Molina Healthcare (MOH) 8-K Other Events

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

	June 30, 2006			December 31, 2005
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	312,118		$	249,203
Investments		94,570			103,437
Receivables		77,201			70,532
Income tax receivable		4,785			3,014
Deferred income taxes		2,878			2,339
Prepaid expenses and other current assets		7,534			10,321
Total current assets		499,086			438,846
Property and equipment, net		34,093			31,794
Goodwill and intangible assets, net		150,699			124,914
Restricted investments		18,302			18,242
Receivable for ceded life and annuity contracts		35,834			38,113
Other assets		8,608			8,018
Total assets	$	746,622		$	659,927
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	249,789		$	217,354
Deferred revenue		8,896			803
Accounts payable and accrued liabilities		33,540			31,457
Total current liabilities		292,225			249,614
Long-term debt		15,000			—
Deferred income taxes		7,346			4,796
Liability for ceded life and annuity contracts		35,834			38,113
Other long-term liabilities		4,660			4,554
Total liabilities		355,065			297,077
Stockholders’ equity:
Common stock, $0.001 par value; 80,000,000 shares authorized; issued and outstanding: 27,995,782 shares at June 30, 2006 and 27,792,360 shares at December 31, 2005		28			28
Preferred stock, $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding		—			—
Paid-in capital		169,743			162,693
Accumulated other comprehensive loss		(714	)		(629	)
Retained earnings		242,890			221,148
Treasury stock (1,201,174 shares, at cost)		(20,390	)		(20,390	)
Total stockholders’ equity		391,557			362,850
Total liabilities and stockholders’ equity	$	746,622		$	659,927

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2006			2005			2006			2005
Revenue:
Premium revenue	$	479,823		$	401,915		$	929,117		$	794,102
Investment income		4,811			2,359			8,893			4,124
Total revenue		484,634			404,274			938,010			798,226
Expenses:
Medical care costs:
Medical services		86,020			67,604			160,878			131,271
Hospital and specialty services		267,689			259,016			530,559			485,548
Pharmacy		48,006			42,870			93,525			85,785
Total medical care costs		401,715			369,490			784,962			702,604
Salary, general and administrative expenses		56,308			37,060			107,521			70,606
Loss contract charge		—			939			—			939
Depreciation and amortization		4,870			3,558			9,632			6,756
Total expenses		462,893			411,047			902,115			780,905
Operating income (loss)		21,741			(6,773	)		35,895			17,321
Other expense:
Interest expense		(577	)		(418	)		(991	)		(707	)
Other, net		—			(400	)		—			(400	)
Total other expense		(577	)		(818	)		(991	)		(1,107	)
Income (loss) before income taxes		21,164			(7,591	)		34,904			16,214
Income tax expense (benefit)		8,012			(2,885	)		13,162			6,161
Net income (loss)	$	13,152		$	(4,706	)	$	21,742		$	10,053
Net income (loss) per share:
Basic	$	0.47		$	(0.17	)	$	0.78		$	0.36
Diluted	$	0.47		$	(0.17	)	$	0.77		$	0.36
Weighted average shares outstanding:
Basic		27,947			27,707			27,901			27,662
Diluted		28,270			27,707			28,207			27,981

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Six months ended June 30
	2006			2005
Operating activities
Net income	$	21,742		$	10,053
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,632			6,756
Amortization of capitalized credit facility fees		429			338
Deferred income taxes		(2,483	)		68
Stock-based compensation		2,747			341
Changes in operating assets and liabilities:
Receivables		(6,208	)		(3,544	)
Prepaid expenses and other current assets		3,098			(287	)
Medical claims and benefits payable		9,919			19,127
Accounts payable and accrued liabilities		(2,922	)		(6,637	)
Income taxes		2,634			(17,784	)
Net cash provided by operating activities		38,588			8,431
Investing activities
Purchases of equipment		(7,333	)		(6,798	)
Purchases of investments		(57,737	)		(19,645	)
Sales and maturities of investments		66,476			22,358
Decrease (increase) in restricted cash		940			(89	)
Net cash acquired (paid) in purchase transactions		5,820			(31,200	)
Increase in other long-term liabilities		106			295
Increase in other assets		(1,070	)		(5,210	)
Net cash provided by (used in) investing activities		7,202			(40,289	)
Financing activities
Tax benefit from exercise of employee stock options recorded as additional paid-in capital		653			1,758
Proceeds from exercise of stock options and employee stock purchases		1,472			1,474
Borrowings under credit facility		20,000			3,100
Principal payments on credit facility, capital lease obligation and mortgage note		(5,000	)		(82	)
Net cash provided by financing activities		17,125			6,250
Net increase (decrease) in cash and cash equivalents		62,915			(25,608	)
Cash and cash equivalents at beginning of period		249,203			228,071
Cash and cash equivalents at end of period	$	312,118		$	202,463
Supplemental cash flow information
Cash paid during the period for:
Income taxes	$	12,411		$	22,122
Interest	$	1,055		$	281
Schedule of non-cash investing and financing activities:
Change in unrealized gain on investments	$	(128	)	$	(202	)
Deferred taxes		43			79
Change in net unrealized gain on investments	$	(85	)	$	(123	)
Value of stock issued for employee compensation earned in previous year	$	2,178		$	—
Details of acquisitions:
Fair value of assets acquired	$	86,003		$	31,200
Less cash acquired in purchase transaction		(49,820	)		—
Liabilities assumed in purchase transaction		(42,003	)		—
Cash (acquired) paid in purchase transaction, net of cash acquired	$	(5,820	)	$	31,200