Supplemental Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2016

Condensed Financial Information [Abstract]

Supplemental Condensed Consolidating Financial Information

As discussed in Note 12, “Debt,” in November 2015 we completed the private offering of $700 million aggregate principal amount of 5.375% Notes, which were subsequently exchanged for registered notes in September 2016.

The 5.375% Notes are fully and unconditionally guaranteed by certain of our wholly owned subsidiaries on a joint and several basis, with exceptions considered customary for such guarantees. The 5.375% Notes and the guarantees are effectively subordinated to all existing and future secured debt of us and our guarantors to the extent of the assets securing such debt. In addition, the 5.375% Notes and the guarantees are structurally subordinated to all indebtedness and other liabilities and preferred stock of our subsidiaries that do not guarantee the 5.375% Notes.

In January 2017, pursuant to the terms of the amended Credit Facility described in Note 12, “Debt,” and the terms of the indenture governing the 5.375% Notes, all guarantors immediately prior to January 3, 2017 other than Molina Information Systems, LLC, d/b/a Molina Medicaid Solutions, Molina Pathways, LLC and Pathways Health and Community Support LLC were automatically and unconditionally released as guarantors of our amended Credit Facility and the 5.375% Notes.

The following condensed consolidating financial statements present Molina Healthcare, Inc. (as parent guarantor), the subsidiary guarantors, the subsidiary non-guarantors and eliminations.

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATING STATEMENTS OF INCOME



	Year Ended December 31, 2016
	Parent Guarantor			Other Guarantors			Non-Guarantors		Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	1,078		$	556		$	17,287	$	(1,139	)	$	17,782
Expenses:
Medical care costs	73			54			14,705		(58		)	14,774
Cost of service revenue	—			443			42		—			485
General and administrative expenses	899			48			1,527		(1,081		)	1,393
Premium tax expenses	—			—			468		—			468
Health insurer fee expenses	—			—			217		—			217
Depreciation and amortization	95			12			32		—			139
Total operating expenses	1,067			557			16,991		(1,139		)	17,476
Operating income (loss)	11			(1		)	296		—			306
Interest expense	101			—			—		—			101
(Loss) income before income taxes	(90		)	(1		)	296		—			205
Income tax (benefit) expense	(24		)	(4		)	181		—			153
Net (loss) income before equity in earnings of subsidiaries	(66		)	3			115		—			52
Equity in net earnings of subsidiaries	118			1			—		(119		)	—
Net income	$	52		$	4		$	115	$	(119	)	$	52



	Year Ended December 31, 2015
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	931		$	293		$	13,931		$	(977	)	$	14,178
Expenses:
Medical care costs	55			36			11,753			(50		)	11,794
Cost of service revenue	—			184			9			—			193
General and administrative expenses	797			41			1,235			(927		)	1,146
Premium tax expenses	—			—			397			—			397
Health insurer fee expenses	—			—			157			—			157
Depreciation and amortization	82			4			18			—			104
Total operating expenses	934			265			13,569			(977		)	13,791
Operating (loss) income	(3		)	28			362			—			387
Total other expenses (income), net	66			—			(1		)	—			65
(Loss) income before income taxes	(69		)	28			363			—			322
Income tax (benefit) expense	(21		)	9			191			—			179
Net (loss) income before equity in earnings of subsidiaries	(48		)	19			172			—			143
Equity in net earnings of subsidiaries	191			(1		)	—			(190		)	—
Net income	$	143		$	18		$	172		$	(190	)	$	143



	Year Ended December 31, 2014
	Parent Guarantor			Other Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	706		$	240	$	9,454	$	(733	)	$	9,667
Expenses:
Medical care costs	46			27		8,034		(31		)	8,076
Cost of service revenue	—			157		—		—			157
General and administrative expenses	583			29		855		(702		)	765
Premium tax expenses	—			—		294		—			294
Health insurer fee expenses	—			—		89		—			89
Depreciation and amortization	73			5		15		—			93
Total operating expenses	702			218		9,287		(733		)	9,474
Operating income	4			22		167		—			193
Total other expenses, net	58			—		—		—			58
(Loss) income before income taxes	(54		)	22		167		—			135
Income tax (benefit) expense	(27		)	8		92		—			73
Net (loss) income before equity in earnings of subsidiaries	(27		)	14		75		—			62
Equity in net earnings of subsidiaries	89			—		—		(89		)	—
Net income	$	62		$	14	$	75	$	(89	)	$	62

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME



	Year Ended December 31, 2016
	Parent Guarantor		Other Guarantors		Non-Guarantors		Eliminations			Consolidated

	(In millions)
Net income	$	52	$	4	$	115	$	(119	)	$	52
Other comprehensive income, net of tax	2		—		1		(1		)	2
Comprehensive income	$	54	$	4	$	116	$	(120	)	$	54



	Year Ended December 31, 2015
	Parent Guarantor			Other Guarantors		Non-Guarantors			Eliminations			Consolidated

	(In millions)
Net income	$	143		$	18	$	172		$	(190	)	$	143
Other comprehensive loss, net of tax	(3		)	—		(3		)	3			(3		)
Comprehensive income	$	140		$	18	$	169		$	(187	)	$	140



	Year Ended December 31, 2014
	Parent Guarantor		Other Guarantors		Non-Guarantors		Eliminations			Consolidated

	(In millions)
Net income	$	62	$	14	$	75	$	(89	)	$	62
Other comprehensive loss, net of tax	—		—		—		—			—
Comprehensive income	$	62	$	14	$	75	$	(89	)	$	62

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS



	December 31, 2016
	Parent Guarantor		Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	86	$	38		$	2,695		$	—		$	2,819
Investments	178		—			1,580			—			1,758
Receivables	2		78			894			—			974
Income tax refundable	17		4			18			—			39
Due from (to) affiliates	104		(19		)	(85		)	—			—
Prepaid expenses and other current assets	58		40			38			(5		)	131
Derivative asset	267		—			—			—			267
Total current assets	712		141			5,140			(5		)	5,988
Property, equipment, and capitalized software, net	301		70			83			—			454
Deferred contract costs	—		86			—			—			86
Goodwill and intangible assets, net	58		223			479			—			760
Restricted investments	—		—			110			—			110
Investment in subsidiaries, net	2,609		42			—			(2,651		)	—
Deferred income taxes	10		—			—			—			10
Other assets	48		4			5			(16		)	41
	$	3,738	$	566		$	5,817		$	(2,672	)	$	7,449
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	1	$	—		$	1,928		$	—		$	1,929
Amounts due government agencies	—		—			1,202			—			1,202
Accounts payable and accrued liabilities	146		56			188			(5		)	385
Deferred revenue	—		40			275			—			315
Current portion of long-term debt	472		—			—			—			472
Derivative liability	267		—			—			—			267
Total current liabilities	886		96			3,593			(5		)	4,570
Long-term debt	1,173		—			16			(16		)	1,173
Deferred income taxes	11		40			(36		)	—			15
Other long-term liabilities	19		3			20			—			42
Total liabilities	2,089		139			3,593			(21		)	5,800
Total stockholders’ equity	1,649		427			2,224			(2,651		)	1,649
	$	3,738	$	566		$	5,817		$	(2,672	)	$	7,449

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS



	December 31, 2015
	Parent Guarantor		Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	360	$	42		$	1,927		$	—		$	2,329
Investments	252		—			1,549			—			1,801
Receivables	—		79			518			—			597
Income tax refundable	7		3			3			—			13
Due from (to) affiliates	86		(4		)	(82		)	—			—
Prepaid expenses and other current assets	46		11			136			(1		)	192
Derivative asset	374		—			—			—			374
Total current assets	1,125		131			4,051			(1		)	5,306
Property, equipment, and capitalized software, net	267		52			74			—			393
Deferred contract costs	—		81			—			—			81
Goodwill and intangible assets, net	61		246			334			—			641
Restricted investments	—		—			109			—			109
Investment in subsidiaries, net	2,205		1			—			(2,206		)	—
Deferred income taxes	23		(35		)	30			—			18
Other assets	36		2			6			(16		)	28
	$	3,717	$	478		$	4,604		$	(2,223	)	$	6,576
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	—	$	3		$	1,682		$	—		$	1,685
Amounts due government agencies	—		1			728			—			729
Accounts payable and accrued liabilities	157		35			170			—			362
Deferred revenue	—		34			189			—			223
Current portion of long-term debt	449		—			—			—			449
Derivative liability	374		—			—			—			374
Total current liabilities	980		73			2,769			—			3,822
Long-term debt	1,160		—			16			(16		)	1,160
Other long-term liabilities	20		2			16			(1		)	37
Total liabilities	2,160		75			2,801			(17		)	5,019
Total stockholders’ equity	1,557		403			1,803			(2,206		)	1,557
	$	3,717	$	478		$	4,604		$	(2,223	)	$	6,576

MOLINA HEALTHCARE, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



	Year Ended December 31, 2016
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	55		45			573			—		$	673
Investing activities:
Purchases of investments	(115		)	—			(1,814		)	—		(1,929		)
Proceeds from sales and maturities of investments	188			—			1,778			—		1,966
Purchases of property, equipment and capitalized software	(125		)	(34		)	(17		)	—		(176		)
Decrease in restricted investments	—			—			4			—		4
Net cash paid in business combinations	—			(11		)	(37		)	—		(48		)
Capital contributions to subsidiaries	(386		)	20			366			—		—
Dividends received from subsidiaries	101			—			(101		)	—		—
Change in amounts due to/from affiliates	(18		)	3			15			—		—
Other, net	6			(26		)	1			—		(19		)
Net cash (used in) provided by investing activities	(349		)	(48		)	195			—		(202		)
Financing activities:
Proceeds from employee stock plans	18			—			—			—		18
Other, net	2			(1		)	—			—		1
Net cash provided by (used in) financing activities	20			(1		)	—			—		19
Net (decrease) increase in cash and cash equivalents	(274		)	(4		)	768			—		490
Cash and cash equivalents at beginning of period	360			42			1,927			—		2,329
Cash and cash equivalents at end of period	$	86		$	38		$	2,695		$	—	$	2,819



	Year Ended December 31, 2015
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	113		58			954			—		$	1,125
Investing activities:
Purchases of investments	(244		)	—			(1,679		)	—		(1,923		)
Proceeds from sales and maturities of investments	118			—			1,008			—		1,126
Purchases of property, equipment and capitalized software	(91		)	(23		)	(18		)	—		(132		)
Decrease in restricted investments	—			5			(11		)	—		(6		)
Net cash paid in business combinations	—			(214		)	(236		)	—		(450		)
Capital contributions to subsidiaries	(770		)	238			532			—		—
Dividends received from subsidiaries	142			(17		)	(125		)	—		—
Change in amounts due to/from affiliates	(68		)	15			53			—		—
Other, net	—			(35		)	—			—		(35		)
Net cash used in investing activities	(913		)	(31		)	(476		)	—		(1,420		)
Financing activities:
Proceeds from senior notes offerings, net of issuance costs	689			—			—			—		689
Proceeds from common stock offering, net of issuance costs	373			—			—			—		373
Proceeds from employee stock plans	18			—			—			—		18
Other, net	5			—			—			—		5
Net cash provided by financing activities	1,085			—			—			—		1,085
Net increase in cash and cash equivalents	285			27			478			—		790
Cash and cash equivalents at beginning of period	75			15			1,449			—		1,539
Cash and cash equivalents at end of period	$	360		$	42		$	1,927		$	—	$	2,329



	Year Ended December 31, 2014
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	74		29			957			—		$	1,060
Investing activities:
Purchases of investments	(129		)	—			(824		)	—		(953		)
Proceeds from sales and maturities of investments	263			—			370			—		633
Purchases of property, equipment and capitalized software	(94		)	(12		)	(9		)	—		(115		)
Decrease in restricted investments	—			5			(39		)	—		(34		)
Net cash paid in business combinations	—			—			(44		)	—		(44		)
Capital contributions to subsidiaries	(292		)	14			278			—		—
Dividends received from subsidiaries	—			—			—			—		—
Change in amounts due to/from affiliates	16			(1		)	(15		)	—		—
Other, net	8			(29		)	(2		)	—		(23		)
Net cash used in investing activities	(228		)	(23		)	(285		)	—		(536		)
Financing activities:
Proceeds from senior notes offerings, net of issuance costs	123			—			—			—		123
Contingent consideration liabilities settled	—			—			(50		)	—		(50		)
Proceeds from employee stock plans	14			—			—			—		14
Principal payments on convertible senior notes	(10		)	—			—			—		(10		)
Other, net	2			—			—			—		2
Net cash provided by (used in) financing activities	129			—			(50		)	—		79
Net (decrease) increase in cash and cash equivalents	(25		)	6			622			—		603
Cash and cash equivalents at beginning of period	100			9			827			—		936
Cash and cash equivalents at end of period	$	75		$	15		$	1,449		$	—	$	1,539