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Supplemental Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2017

Condensed Financial Information [Abstract]

Supplemental Condensed Consolidating Financial Information

Supplemental Condensed Consolidating Financial Information

The 5.375% Notes described in Note 7, “Debt,” are fully and unconditionally guaranteed by certain of our 100% owned subsidiaries on a joint and several basis, with certain exceptions considered customary for such guarantees. The 5.375% Notes and the guarantees are effectively subordinated to all of our and our guarantors’ existing and future secured debt 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, if any, of our subsidiaries that do not guarantee the 5.375% Notes.

As discussed in Note 7, “Debt,” the First Amendment to the Credit Facility provided that 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 from their obligations as guarantors under the 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, according to the guarantor structure as assessed at the most recent balance sheet date, September 30, 2017.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Three Months Ended September 30, 2017
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Revenue:
Total revenue	$	380			$	47			$	4,983			$	(379	)		$	5,031
Expenses:
Medical care costs	3				—				4,217				—				4,220
Cost of service revenue	—				42				81				—				123
General and administrative expenses	244				(1		)		519				(379		)		383
Premium tax expenses	—				—				106				—				106
Depreciation and amortization	23				1				9				—				33
Impairment losses	—				28				101				—				129
Restructuring and separation costs	77				8				33				—				118
Total operating expenses	347				78				5,066				(379		)		5,112
Operating income (loss)	33				(31		)		(83		)		—				(81		)
Interest expense	32				—				—				—				32
Income (loss) before income taxes	1				(31		)		(83		)		—				(113		)
Income tax expense (benefit)	9				(10		)		(15		)		—				(16		)
Net loss before equity in net losses of subsidiaries	(8		)		(21		)		(68		)		—				(97		)
Equity in net losses of subsidiaries	(89		)		(77		)		—				166				—
Net loss	$	(97	)		$	(98	)		$	(68	)		$	166			$	(97	)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE LOSS

	Three Months Ended September 30, 2017
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Net loss	$	(97	)		$	(98	)		$	(68	)		$	166			$	(97	)
Other comprehensive loss, net of tax	—				—				—				—				—
Comprehensive loss	$	(97	)		$	(98	)		$	(68	)		$	166			$	(97	)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

	Three Months Ended September 30, 2016
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Revenue:
Total revenue	$	274			$	48			$	4,498			$	(274	)		$	4,546
Expenses:
Medical care costs	19				—				3,730				(1		)		3,748
Cost of service revenue	—				42				77				—				119
General and administrative expenses	223				(4		)		397				(273		)		343
Premium tax expenses	—				—				127				—				127
Health insurer fee expenses	—				—				55				—				55
Depreciation and amortization	25				2				9				—				36
Total operating expenses	267				40				4,395				(274		)		4,428
Operating income	7				8				103				—				118
Interest expense	26				—				—				—				26
(Loss) income before income taxes	(19		)		8				103				—				92
Income tax expense	4				—				46				—				50
Net (loss) income before equity in net earnings of subsidiaries	(23		)		8				57				—				42
Equity in net earnings of subsidiaries	65				—				—				(65		)		—
Net income	$	42			$	8			$	57			$	(65	)		$	42

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30, 2016
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Net income	$	42			$	8			$	57			$	(65	)		$	42
Other comprehensive loss, net of tax	(1		)		—				(1		)		1				(1		)
Comprehensive income	$	41			$	8			$	56			$	(64	)		$	41

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Nine Months Ended September 30, 2017
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Revenue:
Total revenue	$	1,010			$	146			$	14,792			$	(1,014	)		$	14,934
Expenses:
Medical care costs	10				—				12,812				—				12,822
Cost of service revenue	—				127				242				—				369
General and administrative expenses	799				13				1,429				(1,014		)		1,227
Premium tax expenses	—				—				331				—				331
Depreciation and amortization	75				1				33				—				109
Impairment losses	—				28				173				—				201
Restructuring and separation costs	120				8				33				—				161
Total operating expenses	1,004				177				15,053				(1,014		)		15,220
Operating income (loss)	6				(31		)		(261		)		—				(286		)
Interest expense	85				—				—				—				85
Other income, net	(75		)		—				—				—				(75		)
Loss before income taxes	(4		)		(31		)		(261		)		—				(296		)
Income tax expense (benefit)	26				(10		)		(62		)		—				(46		)
Net loss before equity in net losses of subsidiaries	(30		)		(21		)		(199		)		—				(250		)
Equity in net losses of subsidiaries	(220		)		(143		)		—				363				—
Net loss	$	(250	)		$	(164	)		$	(199	)		$	363			$	(250	)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE LOSS

	Nine Months Ended September 30, 2017
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Net loss	$	(250	)		$	(164	)		$	(199	)		$	363			$	(250	)
Other comprehensive income, net of tax	1				—				1				(1		)		1
Comprehensive loss	$	(249	)		$	(164	)		$	(198	)		$	362			$	(249	)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

	Nine Months Ended September 30, 2016
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Revenue:
Total revenue	$	786			$	147			$	13,099			$	(784	)		$	13,248
Expenses:
Medical care costs	50				—				10,881				(1		)		10,930
Cost of service revenue	—				130				232				—				362
General and administrative expenses	659				5				1,153				(783		)		1,034
Premium tax expenses	—				—				345				—				345
Health insurer fee expenses	—				—				163				—				163
Depreciation and amortization	70				5				27				—				102
Total operating expenses	779				140				12,801				(784		)		12,936
Operating income	7				7				298				—				312
Interest expense	76				—				—				—				76
(Loss) income before income taxes	(69		)		7				298				—				236
Income tax (benefit) expense	(24		)		(1		)		162				—				137
Net (loss) income before equity in earnings of subsidiaries	(45		)		8				136				—				99
Equity in net earnings of subsidiaries	144				3				—				(147		)		—
Net income	$	99			$	11			$	136			$	(147	)		$	99

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

	Nine Months Ended September 30, 2016
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Net income	$	99			$	11			$	136			$	(147	)		$	99
Other comprehensive income, net of tax	7				—				6				(6		)		7
Comprehensive income	$	106			$	11			$	142			$	(153	)		$	106

CONDENSED CONSOLIDATING BALANCE SHEETS

	September 30, 2017
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	356			$	58			$	3,520			$	—			$	3,934
Investments	35				—				1,752				—				1,787
Restricted investments	326				—				—				—				326
Receivables	2				25				975				—				1,002
Income taxes refundable	2				—				58				—				60
Due from (to) affiliates	203				(5		)		(198		)		—				—
Prepaid expenses and other current assets	65				20				89				—				174
Derivative asset	425				—				—				—				425
Total current assets	1,414				98				6,196				—				7,708
Property, equipment, and capitalized software, net	261				37				99				—				397
Deferred contract costs	—				97				—				—				97
Goodwill and intangible assets, net	55				43				433				—				531
Restricted investments	—				—				117				—				117
Investment in subsidiaries, net	2,625				95				—				(2,720		)		—
Deferred income taxes	10				—				96				(44		)		62
Other assets	50				2				6				(16		)		42
	$	4,415			$	372			$	6,947			$	(2,780	)		$	8,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	—			$	—			$	2,478			$	—			$	2,478
Amounts due government agencies	—				—				1,324				—				1,324
Accounts payable and accrued liabilities	227				40				218				—				485
Deferred revenue	—				52				416				—				468
Current portion of long-term debt	782				—				—				—				782
Derivative liability	425				—				—				—				425
Total current liabilities	1,434				92				4,436				—				5,962
Long-term debt	1,515				—				16				(16		)		1,515
Deferred income taxes	12				32				—				(44		)		—
Other long-term liabilities	25				1				22				—				48
Total liabilities	2,986				125				4,474				(60		)		7,525
Total stockholders’ equity	1,429				247				2,473				(2,720		)		1,429
	$	4,415			$	372			$	6,947			$	(2,780	)		$	8,954

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			$	6			$	2,727			$	—			$	2,819
Investments	178				—				1,580				—				1,758
Receivables	2				34				938				—				974
Income tax refundable	17				4				18				—				39
Due from (to) affiliates	104				(5		)		(99		)		—				—
Prepaid expenses and other current assets	58				30				43				—				131
Derivative asset	267				—				—				—				267
Total current assets	712				69				5,207				—				5,988
Property, equipment, and capitalized software, net	301				46				107				—				454
Deferred contract costs	—				86				—				—				86
Goodwill and intangible assets, net	58				73				629				—				760
Restricted investments	—				—				110				—				110
Investment in subsidiaries, net	2,609				246				—				(2,855		)		—
Deferred income taxes	10				—				—				—				10
Other assets	48				3				6				(16		)		41
	$	3,738			$	523			$	6,059			$	(2,871	)		$	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				34				205				—				385
Deferred revenue	—				40				275				—				315
Current portion of long-term debt	472				—				—				—				472
Derivative liability	267				—				—				—				267
Total current liabilities	886				74				3,610				—				4,570
Long-term debt	1,173				—				16				(16		)		1,173
Deferred income taxes	11				39				(35		)		—				15
Other long-term liabilities	19				1				22				—				42
Total liabilities	2,089				114				3,613				(16		)		5,800
Total stockholders’ equity	1,649				409				2,446				(2,855		)		1,649
	$	3,738			$	523			$	6,059			$	(2,871	)		$	7,449

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30, 2017
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	215			$	81			$	661			$	—			$	957
Investing activities:
Purchases of investments	(333		)		—				(1,563		)		—				(1,896		)
Proceeds from sales and maturities of investments	150				—				1,388				—				1,538
Purchases of property, equipment and capitalized software	(67		)		(10		)		(8		)		—				(85		)
Increase in restricted investments held-to-maturity	—				—				(10		)		—				(10		)
Capital contributions to/from subsidiaries	(363		)		2				361				—				—
Dividends to/from subsidiaries	136				—				(136		)		—				—
Change in amounts due to/from affiliates	(100		)		—				100				—				—
Other, net	—				(21		)		—				—				(21		)
Net cash (used in) provided by investing activities	(577		)		(29		)		132				—				(474		)
Financing activities:
Proceeds from senior notes offering, net of issuance costs	325				—				—				—				325
Proceeds from borrowings under credit facility	300				—				—				—				300
Proceeds from employee stock plans	11				—				—				—				11
Other, net	(4		)		—				—				—				(4		)
Net cash provided by financing activities	632				—				—				—				632
Net increase in cash and cash equivalents	270				52				793				—				1,115
Cash and cash equivalents at beginning of period	86				6				2,727				—				2,819
Cash and cash equivalents at end of period	$	356			$	58			$	3,520			$	—			$	3,934

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30, 2016
	Parent Guarantor				Other Guarantors				Non-Guarantors				Eliminations				Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	43			$	34			$	556			$	—			$	633
Investing activities:
Purchases of investments	(114		)		—				(1,330		)		—				(1,444		)
Proceeds from sales and maturities of investments	103				—				1,409				—				1,512
Purchases of property, equipment and capitalized software	(102		)		(23		)		(18		)		—				(143		)
Decrease in restricted investments held-to-maturity	—				—				4				—				4
Net cash paid in business combinations	—				(5		)		(43		)		—				(48		)
Capital contributions to/from subsidiaries	(221		)		7				214				—				—
Dividends to/from subsidiaries	50				—				(50		)		—				—
Change in amounts due to/from affiliates	(12		)		4				8				—				—
Other, net	6				(19		)		1				—				(12		)
Net cash (used in) provided by investing activities	(290		)		(36		)		195				—				(131		)
Financing activities:
Proceeds from employee stock plans	10				—				—				—				10
Other, net	2				—				(1		)		—				1
Net cash provided by (used in) financing activities	12				—				(1		)		—				11
Net (decrease) increase in cash and cash equivalents	(235		)		(2		)		750				—				513
Cash and cash equivalents at beginning of period	360				13				1,956				—				2,329
Cash and cash equivalents at end of period	$	125			$	11			$	2,706			$	—			$	2,842

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Condensed Financial Information [Abstract]

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The entire disclosure for condensed financial statements.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 3
-Subparagraph (SX 210.12-04)
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e24072-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=84161450&loc=d3e5614-111684

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.10-01(a))
-URI http://asc.fasb.org/extlink&oid=27015980&loc=d3e46468-122699

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