XML 25 R12.htm IDEA: XBRL DOCUMENT
v3.20.2

Fair Value Measurements | 9 Months Ended
--- | ---
Sep. 30, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements We generally consider the carrying amounts of current assets and current liabilities to approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization or payment. For our financial instruments measured at fair value on a recurring basis, we prioritize the inputs used in measuring fair value according to the three-tier fair value hierarchy. For a description of the methods and assumptions that we use to a) estimate the fair value; and b) determine the classification according to the fair value hierarchy for each financial instrument, refer to our 2019 Annual Report on Form 10-K, Note 4, “Fair Value Measurements.” As of September 30, 2020, our Level 3 financial instruments recorded at fair value on a recurring basis included contingent consideration liabilities of $40 million, in connection with the Kentucky acquisition described in Note 4, “Business Combinations.” Such liabilities are reported in “Accounts payable, accrued liabilities and other” in the accompanying consolidated balance sheets. The fair value of the contingent consideration was estimated using a simulation-based option pricing model through the end of the measurement period of approximately 5 months, and included certain non-observable inputs. The key assumptions included a U.S. Treasury based risk-free rate of return, expected asset volatility of 35%, expected revenue volatility of 9%, forecasted membership enrollment, and other estimated revenue, asset and payment correlations and discount rates. The model produced an estimated range of undiscounted amounts Molina could pay under the contingent consideration arrangement of $25 million to $75 million. Our financial instruments measured at fair value on a recurring basis at September 30, 2020, were as follows:
|  |  | Observable Inputs |  | Directly or Indirectly Observable Inputs |  | Unobservable Inputs
| Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
| (In millions)
Corporate debt securities | $ | 1,041 |  |  | $ | — |  |  | $ | 1,041 |  |  | $ | — |
Mortgage-backed securities | 417 |  |  | — |  |  | 417 |  |  | — |
Municipal securities | 168 |  |  | — |  |  | 168 |  |  | — |
Asset-backed securities | 136 |  |  | — |  |  | 136 |  |  | — |
Certificates of deposit | 5 |  |  | — |  |  | 5 |  |  | — |
U.S. Treasury notes | 2 |  |  | — |  |  | 2 |  |  | — |
Total assets | $ | 1,769 |  |  | $ | — |  |  | $ | 1,769 |  |  | $ | — |
Contingent consideration liabilities | $ | 40 |  |  | $ | — |  |  | $ | — |  |  | $ | 40 |
Total liabilities | $ | 40 |  |  | $ | — |  |  | $ | — |  |  | $ | 40 |
Our financial instruments measured at fair value on a recurring basis at December 31, 2019, were as follows:
|  |  | Observable Inputs |  | Directly or Indirectly Observable Inputs |  | Unobservable Inputs
| Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
| (In millions)
Corporate debt securities | $ | 1,178 |  |  | $ | — |  |  | $ | 1,178 |  |  | $ | — |
Mortgage-backed securities | 420 |  |  | — |  |  | 420 |  |  | — |
Municipal securities | 78 |  |  | — |  |  | 78 |  |  | — |
Asset-backed securities | 127 |  |  | — |  |  | 127 |  |  | — |
Certificates of deposit | 1 |  |  | — |  |  | 1 |  |  | — |
U.S. Treasury notes | 86 |  |  | — |  |  | 86 |  |  | — |
GSEs | 49 |  |  | — |  |  | 49 |  |  | — |
Other | 7 |  |  | — |  |  | 7 |  |  | — |
Subtotal | 1,946 |  |  | — |  |  | 1,946 |  |  | — |
Call option derivative asset | 29 |  |  | — |  |  | — |  |  | 29 |
Total assets | $ | 1,975 |  |  | $ | — |  |  | $ | 1,946 |  |  | $ | 29 |
Conversion option derivative liability | $ | 29 |  |  | $ | — |  |  | $ | — |  |  | $ | 29 |
Total liabilities | $ | 29 |  |  | $ | — |  |  | $ | — |  |  | $ | 29 |
The net changes in fair value of Level 3 financial instruments were insignificant to our results of operations for the nine months ended September 30, 2020. Derivatives The following table summarizes the fair values and the presentation of our derivative financial instruments in the accompanying consolidated balance sheets:
| Balance Sheet Location |  | September 30, 2020 |  | December 31, 2019
|  |  | (In millions)
Derivative asset: |  |  |  |  |
Call option | Current assets: Prepaid expenses and other current assets |  | $ | — |  |  | $ | 29 |
Derivative liability: |  |  |  |  |
Conversion option | Current liabilities: Accounts payable, accrued liabilities and other |  | $ | — |  |  | $ | 29 |
For additional information regarding our derivative financial instruments, see Note 11, “Debt,” and Note 12, “Derivatives,” in our 2019 Annual Report on Form 10-K. In the first quarter of 2020, we received $27 million for the settlement of the call option derivative asset, and we paid $39 million to settle the outstanding $12 million principal amount of the 1.125% Convertible Notes, and settle the related conversion option. For more information, refer to Notes 8, “Debt,” and 9, “Stockholders' Equity.” Fair Value Measurements – Disclosure Only The carrying amounts and estimated fair values of our notes payable are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted market prices for similar securities in active markets or quoted prices for identical securities in inactive markets.
| September 30, 2020 |  | December 31, 2019
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
| (In millions)
4.375% Notes | $ | 789 |  |  | $ | 816 |  |  | $ | — |  |  | $ | — |
5.375% Notes | 697 |  |  | 731 |  |  | 696 |  |  | 745 |
4.875% Notes | 327 |  |  | 337 |  |  | 327 |  |  | 340 |
Term loan facility (1) | — |  |  | — |  |  | 220 |  |  | 220 |
1.125% Convertible Notes (1) | — |  |  | — |  |  | 12 |  |  | 42 |
Total | $ | 1,813 |  |  | $ | 1,884 |  |  | $ | 1,255 |  |  | $ | 1,347 |
______________________ (1)For more information on financing activities, refer to Note 8, “Debt.”

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration