EX-99.1 2 pathwaysproforma_ex991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of Molina Healthcare, Inc. (the “Company”), as adjusted to give effect to the October 19, 2018, sale of its wholly owned subsidiary, Pathways Health and Community Support LLC (the "Pathways Sale") to Pyramid Health Holdings, LLC (the “Buyer”). The Pathways Sale was not a disposition that qualifies as a discontinued operation under Accounting Standards Codification No. 205, Presentation of Financial Statements.
The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2018, and the year ended December 31, 2017, give effect to the Pathways Sale as if it had occurred on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2018, gives effect to the Pathways Sale as if it had occurred on June 30, 2018.
The unaudited pro forma condensed consolidated financial statements are for informational purposes only and are not necessarily indicative of what the Company's financial performance and financial position would have been had the Pathways Sale been completed on the dates assumed, nor is such unaudited pro forma condensed consolidated financial information necessarily indicative of the results to be expected in any future period.


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MOLINA HEALTHCARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2018
(In millions, except per-share amounts)
 
Historical
 
Adjustments to reflect Pathways Sale (a)
 
Pro Forma
Total revenue
$
9,529

 
$
(162
)
 
$
9,367

Operating expenses:
 
 
 
 
 
Medical care costs
7,572

 
—

 
7,572

Cost of service revenue
238

 
(151
)
 
87

General and administrative expenses
687

 
(15
)
 
672

Premium tax expenses
210

 
—

 
210

Health insurer fees
174

 
—

 
174

Depreciation and amortization
51

 
(1
)
 
50

Restructuring and separation costs
33

 
—

 
33

Total operating expenses
8,965

 
(167
)
 
8,798

Operating income
564

 
5

 
569

Other expenses, net
80

 
—

 
80

Income before income tax expense
484

 
5

 
489

Income tax expense
175

 
1

 
176

Net income
$
309

 
$
4

 
$
313

 
 
 
 
 
 
Net income per share:
 
 
 
 
 
Basic
$
5.10

 
 
 
$
5.16

Diluted
$
4.68

 
 
 
$
4.73

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
60.5

 
 
 
60.5

Diluted
66.0

 
 
 
66.0

__________________
(a)
Reflects the elimination of the results of operations of Pathways Health and Community Support LLC ("Pathways"), as if the sale had occurred on January 1, 2017.


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MOLINA HEALTHCARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
(In millions, except per-share amounts)
 
Historical
 
Adjustments to reflect Pathways Sale (a)
 
Pro Forma
Total revenue
$
19,883

 
$
(332
)
 
$
19,551

Operating expenses:
 
 
 
 
 
Medical care costs
17,073

 
—

 
17,073

Cost of service revenue
492

 
(318
)
 
174

General and administrative expenses
1,594

 
(29
)
 
1,565

Premium tax expenses
438

 
—

 
438

Depreciation and amortization
137

 
(5
)
 
132

Impairment losses
470

 
(171
)
 
299

Restructuring and separation costs
234

 
—

 
234

Total operating expenses
20,438

 
(523
)
 
19,915

Operating loss
(555
)
 
191

 
(364
)
Other expenses, net
57

 
—

 
57

Loss before income tax benefit
(612
)
 
191

 
(421
)
Income tax benefit
(100
)
 
29

 
(71
)
Net loss
$
(512
)
 
$
162

 
$
(350
)
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
Basic
$
(9.07
)
 
 
 
$
(6.19
)
Diluted
$
(9.07
)
 
 
 
$
(6.19
)
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
56.4

 
 
 
56.4

Diluted
56.4

 
 
 
56.4

__________________
(a)
Reflects the elimination of the results of operations of Pathways, as if the sale had occurred on January 1, 2017.

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MOLINA HEALTHCARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2018
(In millions)
 
Historical
 
Adjustments to reflect Pathways Sale (a)
 
Pro Forma
ASSETS
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
3,392

 
$
(19
)
 
$
3,373

Investments
2,176

 
—

 
2,176

Restricted investments
80

 
—

 
80

Receivables
1,148

 
(40
)
 
1,108

Income tax refundable (b)
—

 
30

 
30

Prepaid expenses and other current assets
344

 
(5
)
 
339

Derivative asset
657

 
—

 
657

Assets held for sale
230

 
—

 
230

Total current assets
8,027

 
(34
)
 
7,993

Property, equipment, and capitalized software, net
276

 
(9
)
 
267

Goodwill and intangible assets, net
201

 
—

 
201

Restricted investments
117

 
—

 
117

Deferred income taxes
114

 
(18
)
 
96

Other assets
28

 
(1
)
 
27

 
$
8,763

 
$
(62
)
 
$
8,701

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
 
Medical claims and benefits payable
$
1,920

 
$
—

 
$
1,920

Amounts due government agencies
1,746

 
—

 
1,746

Accounts payable and accrued liabilities
754

 
(20
)
 
734

Deferred revenue
193

 
—

 
193

Current portion of long-term debt
484

 
—

 
484

Derivative liability
657

 
—

 
657

Liabilities held for sale
66

 
—

 
66

Total current liabilities
5,820

 
(20
)
 
5,800

Long-term debt and other long-term liabilities
1,285

 
(1
)
 
1,284

Total liabilities
7,105

 
(21
)
 
7,084

Total stockholders’ equity
1,658

 
(41
)
 
1,617

 
$
8,763

 
$
(62
)
 
$
8,701

__________________
(a)
Reflects the elimination of the assets and liabilities of Pathways, Buyer's retention of approximately $19 million of the cash balance, payment of approximately $3 million of transaction fees, and recognition of a $41 million loss on sale, net of taxes, as if the sale had occurred on June 30, 2018. A tax rate of 22% is applied to the loss on sale.
(b)
The Company will record income taxes refundable for the tax benefits arising from the loss on its investment in Pathways.

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