Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information of Registrant

The condensed balance sheets as of December 31, 2022 and 2021, and the related condensed statements of income, comprehensive income and cash flows for each of the three years in the period ended December 31, 2022 for our parent company Molina Healthcare, Inc. (the “Registrant”), are presented below.

Condensed Balance Sheets


	December 31,
	2022		2021

	(In millions, except per-share data)
ASSETS
Current assets:
Cash and cash equivalents	$	329	$	274
Investments	46		74

Due from affiliates	143		74
Prepaid expenses and other current assets	106		142
Total current assets	624		564
Property, equipment, and capitalized software, net	224		349
Goodwill and intangible assets, net	731		699
Investments in subsidiaries	4,142		3,772
Deferred income taxes	37		(18)
Advances to related parties and other assets	78		68
Total assets	$	5,836	$	5,434
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued liabilities and other	$	448	$	378
Total current liabilities	448		378
Long-term debt	2,176		2,173
Finance lease liabilities	215		219
Other long-term liabilities	33		34
Total liabilities	2,872		2,804
Stockholders’ equity:
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 58 million shares at each of December 31, 2022 and December 31, 2021	—		—
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding	—		—
Additional paid-in capital	328		236
Accumulated other comprehensive loss	(160)		(5)
Retained earnings	2,796		2,399
Total stockholders’ equity	2,964		2,630
Total liabilities and stockholders’ equity	$	5,836	$	5,434

See accompanying notes.

Condensed Statements of Income


	Year Ended December 31,
	2022		2021		2020

	(In millions)
Revenue:
Administrative services fees	$	1,826	$	1,496	$	1,208
Investment income and other revenue	8		11		13
Total revenue	1,834		1,507		1,221
Expenses:
General and administrative expenses	1,721		1,424		1,089
Depreciation and amortization	141		98		67
Impairment	138		—		—
Other	—		5		24
Total operating expenses	2,000		1,527		1,180
Operating (loss) income	(166)		(20)		41
Interest expense	110		120		102
Other expenses, net	—		25		15
Total other expenses, net	110		145		117
Loss before income tax benefit and equity in net earnings of subsidiaries	(276)		(165)		(76)
Income tax benefit	(42)		(21)		(5)
Net loss before equity in net earnings of subsidiaries	(234)		(144)		(71)
Equity in net earnings of subsidiaries	1,026		803		744
Net income	$	792	$	659	$	673

Condensed Statements of Comprehensive Income


	Year Ended December 31,
	2022		2021		2020

	(In millions)
Net income	$	792	$	659	$	673
Other comprehensive (loss) income:
Unrealized investment (loss) income	(204)		(55)		44
Less: effect of income taxes	(49)		(13)		11
Other comprehensive (loss) income, net of tax	(155)		(42)		33
Comprehensive income	$	637	$	617	$	706

See accompanying notes.

Condensed Statements of Cash Flows


	Year Ended December 31,
	2022		2021		2020

	(In millions)
Operating activities:
Net cash provided by operating activities	$	119	$	60	$	67
Investing activities:
Capital contributions to subsidiaries	(159)		(440)		(107)
Dividends received from subsidiaries	668		564		635
Purchases of investments	(29)		(27)		(188)
Proceeds from sales and maturities of investments	49		21		282
Purchases of property, equipment and capitalized software	(86)		(70)		(74)
Net cash paid in business combinations	—		(263)		(1,028)
Change in amounts due to/from affiliates	(69)		40		(68)
Other, net	3		(3)		3
Net cash provided by (used in) investing activities	377		(178)		(545)
Financing activities:
Common stock purchases	(400)		(128)		(606)
Common stock withheld to settle employee tax obligations	(54)		(53)		(8)
Contingent consideration liabilities settled	(20)		(20)		—
Proceeds from senior notes offering, net of issuance costs	—		740		1,429
Repayment of senior notes	—		(723)		(338)
Repayment of term loan facility	—		—		(600)
Proceeds from borrowings under term loan facility	—		—		380
Cash paid for partial termination of warrants	—		—		(30)
Cash paid for partial settlement of conversion option	—		—		(27)
Cash received for partial settlement of call option	—		—		27
Repayment of principal amount of convertible notes	—		—		(12)
Other, net	33		1		2
Net cash (used in) provided by financing activities	(441)		(183)		217
Net increase (decrease) in cash and cash equivalents	55		(301)		(261)
Cash and cash equivalents at beginning of period	274		575		836
Cash and cash equivalents at end of period	$	329	$	274	$	575

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 2022, 2021, and 2020 for these services amounted to $1,826 million, $1,496 million, and $1,208 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.