Molina Healthcare Reports Second Quarter 2008 Results

LONG BEACH, Calif.--(Business Wire)--
Molina Healthcare, Inc. (NYSE: MOH):

-- Diluted earnings of $0.59 per share, up 25% over the second
quarter of 2007.

-- Revises range of full-year 2008 guidance to $2.20 to $2.40 per
diluted share.

-- Quarterly revenues of $766.5 million, up 25%.

-- Aggregate membership up 15% over the second quarter of 2007
(including the Missouri plan) and 4% sequentially.

-- 1.1 million shares repurchased; additional share repurchase
program announced.

Molina Healthcare, Inc. (NYSE: MOH) today announced its financial
results for the second quarter and six months ended June 30, 2008.

Net income for the second quarter ended June 30, 2008, increased
to $16.5 million, or $0.59 per diluted share, compared with net income
of $13.3 million, or $0.47 per diluted share, for the quarter ended
June 30, 2007. Net income for the six months ended June 30, 2008,
increased to $29.7 million, or $1.05 per diluted share, compared with
net income of $22.9 million, or $0.81 per diluted share, for the six
months period ended June 30, 2007.

In commenting on the results, J. Mario Molina, M.D., president and
chief executive officer of Molina Healthcare, said, "Our 24%
improvement over second quarter 2007 net income and our 4% sequential
enrollment growth demonstrate continued progress towards our strategic
goals of growth, diversification of revenues, containment of
administrative costs, and prudent management of medical care costs."

2008 Earnings Per Share Guidance

The Company revised the range of its full-year 2008 guidance to
$2.20 to $2.40 per diluted share. The Company had previously issued
revised guidance for 2008 of $2.10 to $2.40 on April 29, 2008. The
Company believes that the improved financial performance at a number
of its health plans, particularly in Michigan, Missouri, New Mexico
and Texas, contributed most significantly to its revision of guidance.
The net improvement in health plan performance will be partially
offset by higher administrative costs, principally related to
increased accruals for incentive compensation.

The Company may update its guidance for 2008 as future
developments warrant, including the Company's obtaining additional
clarity regarding issues such as the following:

-- The finalization of premium rates for the California, Michigan
and Texas health plans and the Company's Medicare health
plans.

-- The development of medical cost trends at the Ohio health
plan.

-- The success of the Company's efforts in working with the state
of Michigan to mitigate the impact of the January 1, 2008,
business tax increase.

The revised guidance assumes an effective tax rate of 41.8% and
weighted average diluted shares outstanding of 28.0 million.

Financial Results - Comparison of Quarters Ended June 30, 2008 and
2007

Premium revenue for the second quarter of 2008 was $761.1 million,
an increase of $154.0 million, or 25.4%, over the $607.1 million of
premium revenue for the second quarter of 2007. Medicare premium
revenue for the second quarter of 2008 was $23.1 million compared with
$10.5 million in the second quarter of 2007. Excluding the impact of
the November 1, 2007, acquisition of the Missouri plan, consolidated
membership increased 7.6% between June 30, 2008 and June 30, 2007.

Significant contributors to the $154.0 million increase in
quarterly premium revenue included the following:

-- A $54.3 million increase as a result of the acquisition of
Mercy CarePlus in Missouri on November 1, 2007.

-- A $35.7 million increase at the Ohio health plan due to higher
enrollment, particularly in the Covered Families and Children
(CFC) population.

-- A $27.9 million increase at the New Mexico health plan due to
higher enrollment, higher premium rates, and the recognition
of $6.2 million in revenues associated with a minimum medical
care ratio contract provision.

-- A $14.7 million increase at the Washington health plan due to
higher premium rates and slightly higher membership.

Medical care costs as a percentage of premium revenue (the medical
care ratio) decreased to 84.2% in the second quarter of 2008 from
85.1% in the second quarter of 2007. Sequentially, the medical care
ratio decreased from 85.8% for the quarter ended March 31, 2008, a
change of 160 basis points. Excluding Medicare, the Company's medical
care ratio was 84.2% in the second quarter of 2008, 85.4% in the
second quarter of 2007, and 85.8% in the first quarter of 2008.

-- The medical care ratio of the Michigan health plan decreased
330 basis points to 80.0% in the second quarter of 2008 from
83.3% in the second quarter of 2007. This decrease was due
primarily to lower hospital fee-for-service costs.

-- The medical care ratio of the Missouri health plan was 83.0%
for the quarter, down from 89.7% in the first quarter of 2008.
The sequential decrease was due primarily to lower hospital
fee-for-service costs.

-- The medical care ratio of the California health plan increased
as a result of an increase in PMPM medical costs of
approximately 10%, primarily in pharmacy costs and specialist
fee-for-service costs. The California medical care ratio rose
to 84.9% in the second quarter of 2008 from 80.4% in the
second quarter of 2007.

-- The medical care ratio of the New Mexico health plan decreased
830 basis points to 78.0% in the second quarter of 2008 from
86.3% in the second quarter of 2007. This decrease was due to
higher premium rates, particularly under the State Coverage
Initiative (SCI) contract, which more than offset higher
medical costs. The medical care ratio decrease also included
the impact of the recognition of $6.2 million in revenue
associated with a minimum medical care ratio contract
provision. Absent the adjustments made to premium revenue in
the second quarter of 2008 and 2007 under this provision, the
medical care ratio in New Mexico would have been 83.8% in the
second quarter of 2008 and 82.1% in the second quarter of
2007.

-- The medical care ratios of the Ohio health plan, by line of
business, were as follows:

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*T

Three Months Ended
-----------------------------
June 30, March 31, June 30,
2008 2008 2007
-------- --------- --------
Covered Families and Children (CFC) 90.7% 88.9% 90.6%
Aged, Blind or Disabled (ABD) 91.5 92.7 92.3
-------- --------- --------
Aggregate 91.0% 90.3% 91.1%
======== ========= ========

In total, the medical care ratio decreased 10 basis points year-
over-year and increased 70 basis points sequentially. The
sequential increase was due primarily to increased expense due a
sub-capitated behavioral health provider under a risk-sharing
arrangement with that provider. These amounts added approximately
70 basis points to the aggregate medical care ratio in Ohio when
compared with the first quarter of 2008. The Company is in the
process of terminating its contract with this provider and will
bring behavioral health care in-house beginning September 1, 2008.
*T

-- The medical care ratio of the Texas health plan decreased
primarily due to low medical costs for the Star Plus
membership. During the second quarter of 2008, the Texas
health plan reduced revenue $2.3 million to record amounts due
back to the state under a profit-sharing agreement.

-- The medical care ratio reported at the Washington health plan
increased to 82.1% in the second quarter of 2008 from 80.2% in
the second quarter of 2007, primarily due to higher
fee-for-service hospital and specialist costs. The higher
fee-for-service costs were driven by an increase to the
Medicaid fee schedule that took effect on each of August 1,
2007 and January 1, 2008.

Days in medical claims and benefits payable were 47 days at June
30, 2008, 50 days at March 31, 2008, and 54 days at June 30, 2007. The
Company's reserving methodology is consistently applied across all
periods presented. As of June 30, 2008, medical claims inventory
(measured as the total billed charges of all claims received but not
paid as of the reporting date) has decreased approximately 20% since
June 30, 2007, and 4% since March 31, 2008. Additionally, increased
capitation and pharmacy expenses (measured as a percentage of total
medical costs) reduced days in medical claims payable by approximately
one day between June 30, 2008 and March 31, 2008.

General and administrative expenses were $87.1 million, or 11.4%
of total revenue, for the second quarter of 2008 compared with $67.2
million, or 10.9% of total revenue, for the second quarter of 2007.

Core G&A expenses (defined as G&A expenses less premium taxes)
were 8.2% of revenue in the second quarter of 2008 compared with 7.7%
in the second quarter of 2007 and 7.8% in the first quarter of 2008.
The increase in core G&A compared with the second quarter of 2007 was
primarily due to the Company's continued investment in the
administrative infrastructure necessary to support its Medicare
product line as indicated in the table below.

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*T

Three Months Ended June 30,
----------------------------------------
2008 2007
------------------- -------------------
% of Total % of Total
(in thousands) Amount Revenue Amount Revenue
------- ---------- ------- ----------
Medicare-related
administrative costs $ 4,118 0.5% $ 2,043 0.3%
Non Medicare-related
administrative costs:
Administrative payroll,
including employee
incentive compensation
48,656 6.3 38,120 6.2
All other administrative
expense 10,129 1.4 6,970 1.2
------- ---------- ------- ----------
Core G&A expenses $62,903 8.2% $47,133 7.7%
======= ========== ======= ==========

*T

Income taxes were recorded at an effective rate of 40.9% in the
second quarter of 2008 compared with 38.2% in the second quarter of
2007. The increase in the Company's effective tax rate was primarily
the result of a change in Michigan state taxes effective January 1,
2008. Prior to January 1, 2008, Michigan state taxes were calculated
as a percentage of net income at a rate of 1.9%. As of January 1,
2008, the state income tax was changed to comprise three components on
a combined filing basis: a gross receipts tax calculated at 0.8% of
modified gross receipts; an income tax calculated at 4.95% of income
before taxes; and a surtax of 21.99% of the total of the previous two
items.

Cash Flow

Cash provided by operating activities for the six months ended
June 30, 2008, was $39.0 million compared with $87.9 million for the
same period in 2007, a decrease of $48.9 million. The decline was due
primarily to the following:

-- Timing of the receipt of premiums recorded as deferred revenue
in Ohio and Washington, netting to a $16.1 million decline
year-over-year.

-- The reversal of $12.9 accrued costs relating to the minimum
medical care ratio contract provision in New Mexico in the
first half of 2008.

-- In 2007, the ramping up of operations and medical claims and
benefits payable of the Company's Texas and Ohio plans
compared with less significant changes in medical claims and
benefits payable for these plans in 2008.

At June 30, 2008, the Company had cash and investments (not
including restricted investments) of approximately $688.5 million,
including auction rate securities with a fair value of $66.8 million
that were reclassified as non-current assets in the first quarter of
2008. While these securities are collateralized by student loan
portfolios guaranteed by the U.S. government, the Company believes
that the market for these may take in excess of 12 months to fully
recover. At June 30, 2008, the parent company had cash and investments
of approximately $76.1 million, including auction rate securities with
a fair value of $19.6 million.

Share Repurchase Program

During the second quarter of 2008, the Company repurchased
approximately 1.1 million shares of its common stock for $30 million
(average cost of approximately $26.50 per share). Shares used for
computing diluted earnings per share for the second quarters of 2008
and 2007 were 28.0 million and 28.3 million, respectively.

The Company's Board of Directors has authorized the repurchase of
up to an additional one million shares of the Company's common stock.
The repurchase program will be funded using Molina's working capital,
and the timing and amount of any shares repurchased will be made
pursuant to a Rule 10b5-1 trading plan. The repurchase program extends
through December 31, 2008, but the Company reserves the right to
suspend or discontinue the program at any time.

Conference Call

The Company's management will host a conference call and webcast
to discuss its second quarter results at 5:00 p.m. Eastern Time on
Wednesday, July 23, 2008. The telephone number for this interactive
conference call is 212-896-6053, and the live webcast of the call can
be accessed on the Company's website at www.molinahealthcare.com, or
at www.earnings.com. An online replay will be available beginning
approximately one hour following the conclusion of the call and
webcast.

Molina Healthcare, Inc. is a multi-state managed care organization
that arranges for the delivery of health care services to persons
eligible for Medicaid, Medicare, and other government-sponsored
programs for low-income families and individuals. Molina Healthcare's
nine licensed health plan subsidiaries in California, Michigan,
Missouri, Nevada, New Mexico, Ohio, Texas, Utah, and Washington
currently serve approximately 1.2 million members. More information
about Molina Healthcare can be obtained at www.molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains "forward-looking
statements" identified by words such as "will," "should," "believes,"
"expects" or "expectations," "anticipates," "plans," "projects,"
"estimates," "intends," and similar words and expressions. In
addition, any statements that explicitly or implicitly refer to
earnings guidance, expectations, projections, or their underlying
assumptions, or other characterizations of future events or
circumstances, are forward-looking statements. All of our
forward-looking statements are based on our current expectations and
assumptions which are subject to numerous known and unknown risks,
uncertainties, and other factors that could cause actual results to
differ materially. Such factors include, without limitation, risks
related to: the successful management of our medical costs and the
achievement of our projected medical care ratios in all health plans
in 2008, including the reduction of the medical care ratio of our Ohio
health plan; the achievement of projected growth in both Medicaid and
Medicare enrollment; increased administrative costs in support of the
Company's efforts to expand its Medicare membership; risks related to
our more limited experience with Ohio, Texas, and dual eligible
members and attendant claims estimation difficulties; funding
decreases in the Medicaid, Medicare, or SCHIP programs or the failure
to fully fund the SCHIP program; the budget crisis in California and
the pressure to reduce provider rates in that state, including current
PMPM rates under our existing contracts; the final implementation of
the Rogers Amendment to the Federal Deficit Reduction Act regarding
the rates to be paid to non-contracting hospitals by our California
health plan; the securing of projected premium rate increases in 2008
that are consistent with our expectations, in particular in the states
of Michigan and Texas and in connection with our Medicare plans; the
success of our efforts in working with the state of Michigan to
mitigate the impact of the January 1, 2008 business tax increase; our
ability to accurately estimate incurred but not reported medical costs
across all health plans; the successful renewal and continuation of
the government contracts of all of our health plans; the realization
of projected income from invested cash balances; the successful and
cost-effective integration of our acquisitions; earnings seasonality
consistent with our expectations; the availability of adequate
financing to fund and/or capitalize our acquisitions and start-up
activities; high profile qui tam matters and negative publicity
regarding Medicaid managed care and Medicare Advantage; changes in
funding under our contracts as a result of regulatory or programmatic
adjustments and reforms; approval by state regulators of dividends and
distributions by our subsidiaries; the imposition of fines or
assessments by state or federal regulators for perceived operating
deficiencies; membership eligibility processes and methodologies;
unexpected changes in member utilization patterns, healthcare
practices, or healthcare technologies; high dollar claims related to
catastrophic illness; changes in federal or state laws or regulations
or in their interpretation; failure to maintain effective and
efficient information systems and claims processing technology; the
favorable resolution of litigation or arbitration; competition;
epidemics such as the avian flu; and other risks and uncertainties as
detailed in our reports and filings with the Securities and Exchange
Commission and available on its website at www.sec.gov. All
forward-looking statements in this release represent our judgment as
of July 23, 2008. We disclaim any obligation to update any
forward-looking statement to conform the statement to actual results
or changes in our expectations.

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MOLINA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per-share data)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
Revenue:
Premium revenue $761,153 $607,127 $1,490,791 $1,163,362
Investment income 5,338 6,761 12,742 13,429
--------- --------- ----------- -----------
Total operating
revenue 766,491 613,888 1,503,533 1,176,791

Expenses:
Medical care costs 640,829 516,865 1,267,176 993,342
General and
administrative expenses 87,074 67,208 165,166 130,596
Depreciation and
amortization 8,330 6,749 16,482 13,192
Impairment charge on
purchased software - 782 - 782
--------- --------- ----------- -----------
Total expenses 736,233 591,604 1,448,824 1,137,912
--------- --------- ----------- -----------

Operating income 30,258 22,284 54,709 38,879
Interest expense (2,307) (725) (4,579) (1,850)
--------- --------- ----------- -----------

Income before income taxes 27,951 21,559 50,130 37,029
Provision for income taxes 11,435 8,245 20,459 14,123
--------- --------- ----------- -----------
Net income $ 16,516 $ 13,314 $ 29,671 $ 22,906
========= ========= =========== ===========

Net income per share:
Basic $ 0.59 $ 0.47 $ 1.05 $ 0.81
========= ========= =========== ===========
Diluted $ 0.59 $ 0.47 $ 1.05 $ 0.81
========= ========= =========== ===========

Weighted average number of
common shares and
potentially dilutive
common shares outstanding 28,044 28,343 28,324 28,309
========= ========= =========== ===========

Operating Statistics:
Ratio of direct medical
care costs to premium
revenue 81.9% 82.5% 82.5% 82.7%
Ratio of administrative
costs included in
medical care costs to
premium revenue 2.3% 2.6% 2.5% 2.7%
--------- --------- ----------- -----------
Medical care ratio (1) 84.2% 85.1% 85.0% 85.4%
========= ========= =========== ===========
General and
administrative expense
ratio (2) excluding
premium taxes (Core G&A
ratio)
8.2% 7.7% 8.0% 7.8%
Premium taxes included
in general and
administrative expenses
3.2% 3.2% 3.0% 3.3%
--------- --------- ----------- -----------
Total general and
administrative expense
ratio 11.4% 10.9% 11.0% 11.1%
========= ========= =========== ===========
Depreciation and
amortization expense
ratio (2) 1.1% 1.1% 1.1% 1.1%
Effective tax rate 40.9% 38.2% 40.8% 38.1%
*T

(1) Medical care ratio represents medical care costs as a
percentage of premium revenue.

(2) Computed as a percentage of total revenue.

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*T

MOLINA HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per-share data)

June 30, Dec. 31,
2008 2007
----------- -----------
(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents $ 425,424 $ 459,064
Investments 196,268 242,855
Receivables 113,597 111,537
Deferred income taxes 11,557 8,616
Prepaid expenses and other current assets 14,484 12,521
----------- -----------
Total current assets 761,330 834,593
Property and equipment, net 59,191 49,555
Goodwill and intangible assets, net 204,182 207,223
Investments 66,786 -
Restricted investments 29,875 29,019
Receivable for ceded life and annuity
contracts 28,143 29,240
Other assets 22,247 21,675
----------- -----------
Total assets $1,171,754 $1,171,305
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Medical claims and benefits payable $ 305,541 $ 311,606
Accounts payable and accrued liabilities 61,872 69,266
Deferred revenue 50,170 40,104
Income taxes payable 11,137 5,946
----------- -----------
Total current liabilities 428,720 426,922
Long-term debt 200,000 200,000
Deferred income taxes 5,297 10,136
Liability for ceded life and annuity
contracts 28,143 29,240
Other long-term liabilities 17,139 14,529
----------- -----------
Total liabilities 679,299 680,827
----------- -----------

Stockholders' equity:
Common stock, $0.001 par value; 80,000
shares authorized; outstanding: 27,453
shares at June 30, 2008, and 28,444
shares at December 31, 2007 29 28
Preferred stock, $0.001 par value; 20,000
shares authorized, no shares issued and
outstanding - -
Additional paid-in capital 191,326 185,808
Accumulated other comprehensive (loss)
income (2,975) 272
Retained earnings 354,431 324,760
Treasury stock, at cost; 2,332 shares at
June 30, 2008 and 1,201 shares at
December 31, 2007 (50,356) (20,390)
----------- -----------
Total stockholders' equity 492,455 490,478
----------- -----------
Total liabilities and stockholders'
equity $1,171,754 $1,171,305
=========== ===========
*T

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MOLINA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Six Months Ended
June 30,
---------------------
2008 2007
---------- ---------
Operating activities:
Net income $ 29,671 $ 22,906
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,482 13,192
Amortization of capitalized long-term debt
fees 406 475
Deferred income taxes (5,649) (4,763)
Stock-based compensation 3,587 3,644
Changes in operating assets and liabilities:
Receivables (2,060) 4,526
Prepaid expenses and other current assets (1,963) (1,353)
Medical claims and benefits payable (6,065) 13,191
Accounts payable and accrued liabilities (10,620) 4,619
Deferred revenue 10,066 26,205
Income taxes 5,191 5,232
---------- ---------
Net cash provided by operating activities 39,046 87,874
---------- ---------

Investing activities:
Purchases of property and equipment (17,098) (10,440)
Purchases of investments (163,447) (42,816)
Sales and maturities of investments 137,805 46,117
Increase in restricted cash (856) (3,326)
Cash paid in business purchase transaction (1,000) -
Increase in other assets (1,770) (864)
Increase in other long-term liabilities 2,610 4,484
---------- ---------
Net cash used in investing activities (43,756) (6,845)
---------- ---------

Financing activities:
Treasury stock purchases (29,966) -
Repayment of amounts borrowed under credit
facility - (15,000)
Payment of credit facility fees - (475)
Tax (provision) benefit from employee stock
compensation recorded as additional paid-in
capital (156) 642
Proceeds from exercise of stock options and
employee stock plan purchases 1,192 1,656
---------- ---------
Net cash used in financing activities (28,930) (13,177)
---------- ---------
Net (decrease) increase in cash and cash
equivalents (33,640) 67,852
Cash and cash equivalents at beginning of
period 459,064 403,650
---------- ---------
Cash and cash equivalents at end of period $ 425,424 $471,502
========== =========
*T

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MOLINA HEALTHCARE, INC.
MEMBERSHIP DATA
(Unaudited)

Total Ending Membership by Health June 30, March 31, June 30,
Plan: 2008 2008 2007
------------------------------------- --------- --------- ---------
California 310,000 303,000 291,000
Michigan 212,000 216,000 217,000
Missouri (1) 76,000 76,000 -
Nevada (2) - - -
New Mexico 81,000 78,000 66,000
Ohio 173,000 140,000 138,000
Texas 29,000 28,000 30,000
Utah 57,000 55,000 47,000
Washington 296,000 289,000 287,000
--------- --------- ---------
Total 1,234,000 1,185,000 1,076,000
========= ========= =========

(1) The Company's Missouri health plan was acquired effective November
1, 2007.

(2) Less than 1,000 members.

Total Ending Membership by State for June 30, March 31, June 30,
the Medicare Advantage Plans: 2008 2008 2007
------------------------------------- --------- --------- ---------
California 1,452 1,223 724
Michigan 1,469 1,359 459
Nevada 680 525 9
New Mexico 149 116 -
Texas 430 363 -
Utah 2,056 2,003 1,646
Washington 911 856 413
--------- --------- ---------
Total 7,147 6,445 3,251
========= ========= =========

Total Ending Membership by State for
the Aged, Blind or Disabled June 30, March 31, June 30,
Population: 2008 2008 2007
------------------------------------- --------- --------- ---------
California 12,092 11,709 10,728
Michigan 30,896 31,801 31,940
New Mexico 6,716 6,827 6,822
Ohio 15,355 14,729 15,117
Texas 15,999 16,069 16,603
Utah 6,993 6,826 6,876
Washington 3,049 3,005 2,693
--------- --------- ---------
Total 91,100 90,966 90,779
========= ========= =========
*T

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*T

Quarter Ended Six Months Ended
----------------------------- -------------------
Total Member Months June 30, March 31, June 30, June 30, June 30,
(1) by Health Plan: 2008 2008 2007 2008 2007
-------------------- --------- --------- --------- --------- ---------
California 922,000 908,000 874,000 1,829,000 1,760,000
Michigan 638,000 638,000 658,000 1,277,000 1,327,000
Missouri (2) 227,000 223,000 - 450,000 -
Nevada 2,000 2,000 - 4,000 -
New Mexico 238,000 228,000 197,000 467,000 389,000
Ohio 522,000 413,000 399,000 935,000 739,000
Texas 85,000 85,000 91,000 170,000 157,000
Utah 165,000 157,000 145,000 321,000 296,000
Washington 879,000 859,000 860,000 1,738,000 1,716,000
--------- --------- --------- --------- ---------
Total 3,678,000 3,513,000 3,224,000 7,191,000 6,384,000
========= ========= ========= ========= =========
*T

(1) Total member months is defined as the aggregate of each
month's ending membership for the period.

(2) The Company's Missouri health plan was acquired effective
November 1, 2007.

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MOLINA HEALTHCARE, INC.
SELECTED FINANCIAL DATA BY HEALTH PLAN
(Dollars in thousands except PMPM amounts)
(Unaudited)

Three Months Ended June 30, 2008
--------------------------------------------------------
Premium Revenue Medical Care Costs Medical Premium
------------------- ------------------- Care Tax
Total PMPM Total PMPM Ratio Expense
---------- -------- ---------- -------- ------- --------
California $104,136 $113.00 $88,449 $95.98 84.9% $3,242
Michigan 125,382 196.37 100,273 157.05 80.0 6,625
Missouri 54,250 238.84 45,050 198.34 83.0 --
Nevada 2,243 1,303.04 2,506 1,456.25 111.8 --
New Mexico 89,279 374.58 69,593 291.99 78.0 4,184
Ohio 147,114 281.73 133,816 256.26 91.0 6,672
Texas 25,742 303.09 19,669 231.58 76.4 460
Utah 35,385 214.89 31,932 193.92 90.2 --
Washington 177,619 202.11 145,840 165.95 82.1 2,993
Other (1) 3 -- 3,701 -- -- (5)
---------- ---------- --------
Consolidated $761,153 $206.96 $640,829 $174.24 84.2% $24,171
========== ========== ========

Three Months Ended June 30, 2007
--------------------------------------------------------
Premium Revenue Medical Care Costs Medical Premium
------------------- ------------------- Care Tax
Total PMPM Total PMPM Ratio Expense
---------- -------- ---------- -------- ------- --------
California $94,710 $108.43 $76,185 $87.22 80.4% $3,202
Michigan 121,427 184.43 101,184 153.68 83.3 7,364
New Mexico 61,337 312.44 52,949 269.71 86.3 1,394
Ohio 111,457 279.18 101,515 254.28 91.1 5,016
Texas 24,953 273.48 22,774 249.59 91.3 433
Utah 30,033 206.15 26,535 182.14 88.4 --
Washington 162,905 189.45 130,726 152.02 80.2 2,685
Other (1) 305 -- 4,997 -- -- (19)
---------- ---------- --------
Consolidated $607,127 $188.30 $516,865 $160.30 85.1% $20,075
========== ========== ========

Six Months Ended June 30, 2008
--------------------------------------------------------
Premium Revenue Medical Care Costs Medical Premium
------------------- ------------------- Care Tax
Total PMPM Total PMPM Ratio Expense
---------- -------- ---------- -------- ------- --------
California $205,756 $112.49 $178,103 $97.37 86.6% $6,201
Michigan 250,134 195.89 203,173 159.12 81.2 13,565
Missouri 106,286 236.29 91,732 203.93 86.3 --
Nevada 4,187 1,267.13 4,133 1,250.76 98.7 --
New Mexico 177,928 381.45 141,518 303.40 79.5 5,686
Ohio 271,720 290.54 246,354 263.42 90.7 12,277
Texas 49,174 288.81 37,499 220.24 76.3 936
Utah 72,731 226.40 64,923 202.10 89.3 --
Washington 352,817 202.97 290,353 167.03 82.3 5,838
Other (1) 58 -- 9,388 -- -- 20
---------- ---------- --------
Consolidated $1,490,791 $207.33 $1,267,176 $176.23 85.0% $44,523
========== ========== ========

Six Months Ended June 30, 2007
--------------------------------------------------------
Premium Revenue Medical Care Costs Medical Premium
------------------- ------------------- Care Tax
Total PMPM Total PMPM Ratio Expense
---------- -------- ---------- -------- ------- --------
California $187,642 $106.64 $152,509 $86.68 81.3% $6,232
Michigan 245,193 184.75 205,785 155.05 83.9 14,873
New Mexico 118,530 305.11 102,168 262.99 86.2 3,610
Ohio 186,401 252.13 170,777 231.00 91.6 8,388
Texas 39,409 250.35 36,122 229.47 91.7 690
Utah 60,960 205.88 55,001 185.76 90.2 --
Washington 324,887 189.33 261,985 152.67 80.6 5,369
Other (1) 340 -- 8,995 -- -- 14
---------- ---------- --------
Consolidated $1,163,362 $182.23 $993,342 $155.60 85.4% $39,176
========== ========== ========
*T

(1) "Other" medical care costs represent medically related
administrative costs at the parent company.

-0-
*T

MOLINA HEALTHCARE, INC.
SELECTED FINANCIAL DATA BY HEALTH PLAN (Continued)
(Dollars in thousands except PMPM amounts)
(Unaudited)

The following tables provide the details of the Company's medical care
costs for the periods indicated:

Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
--------------------------- -------------------------
% of % of
Total Total
Medical Medical
Care Care
Amount PMPM Costs Amount PMPM Costs
---------- ------- -------- -------- ------- --------
Fee-for-
service $ 410,619 $111.65 64.1% $336,654 $104.41 65.1%
Capitation 117,707 32.00 18.4 92,931 28.82 18.0
Pharmacy 88,676 24.11 13.8 65,930 20.45 12.8
Other 23,827 6.48 3.7 21,350 6.62 4.1
---------- ------- -------- -------- ------- --------
Total $ 640,829 $174.24 100.0% $516,865 $160.30 100.0%
========== ======= ======== ======== ======= ========

Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
--------------------------- -------------------------
% of % of
Total Total
Medical Medical
Care Care
Amount PMPM Costs Amount PMPM Costs
---------- ------- -------- -------- ------- --------
Fee-for-
service $ 822,628 $114.40 64.9% $644,534 $100.96 64.9%
Capitation 221,498 30.80 17.5 180,864 28.33 18.2
Pharmacy 174,958 24.33 13.8 126,509 19.82 12.7
Other 48,092 6.70 3.8 41,435 6.49 4.2
---------- ------- -------- -------- ------- --------
Total $1,267,176 $176.23 100.0% $993,342 $155.60 100.0%
========== ======= ======== ======== ======= ========
*T

-0-
*T

MOLINA HEALTHCARE, INC.
CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE
(Dollars in thousands)
(Unaudited)

The Company's claims liability includes an allowance for adverse
claims development based on historical experience and other factors
including, but not limited to, variation in claims payment patterns,
changes in utilization and cost trends, known outbreaks of disease,
and large claims. The Company's reserving methodology is consistently
applied across all periods presented. The negative amounts displayed
for "Components of medical care costs related to: Prior years"
represent the amount by which our original estimate of claims and
benefits payable at the beginning of the period exceeded the actual
amount of the liability based on information (principally the payment
of claims) developed since that liability was first reported. The
benefit of this prior period development may be offset by the
addition of a reserve for adverse claims development when estimating
the liability at the end of the period (captured in "Components of
medical care costs related to: Current year"). The following table
shows the components of the change in medical claims and benefits
payable for the six months ended June 30, 2008 and 2007 (dollar
amounts in thousands):

Six Months Ended
June 30,
------------------------
2008 2007
----------- -----------
Balances at beginning of period $ 311,606 $ 290,048
Components of medical care costs related to:
Current year 1,315,469 1,036,378
Prior years (48,293) (43,036)
----------- -----------
Total medical care costs 1,267,176 993,342
Payments for medical care costs related to:
Current year 1,043,522 764,638
Prior years 229,719 215,513
----------- -----------
Total paid 1,273,241 980,151
----------- -----------
Balances at end of period $ 305,541 $ 303,239
=========== ===========

Benefit from prior period as a percentage
of:
Balance at beginning of period 15.5% 14.8%
Premium revenue 3.2% 3.7%
Total medical care costs 3.8% 4.3%

Days in claims payable 47 54
Number of members at end of period 1,234,000 1,076,000
Number of claims in inventory at end of
period 151,500 254,800
Billed charges of claims in inventory at end
of period $ 209,100 $ 260,100
Claims in inventory per member at end of
period 0.12 0.24
*T

Molina Healthcare, Inc.
Investor Relations:
Juan Jose Orellana, 562-435-3666, ext. 111143

Copyright Business Wire 2008