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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number: 001-31719
molinalogo2016a26.jpg
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-4204626
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
200 Oceangate, Suite 100
 
Long Beach,California90802
(Address of principal executive offices) (Zip Code)
(562) 435-3666
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par Value MOHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer   Accelerated Filer Non-Accelerated Filer Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
The number of shares of the issuer’s Common Stock, $0.001 par value, outstanding as of October 20, 2023, was approximately 58,300,000.


Table of Contents
MOLINA HEALTHCARE, INC. FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS
ITEM NUMBERPage
PART I
1.
2.
3.
4.
PART II
1.
1A.
2.
3.Defaults Upon Senior SecuritiesNot Applicable.
4.Mine Safety DisclosuresNot Applicable.
5.
6.



Table of Contents

CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(Dollars in millions, except per-share amounts)
(Unaudited)
Revenue:
Premium revenue$8,240 $7,636 $24,167 $22,966 
Premium tax revenue176 223 517 646 
Investment income 112 49 280 82 
Other revenue20 19 60 57 
Total revenue8,548 7,927 25,024 23,751 
Operating expenses:
Medical care costs7,306 6,748 21,215 20,183 
General and administrative expenses608 560 1,817 1,682 
Premium tax expenses176 223 517 646 
Depreciation and amortization42 45 128 129 
Other57 16 90 43 
Total operating expenses8,189 7,592 23,767 22,683 
Operating income359 335 1,257 1,068 
Other expenses, net:
Interest expense27 28 82 83 
Total other expenses, net27 28 82 83 
Income before income tax expense332 307 1,175 985 
Income tax expense87 77 300 249 
Net income$245 $230 $875 $736 
Net income per share - Basic $4.24 $4.00 $15.18 $12.74 
Net income per share - Diluted $4.21 $3.95 $15.08 $12.58 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In millions)
(Unaudited)
Net income$245 $230 $875 $736 
Other comprehensive loss:
Unrealized investment loss(24)(75)(7)(237)
Less: effect of income taxes
(5)(18)(2)(57)
Other comprehensive loss, net of tax (19)(57)(5)(180)
Comprehensive income$226 $173 $870 $556 
See accompanying notes.
Molina Healthcare, Inc. September 30, 2023 Form 10-Q | 3

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CONSOLIDATED BALANCE SHEETS
September 30,
2023
December 31,
2022
(Dollars in millions,
except per-share amounts)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$5,565 $4,006 
Investments4,111 3,499 
Receivables2,460 2,302 
Prepaid expenses and other current assets332 277 
Total current assets12,468 10,084 
Property, equipment, and capitalized software, net290 259 
Goodwill, and intangible assets, net1,471 1,390 
Restricted investments261 238 
Deferred income taxes 255 220 
Other assets125 123 
Total assets$14,870 $12,314 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable$4,235 $3,528 
Amounts due government agencies 2,476 2,079 
Accounts payable, accrued liabilities and other1,090 889 
Deferred revenue691 359 
Total current liabilities8,492 6,855 
Long-term debt2,179 2,176 
Finance lease liabilities199 215 
Other long-term liabilities121 104 
Total liabilities10,991 9,350 
Stockholders’ equity:
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at September 30, 2023 and December 31, 2022
  
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding
  
Additional paid-in capital373 328 
Accumulated other comprehensive loss(165)(160)
Retained earnings3,671 2,796 
Total stockholders’ equity3,879 2,964 
Total liabilities and stockholders’ equity$14,870 $12,314 
See accompanying notes.
Molina Healthcare, Inc. September 30, 2023 Form 10-Q | 4

Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive (Loss) Income
Retained
Earnings
Total
OutstandingAmount
(In millions)
(Unaudited)
Balance at December 31, 202258 $ $328 $(160)$2,796 $2,964 
Net income— — — — 321 321 
Other comprehensive income, net— — — 35 — 35 
Share-based compensation— — (32)— — (32)
Balance at March 31, 202358  296 (125)3,117 3,288 
Net income— — — — 309 309 
Other comprehensive loss, net— — — (21)— (21)
Share-based compensation— — 45 — — 45 
Balance at June 30, 202358  341 (146)3,426 3,621 
Net income— — — — 245 245 
Other comprehensive loss, net— — — (19)— (19)
Share-based compensation— — 32 — — 32 
Balance at September 30, 202358 $ $373 $(165)$3,671 $3,879 

Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
OutstandingAmount
(In millions)
(Unaudited)
Balance at December 31, 202158 $ $236 $(5)$2,399 $2,630 
Net income— — — — 258 258 
Other comprehensive loss, net— — — (76)— (76)
Share-based compensation1 — (18)— — (18)
Balance at March 31, 202259  218 (81)2,657 2,794 
Net income— — — — 248 248 
Common stock purchases(1)— (2)— (198)(200)
Other comprehensive loss, net— — — (47)— (47)
Share-based compensation— — 35 — — 35 
Balance at June 30, 202258  251 (128)2,707 2,830 
Net income— — — — 230 230 
Other comprehensive loss, net— — — (57)— (57)
Share-based compensation— — 38 — — 38 
Balance at September 30, 202258 $ $289 $(185)$2,937 $3,041 
See accompanying notes.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
 20232022
(In millions)
(Unaudited)
Operating activities:
Net income$875 $736 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization128 129 
Deferred income taxes(33)(35)
Share-based compensation88 80 
Other, net3 (3)
Changes in operating assets and liabilities:
Receivables(132)(15)
Prepaid expenses and other current assets(69)(110)
Medical claims and benefits payable611 251 
Amounts due government agencies 377 (360)
Accounts payable, accrued liabilities and other(137)(40)
Deferred revenue332 293 
Income taxes309 59 
Net cash provided by operating activities2,352 985 
Investing activities:
Purchases of investments(1,295)(1,764)
Proceeds from sales and maturities of investments670 1,082 
Net cash paid in business combinations(3)(134)
Purchases of property, equipment and capitalized software(89)(81)
Other, net(2)(41)
Net cash used in investing activities(719)(938)
Financing activities:
Common stock withheld to settle employee tax obligations(60)(53)
Common stock purchases (200)
Contingent consideration liabilities settled (20)
Other, net(1)15 
Net cash used in financing activities(61)(258)
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents1,572 (211)
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period4,048 4,506 
Cash, cash equivalents, and restricted cash and cash equivalents at end of period$5,620 $4,295 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2023

1. Organization and Basis of Presentation
Organization and Operations
Molina Healthcare, Inc. provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.
As of September 30, 2023, we served approximately 5.2 million members eligible for government-sponsored healthcare programs, located across 20 states.
Our state Medicaid contracts typically have terms of three to five years, contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause. Such contracts are subject to risk of loss in states that issue requests for proposal (“RFPs”) open to competitive bidding by other health plans. If one of our health plans is not a successful responsive bidder to a state RFP, its contract may not be renewed.
In addition to contract renewal, our state Medicaid contracts may be periodically amended to include or exclude certain health benefits (such as pharmacy services, behavioral health services, or long-term care services); and populations such as the aged, blind or disabled (“ABD”); and regions or service areas.
In Medicare, we enter into Medicare Advantage-Part D contracts with the Centers for Medicare and Medicaid Services (“CMS”) annually, and for dual-eligible plans, we enter into contracts with CMS, in partnership with each state’s department of health and human services. Such contracts typically have terms of one to three years.
In Marketplace, we enter into contracts with CMS, which end on December 31 of each year, and must be renewed annually.
Recent Developments
Wisconsin Acquisition—Medicaid and Medicare. On September 1, 2023, we closed on our acquisition of My Choice Wisconsin, which added approximately 40,000 mostly MLTSS members. See Note 4, “Business Combinations,” for further information.
New Mexico Procurement—Medicaid. In August 2023, we confirmed that the New Mexico Human Services Department (“HSD”) has announced its intention to award a Medicaid managed care contract to Molina Healthcare of New Mexico. The announcement by HSD follows its rescission of the cancellation of the Turquoise Care Request for Proposals made on January 30, 2023. The go-live date for the new Medicaid contract is expected to be July 1, 2024. The new contract is expected to have a duration of three years, with potential extensions adding a further five years to the term.
Texas Procurement—Medicaid. In July 2023, we finalized our contract for the Texas STAR+PLUS program, retaining our entire existing footprint. The start of operations for the new contract is expected to begin in September 2024.
Iowa Procurement—Medicaid. Our new contract with the Iowa Department of Health and Human Services commenced on July 1, 2023, and offers health coverage to TANF, CHIP, ABD, LTSS and Medicaid Expansion beneficiaries serving approximately 180,000 new members. This new contract has a term of four years, with a potential for two, two-year extensions.
Mississippi Procurement—Medicaid. In August 2022, we announced that our Mississippi health plan had been notified by the Mississippi Division of Medicaid (“DOM”) of its intent to award a Medicaid Coordinated Care Contract for its Mississippi Coordinated Access Program and Mississippi Children’s Health Insurance Program pursuant to the Request for Qualifications issued by DOM in December 2021. The four-year contract was expected to begin on July 1, 2023, but in the second quarter of 2023, DOM extended the existing contracts by an additional year. We now expect the four-year contract to commence July 1, 2024, and DOM has discretion to extend the new awards for an additional two years. The award enables us to continue serving Medicaid members across the state.
California Acquisition—Medicare. On June 30, 2023, we announced a definitive agreement to acquire 100% of the issued and outstanding capital stock of Brand New Day and Central Health Plan of California, each of which is a
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wholly owned subsidiary of Bright Health Company of California, Inc. The purchase price for the transaction is approximately $510 million, net of certain tax benefits, which we intend to fund with available funds including cash on hand. The transaction is subject to federal and state regulatory approvals, the solvency and continued operation as a going concern of Bright Health Group throughout the pre-closing period, and other closing conditions. The regulatory approval process is proceeding as planned. We continue to work with Bright management on satisfying the remaining closing conditions and continue to expect to close by the first quarter of 2024.
Indiana Procurement—Medicaid. In September 2023, the Indiana Family and Social Services Administration notified us that the state does not intend to offer a long-term services and supports contract to Molina to serve in the state’s Pathways for Aging program effective July 1, 2024. The state deemed Molina not to have met the readiness review requirements. Molina was required to have a dual eligible special needs plan (“D-SNP”) product available in Indiana by January 1, 2024, but was unable to do so due to an administrative requirement of the Centers for Medicare & Medicaid Services (“CMS”). Molina would have had a D-SNP in Indiana on January 1, 2025 through the normal course of action with CMS.
Consolidation and Interim Financial Information
The consolidated financial statements include the accounts of Molina Healthcare, Inc. and its subsidiaries. In the opinion of management, these financial statements reflect all normal recurring adjustments, which are considered necessary for a fair presentation of the results as of the dates and for the interim periods presented. All significant intercompany balances and transactions have been eliminated. The consolidated results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results for the entire year ending December 31, 2023.
The unaudited consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read or have access to our audited consolidated financial statements for the fiscal year ended December 31, 2022. Accordingly, certain disclosures that would substantially duplicate the disclosures contained in our December 31, 2022, audited consolidated financial statements have been omitted.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

2. Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term, highly liquid investments that are both readily convertible into known amounts of cash and have a maturity of three months or less on the date of purchase. The following table provides a reconciliation of cash and cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets.
September 30,
 20232022
(In millions)
Cash and cash equivalents$5,565 $4,242 
Restricted cash and cash equivalents55 53 
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows
$5,620 $4,295 
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Receivables
Receivables consist primarily of premium amounts due from government agencies, which are subject to potential retroactive adjustments. Because substantially all of our receivable amounts are readily determinable and substantially all of our creditors are governmental authorities, our allowance for credit losses is insignificant. Any amounts determined to be uncollectible are charged to expense when such determination is made.
September 30,
2023
December 31,
2022
(In millions)
Government receivables$1,737 $1,702 
Pharmacy rebate receivables316 291 
Other407 309 
Total$2,460 $2,302 
Premium Revenue Recognition and Amounts Due Government Agencies
Premium revenue is generated from our contracts with state and federal agencies, in connection with our participation in the Medicaid, Medicare, and Marketplace programs. Premium revenue is generally received based on per member per month (“PMPM”) rates established in advance of the periods covered. These premium revenues are recognized in the month that members are entitled to receive healthcare services, and premiums collected in advance are deferred. State Medicaid programs and the federal Medicare program periodically adjust premium rates, including certain components of premium revenue that are subject to accounting estimates and are described below, and in our 2022 Annual Report on Form 10-K, Note 2, “Significant Accounting Policies,” under “Contractual Provisions That May Adjust or Limit Revenue or Profit,” and “Quality Incentives.”
Contractual Provisions That May Adjust or Limit Revenue or Profit
Many of our contracts contain provisions that may adjust or limit revenue or profit, as described below. Consequently, we recognize premium revenue as it is earned under such provisions. Liabilities accrued for premiums to be returned under such provisions are reported in the aggregate as “Amounts due government agencies,” in the accompanying consolidated balance sheets. Categorized by program, such amounts due government agencies included the following:
September 30,
2023
December 31,
2022
(In millions)
Medicaid program:
Minimum MLR, corridors, and profit sharing$1,304 $1,145 
Other premium adjustments824 482 
Medicare program:
Minimum MLR, corridors, and profit sharing 64 84 
Risk adjustment and Part D risk sharing59 76 
Other premium adjustments28 27 
Marketplace program:
Risk adjustment163 230 
Minimum MLR2 2 
Other premium adjustments32 33 
Total amounts due government agencies$2,476 $2,079 
Medicaid Program
Minimum MLR and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs as a percentage of premium revenue, or minimum medical loss ratio (“Minimum MLR”). Under certain medical cost corridor provisions, the health plans may refund premiums or receive additional premiums, depending on whether amounts spent on medical care costs fall below or exceed defined thresholds. This includes remaining risk corridors that were enacted by various states in 2020 in response to the reduced demand for medical services stemming from COVID-19.
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Profit Sharing. Our contracts with certain states contain profit sharing provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any.
Other Premium Adjustments. State Medicaid programs periodically adjust premium revenues on a retroactive basis for rate changes and changes in membership and eligibility data. In certain states, adjustments are made based on the health status of our members (as measured through a risk score). In these cases, we adjust our premium revenue in the period in which we determine that the adjustment is probable and reasonably estimable, based on our best estimate of the ultimate premium we expect to realize for the period being adjusted.
Marketplace Program
Risk Adjustment. Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score for all plan participants in a state (risk adjustment payable), and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score for all plan participants in a state (risk adjustment receivable). Under CMS rules, the Marketplace risk adjustment pool in each state is budget neutral. We estimate our ultimate premium based on insurance policy year-to-date experience, and the data submitted and expected to be submitted to CMS, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of income. As of September 30, 2023, Marketplace risk adjustment estimated payables amounted to $163 million and estimated receivables amounted to $246 million, for a net receivable of $83 million. Marketplace risk adjustment receivables at September 30, 2023 are net of a $41 million credit loss allowance resulting from a credit loss recognized in the third quarter of 2023 on 2022 Marketplace risk adjustment receivables due to the insolvency of an issuer in the Texas risk pool. This charge is included in other operating expenses in the accompanying consolidated statements of income. As of December 31, 2022, Marketplace risk adjustment estimated payables amounted to $230 million and estimated receivables amounted to $135 million, for a net payable of $95 million.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, receivables, and restricted investments. Our investments and a portion of our cash equivalents are managed by professional portfolio managers operating under documented investment guidelines. Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. Our investments consist primarily of investment-grade debt securities with final maturities of less than 15 years, or less than 15 years average life for structured securities. Restricted investments are invested principally in cash, cash equivalents, U.S. Treasury securities, and corporate debt securities. Concentration of credit risk with respect to accounts receivable is limited because our payors consist principally of the federal government, and governments of each state in which our health plan subsidiaries operate.
Income Taxes
The provision for income taxes is determined using an estimated annual effective tax rate, which generally differs from the U.S. federal statutory rate primarily because of foreign and state taxes, and nondeductible expenses such as certain compensation and other general and administrative expenses.
The effective tax rate may be subject to fluctuations during the year as new information is obtained. Such information may affect the assumptions used to estimate the annual effective tax rate, including projected pretax earnings, the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or the reversal of the recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where we conduct business. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, along with net operating loss and tax credit carryovers.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not have, nor does management expect such pronouncements to have, a significant impact on our present or future consolidated financial statements.

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3. Net Income Per Share
The following table sets forth the calculation of basic and diluted net income per share:
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In millions, except net income per share)
Numerator:
Net income$245 $230 $875 $736 
Denominator:
Shares outstanding at the beginning of the period57.8 57.6 57.4 57.9 
Weighted-average number of shares issued:
Stock-based compensation  0.3 0.2 
Stock purchases   (0.3)
Denominator for basic net income per share57.8 57.6 57.7 57.8 
Effect of dilutive securities: (1)
Stock-based compensation0.3 0.7 0.4 0.7 
Denominator for diluted net income per share58.1 58.3 58.1 58.5 
Net income per share - Basic (2)
$4.24 $4.00 $15.18 $12.74 
Net income per share - Diluted (2)
$4.21 $3.95 $15.08 $12.58 
______________________________
(1)    The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method.
(2)    Source data for calculations in thousands.
    
4. Business Combinations
We closed on one business combination in the Medicaid and Medicare segments, consistent with our strategy to grow in our existing markets. For this transaction, we applied the acquisition method of accounting, where the total purchase price was preliminarily allocated, to the tangible and intangible assets acquired and liabilities assumed, based on their fair values as of the acquisition date. We expect to complete the final determination of the purchase price allocation as soon as practicable, but no later than one year following the acquisition’s closing date in accordance with Accounting Standards Codification Topic 805, Business Combinations.
My Choice. On September 1, 2023, we closed on our acquisition of My Choice Wisconsin for preliminary purchase consideration of approximately $74 million. Finalization of purchase price adjustments, as provided in the definitive asset purchase agreement governing the transaction, is expected to occur in the first half of 2024.
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Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Such assets include synergies we expect to achieve as a result of the transaction, such as the use of our existing infrastructure to support the added membership, and future economic benefits arising from the assembled workforce. We allocated goodwill in the amounts of $95 million to the Medicaid segment and $31 million to the Medicare segment. Approximately 100% of the goodwill is deductible for income tax purposes. The following table summarizes the provisional fair values assigned to assets acquired and liabilities assumed, in millions.
Assets acquired:
Current assets$98 
Goodwill126 
Intangible assets18 
Other long-term assets8 
Liabilities assumed:
Medical claims and benefits payable(96)
Amounts due government agencies(20)
Accounts payable, accrued and other long-term liabilities(60)
Net consideration transferred$74 
The table below presents intangible assets acquired, by major class, for the My Choice acquisition. The weighted-average amortization period, in the aggregate, is 6.5 years.
Fair ValueLife
 (In millions)(Years)
Contract rights - member list$13 7
Trade name3 2
Provider network2 10
$18 

5. Fair Value Measurements
We 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 used to: a) estimate the fair value; and b) determine the classification according to the fair value hierarchy for each financial instrument, refer to our 2022 Annual Report on Form 10-K, Note 5, “Fair Value Measurements.”
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Our financial instruments measured at fair value on a recurring basis at September 30, 2023, were as follows:
Observable InputsDirectly or Indirectly Observable InputsUnobservable Inputs
Total(Level 1) (Level 2) (Level 3)
 (In millions)
Corporate debt securities$2,619 $ $2,619 $ 
Mortgage-backed securities888  888  
Asset-backed securities361  361  
Municipal securities149  149  
U.S. Treasury notes51  51  
Other
43  43  
Total assets$4,111 $ $4,111 $ 
Our financial instruments measured at fair value on a recurring basis at December 31, 2022, were as follows:
Observable InputsDirectly or Indirectly Observable InputsUnobservable Inputs
Total(Level 1)(Level 2)(Level 3)
 (In millions)
Corporate debt securities$2,184 $ $2,184 $ 
Mortgage-backed securities731  731  
Asset-backed securities288  288  
Municipal securities149  149  
U.S. Treasury notes105  105  
Other
42  42  
Total assets $3,499 $ $3,499 $ 
Contingent consideration liabilities $8 $ $ $8 
Total liabilities$8 $ $ $8 
Contingent Consideration Liabilities
In the nine months ended September 30, 2023, we paid $8 million in connection with our 2020 acquisition of certain assets of Passport Health Plan, Inc., which represented the final payment of the consideration due relating to an operating income guarantee. The amount paid in the nine months ended September 30, 2023, has been presented in “Operating activities” in the accompanying consolidated statements of cash flows.
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, 2023December 31, 2022
 Carrying
Amount
Fair Value Carrying
Amount
Fair Value
 (In millions)
4.375% Notes due 2028
$793 $715 $792 $729 
3.875% Notes due 2030
644 537 643 554 
3.875% Notes due 2032
742 601 741 629 
Total$2,179 $1,853 $2,176 $1,912 

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6. Investments
Available-for-Sale
We consider all of our investments classified as current assets to be available-for-sale. The following tables summarize our current investments as of the dates indicated:
 September 30, 2023
Amortized CostGross UnrealizedEstimated Fair Value
 GainsLosses
 (In millions)
Corporate debt securities$2,739 $1 $121 $2,619 
Mortgage-backed securities955  67 888 
Asset-backed securities378  17 361 
Municipal securities159  10 149 
U.S. Treasury notes
51   51 
Other46  3 43 
Total$4,328 $1 $218 $4,111 
 December 31, 2022
 Amortized CostGross UnrealizedEstimated Fair Value
 GainsLosses
 (In millions)
Corporate debt securities$2,303 $2 $121 $2,184 
Mortgage-backed securities787  56 731 
Asset-backed securities308  20 288 
Municipal securities160  11 149 
U.S. Treasury notes
106  1 105 
Other45  3 42 
Total$3,709 $2 $212 $3,499 
The contractual maturities of our current investments as of September 30, 2023 are summarized below:
Amortized CostEstimated
Fair Value
 (In millions)
Due in one year or less$474 $464 
Due after one year through five years2,447 2,334 
Due after five years through ten years440 424 
Due after ten years967 889 
Total$4,328 $4,111 
Gross realized gains and losses from sales of available-for-sale securities are calculated under the specific identification method and are included in investment income. Gross realized investment gains were insignificant for the nine months ended September 30, 2023, and 2022. Gross realized investment losses amounted to $10 million in nine months ended September 30, 2023, and were reclassified into earnings from other comprehensive income on a net-of-tax basis. Gross realized investment losses were insignificant in nine months ended September 30, 2022.
We have determined that unrealized losses at September 30, 2023, and December 31, 2022, primarily resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers. Therefore, we determined that an allowance for credit losses was not necessary. So long as we maintain the intent and ability to hold these securities to maturity, we are unlikely to experience losses. In the event that we dispose of these securities before maturity, we expect that realized losses, if any, will be insignificant.
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The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of September 30, 2023:
In a Continuous Loss Position
for Less than 12 Months
In a Continuous Loss Position
for 12 Months or More
Estimated
Fair
Value
Unrealized
Losses
Total Number of PositionsEstimated
Fair
Value
Unrealized
Losses
Total Number of Positions
 (Dollars in millions)
Corporate debt securities$942 $23 549 $1,559 $98 785 
Mortgage-backed securities
272 10 219 567 57 297 
Asset-backed securities136 1 96 206 16 100 
Municipal securities   121 10 123 
Other
13 1 16 17 2 16 
Total$1,363 $35 880 $2,470 $183 1,321 
The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of December 31, 2022:
In a Continuous Loss Position
for Less than 12 Months
In a Continuous Loss Position
for 12 Months or More
Estimated
Fair
Value
Unrealized
Losses
Total Number of PositionsEstimated
Fair
Value
Unrealized
Losses
Total Number of Positions
 (Dollars in millions)
Corporate debt securities$1,124 $45 683 $887 $76 371 
Mortgage-backed securities
395 20 220 319 36 131 
Asset-backed securities161 6 108 118 14 59 
Municipal securities75 4 83 57 7 57 
U.S. Treasury notes88 1 6    
Other
15 1 16 17 2 6 
Total$1,858 $77 1,116 $1,398 $135 624 

Restricted Investments Held-to-Maturity
Pursuant to the regulations governing our state health plan subsidiaries, we maintain statutory deposits and deposits required by government authorities primarily in cash, cash equivalents, U.S. Treasury securities, and corporate debt securities. We also maintain restricted investments as protection against the insolvency of certain capitated providers. The use of these funds is limited as required by regulations in the various states in which we operate, or as needed in the event of insolvency of capitated providers. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets.
We have the ability to hold these restricted investments until maturity and, as a result, we would not expect the value of these investments to decline significantly due to a sudden change in market interest rates. Our held-to-maturity restricted investments are carried at amortized cost, which approximates fair value. Such investments amounted to $261 million at September 30, 2023, of which $100 million will mature in one year or less, $155 million will mature in one through five years, and $6 million will mature after five years.

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7. Medical Claims and Benefits Payable
The following table provides the details of our medical claims and benefits payable as of the dates indicated:
September 30,
2023
December 31,
2022
 (In millions)
Claims incurred but not paid (“IBNP”)$2,915 $2,597 
Pharmacy payable197 206 
Capitation payable92 94 
Other1,031 631 
Total$4,235 $3,528 

“Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various government agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. Non-risk provider payables amounted to $554 million and $228 million as of September 30, 2023, and December 31, 2022, respectively.
The following tables present the components of the change in our medical claims and benefits payable for the periods indicated. The amounts presented for “Components of medical care costs related to: Prior years” represent the amount by which our original estimate of medical claims and benefits payable at the beginning of the year varied from the actual liabilities, based on information (principally the payment of claims) developed since those liabilities were first reported.
Nine Months Ended September 30, 2023
Medicaid Medicare MarketplaceConsolidated
 (In millions)
Medical claims and benefits payable, beginning balance$2,815 $452 $261 $3,528 
Components of medical care costs related to:
Current year17,630 2,811 1,132 21,573 
Prior years(327)(6)(25)(358)
Total medical care costs17,303 2,805 1,107 21,215 
Payments for medical care costs related to:
Current year14,961 2,340 927 18,228 
Prior years2,074 424 209 2,707 
Total paid17,035 2,764 1,136 20,935 
Acquired balances, net of post-acquisition adjustments83 13  96 
Change in non-risk and other provider payables335 (4) 331 
Medical claims and benefits payable, ending balance$3,501 $502 $232 $4,235 
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Nine Months Ended September 30, 2022
Medicaid MedicareMarketplaceConsolidated
 (In millions)
Medical claims and benefits payable, beginning balance$2,580 $404 $379 $3,363 
Components of medical care costs related to:
Current year16,520 2,525 1,476 20,521 
Prior years(282)(38)(18)(338)
Total medical care costs16,238 2,487 1,458 20,183 
Payments for medical care costs related to:
Current year14,133 2,103 1,302 17,538 
Prior years1,861 337 283 2,481 
Total paid15,994 2,440 1,585 20,019 
Acquired balances, net of post-acquisition adjustments8   8 
Change in non-risk and other provider payables91 (4) 87 
Medical claims and benefits payable, ending balance$2,923 $447 $252 $3,622 

Our estimates of medical claims and benefits payable recorded at December 31, 2022, and 2021 developed favorably by approximately $358 million and $338 million as of September 30, 2023, and 2022, respectively.
The favorable prior year development recognized in the nine months ended September 30, 2023 was primarily due to lower than expected utilization of medical services by our members and improved operating performance. Consequently, the ultimate costs recognized in 2023, as claims payments were processed, were lower than our estimates in 2022.

8. Debt
The following table summarizes our outstanding debt obligations, all of which are non-current as of the dates reported below:
September 30,
2023
December 31,
2022
(In millions)
Non-current long-term debt:
4.375% Notes due 2028
$800 $800 
3.875% Notes due 2030
650 650 
3.875% Notes due 2032
750 750 
Deferred debt issuance costs (21)(24)
Total$2,179 $2,176 
Credit Agreement
We are party to a credit agreement (the “Credit Agreement”) which includes a revolving credit facility (“Credit Facility”) of $1.0 billion, among other provisions. The Credit Agreement has a term of five years, and all amounts outstanding will be due and payable on June 8, 2025. Borrowings under the Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case, the applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, we are required to pay a quarterly commitment fee.
Effective April 26, 2023, we amended the Credit Agreement to transition from the use of the London Interbank Offered Rate, or LIBOR, to the Secured Overnight Financing Rate, or SOFR, as a benchmark interest rate used in the Credit Agreement.
We have other relationships, including financial advisory and banking, with some parties to the Credit Agreement.
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The Credit Agreement contains customary non-financial and financial covenants. As of September 30, 2023, we were in compliance with all financial and non-financial covenants under the Credit Agreement. As of September 30, 2023, no amounts were outstanding under the Credit Facility.
Senior Notes
Our senior notes are described below. Each of these notes are senior unsecured obligations of the parent corporation, Molina Healthcare, Inc., and rank equally in right of payment with all existing and future senior debt, and senior to all existing and future subordinated debt of Molina Healthcare, Inc. In addition, each of the indentures governing the senior notes contain customary non-financial covenants and change of control provisions. As of September 30, 2023, we were in compliance with all non-financial covenants in the indentures governing the senior notes.
The indentures governing the senior notes contain cross-default provisions that are triggered upon default by us or any of our subsidiaries on any indebtedness in excess of the amount specified in the applicable indenture.
4.375% Notes due 2028. We had $800 million aggregate principal amount of senior notes (the “4.375% Notes”) outstanding as of September 30, 2023, which are due June 15, 2028, unless earlier redeemed. Interest, at a rate of 4.375% per annum, is payable semiannually in arrears on June 15 and December 15.
3.875% Notes due 2030. We had $650 million aggregate principal amount of senior notes (the “3.875% Notes due 2030”) outstanding as of September 30, 2023, which are due November 15, 2030, unless earlier redeemed. Interest, at a rate of 3.875% per annum, is payable semiannually in arrears on May 15 and November 15.
3.875% Notes due 2032. We had $750 million aggregate principal amount of senior notes (the “3.875% Notes due 2032”) outstanding as of September 30, 2023, which are due May 15, 2032, unless earlier redeemed. Interest, at a rate of 3.875% per annum, is payable semiannually in arrears on May 15 and November 15.

9. Stockholders' Equity
In September 2023, our board of directors authorized the purchase of up to $750 million of our common stock. This new program supersedes the stock purchase program previously approved by our board of directors in November 2022 and extends through December 31, 2024. The exact timing and amount of any repurchase is determined by management based on market conditions and share price, in addition to other factors, and subject to the restrictions relating to volume, price, and timing under applicable law.

10. Segments
We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.
The Medicaid, Medicare, and Marketplace segments represent the government-funded or sponsored programs under which we offer managed healthcare services. The Other segment, which is insignificant to our consolidated results of operations, includes long-term services and supports consultative services in Wisconsin.
The key metrics used to assess the performance of our Medicaid, Medicare, and Marketplace segments are premium revenue, medical margin and medical care ratio (“MCR”). MCR represents the amount of medical care costs as a percentage of premium revenue. Therefore, the underlying medical margin, or the amount earned by the Medicaid, Medicare, and Marketplace segments after medical costs are deducted from premium revenue, represents the most important measure of earnings reviewed by management, and is used by our chief executive officer to review results, assess performance, and allocate resources. The key metric used to assess the performance of our Other segment is service margin. The service margin is equal to service revenue minus cost of service revenue. We do not report total assets by segment because this is not a metric used to assess segment performance or allocate resources.
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The following table presents total revenue by segment. Inter-segment revenue was insignificant for all periods presented.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In millions)
Total revenue:
Medicaid$6,976 $6,380 $20,282 $19,091 
Medicare1,046 955 3,157 2,867 
Marketplace507 575 1,528 1,740 
Other19 17 57 53 
Total$8,548 $7,927 $25,024 $23,751 
The following table reconciles margin by segment to consolidated income before income taxes.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In millions)
Margin:
Medicaid$752 $703 $2,242 $2,168 
Medicare78 108 317 360 
Marketplace104 77 393 255 
Other 2 2 7 8 
Total margin 936 890 2,959 2,791 
Add: other operating revenues (1)
289 274 800 732 
Less: other operating expenses (2)
(866)(829)(2,502)(2,455)
Operating income359 335 1,257 1,068 
Other expenses, net27 28 82 83 
Income before income tax expense$332 $307 $1,175 $985 
______________________
(1)Other operating revenues include premium tax revenue, investment income, and certain other revenue.
(2)Other operating expenses include general and administrative expenses, premium tax expenses, depreciation and amortization, and certain other operating expenses, including a credit loss charge of $41 million as described in Note 2.
11. Commitments and Contingencies
Overview
The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments, as well as various contractual provisions, governing our operations. Compliance with these laws, regulations, and contractual provisions can be subject to government audit, review, and interpretation, as well as regulatory actions. Penalties associated with violations of these laws, regulations, and contractual provisions can include significant fines and penalties, temporary or permanent exclusion from participating in publicly funded programs, a limitation on our ability to market or sell products, the repayment of previously billed and collected revenues, and reputational damage.
Legal Proceedings
We are involved in legal actions in the ordinary course of business including, but not limited to, various employment claims, vendor disputes and provider claims. Some of these legal actions seek monetary damages, including claims for punitive damages, which may not be covered by insurance. We review legal matters and update our estimates of reasonably possible losses and related disclosures, as necessary. We have accrued liabilities for legal matters for which we deem the loss to be both probable and reasonably estimable. These liability estimates could change as a result of further developments of the matters. The outcome of legal actions is inherently uncertain. An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations, or cash flows.
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Kentucky RFP. On September 4, 2020, Anthem Kentucky Managed Care Plan, Inc. (“Anthem”) brought an action in Franklin County Circuit Court against the Kentucky Finance and Administration Cabinet, the Kentucky Cabinet for Health and Family Services, and all of the five winning bidder health plans, including our Kentucky health plan. On September 9, 2022, the Kentucky Court of Appeals ruled that, with regard to the earlier Circuit Court ruling granting Anthem relief, the Circuit Court should not have invalidated the 2020 procurement and thus should not have awarded a contract to Anthem. Anthem sought discretionary review by the Kentucky Supreme Court (“KSC”) of the ruling by the Court of Appeals. On April 19, 2023, KSC granted Anthem’s request for discretionary review and ordered legal briefing, which the parties completed in September 2023. KSC is expected to schedule oral argument. Pending further KSC order, our Kentucky health plan will continue to operate for the foreseeable future under its current Medicaid contract. At this time, the Company cannot predict the outcome, or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.
Puerto Rico. On August 13, 2021, Molina Healthcare of Puerto Rico, Inc. (“MHPR”) filed a complaint with the Commonwealth of Puerto Rico, Court of First Instance, San Juan (State Court) asserting, among other claims, breach of contract against Puerto Rico Health Insurance Administration (“ASES”). On September 13, 2021, ASES filed a counterclaim and a third-party complaint against MHPR and the Company. The parties are engaged in settlement conversations. A status hearing was held on September 28, 2023, in which ASES and Molina informed the Court of the ongoing settlement conversations. The Court scheduled a status conference for January 17, 2024, to receive an update on settlement and at this time, the Company cannot predict the outcome, or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered under the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Securities Exchange Act. Many of the forward-looking statements are located under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions, and all statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by words such as “guidance,” “future,” “anticipates,” “believes,” “embedded,” “estimates,” “expects,” “growth,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our future results of operations and financial position, industry and business trends, regulatory developments, business strategy, strategic transactions and commercial arrangements, membership and market growth and our objectives for future operations.
Readers are cautioned not to place undue reliance on any forward-looking statements, as forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the risk factors identified in the section titled “Risk Factors” in our 2022 Annual Report on Form 10-K, including without limitation risks related to the following matters:
the impact of Medicaid redeterminations across the country following the ending of the Public Health Emergency (“PHE”) for the COVID-19 pandemic, including the accuracy of our projections regarding the number of members we expect to retain, their health acuity levels, and the scale of the transition of members out of the Medicaid program and the actuarially sound adjustment of rates with regard to the remaining population;
budget pressures on state governments following the ending of the PHE and reduced federal matching funds, and states’ efforts to reduce rates or limit rate increases;
the constantly evolving market dynamics surrounding the Affordable Care Act (ACA”) Marketplaces, including issues impacting enrollment, special enrollment periods, member choice, risk adjustment estimates and results, Marketplace plan insolvencies or receiverships, and the potential for disproportionate enrollment of higher acuity members;
the success of our efforts to retain existing or awarded government contracts, the success of our bid submissions in response to requests for proposal, and our ability to identify merger and acquisition targets to support our continued growth over time;
the success of the scaling up of our operations in California, New Mexico and Nebraska in connection with our recent request for proposal (“RFP”) wins, and the satisfaction of all readiness review requirements under the new Medicaid contracts;
our ability to close, integrate, and realize benefits from acquisitions, including the acquisitions of AgeWell New York, My Choice Wisconsin, Brand New Day and Central Health Plan of California;
subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment;
effective management of our medical costs;
our ability to predict with a reasonable degree of accuracy utilization rates;
cyber-attacks, ransomware attacks, or other privacy or data security incidents involving either ourselves or our contracted vendors that result in an inadvertent unauthorized disclosure of protected information, and the extent to which our working in a remote work environment heightens our exposure to these risks;
the ability to manage our operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of our care management initiatives;
the impact of our transition to a permanent remote work environment, including any associated impairment charges or contract termination costs;
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our receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
our ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions and requirements;
our estimates of amounts owed for such minimum annual medical loss ratio (“Minimum MLR”), administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions and requirements;
the Medicaid expansion medical cost corridor, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and our ability to recognize revenue amounts associated therewith;
the success and continuance of programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas serving those dually eligible for both Medicaid and Medicare;
the increasing integration of Medicare and Medicaid programmatic and compliance requirements, and the extension or incorporation of federal Medicare requirements developed by CMS into state-administered Medicaid programs;
the accurate estimation of incurred but not reported or paid medical costs across our health plans;
efforts by states to recoup previously paid and recognized premium amounts;
changes in our annual effective tax rate, due to federal and/or state legislation, or changes in our mix of earnings and other factors;
the efficient and effective operations of the vendors on whom our business relies;
complications, member confusion, eligibility redeterminations, or enrollment backlogs related to the renewal of Medicaid coverage;
fraud, waste and abuse matters, government audits or reviews, comment letters, or potential investigations, and any fine, sanction, enrollment freeze, corrective action plan, monitoring program, or premium recovery that may result therefrom;
the success of our providers, including delegated providers, the adequacy of our provider networks, the successful maintenance of relations with our providers, and the potential loss of providers;
approval by state regulators of dividends and distributions by our health plan subsidiaries;
changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
high dollar claims related to catastrophic illness;
the resolution of litigation, arbitration, or administrative proceedings;
the greater scale and revenues of our health plans in California, New York, Ohio, Texas, and Washington, and risks related to the concentration of our business in those states;
the failure to comply with the financial or other covenants in our credit agreement or the indentures governing our outstanding senior notes;
the availability of adequate financing on acceptable terms to fund and capitalize our expansion and growth, repay our outstanding indebtedness at maturity, and meet our general liquidity needs;
the failure of a state in which we operate to renew its federal Medicaid waiver;
changes generally affecting the managed care industry, including any new federal or state legislation that impacts the business space in which we operate;
increases in government surcharges, taxes, and assessments;
the impact of inflation on our medical costs and the cost of refinancing our outstanding indebtedness;
the unexpected loss of the leadership of one or more of our senior executives; and
increasing competition and consolidation in the Medicaid industry.
Each of the terms “Molina Healthcare, Inc.” “Molina Healthcare,” “Company,” “we,” “our,” and “us,” as used herein, refers collectively to Molina Healthcare, Inc. and its wholly owned subsidiaries, unless otherwise stated. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. We
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qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
This Quarterly Report on Form 10-Q and the following discussion of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the notes to those statements appearing elsewhere in this report, and the audited financial statements and Management’s Discussion and Analysis appearing in our 2022 Annual Report on Form 10-K.
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OVERVIEW
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We served approximately 5.2 million members as of September 30, 2023, located across 20 states.
THIRD QUARTER 2023 HIGHLIGHTS
We reported net income of $245 million, or $4.21 per diluted share, for the third quarter of 2023, which reflected the following:
Membership of 5.2 million at September 30, 2023, which increased 31,000, or 1%, compared with September 30, 2022, primarily due to the commencement of the Iowa Medicaid contract in July 2023 and closing of the My Choice Wisconsin acquisition in September 2023, which offset the impact of Medicaid redeterminations;
Premium revenue of $8.2 billion, which increased 8% compared with the third quarter of 2022 due to the increased membership in Medicaid and Medicare, partially offset by the impact of expected attrition in Marketplace membership;
Consolidated medical care ratio (“MCR”) of 88.7%, compared with 88.4% for the third quarter of 2022. Our year-to-date consolidated MCR of 87.8% is squarely in line with our long-term target range, reflecting continued strong operating performance and medical cost management;
Investment income of $112 million, which increased 129% compared with the third quarter of 2022, and continues to bolster our year-over-year increase in net income;
General and administrative expense (“G&A”) ratio of 7.1%, which was consistent with the third quarter of 2022 despite new business implementation spending for new contract wins that started in July 2023 and expected to begin in 2024, due to the benefits of disciplined cost management; and
After-tax margin of 2.9%, which was in line with our expectations.

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CONSOLIDATED FINANCIAL SUMMARY
The following table summarizes our consolidated results of operations and other financial information for the periods indicated:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In millions, except per-share amounts)
Premium revenue$8,240 $7,636 $24,167 $22,966 
Less: medical care costs7,306 6,748 21,215 20,183 
Medical margin934 888 2,952 2,783 
MCR (1)
88.7 %88.4 %87.8 %87.9 %
Other revenues:
Premium tax revenue176 223 517 646 
Investment income112 49 280 82 
Other revenue20 19 60 57 
General and administrative expenses608 560 1,817 1,682 
G&A ratio (2)
7.1 %7.1 %7.3 %7.1 %
Premium tax expenses176 223 517 646 
Depreciation and amortization42 45 128 129 
Other57 16 90 43 
Operating income359 335 1,257 1,068 
Interest expense27 28 82 83 
Income before income tax expense332 307 1,175 985 
Income tax expense87 77 300 249 
Net income$245 $230 $875 $736 
Net income per share – Diluted
$4.21 $3.95 $15.08 $12.58 
Diluted weighted average shares outstanding58.1 58.3 58.1 58.5 
Other Key Statistics
Ending membership5.2 5.2 5.2 5.2 
Effective income tax rate26.3 %24.9 %25.5 %25.2 %
After-tax margin (3)
2.9 %2.9 %3.5 %