Segment Information

6 Months Ended

12 Months Ended

Jun. 30, 2016

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

We have three reportable segments. These segments include our Health Plans and Molina Medicaid Solutions segments, which comprise the vast majority of our operations, and our Other segment. As of December 31, 2015, we changed our reporting structure as a result of the Pathways acquisition in November 2015, which is reported in Other.

Our reportable segments are consistent with how we currently manage the business and view the markets we serve. The Health Plans segment consists of our health plans and our direct delivery business. Our health plans are operating segments that have been aggregated for reporting purposes because they share similar economic characteristics. The Molina Medicaid Solutions segment provides Medicaid management information system (MMIS) design, development, and implementation; business process outsourcing solutions; hosting services; and information technology support services to state Medicaid agencies. Our Other segment includes other businesses, such as our Pathways behavioral health and social services provider, that do not meet the quantitative thresholds for a reportable segment as defined by GAAP, as well as corporate amounts not allocated to other reportable segments.

Gross 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.

Gross 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 costs are deducted from premium revenue. The medical care ratio represents the amount of 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.

	Health Plans		Molina Medicaid Solutions		Other		Consolidated
	(In millions)
Three Months Ended June 30, 2016
Total revenue (1)	$	4,223	$	46	$	90	$	4,359
Gross margin	435		5		14		454
Six Months Ended June 30, 2016
Total revenue (1)	$	8,424	$	98	$	180	$	8,702
Gross margin	842		11		21		874
Three Months Ended June 30, 2015
Total revenue (1)	$	3,477	$	47	$	1	$	3,525
Gross margin	375		14		—		389
Six Months Ended June 30, 2015
Total revenue (1)	$	6,593	$	99	$	4	$	6,696
Gross margin	710		30		—		740
Total Assets
June 30, 2016	$	5,521	$	252	$	1,429	$	7,202
December 31, 2015	4,707		213		1,656		6,576

______________________

(1) Total revenue consists primarily of premium revenue for the Health Plans segment, and service revenue for the Molina Medicaid Solutions and Other segments.

The following table reconciles gross margin by segment to consolidated income before income tax expense:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In millions)
Gross margin:
Health Plans	$	435		$	375		$	842		$	710
Molina Medicaid Solutions	5			14			11			30
Other	14			—			21			—
Total gross margin	454			389			874			740
Add: other operating revenues (1)	195			174			403			322
Less: other operating expenses (2)	(544		)	(447		)	(1,083		)	(864		)
Operating income	105			116			194			198
Other expenses, net	(25		)	(15		)	(50		)	(30		)
Income before income tax expense	$	80		$	101		$	144		$	168

______________________

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

(2) Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fee expenses and depreciation and amortization.

Segment Information

We havethreereportable segments. These segments include our Health Plans and Molina Medicaid Solutions segments, which comprise the vast majority of our operations, and our Other segment. As of December 31, 2015, we changed our reporting structure as a result of the Pathways acquisition in November 2015, which is reported in Other.

Our reportable segments are consistent with how we currently manage the business and view the markets we serve. The Health Plans segment consists of our health plans and our direct delivery business. Our health plans represent operating segments that have been aggregated for reporting purposes because they share similar economic characteristics. The Molina Medicaid Solutions segment provides MMIS design, development, implementation; business process outsourcing solutions; hosting services; and information technology support services to state Medicaid agencies. Our Other segment includes other businesses, such as our Pathways behavioral health and social services provider, that do not meet the quantitative thresholds for a reportable segment as defined by U.S. generally accepted accounting principles (GAAP), as well as corporate amounts not allocated to other reportable segments.

The following table presents gross margin as the appropriate earnings measure for our reportable segments, based on how our chief operating decision maker currently reviews results, assesses performance, and allocates resources.

Gross 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 actual dollars earned by the Health Plans segment after medical costs are deducted from premium revenue. The medical care ratio represents the amount of medical care costs as a percentage of premium revenue. One of the key metrics used to assess the performance of the Health Plans segment is the medical care ratio; 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. We previously reported our segment results to the operating income level, where we reported the cost of all centralized services within our most significant segment, the Health Plans segment.

The accounting policies of the segments are the same as those described in Note 2, "Significant Accounting Policies."

	Health Plans		Molina Medicaid Solutions		Other		Consolidated
	(In millions)
2015
Total revenue (1)	$	13,917	$	195	$	66	$	14,178
Gross margin	1,447		55		5		1,507
Depreciation and amortization (2)	95		25		6		126
Goodwill, and intangible assets, net	393		73		175		641
Total assets	4,707		213		1,656		6,576
2014
Total revenue (1)	9,449		210		8		9,667
Gross margin	947		53		—		1,000
Depreciation and amortization (2)	83		46		5		134
Goodwill, and intangible assets, net	286		75		—		361
Total assets	3,355		185		895		4,435
2013
Total revenue (1)	6,376		205		8		6,589
Gross margin	799		44		—		843
Depreciation and amortization (2)	60		28		6		94
Goodwill, and intangible assets, net	249		81		—		330
Total assets	1,921		176		891		2,988

______________________

(1) Total revenues consists primarily of premium revenue for the Health Plans segment, and service revenue for the Molina Medicaid Solutions and Other segments.

(2) Depreciation and amortization reported in accompanying consolidated statements of cash flows.

The following table reconciles gross margin by segment to consolidated income from continuing operations before income tax expense:

	Year Ended December 31,
	2015		2014		2013
	(In millions)
Gross margin:
Health Plans	$	1,447	$	947	$	799
Molina Medicaid Solutions	55		53		44
Other	5		—		—
Other operating revenues (1)	684		434		205
Other operating expenses (2)	1,804		1,241		911
Operating income	387		193		137
Other expenses, net	65		58		56
Income from continuing operations before income tax expense	$	322	$	135	$	81

______________________

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

(2) Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fee expenses and depreciation and amortization.