous Loss Position for Less than 12 Months, Unrealized Losses | $ 0 | |
In a Continuous Loss Position for Less than 12 Months, Number of Positions (in security) | Security | 0 | |
In a Continuous Loss Position for 12 Months or More, Estimated Fair value | $ 68 | |
In a Continuous Loss Position for 12 Months or More, Unrealized Losses | $ 1 | |
In a Continuous Loss Position for 12 Months or More, Number of Positions (in security) | Security | 52 |
Investments - Held to Maturity
Investments - Held to Maturity Investments (Details) $ in Millions | Mar. 31, 2019USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Due in one year or less | $ 100 |
Medical Claims and Benefits P_3
Medical Claims and Benefits Payable - Medical Claims and Future Benefits (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Other Liabilities Disclosure [Abstract] | ||||
Fee-for-service claims incurred but not paid (“IBNP”) | $ 1,411 | $ 1,562 | ||
Pharmacy payable | 114 | 115 | ||
Capitation payable | 59 | 52 | ||
Other | 411 | 232 | ||
Medical claims and benefits payable | $ 1,995 | $ 1,961 | $ 2,023 | $ 2,192 |
Medical Claims and Benefits P_4
Medical Claims and Benefits Payable - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |||
Non-risk provider payables | $ 278 | $ 107 | |
Expense (recovery) for prior period claims development | $ 189 | $ 311 |
Medical Claims and Benefits P_5
Medical Claims and Benefits Payable - Components of Change in Medical Claims and Benefits Payable (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Insurance Claims | ||
Medical claims and benefits payable, beginning balance | $ 1,961 | $ 2,192 |
Components of medical care costs related to: | ||
Current period | 3,560 | 4,033 |
Prior periods | (189) | (311) |
Total medical care costs | 3,371 | 3,722 |
Change in non-risk provider payables | 171 | 45 |
Payments for medical care costs related to: | ||
Current period | 2,197 | 2,498 |
Prior periods | 1,311 | 1,438 |
Total paid | 3,508 | 3,936 |
Medical claims and benefits payable, ending balance | $ 1,995 | 2,023 |
CMS Subsidies | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Operating expense | $ 70 |
Debt - Maturities of Long-Term
Debt - Maturities of Long-Term Debt (Details) | Mar. 31, 2019USD ($) |
Debt Instrument [Line Items] | |
2020 | $ 209,000,000 |
2021 | 7,000,000 |
2022 | 710,000,000 |
2023 | 10,000,000 |
2024 | 70,000,000 |
Thereafter | 330,000,000 |
Long-term Debt, Gross | 1,336,000,000 |
Senior Notes | 5.375% Notes | |
Debt Instrument [Line Items] | |
2020 | 0 |
2021 | 0 |
2022 | 700,000,000 |
2023 | 0 |
2024 | 0 |
Thereafter | 0 |
Long-term Debt, Gross | 700,000,000 |
Senior Notes | 4.875% Notes | |
Debt Instrument [Line Items] | |
2020 | 0 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Thereafter | 330,000,000 |
Long-term Debt, Gross | 330,000,000 |
Convertible Notes | 1.125% Convertible Notes | |
Debt Instrument [Line Items] | |
2020 | 206,000,000 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Thereafter | 0 |
Long-term Debt, Gross | 206,000,000 |
Line of Credit | Term Loan | |
Debt Instrument [Line Items] | |
2020 | 3,000,000 |
2021 | 7,000,000 |
2022 | 10,000,000 |
2023 | 10,000,000 |
2024 | 70,000,000 |
Thereafter | 0 |
Long-term Debt, Gross | $ 100,000,000 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 06, 2017 |
Current portion of long-term debt: | |||
Lease financing obligations | $ 0 | $ 1 | |
Debt issuance costs | (1) | (1) | |
Current portion of long-term debt | 198 | 241 | |
Non-current portion of long-term debt: | |||
Debt issuance costs | (9) | (10) | |
Senior notes | $ 1,121 | 1,020 | |
1.125% Convertible Notes | |||
Non-current portion of long-term debt: | |||
Percentage of contractual interest rate on Notes | 1.125% | ||
Convertible Notes | 1.125% Convertible Notes | |||
Current portion of long-term debt: | |||
Debt net of unamortized discount | $ 199 | $ 241 | |
Non-current portion of long-term debt: | |||
Percentage of contractual interest rate on Notes | 1.125% | 1.125% | |
Senior Notes | 5.375% Notes | |||
Non-current portion of long-term debt: | |||
Debt net of unamortized debt discount | $ 700 | $ 700 | |
Percentage of contractual interest rate on Notes | 5.375% | ||
Senior Notes | 4.875% Notes | |||
Non-current portion of long-term debt: | |||
Debt net of unamortized debt discount | $ 330 | 330 | |
Percentage of contractual interest rate on Notes | 4.875% | 4.875% | |
Line of Credit | Term Loan | |||
Non-current portion of long-term debt: | |||
Debt net of unamortized debt discount | $ 100 | $ 0 |
Debt - Interest Expense (Detail
Debt - Interest Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Contractual interest at coupon rate | $ 1 | $ 2 |
Amortization of the discount | 3 | 7 |
Interest expense, debt | $ 4 | $ 9 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Apr. 17, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Jan. 31, 2019 | Dec. 31, 2018 | Jun. 06, 2017 | Jan. 31, 2017 |
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount of notes outstanding | $ 1,336,000,000 | |||||||
Loss on debt extinguishment | (3,000,000) | $ 10,000,000 | ||||||
Proceeds from borrowings under Term Loan | $ 100,000,000 | 0 | ||||||
1.125% Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of contractual interest rate on Notes | 1.125% | |||||||
Senior Notes | 4.875% Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount of notes outstanding | $ 330,000,000 | |||||||
Face amount | $ 330,000,000 | |||||||
Percentage of contractual interest rate on Notes | 4.875% | 4.875% | ||||||
Senior Notes | 5.375% Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount of notes outstanding | $ 700,000,000 | |||||||
Face amount | $ 700,000,000 | |||||||
Percentage of contractual interest rate on Notes | 5.375% | |||||||
Line of Credit | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount of notes outstanding | $ 100,000,000 | |||||||
Current borrowing capacity | 500,000,000 | |||||||
Line of Credit | Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 600,000,000 | $ 500,000,000 | ||||||
Minimum principal amount of advancements | $ 50,000,000 | |||||||
Current borrowing capacity | 498,000,000 | |||||||
Line of Credit | Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Amount outstanding under Letter of Credit | 2,000,000 | |||||||
Convertible Notes | 1.125% Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount of notes outstanding | $ 206,000,000 | |||||||
Percentage of contractual interest rate on Notes | 1.125% | 1.125% | ||||||
Repayments of principal | $ 46,000,000 | |||||||
Repayment of aggregate carrying amount | 44,000,000 | |||||||
Repayments of debt | 115,000,000 | |||||||
Loss on debt extinguishment | $ 3,000,000 | |||||||
Conversion ratio | 0.0245277 | |||||||
Conversion price per share of common stock (in dollars per share) | $ 40.77 | |||||||
Effective interest percentage | 6.00% | |||||||
Remaining amortization period (less than) | 1 year | |||||||
If-converted value | $ 456,000,000 | $ 581,000,000 | ||||||
Subsequent Event | Line of Credit | Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from borrowings under Term Loan | $ 120,000,000 | |||||||
Subsequent Event | Convertible Notes | 1.125% Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayments of principal | $ 128,000,000 | |||||||
Repayment of aggregate carrying amount | 123,000,000 | |||||||
Repayments of debt | $ 332,000,000 | |||||||
Minimum | Line of Credit | Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Amortization payment percentage | 1.25% | |||||||
Maximum | Line of Credit | Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Amortization payment percentage | 2.50% |
Derivatives (Details)
Derivatives (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Derivative [Line Items] | |||
Cash received for partial termination of 1.125% Call Option | $ 115 | $ 0 | |
Cash paid for partial termination of 1.125% Warrants | 103 | $ 0 | |
Debt conversion, net cash receipts | $ 12 | ||
1.125% Convertible Notes | |||
Derivative [Line Items] | |||
Percentage of contractual interest rate on Notes | 1.125% | ||
1.125% Call Option | |||
Derivative [Line Items] | |||
Percentage of contractual interest rate on Call Option | 1.125% | ||
1.125% Conversion Option derivative liability | |||
Derivative [Line Items] | |||
Percentage of contractual interest rate on Call Option | 1.125% | ||
Cash received for partial termination of 1.125% Call Option | $ 115 | ||
Current assets: Derivative asset | 1.125% Call Option | |||
Derivative [Line Items] | |||
Derivative assets | 516 | $ 476 | |
Current liabilities: Derivative liability | 1.125% Conversion Option derivative liability | |||
Derivative [Line Items] | |||
Derivative liabilities | 516 | $ 476 | |
1.125% Warrants | |||
Derivative [Line Items] | |||
Cash paid for partial termination of 1.125% Warrants | $ 103 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2013 | |
Class of Stock [Line Items] | ||||
Number of warrants issued (in shares) | 13,500,000 | |||
Warrant, strike price per share (in dollars per share) | $ 53.8475 | |||
Cash paid for partial termination of 1.125% Warrants | $ 103 | $ 0 | ||
Share-based compensation | 9 | $ 6 | ||
Unrecognized compensation expense | $ 71 | |||
Unrecognized compensation forfeiture rate | 14.10% | |||
Stock options granted (in shares) | 0 | |||
Stock options exercised (in shares) | 0 | |||
Restricted Stock Awards | ||||
Class of Stock [Line Items] | ||||
Weighted average period for recognition | 2 years 11 months | |||
Performance Stock Units | ||||
Class of Stock [Line Items] | ||||
Weighted average period for recognition | 2 years 4 months | |||
Employee Stock Option | ||||
Class of Stock [Line Items] | ||||
Unrecognized compensation expense | $ 8 | |||
Weighted average period for recognition | 1 year 6 months | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Number of common stock issued (in shares) | 84,000 | |||
1.125% Warrants | ||||
Class of Stock [Line Items] | ||||
Stated percentage of warrants | 1.125% | |||
Warrants outstanding (in shares) | 5,100,000 | |||
Cash paid for partial termination of 1.125% Warrants | $ 103 | |||
Number of warrants terminated (in shares) | 1,100,000 | |||
Subsequent Event | 1.125% Warrants | ||||
Class of Stock [Line Items] | ||||
Cash paid for partial termination of 1.125% Warrants | $ 298 | |||
Number of warrants terminated (in shares) | 3,100,000 |
Stockholders' Equity - Share Ac
Stockholders' Equity - Share Activity (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Shares | |
Beginning Balance (shares) | 604,310 |
Granted (shares) | 354,172 |
Vested (shares) | (133,654) |
Forfeited (shares) | (18,360) |
Ending Balance (shares) | 806,468 |
Weighted Average Grant Date Fair Value | |
Begining Balance (usd per share) | $ / shares | $ 71.50 |
Granted (usd per share) | $ / shares | 137.37 |
Vested (usd per share) | $ / shares | 68.24 |
Forfeited (usd per share) | $ / shares | 74.03 |
Ending Balance (usd per share) | $ / shares | $ 100.91 |
Restricted Stock Awards | |
Number of Shares | |
Beginning Balance (shares) | 399,795 |
Granted (shares) | 215,178 |
Vested (shares) | (119,994) |
Forfeited (shares) | (14,220) |
Ending Balance (shares) | 480,759 |
Performance Stock Units | |
Number of Shares | |
Beginning Balance (shares) | 201,383 |
Granted (shares) | 138,994 |
Vested (shares) | (10,528) |
Forfeited (shares) | (4,140) |
Ending Balance (shares) | 325,709 |
Performance Stock Awards | |
Number of Shares | |
Beginning Balance (shares) | 3,132 |
Granted (shares) | 0 |
Vested (shares) | (3,132) |
Forfeited (shares) | 0 |
Ending Balance (shares) | 0 |
Stockholders' Equity - Fair Val
Stockholders' Equity - Fair Value of Awards Granted and Vested (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total fair value of awards granted | $ 48 | $ 37 |
Total fair value of awards vested | 18 | 15 |
Restricted Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total fair value of awards granted | 30 | 23 |
Total fair value of awards vested | 16 | 12 |
Performance Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total fair value of awards vested | 0 | 3 |
Performance Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total fair value of awards granted | 18 | 14 |
Total fair value of awards vested | $ 2 | $ 0 |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 15 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Dec. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 3 | $ 25 | ||
IT Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | 5 | $ 5 | $ 6 | |
2017 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | $ 18 | |||
Other segment | IT Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected restructuring costs | 15 | 15 | ||
Decrease to estimated expected costs remaining | 20 | |||
Restructuring costs | 2 | 11 | ||
One-Time Termination Benefits | Other segment | IT Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 2 | 7 | ||
Consulting Fees | Other segment | IT Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 1 | 4 | ||
Other Restructuring Costs | 2017 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 1 | |||
Contract Termination | 2017 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 3 | |||
Restructuring Reserve | $ 16 | $ 16 |
Segments - Additional Informati
Segments - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments (in segment) | 2 |
Segments - Reconciliation of Gr
Segments - Reconciliation of Gross Margin to Consolidated Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Add: other operating revenues | $ 4,119 | $ 4,646 |
Less: other operating expenses | (3,839) | (4,424) |
Operating income | 280 | 222 |
Other expenses, net | 20 | 43 |
Income before income tax expense | 260 | 179 |
Health Plans | ||
Segment Reporting Information [Line Items] | ||
Add: other operating revenues | 4,117 | 4,509 |
Other | ||
Segment Reporting Information [Line Items] | ||
Add: other operating revenues | 2 | 137 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Gross margin | 581 | 615 |
Operating Segments | Health Plans | ||
Segment Reporting Information [Line Items] | ||
Gross margin | 581 | 601 |
Operating Segments | Other | ||
Segment Reporting Information [Line Items] | ||
Gross margin | 0 | 14 |
Other operating | ||
Segment Reporting Information [Line Items] | ||
Add: other operating revenues | 167 | 189 |
Less: other operating expenses | $ (468) | $ (582) |
Leases - Narrative (Details)
Leases - Narrative (Details) | Mar. 31, 2019 |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 10 years |
Operating lease renewal term | 10 years |
Finance lease renewal term | 25 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Finance lease term | 3 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Finance lease term | 19 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 9 |
Finance lease cost: | |
Amortization of ROU assets | 4 |
Interest on lease liabilities | 4 |
Total finance lease cost | $ 8 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Cash used in operating activities: | |
Operating leases | $ 9 |
Finance leases | 4 |
Cash used in financing activities: | |
Finance leases | 1 |
ROU assets recognized in exchange for lease obligations: | |
Operating leases | 94 |
Finance leases | $ 241 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Operating leases | ||
Other assets | $ 83 | |
Accounts payable and accrued liabilities | 31 | |
Other long-term liabilities | 62 | |
Total operating lease liabilities | 93 | |
Finance leases | ||
Property, equipment, and capitalized software, net | 237 | |
Accounts payable and accrued liabilities | 7 | |
Finance lease liabilities | 234 | $ 197 |
Total finance lease liabilities | $ 241 | |
Weighted average remaining lease term | ||
Operating leases | 4 years | |
Finance leases | 17 years | |
Weighted average discount rate | ||
Operating leases | 5.50% | |
Finance leases | 6.60% |
Leases - Lease Maturities (Deta
Leases - Lease Maturities (Details) $ in Millions | Mar. 31, 2019USD ($) |
Operating Leases | |
2019 | $ 27 |
2020 | 28 |
2021 | 18 |
2022 | 12 |
2023 | 9 |
Thereafter | 9 |
Total lease payments | 103 |
Less imputed interest | (10) |
Total operating lease liabilities | 93 |
Finance Leases | |
2019 | 16 |
2020 | 22 |
2021 | 22 |
2022 | 21 |
2023 | 21 |
Thereafter | 311 |
Total lease payments | 413 |
Less imputed interest | (172) |
Total finance lease liabilities | $ 241 |
Uncategorized Items - moh-20190
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (1,000,000) |
Accounting Standards Update 2016-02 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 85,000,000 |
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 85,000,000 |