Segment Information

We have three reportable segments. These segments consist of our Health Plans segment, which constitutes the vast majority of our operations; our Molina Medicaid Solutions segment; and our Other segment. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.

Gross 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.

Gross margin for our Health Plans segment is referred to as “Medical margin,” and for our Molina Medicaid Solutions and Other segments, as “Service margin.” Medical margin represents the amount earned by the Health Plans segment after medical costs are deducted from premium revenue. The medical care ratio represents medical care costs as a percentage of premium revenue, and is one of the key metrics used to assess the performance of the Health Plans segment. Therefore, the underlying medical margin is the most important measure of earnings reviewed by the chief operating decision maker. The service margin is equal to service revenue minus cost of service revenue.



	Health Plans		Molina Medicaid Solutions		Other			Consolidated

	(In millions)
Three Months Ended June 30, 2017
Total revenue ⁽¹⁾	$	4,868	$	47	$	84		$	4,999
Gross margin	249		4		1			254
Impairment losses	—		—		(72		)	(72		)
Restructuring and separation costs	—		—		(43		)	(43		)

Six Months Ended June 30, 2017
Total revenue ⁽¹⁾	9,639		93		171			9,903
Gross margin	786		8		6			800
Impairment losses	—		—		(72		)	(72		)
Restructuring and separation costs	—		—		(43		)	(43		)

Three Months Ended June 30, 2016
Total revenue ⁽¹⁾	4,223		46		90			4,359
Gross margin	435		5		14			454
Impairment losses	—		—		—			—
Restructuring and separation costs	—		—		—			—

Six Months Ended June 30, 2016
Total revenue ⁽¹⁾	8,424		98		180			8,702
Gross margin	842		11		21			874
Impairment losses	—		—		—			—
Restructuring and separation costs	—		—		—			—

Total Assets
June 30, 2017	6,732		240		1,611			8,583
December 31, 2016	5,897		267		1,285			7,449

Goodwill, and Intangible Assets, Net
June 30, 2017	498		72		101			671
December 31, 2016	513		72		175			760

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(1)	Total revenue consists primarily of premium revenue, premium tax revenue and health insurer fee revenue for the Health Plans segment, and service revenue for the Molina Medicaid Solutions and Other segments. Inter-segment revenue is insignificant for all periods presented.

The following table reconciles gross margin by segment to consolidated income before income tax expense:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(In millions)
Gross margin:
Health Plans	$	249		$	435		$	786		$	842
Molina Medicaid Solutions	4			5			8			11
Other	1			14			6			21
Total gross margin	254			454			800			874
Add: other operating revenues ⁽¹⁾	130			195			255			403
Less: other operating expenses ⁽²⁾	(671		)	(544		)	(1,260		)	(1,083		)
Operating (loss) income	(287		)	105			(205		)	194
Other expenses (income), net	27			25			(22		)	50
(Loss) income before income taxes	$	(314	)	$	80		$	(183	)	$	144

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(1)	Other operating revenues include premium tax revenue, health insurer fee revenue, investment income and other revenue.


(2)	Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fee expenses, depreciation and amortization, impairment losses, and restructuring and separation costs.