Segments

We have three reportable segments, consisting 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. Refer to Note 1, “Organization and Basis of Presentation,” for a discussion of our recent divestiture of Pathways.

Recent Developments – Molina Medicaid Solutions Segment

We closed on the sale of MMS to DXC Technology Company on September 30, 2018. The net cash selling price for the equity interests of MMS was $233 million, which we received on October 1, 2018. As a result of this transaction, we recognized a pretax gain, net of transaction costs, of $37 million.

Description of Earnings Measures for Reportable Segments

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.

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 care 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.

The following table presents total revenue by segment. Inter-segment revenue was insignificant for all periods presented.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(In millions)
Total revenue:
Health Plans	$	4,565	$	4,899	$	13,826	$	14,538
Molina Medicaid Solutions	53		47		152		140
Other	79		85		248		256
Consolidated	$	4,697	$	5,031	$	14,226	$	14,934

The following table reconciles margin by segment to consolidated income (loss) before income taxes:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In millions)
Margin:
Health Plans	$	547		$	557		$	1,812		$	1,343
Molina Medicaid Solutions	14			5			26			13
Other	5			2			16			8
Total margin	566			564			1,854			1,364
Add: other operating revenues ⁽¹⁾	230			124			661			379
Add: gain on sale of subsidiary	37			—			37			—
Less: other operating expenses ⁽²⁾	(538		)	(769		)	(1,693		)	(2,029		)
Operating income (loss)	295			(81		)	859			(286		)
Other expenses, net	36			32			116			10
Income (loss) before income taxes	$	259		$	(113	)	$	743		$	(296	)

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


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