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MOLINA HEALTHCARE, INC. - Quarter Report: 2023 June (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number: 001-31719
molinalogo2016a26.jpg
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-4204626
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
200 Oceangate, Suite 100
 
Long Beach,California90802
(Address of principal executive offices) (Zip Code)
(562) 435-3666
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par Value MOHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer   Accelerated Filer Non-Accelerated Filer Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
The number of shares of the issuer’s Common Stock, $0.001 par value, outstanding as of July 21, 2023, was approximately 58,300,000.


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MOLINA HEALTHCARE, INC. FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

TABLE OF CONTENTS
ITEM NUMBERPage
PART I
1.
2.
3.
4.
PART II
1.
1A.
2.
3.Defaults Upon Senior SecuritiesNot Applicable.
4.Mine Safety DisclosuresNot Applicable.
5.
6.



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CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(Dollars in millions, except per-share amounts)
(Unaudited)
Revenue:
Premium revenue$8,042 $7,799 $15,927 $15,330 
Premium tax revenue169 215 341 423 
Investment income 97 22 168 33 
Other revenue19 18 40 38 
Total revenue8,327 8,054 16,476 15,824 
Operating expenses:
Medical care costs7,038 6,872 13,909 13,435 
General and administrative expenses618 551 1,209 1,122 
Premium tax expenses169 215 341 423 
Depreciation and amortization42 44 86 84 
Other17 11 33 27 
Total operating expenses7,884 7,693 15,578 15,091 
Operating income443 361 898 733 
Other expenses, net:
Interest expense27 27 55 55 
Total other expenses, net27 27 55 55 
Income before income tax expense416 334 843 678 
Income tax expense107 86 213 172 
Net income$309 $248 $630 $506 
Net income per share - Basic $5.37 $4.29 $10.95 $8.74 
Net income per share - Diluted $5.35 $4.25 $10.87 $8.63 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(In millions)
(Unaudited)
Net income$309 $248 $630 $506 
Other comprehensive (loss) gain:
Unrealized investment (loss) gain(29)(62)17 (162)
Less: effect of income taxes
(8)(15)(39)
Other comprehensive (loss) gain, net of tax (21)(47)14 (123)
Comprehensive income$288 $201 $644 $383 
See accompanying notes.
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CONSOLIDATED BALANCE SHEETS
June 30,
2023
December 31,
2022
(Dollars in millions,
except per-share amounts)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$4,910 $4,006 
Investments3,886 3,499 
Receivables2,385 2,302 
Prepaid expenses and other current assets260 277 
Total current assets11,441 10,084 
Property, equipment, and capitalized software, net285 259 
Goodwill, and intangible assets, net1,348 1,390 
Restricted investments249 238 
Deferred income taxes 220 220 
Other assets118 123 
Total assets$13,661 $12,314 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable$3,677 $3,528 
Amounts due government agencies 2,589 2,079 
Accounts payable, accrued liabilities and other857 889 
Deferred revenue414 359 
Total current liabilities7,537 6,855 
Long-term debt2,178 2,176 
Finance lease liabilities203 215 
Other long-term liabilities122 104 
Total liabilities10,040 9,350 
Stockholders’ equity:
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at June 30, 2023 and December 31, 2022
— — 
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding
— — 
Additional paid-in capital341 328 
Accumulated other comprehensive loss(146)(160)
Retained earnings3,426 2,796 
Total stockholders’ equity3,621 2,964 
Total liabilities and stockholders’ equity$13,661 $12,314 
See accompanying notes.
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive (Loss) Income
Retained
Earnings
Total
OutstandingAmount
(In millions)
(Unaudited)
Balance at December 31, 202258 $— $328 $(160)$2,796 $2,964 
Net income— — — — 321 321 
Other comprehensive income, net— — — 35 — 35 
Share-based compensation— — (32)— — (32)
Balance at March 31, 202358 — 296 (125)3,117 3,288 
Net income— — — — 309 309 
Other comprehensive loss, net— — — (21)— (21)
Share-based compensation— — 45 — — 45 
Balance at June 30, 202358 $— $341 $(146)$3,426 $3,621 

Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
OutstandingAmount
(In millions)
(Unaudited)
Balance at December 31, 202158 $— $236 $(5)$2,399 $2,630 
Net income— — — — 258 258 
Other comprehensive loss, net— — — (76)— (76)
Share-based compensation— (18)— — (18)
Balance at March 31, 202259 — 218 (81)2,657 2,794 
Net income— — — — 248 248 
Common stock purchases(1)— (2)— (198)(200)
Other comprehensive loss, net— — — (47)— (47)
Share-based compensation— — 35 — — 35 
Balance at June 30, 202258 $— $251 $(128)$2,707 $2,830 
See accompanying notes.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
 20232022
(In millions)
(Unaudited)
Operating activities:
Net income$630 $506 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization86 84 
Deferred income taxes(4)
Share-based compensation55 57 
Other, net(6)
Changes in operating assets and liabilities:
Receivables(83)(43)
Prepaid expenses and other current assets(64)
Medical claims and benefits payable149 405 
Amounts due government agencies 510 247 
Accounts payable, accrued liabilities and other(208)(147)
Deferred revenue55 (357)
Income taxes202 46 
Net cash provided by operating activities1,403 731 
Investing activities:
Purchases of investments(924)(1,413)
Proceeds from sales and maturities of investments546 879 
Purchases of property, equipment and capitalized software(63)(50)
Other, net(7)
Net cash used in investing activities(439)(591)
Financing activities:
Common stock withheld to settle employee tax obligations(59)(53)
Common stock purchases— (200)
Contingent consideration liabilities settled— (20)
Other, net
Net cash used in financing activities(55)(268)
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents909 (128)
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period4,048 4,506 
Cash, cash equivalents, and restricted cash and cash equivalents at end of period$4,957 $4,378 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2023

1. Organization and Basis of Presentation
Organization and Operations
Molina Healthcare, Inc. provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.
As of June 30, 2023, we served approximately 5.2 million members eligible for government-sponsored healthcare programs, located across 19 states.
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 requests for proposal (“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.
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); and populations such as the aged, blind or disabled (“ABD”); and regions or service areas.
In Medicare, we enter into Medicare Advantage-Part D contracts with the Centers for Medicare and Medicaid Services (“CMS”) annually, and for dual-eligible plans, 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.
In Marketplace, we enter into contracts with CMS, which end on December 31 of each year, and must be renewed annually.
Recent Developments
Iowa Procurement—Medicaid. Our new contract with the Iowa Department of Health and Human Services commenced on July 1, 2023, and offers health coverage to TANF, CHIP, ABD, LTSS and Medicaid Expansion beneficiaries. This new contract has a term of four years, with a potential for two two-year extensions.
Mississippi Procurement—Medicaid. In August 2022, we announced that our Mississippi health plan had been notified by the Mississippi Division of Medicaid (“DOM”) of its intent to award a Medicaid Coordinated Care Contract for its Mississippi Coordinated Access Program and Mississippi Children’s Health Insurance Program pursuant to the Request for Qualifications issued by DOM in December 2021. The four-year contract was expected to begin on July 1, 2023, but in the second quarter of 2023, DOM extended the existing contracts by an additional year. We now expect the four-year contract to commence July 1, 2024, and DOM has discretion to extend the new awards for an additional two years. The award enables us to continue serving Medicaid members across the state.
California Acquisition—Medicare. On June 30, 2023, we announced a definitive agreement to acquire 100% of the issued and outstanding capital stock of Brand New Day and Central Health Plan of California, each of which is a wholly owned subsidiary of Bright Health Company of California, Inc. The purchase price for the transaction is approximately $510 million, net of certain tax benefits, which we intend to fund with available funds including cash on hand. The transaction is subject to federal and state regulatory approvals, the solvency and continued operation as a going concern of Bright Health Group throughout the pre-closing period, and other closing conditions. We currently expect the transaction to close by the first quarter of 2024.
Indiana Procurement—Medicaid. In March 2023, we announced that the Indiana Department of Administration has recommended that contract negotiations begin with our Indiana health plan. Under the proposed contract with the Indiana Family and Social Services Administration (“FSSA”), we are expected to provide risk-based managed care long term services and supports as part of the Indiana Pathways for Aging LTSS program pursuant to the request for proposal issued by FSSA in February 2022. The new contract is expected to have an initial four-year term, with the potential for two, one-year renewal terms.
Wisconsin Acquisition—Medicaid and Medicare. On July 13, 2022, we announced a definitive agreement to acquire substantially all the assets of My Choice Wisconsin (“MCW”). The purchase price for the transaction is approximately $150 million, net of expected tax benefits and required regulatory capital, which we intend to fund
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with cash on hand. The transaction is subject to receipt of applicable federal and state regulatory approvals, and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the fourth quarter of 2023.
Consolidation and Interim Financial Information
The consolidated financial statements include the accounts of Molina Healthcare, Inc. and its subsidiaries. In the opinion of management, these financial statements reflect all normal recurring adjustments, which are considered necessary for a fair presentation of the results as of the dates and for the interim periods presented. All significant intercompany balances and transactions have been eliminated. The consolidated results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results for the entire year ending December 31, 2023.
The unaudited consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read or have access to our audited consolidated financial statements for the fiscal year ended December 31, 2022. Accordingly, certain disclosures that would substantially duplicate the disclosures contained in our December 31, 2022, audited consolidated financial statements have been omitted.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

2. Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term, highly liquid investments that are both readily convertible into known amounts of cash and have a maturity of three months or less on the date of purchase. The following table provides a reconciliation of cash and cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets.
June 30,
 20232022
(In millions)
Cash and cash equivalents$4,910 $4,312 
Restricted cash and cash equivalents47 66 
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows
$4,957 $4,378 
Receivables
Receivables consist primarily of premium amounts due from government agencies, which are subject to potential retroactive adjustments. Because substantially all of our receivable amounts are readily determinable and substantially all of our creditors are governmental authorities, our allowance for credit losses is insignificant. Any amounts determined to be uncollectible are charged to expense when such determination is made.
June 30,
2023
December 31,
2022
(In millions)
Government receivables$1,713 $1,702 
Pharmacy rebate receivables277 291 
Other395 309 
Total$2,385 $2,302 
Premium Revenue Recognition and Amounts Due Government Agencies
Premium revenue is generated from our contracts with state and federal agencies, in connection with our participation in the Medicaid, Medicare, and Marketplace programs. Premium revenue is generally received based on per member per month (“PMPM”) rates established in advance of the periods covered. These premium revenues
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are recognized in the month that members are entitled to receive healthcare services, and premiums collected in advance are deferred. State Medicaid programs and the federal Medicare program periodically adjust premium rates, including certain components of premium revenue that are subject to accounting estimates and are described below, and in our 2022 Annual Report on Form 10-K, Note 2, “Significant Accounting Policies,” under “Contractual Provisions That May Adjust or Limit Revenue or Profit,” and “Quality Incentives.”
Contractual Provisions That May Adjust or Limit Revenue or Profit
Many of our contracts contain provisions that may adjust or limit revenue or profit, as described below. Consequently, we recognize premium revenue as it is earned under such provisions. Liabilities accrued for premiums to be returned under such provisions are reported in the aggregate as “Amounts due government agencies,” in the accompanying consolidated balance sheets. Categorized by program, such amounts due government agencies included the following:
June 30,
2023
December 31,
2022
(In millions)
Medicaid program:
Minimum MLR, corridors, and profit sharing$1,381 $1,145 
Other premium adjustments682 482 
Medicare program:
Minimum MLR and profit sharing 85 84 
Risk adjustment and Part D risk sharing65 76 
Other premium adjustments26 27 
Marketplace program:
Risk adjustment312 230 
Minimum MLR
Other premium adjustments36 33 
Total amounts due government agencies$2,589 $2,079 
Medicaid Program
Minimum MLR and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs as a percentage of premium revenue, or minimum medical loss ratio (“Minimum MLR”). Under certain medical cost corridor provisions, the health plans may refund premiums or receive additional premiums, depending on whether amounts spent on medical care costs fall below or exceed defined thresholds. This includes remaining risk corridors that were enacted by various states in 2020 in response to the reduced demand for medical services stemming from COVID-19.
Profit Sharing. Our contracts with certain states contain profit sharing provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any.
Other Premium Adjustments. State Medicaid programs periodically adjust premium revenues on a retroactive basis for rate changes and changes in membership and eligibility data. In certain states, adjustments are made based on the health status of our members (as measured through a risk score). In these cases, we adjust our premium revenue in the period in which we determine that the adjustment is probable and reasonably estimable, based on our best estimate of the ultimate premium we expect to realize for the period being adjusted.
Marketplace Program
Risk Adjustment. Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score for all plan participants in a state (risk adjustment payable), and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score for all plan participants in a state (risk adjustment receivable). Under CMS rules, the Marketplace risk adjustment pool in each state is budget neutral. We estimate our ultimate premium based on insurance policy year-to-date experience, and the data submitted and expected to be submitted to CMS, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of income. As of June 30, 2023, Marketplace risk adjustment estimated payables
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amounted to $312 million and estimated receivables amounted to $249 million, for a net payable of $63 million. As of December 31, 2022, Marketplace risk adjustment estimated payables amounted to $230 million and estimated receivables amounted to $135 million, for a net payable of $95 million.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, receivables, and restricted investments. Our investments and a portion of our cash equivalents are managed by professional portfolio managers operating under documented investment guidelines. Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. Our investments consist primarily of investment-grade debt securities with final maturities of less than 15 years, or less than 15 years average life for structured securities. Restricted investments are invested principally in cash, cash equivalents, U.S. Treasury securities, and corporate debt securities. Concentration of credit risk with respect to accounts receivable is limited because our payors consist principally of the federal government, and governments of each state in which our health plan subsidiaries operate.
Income Taxes
The provision for income taxes is determined using an estimated annual effective tax rate, which generally differs from the U.S. federal statutory rate primarily because of foreign and state taxes, and nondeductible expenses such as certain compensation and other general and administrative expenses.
The effective tax rate may be subject to fluctuations during the year as new information is obtained. Such information may affect the assumptions used to estimate the annual effective tax rate, including projected pretax earnings, the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or the reversal of the recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where we conduct business. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, along with net operating loss and tax credit carryovers.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not have, nor does management expect such pronouncements to have, a significant impact on our present or future consolidated financial statements.

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3. Net Income Per Share
The following table sets forth the calculation of basic and diluted net income per share:
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
 (In millions, except net income per share)
Numerator:
Net income$309 $248 $630 $506 
Denominator:
Shares outstanding at the beginning of the period57.7 58.1 57.4 57.9 
Weighted-average number of shares issued:
Stock-based compensation— — 0.2 0.2 
Stock purchases— (0.3)— (0.2)
Denominator for basic net income per share57.7 57.8 57.6 57.9 
Effect of dilutive securities: (1)
Stock-based compensation0.2 0.6 0.4 0.7 
Denominator for diluted net income per share57.9 58.4 58.0 58.6 
Net income per share - Basic (2)
$5.37 $4.29 $10.95 $8.74 
Net income per share - Diluted (2)
$5.35 $4.25 $10.87 $8.63 
______________________________
(1)    The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method.
(2)    Source data for calculations in thousands.
    
4. Fair Value Measurements
We consider the carrying amounts of current assets and current liabilities to approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization or payment. For our financial instruments measured at fair value on a recurring basis, we prioritize the inputs used in measuring fair value according to the three-tier fair value hierarchy. For a description of the methods and assumptions used to: a) estimate the fair value; and b) determine the classification according to the fair value hierarchy for each financial instrument, refer to our 2022 Annual Report on Form 10-K, Note 5, “Fair Value Measurements.”
Our financial instruments measured at fair value on a recurring basis at June 30, 2023, were as follows:
Observable InputsDirectly or Indirectly Observable InputsUnobservable Inputs
Total(Level 1) (Level 2) (Level 3)
 (In millions)
Corporate debt securities$2,454 $— $2,454 $— 
Mortgage-backed securities855 — 855 — 
Asset-backed securities321 — 321 — 
Municipal securities152 — 152 — 
U.S. Treasury notes72 — 72 — 
Other
32 — 32 — 
Total assets$3,886 $— $3,886 $— 
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Our financial instruments measured at fair value on a recurring basis at December 31, 2022, were as follows:
Observable InputsDirectly or Indirectly Observable InputsUnobservable Inputs
Total(Level 1)(Level 2)(Level 3)
 (In millions)
Corporate debt securities$2,184 $— $2,184 $— 
Mortgage-backed securities731 — 731 — 
Asset-backed securities288 — 288 — 
Municipal securities149 — 149 — 
U.S. Treasury notes105 — 105 — 
Other
42 — 42 — 
Total assets $3,499 $— $3,499 $— 
Contingent consideration liabilities $$— $— $
Total liabilities$$— $— $
Contingent Consideration Liabilities
In the six months ended June 30, 2023, we paid $8 million in connection with our 2020 acquisition of certain assets of Passport Health Plan, Inc., which represented the final payment of the consideration due relating to an operating income guarantee. The amount paid in the six months ended June 30, 2023, has been presented in “Operating activities” in the accompanying consolidated statements of cash flows.
Fair Value Measurements – Disclosure Only
The carrying amounts and estimated fair values of our notes payable are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted market prices for similar securities in active markets or quoted prices for identical securities in inactive markets.
 June 30, 2023December 31, 2022
 Carrying
Amount
Fair Value Carrying
Amount
Fair Value
 (In millions)
4.375% Notes due 2028
$793 $735 $792 $729 
3.875% Notes due 2030
643 558 643 554 
3.875% Notes due 2032
742 625 741 629 
Total$2,178 $1,918 $2,176 $1,912 

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5. Investments
Available-for-Sale
We consider all of our investments classified as current assets to be available-for-sale. The following tables summarize our current investments as of the dates indicated:
 June 30, 2023
Amortized CostGross UnrealizedEstimated Fair Value
 GainsLosses
 (In millions)
Corporate debt securities$2,563 $$111 $2,454 
Mortgage-backed securities911 — 56 855 
Asset-backed securities338 — 17 321 
Municipal securities161 — 152 
U.S. Treasury notes
72 — — 72 
Other34 — 32 
Total$4,079 $$195 $3,886 
 December 31, 2022
 Amortized CostGross UnrealizedEstimated Fair Value
 GainsLosses
 (In millions)
Corporate debt securities$2,303 $$121 $2,184 
Mortgage-backed securities787 — 56 731 
Asset-backed securities308 — 20 288 
Municipal securities160 — 11 149 
U.S. Treasury notes
106 — 105 
Other45 — 42 
Total$3,709 $$212 $3,499 
The contractual maturities of our current investments as of June 30, 2023 are summarized below:
Amortized CostEstimated
Fair Value
 (In millions)
Due in one year or less$313 $307 
Due after one year through five years2,421 2,311 
Due after five years through ten years428 415 
Due after ten years917 853 
Total$4,079 $3,886 
Gross realized gains and losses from sales of available-for-sale securities are calculated under the specific identification method and are included in investment income. Gross realized investment gains were insignificant for the six months ended June 30, 2023, and 2022. Gross realized investment losses amounted to $10 million in the six months ended June 30, 2023, and were reclassified into earnings from other comprehensive income on a net-of-tax basis. Gross realized investment losses were insignificant in the six months ended June 30, 2022.
We have determined that unrealized losses at June 30, 2023, and December 31, 2022, primarily resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers. Therefore, we determined that an allowance for credit losses was not necessary. So long as we maintain the intent and ability to hold these securities to maturity, we are unlikely to experience losses. In the event that we dispose of these securities before maturity, we expect that realized losses, if any, will be insignificant.
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The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of June 30, 2023:
In a Continuous Loss Position
for Less than 12 Months
In a Continuous Loss Position
for 12 Months or More
Estimated
Fair
Value
Unrealized
Losses
Total Number of PositionsEstimated
Fair
Value
Unrealized
Losses
Total Number of Positions
 (Dollars in millions)
Corporate debt securities$992 $21 561 $1,234 $90 627 
Mortgage-backed securities
275 193 541 48 256 
Asset-backed securities144 88 164 15 86 
Municipal securities55 29 82 103 
Other
18 19 10 
Total$1,484 $33 890 $2,031 $162 1,080 
The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of December 31, 2022:
In a Continuous Loss Position
for Less than 12 Months
In a Continuous Loss Position
for 12 Months or More
Estimated
Fair
Value
Unrealized
Losses
Total Number of PositionsEstimated
Fair
Value
Unrealized
Losses
Total Number of Positions
 (Dollars in millions)
Corporate debt securities$1,124 $45 683 $887 $76 371 
Mortgage-backed securities
395 20 220 319 36 131 
Asset-backed securities161 108 118 14 59 
Municipal securities75 83 57 57 
U.S. Treasury notes88 — — — 
Other
15 16 17 
Total$1,858 $77 1,116 $1,398 $135 624 

Restricted Investments Held-to-Maturity
Pursuant to the regulations governing our state health plan subsidiaries, we maintain statutory deposits and deposits required by government authorities primarily in cash, cash equivalents, U.S. Treasury securities, and corporate debt securities. We also maintain restricted investments as protection against the insolvency of certain capitated providers. The use of these funds is limited as required by regulations in the various states in which we operate, or as needed in the event of insolvency of capitated providers. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets.
We have the ability to hold these restricted investments until maturity and, as a result, we would not expect the value of these investments to decline significantly due to a sudden change in market interest rates. Our held-to-maturity restricted investments are carried at amortized cost, which approximates fair value. Such investments amounted to $249 million at June 30, 2023, of which $112 million will mature in one year or less, $131 million will mature in one through five years, and $6 million will mature after five years.

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6. Medical Claims and Benefits Payable
The following table provides the details of our medical claims and benefits payable as of the dates indicated:
June 30,
2023
December 31,
2022
 (In millions)
Claims incurred but not paid (“IBNP”)$2,612 $2,597 
Pharmacy payable208 206 
Capitation payable130 94 
Other727 631 
Total$3,677 $3,528 

“Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various government agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. Non-risk provider payables amounted to $277 million and $228 million as of June 30, 2023, and December 31, 2022, respectively.
The following tables present the components of the change in our medical claims and benefits payable for the periods indicated. The amounts presented for “Components of medical care costs related to: Prior years” represent the amount by which our original estimate of medical claims and benefits payable at the beginning of the year varied from the actual liabilities, based on information (principally the payment of claims) developed since those liabilities were first reported.
Six Months Ended June 30, 2023
Medicaid Medicare MarketplaceConsolidated
 (In millions)
Medical claims and benefits payable, beginning balance$2,815 $452 $261 $3,528 
Components of medical care costs related to:
Current year11,585 1,857 738 14,180 
Prior years(241)(6)(24)(271)
Total medical care costs11,344 1,851 714 13,909 
Payments for medical care costs related to:
Current year9,184 1,430 552 11,166 
Prior years2,041 406 203 2,650 
Total paid11,225 1,836 755 13,816 
Change in non-risk and other provider payables58 (2)— 56 
Medical claims and benefits payable, ending balance$2,992 $465 $220 $3,677 
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Six Months Ended June 30, 2022
Medicaid MedicareMarketplaceConsolidated
 (In millions)
Medical claims and benefits payable, beginning balance$2,580 $404 $379 $3,363 
Components of medical care costs related to:
Current year11,059 1,681 1,006 13,746 
Prior years(243)(33)(35)(311)
Total medical care costs10,816 1,648 971 13,435 
Payments for medical care costs related to:
Current year8,532 1,270 820 10,622 
Prior years1,801 330 280 2,411 
Total paid10,333 1,600 1,100 13,033 
Acquired balances, net of post-acquisition adjustments— — 
Change in non-risk and other provider payables— — 
Medical claims and benefits payable, ending balance$3,073 $452 $250 $3,775 

Our estimates of medical claims and benefits payable recorded at December 31, 2022, and 2021 developed favorably by approximately $271 million and $311 million as of June 30, 2023, and 2022, respectively.
The favorable prior year development recognized in the six months ended June 30, 2023 was primarily due to lower than expected utilization of medical services by our members and improved operating performance. Consequently, the ultimate costs recognized in 2023, as claims payments were processed, were lower than our estimates in 2022.

7. Debt
The following table summarizes our outstanding debt obligations, all of which are non-current as of the dates reported below:
June 30,
2023
December 31,
2022
(In millions)
Non-current long-term debt:
4.375% Notes due 2028
$800 $800 
3.875% Notes due 2030
650 650 
3.875% Notes due 2032
750 750 
Deferred debt issuance costs (22)(24)
Total$2,178 $2,176 
Credit Agreement
We are party to a credit agreement (the “Credit Agreement”) which includes a revolving credit facility (“Credit Facility”) of $1.0 billion, among other provisions. The Credit Agreement has a term of five years, and all amounts outstanding will be due and payable on June 8, 2025. Borrowings under the Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case, the applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, we are required to pay a quarterly commitment fee.
Effective April 26, 2023, we amended the Credit Agreement to transition from the use of the London Interbank Offered Rate, or LIBOR, to the Secured Overnight Financing Rate, or SOFR, as a benchmark interest rate used in the Credit Agreement.
We have other relationships, including financial advisory and banking, with some parties to the Credit Agreement.
The Credit Agreement contains customary non-financial and financial covenants. As of June 30, 2023, we were in compliance with all financial and non-financial covenants under the Credit Agreement. As of June 30, 2023, no amounts were outstanding under the Credit Facility.
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Senior Notes
Our senior notes are described below. Each of these notes are senior unsecured obligations of the parent corporation, Molina Healthcare, Inc., and rank equally in right of payment with all existing and future senior debt, and senior to all existing and future subordinated debt of Molina Healthcare, Inc. In addition, each of the indentures governing the senior notes contain customary non-financial covenants and change of control provisions. As of June 30, 2023, we were in compliance with all non-financial covenants in the indentures governing the senior notes.
The indentures governing the senior notes contain cross-default provisions that are triggered upon default by us or any of our subsidiaries on any indebtedness in excess of the amount specified in the applicable indenture.
4.375% Notes due 2028. We had $800 million aggregate principal amount of senior notes (the “4.375% Notes”) outstanding as of June 30, 2023, which are due June 15, 2028, unless earlier redeemed. Interest, at a rate of 4.375% per annum, is payable semiannually in arrears on June 15 and December 15.
3.875% Notes due 2030. We had $650 million aggregate principal amount of senior notes (the “3.875% Notes due 2030”) outstanding as of June 30, 2023, which are due November 15, 2030, unless earlier redeemed. Interest, at a rate of 3.875% per annum, is payable semiannually in arrears on May 15 and November 15.
3.875% Notes due 2032. We had $750 million aggregate principal amount of senior notes (the “3.875% Notes due 2032”) outstanding as of June 30, 2023, which are due May 15, 2032, unless earlier redeemed. Interest, at a rate of 3.875% per annum, is payable semiannually in arrears on May 15 and November 15.

8. Segments
We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.
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.
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”). MCR represents the amount of medical care costs as a percentage of premium revenue. 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. The key metric used to assess the performance of our Other segment is service margin. The service margin is equal to service revenue minus cost of service revenue. We do not report total assets by segment because this is not a metric used to assess segment performance or allocate resources.
The following table presents total revenue by segment. Inter-segment revenue was insignificant for all periods presented.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(In millions)
Total revenue:
Medicaid$6,728 $6,524 $13,306 $12,711 
Medicare1,055 963 2,111 1,912 
Marketplace524 549 1,021 1,165 
Other20 18 38 36 
Total$8,327 $8,054 $16,476 $15,824 
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The following table reconciles margin by segment to consolidated income before income taxes.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(In millions)
Margin:
Medicaid$756 $755 $1,490 $1,465 
Medicare113 124 239 252 
Marketplace135 48 289 178 
Other
Total margin 1,007 930 2,023 1,901 
Add: other operating revenues (1)
265 237 511 458 
Less: other operating expenses (2)
(829)(806)(1,636)(1,626)
Operating income443 361 898 733 
Other expenses, net27 27 55 55 
Income before income tax expense$416 $334 $843 $678 
______________________
(1)Other operating revenues include premium tax revenue, investment income, and certain other revenue.
(2)Other operating expenses include general and administrative expenses, premium tax expenses, depreciation and amortization, and certain other operating expenses.
9. Commitments and Contingencies
Overview
The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments, as well as various contractual provisions, governing our operations. Compliance with these laws, regulations, and contractual provisions can be subject to government audit, review, and interpretation, as well as regulatory actions. Penalties associated with violations of these laws, regulations, and contractual provisions can include significant fines and penalties, temporary or permanent exclusion from participating in publicly funded programs, a limitation on our ability to market or sell products, the repayment of previously billed and collected revenues, and reputational damage.
Legal Proceedings
We are involved in legal actions in the ordinary course of business including, but not limited to, various employment claims, vendor disputes and provider claims. Some of these legal actions seek monetary damages, including claims for punitive damages, which may not be covered by insurance. We review legal matters and update our estimates of reasonably possible losses and related disclosures, as necessary. We have accrued liabilities for legal matters for which we deem the loss to be both probable and reasonably estimable. These liability estimates could change as a result of further developments of the matters. The outcome of legal actions is inherently uncertain. An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations, or cash flows.
Kentucky RFP. On September 4, 2020, Anthem Kentucky Managed Care Plan, Inc. brought an action in Franklin County Circuit Court against the Kentucky Finance and Administration Cabinet, the Kentucky Cabinet for Health and Family Services, and all of the five winning bidder health plans, including our Kentucky health plan. On September 9, 2022, the Kentucky Court of Appeals ruled that, with regard to the earlier Circuit Court ruling granting Anthem relief, the Circuit Court should not have invalidated the 2020 procurement and thus should not have awarded a contract to Anthem. Anthem sought discretionary review by the Kentucky Supreme Court of the ruling by the Court of Appeals. On April 19, 2023, the Kentucky Supreme Court granted Anthem’s request for discretionary review and ordered legal briefing, which we expect to be completed by early September 2023. Pending further Court order, our Kentucky health plan will continue to operate for the foreseeable future under its current Medicaid contract.
Puerto Rico. On August 13, 2021, Molina Healthcare of Puerto Rico, Inc. (“MHPR”) filed a complaint with the Commonwealth of Puerto Rico, Court of First Instance, San Juan (State Court) asserting, among other claims, breach of contract against Puerto Rico Health Insurance Administration (“ASES”). On September 13, 2021, ASES
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filed a counterclaim and a third-party complaint against MHPR and the Company. This matter remains subject to significant additional proceedings, and no prediction can be made as to the outcome.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, and results of operations within the meaning of Section 27A of the Securities Act of 1933, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, or Securities Exchange Act. Many of the forward-looking statements are located under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “guidance,” “future,” “anticipates,” “believes,” “embedded,” “estimates,” “expects,” “growth,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” and similar terms. Readers are cautioned not to place undue reliance on any forward-looking statements, as forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly due to numerous known and unknown risks and uncertainties. Those known risks and uncertainties include, but are not limited to, the risk factors identified in the section titled “Risk Factors” in our 2022 Annual Report on Form 10-K, including without limitation risks related to the following matters:
the impact of Medicaid redeterminations across the country following the ending of the Public Health Emergency (“PHE”) for the COVID-19 pandemic, including the accuracy of our projections regarding the number of members we expect to retain, their health acuity levels, and the scale of the transition of members out of the Medicaid program and the actuarially sound adjustment of rates with regard to the remaining population;
budget pressures on state governments following the ending of the PHE and reduced federal matching funds, and states’ efforts to reduce rates or limit rate increases;
the constantly evolving market dynamics surrounding the Affordable Care Act (ACA”) Marketplaces, including issues impacting enrollment, special enrollment periods, member choice, risk adjustment estimates and results, Marketplace plan insolvencies or receiverships, and the potential for disproportionate enrollment of higher acuity members;
the success of our efforts to retain existing or awarded government contracts, the success of our bid submissions in response to requests for proposal, and our ability to identify merger and acquisition targets to support our continued growth over time;
the success of the scaling up of our operations in California, Nebraska, and Indiana in connection with our recent request for proposal (“RFP”) wins, and the satisfaction of all readiness review requirements under the new Medicaid contracts;
our ability to close, integrate, and realize benefits from acquisitions, including the acquisitions of AgeWell New York, My Choice Wisconsin, Brand New Day and Central Health Plan of California;
subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment;
effective management of our medical costs;
our ability to predict with a reasonable degree of accuracy utilization rates;
cyber-attacks, ransomware attacks, or other privacy or data security incidents involving either ourselves or our contracted vendors that result in an inadvertent unauthorized disclosure of protected information, and the extent to which our working in a remote work environment heightens our exposure to these risks;
the ability to manage our operations, including maintaining and creating adequate internal systems and controls relating to authorizations, approvals, provider payments, and the overall success of our care management initiatives;
the impact of our transition to a permanent remote work environment, including any associated impairment charges or contract termination costs;
our receipt of adequate premium rates to support increasing pharmacy costs, including costs associated with specialty drugs and costs resulting from formulary changes that allow the option of higher-priced non-generic drugs;
our ability to operate profitably in an environment where the trend in premium rate increases lags behind the trend in increasing medical costs;
the interpretation and implementation of federal or state medical cost expenditure floors, administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions and requirements;
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our estimates of amounts owed for such minimum annual medical loss ratio (“Minimum MLR”), administrative cost and profit ceilings, premium stabilization programs, profit-sharing arrangements, and risk adjustment provisions and requirements;
the Medicaid expansion medical cost corridor, and any other retroactive adjustment to revenue where methodologies and procedures are subject to interpretation or dependent upon information about the health status of participants other than Molina members;
the interpretation and implementation of at-risk premium rules and state contract performance requirements regarding the achievement of certain quality measures, and our ability to recognize revenue amounts associated therewith;
the success and continuance of programs in California, Illinois, Michigan, Ohio, South Carolina, and Texas serving those dually eligible for both Medicaid and Medicare;
the increasing integration of Medicare and Medicaid programmatic and compliance requirements, and the extension or incorporation of federal Medicare requirements developed by CMS into state-administered Medicaid programs;
the accurate estimation of incurred but not reported or paid medical costs across our health plans;
efforts by states to recoup previously paid and recognized premium amounts;
changes in our annual effective tax rate, due to federal and/or state legislation, or changes in our mix of earnings and other factors;
the efficient and effective operations of the vendors on whom our business relies;
complications, member confusion, eligibility redeterminations, or enrollment backlogs related to the renewal of Medicaid coverage;
fraud, waste and abuse matters, government audits or reviews, comment letters, or potential investigations, and any fine, sanction, enrollment freeze, corrective action plan, monitoring program, or premium recovery that may result therefrom;
the success of our providers, including delegated providers, the adequacy of our provider networks, the successful maintenance of relations with our providers, and the potential loss of providers;
approval by state regulators of dividends and distributions by our health plan subsidiaries;
changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;
high dollar claims related to catastrophic illness;
the resolution of litigation, arbitration, or administrative proceedings;
the greater scale and revenues of our health plans in California, New York, Ohio, Texas, and Washington, and risks related to the concentration of our business in those states;
the failure to comply with the financial or other covenants in our credit agreement or the indentures governing our outstanding senior notes;
the availability of adequate financing on acceptable terms to fund and capitalize our expansion and growth, repay our outstanding indebtedness at maturity, and meet our general liquidity needs;
the failure of a state in which we operate to renew its federal Medicaid waiver;
changes generally affecting the managed care industry, including any new federal or state legislation that impacts the business space in which we operate;
increases in government surcharges, taxes, and assessments;
the impact of inflation on our medical costs and the cost of refinancing our outstanding indebtedness;
the unexpected loss of the leadership of one or more of our senior executives; and
increasing competition and consolidation in the Medicaid industry.
Each of the terms “Molina Healthcare, Inc.” “Molina Healthcare,” “Company,” “we,” “our,” and “us,” as used herein, refers collectively to Molina Healthcare, Inc. and its wholly owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Readers should refer to the section entitled “Risk Factors” in our 2022 Annual Report on Form 10-K, for a discussion of certain risk factors that could materially affect our business, financial condition, cash flows, or results of operations. Given these risks and uncertainties, we can give no assurance that any results or events projected or contemplated by our forward-looking statements will in fact occur.
This Quarterly Report on Form 10-Q and the following discussion of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the notes to those statements appearing elsewhere in this report, and the audited financial statements and Management’s Discussion and Analysis appearing in our 2022 Annual Report on Form 10-K.
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OVERVIEW
Molina Healthcare, Inc., a FORTUNE 500 company (currently ranked 126), provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We served approximately 5.2 million members as of June 30, 2023, located across 19 states.
SECOND QUARTER 2023 HIGHLIGHTS
We reported net income of $309 million, or $5.35 per diluted share, for the second quarter of 2023, which reflected the following:
Membership increased 58,000, or 1%, compared with June 30, 2022, and decreased sequentially by 90,000 compared to March 31, 2023 as expected, due to redetermination impacts;
Premium revenue of $8.0 billion increased 3% compared with the second quarter of 2022, reflecting the increased membership in Medicaid and Medicare, partially offset by the impact of expected attrition in Marketplace membership;
Consolidated medical care ratio (“MCR”) was 87.5%, compared with 88.1% for the second quarter of 2022, reflecting continued strong operating performance and medical cost management;
General and administrative expense (“G&A”) ratio of 7.4%, compared with 6.8% in the second quarter of 2022, reflecting new business implementation spending ahead of new contract wins starting in July 2023 and in 2024, partially offset by the benefits of disciplined cost management; and
After-tax margin of 3.7%, which was in line with our expectations.

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CONSOLIDATED FINANCIAL SUMMARY
The following table summarizes our consolidated results of operations and other financial information for the periods indicated:
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
 (In millions, except per-share amounts)
Premium revenue$8,042 $7,799 $15,927 $15,330 
Less: medical care costs7,038 6,872 13,909 13,435 
Medical margin1,004 927 2,018 1,895 
MCR (1)
87.5 %88.1 %87.3 %87.6 %
Other revenues:
Premium tax revenue169 215 341 423 
Investment income97 22 168 33 
Other revenue19 18 40 38 
General and administrative expenses618 551 1,209 1,122 
G&A ratio (2)
7.4 %6.8 %7.3 %7.1 %
Premium tax expenses169 215 341 423 
Depreciation and amortization42 44 86 84 
Other17 11 33 27 
Operating income443 361 898 733 
Interest expense27 27 55 55 
Income before income tax expense416 334 843 678 
Income tax expense107 86 213 172 
Net income$309 $248 $630 $506 
Net income per share – Diluted
$5.35 $4.25 $10.87 $8.63 
Diluted weighted average shares outstanding57.9 58.4 58.0 58.6 
Other Key Statistics
Ending membership5.2 5.1 5.2 5.1 
Effective income tax rate25.5 %25.8 %25.2 %25.4 %
After-tax margin (3)
3.7 %3.1 %3.8 %3.2 %
________________________
(1)    MCR represents medical care costs as a percentage of premium revenue.
(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 in the second quarter of 2023 amounted to $309 million, or $5.35 per diluted share, compared with $248 million, or $4.25 per diluted share, in the second quarter of 2022. The 25% increase in net income is consistent with the improvement in operating income, which increased to $443 million in the second quarter of 2023, compared with $361 million in the second quarter of 2022.
Net income in the six months ended June 30, 2023 amounted to $630 million, or $10.87 per diluted share, compared with $506 million, or $8.63 per diluted share, in the six months ended June 30, 2022. The 25% increase in net income is consistent with the improvement in operating income of $898 million in the six months ended June 30, 2023, compared with $733 million in the six months ended June 30, 2022.
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The improvement in operating income for both periods was mainly due to membership growth that drove higher premium revenues, and medical margin, and increased investment income.
PREMIUM REVENUE
Premium revenue increased $243 million, or 3%, in the second quarter of 2023, when compared with the second quarter of 2022, and increased $597 million, or 4%, in the six months ended June 30, 2023, when compared with the six months ended June 30, 2022. The higher premium revenue reflects increased organic membership in the Medicaid and Medicare segments and the impact from the AgeWell acquisition that closed in the fourth quarter of 2022, partially offset by a decline in the Marketplace segment.
MEDICAL CARE RATIO
The consolidated MCR in the second quarter of 2023 decreased to 87.5%, compared with 88.1% in the second quarter of 2022, or 60 basis points. The consolidated MCR in the six months ended June 30, 2023 decreased to 87.3%, compared with 87.6% MCR for the six months ended June 30, 2022, or 30 basis points. The improvement reflects continued strong operating performance and medical cost management. See further discussion in “Reportable Segments—Segment Financial Performance,” below.
Prior year reserve development has been favorable for the six months ended June 30, 2023, but its impact on earnings has been mostly absorbed by minimum MLRs and medical cost corridors.
PREMIUM TAX REVENUE AND EXPENSES
The premium tax ratio (premium tax expense as a percentage of premium revenue plus premium tax revenue) was 2.0% and 2.7% for the second quarter of 2023 and 2022, respectively, and 2.1% and 2.7% for the six months ended June 30, 2023 and 2022, respectively. The current year ratio decrease was mainly due to changes in business mix.
INVESTMENT INCOME
Investment income increased to $97 million in the second quarter of 2023, compared with $22 million in the second quarter of 2022, and increased to $168 million in the six months ended June 30, 2023, compared with $33 million in the six months ended June 30, 2022.The increase in both periods was mainly driven by an increase in interest rates and, to a lesser extent, higher levels of invested assets.
OTHER REVENUE
Other revenue increased slightly to $19 million in the second quarter of 2023, compared with $18 million in the second quarter of 2022, and increased to $40 million in the six months ended June 30, 2023, compared with $38 million in the six months ended June 30, 2022. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.
G&A EXPENSES
The G&A expense ratio increased to 7.4% in the second quarter of 2023, compared with 6.8% in the second quarter of 2022. The G&A expense ratio was 7.3% in the six months ended June 30, 2023, compared with 7.1% in the six months ended June 30, 2022. The increase resulted primarily from deployment costs for new business implementation associated with our recent contract wins that started in July and will start in 2024 and was partially offset by the benefits of scale and continued disciplined cost management.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization was $42 million in the second quarter of 2023, compared with $44 million in the second quarter of 2022, and increased to $86 million in the six months ended June 30, 2023, compared with $84 million in the six months ended June 30, 2022.
OTHER OPERATING EXPENSES
Other operating expenses increased to $17 million in the second quarter of 2023, compared with $11 million in the second quarter of 2022, and increased to $33 million in the six months ended June 30, 2023, compared with $27 million in the six months ended June 30, 2022. Other operating expenses mainly includes service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above.
INTEREST EXPENSE
Interest expense was $27 million in the second quarter of 2023 and 2022, and $55 million in the six months ended June 30, 2023 and 2022.
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INCOME TAXES
Income tax expense amounted to $107 million in the second quarter of 2023, or 25.5% of pretax income, compared with income tax expense of $86 million, or 25.8% of pretax income in the second quarter of 2022. Income tax expense amounted to $213 million in the six months ended June 30, 2023, or 25.2% of pretax income, compared with income tax expense of $172 million, or 25.4% of pretax income in the six months ended June 30, 2022. The difference in the effective tax rate is primarily due to state income taxes.

TRENDS AND UNCERTAINTIES
COVID-19 PANDEMIC
Federal Economic Stabilization and Other Programs
The PHE officially ended on May 11, 2023. There are several other healthcare programs tied to the PHE which are impacted by this change in policy. 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 will continue for the rest of 2023 or through 2024, and some will remain in place permanently.
Operations
Enrollment and Premium Revenue
Excluding acquisitions and our exit from Puerto Rico, we added approximately 800,000 new Medicaid members since March 31, 2020, when we first began to report on the impacts of the pandemic. We believe this membership increase was mainly due to the suspension of redeterminations for Medicaid eligibility. The recently passed Consolidated Appropriations Act of 2023 authorizes states to resume redeterminations and terminate coverage for ineligible enrollees starting on April 1, 2023, irrespective of the status of the PHE. Consequently, during the second quarter of 2023, all but four of the states in which we operate began disenrolling members, with the remaining states initiating disenrollment on July 1, 2023. Our Medicaid membership declined 93,000 members during the second quarter of 2023, which was within our expectations. Although the medical cost profile of members who have left is slightly more favorable than the portfolio average, the impact on our Medicaid MCR during the second quarter of 2023 was negligible and within our expectations. We are still in the early stages of the Medicaid redetermination process, but based on the experience to date, we continue to expect that we will retain approximately half the membership gained since March 31, 2020.
OTHER RECENT DEVELOPMENTS
Iowa Procurement—Medicaid. Our new contract with the Iowa Department of Health and Human Services commenced on July 1, 2023, and offers health coverage to TANF, CHIP, ABD, LTSS and Medicaid Expansion beneficiaries. This new contract has a term of four years, with a potential for two two-year extensions.
Mississippi Procurement—Medicaid. In August 2022, we announced that our Mississippi health plan had been notified by the Mississippi Division of Medicaid (“DOM”) of its intent to award a Medicaid Coordinated Care Contract for its Mississippi Coordinated Access Program and Mississippi Children’s Health Insurance Program pursuant to the Request for Qualifications issued by DOM in December 2021. The four-year contract was expected to begin on July 1, 2023, but in the second quarter of 2023, DOM extended the existing contracts by an additional year. We now expect the four-year contract to commence July 1, 2024, and DOM has discretion to extend the new awards for an additional two-years. The award enables us to continue serving Medicaid members across the state.
California Acquisition—Medicare. On June 30, 2023, we announced a definitive agreement to acquire 100% of the issued and outstanding capital stock of Brand New Day and Central Health Plan of California, each of which is a wholly owned subsidiary of Bright Health Company of California, Inc. The purchase price for the transaction is approximately $510 million, net of certain tax benefits, which we intend to fund with available funds including cash on hand. The transaction is subject to federal and state regulatory approvals, the solvency and continued operation as a going concern of Bright Health Group throughout the pre-closing period, and other closing conditions. We currently expect the transaction to close by the first quarter of 2024.
Indiana Procurement—Medicaid. In March 2023, we announced that the Indiana Department of Administration has recommended that contract negotiations begin with our Indiana health plan. Under the proposed contract with the Indiana Family and Social Services Administration (“FSSA”), we are expected to provide risk-based managed care long term services and supports as part of the Indiana Pathways for Aging LTSS program pursuant to the request
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for proposal issued by FSSA in February 2022. The new contract is expected to have an initial four-year term, with the potential for two, one-year renewal terms.
Wisconsin Acquisition—Medicaid and Medicare. On July 13, 2022, we announced a definitive agreement to acquire substantially all the assets of My Choice Wisconsin (“MCW”). The purchase price for the transaction is approximately $150 million, net of expected tax benefits and required regulatory capital, which we intend to fund with cash on hand. The transaction is subject to receipt of applicable federal and state regulatory approvals, and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the fourth quarter of 2023.
For a discussion of additional segment trends, uncertainties and other developments, refer to our 2022 Annual Report on Form 10-K, “Item 1. Business—Our Business,” and “—Legislative and Political Environment.”

REPORTABLE SEGMENTS
As of June 30, 2023, we served approximately 5.2 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 four 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.
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”). MCR represents the amount of medical care costs as a percentage of premium revenue. 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. The key metric used to assess the performance of our Other segment is service margin. The service margin is equal to service revenue minus cost of service revenue.
Management’s discussion and analysis of the change in medical margin is discussed below under “Segment Financial Performance.” For more information, see Notes to Consolidated Financial Statements, Note 8, “Segments.”
SEGMENT MEMBERSHIP
The following table sets forth our membership by segment as of the dates indicated:
June 30,December 31,June 30,
2023
2022
2022
Medicaid4,741,000 4,754,000 4,610,000 
Medicare166,000 156,000 151,000 
Marketplace269,000 348,000 357,000 
Total5,176,000 5,258,000 5,118,000 
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SEGMENT FINANCIAL PERFORMANCE
The following tables summarize premium revenue, medical margin, and MCR by segment for the periods indicated (dollars in millions):
Three Months Ended June 30,
20232022
Premium
Revenue
Medical
Margin
MCRPremium
Revenue
Medical
Margin
MCR
Medicaid$6,485 $756 88.3 %$6,301 $755 88.0 %
Medicare1,044 113 89.2 957 124 86.9 
Marketplace513 135 73.7 541 48 91.2 
Total$8,042 $1,004 87.5 %$7,799 $927 88.1 %
Six Months Ended June 30,
20232022
Premium
Revenue
Medical
Margin
MCRPremium
Revenue
Medical
Margin
MCR
Medicaid$12,834 $1,490 88.4 %$12,281 $1,465 88.1 %
Medicare2,090 239 88.6 1,900 252 86.7 
Marketplace1,003 289 71.2 1,149 178 84.5 
Total$15,927 $2,018 87.3 %$15,330 $1,895 87.6 %
Medicaid
Medicaid premium revenue increased $184 million, or 3% in the second quarter of 2023, when compared with the second quarter of 2022. Medicaid premium revenue increased $553 million, or 5% in the six months ended June 30, 2023, when compared with the six months ended June 30, 2022. The increases were mainly due to organic membership growth and the impact from the AgeWell acquisition that closed in the fourth quarter of 2022. Excluding the AgeWell acquisition, membership growth was across several states and was mainly driven by the extension of the PHE period and the associated suspension of membership redeterminations due to COVID-19.
The medical margin in our Medicaid program in the second quarter of 2023 was essentially flat when compared with the second quarter of 2022, and increased $25 million, or 2%, in the six months ended June 30, 2023 when compared with the six months ended June 30, 2022. The year-over-year changes for both periods were driven by increased premium revenues and margin associated with the membership growth discussed above, partially offset by an increase in MCR.
The Medicaid MCR increased 30 basis points to 88.3% in the second quarter of 2023, from 88.0% in the second quarter of 2022, and increased 30 basis points to 88.4% in the six months ended June 30, 2023, from 88.1% in the six months ended June 30, 2022. The increase was mainly attributable to changes in business and membership mix, partially offset by improved operating performance and medical cost management. The Medicaid MCR for the six months ended June 30, 2023 is consistent with our long-term target range.
Medicare
Medicare premium revenue increased $87 million, or 9%, in the second quarter of 2023 compared to the second quarter of 2022, and increased $190 million, or 10%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase was primarily due to the impact of MAPD and D-SNP membership expansion, including organic membership growth in existing states.
The medical margin for Medicare decreased $11 million in the second quarter of 2023, and decreased $13 million in the six months ended June 30, 2023, when compared to the same periods in 2022. The decrease in both periods was mainly due to the increase in MCR discussed below, partially offset by the increase in premium revenues.
The Medicare MCR increased to 89.2% in the second quarter of 2023, from 86.9% in the second quarter of 2022, or 230 basis points. The Medicare MCR increased to 88.6% in the six months ended June 30, 2023, compared to 86.7% in the six months ended June 30, 2022, or 190 basis points. The increases were primarily driven by increased utilization in professional and outpatient services and the impact of lower risk-adjusted premiums associated with new MAPD and D-SNP members, partially offset by higher risk scores on renewing members that
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more closely reflect the acuity of our membership, and strong medical cost management. The Medicare MCR for the six months ended June 30, 2023 is within our long-term target range.
Marketplace
Marketplace premium revenue decreased $28 million in the second quarter of 2023 compared to the second quarter of 2022, and decreased $146 million in the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease in both periods was mainly due to an expected reduction in membership, partially offset by an increase in premium revenue PMPM. Our Marketplace membership as of June 30, 2023, amounted to 269,000 members, representing a decrease of 88,000 members compared to June 30, 2022, which is in line with our product and pricing strategy to achieve our target margins in this segment. The increase in premium revenue PMPM was due to higher silver metal tier product mix consistent with the product and pricing strategy.
The Marketplace medical margin increased $87 million in the second quarter of 2023 when compared with the second quarter of 2022, and increased $111 million in the six months ended June 30, 2023 when compared with the six months ended June 30, 2022. The improvement in the second quarter of 2023 was due mainly to the decrease in MCR discussed below, partially offset by the decrease in membership and premiums.
The Marketplace MCR decreased to 73.7% in the second quarter of 2023, compared to 91.2% in the second quarter of 2022, or 1,750 basis points, and decreased to 71.2% in the six months ended June 30, 2023, compared to 84.5% in the six months ended June 30, 2022, or 1,330 basis points. The decreases resulted mainly from our product and pricing strategy to achieve our target margins and a favorable change in the 2022 risk adjustment payable recognized in the second quarter of 2023, compared to an unfavorable change in the 2021 risk adjustment payable recognized in the second quarter of 2022. These impacts were partially offset by changes in membership mix discussed above. Silver metal tier products incur less MCR seasonality than bronze metal tier products due to lower deductibles. Our second quarter 2023 Marketplace MCR was below full year expectations, but consistent with seasonality patterns.
Other
The Other segment includes service revenues and costs associated with 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 the three and six months ended June 30, 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. 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. Our regulated subsidiaries generate significant cash flows from premium revenue, which is generally received a short time before related healthcare services are paid. 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.
A majority of the assets held by our regulated health plan subsidiaries is in the form of cash, cash equivalents, and investments. When available and as permitted by applicable regulations, cash in excess of the capital needs of our regulated health plan subsidiaries is generally paid in the form of dividends to our parent company to be used for general corporate purposes. In the second quarter and six months ended June 30, 2023, the parent company received $148 million and $248 million, respectively, in dividends and return of capital from the regulated health plan subsidiaries. See further discussion of dividends below in “Future Sources and Uses of Liquidity—Future Sources.”
The parent company may also contribute capital to the regulated health plan subsidiaries to satisfy minimum statutory net worth requirements, including funding for newer health plans. In the second quarter and six months ended June 30, 2023, the parent company contributed capital in the aggregate amount of $17 million and $33 million, respectively, to certain of the regulated health plan subsidiaries.
Cash, cash equivalents and investments at the parent company amounted to $482 million and $375 million as of June 30, 2023, and December 31, 2022, respectively. The increase as of June 30, 2023, was primarily due to
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dividends received from regulated health plan subsidiaries, partially offset by the timing of corporate payments and capital contributions to regulated health plan subsidiaries.
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.
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 investment policies require that our investments have final maturities of less than 15 years, or less than 15 years average life for structured securities. Professional portfolio managers operating under documented guidelines manage our investments and a portion of our cash equivalents. 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 remains strong and is rated A+. Our investment policy has directives in conjunction with state guidelines to minimize risks and exposures in volatile markets. Additionally, our portfolio managers assist us in navigating volatility in the capital markets.
Our restricted investments are invested principally in cash, cash equivalents, U.S. Treasury securities, and corporate debt securities; we have the ability to hold such restricted investments until maturity. All of our unrestricted investments are classified as current assets.
Cash Flow Activities
Our cash flows are summarized as follows:
Six Months Ended June 30,
20232022Change
(In millions)
Net cash provided by operating activities$1,403 $731 $672 
Net cash used in investing activities(439)(591)152 
Net cash used in financing activities(55)(268)213 
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents$909 $(128)$1,037 
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. For example, government payors may delay our premium payments, or they may prepay the following month’s premium payment.
Net cash provided by operations for the six months ended June 30, 2023 was $1,403 million, compared with $731 million in the six months ended June 30, 2022. The $672 million increase in cash flow was due to the net impact of timing differences in government receivables and payables accompanied by the growth in operations and net earnings.
Investing Activities
Net cash used in investing activities was $439 million in the six months ended June 30, 2023, compared with $591 million used in the six months ended June 30, 2022, an increase in cash flow of $152 million. This increase in cash flow was primarily due to the net activity of proceeds and purchases of investments in the six months ended June 30, 2023.
Financing Activities
Net cash used in financing activities was $55 million in the six months ended June 30, 2023, compared with $268 million used in the six months ended June 30, 2022, an increase in cash flow of $213 million. In the six months ended June 30, 2023, financing cash outflows included $59 million for common stock withheld to settle employee tax obligations. In the six months ended June 30, 2022, financing cash outflows included common stock purchases
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of $200 million and $53 million for common stock withheld to settle employee tax obligations. Additionally, we paid $20 million in the six months ended June 30, 2022, to settle contingent consideration liabilities.
FINANCIAL CONDITION
We believe that our cash resources, borrowing capacity available under the 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, at June 30, 2023, our working capital was $3.9 billion, compared with $3.2 billion at December 31, 2022. At June 30, 2023, our cash and investments amounted to $9.0 billion, compared with $7.7 billion at December 31, 2022. A significant portion of our portfolio is held in cash and cash equivalents and we do not anticipate the fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position since we intend to hold our securities to maturity. Net unrealized losses on our investments classified as current and available for sale decreased to $193 million at June 30, 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.
Regulatory Capital and Dividend Restrictions
Each of our regulated, wholly owned subsidiaries must maintain a minimum amount of statutory capital determined by statute or regulations. Such statutes, regulations and capital requirements also restrict the timing, payment and amount of dividends and other distributions, loans or advances that may be paid to us as the sole stockholder. 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 June 30, 2023 and December 31, 2022. The aggregate capital and surplus of our regulated, 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 regulated, wholly owned subsidiaries without prior approval by regulatory authorities as of June 30, 2023, was approximately $270 million in the aggregate. These 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 June 30, 2023, management believes that our regulated, wholly owned subsidiaries remain well capitalized and exceed their regulatory minimum requirements. We have the ability, and have committed to provide, additional capital to each of our health plans as necessary to ensure compliance with statutory capital and surplus requirements.
Debt Ratings
Each of our senior notes is rated “BB-” by Standard & Poor’s, and “Ba3” by Moody’s Investor Service, Inc. A downgrade in our ratings could adversely affect our borrowing capacity and increase our future 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.
In addition, the indentures governing each of our outstanding senior notes contain cross-default provisions that are triggered upon default by us or any of our subsidiaries on any indebtedness in excess of the amount specified in the applicable indenture. As of June 30, 2023, we were in compliance with all financial and non-financial covenants under the Credit Agreement and the indentures governing our senior notes.
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. 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.
Potential Impact of COVID-19 Pandemic. Excluding acquisitions and our exit from Puerto Rico, we added approximately 800,000 new Medicaid members since March 31, 2020, when we first began to report on the impacts of the pandemic. We believe this membership increase was mainly due to the suspension of redeterminations for Medicaid eligibility. The recently passed Consolidated Appropriations Act of 2023 authorizes states to resume
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redeterminations and terminate coverage for ineligible enrollees starting on April 1, 2023, irrespective of the status of the PHE. Consequently, during the second quarter of 2023, all but four of the states in which we operate began disenrolling members, with the remaining states initiating disenrollment on July 1, 2023. Our Medicaid membership declined 93,000 members during the second quarter of 2023, which was within our expectations. Although the medical cost profile of members who have left is slightly more favorable than the portfolio average, the impact on our Medicaid MCR during the second quarter of 2023 was negligible and within our expectations. We are still in the early stages of the Medicaid redetermination process, but based on the experience to date, we continue to expect that we will retain approximately half the membership gained since March 31, 2020.
Dividends from Subsidiaries. When available and as permitted by applicable regulations, cash in excess of the capital needs of our regulated health plans is generally paid in the form of dividends to our unregulated parent company to be used for general corporate purposes.
Credit Agreement Borrowing Capacity. As of June 30, 2023, we had available borrowing capacity of $1 billion under the revolving credit facility of our Credit Agreement. 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 our consolidated net leverage ratio is not greater than a defined maximum. See further discussion in the Notes to Consolidated Financial Statements, Note 7, “Debt.”
Future Uses
Common Stock Purchases. In November 2022, our board of directors authorized the purchase of up to $500 million of our common stock. This new program is funded with cash on hand and extends through December 31, 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. As of June 30, 2023, $300 million remained available to purchase our common stock under this program through December 31, 2023.
Acquisitions. On July 13, 2022, we announced a definitive agreement to acquire substantially all the assets of My Choice Wisconsin (“MCW”). The purchase price for the transaction is approximately $150 million, net of expected tax benefits and required regulatory capital, which we intend to fund with cash on hand. The transaction is subject to receipt of applicable federal and state regulatory approvals, and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the fourth quarter of 2023.
On June 30, 2023, we announced a definitive agreement to acquire 100% of the issued and outstanding capital stock of Brand New Day and Central Health Plan of California, each of which is a wholly owned subsidiary of Bright Health Company of California, Inc. The purchase price for the transaction is approximately $510 million, net of certain tax benefits, which we intend to fund with available funds including cash on hand. The transaction is subject to federal and state regulatory approvals, the solvency and continued operation as a going concern of Bright Health Group throughout the pre-closing period, and other closing conditions. We currently expect the transaction to close by the first quarter of 2024.
Regulatory Capital Requirements. We have the ability, and have committed to provide, additional capital to each of our health plans as necessary to ensure compliance with statutory capital and surplus requirements.

CONTRACTUAL OBLIGATIONS
A summary of future obligations under our various contractual obligations and commitments as of December 31, 2022, was disclosed in our 2022 Annual Report on Form 10-K.
There were no significant changes to our contractual obligations and commitments outside the ordinary course of business during the six months ended June 30, 2023.

CRITICAL ACCOUNTING ESTIMATES
When we prepare our consolidated financial statements, we use estimates based on assumptions that may affect reported amounts and disclosures; actual results could differ from these estimates. Our critical accounting estimates relate to:
Medical claims and benefits payable. Refer to Notes to Consolidated Financial Statements, Note 6, “Medical Claims and Benefits Payable,” for a table that presents the components of the change in medical
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claims and benefits payable, and for additional information regarding the factors used to determine our changes in estimates for all periods presented in the accompanying consolidated financial statements. Other than the discussion as noted above, in the six months ended June 30, 2023 there were no significant changes to our disclosure reported in “Critical Accounting Estimates” in our 2022 Annual Report on Form 10-K.
Contractual provisions that may adjust or limit revenue or profit. For a discussion of this topic, including amounts recorded in our consolidated financial statements, refer to Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies.”
Quality incentives. In the six months ended June 30, 2023, there were no significant changes to our disclosure reported in “Critical Accounting Estimates” in our 2022 Annual Report on Form 10-K.
Business combinations, goodwill, and intangible assets, net. In the six months ended June 30, 2023, there were no significant changes to our disclosure reported in “Critical Accounting Estimates” in our 2022 Annual Report on Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our earnings and financial position are exposed to financial market risk relating to changes in interest rates, and the resulting impact on investment income and interest expense.
Substantially all of our investments and restricted investments are subject to interest rate risk and will decrease in value if market interest rates increase. Assuming a hypothetical and immediate 1% increase in market interest rates at June 30, 2023, the fair value of our fixed income investments would decrease by approximately $99 million. Declines in interest rates over time will reduce our investment income.
For further information on fair value measurements and our investment portfolio, please refer to Notes to Consolidated Financial Statements, Note 4, “Fair Value Measurements,” and Note 5, “Investments.”
Borrowings under the Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case, the applicable margin. For further information, see Notes to Consolidated Financial Statements, Note 7, “Debt.”

CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our chief executive officer and our chief financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act). Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the six months ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

LEGAL PROCEEDINGS
For information regarding legal proceedings, see Notes to Consolidated Financial Statements, Note 9, “Commitments and Contingencies.”

RISK FACTORS
Certain risks may have a material adverse effect on our business, financial condition, cash flows, results of operations, or stock price, and you should carefully consider them before making an investment decision with respect to our securities. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed under the caption “Risk Factors,” in our 2022 Annual Report on Form 10-K. The risk factors described in our 2022 Annual Report on Form 10-K are not the only risks that we face. Additional risks and
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uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows, results of operations, or stock price.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES
Purchases of common stock made by us, or on our behalf, during the second 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 ShareTotal 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)
April 1 - April 303,000 $267.49 — $300,000,000 
May 1 - May 31— $— — $300,000,000 
June 1 - June 30— $— — $300,000,000 
Total3,000 $267.49 — 
_______________________
(1)During the second quarter of 2023, we withheld approximately 3,000 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 our 2022 Annual Report on Form 10-K, Note 13, “Stockholders' Equity.”

OTHER INFORMATION
(a)    None.        
(b)    None.
(c)    No director or officer (as defined in 17 CFR § 240.16a-1(f)) of the Company adopted or terminated (i) any contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), or (ii) any “non-Rule 10b5-1 trading arrangement” (as defined in 17 CFR § 229.408(c)) during the three months ended June 30, 2023.





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INDEX TO EXHIBITS 
Exhibit No.TitleMethod of Filing
31.1Filed herewith.
31.2Filed herewith.
32.1Filed herewith.
32.2Filed herewith.
101.INS Inline XBRL Taxonomy Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.Filed herewith.
101.SCH Inline XBRL Taxonomy Extension Schema Document.Filed herewith.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.Filed herewith.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.Filed herewith.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.Filed herewith.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.Filed herewith.
104Cover Page Interactive Data file (formatted as Inline XBRL and embedded within Exhibit 101)Filed herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MOLINA HEALTHCARE, INC.
(Registrant)
Dated: July 27, 2023/s/ JOSEPH M. ZUBRETSKY
Joseph M. Zubretsky
Chief Executive Officer
(Principal Executive Officer)
Dated: July 27, 2023/s/ MARK L. KEIM
Mark L. Keim
Chief Financial Officer and Treasurer
(Principal Financial Officer)
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