Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2021

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information of Registrant

The condensed balance sheets as of December 31, 2021 and 2020, and the related condensed statements of income, comprehensive income and cash flows for each of the three years in the period ended December 31, 2021 for our parent company Molina Healthcare, Inc. (the “Registrant”), are presented below.

Condensed Balance Sheets


	December 31,
	2021		2020

	(In millions, except per-share data)
ASSETS
Current assets:
Cash and cash equivalents	$	274	$	575
Investments	74		69
Receivables	—		2
Due from affiliates	74		114
Prepaid expenses and other current assets	142		65
Total current assets	564		825
Property, equipment, and capitalized software, net	349		339
Goodwill and intangible assets, net	699		369
Investments in subsidiaries	3,772		3,228
Deferred income taxes	(18)		5
Advances to related parties and other assets	68		83
Total assets	$	5,434	$	4,849
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued liabilities and other	$	378	$	338
Total current liabilities	378		338
Long-term debt	2,173		2,127
Finance lease liabilities	219		225
Other long-term liabilities	34		63
Total liabilities	2,804		2,753
Stockholders’ equity:
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 58 million shares at December 31, 2021, and 59 million at December 31, 2020	—		—
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding	—		—
Additional paid-in capital	236		199
Accumulated other comprehensive (loss) income	(5)		37
Retained earnings	2,399		1,860
Total stockholders’ equity	2,630		2,096
Total liabilities and stockholders’ equity	$	5,434	$	4,849

See accompanying notes.

Condensed Statements of Income


	Year Ended December 31,
	2021		2020		2019

	(In millions)
Revenue:
Administrative services fees	$	1,496	$	1,208	$	1,038
Investment income and other revenue	11		13		18
Total revenue	1,507		1,221		1,056
Expenses:
General and administrative expenses	1,424		1,089		937
Depreciation and amortization	98		67		63
Other	5		24		4
Total operating expenses	1,527		1,180		1,004
Operating (loss) income	(20)		41		52
Interest expense	120		102		87
Other expenses (income), net	25		15		(15)
Total other expenses, net	145		117		72
Loss before income tax (benefit) expense and equity in net earnings of subsidiaries	(165)		(76)		(20)
Income tax (benefit) expense	(21)		(5)		9
Net loss before equity in net earnings of subsidiaries	(144)		(71)		(29)
Equity in net earnings of subsidiaries	803		744		766
Net income	$	659	$	673	$	737

Condensed Statements of Comprehensive Income


	Year Ended December 31,
	2021		2020		2019

	(In millions)
Net income	$	659	$	673	$	737
Other comprehensive (loss) income:
Unrealized investment (loss) income	(55)		44		16
Less: effect of income taxes	(13)		11		4
Other comprehensive (loss) income, net of tax	(42)		33		12
Comprehensive income	$	617	$	706	$	749

See accompanying notes.

Condensed Statements of Cash Flows


	Year Ended December 31,
	2021		2020		2019

	(In millions)
Operating activities:
Net cash provided by operating activities	$	60	$	67	$	71
Investing activities:
Capital contributions to subsidiaries	(440)		(107)		(43)
Dividends received from subsidiaries	564		635		1,373
Purchases of investments	(27)		(188)		(152)
Proceeds from sales and maturities of investments	21		282		93
Purchases of property, equipment and capitalized software	(70)		(74)		(56)
Net cash paid in business combinations	(263)		(1,028)		—
Change in amounts due to/from affiliates	40		(68)		38
Other, net	(3)		3		1
Net cash (used in) provided by investing activities	(178)		(545)		1,254
Financing activities:
Proceeds from senior notes offering, net of issuance costs	740		1,429		—
Repayment of senior notes	(723)		(338)		—
Common stock purchases	(128)		(606)		(47)
Common stock withheld to settle employee tax obligations	(53)		(8)		(7)
Contingent consideration liabilities settled	(20)		—		—
Repayment of term loan facility	—		(600)		—
Proceeds from borrowings under term loan facility	—		380		220
Cash paid for partial termination of warrants	—		(30)		(514)
Cash paid for partial settlement of conversion option	—		(27)		(578)
Cash received for partial settlement of call option	—		27		578
Repayment of principal amount of convertible notes	—		(12)		(240)
Other, net	1		2		29
Net cash (used in) provided by financing activities	(183)		217		(559)
Net (decrease) increase in cash and cash equivalents	(301)		(261)		766
Cash and cash equivalents at beginning of period	575		836		70
Cash and cash equivalents at end of period	$	274	$	575	$	836

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 our subsidiaries pursuant to administrative services agreements that include, but are not limited to, information technology, product development

and administration, underwriting, claims processing, customer service, certain care management services, human resources, marketing, purchasing, risk management, actuarial, finance, accounting, compliance, legal and public relations. 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 2021, 2020, and 2019 for these services amounted to $1,496 million, $1,208 million, and $1,038 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.