Business Wire | Jul 28, 2021 04:15PM EDT

Molina Healthcare Reports Second Quarter 2021 Financial Results

Jul. 28, 2021

LONG BEACH, Calif.--(BUSINESS WIRE)--Jul. 28, 2021--Molina Healthcare, Inc. (NYSE: MOH) (the "Company") today reported second quarter of 2021 GAAP earnings per diluted share of $3.16 and adjusted earnings per diluted share of $3.40. Financial results are summarized below:

Quarter ended Six months ended

June 30, June 30,

2021 2020 2021 2020



(In millions, except per-share results)

Premium Revenue $6,583 $4,372 $12,889 $8,676

Total Revenue $6,800 $4,618 $13,322 $9,167



GAAP:

Net Income $185 $276 $413 $454

EPS - Diluted $3.16 $4.65 $7.05 $7.54

Medical Care Ratio (MCR) 88.4% 82.3% 87.6% 84.3%

G&A Ratio 7.1% 7.5% 7.2% 7.2%

After-tax Margin 2.7% 6.0% 3.1% 5.0%



Adjusted:

Net Income $199 $285 $459 $469

EPS - Diluted $3.40 $4.79 $7.83 $7.79

G&A Ratio 6.9% 7.5% 7.0% 7.2%

After-tax Margin 2.9% 6.2% 3.4% 5.1%

See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end ofthis release.

Quarter Highlights

* GAAP net income for the second quarter of 2021 was $185 million, or $3.16 per diluted share. * Adjusted net income for the second quarter of 2021 was $199 million, or $3.40 per diluted share. * As of June 30, 2021, the Company served approximately 4.7 million members, an increase of 1.1 million members, or 32%, compared to June 30, 2020. * Premium revenue was approximately $6.6 billion for the second quarter of 2021, an increase of 51% compared to the second quarter of 2020. * The net effect of COVID decreased net income by approximately $1.00 per diluted share in the second quarter of 2021. * The Company increased its full year 2021 premium revenue guidance to more than $25.0 billion, from its previous guidance of more than $24.0 billion. * The Company increased its full year 2021 adjusted earnings guidance to no less than $13.25 per diluted share, from its previous guidance of no less than $13.00 per diluted share.

"We are pleased with our second quarter and year to date results as we continue to produce solid margin performance despite the challenges created by the pandemic," said Joseph Zubretsky, president and CEO of Molina Healthcare. "We accomplished this while generating approximately 50% year-over-year premium revenue growth and successfully integrating businesses representing approximately $5 billion in annual revenue."

Premium RevenuePremium revenue was approximately $6.6 billion for the second quarter of 2021, an increase of 51% compared to the second quarter of 2020. The higher premium revenue reflects increased organic membership in Medicaid, Medicare, and Marketplace, along with the impact of acquisitions that closed in the second half of 2020.

Net IncomeNet income for the second quarter was $185 million, or $3.16 per diluted share, compared to $276 million, or $4.65 per diluted share in the second quarter of 2020. Adjusted net income for the second quarter was $199 million, or $3.40 per diluted share, compared to $285 million, or $4.79 per diluted share in the second quarter of 2020.

The year over year comparison reflects the negative impact from the net effect of COVID in the second quarter of 2021 while, in contrast, the prior year quarter was positively impacted by the net effect of COVID.

Net income for the six months ended June 30, 2021 was $413 million, or $7.05 per diluted share, compared to $454 million, or $7.54 per diluted share in the six months ended June 30, 2020. Adjusted net income for the six months ended June 30, 2021 was $459 million, or $7.83 per diluted share, compared to $469 million, or $7.79 per diluted share in the six months ended June 30, 2020.

Medical Care RatioThe consolidated MCR for the second quarter was 88.4%, compared to 82.3% in the second quarter of 2020. The net effect of COVID increased the consolidated MCR by 110 basis points and impacted all three lines of business. In the prior year, the net effect of COVID decreased the consolidated MCR by approximately 350 basis points.

A year-over-year comparison is less meaningful than it would be in a typical year. The second quarter of 2020 was the first full quarter of the COVID pandemic, and was distorted by the significant positive net effect of COVID that characterized that early phase of the crisis. In contrast, the current quarter was negatively impacted by the net effect of COVID. Therefore, a sequential MCR comparison is more relevant.

On a sequential basis, the consolidated MCR for the second quarter was 88.4%, compared to 86.8% in the first quarter of 2021. The net effect of COVID increased the consolidated MCR by 110 basis points in the second quarter of 2021 and was negligible the first quarter.

* Medicaid MCR: Increased to 89.0% compared to 87.5% for the first quarter of 2021. The increase in the MCR was primarily due to the net effect of COVID. * Medicare MCR: Decreased to 87.6% compared to 90.3% in the first quarter of 2021. The decrease in the MCR was primarily due to the lower negative net effect of COVID and improved underlying performance compared to the first quarter. * Marketplace MCR: Increased to 84.8% compared to 77.3% for the first quarter of 2021. The impact from the net effect of COVID in the second quarter was approximately 500 basis points, consistent with the first quarter, due to continued COVID utilization pressure in many geographies. The sequential increase in the MCR primarily reflects normal seasonality.

General and Administrative Expense RatioThe G&A ratio for the second quarter was 7.1%, compared to 7.5% for the second quarter of 2020. The adjusted G&A ratio for the second quarter was 6.9%, compared to 7.5% for the second quarter of 2020 reflecting disciplined cost management and the benefits of fixed cost leverage produced by substantial revenue growth.

Balance SheetCash and investments at the parent company amounted to $564 million as of June 30, 2021, compared to $644 million as of December 31, 2020. The decline was primarily due to the Company's share repurchase program.

Cash FlowOperating cash flow for the six months ended June 30, 2021 amounted to $1,061 million and was higher compared to the six months ended June 30, 2020, primarily due to growth in operations and the net impact of timing differences in governmental receivables and payables.

2021 GuidanceThe Company now expects its full year 2021 total revenue to be more than $26.0 billion, compared to the previous guidance of more than $25.0 billion, an increase of approximately 34% from the full year 2020.

Premium revenue guidance is now expected to be more than $25.0 billion, compared to the previous guidance of more than $24.0 billion, an increase of approximately 37% from the full year 2020.

The Company increased its full year 2021 adjusted earnings per share guidance to be no less than $13.25 per share, compared to the previous guidance of no less than $13.00.

Revised guidance reflects:

* Updated assumptions for the Public Health Emergency period, and the associated pause on Medicaid membership redeterminations, which is now expected to continue through the fourth quarter of 2021; * Retention of pharmacy related premium in California, New York, and Kentucky; * Underlying outperformance; * Offset by an increase in the estimated net effect of COVID by $1.00 per share which is now expected to be approximately $2.50 per share for the full year; and * Continued caution in forecasting utilization trends in the remaining six months of the year due to the COVID pandemic.

The impact of the Affinity and the Cigna Texas membership acquisitions are not included.

See the Reconciliation of Unaudited Non-GAAP Financial Measures at the end of this release.

Conference CallManagement will host a conference call and webcast to discuss Molina Healthcare's second quarter 2021 results at 8:00 a.m. Eastern Time on Thursday, July 29, 2021. The number to call for the interactive teleconference is (877) 883-0383 and the confirmation number is 5686734. A telephonic replay of the conference call will be available through Thursday, August 12, 2021, by dialing (877) 344-7529 and entering confirmation number 10157375. A live audio broadcast of this conference call will be available on Molina Healthcare's website, molinahealthcare.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast.

About Molina HealthcareMolina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served approximately 4.7 million members as of June 30, 2021. For more information about Molina Healthcare, please visit molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995This earnings release and the Company's accompanying oral remarks contain forward-looking statements regarding its 2021 guidance, as well as its plans, expectations, and the Company's expectations regarding future developments. Actual results could differ materially due to numerous known and unknown risks and uncertainties. These risks and uncertainties are discussed under the headings "Forward-Looking Statements," and "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the SEC, and also in its Quarterly Report on Form 10-Q for the period ended June 30, 2021, which the Company expects to file on or about July 29, 2021.

These reports can be accessed under the investor relations tab of the Company's website or on the SEC's website at sec.gov. Given these risks and uncertainties, the Company can give no assurances that its forward-looking statements will prove to be accurate, or that any other results or developments projected or contemplated by its forward-looking statements will in fact occur, and the Company cautions investors not to place undue reliance on these statements. All forward-looking statements in this release represent the Company's judgment as of July 28, 2021, and, except as otherwise required by law, the Company disclaims any obligation to update any forward-looking statement to conform the statement to actual results or changes in its expectations.

MOLINA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020



(In millions, except per-share amounts)

Revenue:

Premium revenue $ 6,583 $ 4,372 $ 12,889 $ 8,676

Premium tax revenue 185 157 372 307

Health insurer fees reimbursed - 71 - 137

Investment income 10 13 19 38

Other revenue 22 5 42 9

Total revenue 6,800 4,618 13,322 9,167

Operating expenses:

Medical care costs 5,819 3,598 11,293 7,314

General and administrative expenses 484 345 957 662

Premium tax expenses 185 157 372 307

Health insurer fees - 71 - 139

Depreciation and amortization 31 21 64 41

Other 8 2 28 6

Total operating expenses 6,527 4,194 12,714 8,469

Operating income 273 424 608 698

Other expenses, net:

Interest expense 30 24 60 45

Other expense, net - 5 - 5

Total other expenses, net 30 29 60 50

Income before income tax expense 243 395 548 648

Income tax expense 58 119 135 194

Net income $ 185 $ 276 $ 413 $ 454



Net income per share - Diluted $ 3.16 $ 4.65 $ 7.05 $ 7.54



Diluted weighted average shares 58.4 59.4 58.5 60.2 outstanding



Operating Statistics:

Medical care ratio 88.4 % 82.3 % 87.6 % 84.3 %

G&A ratio 7.1 % 7.5 % 7.2 % 7.2 %

Premium tax ratio 2.7 % 3.5 % 2.8 % 3.4 %

Effective income tax rate 24.2 % 30.0 % 24.7 % 29.9 %

After-tax margin 2.7 % 6.0 % 3.1 % 5.0 %



MOLINA HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

2021

2020

Unaudited

(Dollars in millions,

except per-share amounts)

ASSETS

Current assets:

Cash and cash equivalents

$

4,608

$

4,154

Investments

2,241

1,875

Receivables

1,857

1,672

Prepaid expenses and other current assets

168

175

Total current assets

8,874

7,876

Property, equipment, and capitalized software, net

383

391

Goodwill and intangible assets, net

929

941

Restricted investments

145

136

Deferred income taxes

65

69

Other assets

134

119

Total assets

$

10,530

$

9,532

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Medical claims and benefits payable

$

2,942

$

2,696

Amounts due government agencies

2,072

1,253

Accounts payable, accrued liabilities and other

651

641

Deferred revenue

42

375

Total current liabilities

5,707

4,965

Long-term debt

2,129

2,127

Finance lease liabilities

223

225

Other long-term liabilities

101

119

Total liabilities

8,160

7,436

Stockholders' equity:

Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at June 30, 2021, and 59 million shares at December 31, 2020

-

-

Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding

-

-

Additional paid-in capital

191

199

Accumulated other comprehensive income

26

37

Retained earnings

2,153

1,860

Total stockholders' equity

2,370

2,096

Total liabilities and stockholders' equity

$

10,530

$

9,532

MOLINA HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

June 30, December 31,

2021 2020

Unaudited

(Dollars in millions, except per-share amounts)

ASSETS

Current assets:

Cash and cash equivalents $ 4,608 $ 4,154

Investments 2,241 1,875

Receivables 1,857 1,672

Prepaid expenses and other current assets 168 175

Total current assets 8,874 7,876

Property, equipment, and capitalized software, net 383 391

Goodwill and intangible assets, net 929 941

Restricted investments 145 136

Deferred income taxes 65 69

Other assets 134 119

Total assets $ 10,530 $ 9,532



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Medical claims and benefits payable $ 2,942 $ 2,696

Amounts due government agencies 2,072 1,253

Accounts payable, accrued liabilities and other 651 641

Deferred revenue 42 375

Total current liabilities 5,707 4,965

Long-term debt 2,129 2,127

Finance lease liabilities 223 225

Other long-term liabilities 101 119

Total liabilities 8,160 7,436

Stockholders' equity:

Common stock, $0.001 par value, 150 million sharesauthorized; outstanding: 58 million shares at June 30, - - 2021, and 59 million shares at December 31, 2020

Preferred stock, $0.001 par value; 20 million shares - - authorized, no shares issued and outstanding

Additional paid-in capital 191 199

Accumulated other comprehensive income 26 37

Retained earnings 2,153 1,860

Total stockholders' equity 2,370 2,096

Total liabilities and stockholders' equity $ 10,530 $ 9,532



MOLINA HEALTHCARE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30,

2021

2020

(in millions)

Operating activities:

Net income

$

413

$

454

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

64

41

Deferred income taxes

7

6

Share-based compensation

35

28

Loss on debt repayment

-

5

Other, net

10

(1)

Changes in operating assets and liabilities:

Receivables

(192)

(174)

Prepaid expenses and other current assets

(6)

(157)

Medical claims and benefits payable

272

106

Amounts due government agencies

792

201

Accounts payable, accrued liabilities and other

(15)

259

Deferred revenue

(333)

(195)

Income taxes

14

184

Net cash provided by operating activities

1,061

757

Investing activities:

Purchases of investments

(1,006)

(670)

Proceeds from sales and maturities of investments

622

750

Purchases of property, equipment, and capitalized software

(29)

(45)

Other, net

5

3

Net cash (used in) provided by investing activities

(408)

38

Financing activities:

Common stock purchases

(128)

(453)

Common stock withheld to settle employee tax obligations

(52)

(8)

Contingent consideration liabilities settled

(20)

-

Proceeds from senior notes offering, net of issuance costs

-

789

Repayment of term loan facility

-

(600)

Proceeds from borrowings under term loan facility

-

380

Other, net

-

(45)

Net cash (used in) provided by financing activities

(200)

63

Net increase in cash, cash equivalents, and restricted cash and cash equivalents

453

858

Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period

4,223

2,508

Cash, cash equivalents, and restricted cash and cash equivalents at end of period

$

4,676

$

3,366

MOLINA HEALTHCARE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30,

2021 2020



(in millions)

Operating activities:

Net income $ 413 $ 454

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 64 41

Deferred income taxes 7 6

Share-based compensation 35 28

Loss on debt repayment - 5

Other, net 10 (1)

Changes in operating assets and liabilities:

Receivables (192) (174)

Prepaid expenses and other current assets (6) (157)

Medical claims and benefits payable 272 106

Amounts due government agencies 792 201

Accounts payable, accrued liabilities and other (15) 259

Deferred revenue (333) (195)

Income taxes 14 184

Net cash provided by operating activities 1,061 757

Investing activities:

Purchases of investments (1,006) (670)

Proceeds from sales and maturities of investments 622 750

Purchases of property, equipment, and capitalized (29) (45) software

Other, net 5 3

Net cash (used in) provided by investing activities (408) 38

Financing activities:

Common stock purchases (128) (453)

Common stock withheld to settle employee tax obligations (52) (8)

Contingent consideration liabilities settled (20) -

Proceeds from senior notes offering, net of issuance - 789 costs

Repayment of term loan facility - (600)

Proceeds from borrowings under term loan facility - 380

Other, net - (45)

Net cash (used in) provided by financing activities (200) 63

Net increase in cash, cash equivalents, and restricted 453 858 cash and cash equivalents

Cash, cash equivalents, and restricted cash and cash 4,223 2,508 equivalents at beginning of period

Cash, cash equivalents, and restricted cash and cash $ 4,676 $ 3,366 equivalents at end of period



MOLINA HEALTHCARE, INC.

UNAUDITED SEGMENT DATA

(Dollars in millions)

June 30,

December 31,

June 30,

2021 (1)

2020

2020

Ending Membership by Segment:

Medicaid

3,928,000

3,599,000

3,122,000

Medicare

130,000

115,000

108,000

Marketplace

638,000

318,000

325,000

Total

4,696,000

4,032,000

3,555,000

(1) Approximately 200,000 members, from the Magellan Complete Care acquisition that closed on December 31, 2020, are included in the totals as of June 30, 2021, but not in prior periods.

MOLINA HEALTHCARE, INC.

UNAUDITED SEGMENT DATA

(Dollars in millions)

June 30, December 31, June 30,

2021 ^(1) 2020 2020

Ending Membership by Segment:

Medicaid 3,928,000 3,599,000 3,122,000

Medicare 130,000 115,000 108,000

Marketplace 638,000 318,000 325,000

Total 4,696,000 4,032,000 3,555,000



(1) Approximately 200,000 members, from the Magellan Complete Care acquisitionthat closed on December 31, 2020, are included in the totals as of June 30,2021, but not in prior periods.

Three Months Ended March 31,

2021

2020

Premium Revenue

Medical

Margin

MCR (1)

Premium Revenue

Medical

Margin

MCR (1)

Medicaid

$

4,840

$

604

87.5

%

$

3,286

$

365

88.9

%

Medicare

799

77

90.3

634

117

81.7

Marketplace

667

151

77.3

384

106

72.3

Consolidated

$

6,306

$

832

86.8

%

$

4,304

$

588

86.3

%

Three Months Ended June 30,

2021

2020

Premium Revenue

Medical

Margin

MCR (1)

Premium Revenue

Medical

Margin

MCR (1)

Medicaid

$

5,034

$

551

89.0

%

$

3,375

$

553

83.6

%

Medicare

814

101

87.6

630

125

80.0

Marketplace

735

112

84.8

367

96

74.0

Consolidated

$

6,583

$

764

88.4

%

$

4,372

$

774

82.3

%

Six Months Ended June 30,

2021

2020

Premium Revenue

Medical

Margin

MCR (1)

Premium Revenue

Medical

Margin

MCR (1)

Medicaid

$

9,874

$

1,155

88.3

%

$

6,661

$

918

86.2

%

Medicare

1,613

178

89.0

1,264

242

80.8

Marketplace

1,402

263

81.2

751

202

73.1

Consolidated

$

12,889

$

1,596

87.6

%

$

8,676

$

1,362

84.3

%

(1) The MCR represents medical costs as a percentage of premium revenue.

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

The Company's claims liabilities include additional reserves to account for moderately adverse conditions 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 year" represent the amounts by which the original estimates of claims and benefits payable at the beginning of the year were more than the actual liabilities based on information (principally the payment of claims) developed since those liabilities were first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:

Three Months Ended March 31,

2021 2020

Premium Medical MCR ^ Premium Medical MCR ^ Revenue (1) Revenue (1) Margin Margin

Medicaid $ 4,840 $ 604 87.5 % $ 3,286 $ 365 88.9 %

Medicare 799 77 90.3 634 117 81.7

Marketplace 667 151 77.3 384 106 72.3

Consolidated $ 6,306 $ 832 86.8 % $ 4,304 $ 588 86.3 %





Three Months Ended June 30,

2021 2020

Premium Medical MCR ^ Premium Medical MCR ^ Revenue (1) Revenue (1) Margin Margin

Medicaid $ 5,034 $ 551 89.0 % $ 3,375 $ 553 83.6 %

Medicare 814 101 87.6 630 125 80.0

Marketplace 735 112 84.8 367 96 74.0

Consolidated $ 6,583 $ 764 88.4 % $ 4,372 $ 774 82.3 %





Six Months Ended June 30,

2021 2020

Premium Medical MCR ^ Premium Medical MCR ^ Revenue (1) Revenue (1) Margin Margin

Medicaid $ 9,874 $ 1,155 88.3 % $ 6,661 $ 918 86.2 %

Medicare 1,613 178 89.0 1,264 242 80.8

Marketplace 1,402 263 81.2 751 202 73.1

Consolidated $ 12,889 $ 1,596 87.6 % $ 8,676 $ 1,362 84.3 %



(1) The MCR represents medical costs as a percentage of premium revenue.

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

The Company's claims liabilities include additional reserves to account for moderately adverse conditions 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 year" represent the amounts by which the original estimates of claims and benefits payable at the beginning of the year were more than the actual liabilities based on information (principally the payment of claims) developed since those liabilities were first reported. The following table presents the components of the change in medical claims and benefits payable for the periods indicated:

Six Months Ended

June 30,

2021 2020



Unaudited

Medical claims and benefits payable, beginning balance $ 2,696 $ 1,854

Components of medical care costs related to:

Current year 11,486 7,372

Prior year (193) (58)

Total medical care costs 11,293 7,314

Payments for medical care costs related to:

Current year 9,023 5,688

Prior year 1,949 1,486

Total paid 10,972 7,174

Change in acquired balances (26) -

Change in non-risk and other provider payables (49) (34)

Medical claims and benefits payable, ending balance $ 2,942 $ 1,960



Days in claims payable, fee for service ^(1) 48 52

__________________

(1) Claims payable includes primarily claims incurred but not paid, or IBNP. Italso includes certain fee-for-service payables reported in medical claims andbenefits payable amounting to $110 million and $71 million, as of June 30,2021, and 2020, respectively.

MOLINA HEALTHCARE, INC. RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES (In millions, except per diluted share amounts)

The Company believes that certain non-GAAP (generally accepted accounting principles) financial measures are useful supplemental measures to investors in comparing the Company's performance to the performance of other public companies in the health care industry. The non-GAAP financial measures are also used internally to enable management to assess the Company's performance consistently over time. These non-GAAP financial measures, presented below, should be considered as supplements to, and not as substitutes for or superior to, GAAP measures.

Adjustments represent additions and deductions to GAAP net income as indicated in the table below, which include the non-cash impact of amortization of acquired intangible assets, acquisition-related expenses, and the impact of certain expenses and other items that management believes are not indicative of longer-term business trends and operations.

Adjusted G&A Ratio represents the GAAP G&A ratio, recognizing adjustments.

Adjusted net income represents GAAP net income recognizing the adjustments, net of tax. The Company believes that adjusted net income is helpful to investors in assessing the Company's financial performance.

Adjusted net income per diluted share represents adjusted net income divided by weighted average common shares outstanding on a fully diluted basis.

Adjusted after-tax margin represents adjusted net income, divided by total revenue.

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020

Per Per Per Per Amount Diluted Amount Diluted Amount Diluted Amount Diluted Share Share Share Share

Net income $ 185 $ 3.16 $ 276 $ 4.65 $ 413 $ 7.05 $ 454 $ 7.54

Adjustments:

Acquisition-related 6 0.11 - - 27 0.46 - - expenses ^(1)

Amortization of intangible 12 0.20 4 0.06 24 0.40 8 0.13 assets

Loss on debt repayment - - 5 0.08 - - 5 0.08

Other ^(2) - - 2 0.04 9 0.16 6 0.11

Subtotal, adjustments 18 0.31 11 0.18 60 1.02 19 0.32

Income tax effect (4) (0.07) (2) (0.04) (14) (0.24) (4) (0.07)

Adjustments, net of tax 14 0.24 9 0.14 46 0.78 15 0.25

Adjusted net income $ 199 $ 3.40 $ 285 $ 4.79 $ 459 $ 7.83 $ 469 $ 7.79

__________________

(1) Beginning in the third quarter of 2020, reflects non-recurring costsassociated with acquisitions, including various transaction and integrationcosts.(2) The first half of 2021 includes change in premium deficiency reserves, losson sale of property, and restructuring costs. The first half of 2020 includesrestructuring costs.

MOLINA HEALTHCARE, INC.

RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES (CONTINUED)

2021 GUIDANCE

Net income per diluted share (1)

$

11.65

Adjustments:

Acquisition-related expenses

1.13

Amortization of intangible assets

0.81

Other

0.16

Subtotal, adjustments

2.10

Income tax effect (2)

(0.50)

Adjustments, net of tax

1.60

Adjusted net income per diluted share

$

13.25

__________________

(1) Computations assume approximately 58.6 million diluted weighted average shares outstanding. (2) Income tax effect calculated at the statutory tax rate of 23.8%.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005899/en/

CONTACT: Investor Contact: Julie Trudell, Julie.Trudell@molinahealthcare.com, 562-912-6720 Media Contact: Caroline Zubieta, Caroline.Zubieta@molinahealthcare.com, 562-951-1588