Molina Healthcare, Inc 10-K for FY2022

Molina Healthcare, Inc. (MOH)

10-K 2023-02-13 For: 2022-12-31

Added on April 10, 2026

About this 10-K

Molina Healthcare, Inc filed this 10-K on February 13, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $31.97B; up 15.1% from $27.77B a year earlier
Net income: $792M; up 20.2% from net income of $659M a year earlier
Diluted EPS: $13.55; up 20.4% from $11.25 a year earlier

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Delaware						13-4204626
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 Par Value	MOH	New York Stock Exchange


		Page

Part I
Item Number
1.	Business	3

1A.	Risk Factors	19

1B.	Unresolved Staff Comments	Not Applicable.

2.	Properties	32

3.	Legal Proceedings	32

4.	Mine Safety Disclosures	Not Applicable.

Part II

5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32

6.	[Reserved]	Not Applicable.

7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

7A.	Quantitative and Qualitative Disclosures About Market Risk	46

8.	Financial Statements and Supplementary Data	48

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	Not Applicable.

9A.	Controls and Procedures	85

9B.	Other Information	89

9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	Not Applicable.

Part III

10.	Directors, Executive Officers and Corporate Governance	89

11.	Executive Compensation	89

12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	89

13.	Certain Relationships and Related Transactions, and Director Independence	89

14.	Principal Accountant Fees and Services	89

Part IV

15.	Exhibits and Financial Statement Schedules	90

16.	Form 10-K Summary	Not Applicable.


	Year Ended December 31,
	2022			2021

	(In millions, except per-share amounts)
Premium Revenue	$	30,883		$	26,855
Total Revenue	$	31,974		$	27,771
Medical Care Ratio (“MCR”) (1)	88.0		%	88.3		%
Net Income	$	792		$	659
Net Income per Diluted Share	$	13.55		$	11.25


	As of December 31,
	2022	2021



Medicaid	4,754,000	4,329,000


Medicare	156,000	142,000

Marketplace	348,000	728,000
Total	5,258,000	5,199,000


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)
October 1 — October 31	2,000	$	331.74	—	$	300,000,000
November 1 — November 30	147,000	$	328.85	147,000	$	451,658,000
December 1 — December 31	443,000	$	342.44	443,000	$	300,000,000
	592,000	$	339.03	590,000


Increase (Decrease) in Estimated Completion Factors	Increase (Decrease) in Medical Claims and Benefits Payable
(6)%	$	869
(4)%	579
(2)%	290
2%	(290)
4%	(579)
6%	(869)


(Decrease) Increase in Trended Per Member Per Month Cost Estimates	(Decrease) Increase in Medical Claims and Benefits Payable
(6)%	$	(307)
(4)%	(204)
(2)%	(102)
2%	102
4%	204
6%	307


			Page
Consolidated Statements of Income			49
Consolidated Statements of Comprehensive Income			49
Consolidated Balance Sheets			50
Consolidated Statements of Stockholders’ Equity			51
Consolidated Statements of Cash Flows			52
Notes to Consolidated Financial Statements			54


	December 31,
	2022		2021

	(Dollars in millions, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	4,006	$	4,438
Investments	3,499		3,202
Receivables	2,302		2,177
Prepaid expenses and other current assets	277		247
Total current assets	10,084		10,064
Property, equipment, and capitalized software, net	259		396
Goodwill and intangible assets, net	1,390		1,252
Restricted investments	238		212
Deferred income taxes	220		106
Other assets	123		179
Total assets	$	12,314	$	12,209

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	3,528	$	3,363
Amounts due government agencies	2,079		2,472
Accounts payable, accrued liabilities and other	889		842
Deferred revenue	359		370
Total current liabilities	6,855		7,047
Long-term debt	2,176		2,173
Finance lease liabilities	215		219
Other long-term liabilities	104		140
Total liabilities	9,350		9,579
Stockholders’ equity:
Common stock, $0.001 par value per share; 150 million shares authorized; outstanding: 58 million shares at each of December 31, 2022, and December 31, 2021	—		—
Preferred stock, $0.001 par value per share; 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	$	12,314	$	12,209


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
	Outstanding	Amount

	(In millions)
Balance at December 31, 2019	62	$	—	$	175	$	4	$	1,781	$	1,960
Net income	—	—		—		—		673		673
Common stock purchases	(4)	—		(11)		—		(594)		(605)
Termination of warrants	—	—		(30)		—		—		(30)







Other comprehensive income, net	—	—		—		33		—		33
Share-based compensation	1	—		65		—		—		65
Balance at December 31, 2020	59	—		199		37		1,860		2,096
Net income	—	—		—		—		659		659
Common stock purchases	(1)	—		(2)		—		(120)		(122)








Other comprehensive loss, net	—	—		—		(42)		—		(42)
Share-based compensation	—	—		39		—		—		39
Balance at December 31, 2021	58	—		236		(5)		2,399		2,630
Net income	—	—		—		—		792		792
Common stock purchases	(1)	—		(5)		—		(395)		(400)








Other comprehensive loss, net	—	—		—		(155)		—		(155)
Share-based compensation	1	—		97		—		—		97
Balance at December 31, 2022	58	$	—	$	328	$	(160)	$	2,796	$	2,964


	Fair Value		Life			Weighted-Average Life

	(In millions)		(Years)			(Years)
Contract rights - member list	$	81	2	-	5	3.7
Provider network	1		2	-	5	4.0
	$	82				3.7


	Total		Level 1		Level 2		Level 3

	(In millions)
Corporate debt securities	$	2,184	$	—	$	2,184	$	—
Mortgage-backed securities	731		—		731		—
Asset-backed securities	288		—		288		—
Municipal securities	149		—		149		—
U.S. Treasury notes	105		—		105		—


Other	42		—		42		—
Total assets	$	3,499	$	—	$	3,499	$	—

Contingent consideration liabilities	$	8	$	—	$	—	$	8
Total liabilities	$	8	$	—	$	—	$	8


	Year Ended December 31,
	2022			2021

	(In millions, except per-share amounts)
Premium revenue	$	30,883		$	26,855
Less: medical care costs	27,175			23,704
Medical margin	3,708			3,151
MCR (1)	88.0		%	88.3		%

Other revenues:
Premium tax revenue	873			787


Investment income	143			52
Other revenue	75			77

General and administrative expenses	2,311			2,068
G&A ratio (2)	7.2		%	7.4		%

Premium tax expenses	873			787

Depreciation and amortization	176			131
Impairment	208			—
Other	58			61
Operating income	1,173			1,020
Interest expense	110			120
Other expenses, net	—			25
Income before income tax expense	1,063			875
Income tax expense	271			216
Net income	$	792		$	659

Net income per diluted share	$	13.55		$	11.25

Diluted weighted average shares outstanding	58.5			58.6

Other Key Statistics:
Ending Membership	5.3			5.2
Effective income tax rate	25.5		%	24.7		%
After-tax margin (3)	2.5		%	2.4		%


	Year Ended December 31,
	2022						2021
	Premium Revenue		Medical Margin		MCR		Premium Revenue		Medical Margin		MCR

Medicaid	$	24,827	$	2,981	88.0	%	$	20,461	$	2,322	88.7	%
Medicare	3,795		437		88.5		3,361		430		87.2
Marketplace	2,261		290		87.2		3,033		399		86.9
Total	$	30,883	$	3,708	88.0	%	$	26,855	$	3,151	88.3	%


	Year Ended December 31,
	2022		2021		Change

	(In millions)
Net cash provided by operating activities	$	773	$	2,119	$	(1,346)
Net cash used in investing activities	(790)		(1,653)		863
Net cash used in financing activities	(441)		(183)		(258)
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents	$	(458)	$	283	$	(741)


	Year Ended December 31,
	2022						2021
	Amount		PMPM		% of Total		Amount		PMPM		% of Total

	(In millions, except PMPM amounts)
Fee-for-service	$	19,703	$	318.55	72.5	%	$	17,433	$	303.80	73.5	%
Pharmacy	4,346		70.26		16.0		3,831		66.77		16.2
Capitation	1,637		26.47		6.0		1,471		25.64		6.2
Other	1,489		24.07		5.5		969		16.88		4.1
Total	$	27,175	$	439.35	100.0	%	$	23,704	$	413.09	100.0	%


	December 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

	(In millions)
4.375% Notes due 2028	$	792	$	729	$	791	$	829
3.875% Notes due 2030	643		554		642		675
3.875% Notes due 2032	741		629		740		760
Total	$	2,176	$	1,912	$	2,173	$	2,264


	December 31, 2022
	Amortized Cost		Gross Unrealized				Estimated Fair Value
			Gains		Losses

	(In millions)
Corporate debt securities	$	2,303	$	2	$	121	$	2,184
Mortgage-backed securities	787		—		56		731
Asset-backed securities	308		—		20		288
Municipal securities	160		—		11		149
U.S. Treasury notes	106		—		1		105


Other	45		—		3		42
Total	$	3,709	$	2	$	212	$	3,499


	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 Positions	Estimated 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 securities	161		6		108	118		14		59
Municipal securities	75		4		83	57		7		57
U.S. Treasury notes	88		1		6	—		—		—

Other	15		1		16	17		2		6

Total	$	1,858	$	77	1,116	$	1,398	$	135	624


	Operating		Finance
	Leases		Leases

	(In millions)
2023	$	28	$	34
2024	22		30
2025	18		26
2026	11		23
2027	9		24
Thereafter	55		219
Subtotal - undiscounted lease payments	143		356
Less imputed interest	(25)		(119)
Total	$	118	$	237


	December 31, 2022						December 31, 2021
	Cost		Accumulated Amortization		Carrying Amount		Cost		Accumulated Amortization		Carrying Amount

	(In millions)
Contract rights and licenses	$	507	$	279	$	228	$	426	$	210	$	216
Provider networks	57		24		33		56		19		37
Trade names	19		5		14		19		2		17
Total	$	583	$	308	$	275	$	501	$	231	$	270


	Year Ended December 31, 2022
	Medicaid		Medicare		Marketplace		Consolidated

	(In millions)
Medical claims and benefits payable, beginning balance	$	2,580	$	404	$	379	$	3,363
Components of medical care costs related to:
Current year	22,097		3,390		1,972		27,459
Prior years	(251)		(32)		(1)		(284)
Total medical care costs	21,846		3,358		1,971		27,175
Payments for medical care costs related to:
Current year	19,655		2,944		1,746		24,345
Prior years	1,966		361		343		2,670
Total paid	21,621		3,305		2,089		27,015
Acquired balances, net of post-acquisition adjustments	12		—		—		12
Change in non-risk and other provider payables	(2)		(5)		—		(7)
Medical claims and benefits payable, ending balance	$	2,815	$	452	$	261	$	3,528


	Year Ended December 31, 2021
	Medicaid		Medicare		Marketplace		Consolidated

	(In millions)
Medical claims and benefits payable, beginning balance	$	2,129	$	392	$	175	$	2,696
Components of medical care costs related to:
Current year	18,321		2,970		2,652		23,943
Prior years	(182)		(39)		(18)		(239)
Total medical care costs	18,139		2,931		2,634		23,704
Payments for medical care costs related to:
Current year	16,284		2,573		2,291		21,148
Prior years	1,601		340		139		2,080
Total paid	17,885		2,913		2,430		23,228
Acquired balances, net of post-acquisition adjustments	205		(8)		—		197
Change in non-risk and other provider payables	(8)		2		—		(6)
Medical claims and benefits payable, ending balance	$	2,580	$	404	$	379	$	3,363


	Year Ended December 31, 2020
	Medicaid		Medicare		Marketplace		Consolidated

	(In millions)
Medical claims and benefits payable, beginning balance	$	1,465	$	267	$	122	$	1,854
Components of medical care costs related to:
Current year	12,545		2,189		1,205		15,939
Prior years	(84)		(28)		(7)		(119)
Total medical care costs	12,461		2,161		1,198		15,820
Payments for medical care costs related to:
Current year	10,940		1,884		1,047		13,871
Prior years	1,176		233		98		1,507
Total paid	12,116		2,117		1,145		15,378
Acquired balances, net of post-acquisition adjustments	215		79		—		294
Change in non-risk and other provider payables	104		2		—		106
Medical claims and benefits payable, ending balance	$	2,129	$	392	$	175	$	2,696


Incurred Claims and Allocated Claims Adjustment Expenses							Total IBNP		Cumulative number of reported claims
Benefit Year	2020		2021		2022

	(Unaudited)		(Unaudited)
	(In millions)
2020	$	16,233	$	16,056	$	16,000	$	27	138
2021			24,167		23,979		108		236
2022					27,459		2,453		264
					$	67,438	$	2,588


Cumulative Paid Claims and Allocated Claims Adjustment Expenses
Benefit Year	2020		2021		2022

	(Unaudited)		(Unaudited)
	(In millions)
2020	$	13,871	$	16,004	$	15,973
2021			21,148		23,871
2022					24,345
					$	64,189


	RSAs	Weighted Average Grant Date Fair Value		PSUs	Weighted Average Grant Date Fair Value
Unvested balance, December 31, 2021	539,117	$	169.39	275,050	$	129.99
Granted	237,590	312.27		271,270	214.94
Vested	(224,345)	156.21		(219,674)	137.54
Forfeited	(41,257)	224.96		(13,816)	249.09
Unvested balance, December 31, 2022	511,105	$	237.10	312,830	$	193.09


	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual term

		(Per share)		(In millions)		(Years)
Stock options outstanding as of December 31, 2021	395,000	$	65.59
Exercised	(390,000)	66.01
Stock options outstanding, vested, and exercisable as of December 31, 2022	5,000	33.02		$	1	0.2


						Incurred but not paid (IBNP) claims reverses

Description of the matter						As of December 31, 2022, the Company’s liability for fee-for-service claims incurred but not paid (“IBNP”), comprised $2,597 million of the $3,528 million of Medical Claims and Benefits Payable. The Company’s IBNP liability is determined using actuarial methods that include a number of factors and assumptions, including completion factors, which seek to measure the cumulative percentage of claims expense that will have been paid for a given month of service as of the reporting date, based on historical payment patterns, and assumed health care cost trend factors, which represent an estimate of claims expense based on recent claims expense levels and healthcare cost levels. There is significant uncertainty inherent in determining management’s best estimate of completion and trend factors, which are used to calculate actuarial estimates of incurred but not paid claims.


How we addressed the matter in our audit						We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the process for estimating the IBNP liability. This included testing management review controls over completion and trend factor assumptions, and management’s review and approval of actuarial methods used to calculate IBNP liability, including the data inputs and outputs of those models.

						To test IBNP liability, our audit procedures included, among others, testing the completeness and accuracy of data used in the calculation by testing reconciliations of underlying claims and membership data recorded in source systems to the actuarial reserving calculations, and comparing a sample of claims to source documentation. With the assistance of EY actuarial specialists, we evaluated the Company’s selection and weighting of actuarial methods by comparing the weightings used in the current estimate to those used in prior periods and those used in the industry for the specific types of insurance. To evaluate significant assumptions used by management in the actuarial methods, we compared assumptions to current and historical claims trends, to those used historically and to current industry benchmarks. We also compared management’s recorded IBNP liability to a range of reasonable IBNP estimates calculated independently by our EY actuarial specialists. Additionally, we performed a review of the prior period estimates using subsequent claims development, and we reviewed and evaluated management’s disclosures surrounding fee-for-service claims IBNP.


			MOLINA HEALTHCARE, INC.

			By:						/s/ Joseph M. Zubretsky
									Joseph M. Zubretsky
									Chief Executive Officer (Principal Executive Officer)


Signature						Title

/s/ Joseph M. Zubretsky						Chief Executive Officer, President and Director
Joseph M. Zubretsky						(Principal Executive Officer)

/s/ Mark L. Keim						Chief Financial Officer
Mark L. Keim						(Principal Financial Officer)

/s/ Maurice S. Hebert						Chief Accounting Officer
Maurice S. Hebert						(Principal Accounting Officer)

/s/ Barbara L. Brasier						Director
Barbara L. Brasier

/s/ Daniel Cooperman						Director
Daniel Cooperman

/s/ Stephen H. Lockhart						Director
Stephen H. Lockhart

/s/ Steven J. Orlando						Director
Steven J. Orlando

/s/ Ronna E. Romney						Director
Ronna E. Romney

/s/ Richard M. Schapiro						Director
Richard M. Schapiro

/s/ Dale B. Wolf						Chairman of the Board
Dale B. Wolf

/s/ Richard C. Zoretic						Director
Richard C. Zoretic


*			Management contract or compensatory plan or arrangement required to be filed (and/or incorporated by reference) as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K.
**			Certain portions of this agreement have been omitted in accordance with Item 601(b)(10) of Regulation S-K. A copy of any omitted portion will be furnished to the Securities and Exchange Commission upon request.
+			Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission under Rule 24b-2. The omitted confidential material has been filed separately. The location of the redacted confidential information is indicated in the exhibit as “[redacted]”.


Name			Jurisdiction of Incorporation
2028 West Broadway, LLC			Delaware
MHAZ, Inc.*			Arizona
Molina Healthcare Data Center, LLC			New Mexico
Molina Healthcare of Arizona, Inc.			Arizona
Molina Healthcare of California			California
Molina Healthcare of Florida, Inc.			Florida
Molina Healthcare of Georgia, Inc.*			Georgia
Molina Healthcare of Illinois, Inc.			Illinois
Molina Healthcare of Indiana, Inc.*			Indiana
Molina Healthcare of Iowa, Inc.*			Iowa
Molina Healthcare of Kentucky, Inc.			Kentucky
Molina Healthcare of Louisiana, Inc.*			Louisiana
Molina Healthcare of Michigan, Inc.			Michigan
Molina Healthcare of Mississippi, Inc.			Mississippi
Molina Healthcare of Nebraska, Inc.*			Nebraska
Molina Healthcare of Nevada, Inc.			Nevada
Molina Healthcare of New Mexico, Inc.			New Mexico
Molina Healthcare of New York, Inc.			New York
Molina Healthcare of Ohio, Inc.			Ohio
Molina Healthcare of Oklahoma, Inc.*			Oklahoma
Molina Healthcare of Pennsylvania, Inc.*			Pennsylvania
Molina Healthcare of Puerto Rico, Inc.			Puerto Rico/Nevada
Molina Healthcare of Rhode Island Holding Company, Inc.			Delaware
Molina Healthcare of Rhode Island, Inc.+*			Rhode Island
Molina Healthcare of South Carolina, Inc.			South Carolina
Molina Healthcare of Tennessee, Inc.*			Tennessee
Molina Healthcare of Texas, Inc.			Texas
Molina Healthcare of Texas Insurance Company			Texas
Molina Healthcare of Utah, Inc.			Utah
Molina Healthcare of Virginia, LLC			Virginia
Molina Healthcare of Washington, Inc.			Washington
Molina Healthcare of Wisconsin, Inc.			Wisconsin
Molina Healthcare of Wisconsin CMO, Inc.*			Wisconsin
Molina Clinical Services, LLC			Delaware
Molina Care Connections, LLC			Texas
Oceangate Reinsurance, Inc.			Utah
SWH Holdings, Inc.			Delaware
Senior Health Holdings, LLC++			Delaware
Senior Health Holdings, Inc.+++			Delaware
AlphaCare Holdings, Inc.++++			Delaware
Senior Whole Health of New York, Inc.+++++			New York
Senior Whole Health, LLC++++			Delaware
The Management Group, LLC			Wisconsin



Dated: February 13, 2023						/s/ Joseph M. Zubretsky
						Joseph M. Zubretsky
						Chief Executive Officer, President and Director