CORRECTING and REPLACING Molina Healthcare Reports Fourth Quarter and Year-End 2012 Results

Thu Feb 7, 2013 10:13pm EST

* Reuters is not responsible for the content in this press release.

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LONG BEACH, Calif.--(Business Wire)--
The table entitled "Unaudited Change in Medical Claims and Benefits Payable" on
page 15 of the press release presented incorrect amounts in the columns entitled
"Three Months Ended December 31, 2012," and "Year Ended December 31, 2012." Such
incorrect amounts were contained in the rows entitled "Payments for medical care
costs related to: Current period," and "Payments for medical care costs related
to: Prior period," and were due to an inadvertent reversal of signs in the
computation. No subtotals or totals in the table were incorrect. As amended,
"Payments for medical care costs related to: Current period" for the three
months ended December 31, 2012 has been corrected to read $906,108; "Payments
for medical care costs related to: Prior period" for the three months ended
December 31, 2012 has been corrected to read $409,449; "Payments for medical
care costs related to: Current period" for the year ended December 31, 2012 has
been corrected to read $4,649,363; and "Payments for medical care costs related
to: Prior period" for the year ended December 31, 2012 has been corrected to
read $355,343. 

The corrected release reads: 

MOLINA HEALTHCARE REPORTS FOURTH QUARTER AND YEAR-END 2012 RESULTS

Molina Healthcare, Inc. (NYSE: MOH):

* Quarterly earnings per diluted share of $0.54 
* Full year earnings per diluted share of $0.21 
* Annual revenue of $6 billion, up 26% over 2011 
* Aggregate membership up 6% over 2011 
* Earnings per diluted share guidance of $1.55 for fiscal year 2013

Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the
fourth quarter and year ended December 31, 2012. 

Net income for the quarter was $25.6 million, or $0.54 per diluted share,
compared with a net loss of $33.0 million, or $0.72 per diluted share, for the
quarter ended December 31, 2011. Net income for the year ended December 31,
2012, was $9.8 million, or $0.21 per diluted share, compared with net income of
$20.8 million, or $0.45 per diluted share, for the year ended December 31, 2011.
Results for the quarter and year ended December 31, 2011, were affected by an
impairment charge of $64.6 million related to the Company`s Missouri health
plan. 

"While 2012 was a difficult year, our achievements during the fourth quarter
have given us confidence as we look forward to 2013 and beyond," said J. Mario
Molina, M.D., chief executive officer of Molina Healthcare, Inc. "We have
demonstrated that we can reach fair agreements on premium rates with our state
partners and that, in time, our patient care programs will produce both better
health outcomes and lower medical costs. The challenges we faced in California
and Texas in 2012 may be repeated over the next several years in different
states and with different members. Our fourth quarter results demonstrate that
Molina Healthcare is able to meet those challenges." 

Earnings Per Share Guidance

The Company expects earnings per diluted share of $1.55 for fiscal year 2013.
Additional details regarding the Company`s guidance are provided later in this
release. 

Fourth Quarter 2012 Compared with Third Quarter 2012

Overview

The Company`s financial performance in the fourth quarter of 2012 improved
substantially over the third quarter of 2012, as earnings per diluted share
increased to $0.54 from $0.07. Modest premium rate increases in some states,
along with decreased medical costs, were the primary reasons for the improved
financial performance. The ratio of medical care costs to premium revenue net of
premium tax (the medical care ratio, or MCR) decreased approximately 450 basis
points between the third and fourth quarter of 2012. Medical care ratios
decreased at seven of the Company`s nine health plans, most notably in Texas and
California. 

The Company has changed its method of calculating the medical care ratio
effective with the release of its fourth quarter earnings. The Company now
calculates the medical care ratio by dividing total medical care costs by
premium revenue, net of premium taxes. Previously, the Company did not adjust
premium revenue to remove the impact of premium taxes when calculating the
medical care ratio. The Company has made this change for all periods presented
to allow better comparability of the medical care ratio between periods for
health plans operating in states where premium taxes are either increased or
decreased. Two states where the Company operates health plans (Michigan and
California) either reduced or eliminated their premium tax during 2012. 

Premium Revenue

Premium revenue increased $29.2 million to $1,480.0 million in the fourth
quarter of 2012, from $1,450.8 million in the third quarter of 2012. Fourth
quarter premium revenue benefited from the following increases in premium
rates:

* An increase to premium rates of approximately 1%, or approximately $200,000
per month, at the Florida health plan effective September 1, 2012; 
* An increase to premium rates of approximately 2%, or approximately $900,000
per month, at the Michigan health plan effective October 1, 2012; 
* An increase to premium rates of approximately 4%, or approximately $4.5
million per month, at the Texas health plan effective September 1, 2012; and 
* An increase to premium rates for the aged, blind or disabled, or ABD,
population of approximately 2% at the California health plan retroactive to July
1, 2011. This increase translated to a blended rate increase of approximately 1%
for the California health plan`s premium revenue overall. Due to the retroactive
nature of this increase, the California health plan recorded approximately $12
million of incremental revenue (net of related costs) in the fourth quarter of
2012. Approximately $4 million of the retroactive revenue related to 2011 and $2
million to each of the four quarters of 2012. Revenue beginning October 1, 2012,
increased about $2 million per quarter.

The Company had 29,000 fewer members at December 31, 2012, than at September 30,
2012. Most of the membership loss occurred at the Ohio health plan, which saw a
decrease of 28,000 members due to the correction of Medicaid eligibility errors
made by the state earlier in 2012. 

Medical Care Costs

The Company`s consolidated medical care ratio decreased 450 basis points to
86.1% in the fourth quarter of 2012, from 90.6% in the third quarter of 2012.
Increased premium rates for the ABD membership of the California and Texas
health plans, favorable development of the Texas health plan`s medical claims
liability recorded at September 30, 2012, and reduced inpatient utilization
(particularly among the California health plan`s ABD population) contributed to
this decline. Medical costs per member per month (PMPM) declined approximately
2%. Inpatient utilization decreased approximately 4%, contributing to a decrease
of approximately 5% in inpatient facility costs PMPM. 

Influenza-related illnesses do not appear to have significantly affected fourth
quarter 2012 financial results, but may negatively impact financial results in
the first quarter of 2013. The Company estimates that it incurred approximately
$5 million more of medical costs for influenza-related illnesses in the fourth
quarter than it would have incurred in a fourth quarter with more typical flu
activity. 

Individual Health Plan Analysis

Texas

The Texas health plan`s financial performance improved significantly in the
fourth quarter compared with the third quarter of 2012. The medical care ratio
of the Texas health plan was 77.8% in the fourth quarter of 2012, compared with
91.9% in the third quarter of 2012. The Company believes that the reduction to
the Texas health plan`s medical care ratio was primarily the result of the
following factors:

* A blended rate increase of approximately 4%, or $4.5 million per month,
effective September 1, 2012; 
* The results of medical cost containment initiatives implemented beginning in
the second quarter of 2012; and 
* A reduction of approximately $30 million to the estimated amount of medical
costs incurred prior to the fourth quarter of 2012. The change in that estimate
was recorded in the fourth quarter of 2012.

If the Company were to retroactively adjust for the reduction to estimated
medical costs incurred in the second and third quarters of 2012, it believes
that the medical care ratio of the Texas health plan would have been
approximately 89% in the fourth quarter of 2012, approximately 90% in the third
quarter of 2012 and approximately 99% in the second quarter of 2012. 

California

The medical care ratio at the California health plan decreased to 89.2% in the
fourth quarter of 2012, from 96.1% in the third quarter of 2012, primarily due
to a retroactive premium rate increase relating to its ABD membership. As noted
above, the California health plan recorded approximately $12 million of
incremental revenue (net of related costs) in the fourth quarter of 2012 related
to a rate increase for its ABD membership that was retroactive to July 1, 2011.
If the Company were to retroactively adjust for that rate increase, it estimates
that the medical care ratio of the California health plan would have been
approximately 94.5% in the fourth quarter of 2012, approximately 93.5% in the
third quarter of 2012, approximately 90% in the second quarter of 2012, and
approximately 88% in the first quarter of 2012. 

The medical care ratio for the California health plan`s ABD membership was 86.1%
in the fourth quarter of 2012, compared with 110.2% in the third quarter of
2012. If the Company were to retroactively adjust for that rate increase, it
estimates that the medical care ratio of the California health plan`s ABD
members would have been approximately 103% in both the fourth and third quarters
of 2012. The Company has consistently stated its belief that, over time, it can
improve quality of care and reduce costs among individuals (such as the
California health plan`s ABD membership) who have only recently been
transitioned from fee-for-service reimbursement to managed care. 

Also during the fourth quarter, the Company exited an unprofitable service area
in California, reducing enrollment by approximately 5,000 members. 

General and Administrative Costs

General and administrative costs increased $25.9 million to $153.4 million in
the fourth quarter of 2012, from $127.5 million in the third quarter of 2012,
primarily due to approximately $14 million of expense recognized in the fourth
quarter of 2012 related to the potential settlement of various claims made upon
the Company by government agencies and health care providers. Approximately $11
million of these costs related to matters arising prior to 2012. Absent the $14
million identified above, the Company`s consolidated general and administrative
expense ratio would have been approximately 8.8% for the fourth quarter of 2012.


Year Ended December 31, 2012, Compared with Year Ended December 31, 2011

Overview

Earnings decreased in 2012 compared with 2011 because lower margins in the
Health Plans segment more than offset higher premium revenue. Net income for the
year ended December 31, 2012, was $9.8 million, or $0.21 per diluted share,
compared with net income of $20.8 million, or $0.45 per diluted share, for the
year ended December 31, 2011. Results for the quarter and year ended December
31, 2011 were affected by an impairment charge of $64.6 million related to the
Company`s Missouri health plan. 

Lower net income in 2012 was in large part tied to growth in the Company`s ABD
membership in California and Texas, where margins were considerably lower than
for the Company as a whole. During 2012, both California and Texas transitioned
large numbers of ABD members from fee-for-service reimbursement to managed care
contracts. It has been the Company`s experience that members transitioning from
fee-for-service reimbursement to managed care often bring with them pent up
demand for medical services and that the realization of both improved medical
outcomes and costs savings from the application of managed care practices takes
time as both members and providers acquaint themselves to new ways of accessing
and providing care. 

The initial reduction to margins associated with the transition of members from
fee-for-service reimbursement to managed care was exacerbated by premium rates
that assumed unrealistic costs savings from managed care practices. Premium rate
increases received later in 2012 at least partially addressed this issue. 

Those rate increases, together with the improved health outcomes and the gradual
reduction in medical costs resulting from the application of managed care
practices, produced improved financial results in the fourth quarter of 2012.
Nevertheless, the aggregate effect of the ABD membership transitioned in 2012
was a substantial reduction in margins. The Company believes, however, that in
time the higher premium revenue associated with ABD members will allow it to
earn acceptable returns on a total dollar basis even if percentage margins
remain lower than those earned by serving Temporary Assistance for Needy
Families, or TANF, members, for whom PMPM revenue is much lower. 

Premium Revenue

Premium revenue grew 27% in the year ended December 31, 2012, compared with the
year ended December 31, 2011, primarily due to a shift in member mix to
populations generating higher premium revenue PMPM, benefit expansions, and an
increase in membership. Medicare premium revenue was $468 million in the year
ended December 31, 2012, compared with $388 million in the year ended December
31, 2011. 

Growth in the Company`s ABD membership led to higher premium revenue PMPM in
2012. ABD membership, as a percent of total membership, has increased
approximately 31% year over year. Premium revenue PMPM also increased in the
year ended December 31, 2012, as a result of the inclusion of revenue from the
pharmacy benefit for the Company`s Ohio health plan effective October 1, 2011,
and as a result of the inclusion of revenue for the inpatient facility and
pharmacy benefits across all of the Company`s Texas health plan membership
effective March 1, 2012. 

Medical Care Costs

Medical care costs increased in 2012 primarily due to the same shifts in member
mix and the benefit expansions that led to increased premium revenue,
particularly in California and Texas. 

Individual Health Plan Analysis

Texas

Membership and premium revenue increased significantly at the Texas health plan
in 2012 as a result of the transition of large numbers of ABD, TANF and
Children`s Health Insurance Program, or CHIP, members from fee-for-service
reimbursement into managed care effective March 1, 2012. Also on that date,
inpatient facility and pharmacy benefits that had previously been reimbursed
through fee for service for managed care members were transitioned into managed
care contracts, further increasing premium revenue and related medical costs. As
noted above, margins on newly transitioned ABD members were considerably less
than those experienced by the Company overall. The medical care ratio for the
Texas health plan`s ABD membership in total was approximately 97.8% for all of
2012. Nevertheless, the medical care ratio for the Texas health plan overall
decreased to 93.7% for all of 2012 compared with 95.1% for 2011. 

California

The medical care ratio at the California health plan increased significantly in
2012, to 91.1% from 86.9% in 2011. As noted above, margins on newly transitioned
ABD members were considerably less than those experienced by the Company
overall. The medical care ratio for the California health plan`s ABD membership
was 96.5% for all of 2012. 

Molina Medicaid Solutions Segment

Operating income for the Molina Medicaid Solutions segment improved $21.7
million for the year ended December 31, 2012, compared with 2011. This
improvement was primarily the result of stabilization of the newest contracts in
Idaho and Maine. 

Cash Flow

Cash provided by operating activities was $344.3 million in 2012 compared with
$225.4 million in 2011, an increase of $118.9 million. This increase was
primarily due to increases in deferred revenue and medical claims and benefits
payable at December 31, 2012. 

At December 31, 2012, the Company had cash and investments of $1.2 billion, and
the parent company had cash and investments of $46.9 million.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
      Reconciliation of Non-GAAP (1) to GAAP Financial Measures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
      
EBITDA (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                         Three Months Ended                                                                                                                                                                                                                                                                                                                                                                                                                                       Year Ended                                                                                                                                                                                                                                                                        
                                                                                                                                                         December 31,                                                                                                                                                                                                                                                                                                                                                                                                                                             December 31,                                                                                                                                                                                                                                                                      
                                                                                                                                                         2012                                                                                                                                                                                                2011                                                                                                                                                                                                                                                 2012                                                                                                                                                                          2011                                                                                                
                                                                                                                                                         (Amounts in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
      Net income (loss)                                                                                                                                  $                                                25,643                                                                                                                                             $                                                (32,960                                          )                                                                                                                                                  $                                                9,790                                                                                                                        $                                                 20,818                                            
      Add back:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
      Depreciation and amortization reported in the                                                                                                                                                       20,475                                                                                                                                                                                              21,969                                                                                                                                                                                                                                               78,764                                                                                                                                                                         74,383                                            
      consolidated statements of cash flows                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
      Interest expense                                                                                                                                                                                    4,348                                                                                                                                                                                               3,853                                                                                                                                                                                                                                                16,769                                                                                                                                                                         15,519                                            
      Provision for income taxes                                                                                                                                                                          24,503                                                                                                                                                                                              13,004                                                                                                                                                                                                                                               9,275                                                                                                                                                                          43,836                                            
      EBITDA                                                                                                                                             $                                                74,969                                                                                                                                             $                                                5,866                                                                                                                                                                                               $                                                114,598                                                                                                                      $                                                 154,556                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 (1)  GAAP stands for U.S. generally accepted accounting principles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 (2)  EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense, and the provision for income taxes. This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities, nor should EBITDA be considered in isolation from these GAAP measures of operating performance. Management uses EBITDA as a supplemental metric in evaluating the Company`s financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating the Company`s performance and the performance of other companies in the Company`s industry.    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    


Conference Call

The Company`s management will host a conference call and webcast to discuss its
fourth quarter and year-end results at 5:00 p.m. Eastern time on Thursday,
February 7, 2013. The number to call for the interactive teleconference is (212)
231-2933. A telephonic replay of the conference call will be available from 7:00
p.m. Eastern time on Thursday, February 7, 2013, through 6:00 p.m. on Friday,
February 8, 2013, by dialing (800) 633-8284 and entering confirmation number
21643415. A live broadcast of Molina Healthcare`s conference call will be
available on the Company`s website, www.molinahealthcare.com, or at
www.earnings.com. A 30-day online replay will be available approximately an hour
following the conclusion of the live broadcast. 

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides quality and
cost-effective Medicaid-related solutions to meet the health care needs of
low-income families and individuals and to assist state agencies in their
administration of the Medicaid program. The Company`s licensed health plans in
California, Florida, Michigan, New Mexico, Ohio, Texas, Utah, Washington, and
Wisconsin currently serve approximately 1.8 million members, and its subsidiary,
Molina Medicaid Solutions, provides business processing and information
technology administrative services to Medicaid agencies in Idaho, Louisiana,
Maine, New Jersey, and West Virginia, and drug rebate administration services in
Florida. More information about Molina Healthcare is available at
www.molinahealthcare.com. 

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: This earnings release contains "forward-looking statements" regarding the
Company`s plans, expectations, and anticipated future events.Actual results
could differ materially due to numerous known and unknown risks and
uncertainties, including, without limitation, risk factors related to the
following:

* uncertainties associated with the implementation of the Affordable Care Act,
including the impact of the health insurance industry excise tax, the expansion
of Medicaid eligibility in the states that participate to previously uninsured
populations unfamiliar with managed care, the implementation of state insurance
exchanges currently expected to become operational by October 1, 2013, the
effect of various implementing regulations, and uncertainties regarding the
impact of other federal or state health care and insurance reform measures,
including the duals demonstration programs in California, Ohio, Michigan, and
Texas;
* the success of our medical cost containment initiatives in Texas, and other
risks associated with the expansion of our Texas health plan`s service areas in
2012;
* significant budget pressures on state governments and their potential
inability to maintain current rates, to implement expected rate increases, or to
maintain existing benefit packages or membership eligibility thresholds or
criteria;
* management of our medical costs, including seasonal flu patterns and rates of
utilization that are consistent with our expectations and our incurred but not
reported accruals;
* the success of our efforts to retain existing government contracts and to
obtain new government contracts in connection with state requests for proposals
(RFPs) in both existing and new states, and our ability to increase our revenues
consistent with our expectations;
* accurate estimation of incurred but not reported medical costs across our
health plans;
* risks associated with the continued growth in new Medicaid and Medicare
enrollees, and the development of actuarially sound rates with respect to such
new enrollees, including duals;
* retroactive adjustments to premium revenue or accounting estimates which
require adjustment based upon subsequent developments, including Medicaid
pharmaceutical rebates;
* continuation and renewal of the government contracts of both our health plans
and Molina Medicaid Solutions and the terms under which such contracts are
renewed;
* government audits and reviews, and any enrollment freeze or monitoring program
that may result therefrom;
* changes with respect to our provider contracts and the loss of providers;
* the establishment of a federal or state medical cost expenditure floor as a
percentage of the premiums we receive, and the interpretation and implementation
of medical cost expenditure floors, administrative cost and profit ceilings, and
profit sharing arrangements;
* interpretation and implementation of at-risk premium rules regarding the
achievement of certain quality measures;
* 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 favorable resolution of litigation, arbitration, or administrative
proceedings, including our pending litigation against the state of California
related to rates paid to our California plan in earlier years that were not
actuarially sound;
* restrictions and covenants in our credit facility;
* the relatively small number of states in which we operate health plans;
* the availability of adequate financing to fund and capitalize our expansion
and growth activities and to meet our liquidity needs, including the interest
expense and other costs associated with such financing;
* a state`s failure to renew its federal Medicaid waiver;
* inadvertent unauthorized disclosure of protected health information;
* changes generally affecting the managed care or Medicaid management
information systems industries;
* increases in government surcharges, taxes, and assessments;
* changes in general economic conditions, including unemployment rates; and
* increasing consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in the Company`s
periodic reports and filings with the Securities and Exchange Commission.These
reports can be accessed under the investor relations tab of the Company`s
website or on the SEC`s website at www.sec.gov.Given these risks and
uncertainties, we can give no assurances that the Company`s forward-looking
statements will prove to be accurate, or that any other results or events
projected or contemplated by the Company`s forward-looking statements will in
fact occur, and we caution investors not to place undue reliance on these
statements.All forward-looking statements in this release represent the
Company`s judgment as of February 7, 2013, and we disclaim any obligation to
update any forward-looking statements to conform the statement to actual results
or changes in the Company`s expectations.

                                                                                                                                                                                                                                                                                                                                   
      MOLINA HEALTHCARE, INC.                                                                                                                                                                                                                                                                                                      
      UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                   
                                                                                                                 Three Months Ended                                                                                              Year Ended                                                                                        
                                                                                                                 December 31,                                                                                                    December 31,                                                                                      
                                                                                                                 2012                                                    2011                                                    2012                                                    2011                                      
                                                                                                                 (Amounts in thousands, except net income (loss) per share)                                                                                                                                                        
      Revenue:                                                                                                                                                                                                                                                                                                                     
      Premium revenue                                                                                            $             1,480,014                                 $             1,211,013                                 $             5,667,500                                 $             4,448,818                   
      Premium tax                                                                                                              38,038                                                  43,956                                                  158,991                                                 154,589                     
      Service revenue                                                                                                          55,359                                                  49,157                                                  187,710                                                 160,447                     
      Investment income                                                                                                        1,192                                                   1,735                                                   5,188                                                   5,539                       
      Rental income                                                                                                            3,966                                                   547                                                     9,374                                                   547                         
      Total revenue                                                                                                            1,578,569                                               1,306,408                                               6,028,763                                               4,769,940                   
      Expenses:                                                                                                                                                                                                                                                                                                                    
      Medical care costs                                                                                                       1,273,624                                               1,037,945                                               5,096,760                                               3,859,994                   
      Cost of service revenue                                                                                                  43,097                                                  38,967                                                  141,208                                                 143,987                     
      General and administrative expenses                                                                                      153,419                                                 124,965                                                 532,627                                                 415,932                     
      Premium tax expenses                                                                                                     38,038                                                  43,956                                                  158,991                                                 154,589                     
      Depreciation and amortization                                                                                            16,258                                                  12,103                                                  63,704                                                  50,690                      
      Total expenses                                                                                                           1,524,436                                               1,257,936                                               5,993,290                                               4,625,192                   
      Impairment of goodwill and intangible assets                                                                             -                                                       (64,575       )                                         -                                                       (64,575       )             
      Operating income (loss)                                                                                                  54,133                                                  (16,103       )                                         35,473                                                  80,173                      
      Other expenses (income):                                                                                                                                                                                                                                                                                                     
      Interest expense                                                                                                         4,348                                                   3,853                                                   16,769                                                  15,519                      
      Other income                                                                                                             (361          )                                         -                                                       (361          )                                         -                           
      Total other expenses (income)                                                                                            3,987                                                   3,853                                                   16,408                                                  15,519                      
      Income (loss) before income taxes                                                                                        50,146                                                  (19,956       )                                         19,065                                                  64,654                      
      Provision for income taxes                                                                                               24,503                                                  13,004                                                  9,275                                                   43,836                      
      Net income (loss)                                                                                          $             25,643                                    $             (32,960       )                           $             9,790                                     $             20,818                      
      Net income (loss) per share:                                                                                                                                                                                                                                                                                                 
      Basic                                                                                                      $             0.55                                      $             (0.72         )                           $             0.21                                      $             0.45                        
      Diluted                                                                                                    $             0.54                                      $             (0.72         )                           $             0.21                                      $             0.45                        
      Weighted average shares outstanding:                                                                                                                                                                                                                                                                                         
      Basic                                                                                                                    46,617                                                  45,702                                                  46,380                                                  45,756                      
      Diluted                                                                                                                  47,143                                                  45,702                                                  46,999                                                  46,425                      
      Operating Statistics:                                                                                                                                                                                                                                                                                                        
      Ratio of medical care costs paid directly to providers to premium revenue                                                83.9          %                                         83.6          %                                         87.6          %                                         84.5          %             
      Ratio of medical care costs not paid directly to providers to premium revenue                                            2.2           %                                         2.1           %                                         2.3           %                                         2.3           %             
      Medical care ratio (1)                                                                                                   86.1          %                                         85.7          %                                         89.9          %                                         86.8          %             
      Service revenue ratio (2)                                                                                                77.9          %                                         79.3          %                                         75.2          %                                         89.7          %             
      General and administrative expense ratio (3)                                                                             9.7           %                                         9.6           %                                         8.8           %                                         8.7           %             
      Premium tax ratio (1)                                                                                                    2.6           %                                         3.6           %                                         2.8           %                                         3.5           %             
      Effective tax rate                                                                                                       48.9          %                                         (65.2         )%                                        48.6          %                                         67.8          %             
                                                                                                                                                                                                                                                                                                                                   
 (1)  Medical care ratio represents medical care costs as a percentage of premium revenue, net of premium taxes; premium tax ratio represents premium taxes as a percentage of premium revenue, net of premium taxes.                                                                                                              
 (2)  Service revenue ratio represents cost of service revenue as a percentage of service revenue.                                                                                                                                                                                                                                 
 (3)  Computed as a percentage of total revenue.                                                                                                                                                                                                                                                                                   


                                                                                                                                                                                                           
 MOLINA HEALTHCARE, INC.                                                                                                                                                                                   
 
UNAUDITED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                    
                                                                                                                                                                                                           
                                                                                                                                                       December 31,                                        
                                                                                                                                                       2012                           2011                 
                                                                                                                                                       (Amounts in thousands,                              
                                                                                                                                                       except per-share data)                              
 ASSETS                                                                                                                                                                                                    
 Current assets:                                                                                                                                                                                           
 Cash and cash equivalents                                                                                                                             $    795,770                   $    493,827         
 Investments                                                                                                                                                342,845                        336,916         
 Receivables                                                                                                                                                149,682                        167,898         
 Income tax refundable                                                                                                                                      -                              11,679          
 Deferred income taxes                                                                                                                                      32,443                         18,327          
 Prepaid expenses and other current assets                                                                                                                  28,386                         19,435          
 Total current assets                                                                                                                                       1,349,126                      1,048,082       
 Property, equipment, and capitalized software, net                                                                                                         221,443                        190,934         
 Deferred contract costs                                                                                                                                    58,313                         54,582          
 Intangible assets, net                                                                                                                                     77,711                         101,796         
 Goodwill and indefinite-lived intangible assets                                                                                                            151,088                        153,954         
 Auction rate securities                                                                                                                                    13,419                         16,134          
 Restricted investments                                                                                                                                     44,101                         46,164          
 Receivable for ceded life and annuity contracts                                                                                                            -                              23,401          
 Other assets                                                                                                                                               19,621                         17,099          
                                                                                                                                                       $    1,934,822                 $    1,652,146       
                                                                                                                                                                                                           
 LIABILITIES AND STOCKHOLDERS` EQUITY                                                                                                                                                                      
 Current liabilities:                                                                                                                                                                                      
 Medical claims and benefits payable                                                                                                                   $    494,530                   $    402,476         
 Accounts payable and accrued liabilities                                                                                                                   184,034                        147,214         
 Deferred revenue                                                                                                                                           141,798                        50,947          
 Income taxes payable                                                                                                                                       6,520                          -               
 Current maturities of long-term debt                                                                                                                       1,155                          1,197           
 Total current liabilities                                                                                                                                  828,037                        601,834         
 Long-term debt                                                                                                                                             261,784                        216,929         
 Deferred income taxes                                                                                                                                      37,900                         33,127          
 Liability for ceded life and annuity contracts                                                                                                             -                              23,401          
 Other long-term liabilities                                                                                                                                24,787                         21,782          
 Total liabilities                                                                                                                                          1,152,508                      897,073         
 Stockholders` equity:                                                                                                                                                                                     
 Common stock, $0.001 par value; 80,000 shares authorized; outstanding: 46,762 shares at December 31, 2012 and 45,815 shares at December 31, 2011           47                             46              
 Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding                                                              -                              -               
 Additional paid-in capital                                                                                                                                 285,524                        266,022         
 Accumulated other comprehensive loss                                                                                                                       (457       )                   (1,405     )    
 Treasury stock, at cost; 111 shares at December 31, 2012                                                                                                   (3,000     )                   -               
 Retained earnings                                                                                                                                          500,200                        490,410         
 Total stockholders` equity                                                                                                                                 782,314                        755,073         
                                                                                                                                                       $    1,934,822                 $    1,652,146       


                                                                                                                                                                                             
 MOLINA HEALTHCARE, INC.                                                                                                                                                                     
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                                  
                                                                                                                                                                                             
                                                                                        Three Months Ended                                       Year Ended                                  
                                                                                        December 31,                                             December 31,                                
                                                                                        2012                         2011                        2012                      2011              
                                                                                        (Amounts in thousands)                                                                               
 Operating activities:                                                                                                                                                                       
 Net income (loss)                                                                      $    25,643                  $    (32,960   )            $   9,790                 $   20,818        
 Adjustments to reconcile net income to net cash provided by operating activities:                                                                                                           
 Depreciation and amortization                                                               20,475                       21,969                     78,764                    74,383        
 Deferred income taxes                                                                       (11,053  )                   5,767                      (9,887    )               13,836        
 Stock-based compensation                                                                    4,570                        4,329                      20,018                    17,052        
 Non-cash interest on convertible senior notes                                               1,528                        1,417                      5,942                     5,512         
 Impairment of goodwill and intangible assets                                                -                            64,575                     -                         64,575        
 Change in fair value of interest rate swap                                                  37                           -                          1,307                     -             
 Amortization of premium/discount on investments                                             1,580                        1,942                      6,746                     7,242         
 Amortization of deferred financing costs                                                    264                          367                        1,089                     2,818         
 Gain on sale of subsidiary                                                                  643                          -                          (1,747    )               -             
 Gain on acquisition                                                                         -                            (1,676    )                -                         (1,676    )   
 Loss on disposal of property and equipment                                                  2,608                        -                          2,608                     -             
 Tax deficiency from employee stock compensation                                             (367     )                   (67       )                (526      )               (714      )   
 Changes in operating assets and liabilities:                                                                                                                                                
 Receivables                                                                                 7,227                        (5,059    )                18,216                    352           
 Prepaid expenses and other current assets                                                   1,616                        5,127                      (8,958    )               3,308         
 Medical claims and benefits payable                                                         (41,933  )                   41,421                     92,054                    48,120        
 Accounts payable and accrued liabilities                                                    28,888                       2,532                      19,858                    2,778         
 Deferred revenue                                                                            (1,503   )                   (33,554   )                90,851                    (8,154    )   
 Income taxes                                                                                40,050                       (5,898    )                18,172                    (24,855   )   
 Net cash provided by operating activities                                                   80,273                       70,232                     344,297                   225,395       
 Investing activities:                                                                                                                                                                       
 Purchases of equipment                                                                      (25,597  )                   (14,660   )                (78,145   )               (60,581   )   
 Purchases of investments                                                                    (71,972  )                   (87,759   )                (306,437  )               (345,968  )   
 Sales and maturities of investments                                                         84,341                       76,254                     298,006                   302,667       
 Net cash paid in business combinations                                                      -                            (81,000   )                -                         (84,253   )   
 Proceeds from sale of subsidiary, net of cash surrendered                                   -                            -                          9,162                     -             
 (Increase) decrease in deferred contract costs                                              7,189                        (10,065   )                (11,610   )               (42,830   )   
 (Increase) decrease in restricted investments                                               387                          4,330                      (2,647    )               (4,064    )   
 Change in other noncurrent assets and liabilities                                           2,862                        (1,365    )                (1,913    )               (1,898    )   
 Net cash used in investing activities                                                       (2,790   )                   (114,265  )                (93,584   )               (236,927  )   
 Financing activities:                                                                                                                                                                       
 Amount borrowed under term loan                                                             -                            48,600                     -                         48,600        
 Amount borrowed under credit facility                                                       -                            -                          60,000                    -             
 Repayment of amount borrowed under credit facility                                          -                            -                          (20,000   )               -             
 Treasury stock purchases                                                                    (3,000   )                   -                          (3,000    )               (7,000    )   
 Credit facility fees paid                                                                   -                            -                          -                         (1,125    )   
 Principal payments on term loan                                                             (283     )                   -                          (1,129    )               -             
 Proceeds from employee stock plans                                                          6,121                        1,707                      11,692                    7,347         
 Excess tax benefits from employee stock compensation                                        (31      )                   61                         3,667                     1,651         
 Net cash provided by financing activities                                                   2,807                        50,368                     51,230                    49,473        
 Net increase in cash and cash equivalents                                                   80,290                       6,335                      301,943                   37,941        
 Cash and cash equivalents at beginning of period                                            715,480                      487,492                    493,827                   455,886       
 Cash and cash equivalents at end of period                                             $    795,770                 $    493,827                $   795,770               $   493,827       
                                                                                                                                                                                             


 MOLINA HEALTHCARE, INC.                       
 UNAUDITED DEPRECIATION AND AMORTIZATION DATA  


Depreciation and amortization related to the Company`s Health Plans segment is
all recorded in "Depreciation and amortization" in the consolidated statements
of operations. Depreciation and amortization related to the Company`s Molina
Medicaid Solutions segment is recorded within three different headings in the
consolidated statements of operations as follows:

* Amortization of purchased intangibles relating to customer relationships is
reported as amortization within the heading "Depreciation and amortization;" 
* Amortization of purchased intangibles relating to contract backlog is recorded
as a reduction of "Service revenue;" and 
* Depreciation is recorded within the heading "Cost of service revenue."

The following table presents all depreciation and amortization recorded in the
Company`s consolidated statements of operations, regardless of whether the item
appears as depreciation and amortization, a reduction of revenue, or as cost of
service revenue:

                                                                                                                                                                                            
                                                                                                  Three Months Ended December 31,                                                           
                                                                                                  2012                                              2011                                    
                                                                                                  Amount                  % of Total                Amount                  % of Total      
                                                                                                                          Revenue                                           Revenue         
                                                                                                  (Dollar amounts in thousands)                                                             
 Depreciation and amortization of capitalized software                                            $     11,677            0.7     %                 $     8,005             0.6     %       
 Amortization of intangible assets                                                                      4,581             0.3                             4,098             0.3             
 Depreciation and amortization reported as such in the consolidated statements of operations            16,258            1.0                             12,103            0.9             
 Amortization recorded as reduction of service revenue                                                  729               -                               1,545             0.1             
 Amortization of capitalized software recorded as cost of service revenue                               3,488             0.2                             8,321             0.6             
 Total                                                                                            $     20,475            1.2     %                 $     21,969            1.6     %       
                                                                                                                                                                                            


                                                                                                  Year Ended December 31,                                                                   
                                                                                                  2012                                              2011                                    
                                                                                                  Amount                  % of Total                Amount                  % of Total      
                                                                                                                          Revenue                                           Revenue         
                                                                                                  (Dollar amounts in thousands)                                                             
 Depreciation and amortization of capitalized software                                            $     43,201            0.7     %                 $     30,864            0.7     %       
 Amortization of intangible assets                                                                      20,503            0.3                             19,826            0.4             
 Depreciation and amortization reported as such in the consolidated statements of operations            63,704            1.0                             50,690            1.1             
 Amortization recorded as reduction of service revenue                                                  1,571             -                               6,822             0.1             
 Amortization of capitalized software recorded as cost of service revenue                               13,489            0.2                             16,871            0.4             
 Total                                                                                            $     78,764            1.2     %                 $     74,383            1.6     %       


                                                                                                                                                                                                
      MOLINA HEALTHCARE, INC.                                                                                                                                                                   
      
UNAUDITED MEMBERSHIP DATA                                                                                                                                                                
                                                                                                                                                                                                
                                                                                                            As of December 31,                                                                  
                                                                                                            2012                                2011                                2010        
      Total Ending Membership by Health Plan:                                                                                                                                                   
      California                                                                                            336,000                             355,000                             344,000     
      Florida                                                                                               73,000                              69,000                              61,000      
      Michigan                                                                                              220,000                             222,000                             227,000     
      Missouri (1)                                                                                          -                                   79,000                              81,000      
      New Mexico                                                                                            91,000                              88,000                              91,000      
      Ohio                                                                                                  244,000                             248,000                             245,000     
      Texas                                                                                                 282,000                             155,000                             94,000      
      Utah                                                                                                  87,000                              84,000                              79,000      
      Washington                                                                                            418,000                             355,000                             355,000     
      Wisconsin                                                                                             46,000                              42,000                              36,000      
      Total                                                                                                 1,797,000                           1,697,000                           1,613,000   
                                                                                                                                                                                                
      Total Ending Membership by State for the Medicare Advantage Plans:                                                                                                                        
      California                                                                                            7,700                               6,900                               4,900       
      Florida                                                                                               900                                 800                                 500         
      Michigan                                                                                              9,700                               8,200                               6,300       
      New Mexico                                                                                            900                                 800                                 600         
      Ohio                                                                                                  300                                 200                                 -           
      Texas                                                                                                 1,500                               700                                 700         
      Utah                                                                                                  8,200                               8,400                               8,900       
      Washington                                                                                            6,500                               5,000                               2,600       
      Total                                                                                                 35,700                              31,000                              24,500      
                                                                                                                                                                                                
      Total Ending Membership by State for the Aged, Blind or Disabled Population:                                                                                                              
      California                                                                                            44,700                              31,500                              13,900      
      Florida                                                                                               10,300                              10,400                              10,000      
      Michigan                                                                                              41,900                              37,500                              31,700      
      New Mexico                                                                                            5,700                               5,600                               5,700       
      Ohio                                                                                                  28,200                              29,100                              28,200      
      Texas                                                                                                 95,900                              63,700                              19,000      
      Utah                                                                                                  9,000                               8,500                               8,000       
      Washington                                                                                            30,000                              4,800                               4,000       
      Wisconsin                                                                                             1,700                               1,700                               1,700       
      Total                                                                                                 267,400                             192,800                             122,200     
                                                                                                                                                                                                
 (1)  The Company`s contract with the state of Missouri expired without renewal on June 30, 2012.                                                                                               


                                                                                                                                                                                                                                                               
      MOLINA HEALTHCARE, INC.                                                                                                                                                                                                                                  
      
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN                                                                                                                                                                                                        
      
(Amounts in thousands except per-member-per-month amounts)                                                                                                                                                                                              
                                                                                                                                                                                                                                                               
                                               Three Months Ended December 31, 2012                                                                                                                                                                            
                                               Member                    Premium Revenue                                                               Medical Care Costs                                                            MCR                       
                                               Months (1)                                                                                                                                                                            Excluding                 
                                                                                                                                                                                                                                     Premium                   
                                                                                                                                                                                                                                     Tax                       
                                                                                                                                                                                                                                     Expense (5)               
                                                                         Total                                  PMPM                                   Total                                  PMPM                                   
      California                               1,021                     $            179,078                   $            175.44                    $            159,800                   $            156.55                    89.2         %            
      Florida                                  218                                    57,892                                 266.06                                 48,965                                 225.04                    84.6                      
      Michigan                                 656                                    166,453                                253.54                                 151,230                                230.35                    90.9                      
      Missouri (2)                             -                                      -                                      -                                      -                                      -                         -                         
      New Mexico                               268                                    83,115                                 309.59                                 71,440                                 266.10                    86.0                      
      Ohio                                     752                                    267,918                                356.60                                 235,072                                312.88                    87.7                      
      Texas                                    856                                    341,244                                398.69                                 265,391                                310.07                    77.8                      
      Utah                                     259                                    72,859                                 281.46                                 61,741                                 238.51                    84.7                      
      Washington                               1,248                                  290,246                                232.56                                 253,335                                202.99                    87.3                      
      Wisconsin (3)                            134                                    18,469                                 138.66                                 13,107                                 98.41                     71.0                      
      Other (4)                                -                                      2,740                                  -                                      13,543                                 -                         -                         
                                               5,412                     $            1,480,014                 $            273.54                    $            1,273,624                 $            235.40                    86.1         %            
                                                                                                                                                                                                                                                               
                                               Three Months Ended December 31, 2011                                                                                                                                                                            
                                               Member                    Premium Revenue                                                               Medical Care Costs                                                            MCR                       
                                               Months (1)                                                                                                                                                                            Excluding                 
                                                                                                                                                                                                                                     Premium                   
                                                                                                                                                                                                                                     Tax                       
                                                                                                                                                                                                                                     Expense (5)               
                                                                                      Total                                  PMPM                                   Total                                  PMPM                                   
      California                               1,057                     $            153,653                   $            145.39                    $            133,575                   $            126.39                    86.9         %            
      Florida                                  200                                    53,377                                 266.19                                 45,486                                 226.84                    85.2                      
      Michigan                                 658                                    156,641                                238.12                                 137,827                                209.52                    88.0                      
      Missouri (2)                             237                                    59,596                                 251.32                                 47,697                                 201.14                    80.0                      
      New Mexico                               266                                    96,696                                 363.71                                 71,679                                 269.61                    74.1                      
      Ohio                                     748                                    272,019                                363.45                                 233,733                                312.30                    85.9                      
      Texas                                    462                                    116,407                                252.19                                 110,667                                239.76                    95.1                      
      Utah                                     249                                    72,085                                 289.39                                 56,908                                 228.46                    78.9                      
      Washington                               1,067                                  210,559                                197.30                                 174,744                                163.74                    83.0                      
      Wisconsin                                124                                    18,070                                 145.93                                 16,896                                 136.45                    93.5                      
      Other (4)                                -                                      1,910                                  -                                      8,733                                  -                         -                         
                                               5,068                     $            1,211,013                 $            238.94                    $            1,037,945                 $            204.79                    85.7         %            
                                                                                                                                                                                                                                                               
 (1)  A member month is defined as the aggregate of each month`s ending membership for the period presented.                                                                                                                                                   
 (2)  The Company`s contract with the state of Missouri expired without renewal on June 30, 2012.  The Missouri health plan`s claims run-out activity subsequent to June 30, 2012, is reported in "Other."                                                     
 (3)  Absent amortization of $1.5 million premium deficiency reserve in the fourth quarter 2012, the Wisconsin health plan`s MCR would have been approximately 79.1%.                                                                                          
 (4)  "Other" medical care costs also include medically related administrative costs at the parent company.                                                                                                                                                    
 (5)  The MCR Excluding Premium Tax Expense represents medical costs as a percentage of premium revenue, where premium revenue is reduced by premium tax expense.                                                                                              


                                                                                                                                                                                                                                                              
      MOLINA HEALTHCARE, INC.                                                                                                                                                                                                                                 
      
UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN                                                                                                                                                                                                       
      
(Amounts in thousands except per-member-per-month amounts)                                                                                                                                                                                             
                                                                                                                                                                                                                                                              
                                              Year Ended December 31, 2012                                                                                                                                                                                    
                                              Member                    Premium Revenue                                                               Medical Care Costs                                                            MCR                       
                                              Months (1)                                                                                                                                                                            Excluding                 
                                                                                                                                                                                                                                    Premium                   
                                                                                                                                                                                                                                    Tax                       
                                                                                                                                                                                                                                    Expense (4)               
                                                                        Total                                  PMPM                                   Total                                  PMPM                                   
      California                              4,177                     $            665,792                   $            159.40                    $            606,494                   $            145.20                    91.1         %            
      Florida                                 850                                    228,832                                269.36                                 195,226                                229.80                    85.3                      
      Michigan                                2,639                                  646,551                                244.97                                 570,636                                216.20                    88.3                      
      Missouri (2)                            483                                    113,818                                235.63                                 113,101                                234.15                    99.4                      
      New Mexico                              1,069                                  330,562                                309.22                                 280,108                                262.03                    84.7                      
      Ohio                                    3,065                                  1,095,137                              357.36                                 970,504                                316.69                    88.6                      
      Texas                                   3,245                                  1,233,621                              380.18                                 1,155,433                              356.08                    93.7                      
      Utah                                    1,026                                  298,392                                290.78                                 245,671                                239.41                    82.3                      
      Washington                              4,600                                  974,712                                211.91                                 845,733                                183.87                    86.8                      
      Wisconsin                               508                                    70,678                                 139.25                                 67,968                                 133.91                    96.2                      
      Other (3)                               -                                      9,405                                  -                                      45,886                                 -                         -                         
                                              21,662                    $            5,667,500                 $            261.65                    $            5,096,760                 $            235.30                    89.9         %            
                                                                                                                                                                                                                                                              
                                              Year Ended December 31, 2011                                                                                                                                                                                    
                                              Member                    Premium Revenue                                                               Medical Care Costs                                                            MCR                       
                                              Months (1)                                                                                                                                                                            Excluding                 
                                                                                                                                                                                                                                    Premium                   
                                                                                                                                                                                                                                    Tax                       
                                                                                                                                                                                                                                    Expense (4)               
                                                                                     Total                                  PMPM                                   Total                                  PMPM                                   
      California                              4,190                     $            567,677                   $            135.48                    $            493,419                   $            117.75                    86.9         %            
      Florida                                 788                                    203,904                                258.65                                 187,358                                237.66                    91.9                      
      Michigan                                2,660                                  623,394                                234.35                                 537,779                                202.16                    86.3                      
      Missouri (2)                            959                                    229,584                                239.38                                 195,832                                204.19                    85.3                      
      New Mexico                              1,074                                  336,447                                313.29                                 277,338                                258.25                    82.4                      
      Ohio                                    2,966                                  912,219                                307.55                                 766,949                                258.57                    84.1                      
      Texas                                   1,616                                  402,178                                248.99                                 382,390                                236.74                    95.1                      
      Utah                                    972                                    287,290                                295.51                                 224,513                                230.94                    78.1                      
      Washington                              4,171                                  808,458                                193.85                                 690,513                                165.57                    85.4                      
      Wisconsin                               488                                    69,552                                 142.47                                 64,346                                 131.81                    92.5                      
      Other (3)                               -                                      8,115                                  -                                      39,557                                 -                         -                         
                                              19,884                    $            4,448,818                 $            223.74                    $            3,859,994                 $            194.13                    86.8         %            
                                                                                                                                                                                                                                                              
 (1)  A member month is defined as the aggregate of each month`s ending membership for the period presented.                                                                                                                                                  
 (2)  The Company`s contract with the state of Missouri expired without renewal on June 30, 2012. The Missouri health plan`s claims run-out activity subsequent to June 30, 2012, is reported in "Other."                                                     
 (3)  "Other" medical care costs also include medically related administrative costs at the parent company.                                                                                                                                                   
 (4)  The MCR Excluding Premium Tax Expense represents medical costs as a percentage of premium revenue, where premium revenue is reduced by premium tax expense.                                                                                             


                                                                                                                                                               
 MOLINA HEALTHCARE, INC.                                                                                                                                       
 
UNAUDITED SELECTED FINANCIAL DATA                                                                                                                            
 
(Amounts in thousands, except per-member-per-month amounts)                                                                                                  
 
                                                                                                                                                             
 
The following tables provide the details of the Company`s medical care costs for the periods indicated:                                                      
                                                                                                                                                               
                                Three Months Ended December 31,                                                                                                
                                2012                                                             2011                                                          
                                Amount                   PMPM                  % of              Amount                PMPM                 % of               
                                                                               Total                                                        Total              
 Fee for service                $      855,490           $      158.12         67.2   %          $      713,879        $       140.85            68.8     %    
 Capitation                            139,444                  25.77          10.9                     134,880                26.61             13.0          
 Pharmacy                              229,826                  42.48          18.1                     149,370                29.47             14.4          
 Other                                 48,864                   9.03           3.8                      39,816                 7.86              3.8           
 Total                          $      1,273,624         $      235.40         100.0  %          $      1,037,945      $       204.79            100.0    %    
                                                                                                                                                               
                                Year Ended December 31,                                                                                                        
                                2012                                                             2011                                                          
                                Amount                   PMPM                  % of              Amount                PMPM                 % of               
                                                                               Total                                                        Total              
 Fee for service                $      3,521,960         $      162.60         69.1   %          $      2,764,309      $       139.02            71.6     %    
 Capitation                            557,087                  25.72          10.9                     518,835                26.09             13.4          
 Pharmacy                              835,830                  38.59          16.4                     418,007                21.02             10.8          
 Other                                 181,883                  8.39           3.6                      158,843                8.00              4.2           
 Total                          $      5,096,760         $      235.30         100.0  %          $      3,859,994      $       194.13            100.0    %    
                                                                                                                                                               
 The following table provides the details of the Company`s medical claims and benefits payable as of the dates indicated:                                      
                                                                                                                                                               
                                                                                                 Dec. 31,              Sept. 30,            Dec. 31,           
                                                                                                 2012                  2012                 2011               
 Fee-for-service claims incurred but not paid (IBNP)                                             $      377,614        $       414,725      $    301,020       
 Capitation payable                                                                                     49,066                 55,314            53,532        
 Pharmacy                                                                                               38,992                 42,681            26,178        
 Other                                                                                                  28,858                 23,743            21,746        
                                                                                                 $      494,530        $       536,463      $    402,476       


                                                                                                                                                                                      
 MOLINA HEALTHCARE, INC.                                                                                                                                                              
 UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE                                                                                                                              
                                                                                                                                                                                      
 The Company`s claims liability includes an allowance for adverse claims development based on historical experience and other factors including, but not limited to, variations 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 amounts displayed for "Components of medical care costs related to: Prior period" represent the amount by which the Company`s 
 original estimate of claims and benefits payable at the beginning of the period were (more) or less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table shows the components of the change in medical claims and benefits payable as of the periods indicated: 
                                                                                                                                                                                      
                                                                      Three Months Ended                                        Year Ended                                            
                                                                      December 31,                                              December 31,                                          
                                                                      2012                         2011                         2012                          2011                    
                                                                      (Dollars in thousands, except per-member amounts)                                                               
 Balances at beginning of period                                      $     536,463                $     361,055                $     402,476                 $     354,356           
 Components of medical care costs related to:                                                                                                                                         
 Current period                                                             1,350,043                    1,069,228                    5,136,055                     3,911,803         
 Prior period                                                               (76,419    )                 (31,283    )                 (39,295     )                 (51,809     )     
 Total medical care costs                                                   1,273,624                    1,037,945                    5,096,760                     3,859,994         
 Payments for medical care costs related to:                                                                                                                                          
 Current period                                                             906,108                      708,538                      4,649,363                     3,516,994         
 Prior period                                                               409,449                      287,986                      355,343                       294,880           
 Total paid                                                                 1,315,557                    996,524                      5,004,706                     3,811,874         
 Balances at end of period                                            $     494,530                $     402,476                $     494,530                 $     402,476           
 Benefit from prior period as a percentage of:                                                                                                                                        
 Balance at beginning of period                                             14.2       %                 8.7        %                 9.8         %                 14.6        %     
 Premium revenue                                                            5.2        %                 2.6        %                 0.7         %                 1.2         %     
 Total medical care costs                                                   6.0        %                 3.0        %                 0.8         %                 1.3         %     
                                                                                                                                                                                      
 Claims Data:                                                                                                                                                                         
 Days in claims payable, fee for service                                    40                           40                           40                            40                
 Number of members at end of year                                           1,797,000                    1,697,000                    1,797,000                     1,697,000         
 Number of claims in inventory at end of year                               122,700                      111,100                      122,700                       111,100           
 Billed charges of claims in inventory at end of year                 $     255,200                $     207,600                $     255,200                 $     207,600           
 Claims in inventory per member at end of year                              0.07                         0.07                         0.07                          0.07              
 Billed charges of claims in inventory per member at end of year      $     142.01                 $     122.33                 $     142.01                  $     122.33            
 Number of claims received during the year                                  5,378,400                    4,342,800                    20,842,400                    17,207,500        
 Billed charges of claims received during the year                    $     5,089,600              $     3,732,500              $     19,429,300              $     14,306,500        
                                                                                                                                                                                      


 MOLINA HEALTHCARE, INC.  
 GUIDANCE 2013 DETAILS    


The Company provides the following general commentary regarding its 2013
earnings guidance: 

Due to the significant financial impact that items relating to prior periods
have had on its fourth quarter 2012 results, the Company believes that fourth
quarter results alone are not an appropriate guide to anticipated 2013 full year
results. The Company believes, for example, that its consolidated medical care
ratio for the second half of 2012 (approximately 88%), is more indicative of
2013 performance than its medical care ratio for just the fourth quarter of
2012. 

The following is the Company`s guidance for fiscal year 2013 (all amounts are
approximate):

 Total Revenue                                                $7.0B  
 Medical Care Costs                                           $5.9B  
 Medical Care Ratio                                           88%    
 Service Costs                                                $170M  
 G&A Expense                                                  $600M  
 G&A Ratio                                                    8.6%   
 Premium Tax Expense                                          $160M  
 Income Before Tax                                            $128M  
 Income Tax                                                   $54M   
 Effective Tax Rate                                           42.0%  
 Net Income                                                   $74M   
 Weighted Average Diluted Shares Outstanding                  47.7M  
 Diluted EPS                                                  $1.55  
 EBITDA                                                       $245M  


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

Copyright Business Wire 2013

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