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Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2017
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
Condensed Financial Information of Registrant
Condensed Financial Information of Registrant
The condensed balance sheets as of December 31, 2017 and 2016, and the related condensed statements of operations, comprehensive (loss) income and cash flows for each of the three years in the period ended December 31, 2017 for our parent company Molina Healthcare, Inc. (the Registrant), are presented below.

Condensed Balance Sheets
 
December 31,
 
2017
 
2016
 
(In millions, except per-share data)
ASSETS
Current assets:
 

 
 
Cash and cash equivalents
$
504

 
$
86

Investments
192

 
178

Restricted investments
169

 
—

Receivables
2

 
2

Income taxes refundable
16

 
17

Due from affiliates
148

 
104

Prepaid expenses and other current assets
87

 
58

Derivative asset
522

 
267

Total current assets
1,640

 
712

Property, equipment, and capitalized software, net
223

 
301

Goodwill and intangible assets, net
15

 
58

Investments in subsidiaries
2,306

 
2,609

Deferred income taxes
17

 
10

Advances to related parties and other assets
32

 
48

 
$
4,233

 
$
3,738

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Medical claims and benefits payable
$
3

 
$
1

Accounts payable and accrued liabilities
178

 
146

Current portion of long-term debt
653

 
472

Derivative liability
522

 
267

Total current liabilities
1,356

 
886

Senior notes
1,318

 
975

Lease financing obligations
198

 
198

Deferred income taxes
—

 
11

Other long-term liabilities
24

 
19

Total liabilities
2,896

 
2,089

Stockholders’ equity:
 
 
 
Common stock, $0.001 par value; 150 shares authorized; outstanding:
 
 


60 shares at December 31, 2017 and 57 shares at December 31, 2016
—

 
—

Preferred stock, $0.001 par value; 20 shares authorized, no shares issued and outstanding
—

 
—

Additional paid-in capital
1,044

 
841

Accumulated other comprehensive loss
(5
)
 
(2
)
Retained earnings
298

 
810

Total stockholders’ equity
1,337

 
1,649

 
$
4,233

 
$
3,738


See accompanying notes.
Condensed Statements of Operations
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(In millions)
Revenue:
 
 
 
 
 
Management fees
$
1,317

 
$
1,062

 
$
914

Investment income and other revenue
16

 
16

 
17

Total revenue
1,333

 
1,078

 
931

Expenses:
 
 
 
 
 

Medical care costs
16

 
73

 
55

General and administrative expenses
1,082

 
899

 
797

Depreciation and amortization
93

 
95

 
82

Impairment losses
39

 
—

 
—

Restructuring and separation costs
153

 
—

 
—

Total operating expenses
1,383

 
1,067

 
934

Operating (loss) income
(50
)
 
11

 
(3
)
Interest expense
117

 
101

 
66

Other income
(61
)
 
—

 
—

Loss before income taxes and equity in net income of subsidiaries
(106
)
 
(90
)
 
(69
)
Income tax expense (benefit)
8

 
(24
)
 
(21
)
Net loss before equity in net income of subsidiaries
(114
)
 
(66
)
 
(48
)
Equity in net (loss) income of subsidiaries
(398
)
 
118

 
191

Net (loss) income
$
(512
)
 
$
52

 
$
143


Condensed Statements of Comprehensive (Loss) Income
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(In millions)
Net (loss) income
$
(512
)
 
$
52

 
$
143

Other comprehensive (loss) income:
 
 
 
 
 
Unrealized investment (loss) gain
(5
)
 
3

 
(5
)
Less: effect of income taxes
(2
)
 
1

 
(2
)
Other comprehensive (loss) income, net of tax
(3
)
 
2

 
(3
)
Comprehensive (loss) income
$
(515
)
 
$
54

 
$
140


See accompanying notes.

Condensed Statements of Cash Flows
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(In millions)
Operating activities:
 
 
 
 
 
Net cash provided by operating activities
$
166

 
$
55

 
$
113

Investing activities:
 
 
 
 
 

Capital contributions to subsidiaries
(370
)
 
(386
)
 
(770
)
Dividends received from subsidiaries
286

 
101

 
142

Purchases of investments
(352
)
 
(115
)
 
(244
)
Proceeds from sales and maturities of investments
168

 
188

 
118

Purchases of property, equipment and capitalized software
(67
)
 
(125
)
 
(91
)
Change in amounts due to/from affiliates
(49
)
 
(18
)
 
(68
)
Other, net
—

 
6

 
—

Net cash used in investing activities
(384
)
 
(349
)
 
(913
)
Financing activities:
 
 
 
 
 

Proceeds from senior notes offerings, net of issuance costs
325

 
—

 
689

Proceeds from borrowings under credit facility
300

 
—

 
—

Proceeds from common stock offering, net of issuance costs
—

 
—

 
373

Proceeds from employee stock plans
19

 
18

 
18

Cash paid for financing transaction fees
(7
)
 
—

 
—

Other, net
(1
)
 
2

 
5

Net cash provided by financing activities
636

 
20

 
1,085

Net increase (decrease) in cash and cash equivalents
418

 
(274
)
 
285

Cash and cash equivalents at beginning of year
86

 
360

 
75

Cash and cash equivalents at end of year
$
504

 
$
86

 
$
360


See accompanying notes.
Notes to Condensed Financial Information of Registrant
Note A - Basis of Presentation
The Registrant was incorporated in 2002. Prior to that date, Molina Healthcare of California (formerly known as Molina Medical Centers) operated as a California health plan and as the parent company for three other state health plans. In June 2003, the employees and operations of the corporate entity were transferred from Molina Healthcare of California to the Registrant.
The Registrant’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. The accompanying condensed financial information of the Registrant should be read in conjunction with the consolidated financial statements and accompanying notes.
Note B - Transactions with Subsidiaries
The Registrant provides certain centralized medical and administrative services to its subsidiaries pursuant to administrative services agreements, including medical affairs and quality management, health education, credentialing, management, financial, legal, information systems and human resources services. Fees are based on the fair market value of services rendered and are recorded as operating revenue. Payment is subordinated to the subsidiaries’ ability to comply with minimum capital and other restrictive financial requirements of the states in which they operate. Charges in 2017, 2016, and 2015 for these services amounted to $1,317 million, $1,062 million, and $914 million, respectively, and are included in operating revenue.
The Registrant and its subsidiaries are included in the consolidated federal and state income tax returns filed by the Registrant. Income taxes are allocated to each subsidiary in accordance with an intercompany tax allocation agreement. The agreement allocates income taxes in an amount generally equivalent to the amount which would be expensed by the subsidiary if it filed a separate tax return. Net operating loss benefits are paid to the subsidiary by the Registrant to the extent such losses are utilized in the consolidated tax returns.
Note C - Dividends and Capital Contributions
When the Registrant receives dividends from its subsidiaries, such amounts are recorded as a reduction to the investments in the respective subsidiaries.
For all periods presented, the Registrant made capital contributions to certain subsidiaries primarily to comply with minimum net worth requirements and to fund business combinations. Such amounts have been recorded as an increase in investment in the respective subsidiaries, net of insignificant returns of capital.
Note D - Related Party Transactions
The Registrant’s related party transactions are described in Note 17, “Related Party Transactions.”