Supplemental Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2018

Condensed Financial Information [Abstract]

Supplemental Condensed Consolidating Financial Information

As discussed in Note 7, “Debt,” we have outstanding $700 million aggregate principal amount of 5.375% Notes due November 15, 2022, unless earlier redeemed. The 5.375% Notes were registered in September 2016, and 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.

For all periods presented, the following condensed consolidating financial statements present Molina Healthcare, Inc. (as “Parent Guarantor”), the subsidiary guarantors (as “Other Guarantors”), the subsidiary non-guarantors (as “Non-Guarantors”) and “Eliminations”, according to the guarantor structure as assessed as of and for the six months ended June 30, 2018.

CONDENSED CONSOLIDATING STATEMENTS OF INCOME



	Three Months Ended June 30, 2018
	Parent Guarantor			Other Guarantors			Non-Guarantors		Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	261		$	49		$	4,834	$	(261	)	$	4,883
Expenses:
Medical care costs	3			—			3,847		—			3,850
Cost of service revenue	—			44			74		—			118
General and administrative expenses	252			3			341		(261		)	335
Premium tax expenses	—			—			106		—			106
Health insurer fees	—			—			99		—			99
Depreciation and amortization	18			—			7		—			25
Restructuring and separation costs	(1		)	—			9		—			8
Total operating expenses	272			47			4,483		(261		)	4,541
Operating (loss) income	(11		)	2			351		—			342
Interest expense	31			—			1		—			32
Other expenses, net	5			—			—		—			5
(Loss) income before income taxes	(47		)	2			350		—			305
Income tax expense	1			1			101		—			103
Net (loss) income before equity in net earnings (losses) of subsidiaries	(48		)	1			249		—			202
Equity in net earnings (losses) of subsidiaries	250			(1		)	—		(249		)	—
Net income	$	202		$	—		$	249	$	(249	)	$	202

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME



	Three Months Ended June 30, 2018
	Parent Guarantor		Other Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In millions)
Net income	$	202	$	—	$	249	$	(249	)	$	202
Other comprehensive gain, net of tax	2		—		2		(2		)	2
Comprehensive income	$	204	$	—	$	251	$	(251	)	$	204

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



	Three Months Ended June 30, 2017
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	289		$	51		$	4,952		$	(293	)	$	4,999
Expenses:
Medical care costs	3			—			4,488			—			4,491
Cost of service revenue	—			43			81			—			124
General and administrative expenses	258			7			433			(293		)	405
Premium tax expenses	—			—			114			—			114
Depreciation and amortization	25			—			12			—			37
Impairment losses	—			—			72			—			72
Restructuring and separation costs	43			—			—			—			43
Total operating expenses	329			50			5,200			(293		)	5,286
Operating (loss) income	(40		)	1			(248		)	—			(287		)
Interest expense	27			—			—			—			27
(Loss) income before income taxes	(67		)	1			(248		)	—			(314		)
Income tax benefit	(14		)	—			(70		)	—			(84		)
Net (loss) income before equity in net losses of subsidiaries	(53		)	1			(178		)	—			(230		)
Equity in net losses of subsidiaries	(177		)	(64		)	—			241			—
Net loss	$	(230	)	$	(63	)	$	(178	)	$	241		$	(230	)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended June 30, 2017
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In millions)
Net loss	$	(230	)	$	(63	)	$	(178	)	$	241	$	(230	)
Other comprehensive income, net of tax	—			—			—			—		—
Comprehensive loss	$	(230	)	$	(63	)	$	(178	)	$	241	$	(230	)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME



	Six Months Ended June 30, 2018
	Parent Guarantor			Other Guarantors			Non-Guarantors		Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	594		$	101		$	9,426	$	(592	)	$	9,529
Expenses:
Medical care costs	7			—			7,565		—			7,572
Cost of service revenue	—			87			151		—			238
General and administrative expenses	519			7			753		(592		)	687
Premium tax expenses	—			—			210		—			210
Health insurer fees	—			—			174		—			174
Depreciation and amortization	36			—			15		—			51
Restructuring and separation costs	25			—			8		—			33
Total operating expenses	587			94			8,876		(592		)	8,965
Operating income	7			7			550		—			564
Interest expense	64			—			1		—			65
Other expenses, net	15			—			—		—			15
(Loss) income before income taxes	(72		)	7			549		—			484
Income tax expense	10			2			163		—			175
Net (loss) income before equity in net earnings (losses of subsidiaries	(82		)	5			386		—			309
Equity in net earnings (losses) of subsidiaries	391			(4		)	—		(387		)	—
Net income	$	309		$	1		$	386	$	(387	)	$	309

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME



	Six Months Ended June 30, 2018
	Parent Guarantor			Other Guarantors		Non-Guarantors			Eliminations			Consolidated
	(In millions)
Net income	$	309		$	1	$	386		$	(387	)	$	309
Other comprehensive loss, net of tax	(5		)	—		(5		)	5			(5		)
Comprehensive income	$	304		$	1	$	381		$	(382	)	$	304

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



	Six Months Ended June 30, 2017
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
Revenue:
Total revenue	$	630		$	99		$	9,809		$	(635	)	$	9,903
Expenses:
Medical care costs	7			—			8,595			—			8,602
Cost of service revenue	—			85			161			—			246
General and administrative expenses	555			14			910			(635		)	844
Premium tax expenses	—			—			225			—			225
Depreciation and amortization	52			—			24			—			76
Impairment losses	—			—			72			—			72
Restructuring and separation costs	43			—			—			—			43
Total operating expenses	657			99			9,987			(635		)	10,108
Operating loss	(27		)	—			(178		)	—			(205		)
Interest expense	53			—			—			—			53
Other income, net	(75		)	—			—			—			(75		)
Loss before income taxes	(5		)	—			(178		)	—			(183		)
Income tax expense (benefit)	17			—			(47		)	—			(30		)
Net loss before equity in net losses of subsidiaries	(22		)	—			(131		)	—			(153		)
Equity in net losses of subsidiaries	(131		)	(66		)	—			197			—
Net loss	$	(153	)	$	(66	)	$	(131	)	$	197		$	(153	)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE LOSS



	Six Months Ended June 30, 2017
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
Net loss	$	(153	)	$	(66	)	$	(131	)	$	197		$	(153	)
Other comprehensive income, net of tax	1			—			1			(1		)	1
Comprehensive loss	$	(152	)	$	(66	)	$	(130	)	$	196		$	(152	)

CONDENSED CONSOLIDATING BALANCE SHEETS



	June 30, 2018
	Parent Guarantor		Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	235	$	2		$	3,155		$	—		$	3,392
Investments	105		—			2,071			—			2,176
Restricted investments	80		—			—			—			80
Receivables	2		—			1,146			—			1,148
Due from (to) affiliates	68		(6		)	(62		)	—			—
Prepaid expenses and other current assets	62		—			282			—			344
Derivative asset	657		—			—			—			657
Assets held for sale	—		230			—			—			230
Total current assets	1,209		226			6,592			—			8,027
Property, equipment, and capitalized software, net	196		—			80			—			276
Goodwill and intangible assets, net	14		—			187			—			201
Restricted investments	—		—			117			—			117
Investment in subsidiaries, net	2,761		76			—			(2,837		)	—
Deferred income taxes	33		—			99			(18		)	114
Other assets	39		—			5			(16		)	28
	$	4,252	$	302		$	7,080		$	(2,871	)	$	8,763

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	2	$	—		$	1,918		$	—		$	1,920
Amounts due government agencies	—		—			1,746			—			1,746
Accounts payable and accrued liabilities	211		—			543			—			754
Deferred revenue	—		—			193			—			193
Current portion of long-term debt	484		—			—			—			484
Derivative liability	657		—			—			—			657
Liabilities held for sale	—		66			—			—			66
Total current liabilities	1,354		66			4,400			—			5,820
Long-term debt	1,217		—			16			(16		)	1,217
Deferred income taxes	—		18			—			(18		)	—
Other long-term liabilities	23		1			44			—			68
Total liabilities	2,594		85			4,460			(34		)	7,105
Total stockholders’ equity	1,658		217			2,620			(2,837		)	1,658
	$	4,252	$	302		$	7,080		$	(2,871	)	$	8,763

CONDENSED CONSOLIDATING BALANCE SHEETS



	December 31, 2017
	Parent Guarantor		Other Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	504	$	28		$	2,654		$	—		$	3,186
Investments	192		—			2,332			—			2,524
Restricted investments	169		—			—			—			169
Receivables	2		30			839			—			871
Due from (to) affiliates	148		(6		)	(142		)	—			—
Prepaid expenses and other current assets	103		14			138			(16		)	239
Derivative asset	522		—			—			—			522
Total current assets	1,640		66			5,821			(16		)	7,511
Property, equipment, and capitalized software, net	223		33			86			—			342
Goodwill and intangible assets, net	15		43			197			—			255
Restricted investments	—		—			119			—			119
Investment in subsidiaries, net	2,306		82			—			(2,388		)	—
Deferred income taxes	17		—			101			(15		)	103
Other assets	32		103			7			(1		)	141
	$	4,233	$	327		$	6,331		$	(2,420	)	$	8,471

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	3	$	—		$	2,189		$	—		$	2,192
Amounts due government agencies	—		1			1,541			—			1,542
Accounts payable and accrued liabilities	178		40			148			—			366
Deferred revenue	—		49			233			—			282
Current portion of long-term debt	653		—			16			(16		)	653
Derivative liability	522		—			—			—			522
Total current liabilities	1,356		90			4,127			(16		)	5,557
Long-term debt	1,516		—			—			—			1,516
Deferred income taxes	—		15			—			(15		)	—
Other long-term liabilities	24		2			36			(1		)	61
Total liabilities	2,896		107			4,163			(32		)	7,134
Total stockholders’ equity	1,337		220			2,168			(2,388		)	1,337
	$	4,233	$	327		$	6,331		$	(2,420	)	$	8,471

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



	Six Months Ended June 30, 2018
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	49		$	9		$	256		$	—	$	314
Investing activities:
Purchases of investments	(136		)	—			(778		)	—		(914		)
Proceeds from sales and maturities of investments	303			—			1,032			—		1,335
Purchases of property, equipment and capitalized software	(9		)	(3		)	(2		)	—		(14		)
Capital contributions to subsidiaries	(117		)	—			117			—		—
Dividends from subsidiaries	60			(10		)	(50		)	—		—
Change in amounts due to/from affiliates	75			1			(76		)	—		—
Other, net	—			(14		)	5			—		(9		)
Net cash provided (used in) by investing activities	176			(26		)	248			—		398
Financing activities:
Repayment of credit facility	(300		)	—			—			—		(300		)
Repayment of 1.125% Convertible Notes	(89		)	—			—			—		(89		)
Cash paid for partial settlement of 1.125% Conversion Option	(134		)	—			—			—		(134		)
Cash received for partial termination of 1.125% Call Option	134			—			—			—		134
Cash paid for partial termination of 1.125% Warrants	(113		)	—			—			—		(113		)
Other, net	(1		)	—			—			—		(1		)
Net cash used in financing activities	(503		)	—			—			—		(503		)
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents	(278		)	(17		)	504			—		209
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period	513			28			2,749			—		3,290
Cash, cash equivalents, and restricted cash and cash equivalents at end of period	$	235		$	11		$	3,253		$	—	$	3,499



	Six Months Ended June 30, 2017
	Parent Guarantor			Other Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In millions)
Operating activities:
Net cash provided by operating activities	$	90		$	44		$	538		$	—	$	672
Investing activities:
Purchases of investments	(330		)	—			(1,306		)	—		(1,636		)
Proceeds from sales and maturities of investments	127			—			747			—		874
Purchases of property, equipment and capitalized software	(45		)	(9		)	(6		)	—		(60		)
Capital contributions to subsidiaries	(238		)	2			236			—		—
Dividends from subsidiaries	120			—			(120		)	—		—
Change in amounts due to/from affiliates	(34		)	2			32			—		—
Other, net	—			(13		)	(11		)	—		(24		)
Net cash used in investing activities	(400		)	(18		)	(428		)	—		(846		)
Financing activities:
Proceeds from senior notes offerings, net of issuance costs	325			—			—			—		325
Other, net	8			—			—			—		8
Net cash provided by financing activities	333			—			—			—		333
Net increase in cash, cash equivalents, and restricted cash and cash equivalents	23			26			110			—		159
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period	86			6			2,820			—		2,912
Cash, cash equivalents, and restricted cash and cash equivalents at end of period	$	109		$	32		$	2,930		$	—	$	3,071