10q10k10q10k.net

What changed in Molina Healthcare's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Molina Healthcare's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+386 added−360 removedSource: 10-K (2025-02-11) vs 10-K (2024-02-13)

Top changes in Molina Healthcare's 2024 10-K

386 paragraphs added · 360 removed · 287 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

94 edited+47 added−27 removed75 unchanged
Biggest changeMolina Healthcare, Inc. 2023 Form 10-K | 17 We also offer a comprehensive suite of benefits to all eligible employees, including, among others: • Comprehensive health insurance coverage for employees working 30 hours or more per week, with no increase in employee contributions for 2023 and 2024; • 401(k) employer matching contributions of up to 100% on the first 4% contributed by the employee; • Personal time off that provides employees with paid time away from work, combining vacation and sick leave; • Volunteer time off that provides employees with paid time away from work to build strong community partnerships and connect with the people we serve; • Employee wellness programs that provide tools and incentives to live a healthy life focusing on physical, emotional, financial and work well-being; • Up to ten dependent-care back-up visits per year for a low co-pay, and five hours of homework and tutoring support per child per month at no cost; • Employee discount and other programs, including tuition reimbursement; and • Employee assistance program benefits that provide up to six confidential counseling sessions per rolling 12-month period and includes assistance with physical, emotional, and financial related matters.
Biggest changeWe also offer a comprehensive suite of benefits to all eligible employees, including, among others: • Comprehensive health insurance coverage for employees working 30 hours or more per week; • 401(k) employer matching contributions of up to 100% on the first 4% contributed by the employee; • Personal time off that provides employees with paid time away from work, combining vacation and sick leave; • Paid parental leave to support bonding time for new parents; • Volunteer time off that provides employees with paid time away from work to build strong community partnerships and connect with the people we serve; • Employee wellness programs that provide tools and incentives to live a healthy life focusing on physical, emotional, financial, and work well-being; • Supplemental life insurance and disability plans to provide financial security for our employees and their families; • Employee discount and other programs, including tuition reimbursement; and Molina Healthcare, Inc. 2024 Form 10-K | 18 • Employee assistance program benefits that provide up to six confidential counseling sessions per rolling 12-month period and includes assistance with physical, emotional, and financial related matters.
Consequently, all states in which we operate had begun disenrolling members, resulting in a loss of members that were gained due to the suspension of redetermination for Medicaid eligibility during the PHE. The PHE officially ended on May 11, 2023. There are several healthcare programs tied to the PHE which are impacted by this change in policy.
Consequently, all states in which we operate had begun disenrolling members, resulting in a loss of members that were gained due to the suspension of redetermination for Medicaid eligibility during the PHE. The PHE officially ended on May 11, 2023. There are several healthcare programs tied to the PHE which were impacted by this change in policy.
LICENSING AND SOLVENCY Our health plans are generally licensed by the insurance departments in the states in which they operate, except the following: our California health plan is licensed by the California Department of Managed Health Care; one of our New York health plans is licensed as a prepaid health services plan by the New York State Department of Health; and our Massachusetts health plan is regulated as a risk-bearing entity by the Massachusetts Executive Office of Health and Human Services.
LICENSING AND SOLVENCY Our health plans are generally licensed by the insurance departments in the states in which they operate, except the following: our California health plans are licensed by the California Department of Managed Health Care; one of our New York health plans is licensed as a prepaid health services plan by the New York State Department of Health; and our Massachusetts health plan is regulated as a risk-bearing entity by the Massachusetts Executive Office of Health and Human Services.
Our strategic priorities include: • Organic growth of our core businesses by growing with new state procurement opportunities, retaining existing contracts, increasing market share in current service areas and pursuing carve-in and/or adjacent opportunities; • Inorganic growth through accretive mergers and acquisitions (“M&A”); • Strong MCR and general and administrative (“G&A”) management to drive attractive and sustainable margins; and • Reinvesting excess capital in the business or returning it to shareholders (e.g., share repurchases).
Our strategic priorities include: • Organic growth of our core businesses by growing with new state procurement opportunities, retaining existing contracts, increasing market share in current service areas and pursuing carve-in and/or adjacent opportunities; • Inorganic growth through accretive acquisitions; • Reinvesting excess capital in the business or returning it to shareholders (e.g., share repurchases); and • Strong MCR and general and administrative (“G&A”) management to drive attractive and sustainable margins.
Additionally, seven health plans earned NCQA’s Long Term Services and Supports Distinction. We believe that these objective measures of quality are important to state Medicaid agencies, as a growing number of states link reimbursement and patient assignment to quality scores. In October 2022, CMS published its updated Medicare 2023 Star Ratings based on plan year 2021 data.
Additionally, eight health plans earned NCQA’s Long Term Services and Supports Distinction. We believe that these objective measures of quality are important to state Medicaid agencies, as a growing number of states link reimbursement and patient assignment to quality scores. In October 2022, CMS published its updated Medicare 2023 Star Ratings based on plan year 2021 data.
For further information, refer to the Notes to Consolidated Financial Statements, Note 15, “Commitments and Contingencies—Regulatory Capital Requirements and Dividend Restrictions.” HUMAN CAPITAL As of December 31, 2023, we had just over 18,000 employees. Our diverse employee population reflects the diversity of the members and communities we serve.
For further information, refer to the Notes to Consolidated Financial Statements, Note 15, “Commitments and Contingencies—Regulatory Capital Requirements and Dividend Restrictions.” HUMAN CAPITAL As of December 31, 2024, we had just over 18,000 employees. Our diverse employee population reflects the diversity of the members and communities we serve.
For the 2023 Star Ratings, five of our plans had a decrease of 0.5 Stars, two of our plans had a decrease of 1 Star, one plan had a decrease of 1.5 Stars, and two plans either maintained or increased Star Ratings by 0.5. The decreases to the 2023 Star Ratings impact the 2024 bonus year payments.
For the 2023 Star Ratings, five of our plans had a decrease of 0.5 Stars, two of our plans had a decrease of 1 Star, one plan had a decrease of 1.5 Stars, and two plans either maintained or increased Star Ratings by 0.5. The decreases to the 2023 Star Ratings impacted the 2024 bonus year payments.
AFFORDABLE CARE ACT In addition to past proposals calling for the full repeal of the Affordable Care Act - proposals which could be renewed again in the future - proposed changes and reforms to the ACA have included, or may include, the following: • Prohibiting the federal government from operating Marketplaces; • Eliminating the advanced premium tax credits and cost sharing reductions for low-income individuals who purchase their health insurance through the Marketplaces; • Expanding and encouraging the use of private health savings accounts; • Providing for insurance plans that offer fewer and less extensive health insurance benefits than under the ACA’s essential health benefits package, including broader use of catastrophic coverage plans, or short-term health insurance; • Establishing and funding high risk pools or reinsurance programs for individuals with chronic or high-cost conditions; and • Allowing insurers to sell insurance across state lines.
AFFORDABLE CARE ACT In addition to past proposals calling for the full repeal of the Affordable Care Act - proposals which could be renewed again in the future - proposed changes and reforms to the ACA have included, or may include, the following: • Eliminating or reducing the advanced premium tax credits and cost sharing reductions for low-income individuals who purchase their health insurance through the Marketplaces; • Expanding and encouraging the use of private health savings accounts; • Providing for insurance plans that offer fewer and less extensive health insurance benefits than under the ACA’s essential health benefits package, including broader use of catastrophic coverage plans, or short-term health insurance; • Establishing and funding high risk pools or reinsurance programs for individuals with chronic or high-cost conditions; and • Allowing insurers to sell insurance across state lines.
States have the option of administering CHIP through their Medicaid programs. • Medicaid Expansion - In states that have elected to participate, Medicaid Expansion provides eligibility to nearly all low-income individuals under age 65 with incomes at or below 138% of the federal poverty line. • LTSS – LTSS programs cover a range of medical and personal care assistance that people may need – for several weeks, months, or years – when they experience difficulty completing self-care tasks as a result of aging, chronic illness, or disability.
States have the option of administering CHIP through their Medicaid programs. • Medicaid Expansion – In states that have elected to participate, Medicaid Expansion provides eligibility to nearly all low-income individuals under age 65 with incomes at or below 138% of the federal poverty line. • Long Term Services and Supports (“LTSS”) – LTSS programs cover a range of medical and personal care assistance that people may need – for several weeks, months, or years – when they experience difficulty completing self-care tasks as a result of aging, chronic illness, or disability.
AgeWell is a specialty managed care organization that provides long-term care services at home or in the community for those who are chronically ill or disabled in The Bronx, New York (Manhattan), Queens, Kings (Brooklyn), Nassau, Westchester, and Suffolk counties.
AgeWell is a specialty managed care organization that provides long-term care services at home or in the community for those who are chronically ill or disabled in The Bronx, New York City, Queens, Brooklyn, Nassau, Westchester, and Suffolk counties.
The approximate average FMAP across all jurisdictions is currently 60%, and currently ranges from a federally established FMAP floor of 50% to as high as 77%. Most states have contracted with managed care plans to provide Medicaid services to beneficiaries, seeking to increase budget predictability, constrain spending, improve access to care and value, and meet other objectives.
The approximate average FMAP across all jurisdictions is currently 62%, and currently ranges from a federally established FMAP floor of 50% to as high as 83%. Most states have contracted with managed care plans to provide Medicaid services to beneficiaries, seeking to increase budget predictability, constrain spending, improve access to care and value, and meet other objectives.
The purpose of our survey is to obtain honest, comprehensive feedback on what is going well, and which strategic, operational or cultural concerns are top of mind for our employees. Our results demonstrate year-over-year improvement and exceed industry benchmark. Succession planning and managing our talent pipelines continue to be key to our human capital strategy.
The purpose of our survey is to obtain honest, comprehensive feedback on what is going well, and which strategic, operational or cultural concerns are top of mind for our employees. Our results demonstrate improvement and exceed industry benchmarks. Succession planning and managing our talent pipelines continue to be key to our human capital strategy.
As of December 31, 2023, 17 of our health plans were accredited by the National Committee for Quality Assurance (“NCQA”), and 12 of our health plans have earned NCQA’s Health Equity Accreditation, which is awarded to organizations that lead the market in providing culturally and linguistically sensitive services and work to reduce disparities in health care.
As of December 31, 2024, 19 of our health plans were accredited by the National Committee for Quality Assurance (“NCQA”), and 17 of our health plans have earned NCQA’s Health Equity Accreditation, which is awarded to organizations that lead the market in providing culturally and linguistically sensitive services and work to reduce disparities in health care.
Based on the experience to date, we expect that we will ultimately retain approximately 40% of the membership gained since March 31, 2020.
Based on the experience to date, we expect that we will ultimately retain approximately 30% of the membership gained since March 31, 2020.
We participate in the following Medicare programs: • Medicare Advantage-Part D (“MAPD”) – We contract with CMS under the Medicare Advantage program to provide benefits in excess of original Medicare, including cost-sharing and enhanced prescription drug benefits under Part D, that are targeted towards low-income beneficiaries; • Dual Eligible Special Needs Plan (“D-SNP”) – We contract with CMS to provide benefits in excess of original Medicare, including care coordination complex case management and care management; • Fully-Integrated Dual Special Needs Plans (“FIDE”) – We contract with CMS and state Medicaid agencies to fully integrate care for dually eligible beneficiaries under a single managed care plan; • Medicare-Medicaid Plans (“MMP”) – To coordinate care and deliver services in a more financially efficient manner, some states have undertaken demonstration programs to integrate Medicare and Medicaid services for dual-eligible individuals.
We participate in the following Medicare programs: • Medicare Advantage-Part D (“MAPD”) – We contract with CMS under the Medicare Advantage program to provide benefits in excess of original Medicare, including cost-sharing and enhanced prescription drug benefits under Part D, that are targeted towards low-income beneficiaries; • Dual Eligible Special Needs Plan (“D-SNP”) – We contract with CMS to provide benefits in excess of original Medicare, including care coordination complex case management and care management; • Highly-Integrated Dual Special Needs Plans (“HIDE”) – We contract with CMS and state Medicaid agencies to integrate care at a higher level than a typical D-SNP for dually eligible beneficiaries; • Fully-Integrated Dual Special Needs Plans (“FIDE”) – We contract with CMS and state Medicaid agencies to fully integrate care for dually eligible beneficiaries under a single managed care plan; • Medicare-Medicaid Plans (“MMP”) – To coordinate care and deliver services in a more financially efficient manner, some states have undertaken demonstration programs to integrate Medicare and Medicaid services for dual-eligible individuals.
Approximately one-third of our Medicare premium revenue is not impacted by Star Ratings. We are actively working on improvement plans and remain committed to invest in these programs to improve our quality Star scores with a focus on member experience and access measures.
Approximately 45% of our 2025 Medicare premium revenue is not impacted by Star Ratings. We are actively working on improvement plans and remain committed to invest in these programs to improve our quality Star scores with a focus on member experience and access measures.
Each state differs in its approach to auto-assignment, but one or more of the following criteria is typical in auto-assignment algorithms: a Medicaid beneficiary's previous enrollment with a health plan or experience with a particular provider contracted with a health plan, enrolling family members in the same plan, a plan's quality or performance status, a plan’s network and enrollment size, awarding all auto-assignments to a plan with the lowest bid in a county or region, and equal assignment of individuals who do not choose a plan in a specified county or region.
Each state differs in its approach to auto-assignment, but one or more of the following criteria is typical in auto-assignment algorithms: a Medicaid beneficiary's previous enrollment with a health plan or experience with a particular provider contracted with a health plan, enrolling family Molina Healthcare, Inc. 2024 Form 10-K | 8 members in the same plan, a plan's quality or performance status, a plan’s network and enrollment size, awarding all auto-assignments to a plan with the lowest bid in a county or region, and equal assignment of individuals who do not choose a plan in a specified county or region.
House of Representatives have started to weigh a series of legislative proposals targeting Medicaid, Medicare and other entitlement programs as part of a broader campaign to reduce federal spending and, to maximize their leverage, they have pursued these spending cuts in exchange for their support to raise the debt ceiling, the legal cap that allows the U.S. government to borrow money to pay its bills.
House of Representatives have started to weigh a series of legislative proposals targeting Medicaid, Medicare, and other entitlement programs as part of a broader campaign to reduce federal spending, and they may pursue these spending cuts in exchange for their support of raising the debt ceiling, the legal cap that allows the U.S. government to borrow money to pay its bills.
In the year ended December 31, 2023, Marketplace program PMPM premium rates ranged from $270 to $1,140. Member Enrollment and Marketing Our Marketplace members enroll in our plans with the assistance of insurance agents employed by Molina, outside brokers, vendors, direct to consumer marketing, and via the Internet.
In the year ended December 31, 2024, Marketplace program PMPM premium rates ranged from $400 to $1,980. Member Enrollment and Marketing Our Marketplace members enroll in our plans with the assistance of insurance agents employed by Molina, outside brokers, vendors, direct to consumer marketing, and via the Internet.
Our new contract with the California Department of Health Care Services (“DHCS”) commenced on January 1, 2024, which enables us to continue servicing Medi-Cal members in most of our existing counties and expand our footprint in Los Angeles County. Nebraska Procurement— Medicaid. Our new contract with the Nebraska Department of Health and Human services commenced on January 1, 2024.
Our new contract with the California Department of Health Care Services (“DHCS”) commenced on January 1, 2024, which enabled us to continue servicing Medi-Cal members in most of our existing counties and significantly expanded our footprint in Los Angeles County. Nebraska Procurement—Medicaid.
We are able to freely contact our members and provide them with marketing materials as long as those materials are fair and do not discriminate. Molina Healthcare, Inc. 2023 Form 10-K | 10 Our Marketplace sales and marketing strategy is to provide high quality, affordable, compliant and consumer-centric Marketplace products through a variety of distribution channels.
We are able to freely contact our members and provide them with marketing materials as long as those materials are fair and do not discriminate. Our Marketplace sales and marketing strategy is to provide high quality, affordable, compliant and consumer-centric Marketplace products through a variety of distribution channels.
In the proposed rule for contract year 2025, CMS has further provided states with a process for identifying a pathway to an integrative D-SNP. Our California MMP members were transitioned to Molina’s California EAE-SNP products early in 2023.
In the proposed rule for contract year 2025, CMS has further provided states with a process for identifying a pathway to a FIDE or HIDE D-SNP plan. Our California MMP members were transitioned to Molina’s California EAE-SNP products early in 2023.
In addition to contract renewal, our state Medicaid contracts may be periodically amended to include or exclude certain health benefits (such as pharmacy services, behavioral health services, or long-term care services); populations such as the ABD; and regions or service areas.
In addition to contract renewal, our state Medicaid contracts may be amended periodically to include or exclude certain health benefits, such as pharmacy services, behavioral health services, or long-term care services, the addition or withdrawal of populations such as the ABD; and expansion into or retraction from certain new regions or service areas.
Marketplace Low-income members who receive government subsidies comprise the vast majority of Marketplace membership, which is served by a limited number of health plans. Our primary competitor for low-income Marketplace membership is Centene Corporation. REGULATION Our health plans are highly regulated by both state and federal government agencies.
Low-income members who receive Molina Healthcare, Inc. 2024 Form 10-K | 16 government subsidies comprise the vast majority of Marketplace membership, which is served by a limited number of health plans. Our primary competitor for low-income Marketplace membership is Centene Corporation. REGULATION Our health plans are highly regulated by both state and federal government agencies.
The activities of our independently licensed insurance agents are also regulated by both CMS and the departments of insurance in the states in which we participate. Our sales cycle typically peaks during the annual Open Enrollment Period (“OEP”) as defined and regulated by CMS and the applicable FFM and SBM .
The activities of our independently licensed insurance agents are also regulated by both Molina Healthcare, Inc. 2024 Form 10-K | 11 CMS and the departments of insurance in the states in which we participate. Our sales cycle typically peaks during the annual Open Enrollment Period (“OEP”) as defined and regulated by CMS and the applicable FFM and SBM .
In partnering with quality, cost-effective providers, we utilize clinical and financial information derived by our medical informatics function, as well as the experience we have gained in serving Medicaid members, to gain Molina Healthcare, Inc. 2023 Form 10-K | 13 insight into the needs of both our members and our providers.
In partnering with quality, cost-effective providers, we utilize clinical and financial information derived by our medical informatics function, as well as the experience we have gained in serving Medicaid members, to gain insight into the needs of both our members and our providers.
INFORMATION TECHNOLOGY Our business is dependent on effective and secure information systems that assist us in processing provider claims, monitoring utilization and other cost factors, supporting our medical management techniques, providing data to our regulators, and implementing our data security measures.
Molina Healthcare, Inc. 2024 Form 10-K | 15 INFORMATION TECHNOLOGY Our business is dependent on effective and secure information systems that assist us in processing provider claims, monitoring utilization and other cost factors, supporting our medical management techniques, providing data to our regulators, and implementing our data security measures.
Beginning in 2016, those Medicare plans that achieve less than a three-star rating for three consecutive years will be issued a notice of non-renewal of their contract for the following year.
Beginning in 2016, those Medicare plans that achieve less than a three-star rating for three consecutive years will be issued a notice of non-renewal of their contract for the following year. See further discussion of Star ratings under Operations/Quality .
This collaboration results in drug formularies and clinical initiatives that promote improved patient care. We employ full-time pharmacists and pharmacy technicians who work closely with providers to educate them about our formulary products, clinical programs, and the importance of cost-effective care.
This collaboration results in drug formularies and clinical initiatives that promote improved patient care. We employ full-time pharmacists and pharmacy technicians who work closely with providers to educate them about our formulary products, clinical programs, and the importance of cost-effective care. Medical Cost Management We use various strategies to mitigate the negative effects of healthcare cost inflation.
HIPAA privacy regulations do not preempt more stringent state laws and regulations that may apply to us. We maintain a HIPAA compliance program, which we believe complies with HIPAA privacy and security regulations, and have dedicated resources to monitor compliance with this program.
HIPAA privacy regulations do not preempt more stringent state privacy laws and regulations that may apply to us. We maintain a HIPAA compliance program, which we believe complies with HIPAA privacy and security regulations, and monitor our compliance with applicable state and federal privacy and security laws and regulations.
Companies Molina Healthcare, Inc. 2023 Form 10-K | 16 involved in government healthcare programs such as Medicaid and Medicare are required to maintain compliance programs to detect and deter fraud, waste and abuse, and are often the subject of fraud, waste and abuse investigations and audits.
Companies involved in government healthcare programs such as Medicaid and Medicare are required to maintain compliance programs to detect and deter fraud, waste and abuse, and are often the subject of fraud, waste and abuse investigations and audits.
We served approximately 5.0 million members as of December 31, 2023, located across 20 states. Our business footprint, as of December 31, 2023, is illustrated below.
We served approximately 5.5 million members as of December 31, 2024, located across 21 states. Our business footprint, as of December 31, 2024, is illustrated below.
This would represent an estimated Marketplace premium revenue increase of approximately 17% in 2024, as this business is now positioned to grow modestly and maintain our target margins. Contracts We enter into contracts with CMS annually for the state Marketplace programs. These contracts have a one-year term ending on December 31, and must be renewed annually.
This would represent an estimated Marketplace premium revenue increase of approximately 60% in 2025, while continuing to maintain our target margins. Contracts We enter into contracts with CMS annually for the state Marketplace programs. These contracts have a one-year term ending on December 31, and must be renewed annually.
These proposals include elements such as the following, as well as numerous other potential changes and reforms: • Changes in the entitlement nature of Medicaid (and perhaps Medicare as well) by capping future increases in federal health spending for these programs, and shifting much more of the risk for health costs in the Molina Healthcare, Inc. 2023 Form 10-K | 11 future to states and consumers; • Reversing the ACA’s expansion of Medicaid that enables states to cover low-income childless adults; • Changing Medicaid to a state block grant program, including potentially capping spending on a per-enrollee basis; • Requiring Medicaid beneficiaries to work; • Limiting the amount of lifetime benefits for Medicaid beneficiaries; and • Raising Medicare eligibility to age 67.
These proposals include elements such as the following, as well as numerous other potential changes and reforms: • Changes in the entitlement nature of Medicaid (and perhaps Medicare as well) by capping future increases in federal health spending for these programs, reducing the FMAP, paid to states by the federal government, overall or solely for the ACA Medicaid expansion population in states, and shifting much more of the risk for health costs in the future to states and consumers; • Reversing the ACA’s expansion of Medicaid that enables states to cover low-income childless adults; • Changing Medicaid to a state block grant program, including potentially capping spending on a per-enrollee basis; • Requiring Medicaid beneficiaries to work; • Limiting the amount of lifetime benefits for Medicaid beneficiaries; • Raising Medicare eligibility to age 67; and • In some states, shifting to an alignment of Medicaid and Medicare for dual eligible members.
CMS also announced the removal of the fee-for-service adjuster from the risk adjustment data validation audit methodology beginning for audit year 2018. On March 31, 2023, CMS issued its final 2024 Medicare Advantage Rate Announcement, which implements a three-year phase-in of certain changes to the methodology CMS will use to perform risk adjustment for plan years 2024 through 2026.
On March 31, 2023, CMS issued its final 2024 Medicare Advantage Rate Announcement, which implements a three-year phase-in of certain changes to the methodology CMS will use to perform risk adjustment for plan years 2024 through 2026.
Under a provision within the Final Rule, states can maintain their existing MMP through a two-year extension until December 31, 2025, so long as the applicable state provided CMS with a transition plan by October 1, 2022.
Status of MMP Contracts In May 2022, CMS published a Final Rule that addressed the termination of the Financial Alignment Initiative Demonstration. Under a provision within the Final Rule, states can maintain their existing MMP through a two-year extension until December 31, 2025, so long as the applicable state provided CMS with a transition plan by October 1, 2022.
Molina Healthcare, Inc. 2023 Form 10-K | 3 SEGMENT MEMBERSHIP The following table summarizes our membership by segment as of the dates indicated: As of December 31, 2023 2022 Medicaid 4,542,000 4,754,000 Medicare 172,000 156,000 Marketplace 281,000 348,000 Total 4,995,000 5,258,000 SEGMENT PREMIUM REVENUE The following table presents our consolidated premium revenue by segment for the periods indicated: Year Ended December 31, 2023 2022 (In millions) Medicaid $ 26,327 $ 24,827 Medicare 4,179 3,795 Marketplace 2,023 2,261 Total $ 32,529 $ 30,883 MISSION We improve the health and lives of our members by delivering high-quality healthcare.
Molina Healthcare, Inc. 2024 Form 10-K | 3 SEGMENT MEMBERSHIP The following table summarizes our membership by segment as of the dates indicated: As of December 31, 2024 2023 Medicaid 4,890,000 4,542,000 Medicare 242,000 172,000 Marketplace 403,000 281,000 Total 5,535,000 4,995,000 SEGMENT PREMIUM REVENUE The following table presents our consolidated premium revenue by segment for the periods indicated: Year Ended December 31, 2024 2023 (In millions) Medicaid $ 30,579 $ 26,327 Medicare 5,542 4,179 Marketplace 2,506 2,023 Total $ 38,627 $ 32,529 MISSION Our mission is to improve the health and lives of our members by delivering high-quality health care.
We continue to focus on providing opportunities for our employees that are intellectually stimulating and emotionally fulfilling, and programs and benefits that are financially rewarding. We are also focused on attracting and retaining top talent in a competitive market.
We continue to focus on providing opportunities for our employees that are intellectually stimulating and emotionally fulfilling, and programs and benefits that are financially rewarding. We are also focused on attracting and retaining top talent in a competitive market. We continue to introduce improvements focused on employee development, leader effectiveness, hiring strategies, and human capital policies and practices.
For the states where our health plans are accredited by the NCQA and/or have Medicare Star Ratings, the table below presents such health plans’ NCQA status, as well as their current scores as part of the Medicare Star Ratings, which measures the quality of Medicare plans across the country using a 5-star rating system. _______________________ Note: The California Medicare Star Ratings in the table above reflect Molina’s legacy business.
Molina Healthcare, Inc. 2024 Form 10-K | 13 For the states where our health plans are accredited by the NCQA and/or have Medicare Star Ratings, the table below presents such health plans’ NCQA status, as well as their current scores as part of the Medicare Star Ratings, which measures the quality of Medicare plans across the country using a 5-star rating system.
As a result, there are 56 separate Medicaid programs—one for each U.S. state, each U.S. territory, and the District of Columbia. The federal government guarantees matching funds to states for qualifying Medicaid expenditures based on each state’s federal medical assistance percentage (“FMAP”). A state’s FMAP is calculated annually and varies inversely with average personal income in the state.
The federal government guarantees matching funds to states for qualifying Medicaid expenditures based on each state’s federal medical assistance percentage (“FMAP”). A state’s FMAP is calculated annually and varies inversely with average personal income in the state.
Status of Significant Contracts Our Medicaid premium revenue constituted 81% of our consolidated premium revenue in the year ended December 31, 2023. Our Medicaid contracts with each of the states of New York, Texas and Washington accounted for approximately 10% or more of our consolidated Medicaid premium revenues in the year ended December 31, 2023.
Our Medicaid contracts with the states of California, New York, Texas, and Washington each accounted for approximately 10% or more of our consolidated Medicaid premium revenues in the year ended December 31, 2024. The current status of each of these contracts is described below. California .
Liability under such federal and state statutes and regulations may arise if we know, or it is determined that we should have known, that information we provide to form the basis for a claim for government payment is false or fraudulent, and some courts have permitted False Claims Act suits to proceed if the claimant was out of compliance with program requirements.
Liability under such federal and state statutes and regulations may arise if we know, or it is determined that we should have known, that information we provide to form the basis for a claim for government payment is false or fraudulent.
FINANCIAL HIGHLIGHTS Year Ended December 31, 2023 2022 (In millions, except per-share amounts) Premium Revenue $ 32,529 $ 30,883 Total Revenue $ 34,072 $ 31,974 Medical Care Ratio (“MCR”) (1) 88.1 % 88.0 % Net Income $ 1,091 $ 792 Net Income per Diluted Share $ 18.77 $ 13.55 _______________________ (1) Medical care ratio represents medical care costs as a percentage of premium revenue.
FINANCIAL HIGHLIGHTS Year Ended December 31, 2024 2023 (In millions, except per-share amounts) Premium Revenue $ 38,627 $ 32,529 Total Revenue $ 40,650 $ 34,072 Medical Care Ratio (“MCR”) (1) 89.1 % 88.1 % Net Income $ 1,179 $ 1,091 Net Income per Diluted Share $ 20.42 $ 18.77 _______________________ (1) Medical care ratio represents medical care costs as a percentage of premium revenue.
We strive to ensure that our providers have the appropriate expertise and cultural and linguistic experience. The quality, depth and scope of our provider network are essential if we are to ensure quality, cost-effective care for our members.
The quality, depth and scope of our provider network are essential if we are to ensure quality, cost-effective care for our members.
Additionally, our plans remove financial barriers to quality care and seek to minimize members' out-of-pocket expenses. In 2024, we are participating in the Marketplace in all our markets except Arizona, Iowa, Massachusetts, Nebraska, New York, and Virginia. We expect Marketplace enrollment to increase by approximately 31% in 2024, to a total of 370,000 members by the end of the year.
Additionally, our plans remove financial barriers to quality care and seek to minimize members' out-of-pocket expenses. In 2025, we are participating in the Marketplace in all our markets except Arizona, Iowa, Massachusetts, Nebraska, New York, and Virginia.
Qui tam actions under federal and state law are brought by a private individual, known as a relator, on behalf of the government. A relator who brings a successful qui tam lawsuit can receive 15 to 30 percent of the damages the government recovers from the defendants, which damages are trebled under the False Claims Act.
A relator who brings a successful qui tam lawsuit can receive 15 to 30 percent of the damages the government recovers from the defendants, which damages are trebled under the False Claims Act.
We offer formal leadership development programs including new leader orientation, executive onboarding, front-line leadership essentials, and experienced leader training. We have targeted development plans for critical roles with an emphasis on leadership and business acumen.
We offer formal leadership development programs including new leader orientation, executive onboarding, front-line leadership essentials, and experienced leader development. We have targeted development plans for critical roles with an emphasis on leadership and business acumen. We invest in our workforce through market competitive total rewards including pay, benefits and time-off.
For the year ended December 31, 2023, Medicaid program PMPM premium rates ranged from $270 to $1,100. Member Enrollment and Marketing Most states allow eligible Medicaid members to select the Medicaid plan of their choice. This opportunity to choose a plan is typically afforded to the member at the time of first enrollment and, at a minimum, annually thereafter.
Member Enrollment and Marketing Most states allow eligible Medicaid members to select the Medicaid plan of their choice. This opportunity to choose a plan is typically afforded to the member at the time of first enrollment and, at a minimum, annually thereafter.
In October 2023, CMS published its updated Medicare 2024 Star Ratings based on plan year 2022 data.
The decreases to the 2024 Star Ratings impact the 2025 bonus year payments. In October 2024, CMS published its updated Medicare 2025 Star Ratings based on plan year 2023 data.
Via a “Market Check” provision in the agreement with our long-standing pharmacy benefit management (“PBM”) company, CVS Caremark (“Caremark”), we re-negotiated network and administrative costs (for calendar years 2024 through 2026) to Molina’s benefit. The benefit was largely driven by improvements in network rates, partially offset by higher administrative costs.
Pharmacy We outsource pharmacy benefit management services, including claims processing, pharmacy network contracting, rebate processing and mail and specialty pharmacy fulfillment services. Via a “Market Check” provision in the agreement with our long-standing pharmacy benefit management (“PBM”) company, CVS Caremark (“Caremark”), we re-negotiated network and administrative costs (for calendar years 2024 through 2026) to Molina’s benefit.
We expect Medicare enrollment to increase by approximately 58% in 2024, to a total of 270,000 members by the end of the year, including the 109,000 members we added as a result of the Bright Health Medicare acquisition. In 2024, we are participating in Medicare in all our markets except Florida, Iowa, Mississippi, New Mexico and Nebraska.
We expect our Medicare enrollment to increase by approximately 3% in 2025, to a total of 250,000 members by the end of the year, including the 39,000 members we added as a result of the ConnectiCare acquisition, effective February 1, 2025. In 2025, we are participating in Medicare in all our markets except Florida and Iowa.
HCA exercised its renewal option for at least one year, through December 31, 2024. HCA is expected to re-procure for Medicaid with an anticipated release of an RFP no earlier than mid-2025, and contract effective date of January 1, 2027. Our Washington Medicaid contract represented approximately $3,952 million, or 15%, of consolidated Medicaid premium revenue in 2023. California .
HCA is expected to re-procure for Medicaid with an anticipated release of an RFP no earlier than sometime in 2026, with an expected contract effective date of January 1, 2027. Our Washington Medicaid contract represented approximately $3,998 million, or 13%, of consolidated Medicaid premium revenue in 2024.
Although the medical cost profile of members who have been disenrolled is more favorable than the Medicaid segment average, when combined with the beneficial impact of corridor offsets in several states, our Medicaid MCR for the year ended December 31, 2023 was within our expectations.
The medical cost profile of members who have been disenrolled is more favorable than the Medicaid segment average, and when combined with higher utilization in our continuing population, our Medicaid MCR for the year ended December 31, 2024 was higher than our expectations and above our long-term target.
This is achieved by sound clinical policy based on current evidence-based practices. Additionally, we continuously monitor utilization patterns and strive to identify new opportunities to reduce cost and improve quality of care.
This model has proved to be an effective method of coordinating medical care for our members. Utilization Management Our goal is to optimize access to low-cost, high-quality care. This is achieved by sound clinical policy based on current evidence-based practices. Additionally, we continuously monitor utilization patterns and strive to identify new opportunities to reduce costs and improve quality of care.
Molina Healthcare, Inc. 2023 Form 10-K | 9 Member Enrollment and Marketing Our Medicare members may be enrolled through auto-assignment, as described above in “Medicaid—Member Enrollment and Marketing,” or by enrolling in our plans with the assistance of insurance agents employed by Molina, outside brokers, or via the Internet.
Member Enrollment and Marketing Our Medicare members may be enrolled through auto-assignment, as described above in “Medicaid—Member Enrollment and Marketing,” or by enrolling in our plans with the assistance of insurance agents employed by Molina, outside brokers, or via the Internet. Generally, the enrollment period occurs between mid-October and early December for coverage that begins on the following January 1.
We expect Medicaid enrollment to increase by approximately 12% in 2024, to a total of 5.1 million members by the end of the year, despite additional, expected losses from redetermination. In 2024, we anticipate a benefit from our recent RFP successes in California, Nebraska, New Mexico and Texas, as well as organic growth.
We expect our Medicaid enrollment to increase by over 100,000 in 2025, to a total of five million members by the end of the year. In 2025, we anticipate a benefit from our recent RFP successes in Florida, New Mexico, Wisconsin, Michigan, Mississippi and Texas, as well as from organic growth.
Ancillary Providers Our ancillary agreements provide coverage of medically-necessary care, including laboratory services, home health, physical, speech and occupational therapy, durable medical equipment, radiology, ambulance and transportation services, and are reimbursed on a capitation and fee-for-service basis. Pharmacy We outsource pharmacy benefit management services, including claims processing, pharmacy network contracting, rebate processing and mail and specialty pharmacy fulfillment services.
We reimburse hospitals under a variety of payment methods, including fee-for-service, per diems, diagnostic-related groups, capitation, and case rates. Ancillary Providers Our ancillary agreements provide coverage of medically-necessary care, including laboratory services, home health, physical, speech and occupational therapy, durable medical equipment, radiology, ambulance and transportation services, and are reimbursed on a capitation and fee-for-service basis.
We have continued to execute a capital plan that has produced a strong and stable balance sheet, with a simplified capital structure, which resulted in the following accomplishments in 2023: • Our regulated health plans paid $705 million in total dividends to the parent company, representing cash in excess of their capital needs. • Investment income increased $251 million in 2023, due to higher levels of invested assets and increased interest rates. • In September 2023, our board of directors authorized the purchase of up to $750 million of our common stock.
We have continued to execute a capital plan that has produced a strong and stable balance sheet, with a simplified capital structure, which resulted in the following accomplishments in 2024: • Our regulated health plans paid $997 million in total dividends to the parent company, representing cash in excess of their capital needs. • Investment income increased $58 million in 2024, or 15%, due mainly to growth in invested assets. • In November 2024, we completed the private offering of $750 million aggregate principal amount of 6.250% senior notes due 2033.
Molina would have had a D-SNP in Indiana on January 1, 2025 through the normal course of action with CMS. CAPITAL MANAGEMENT Continued management of our cash, investments, and capital structure is enabling us to meet the short- and long-term objectives and obligations of our business while maintaining liquidity and financial flexibility.
CAPITAL MANAGEMENT Continued management of our cash, investments, and capital structure is enabling us to meet the short- and long-term objectives and obligations of our business while maintaining liquidity and financial flexibility.
Our 2023 strategy refresh analyzed our changing environment to identify the largest opportunities and risks within our portfolio and the adequacy of our capabilities. Landscape. We operate in highly competitive environment as our markets are attractive. Public policy and demographics continue to be positive catalysts for growth. The convergence of Medicaid and low-income Medicare poses an opportunity and a threat.
Our strategy analyzes our changing environment to identify the largest opportunities and risks within our portfolio and the adequacy of our capabilities. Landscape. The competition is fierce, as our markets are attractive. Public policy and demographics continue to be positive catalysts for growth.
OPERATIONS QUALITY Our long-term success depends, to a significant degree, on the quality of the services we provide. We are focused on providing our members effective and appropriate access to care at the right time and in the right setting, including preventive health and wellness and care management.
We are focused on providing our members effective and appropriate access to care at the right time and in the right setting, including preventive health and wellness and care management. We offer our government customers, members and providers reliable service and a seamless experience.
Molina Healthcare, Inc. 2023 Form 10-K | 6 Contracts Our state Medicaid contracts typically have terms of three to five years, contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause.
Contracts Our state Medicaid contracts typically have terms of three to five years, contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause. Such contracts are subject to risk of loss in states that issue RFPs open to competitive bidding by other health plans.
We operate MMPs in five states, as described further below. Molina Healthcare, Inc. 2023 Form 10-K | 8 Contracts We enter into MAPD contracts with CMS annually, and for D-SNP, FIDE and MMP (collectively, “dual-eligible programs”), we enter into contracts with CMS, in partnership with each state’s department of health and human services.
Our MMPs are transitioning to other products, as described further below. Contracts We enter into MAPD contracts with CMS annually, and for D-SNP, HIDE, FIDE and MMP (collectively, “dual-eligible programs”), we enter into contracts with CMS, in partnership with each state’s department of health and human services. Such contracts typically have terms of one to three years.
Such contracts are subject to risk of loss in states that issue RFPs open to competitive bidding by other health plans. If one of our health plans is not a successful responsive bidder to a state RFP, its contract may not be renewed.
If one of our health plans is not a successful responsive bidder to a state RFP, its contract may not be renewed.
Generally, the enrollment period occurs between mid-October and early December for coverage that begins on the following January 1. Our Medicare marketing and sales activities are regulated by CMS and the states in which we operate. CMS has oversight over all marketing materials used by Medicare Advantage plans, and in some cases has imposed advance approval requirements.
Molina Healthcare, Inc. 2024 Form 10-K | 10 Our Medicare marketing and sales activities are regulated by CMS and the states in which we operate. CMS has oversight over all marketing materials used by Medicare Advantage plans, and in some cases has imposed advance approval requirements.
Our presence in New York has increased substantially after completion of the Magellan Complete Care acquisition in December 2020, the Affinity Health Plan acquisition in October 2021 and the AgeWell New York acquisition in 2022. Affinity Health Plan is a Medicaid managed care organization serving members in New York City, Westchester, Orange, Nassau, Suffolk, and Rockland counties in New York.
Affinity Health Plan is a Medicaid managed care organization serving members in New York City, Westchester, Orange, Nassau, Suffolk, and Rockland counties in New York.
Our New York Medicaid contracts represented premium revenue of approximately $3,695 million, or 14%, of our consolidated Medicaid premium revenue in 2023. Texas. In July 2023, we finalized our contract for the Texas STAR+PLUS program, retaining our entire existing footprint in each of Bexar, Dallas, El Paso, Harris, Hidalgo, Jefferson, Northeast Texas, and Tarrant Service Areas.
Our new contract for the Texas STAR+PLUS program commenced on September 1, 2024, retaining our entire existing footprint in each of Bexar, Dallas, El Paso, Harris, Hidalgo, Jefferson, Northeast Texas, and Tarrant service areas and grew our market share.
Approximately $20 billion of current revenue will be up for state re-procurement over the 2024-2026 planning horizon; however, our proven track record of RFP success makes us confident in our ability to retain current revenue and pursue the majority of new state opportunities with a continued high win rate.
We will continue to focus on driving market share gains through improved execution of enrollment and retention. Our proven track record of RFP success makes us confident in our ability to retain current revenue and to pursue the majority of new state opportunities with a continued high win rate.
These include coverage of COVID-19 testing and vaccines, changes to the Medicare fee schedule for COVID-related treatments, and free coverage of at-home COVID-19 diagnostic tests.
These include coverage of COVID-19 testing and vaccines, changes to the Medicare fee schedule for COVID-related treatments, and free coverage of at-home COVID-19 diagnostic tests. Per federal statutory and regulatory requirements, some of these programs concluded with the end of the PHE, while some continued through 2024, and some are expected to remain in place permanently.
Although jointly funded by federal and state governments, Medicaid is a state-operated and state-implemented program. Subject to federal laws and regulations, states have significant flexibility to structure their own programs in terms of eligibility, benefits, delivery of services, and provider payments.
Subject to federal laws and regulations, states have significant flexibility to structure their own programs in terms of eligibility, benefits, delivery of services, and provider payments. As a result, there are 56 separate Medicaid programs—one for each U.S. state, each U.S. territory, and the District of Columbia.
On January 30, 2023, CMS finalized its approach to RADV audits, including its decision to extrapolate the results of audit samples when calculating payment errors, but without comparison of the audit results to a similar audit of the government’s original Medicare program.
On January 30, 2023, CMS finalized its approach to RADV audits, including its decision to extrapolate the results of audit samples when calculating payment errors, which will also not include the Fee-For-Service Adjuster. CMS will apply extrapolation to audits for the 2018 payment year.
When we contract with groups of physicians on a capitated basis, we monitor their solvency. Hospitals We generally contract with hospitals that have significant experience dealing with the medical needs of the Medicaid population. We reimburse hospitals under a variety of payment methods, including fee-for-service, per diems, diagnostic-related groups, capitation, and case rates.
When we contract with groups of physicians on a capitated basis, we monitor their solvency. Molina Healthcare, Inc. 2024 Form 10-K | 14 Hospitals We generally contract with hospitals that have significant experience dealing with the medical needs of the Medicaid population.
This new program supersedes the stock purchase program previously approved by our board of directors in November 2022 and extends through December 31, 2024. OUR BUSINESS MEDICAID Overview Medicaid was established in 1965 under the U.S. Social Security Act to provide healthcare and long-term services and support to low-income Americans.
OUR BUSINESS MEDICAID Overview Medicaid was established in 1965 under the U.S. Social Security Act to provide healthcare and long-term services and support to low-income Americans. Although jointly funded by federal and state governments, Medicaid is a state-operated and state-implemented program.
MEDICAL MANAGEMENT Our mission is to improve the health outcomes and lives of our members by delivering high-quality healthcare. We believe our singular focus on government-sponsored healthcare enables us to identify and implement efficiencies that distinguish us as the low-cost, high-quality health plan of choice.
We believe our singular focus on government-sponsored healthcare enables us to identify and implement efficiencies that distinguish us as the low-cost, high-quality health plan of choice. We emphasize primary care physicians as the central point of delivery for routine and preventive care, coordination of referrals to specialists, and appropriate assessment of the need for hospital care.
Our Texas Medicaid contracts represented approximately $3,587 million, or 14%, of consolidated Medicaid premium revenue in 2023. Washington. Our managed care contract with the Washington State Health Care Authority (“HCA”) covers all ten regions of the state’s Apple Health Integrated Managed Care program, and was effective through December 31, 2023.
Our managed care contract with the Washington State Health Care Authority (“HCA”) covers all ten regions of the state’s Apple Health Integrated Managed Care program, and was effective through December 31, 2024. HCA has renewed the contract through December 31, 2025, with a further renewal expected for 2026.
The passage of any of these changes or other reforms could have a material adverse effect on our business, financial condition, cash flows, or results of operations. CORPORATE TAX REFORM Recent proposals related to corporate tax reform propose raising corporate taxes, among other things. Some proposed reforms could have a material impact on our future results of operations.
The passage of any of these changes or other reforms could have a material adverse effect on our business, financial condition, cash flows, or results of operations. OPERATIONS QUALITY Our long-term success depends, to a significant degree, on the quality of the services we provide.
For the 2024 Star Ratings, three of our plans had a decrease of 0.5 Stars, one of our plans had a decrease of 1 Star, four Molina Healthcare, Inc. 2023 Form 10-K | 12 plans maintained, and one plan had an increase of 0.5 Stars. The decreases to the 2024 Star Ratings impact the 2025 bonus year payments.
In October 2023, CMS published its updated Medicare 2024 Star Ratings based on plan year 2022 data. For the 2024 Star Ratings, three of our plans had a decrease of 0.5 Stars, one of our plans had a decrease of 1 Star, four plans maintained their ratings, and one plan had an increase of 0.5 Stars.
The 2024 Star Ratings for Brand New Day and Central Health Plan of California are 2.5 and 3.5, respectively. PROVIDERS We arrange healthcare services for our members through contracts with a vast network of providers, including independent physicians and physician groups, hospitals, ancillary providers, and pharmacies.
PROVIDERS We arrange healthcare services for our members through contracts with a vast network of providers, including independent physicians and physician groups, hospitals, ancillary providers, and pharmacies. We strive to ensure that our providers have the appropriate expertise and cultural and linguistic experience.
In December 2022, we were notified by DHCS of its confirmation to award a Medi-Cal contract in each of Los Angeles, Riverside, San Bernardino, Sacramento, and San Diego Counties. The five Medi-Cal contracts commenced on January 1, 2024, which enables us to continue serving Medi-Cal members in most of our existing counties and expand our footprint in Los Angeles County.
The three DHCS Medi-Cal contracts and plan-to-plan subcontract for Los Angeles County commenced on January 1, 2024, which enabled us to continue serving Medi-Cal members in Los Angeles, Riverside/San Bernardino, Sacramento, and San Diego counties and significantly expanded our footprint in Los Angeles County. The expansion in Los Angeles County added 500,000 new members.
Collectively, these RFP successes and acquisitions represent $7 billion of incremental annual premium revenue, which was partially realized in 2023, is expected to be mostly realized in 2024 and is expected to be fully realized in 2025. Presented below is more detail on the recent developments and accomplishments relating to our growth strategy: California Acquisition—Medicare.
Collectively, newly reported RFP successes and acquisitions in 2024 represent nearly $7 billion of incremental annual premium revenue, which will be partially realized in 2025, is expected to be mostly realized in 2026 and is expected to be fully realized in 2027 and 2028.

… 88 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

98 edited+29 added−19 removed133 unchanged
Biggest changeHowever, this expectation is subject to a number of uncertain variables and assumptions. Moreover, actuarial assumptions related to the health acuity of the remaining members may become more difficult to predict or may be inaccurate, resulting in inaccurate rates to be paid to health plans.
Biggest changeActuarial assumptions related to the health acuity of remaining members may continue to be difficult to predict or may be inaccurate, resulting in inaccurate rates to be paid to health plans. Errors in our estimates related to redeterminations, and actuarial errors related to the acuity of Medicaid members, may impact our business, financial condition, cash flows, or results of operations.
In addition, this could negatively affect our operations, cause system disruptions, damage our reputation, cause membership losses and contract breaches, and could also result in regulatory enforcement actions, material fines and penalties, litigation or other actions that could have a material adverse effect on our business, cash flows, financial condition, and results of operations.
In addition, this could negatively affect our operations, cause system disruptions, damage our reputation, cause membership losses and contract breaches, and could also result in regulatory enforcement actions, material fines and penalties, litigation, or other actions that could have a material adverse effect on our business, cash flows, financial condition, or results of operations.
Federal agencies have continued to issue guidance regarding the implementation of the No Surprises Act, and we expect the agencies’ interpretations of law’s requirements will continue to evolve. The impact that federal and state surprise billing laws will have on our business is uncertain and could adversely affect our business, financial condition, cash flows, or results of operations.
Federal agencies have continued to issue guidance regarding the implementation of the No Surprises Act, and we expect the agencies’ interpretations of the law’s requirements will continue to evolve. The impact that federal and state surprise billing laws will have on our business is uncertain and could adversely affect our business, financial condition, cash flows, or results of operations.
RISKS RELATED TO OUR INDUSTRY Our Medicaid enrollees continue to be subject to eligibility redeterminations and potential disenrollments on a state by state basis, and the number and health acuity level of Medicaid enrollees we retain may be lower than our current estimates.
RISKS RELATED TO OUR INDUSTRY Medicaid enrollees continue to be subject to eligibility redeterminations and potential disenrollments on a state by state basis, and the number and health acuity level of Medicaid enrollees we retain may be lower than our current estimates.
They also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our systems or otherwise exploit security vulnerabilities. We may also face increased cybersecurity risks due to our reliance on internet technology and our fully remote working environment, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
They also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our systems or otherwise exploit security vulnerabilities. We may also face increased cybersecurity risks due to our reliance on internet technology and our remote working environment, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
Our health plans are subject to risk associated with various contractual provisions and regulations establishing medical cost expenditure floors, profit ceilings, risk corridors, and quality withholds. A substantial portion of our premium revenue is subject to contract provisions pertaining to medical cost expenditure floors and corridors, administrative cost and profit ceilings, premium stabilization programs, and cost-plus and performance-based reimbursement programs.
Our health plans are subject to risk associated with various contractual provisions and regulations establishing medical cost expenditure floors, profit ceilings, risk corridors, or quality withholds. A substantial portion of our premium revenue is subject to contract provisions pertaining to medical cost expenditure floors and corridors, administrative cost and profit ceilings, premium stabilization programs, or cost-plus and performance-based reimbursement programs.
There have been lawsuits challenging portions of the No Surprises Act in federal courts, particularly related to the use of the qualifying payment amount (“QPA”) in the IDR process, which may result in an increase in rates we must pay to out-of-network providers.
There have been lawsuits challenging portions of the No Surprises Act in federal courts, particularly related to the use of the qualifying payment amount in the IDR process, which may result in an increase in rates we must pay to out-of-network providers.
We estimate our medical claims liabilities using actuarial methods based on historical data adjusted for claims receipt and payment experience (and variations in that experience), changes in membership, provider billing practices, healthcare service utilization trends, cost trends, product mix, seasonality, prior authorization of medical services, benefit changes, known incidence of disease, including COVID-19, or increased incidence of illness such as the flu, provider contract changes, changes to Medicaid fee schedules, and the incidence of high dollar or catastrophic claims.
We estimate our medical claims liabilities using actuarial methods based on historical data adjusted for claims receipt and payment experience (and variations in that experience), changes in membership, provider billing practices, healthcare service utilization trends, cost trends, product mix, seasonality, prior authorization of medical services, benefit changes, known incidence of disease, or increased incidence of illness such as the flu or COVID, provider contract changes, changes to Medicaid fee schedules, and the incidence of high dollar or catastrophic claims.
A state could increase hospital or other provider rates without making a commensurate increase in the rates paid to us, could lower our rates without making a commensurate reduction in the rates paid to hospitals or other providers, or could delay the processing of rate changes.
In addition, a state could increase hospital or other provider rates without making a commensurate increase in the rates paid to us, could lower our rates without making a commensurate reduction in the rates paid to hospitals or other providers, or could delay the processing of rate changes.
Many of these factors are beyond our control. The inability to forecast and manage our medical care costs or to establish and maintain a satisfactory medical care ratio, either with respect to a particular health plan or across the consolidated entity, could have a material adverse effect on our business, financial condition, cash flows, or results of operations.
Many of these factors are beyond our control. The inability to accurately forecast and effectively manage our medical care costs or to establish and maintain a satisfactory medical care ratio, either with respect to a particular health plan or across the consolidated entity, could have a material adverse effect on our business, financial condition, cash flows, or results of operations.
Violation of the laws, regulations, or contract provisions governing our operations, or changes in interpretations of those laws and regulations, could result in the imposition of civil or criminal penalties, the cancellation of our government contracts, the suspension or revocation of our licenses, the exclusion from participation in government sponsored health programs, or the revision and recoupment of past payments made based on audit findings.
Violation of the laws, regulations, executive orders or contract provisions governing our operations, or changes in interpretations of those laws, regulations or executive orders, could result in the imposition of civil or criminal penalties, the cancellation of our government contracts, the suspension or revocation of our licenses, the exclusion from participation in government sponsored health programs, or the revision and recoupment of past payments made based on audit findings.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards.
For example, the FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards.
Our ability to replace them or any other key employee may be difficult and may take an extended period of time because of the limited number of individuals in the healthcare industry who have the breadth and depth of skills and experience necessary to operate and lead a business such as ours.
Our ability to replace our leaders or any other key employee may be difficult and may take an extended period of time because of the limited number of individuals in the healthcare industry who have the breadth and depth of skills and experience necessary to operate and lead a business such as ours.
We may not be successful in our artificial intelligence (“AI”) administrative and operational initiatives, which could adversely affect our business, reputation, or financial results. As part of our operating efficiencies, we are making appreciable investments in certain AI administrative tools and initiatives to enhance our operations and to save costs.
We may not be successful in our artificial intelligence (“AI”) administrative and operational initiatives, which could adversely affect our business or reputation. As part of our operating efficiencies, we are making appreciable investments in certain AI administrative tools and initiatives to enhance our operations and to save costs.
Many factors may affect our medical care costs, including: • the level of utilization of healthcare services; • changes in the underlying risk acuity of our membership; • unexpected patterns in the annual flu season; • increases in hospital costs; • increased incidences or acuity of high dollar claims related to catastrophic illnesses or medical conditions for which we do not have adequate reinsurance coverage; • increased maternity costs; • changes in state eligibility certification methodologies; • relatively low levels of hospital and specialty provider competition in certain geographic areas; • increases in the cost of pharmaceutical products and services; • changes in healthcare regulations and practices; • epidemics or pandemics, such as COVID-19; • new medical technologies; and • other various external factors.
Many factors may affect our medical care costs, including: • the level of utilization of healthcare services; • changes in the underlying risk acuity of our membership; • unexpected patterns in the annual flu season; • increases in hospital costs; • increased incidences or acuity of high dollar claims related to catastrophic illnesses or medical conditions for which we do not have adequate reinsurance coverage; • increased maternity costs; • changes in state eligibility certification methodologies; • relatively low levels of hospital and specialty provider competition in certain geographic areas; • increases in the cost of pharmaceutical products and services; • changes in healthcare regulations and practices; • epidemics or pandemics; • new medical technologies; and • other various external factors.
If, in the interest of long-term profitability, we decide to exit certain state contractual arrangements, make changes to our provider networks, or make changes to our administrative infrastructure, we may incur disruptions to our business that could in the short term materially reduce our premium revenues and our net income.
If, in the interest of long-term profitability, we decide to exit certain state contractual arrangements, make changes to our provider networks, or make changes to our administrative infrastructure, we may suffer disruptions to our business that could in the short term materially reduce our premium revenues and our net income.
If providers claim they are underpaid for their services, they may either litigate or arbitrate their dispute with our health plan.
If providers claim they are underpaid for their services, they may litigate or arbitrate their dispute with our health plan.
HIPAA establishes basic national privacy and security standards for protection of PHI by covered entities and business associates, including health plans such as ours. HIPAA requires covered entities like us to develop and maintain policies and procedures regarding PHI, and to adopt administrative, physical, and technical safeguards to protect PHI. HIPAA violations may result in significant civil penalties.
HIPAA establishes basic privacy and security standards for protection of PHI by covered entities and business associates, including health plans such as ours. HIPAA requires covered entities like us to develop and maintain policies and procedures regarding PHI, and to adopt administrative, physical, and technical safeguards to protect PHI. HIPAA violations may result in significant civil or criminal penalties.
GENERAL RISK FACTORS We are dependent on the leadership of our chief executive officer and other executive officers and key employees. The success of our business and the ability to execute our strategy are highly dependent on the efforts of Mr. Zubretsky, our chief executive officer, and our other key executive officers and employees.
GENERAL RISK FACTORS We are dependent on the leadership of our chief executive officer and other executive officers and key employees. The success of our business and the ability to execute our strategy are highly dependent on the leadership of Mr. Zubretsky, our chief executive officer, and that of our other key executive officers and employees.
In addition, if a D-SNP or MMP plan pays minimum MLR rebates for three consecutive years, such plan will become ineligible to enroll new members. Our health plans operate with very low profit margins, and small changes in operating performance or slight changes to our accounting estimates could have a disproportionate impact on our reported net income.
In addition, if a D-SNP or MMP plan pays minimum medical loss ratio (“MLR”) rebates for three consecutive years, such plan will become ineligible to enroll new members. Our health plans operate with very low profit margins, and small changes in operating performance or slight changes to our accounting estimates could have a disproportionate impact on our reported net income.
Our business is dependent on effective and secure information systems that assist us in processing provider claims, monitoring utilization and other cost factors, supporting our medical management techniques, providing data to our Molina Healthcare, Inc. 2023 Form 10-K | 25 regulators, and implementing our data security measures.
Our business is dependent on effective and secure information systems that assist us in processing provider claims, monitoring utilization and other cost factors, supporting our medical management techniques, providing data to our Molina Healthcare, Inc. 2024 Form 10-K | 26 regulators, and implementing our data security measures.
Our estimated reserves for such incurred but not paid, or IBNP, medical care costs are based on numerous assumptions.
Our estimated reserves for such incurred but not paid, or IBNP, medical care costs are based on numerous assumptions and inputs.
All of these risks are also faced by our significant vendors who are also in possession of sensitive confidential information.
These same risks are also faced by our significant vendors who are also in possession of sensitive confidential information.
As of December 31, 2023, the carrying amount of goodwill was $1,241 million, and intangible assets, net, were $208 million. Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment on an annual basis and more frequently if impairment indicators are present.
As of December 31, 2024, the carrying amount of goodwill was $1,671 million, and intangible assets, net, were $267 million. Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment on an annual basis and more frequently if impairment indicators are present.
Premium rates are based on our estimates of utilization of services and unit costs, anticipated member risk acuity and related federal risk adjustment transfer amounts, and non-benefit expenses such as administrative costs, taxes, and fees. In the year ended December 31, 2023, Marketplace program PMPM premium rates ranged from $270 to $1,140.
Premium rates are based on our estimates of utilization of services and unit costs, anticipated member risk acuity and related federal risk adjustment transfer amounts, and non-benefit expenses such as administrative costs, taxes, and fees. In the year ended December 31, 2024, Marketplace program PMPM premium rates ranged from $400 to $1,980.
If the number of health care entities willing and able to enter into consolidation transactions with us declines in the future, we may be unable to fully achieve our growth strategy, which could have an adverse effect on our business, financial condition, or results of operations.
Many of the targets of our strategic transactions have been non-profit entities. If the number of health care entities willing and able to enter into consolidation transactions with us declines in the future, we may be unable to fully achieve our growth strategy, which could have an adverse effect on our business, financial condition, or results of operations.
In addition, if the actuarial assumptions made by a state in implementing a rate or benefit change are incorrect or are at variance with the particular utilization patterns of the members of one or more of our health plans, our medical margins could be reduced.
If the actuarial assumptions made by a state in implementing a rate or benefit change or update are incorrect or are at variance with the prevailing medical cost trend or particular utilization patterns of the members of one or more of our health plans, our medical margins could be reduced.
Our encounter data, or the encounter data of the health plans we acquire, may be inaccurate or incomplete, which could have a material adverse effect on our results of operations, financial condition, cash flows and ability to bid for, and continue to participate in, certain programs. Our contracts require the submission of complete and correct encounter data.
Our encounter data, or the encounter data of the health plans we acquire, may be inaccurate or incomplete, which could have a material adverse effect on our business, financial condition, cash flows, or results of operations, and on our ability to bid for, and continue to participate in, certain programs.
As part of our normal operations, we routinely collect, process, store, and transmit large amounts of data, including sensitive personal information as well as proprietary or confidential information relating to our business or third parties.
As part of our normal operations, we routinely collect, process, store (both onsite and in the cloud), and transmit large amounts of data, including sensitive personal information as well as proprietary or confidential information relating to our business or third parties.
State and federal laws and regulations including, but not limited to, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act, and all regulations promulgated thereunder (collectively, “HIPAA”), the California Consumer Privacy Act (the “CCPA”), the California Privacy Rights Act (the “CPRA”), and the Gramm-Leach-Bliley Act, govern the collection, dissemination, use, privacy, confidentiality, security, availability, and integrity of personally identifiable information (“PII”), including protected health information (“PHI”).
State and federal laws and regulations including, but not limited to, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act, and all regulations promulgated thereunder (collectively, “HIPAA”), the California Consumer Privacy Act (the “CCPA”), the California Privacy Rights Act (the “CPRA”), and the Gramm-Leach-Bliley Act (“GLBA”), govern the collection, Molina Healthcare, Inc. 2024 Form 10-K | 29 dissemination, use, privacy, confidentiality, security, availability, and integrity of personally identifiable information (“PII”), including protected health information (“PHI”).
Our acquisitions and the related integration activities involve a number of risks, including the following: • The transition services that a seller may have agreed to provide following the closing may not be provided in a timely or efficient manner, or certain necessary transition services may not be provided at all; • Unforeseen expenses or delays associated with the acquisition and/or integration; • The assumptions underlying our expectations regarding the integration process or the expected benefits to be achieved from an acquisition may prove to be incorrect; • Maintaining employee morale and retaining key management and other employees; • Difficulties retaining the business and operational relationships of the acquired business, and attracting new business and operational relationships; • Unanticipated attrition in the membership of the acquired business pending the completion of the proposed transaction or after the closing of the transaction; • Unanticipated difficulties or costs in integrating information technology, communications and other systems, consolidating corporate and administrative infrastructures, and eliminating duplicative operations; • Attention to integration activities may divert management’s attention from ongoing business concerns, which could result in performance shortfalls; Molina Healthcare, Inc. 2023 Form 10-K | 21 • Successfully addressing the challenges inherent in managing a larger company and coordinating geographically separate organizations; and • Delays in obtaining, or inability to obtain, necessary state or federal regulatory approvals, or such approvals may impose conditions that were not anticipated.
Our acquisitions and the related integration activities involve a number of risks, including the following: • The transition services that a seller may have agreed to provide following the closing may not be provided in a timely or efficient manner, or certain necessary transition services may not be provided at all; similarly, any agreement by us to provide “reverse transition services” to a seller may be unduly burdensome, inefficient, and costly; • Unforeseen expenses or delays associated with the acquisition and/or integration; • The assumptions underlying our expectations regarding the integration process or the expected benefits to be achieved from an acquisition may prove to be incorrect; • Maintaining employee morale and retaining key management and other employees, and satisfactorily addressing any differences in corporate culture; • Difficulties retaining the business and operational relationships of the acquired business, and attracting new business and operational relationships; • Unanticipated attrition in the membership of the acquired business pending the completion of the proposed transaction or after the closing of the transaction; • Unanticipated difficulties or costs in integrating information technology, communications, and other systems, consolidating corporate and administrative infrastructures, and eliminating duplicative operations; • Attention to integration activities may divert management’s attention from ongoing business concerns, which could result in performance shortfalls; • Successfully addressing the challenges inherent in managing a larger company and coordinating geographically separate organizations; and • Delays in obtaining, or inability to obtain, necessary state or federal regulatory approvals, or such approvals may impose conditions that were not anticipated.
Because the techniques used to circumvent, gain access to, or sabotage security systems can be highly sophisticated and change frequently, they often are not recognized until launched against a target, and may originate from less regulated and remote areas around the world.
Because the techniques used to circumvent, gain access to, or sabotage security systems can be highly sophisticated, may use advanced technologies (such as artificial intelligence) and change frequently, they often are not recognized until launched against a target, and may originate from less regulated and remote areas around the world.
Measured by Medicaid premium revenue by health plan, our top four health plans were in California, New York, Texas, and Washington, with aggregate Medicaid premium revenue of $13.5 billion, or approximately 51% of total Medicaid premium revenue, in the year ended December 31, 2023.
Measured by Medicaid premium revenue by health plan, our top four health plans were in California, New York, Texas, and Washington, with aggregate Medicaid premium revenue of $15.6 billion, or approximately 51% of total Medicaid premium revenue, in the year ended December 31, 2024.
The volume of new software vulnerabilities has increased substantially, as has the importance of patches and other remedial measures. In addition to remediating newly Molina Healthcare, Inc. 2023 Form 10-K | 20 identified vulnerabilities, previously identified vulnerabilities must also be updated. We are at risk that cyber attackers exploit these known vulnerabilities before they have been addressed.
The volume of new software vulnerabilities has increased substantially, as has the importance of patches and other remedial measures. In addition to remediating newly identified vulnerabilities, previously identified vulnerabilities must also be updated. We are at risk that cyber attackers exploit these known vulnerabilities before they have been addressed.
In some markets, certain providers, particularly hospitals and some specialists, may have significant market positions or even monopolies. If these providers refuse to contract with us or utilize their market position to negotiate favorable contracts which are disadvantageous to us, our profitability in those areas could be adversely affected.
In some markets, certain providers, particularly hospitals and some specialists, may have significant market positions or even monopolies. If these providers refuse to contract with us or utilize their market position to Molina Healthcare, Inc. 2024 Form 10-K | 25 negotiate favorable contracts which are disadvantageous to us, our profitability in those areas could be adversely affected.
Any compromise of the confidential data of our members, employees, or business, or the failure to prevent or mitigate the loss of or damage to this data through breach, could result in operational, reputational, competitive, or other business harm, as well as financial costs and regulatory action.
Though the CHC incident was not material to us, any compromise of the confidential data of our members, employees, or business, or the failure to prevent or mitigate the loss of or damage to this data through breach, could result in operational, reputational, competitive, or other business harm, as well as financial costs and regulatory action.
Further, the Star Rating System utilized by CMS to evaluate Medicare plans may have a significant effect on our revenue, as higher-rated plans tend to experience increased enrollment and plans with a Star rating of 4.0 or higher are eligible for quality-based bonus payments.
Molina Healthcare, Inc. 2024 Form 10-K | 28 Further, the Star Rating System utilized by CMS to evaluate Medicare plans may have a significant effect on our revenue, as higher-rated plans tend to experience increased enrollment and plans with a Star rating of 4.0 or higher are eligible for quality-based bonus payments.
Changes in existing laws or regulations, or their interpretations, or the enactment of new laws or regulations, could reduce our profitability by imposing additional capital requirements, increasing our liability, increasing our administrative and other costs, increasing mandated benefits, forcing us to restructure our Molina Healthcare, Inc. 2023 Form 10-K | 30 relationships with providers, requiring us to implement additional or different programs and systems, or making it more difficult to predict future results.
Changes in existing laws or regulations, or their interpretations, or the enactment of new laws or regulations or executive orders, could reduce our profitability by imposing additional capital requirements, increasing our liability, increasing our administrative and other costs, increasing mandated benefits, forcing us to restructure our relationships with providers, requiring us to implement additional or different programs and systems, or making it more difficult to predict future results.
If there is a major Southern California earthquake or wildfire, there can be no assurances that our disaster recovery plan will be successful or that the business operations of our health plans, including those that are remote from any such event, would not be impacted. Molina Healthcare, Inc. 2023 Form 10-K | 32
If there is a major Southern California earthquake or wildfire, there can be no assurances that our disaster recovery plan will be successful or that the business operations of our health plans, including those that are remote from any such event, would not be impacted.
Impairment indicators may include experienced or expected operating cash-flow deterioration or losses, significant losses of membership, loss of state funding, loss of state contracts, and other Molina Healthcare, Inc. 2023 Form 10-K | 26 factors. Goodwill is impaired if the carrying amount of a reporting unit exceeds its estimated fair value.
Impairment indicators may include experienced or expected operating cash-flow deterioration or losses, significant losses of membership, loss of state funding, loss of state contracts, and other factors. Goodwill is impaired if the carrying amount of a reporting unit exceeds its estimated fair value.
Thus, it is not possible to predict all of the risks and potentially unintended consequences related to the use of AI by vendors, third-party developers, or the Company. An impairment charge with respect to our recorded goodwill, or our finite-lived intangible assets, could have a material impact on our financial results.
Therefore, it is not possible to predict all of the risks and potentially unintended consequences related to the use of AI by vendors, third-party developers, or the Company. Molina Healthcare, Inc. 2024 Form 10-K | 27 An impairment charge with respect to our recorded goodwill, or our finite-lived intangible assets, could have a material impact on our financial results.
Molina Healthcare, Inc. 2023 Form 10-K | 19 We are subject to risks associated with outsourcing services and functions to third parties. We contract with third party vendors and service providers who provide services to us and our subsidiaries or to whom we delegate selected functions. Some of these third parties have direct access to our systems.
We are subject to risks associated with outsourcing services and functions to third parties. We contract with third party vendors and service providers who provide services to us and our subsidiaries or to whom we delegate selected functions. Some of these third parties have direct access to our systems.
Our parent company received $705 million and $668 million in dividends from our regulated health plan subsidiaries during 2023 and 2022, respectively.
Our parent company received $997 million and $705 million in dividends from our regulated health plan subsidiaries during 2024 and 2023, respectively.
In addition, these risks include the possibility of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other complications that could adversely affect our business, reputation, or financial results. The development and use of AI technologies is still in its early stages.
In addition, these risks include the possibility of new, changing, or enhanced governmental or regulatory scrutiny, litigation, other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other complications that could adversely affect our business, reputation, or financial results.
If we lose contracts that constitute a significant amount of our premium revenue, we will lose the administrative cost efficiencies or cost leverage that is inherent in a larger revenue base.
If we lose contracts that constitute a significant amount of our premium revenue, we will lose the administrative cost efficiencies or cost leverage that is inherent in a larger revenue base. We currently spread the cost of centralized services over a large revenue base.
Where doing so is necessary in order to conduct our business, we also provide sensitive personal member information, as well as proprietary or confidential information relating to our business, to our third-party service providers.
Where doing so is necessary in order to conduct our business, we also provide sensitive personal member information, as well as proprietary or confidential information relating to our business, to our third-party service providers. Those third-party service providers may also be subject to data intrusions or data breaches.
Liabilities incurred or losses suffered as a result of provider insolvency or other circumstances could have a material adverse effect on our business, financial condition, cash flows, or results of operations. Receipt of inadequate or significantly delayed premiums could negatively affect our business, financial condition, cash flows, or results of operations.
Liabilities incurred or losses suffered as a result of provider insolvency or other circumstances could have a material adverse effect on our business, financial condition, cash flows, or results of operations.
We currently derive our premium revenues from health plans that operate in 20 states. Our Medicaid premium revenue constituted 81% of our consolidated premium revenue in the year ended December 31, 2023.
We currently derive our premium revenues from health plans that operate in 21 states. Our Medicaid premium revenue constituted 79% of our consolidated premium revenue in the year ended December 31, 2024.
Our policies, employee training (including phishing prevention training), procedures and technical safeguards may not prevent all improper access to our network or proprietary or confidential information by employees, vendors, counterparties, or other third parties.
Our policies, employee training (including phishing prevention training), Molina Healthcare, Inc. 2024 Form 10-K | 21 procedures, and technical safeguards may not prevent all improper access to our network or proprietary or confidential information by employees, vendors, counterparties, or other third parties.
The unpredictable nature of these factors may have a material adverse effect on our business, financial condition, cash flows, or results of operations. Increases in our pharmaceutical costs could have a material adverse effect on the level of our medical costs and our results of operations.
The unpredictable nature of these factors may have a material adverse effect on our business, financial condition, cash flows, or results of operations. Molina Healthcare, Inc. 2024 Form 10-K | 30 Increases in our pharmaceutical costs could have a material adverse effect on the level of our medical costs and our results of operations.
Our access to additional financing will depend on a variety of factors such as prevailing economic and credit market conditions, the general availability of credit, the overall availability of credit to our industry, our credit ratings and credit capacity, and perceptions of our financial prospects.
Molina Healthcare, Inc. 2024 Form 10-K | 32 Our access to additional financing will depend on a variety of factors such as prevailing economic and credit market conditions, the general availability of credit, the overall availability of credit to our industry, our credit ratings and credit capacity, and perceptions of our financial prospects.
For example, in September 2023 we closed on our acquisition of My Choice Wisconsin and in January 2024 we closed on the acquisition of Bright Health Medicare. The integration of acquired businesses with our existing business is a complex, costly and time-consuming process.
For example, in January 2024 we closed on the acquisition of Bright Health Medicare and in February 2025 we closed on the acquisition of ConnectiCare. The integration of acquired businesses with our existing business is a complex, costly, and time-consuming process.
The success of acquisitions we make will depend, in part, on our ability to successfully combine our existing business with such acquired businesses and realize the anticipated benefits, including synergies, cost savings, growth in earnings, innovation, and operational efficiencies, from the combinations.
The success of acquisitions we make will depend, in part, on our ability to successfully combine our existing business with such acquired businesses and realize the anticipated benefits, including Molina Healthcare, Inc. 2024 Form 10-K | 22 synergies, cost savings, growth in earnings, innovation, and operational efficiencies.
If we fail to report and correct errors discovered through our own auditing procedures or during a RADV audit, or otherwise fail to comply with applicable laws and regulations, we could be subject to fines, civil penalties or other sanctions, which could have a material adverse effect on our ability to participate in these programs, and on our financial condition, cash flows and results of operations.
If errors are identified during a RADV audit, or it is otherwise determined that we fail to comply with applicable laws and regulations, we could be subject to fines, civil penalties or other sanctions, which could have a material adverse effect on our ability to participate in these programs, and on our financial condition, cash flows and results of operations.
Our business is extensively regulated by the federal government and the states in which we operate. The laws and regulations governing our operations are generally intended to benefit and protect health plan members and providers rather than managed care organizations. The government agencies administering these laws and regulations have broad latitude in interpreting and applying them.
The laws and regulations governing our operations are generally intended to benefit and protect health plan members and providers rather than managed care organizations. The government agencies administering these laws and regulations have broad latitude in interpreting and applying them.
Molina Healthcare, Inc. 2023 Form 10-K | 24 We rely on the accuracy of eligibility lists provided by state governments. Inaccuracies in those lists would negatively affect our results of operations. Premium payments to our health plans are based upon eligibility lists produced by state governments.
We rely on the accuracy of eligibility lists provided by state governments. Inaccuracies in those lists could negatively affect our results of operations. Premium payments to our health plans are based upon eligibility lists produced by state governments.
Further, our principal pharmacy benefit manager, or PBM, CVS Caremark (“CVS”), is party to certain lawsuits and putative class actions regarding its drug pricing practices and its rebate arrangements with drug manufacturers.
Some of our competitors have been subject to substantial sanctions related to allegations of improper transfer pricing practices. Further, our principal pharmacy benefit manager, or PBM, CVS Caremark (“CVS”), is party to certain lawsuits and putative class actions regarding its drug pricing practices and its rebate arrangements with drug manufacturers.
Beginning in 2016, those Medicare plans that achieve less than a 3.0 Star rating for three consecutive years will be issued a notice of non-renewal of their contract for the following year.
Those Medicare plans that achieve less than a 3.0 Star rating for either part C or D for three consecutive years are issued a notice of non-renewal of their contract for the following year.
Liability under such federal and state statutes and regulations may arise if we know, or it is determined that we should have known, that information we provide to form the basis for a claim for government payment is false or fraudulent, and some courts have permitted False Claims Act suits to proceed if the claimant was out of compliance with program requirements.
Liability under such federal and state statutes and regulations may arise if we know, or it is determined that we should have known, that information we provide to form the basis for a claim for government payment is false or fraudulent.
Any of these rate adjustments in one or more of the states in which we operate could have a material adverse effect on our business, financial condition, cash flows, or results of operations.
Any of these rate adjustments in one or more of the states in which we operate could have a material adverse effect on our business, financial condition, cash flows, or results of operations. Our Marketplace business has been volatile and unpredictable in the past. We offer Marketplace plans in many of the states where we offer Medicaid health plans.
Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain, or motivate these personnel. If we are unsuccessful in recruiting, retaining, managing, and motivating such personnel, our business, financial condition, cash flows, or results of operations could be adversely affected. We face risks related to litigation.
If we are unsuccessful in recruiting, retaining, managing, protecting, and motivating such personnel, our business, financial condition, cash flows, or results of operations could be adversely affected. We face risks related to litigation.
If we or one of our significant vendors sustain a cyber-attack or suffer data privacy or security breaches that disrupt our information systems or operations, or result in the dissemination of sensitive personal or confidential information, we could suffer increased costs, exposure to significant liability, reputational harm, loss of business, and other serious negative consequences.
If we or one of our vendors sustain a cyber-attack or suffer a data privacy or security breach, we could suffer operational impact, increased costs, exposure to significant liability, reputational harm, loss of business, and other serious negative consequences.
Historically, our medical care ratio, meaning our medical care costs as a percentage of our premium revenue, has fluctuated substantially, and has varied across our health plans.
Our profitability depends to a significant degree on our ability to accurately predict and effectively manage our medical care costs. Historically, our medical care ratio, meaning our medical care costs as a percentage of our premium revenue, has fluctuated substantially, and has varied across our health plans.
Unforeseen changes in pharmaceutical regulations or market conditions may impact our revenues and adversely affect our results of operations. Pharmaceutical products and services are a significant component of our healthcare costs.
If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected. Unforeseen changes in pharmaceutical regulations or market conditions may impact our revenues and adversely affect our results of operations. Pharmaceutical products and services are a significant component of our healthcare costs.
We use a large portion of our revenues to pay the costs of healthcare services delivered to our members. If premiums do not increase when expenses related to healthcare services rise, our medical margins will be compressed, and our earnings will be negatively affected.
If premiums do not increase when expenses related to healthcare services rise, our medical margins will be compressed, and our earnings will be negatively affected.
Our Marketplace plans allow our Medicaid members to stay with their providers as they transition between Medicaid and the Marketplace. Additionally, our plans remove financial barriers to quality care and seek to minimize members' out-of-pocket expenses. We develop each state’s Marketplace premium rates during the spring of each year for policies effective in the following calendar year.
Additionally, our plans remove financial barriers to quality care and seek to minimize Molina Healthcare, Inc. 2024 Form 10-K | 20 members' out-of-pocket expenses. We develop each state’s Marketplace premium rates during the spring of each year for policies effective in the following calendar year.
We may be unable to anticipate these techniques or implement adequate preventive measures, resulting in potential data loss and damage to our systems. Our systems are also subject to compromise from internal threats such as improper action by employees, including malicious insiders, or by vendors, counterparties, and other third parties with otherwise legitimate access to our systems.
Our systems are also subject to compromise from internal threats such as improper action by employees, including malicious insiders, or by vendors, counterparties, and other third parties with otherwise legitimate access to our systems.
If we are unsuccessful in achieving the stated Molina Healthcare, Inc. 2023 Form 10-K | 22 performance measure, we will be unable to recognize the revenue associated with that measure, which could have a material adverse effect on our business, financial condition, cash flows, or results of operations.
If we are unsuccessful in achieving the stated performance measure, we will be unable to recognize the revenue associated with that measure, which could have a material adverse effect on our business, financial condition, cash flows, or results of operations. Our Medicaid premium revenues could be adversely impacted by retroactive adjustments or states’ delays in implementing rate changes.
For example, if our overall medical care ratio of 88.1% for the year ended December 31, 2023, had been one percentage point higher, Molina Healthcare, Inc. 2023 Form 10-K | 23 or 89.1%, our net income per diluted share for the year ended December 31, 2023 would have been approximately $14.51 rather than our actual net income per diluted share of $18.77, a difference of $4.26.
For example, if our overall medical care ratio of 89.1% for the year ended December 31, 2024, had been one percentage point higher, or 90.1%, our net income per diluted share for the year ended December 31, 2024 would have been approximately $15.18 rather than our actual net income per diluted share of $20.42, a difference of $5.24.
Moreover, these same issues may also apply to the health plans we acquire, and we may be required to expend significant costs or pay fines to correct these deficiencies.
In either case, it may be prohibitively expensive or impossible for us to collect or reconstruct this historical data. Moreover, these same issues may also apply to the health plans we acquire, and we may be required to expend significant costs or pay fines to correct these deficiencies.
Marketplace plan selection by members is highly price sensitive, and the Marketplace markets in general are highly volatile and unpredictable from year to year. Any variation from our cost expectations regarding acuity, enrollment levels, adverse selection, or other assumptions utilized in setting premium rates, could have a material adverse effect on our results of operations, financial position, and cash flows.
Any variation from our cost expectations regarding acuity, enrollment levels, adverse selection, or other assumptions utilized in setting premium rates, could have a material adverse effect on our results of operations, financial position, and cash flows. In addition, the non-renewal of Marketplace premium subsidies starting in 2026 could negatively impact our Marketplace enrollment.
Southern California is exposed to a statistically greater risk of a major earthquake and wildfires than most other parts of the United States. If a major earthquake or wildfire were to strike Southern California, our corporate functions and claims processing could be impaired for an unforeseen period of time.
If a major earthquake or wildfire were to strike near our location in Southern California, our corporate functions and claims processing could be impaired for an unforeseen period of time.
Molina Healthcare, Inc. 2023 Form 10-K | 28 Our use and disclosure of personally identifiable information and other non-public information, including protected health information, is subject to federal and state privacy and security regulations, and our failure or the failure of our vendors to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm.
Our use and disclosure of personally identifiable information and other non-public information, including protected health information, is subject to federal and state privacy and security regulations, and our failure or the failure of our vendors to comply with those regulations or to adequately secure the information we hold could adversely affect our business, results of operations, or financial condition.
The accurate and timely reporting of encounter data is increasingly important to the success of our programs because more states are using encounter data to determine compliance with performance standards and to set premium rates. We have been, and continue to be, exposed to operating sanctions and financial fines and penalties for noncompliance.
Our contracts require the submission of complete and correct encounter data. The accurate and timely reporting of encounter data is increasingly important to the success of our programs because more states are using encounter data to determine compliance with performance standards and to set premium rates.
Illinois and Ohio have included plans to transition to Fully Integrated D-SNPs. Michigan, South Carolina, and Texas are electing to transition to Highly Integrated D-SNPs. We anticipate states to release procurements to contract with D-SNPs in 2024. The economic impact of such transitions to D-SNP on our premium revenue is uncertain at this point.
Illinois and Ohio have included plans to transition to Fully Integrated D-SNPs. Michigan and South Carolina are electing to transition to Highly Integrated D-SNPs. Texas is allowing optionality between a Fully Integrated D-SNP and a Highly Integrated D-SNP. The RFP award for Illinois is still pending. The economic impact of such transitions to D-SNP on our premium revenue is uncertain.
If we or one or more of our significant vendors do not comply with existing or new laws and regulations related to PHI, PII, or non-public information, we could be subject to criminal or civil sanctions.
Similar laws have gone into effect or have been proposed in many other states and at the federal level as well. If we or one or more of our vendors does not comply with existing or new laws and regulations related to PHI, PII, or non-public personal information, we could be subject to criminal or civil sanctions.
In some instances, our government clients have established retroactive requirements for the encounter data we must submit. There also may be periods of time in which we are unable to meet existing requirements. In either case, it may be prohibitively expensive or impossible for us to collect or reconstruct this historical data.
We have been, and continue to be, exposed to operating sanctions and financial fines and penalties for noncompliance. In some instances, our government clients have established retroactive requirements for the encounter data we must submit. There also may be periods of time in which we are unable to meet existing requirements.
Our actual claims liabilities have varied and will continue to vary from our estimates, particularly in times of significant changes in utilization, medical cost trends, and populations and markets served. If our actual liability for claims payments is higher than previously estimated, our earnings in any particular quarter or annual period could be negatively affected.
Our actual claims liabilities have varied and will continue to vary from our estimates, particularly in times of significant changes in utilization, medical cost trends, and populations and markets served.
Our facilities may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, misplaced or lost data, human errors, or other similar events that could negatively affect our systems and our and our members’ data. Moreover, we face the ongoing challenge of managing access controls in a complex environment.
Our facilities and IT systems, or those of our service providers, may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, misplaced or lost data, human errors, or other similar events that could negatively affect our systems and our and our members’ data. For example, in July 2024, a software update by CrowdStrike Holdings, Inc.
Similarly, if we fail to meet or exceed any performance standards imposed by state Medicaid programs in which we participate, we may not receive performance-based bonus payments, may incur penalties, or lose our Medicaid contract. We are periodically subject to government audits, including CMS RADV audits of our Medicare D-SNP plans to validate diagnostic data, patient claims, and financial reporting.
Similarly, if we fail to meet or exceed any performance standards imposed by state Medicaid programs in which we participate, we may not receive performance-based bonus payments, we may incur penalties, or we may lose our Medicaid contract which may also result in a loss to our Medicare contract if it is a HIDE or FIDE D-SNP.

… 66 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+1 added−1 removed23 unchanged
Biggest changeMolina Healthcare, Inc. 2023 Form 10-K | 33 The Program is overseen by the Company’s Board of Directors through its Audit Committee which, pursuant to its charter, assists the Board with oversight of Company privacy, data security, and cybersecurity matters and risks.
Biggest changeMolina Healthcare, Inc. 2024 Form 10-K | 35 The Program is overseen by the Company’s Board of Directors through its Audit Committee which, pursuant to its charter, assists the Board with oversight of Company privacy, data security, and cybersecurity matters and risks.
Removed
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Added
For a discussion of the Company’s cybersecurity-related risks, see Item 1A of this Form 10-K under the heading “Risk Factors—If we or one of our significant vendors sustain a cyber-attack or suffer data privacy or security breaches that disrupt our information systems or operations, or result in the dissemination of sensitive personal or confidential information, we could suffer increased costs, exposure to significant liability, reputational harm, loss of business, and other serious negative consequences.”

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 2. PROPERTIES We own and lease certain real properties to support the business operations of our reportable segments. In 2022, we completed a plan to reduce the real estate footprint used in our business operations to accommodate our move to a permanent remote work environment, a model we have been working under successfully for over three years.
Biggest changeItem 2. PROPERTIES We own and lease certain real properties to support the business operations of our reportable segments. In 2022, we completed a plan to reduce the real estate footprint used in our business operations to accommodate our move to a permanent remote work environment, a model we have been working under successfully for over four years.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+3 added−1 removed3 unchanged
Biggest changeMolina Healthcare, Inc. 2023 Form 10-K | 34 Purchases of common stock made by us, or on our behalf, during the fourth quarter of 2023, including shares withheld by us to satisfy our employees’ income tax obligations, are set forth below: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 - October 31 1,700 $ 328.24 — $ 750,000,000 November 1 - November 30 — $ — — $ 750,000,000 December 1 - December 31 — $ — — $ 750,000,000 Total 1,700 $ 328.24 — _______________________ (1) During the fourth quarter of 2023, we withheld approximately 1,700 shares of common stock to settle employee income tax obligations for releases of awards granted under the Molina Healthcare, Inc. 2019 Equity Incentive Plan.
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ISSUER PURCHASES OF EQUITY SECURITIES Purchases of common stock made by us, or on our behalf, during the fourth quarter of 2024, including shares withheld by us to satisfy our employees’ income tax obligations, are set forth below: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 - October 31 1,600 $ 341.91 — $ 1,000,000,000 November 1 - November 30 275,900 $ 297.25 275,900 $ 918,000,000 December 1 - December 31 1,390,500 $ 300.59 1,390,500 $ 500,000,000 Total 1,668,000 $ 300.08 1,666,400 _______________________ (1) During the fourth quarter of 2024, there were approximately 1,666,400 shares repurchased as part of our publicly announced share repurchase program and we withheld 1,600 shares of common stock to settle employee income tax obligations for releases of awards granted under the Molina Healthcare, Inc. 2019 Equity Incentive Plan.
(2) For further information on our stock repurchase programs, refer to the accompanying Notes to Financial Statements, Note 13, “Stockholders' Equity.” STOCK PERFORMANCE GRAPH The following graph and related discussion are being furnished solely to accompany this Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed to be “soliciting materials” or to be “filed” with the U.S.
For further information on our stock repurchase programs, refer to the accompanying Notes to Financial Statements, Note 13, “Stockholders' Equity.” STOCK PERFORMANCE GRAPH The following graph and related discussion are being furnished solely to accompany this Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed to be “soliciting materials” or to be “filed” with the U.S.
The comparison assumes $100 was invested on December 31, 2018, in our common stock and in each of the foregoing indices and assumes reinvestment of dividends. The stock performance shown on the graph below represents historical stock price performance and is not necessarily indicative of future stock price performance.
The comparison assumes $100 was invested on December 31, 2019, in our common stock and in each of the foregoing indices and assumes reinvestment of dividends. The stock performance shown on the graph below represents historical stock price performance and is not necessarily indicative of future stock price performance.
For more information regarding restrictions on the ability of our regulated subsidiaries to pay dividends to us, please see the Notes to Consolidated Financial Statements, Note 15, “Commitments and Contingencies—Regulatory Capital Requirements and Dividend Restrictions.” UNREGISTERED SALES OF SECURITIES None. Molina Healthcare, Inc. 2023 Form 10-K | 36
For more information regarding restrictions on the ability of our regulated subsidiaries to pay dividends to us, please see the Notes to Consolidated Financial Statements, Note 15, “Commitments and Contingencies—Regulatory Capital Requirements and Dividend Restrictions.” UNREGISTERED SALES OF SECURITIES None. Molina Healthcare, Inc. 2024 Form 10-K | 38
(UHS). STOCK TRADING SYMBOL AND DIVIDENDS Our common stock is listed on the New York Stock Exchange under the trading symbol “MOH.” As of February 9, 2024, there were 14 registered holders of record of our common stock, including Cede & Co. To date we have not paid cash dividends on our common stock.
STOCK TRADING SYMBOL AND DIVIDENDS Our common stock is listed on the New York Stock Exchange under the trading symbol “MOH.” As of February 7, 2025, there were 14 registered holders of record of our common stock, including Cede & Co. To date we have not paid cash dividends on our common stock.
The following line graph compares the percentage change in the cumulative total return on our common stock against the cumulative total return of the Standard & Poor’s Corporation Composite 500 Index (the “S&P 500”) and a peer group index for the five-year period from December 31, 2018 to December 31, 2023.
The following line graph compares the percentage change in the cumulative total return on our common stock against the cumulative total return of the Standard & Poor’s Corporation Composite 500 Index (the “S&P 500”), a peer group index for the five-year period from December 31, 2019 to December 31, 2024 and a prior peer group index used in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Molina Healthcare, Inc. 2023 Form 10-K | 35 The peer group index consists of Acadia Healthcare Company, Inc. (ACHC), Elevance Health, Inc. (ELV), Centene Corporation (CNC), Cigna Corporation (CI), Community Health Systems, Inc. (CYH), HCA Healthcare, Inc. (HCA), Humana, Inc. (HUM), Laboratory Corporation of America Holdings (LH), Quest Diagnostics Incorporated (DGX), Tenet Healthcare Corporation (THC) and Universal Health Services, Inc.
Molina Healthcare, Inc. 2024 Form 10-K | 37 The 2023 peer group index consists of Acadia Healthcare Company, Inc. (ACHC), Centene Corporation (CNC), Cigna Corporation (CI), Community Health Systems, Inc. (CYH), Elevance Health, Inc. (ELV), HCA Healthcare, Inc. (HCA), Humana, Inc.
This new program supersedes the stock purchase program previously approved by our board of directors in November 2022 and extends through December 31, 2024.
(2) In October 2024, our board of directors authorized the purchase of up to $1 billion of our common stock. This new program extends through December 31, 2025 and supersedes the stock purchase program previously approved by our board of directors in September 2023.
The exact timing and amount of any repurchase is determined by management based on market conditions and share price, in addition to other factors, and subject to the restrictions relating to volume, price, and timing under applicable law.
The exact timing and amount of any repurchase is determined by management based on market conditions and share price, in addition to other factors, and repurchases generally will be made in accordance with the volume, price, and timing parameters under Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
Removed
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES STOCK REPURCHASE PROGRAMS In September 2023, our board of directors authorized the purchase of up to $750 million of our common stock.
Added
(HUM), Laboratory Corporation of America Holdings (LH), Quest Diagnostics Incorporated (DGX), Tenet Healthcare Corporation (THC) and Universal Health Services, Inc. (UHS). The 2024 peer group index consists of Aflac Incorporated (AFL), Becton, Dickinson and Company (BDX), Boston Scientific Corporation (BSX), Centene Corporation (CNC), The Cigna Group (CI), Community Health Systems, Inc. (CYH), DaVita Inc. (DVA), Elevance Health, Inc.
Added
(ELV), HCA Healthcare, Inc. (HCA), Humana, Inc. (HUM), Laboratory Corporation of America Holdings (LH), MetLife, Inc. (MET), Prudential Financial, Inc. (PRU), Quest Diagnostics Incorporated (DGX), Tenet Healthcare Corporation (THC) and Universal Health Services, Inc. (UHS).
Added
The Company’s peer group was updated to include relevant peers across business segment and certain financial metrics, including but not limited to criteria relevant to revenue, market capitalization, EBITDA, organization model, and employee recruitment.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+19 added−25 removed45 unchanged
Biggest changeTo recap the growth milestones achieved in 2023 and early 2024: • In January, we successfully re-procured our contract in Texas for the state’s STAR+PLUS program, retaining all eight regions and expecting to grow our market share; • In July, we successfully launched our Iowa Medicaid plan which we won in a highly competitive process in late 2022; • In August, we announced that we were awarded a contract to once again serve Medicaid beneficiaries in the state of New Mexico; • In September, we closed on the My Choice Wisconsin acquisition, further expanding on our market leading LTSS franchise; • Effective January 1, 2024, we closed our acquisition of Bright Health’s California Medicare business (Brand New Day and Central Health Plan of California); • On January 1, 2024, we successfully launched our Nebraska health plan; and finally, • On January 1, 2024, we launched our expanded California Medicaid platform, including Los Angeles county, which approximately doubled the size of our business in the state.
Biggest changeTo recap the growth milestones achieved in 2024 and early 2025: • Effective January 1, 2024, we closed our acquisition of Bright Health’s California Medicare business (Brand New Day and Central Health Plan of California); • On January 1, 2024, we successfully launched our Nebraska health plan and launched our expanded California Medicaid platform, including Los Angeles county, which approximately doubled the size of our business in the state; • Our new contracts with New Mexico started on July 1, 2024, Texas STAR+PLUS started on September 1, 2024 and Michigan started on October 1, 2024; • Successfully defended RFPs for Medicaid contracts in Florida, Michigan, Mississippi, Texas, and Wisconsin and procured Medicare contracts in Idaho, Massachusetts, Michigan, and Ohio; • Effective February 1, 2025, we closed on our acquisition of ConnectiCare and expect approximately $1.2 billion of revenue, mostly in our Marketplace segment.
For claims incurred within three months before the financial statement date, actual claims paid are a less reliable measure of our ultimate cost since a large portion of medical claims are not submitted to us until several months after services have been submitted.
For claims incurred within three months before the financial statement date, actual claims paid are a less reliable measure of our ultimate cost since a large portion of medical claims are not submitted to us until several months after services have been provided.
As of December 31, 2023, we were in compliance with all financial and non-financial covenants under the Credit Agreement and other long-term debt. FUTURE SOURCES AND USES OF LIQUIDITY Future Sources Our regulated subsidiaries generate significant cash flows from premium revenue, which is generally received a short time before related healthcare services are paid.
As of December 31, 2024, we were in compliance with all financial and non-financial covenants under the Credit Agreement and other long-term debt. FUTURE SOURCES AND USES OF LIQUIDITY Future Sources Our regulated subsidiaries generate significant cash flows from premium revenue, which is generally received a short time before related healthcare services are paid.
The following table reflects the hypothetical change in our estimate of claims liability as of December 31, 2023 that would result if we change our completion factors for the fourth through the twelfth months preceding December 31, 2023, by the percentages indicated. A reduction in the completion factor results in an increase in medical claims liabilities.
The following table reflects the hypothetical change in our estimate of claims liability as of December 31, 2024 that would result if we change our completion factors for the fourth through the twelfth months preceding December 31, 2024, by the percentages indicated. A reduction in the completion factor results in an increase in medical claims liabilities.
Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. The overall rating of our portfolio is A+. Our investment policy has directives in conjunction with state guidelines to minimize risks and exposures in volatile markets.
Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. The overall rating of our portfolio is AA-. Our investment policy has directives in conjunction with state guidelines to minimize risks and exposures in volatile markets.
Our MD&A as of and for the year ended December 31, 2021, may be found in our 2022 Annual Report on Form 10-K, which prior disclosure is incorporated by reference herein.
Our MD&A as of and for the year ended December 31, 2022, may be found in our 2023 Annual Report on Form 10-K, which prior disclosure is incorporated by reference herein.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”) Management’s discussion and analysis of financial condition and results of operations as of and for the years ended December 31, 2023 and 2022, are presented in the sections that follow.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”) Management’s discussion and analysis of financial condition and results of operations as of and for the years ended December 31, 2024 and 2023, are presented in the sections that follow.
Other medical care costs include all medically-related administrative costs, amounts due to providers pursuant to risk-sharing or other incentive arrangements, provider claims, and other healthcare expenses. Examples of medically-related administrative costs include expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses.
Other medical care costs include all medically-related administrative costs, amounts due to providers pursuant to risk-sharing or other incentive arrangements, provider claims, claim overpayment recoveries, and other healthcare expenses. Examples of medically-related administrative costs include expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses.
For a comparison of our results of operations for the fiscal years ended December 31, 2022 and December 31, 2021, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 13, 2022.
For a comparison of our results of operations for the fiscal years ended December 31, 2023 and December 31, 2022, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 13, 2024.
Therefore, the underlying medical margin, or the amount earned by the Medicaid, Medicare, and Marketplace segments after medical costs are deducted from premium revenue, represents the most important measure of earnings reviewed by management, and is used by our chief executive officer to review results, assess performance, and allocate resources.
Therefore, the underlying medical margin, or the amount earned by the Medicaid, Medicare, and Marketplace segments after medical costs are deducted from premium revenue, represents the most important measure of earnings reviewed by management, and is used by our chief executive officer, who is our chief operating decision maker, to review results, assess performance, and allocate resources.
The following discussion and analysis does not include certain items related to the year ended December 31, 2021, including year-to-year comparisons between the year ended December 31, 2022 and the year ended December 31, 2021.
The following discussion and analysis does not include certain items related to the year ended December 31, 2022, including year-to-year comparisons between the year ended December 31, 2023 and the year ended December 31, 2022.
Net unrealized losses on our investments classified as current and available for sale decreased to $108 million at December 31, 2023 compared to $210 million at December 31, 2022. We have determined that the unrealized losses primarily resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers.
Net unrealized losses on our investments classified as current and available for sale decreased to $75 million at December 31, 2024 compared to $108 million at December 31, 2023. We have determined that the unrealized losses primarily resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers.
To the extent our subsidiaries must comply with these regulations, they may not have the financial flexibility to transfer funds to us. Based upon current statutes and regulations, the minimum capital and surplus requirement for these subsidiaries was estimated to be approximately $2.3 billion at both December 31, 2023 and December 31, 2022.
To the extent our subsidiaries must comply with these regulations, they may not have the financial flexibility to transfer funds to us. Based upon current statutes and regulations, the minimum capital and surplus requirement for these subsidiaries was estimated to be approximately $2.6 billion at December 31, 2024 and $2.3 billion at December 31, 2023.
This provision is reported as part of “Components of medical care costs related to: Current year” in the table presented in Note 10, “Medical Claims and Benefits Payable.” Adverse conditions are situations that may cause actual claims to be higher than the otherwise estimated value of such claims at the time of the estimate, such as changes in the magnitude or severity of claims, uncertainties related to our entry into new geographical markets or provision of services to new populations, changes in state-controlled fee schedules, and modifications or upgrades to our claims processing systems and practices.
This provision is reported as part of “Components of medical care costs related to: Current year” in the table presented in Note 10, “Medical Claims and Benefits Payable.” Adverse conditions are situations that may cause actual claims to be higher than the otherwise estimated value of such claims at the time of the estimate, such as changes in the magnitude or severity of claims, uncertainties related to our entry into new geographical markets or provision of Molina Healthcare, Inc. 2024 Form 10-K | 49 services to new populations, changes in state-controlled fee schedules, and modifications or upgrades to our claims processing systems and practices.
The aggregate capital and surplus of our wholly owned subsidiaries was in excess of these minimum capital requirements as of both dates. Under applicable regulatory requirements, the amount of dividends that may be paid by our wholly owned subsidiaries without prior approval by regulatory authorities as of December 31, 2023, was approximately $380 million in the aggregate.
The aggregate capital and surplus of our wholly owned subsidiaries was in excess of these minimum capital requirements as of both dates. Under applicable regulatory requirements, the amount of dividends that may be paid by our wholly owned subsidiaries without prior approval by regulatory authorities as of December 31, 2024, was approximately $400 million in the aggregate.
Growth Initiatives In addition to delivering strong 2023 financial results, we continued to execute on our profitable growth strategy.
Growth Initiatives In addition to delivering strong 2024 financial results, we continued to execute on our profitable growth strategy.
In addition, the Credit Agreement provides for a $15 million swingline sub-facility and a $100 million letter of credit sub-facility, as well as incremental term loans available to finance certain acquisitions up to $500 million, plus an unlimited amount of such term loans as long as we maintain a minimum consolidated net leverage ratio.
The Credit Agreement also provides for a $15 million swingline sub-facility and a $100 million letter of credit sub-facility, as well as incremental term loans available to finance certain acquisitions up to $800 million, plus an unlimited amount of such term loans as long as we maintain a minimum consolidated net leverage ratio.
The Medicare MCR for the year ended December 31, 2023 is above our long-term target range.
The Medicare MCR for the year ended December 31, 2024 is above our long-term target range.
HOW WE ASSESS PERFORMANCE We derive our revenues primarily from health insurance premiums. Our primary customers are state Medicaid agencies and the federal government. The key metrics used to assess the performance of our Medicaid, Medicare, and Marketplace segments are premium revenue, medical margin and medical care ratio (“MCR”).
Business,” for further description of our segments. HOW WE ASSESS PERFORMANCE We derive our revenues primarily from health insurance premiums. Our primary customers are state Medicaid agencies and the federal government. The key metrics used to assess the performance of our Medicaid, Medicare, and Marketplace segments are premium revenue, medical margin and medical care ratio (“MCR”).
For example, government payors may delay our premium payments, or they may prepay the following month’s premium payment. Net cash provided by operations was $1,662 million in 2023, compared with $773 million in 2022.
For example, government payors may delay our premium payments, or they may prepay the following month’s premium payment. Net cash provided by operations was $644 million in 2024, compared with $1,662 million in 2023.
We have the ability, and have committed to provide, additional capital to each of our health plans as necessary to ensure compliance with minimum statutory capital requirements. The Molina Healthcare Charitable Foundation. In 2020, we announced our commitment of $150 million to fund The Molina Healthcare Charitable Foundation (the “Foundation”), an independent not-for-profit charitable foundation.
We have the ability, and have committed to provide, additional capital to each of our health plans as necessary to ensure compliance with minimum statutory capital requirements. The Molina Healthcare Charitable Foundation. In 2020, we announced our formation of The Molina Healthcare Charitable Foundation (the “Foundation”), an independent not-for-profit charitable foundation.
(Decrease) Increase in Trended Per Member Per Month Cost Estimates (Decrease) Increase in Medical Claims and Benefits Payable (6)% $ (342) (4)% (228) (2)% (114) 2% 114 4% 228 6% 342 There are many related factors working in conjunction with one another that determine the accuracy of our estimates, some of which are qualitative in nature rather than quantitative.
(Decrease) Increase in Trended Per Member Per Month Cost Estimates (Decrease) Increase in Medical Claims and Benefits Payable (6)% $ (394) (4)% (262) (2)% (131) 2% 131 4% 262 6% 394 There are many related factors working in conjunction with one another that determine the accuracy of our estimates, some of which are qualitative in nature rather than quantitative.
Molina Healthcare, Inc. 2023 Form 10-K | 42 Parent company liquidity requirements generally consist of payment of administrative costs not directly incurred by our regulated operations, including, but not limited to, staffing costs, lease payments, branding and certain information technology services; capital contributions paid to our regulated health plan subsidiaries, including funding for newer health plans; capital expenditures; debt service; funding for common stock purchases, acquisitions and other growth-related activities; and federal tax payments.
Parent company liquidity requirements generally consist of payment of administrative costs not directly incurred by our regulated operations, including, but not limited to, staffing costs, lease payments, branding and certain information technology services; capital contributions paid to our regulated health plan subsidiaries, including funding for newer health plans; capital expenditures; debt service; funding for common stock purchases, acquisitions and other growth-related activities; and federal tax payments.
This new program supersedes the stock purchase program previously approved by our board of directors in November 2022 and extends through December 31, 2024. As debt held by the parent company comes due, we typically engage in a new private offering of debt to retire and replace the prior issuance.
This new program supersedes the stock purchase program previously approved by our board of directors in September 2023 and extends through December 31, 2025. As debt held by the parent company comes due, we typically engage in a new private offering of debt to retire and replace the prior issuance.
FINANCIAL CONDITION We believe that our cash resources, borrowing capacity available under our Credit Agreement as discussed further below in “Future Sources and Uses of Liquidity—Future Sources,” and internally generated funds will be sufficient to support our operations, regulatory requirements, debt repayment obligations and capital expenditures for at least the next 12 months.
Molina Healthcare, Inc. 2024 Form 10-K | 45 FINANCIAL CONDITION We believe that our cash resources, borrowing capacity available under our Credit Agreement as discussed further below in “Future Sources and Uses of Liquidity—Future Sources,” and internally generated funds will be sufficient to support our operations, regulatory requirements, debt repayment obligations and capital expenditures for at least the next 12 months.
On a consolidated basis, as of December 31, 2023, our working capital was $4.4 billion compared with $3.2 billion as of December 31, 2022. At December 31, 2023, our cash and investments amounted to $9.4 billion, compared with $7.7 billion of cash and investments at December 31, 2022.
On a consolidated basis, as of December 31, 2024, our working capital was $4.9 billion compared with $4.4 billion as of December 31, 2023. At December 31, 2024, our cash and investments amounted to $9.3 billion, compared with $9.4 billion of cash and investments at December 31, 2023.
Other relevant factors also include, but are not limited to, healthcare service utilization trends, claim inventory levels, changes in Molina Healthcare, Inc. 2023 Form 10-K | 47 membership, product mix, seasonality, benefit changes or changes in fee schedules, provider contract changes, prior authorizations and the incidence of catastrophic or pandemic cases.
Other relevant factors also include, but are not limited to, healthcare service utilization trends, claim inventory levels, changes in membership, product mix, seasonality, benefit changes or changes in fee schedules, provider contract changes, prior authorizations and the incidence of catastrophic or pandemic cases.
As a result, we do not expect to be able to fully quantify the impact of individual factors on changes in estimates. RECENTLY ISSUED ACCOUNTING STANDARDS Refer to the Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies,” for a discussion of recent accounting pronouncements that affect us.
As a result, we do not expect to be able to fully quantify the impact of individual factors on changes in estimates. RECENTLY ISSUED ACCOUNTING STANDARDS Refer to the Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies,” for a discussion of recent accounting pronouncements that affect us. Molina Healthcare, Inc. 2024 Form 10-K | 50
(2) G&A ratio represents general and administrative expenses as a percentage of total revenue. (3) After-tax margin represents net income as a percentage of total revenue. CONSOLIDATED RESULTS NET INCOME AND OPERATING INCOME Net income amounted to $1,091 million, or $18.77 per diluted share in 2023, compared with net income of $792 million, or $13.55 per diluted share, in 2022.
(2) G&A ratio represents general and administrative expenses as a percentage of total revenue. (3) After-tax margin represents net income as a percentage of total revenue. CONSOLIDATED RESULTS NET INCOME AND OPERATING INCOME Net income amounted to $1,179 million, or $20.42 per diluted share in 2024, compared with net income of $1,091 million, or $18.77 per diluted share, in 2023.
The subsidiaries may pay dividends over this amount, but only after approval is granted by the regulatory authorities. Molina Healthcare, Inc. 2023 Form 10-K | 44 Based on our cash and investments balances as of December 31, 2023, management believes that our regulated wholly owned subsidiaries remain well capitalized and exceed their regulatory minimum requirements.
The subsidiaries may pay dividends over this amount, but only after approval is granted by the regulatory authorities. Based on our cash and investments balances as of December 31, 2024, management believes that our regulated wholly owned subsidiaries remain well capitalized and exceed their regulatory minimum requirements.
Cash, cash equivalents and investments at the parent company amounted to $742 million and $375 million as of December 31, 2023, and 2022, respectively.
Cash, cash equivalents and investments at the parent company amounted to $445 million and $742 million as of December 31, 2024, and 2023, respectively.
The parent company contributed capital of $221 million and $159 million in 2023 and 2022, respectively, to our regulated health plan subsidiaries to satisfy statutory capital and surplus requirements. The higher contributions in 2023 were mainly attributed to fund growth in our Wisconsin and Iowa health plans.
The parent company contributed capital of $490 million and $221 million in 2024 and 2023, respectively, to our regulated health plan subsidiaries to satisfy statutory capital and surplus requirements. The higher contributions in 2024 were mainly attributed to fund our California, Iowa, Nebraska, and Wisconsin health plans.
Premium revenue is our primary source of liquidity. Thus, any decline in the receipt of premium revenue, and our profitability, could have a negative impact on our liquidity. Regulatory Developments .
Premium revenue is our primary source of liquidity. Thus, any decline in the receipt of premium revenue, and our profitability, could have a negative impact on our liquidity. Dividends from Subsidiaries.
We have the ability, and have committed to provide, additional capital to each of our health plans as necessary to ensure compliance with minimum statutory capital and surplus requirements. Capital Structure In September 2023, our board of directors authorized the purchase of up to $750 million of our common stock.
We have the ability, and have committed to provide, additional capital to each of our health plans as necessary to ensure compliance with minimum statutory capital and surplus requirements. Capital Structure In October 2024, our board of directors authorized the purchase of up to $1 billion of our common stock.
For more information on our regulatory capital requirements and dividend restrictions, refer to Notes to Consolidated Financial Statements, Note 15, “Commitments and Contingencies—Regulatory Capital Requirements and Dividend Restrictions,” and Note 17, “Condensed Financial Information of Registrant—Note C - Dividends and Capital Contributions.” Molina Healthcare, Inc. 2023 Form 10-K | 45 Credit Agreement Borrowing Capacity.
For more information on our regulatory capital requirements and dividend restrictions, refer to Notes to Consolidated Financial Statements, Note 15, “Commitments and Contingencies—Regulatory Capital Requirements and Dividend Restrictions,” and Note 17, “Condensed Financial Information of Registrant—Note C - Dividends and Capital Contributions.” Credit Agreement Borrowing Capacity.
The regulated health plan subsidiaries paid dividends to the parent company amounting to $705 million in 2023 and $668 million in 2022.
The regulated health plan subsidiaries paid dividends to the parent company amounting to $997 million in 2024 and $705 million in 2023.
Actual results could differ from these estimates, and some differences could be material. Our most significant accounting estimates, which include a higher degree of judgment and/or complexity, include the following: Molina Healthcare, Inc. 2023 Form 10-K | 46 • Medical costs, claims and benefits payable.
Actual results could differ from these estimates, and some differences could be material. Our most significant accounting estimates, which include a higher degree of judgment and/or complexity, include the following: • Medical costs, claims and benefits payable.
Marketplace Key factors affecting results for this segment include: • Execution of our product and pricing strategy, which resulted in an overall reduction in membership, repositioning in the metallic tier membership mix, and returning the business to target margins; and • Achievement of member risk scores and associated risk-adjusted premium that are commensurate with the health status, or acuity, of our Marketplace members.
Marketplace Key factors affecting results for this segment include: • Execution of our product and pricing strategy, to achieve growth and repositioning in the metallic tier membership mix, while maintaining target margins; and • Achievement of member risk scores and associated risk-adjusted premium that are commensurate with the health status, or acuity, of our Marketplace members.
Our investment policies are designed to provide liquidity, preserve capital, and maximize total return on invested assets, all in a manner consistent with state requirements that prescribe the types of instruments in which our subsidiaries may invest.
These investments are made pursuant to board-approved investment policies which conform to applicable state laws and regulations. Our investment policies are designed to provide liquidity, preserve capital, and maximize total return on invested assets, all in a manner consistent with state requirements that prescribe the types of instruments in which our subsidiaries may invest.
This new program supersedes the stock purchase program previously approved by our board of directors in November 2022 and extends through December 31, 2024.
This new program extends through December 31, 2025 and supersedes the stock purchase program previously approved by our board of directors in September 2023.
The Medicaid, Medicare, and Marketplace segments represent the government-funded or sponsored programs under which we offer managed healthcare services. The Other segment, which is insignificant to our consolidated results of operations, includes long-term services and supports consultative services in Wisconsin. See "Item 1. Business,” for further description of our segments.
We currently have reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other. The Medicaid, Medicare, and Marketplace segments represent the government-funded or sponsored programs under which we offer managed healthcare services. The Other segment, which is insignificant to our consolidated results of operations, includes long-term services and supports consultative services in Wisconsin. See "Item 1.
INCOME TAXES Income tax expense amounted to $373 million in 2023, or 25.5% of pretax income, compared with income tax expense of $271 million in 2022, or 25.5% of the pretax income.
INCOME TAXES Income tax expense amounted to $410 million in 2024, or 25.8% of pretax income, compared with income tax expense of $373 million in 2023, or 25.5% of pretax income.
A downgrade in our ratings could adversely affect our borrowing capacity and increase our borrowing costs. Financial Covenants The Credit Agreement contains customary non-financial and financial covenants, including a net leverage ratio and an interest coverage ratio. Such ratios are computed as defined by the terms of the Credit Agreement.
Financial Covenants Our Credit Agreement contains customary non-financial and financial covenants, including a net leverage ratio and an interest coverage ratio. Such ratios are computed as defined by the terms of the Credit Agreement.
We served approximately 5.0 million members as of December 31, 2023, located across 20 states. 2023 HIGHLIGHTS Highlights of our full-year 2023 results included the following: • Net income of $1,091 million, or $18.77 per diluted share, compared to $792 million, or $13.55 per diluted share in 2022; • Membership of 5.0 million at December 31, 2023, mainly reflects the impact of our growth initiatives, which partially offset the impact of Medicaid redeterminations; • Total revenue of $34.1 billion, which increased 7% compared to 2022; • Premium revenue of $32.5 billion, which increased 5% compared to 2022; • Consolidated medical care ratio (“MCR”) of 88.1%, compared to 88.0% in 2022; • General and administrative expense ratio (“G&A ratio”) of 7.2%, equal to 7.2% in 2022; • Investment income of $394 million, which more than doubled compared to 2022; and • After-tax margin of 3.2%, which improved compared to 2.5% in 2022.
We served approximately 5.5 million members as of December 31, 2024, located across 21 states. 2024 HIGHLIGHTS Highlights of our full-year 2024 results included the following: • Net income of $1,179 million, or $20.42 per diluted share, compared to $1,091 million, or $18.77 per diluted share in 2023; • Membership of 5.5 million at December 31, 2024, mainly reflecting the impact of our growth initiatives, which partially offset the impact of Medicaid redeterminations; • Total revenue of $40.7 billion, which increased 19% compared to 2023; • Premium revenue of $38.6 billion, which increased 19% compared to 2023; • Consolidated medical care ratio (“MCR”) of 89.1%, compared to 88.1% in 2023; • General and administrative expense ratio (“G&A ratio”) of 6.7%, which decreased from 7.2% in 2023; • Investment income of $452 million, which increased 5% compared to 2023; and • After-tax margin of 2.9%, compared to 3.2% in 2023.
Increase (Decrease) in Estimated Completion Factors Increase (Decrease) in Medical Claims and Benefits Payable (6)% $ 982 (4)% 654 (2)% 327 2% (327) 4% (654) 6% (982) Molina Healthcare, Inc. 2023 Form 10-K | 48 The following table reflects the hypothetical change in our estimate of claims liability as of December 31, 2023 that would result if we alter our assumed medical care cost trend factors by the percentages indicated.
Increase (Decrease) in Estimated Completion Factors Increase (Decrease) in Medical Claims and Benefits Payable (6)% $ 1,139 (4)% 759 (2)% 380 2% (380) 4% (759) 6% (1,139) The following table reflects the hypothetical change in our estimate of claims liability as of December 31, 2024 that would result if we alter our assumed medical care cost trend factors by the percentages indicated.
Cash Flow Activities Our cash flows are summarized as follows: Year Ended December 31, 2023 2022 Change (In millions) Net cash provided by operating activities $ 1,662 $ 773 $ 889 Net cash used in investing activities (744) (790) 46 Net cash used in financing activities (58) (441) 383 Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents $ 860 $ (458) $ 1,318 Molina Healthcare, Inc. 2023 Form 10-K | 43 Operating Activities We typically receive capitation payments monthly, in advance of payments for medical claims; however, government payors may adjust their payment schedules, positively or negatively impacting our reported cash flows from operating activities in any given period.
Cash Flow Activities Our cash flows are summarized as follows: Year Ended December 31, 2024 2023 Change (In millions) Net cash provided by operating activities $ 644 $ 1,662 $ (1,018) Net cash used in investing activities (464) (744) 280 Net cash used in financing activities (347) (58) (289) Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents $ (167) $ 860 $ (1,027) Operating Activities We typically receive capitation payments monthly, in advance of payments for medical claims; however, government payors may adjust their payment schedules, positively or negatively impacting our reported cash flows from operating activities in any given period.
Our 2023 Marketplace MCR was well below our long-term target range. Other The Other segment includes service revenues and costs associated with the long-term services and supports consultative services we provide in Wisconsin, and also includes certain corporate amounts not allocated to the Medicaid, Medicare, or Marketplace segments.
Other The Other segment includes service revenues and costs associated with the long-term services and supports consultative services we provide in Wisconsin, and also includes certain corporate amounts not allocated to the Medicaid, Medicare, or Marketplace segments. Such amounts were immaterial to our consolidated results of operations for 2024 and 2023.
Business—Our Business,” “—Trends and Uncertainties,” “—Legislative and Political Environment,” “—Operations—Medical Management,” and “—Regulation.” SEGMENT FINANCIAL PERFORMANCE The following table summarizes our membership by segment as of the dates indicated: As of December 31, 2023 2022 Medicaid 4,542,000 4,754,000 Medicare 172,000 156,000 Marketplace 281,000 348,000 Total 4,995,000 5,258,000 Molina Healthcare, Inc. 2023 Form 10-K | 40 The tables below summarize premium revenue, medical margin, and MCR by segment for the periods indicated (dollars in millions): Year Ended December 31, 2023 2022 Premium Revenue Medical Margin MCR Premium Revenue Medical Margin MCR Medicaid $ 26,327 $ 2,973 88.7 % $ 24,827 $ 2,981 88.0 % Medicare 4,179 388 90.7 3,795 437 88.5 Marketplace 2,023 499 75.3 2,261 290 87.2 Total $ 32,529 $ 3,860 88.1 % $ 30,883 $ 3,708 88.0 % Medicaid Key factors affecting results for this segment include: • Our growth initiatives, including acquisitions and expansion into new states, drove an increase in member months during the year, despite the impact of redeterminations, and changes in membership mix; • Impact of redetermination, including the loss of approximately 500,000 members, and a moderate impact from the effect of acuity shifts, net of the beneficial impact of risk corridors; and • Improved operating performance, including medical cost management, and prospective and retrospective rates.
Business—Our Business,” “—Trends and Uncertainties,” “—Legislative and Political Environment,” “—Operations—Medical Management,” and “—Regulation.” SEGMENT FINANCIAL PERFORMANCE The following table summarizes our membership by segment as of the dates indicated: As of December 31, 2024 2023 Medicaid 4,890,000 4,542,000 Medicare 242,000 172,000 Marketplace 403,000 281,000 Total 5,535,000 4,995,000 The tables below summarize premium revenue, medical margin, and MCR by segment for the periods indicated (dollars in millions): Year Ended December 31, 2024 2023 Premium Revenue Medical Margin MCR Premium Revenue Medical Margin MCR Medicaid $ 30,579 $ 2,979 90.3 % $ 26,327 $ 2,973 88.7 % Medicare 5,542 603 89.1 4,179 388 90.7 Marketplace 2,506 617 75.4 2,023 499 75.3 Total $ 38,627 $ 4,199 89.1 % $ 32,529 $ 3,860 88.1 % Molina Healthcare, Inc. 2024 Form 10-K | 42 Medicaid Key factors affecting results for this segment include: • Our growth initiatives, including acquisitions and expansion into new states, drove an increase in member months during the year, despite the impact of redeterminations, and changes in membership mix; • Impact of redetermination, including the loss of approximately 675,000 members, and a moderate impact from the effect of acuity shifts, net of the beneficial impact of risk corridors; and • Continued focus on managing medical costs amid higher-than-expected utilization, particularly in LTSS, pharmacy and behavioral health services.
REPORTABLE SEGMENTS As of December 31, 2023, we served approximately 5.0 million members eligible for Medicaid, Medicare, and other government-sponsored healthcare programs for low-income families and individuals, including Marketplace members, most of whom receive government premium subsidies. We currently have reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other.
Molina Healthcare, Inc. 2024 Form 10-K | 41 REPORTABLE SEGMENTS As of December 31, 2024, we served approximately 5.5 million members eligible for Medicaid, Medicare, and other government-sponsored healthcare programs for low-income families and individuals, including Marketplace members, most of whom receive government premium subsidies.
PREMIUM TAX REVENUE AND EXPENSES The premium tax ratio increased to 3.2% in 2023, compared with 2.7% in 2022, due mainly to the reinstatement of the California managed care organization (“MCO”) tax by the state’s Department of Health Care Services in the fourth quarter of 2023, on a retroactive basis effective April 1, 2023.
PREMIUM TAX REVENUE AND EXPENSES The premium tax ratio increased to 3.7% in 2024, compared with 3.2% in 2023, due mainly to the reinstatement of the California MCO tax by the state’s Department of Health Care Services effective April 1, 2023, and changes in business mix.
Molina Healthcare, Inc. 2023 Form 10-K | 37 FINANCIAL RESULTS SUMMARY Year Ended December 31, 2023 2022 (In millions, except per-share amounts) Premium revenue $ 32,529 $ 30,883 Less: medical care costs 28,669 27,175 Medical margin 3,860 3,708 MCR (1) 88.1 % 88.0 % Other revenues: Premium tax revenue 1,069 873 Investment income 394 143 Other revenue 80 75 General and administrative expenses 2,462 2,311 G&A ratio (2) 7.2 % 7.2 % Premium tax expenses 1,069 873 Depreciation and amortization 171 176 Impairment — 208 Other 128 58 Operating income 1,573 1,173 Interest expense 109 110 Income before income tax expense 1,464 1,063 Income tax expense 373 271 Net income $ 1,091 $ 792 Net income per diluted share $ 18.77 $ 13.55 Diluted weighted average shares outstanding 58.1 58.5 Other Key Statistics: Ending Membership 5.0 5.3 Effective income tax rate 25.5 % 25.5 % After-tax margin (3) 3.2 % 2.5 % __________________ (1) MCR represents medical care costs as a percentage of premium revenue.
Molina Healthcare, Inc. 2024 Form 10-K | 39 FINANCIAL RESULTS SUMMARY Year Ended December 31, 2024 2023 (In millions, except per-share amounts) Premium revenue $ 38,627 $ 32,529 Less: medical care costs 34,428 28,669 Medical margin 4,199 3,860 MCR (1) 89.1 % 88.1 % Other revenues: Premium tax revenue 1,486 1,069 Investment income 452 394 Other revenue 85 80 General and administrative expenses 2,743 2,462 G&A ratio (2) 6.7 % 7.2 % Premium tax expenses 1,486 1,069 Depreciation and amortization 186 171 Other 100 128 Operating income 1,707 1,573 Interest expense 118 109 Income before income tax expense 1,589 1,464 Income tax expense 410 373 Net income $ 1,179 $ 1,091 Net income per diluted share $ 20.42 $ 18.77 Diluted weighted average shares outstanding 57.7 58.1 Other Key Statistics: Ending Membership 5.5 5.0 Effective income tax rate 25.8 % 25.5 % After-tax margin (3) 2.9 % 3.2 % __________________ (1) MCR represents medical care costs as a percentage of premium revenue.
The following table illustrates consolidated medical care costs by type for the periods indicated: Year Ended December 31, 2023 2022 Amount PMPM % of Total Amount PMPM % of Total (In millions, except PMPM amounts) Fee-for-service $ 21,415 $ 342.25 74.7 % $ 19,703 $ 318.55 72.5 % Pharmacy 3,987 63.72 13.9 4,346 70.26 16.0 Capitation 1,651 26.39 5.8 1,637 26.47 6.0 Other 1,616 25.84 5.6 1,489 24.07 5.5 Total $ 28,669 $ 458.20 100.0 % $ 27,175 $ 439.35 100.0 % Medical claims and benefits payable consist mainly of fee-for-service IBNP, unpaid pharmacy claims, capitation costs, other medical costs, including amounts payable to providers pursuant to risk-sharing or other incentive arrangements and amounts payable to providers on behalf of certain state agencies for certain state assessments in which we assume no financial risk.
Molina Healthcare, Inc. 2024 Form 10-K | 48 The following table illustrates consolidated medical care costs by type for the periods indicated: Year Ended December 31, 2024 2023 Amount % of Total Amount % of Total (In millions) Fee-for-service $ 25,386 73.7 % $ 21,415 74.7 % Pharmacy 4,331 12.6 3,987 13.9 Capitation 3,048 8.9 1,651 5.8 Other 1,663 4.8 1,616 5.6 Total $ 34,428 100.0 % $ 28,669 100.0 % Medical claims and benefits payable consist mainly of fee-for-service IBNP, unpaid pharmacy claims, capitation costs, other medical costs, including amounts payable to providers pursuant to risk-sharing or other incentive arrangements, and amounts payable to providers on behalf of certain state agencies for certain state assessments in which we assume no financial risk.
We have contributed $20 million to the Foundation on a cumulative basis as of December 31, 2023.
We have contributed Molina Healthcare, Inc. 2024 Form 10-K | 47 $20 million to the Foundation on a cumulative basis as of December 31, 2024.
In the first three years of its existence, our Charitable Foundation funded nearly 700 grants to local community organizations in 25 states that address social determinants of health, disaster relief, mental health, maternal child health and other health-related concerns afflicting our communities in need. Contractual Obligations.
Since 2021, the Molina Healthcare Charitable Foundation has funded over 800 grants to local community organizations in 27 states that address social determinants of health, disaster relief, behavioral health, maternal child health, and other health-related concerns that our afflicting our communities in need. Contractual Obligations.
In addition to organic growth, we will consider targeted acquisitions that are a strategic fit that we believe will leverage operational synergies, and lead to incremental earnings accretion.
Organic growth, which includes leveraging our existing health plan portfolio and winning new territories, is our highest priority. In addition to organic growth, we will consider targeted acquisitions that are a strategic fit that we believe will leverage operational synergies, and lead to incremental earnings accretion.
Investments After considering expected cash flows from operating activities, we generally invest cash of regulated subsidiaries that exceeds our expected short-term obligations in longer term, investment-grade, and marketable debt securities to improve our overall investment return. These investments are made pursuant to board-approved investment policies which conform to applicable state laws and regulations.
Molina Healthcare, Inc. 2024 Form 10-K | 44 Investments After considering expected cash flows from operating activities, we generally invest cash of regulated subsidiaries that exceeds our expected short-term obligations in longer term, investment-grade, and marketable debt securities to improve our overall investment return.
For several years we saw a continued decline in interest rates, which benefited our overall cost of capital during that time. However, interest rates have increased since we issued our 3.875% Notes due 2032 in 2021. Accordingly, future refinancing may occur at a higher rate than those we have achieved historically.
For several years we saw a continued decline in interest rates, which benefited our overall cost of capital during that time. However, interest rates have increased since we issued our 3.875% Notes due 2032 in 2021, as we experienced with our most recent issuance of our 6.250% Notes in 2024.
Prior year reserve development has been favorable for 2023, but its impact on earnings has been mostly absorbed by minimum MLRs and medical cost corridors.
See further discussion in “Reportable Segments—Segment Financial Performance,” below. Prior year reserve development has been favorable in 2024, but its impact on earnings has been mostly absorbed by minimum MLRs and medical cost corridors.
For further information on our acquisitions, refer to the Notes to Consolidated Financial Statements, Note 4, “Business Combinations.” On January 1, 2024, we closed on our acquisition of 100% of the issued and outstanding capital stock of Brand New Day and Central Health Plan of California for $441 million. Regulatory Capital Requirements and Dividend Restrictions.
For further information on our acquisitions, refer to the Notes to Consolidated Financial Statements, Note 4, “Business Combinations.” Connecticut Acquisition—Marketplace and Medicare. Effective February 1, 2025, we closed on our acquisition of 100% of the issued and outstanding capital stock of ConnectiCare Holding Company, Inc. The purchase price for the transaction was $350 million. Regulatory Capital Requirements and Dividend Restrictions.
See further discussion in the Notes to Consolidated Financial Statements, Note 11, “Debt.” Future Uses Common Stock Purchases. In September 2023, our board of directors authorized the purchase of up to $750 million of our common stock.
As of December 31, 2024, we had available borrowing capacity of $1.25 billion under the Credit Agreement. See further discussion in the Notes to Consolidated Financial Statements, Note 11, “Debt.” Future Uses Common Stock Purchases. In October 2024, our board of directors authorized the purchase of up to $1 billion of our common stock.
Collectively, these acquisitions and requests for proposal (“RFP”) successes represent $7 billion of annual premium, which was partially realized in 2023, is expected to be mostly realized in 2024 and is expected to be fully realized in 2025.
Collectively, newly reported RFP successes and acquisitions in 2024 represent nearly $7 billion of incremental annual premium revenue, which will be partially realized in 2025, is expected to be mostly realized in 2026 and is expected to be fully realized in 2027 and 2028.
The G&A ratio in 2023 reflects deployment costs for new business implementation associated with the Iowa Medicaid contract win that started in July 2023, and the Nebraska and California Medicaid contract wins that started in January 2024, and was partially offset by the benefits of scale produced by our growth and continued disciplined cost management.
The G&A ratio in 2024 reflects operating discipline, including labor cost management and vendor management, and the continued benefit of fixed cost leverage as we grow our business, partially offset by new business implementation costs associated with the Nebraska and California Medicaid contracts that started in January 2024 and the New Mexico Medicaid contract that started on July 1, 2024.
This would increase our cost of capital in the future or may cause us to pursue alternative financing sources, should the need arise. We are not a party to any off-balance sheet financing arrangements. Debt Ratings Each of our senior notes is rated “BB-” by Standard & Poor’s, and “Ba3” by Moody’s Investor Service, Inc.
Accordingly, future refinancing may occur at a higher rate than those we have achieved historically. This would increase our cost of capital in the future or may cause us to pursue alternative financing sources, should the need arise. We are not a party to any off-balance sheet financing arrangements.
Such amounts were immaterial to our consolidated results of operations for 2023 and 2022. LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES LIQUIDITY We manage our cash, investments, and capital structure to meet the short- and long-term obligations of our business while maintaining liquidity and financial flexibility.
LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES LIQUIDITY We manage our cash, investments, and capital structure to meet the short- and long-term obligations of our business while maintaining liquidity and financial flexibility. We forecast, analyze, and monitor our cash flows to enable prudent investment management and financing within the confines of our financial strategy.
Medicare premium revenue increased $384 million, or 10%, in 2023 compared to 2022. The increase was primarily due to the impact of MAPD and D-SNP membership expansion, including organic membership growth in existing states and the closing of My Choice Wisconsin on September 1, 2023. The medical margin for Medicare decreased $49 million in 2023 compared to 2022.
The increase was primarily due to the Bright Health Medicare acquisition that closed on January 1, 2024, the impact of MAPD and D-SNP membership expansion and organic membership growth in existing states, and increased premiums that are more commensurate with the acuity of our population. The medical margin for Medicare increased $215 million in 2024 compared to 2023.
We forecast, analyze, and monitor our cash flows to enable prudent investment management and financing within the confines of our financial strategy. We maintain liquidity at two levels: 1) the regulated health plan subsidiaries; and 2) the parent company.
We maintain liquidity at two levels: 1) the regulated health plan subsidiaries; and 2) the parent company.
The change in cash flow was primarily due to the net activity of proceeds and purchases of investments, which were net purchases of $661 million in 2023 and net purchases of $515 million in 2022. In 2023 and 2022, net cash outflow related to acquisitions was $3 million and $134 million, respectively.
The change in cash flow was primarily due to a $295 million net cash outflow related to the Bright Health Medicare acquisition in January 2024, and $49 million for final purchase consideration paid for the My Choice Wisconsin acquisition, offset by the net activity of proceeds and purchases of investments, which were net purchases of $21 million in 2024 and net purchases of $661 million in 2023.
In 2022, cash outflows included common stock purchases of $400 million and $54 million for common stock withheld to settle employee tax obligations. Additionally, we paid $20 million in 2022 to settle contingent consideration liabilities.
In 2024 and 2023, cash outflows included $57 million and $60 million, respectively, for common stock withheld to settle employee tax obligations.
Marketplace premium revenue decreased $238 million in 2023 compared to 2022. The decrease was mainly due to an expected decrease in membership in line with our product and pricing strategy, partially offset by an increase in premium revenue PMPM.
Marketplace premium revenue increased $483 million in 2024 compared to 2023. The increase was mainly due to an increase in membership.
The increase in 2023 was primarily due to the dividends received from our regulated health plan subsidiaries, partially offset by the timing of corporate payments, capital contributions to regulated health plan subsidiaries and net cash paid for acquisitions.
The decrease in 2024 was primarily due to funding of our Bright Health Medicare acquisition for $441 million and the purchase of approximately 3.1 million shares of our stock for $1.0 billion in the third and fourth quarter of 2024, partially offset by the $740 million net proceeds from issuing the new 6.250% Notes, net inflows from dividends received from and capital contributions made to our regulated health plan subsidiaries, and the timing of corporate payments.
Operating income was $1,573 million in 2023, compared with $1,173 million in 2022. The increase in operating income was mainly due to higher premium revenues and medical margin, increased investment income, and the impact of the real estate impairment recognized in 2022.
Operating income was $1,707 million in 2024, compared with $1,573 million in 2023. The increase in operating income was mainly due to the impact of increased premiums and medical margin stemming from our membership growth, improved G&A expense ratio, and increased investment income, partially offset by an increase in the consolidated MCR.
The increase was mainly driven by higher levels of invested assets and higher interest rates. OTHER REVENUE Other revenue increased slightly to $80 million in 2023, compared with $75 million in 2022. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.
Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin. GENERAL AND ADMINISTRATIVE (“G&A”) EXPENSES The G&A ratio was 6.7% in 2024, compared to 7.2% in 2023.
See further information in the Notes to Consolidated Financial Statements, Note 13, “Stockholders' Equity.” Acquisitions . We have a disciplined and steady approach to growth. Organic growth, which includes leveraging our existing health plan portfolio and winning new territories, is our highest priority.
As of February 11, 2025, $500 million remained available to purchase our common stock under this program through December 31, 2025. See further information in the Notes to Consolidated Financial Statements, Note 13, “Stockholders' Equity.” Acquisitions . We have a disciplined and steady approach to growth.
The Marketplace medical margin increased $209 million in 2023, primarily due to the decrease in MCR discussed below, partially offset by the decrease in membership and premiums. The Marketplace MCR decreased to 75.3% in 2023, compared to 87.2% in 2022, or 1,190 basis points.
The Marketplace medical margin increased $118 million in 2024, primarily due to the growth in premiums and margin associated with the higher membership and the impact of MCR changes discussed below. The Marketplace MCR was 75.4% in 2024 and 75.3% in 2023.
Financing Activities Net cash used in financing activities was $58 million in 2023, compared with $441 million in 2022, an increase in year-over-year cash flow of $383 million. In 2023, cash outflows included $60 million for common stock withheld to settle employee tax obligations.
Financing Activities Net cash used in financing activities was $347 million in 2024, compared with $58 million in 2023, a decrease in year-over-year cash flow of $289 million.
The year-over-year decrease was mainly due to the increase in MCR discussed below, partially offset by the increase in the premium revenues. The Medicare MCR increased to 90.7% in 2023, from 88.5% in 2022, or 220 basis points.
The increase was mainly due to the year-over-year growth in membership and premium revenues combined with the decrease in MCR discussed below.
The exact timing and amount of any repurchase is determined by management based on market conditions and share price, in addition to other factors, and subject to the restrictions relating to volume, price, and timing under applicable law. As of February 13, 2024, $750 million remained available to purchase our common stock under this program through December 31, 2024.
The exact timing and amount of any repurchase is determined by management based on market conditions and share price, in addition to other factors, and repurchases generally will be made in accordance with the volume, price, and timing parameters under Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
The $889 million increase in 2023 cash flow was due to the growth in operations and net earnings from organic and new RFP starts and acquisitions, accompanied by the net impact of timing differences in government receivables and payables. Investing Activities Net cash used in investing activities was $744 million in 2023, compared with $790 million in 2022.
The $1,018 million decrease in 2024 cash flow was due to timing differences in government receivables and payables, including the receipt of Medicare and Medicaid 2024 premium prepayments in the 2023 period, and increased risk corridor settlement activity in 2024. Investing Activities Net cash used in investing activities was $464 million in 2024, compared with $744 million in 2023.
Medicare Key factors affecting results for this segment include: • Increased utilization of supplemental benefits, in-home services, and high-cost drugs; • Our continued expansion in MAPD and D-SNP membership; and • The impact of lower risk-adjusted premiums associated with the new MAPD and D-SNP members, partially offset by higher risk scores on renewing members.
Medicare Key factors affecting results for this segment include: • Pricing and benefit design changes implemented in 2024; • Increased utilization of LTSS benefits, high-cost drugs, and outpatient services; and • The impact of risk-adjusted premiums that are more commensurate with the acuity of our membership. Medicare premium revenue increased $1.4 billion, or 33%, in 2024 compared to 2023.
The Medicaid MCR for the year ended December 31, 2023 is consistent with our long-term target range.
The increase was partially offset by minimum MLR and medical cost corridors, and medical cost management. Excluding new contracts and the My Choice acquisition, our legacy Medicaid MCR for the year ended December 31, 2024 is above our long-term target range.

… 46 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed2 unchanged
Biggest changeFor further information, see Notes to Consolidated Financial Statements, Note 11, “Debt.” Molina Healthcare, Inc. 2023 Form 10-K | 49
Biggest changeOur notes bear interest at specified rates, each payable semiannually in arrears. For further information, see Notes to Consolidated Financial Statements, Note 11, “Debt.” Molina Healthcare, Inc. 2024 Form 10-K | 51
Assuming a hypothetical and immediate 1% increase in market interest rates at December 31, 2023, the fair value of our fixed income investments would decrease by approximately $104 million. Declines in interest rates over time will reduce our investment income.
Assuming a hypothetical and immediate 1% increase in market interest rates at December 31, 2024, the fair value of our fixed income investments would decrease by approximately $112 million. Declines in interest rates over time will reduce our investment income.

Other MOH 10-K year-over-year comparisons