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Press release from Business Wire

Molina Healthcare Reports First Quarter 2012 Results

Monday, April 30, 2012

Molina Healthcare Reports First Quarter 2012 Results16:00 EDT Monday, April 30, 2012 LONG BEACH, Calif. (Business Wire) -- Molina Healthcare, Inc. (NYSE: MOH): Earnings per diluted share for first quarter 2012 of $0.39 Quarterly EBITDA of $51.8 million, up 5% over 2011 Quarterly premium revenues of $1.3 billion, up 23% over 2011 Quarterly operating income of $33.4 million, up 7% over 2011 Aggregate membership up 11% over 2011 Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the first quarter and three months ended March 31, 2012. Net income for the quarter was $18.1 million, or $0.39 per diluted share, compared with net income of $17.4 million, or $0.38 per diluted share, for the quarter ended March 31, 2011. “During the first quarter, we continued to pursue the many opportunities that are open to the Company today,” said J. Mario Molina, M.D., chief executive officer of Molina Healthcare, Inc. “Even as we prepare for the transfer of dual-eligible populations into managed care across many of our states, we are already growing dramatically in other directions. California health plan revenue has grown nearly 20% since the first quarter of 2011 as a result of the transition of the Seniors and Persons with Disabilities, or SPD, population into managed care. Our revenue growth in Texas is even more dramatic. With the regional and benefit expansions that were effective March 1, 2012, our Texas health plan added nearly 125,000 members and $900 million in annualized revenue. Enrollment in Texas as of today stands at 300,000 members.” Earnings Per Share Guidance The Company reaffirms its earnings per diluted share guidance for fiscal year 2012 of $1.75. Overview of Financial ResultsFirst Quarter 2012 Compared with First Quarter 2011 The Company recorded higher revenue in its Health Plans segment and experienced a higher margin in its Molina Medicaid Solutions segment. These increases were offset by lower margins in the Health Plans segment. In the aggregate, the Company achieved higher net income for the first quarter of 2012 when compared with the first quarter of 2011. The Company's established health plans continue to perform well, with the Florida, Michigan, New Mexico, Utah, Texas, Washington and Wisconsin health plans reporting improved medical margins over the first quarter of 2011. The medical margin of the Company's Ohio health plan was reduced as a result of a premium rate reduction effective January 1, 2012. In addition, the Ohio health plan is earning lower margins on the pharmacy benefit (added October 1, 2011) than on its business as a whole. The medical margin of the Company's California health plan decreased primarily due to premium rate reductions effective July 1, 2011, and the mandatory assignment of SPD members to managed care plans starting June 1, 2011. The California health plan is currently experiencing a medical care ratio in excess of 90% for these members. It has been the Company's experience that state funding agencies often underestimate the cost of serving new populations or of providing new benefits, requiring them to increase premium rates paid to managed care plans in subsequent periods. Health Plans SegmentPremium Revenue Premium revenue for the first quarter of 2012 increased by 22.7% over the first quarter of 2011, due primarily to a membership increase at the Texas health plan. The Company also experienced notable membership growth at its Utah and Washington health plans. A shift in member mix to populations generating higher premium revenue per member per month (PMPM) also increased premium revenue in the first quarter of 2012. The Company cares for a larger percentage of aged, blind or disabled, or ABD, members and Medicare members than a year ago. In the first quarter of 2012, 15% of the Company's membership comprised ABD members (including California SPD and Texas STAR+ members) and Medicare members, compared with just 11% of membership in the first quarter of 2011. Premium revenue PMPM also increased due to the inclusion of revenue from the pharmacy benefit for our Ohio health plan, which did not provide this benefit in the first quarter of 2011. Medical Care Costs Medical care costs increased in the first quarter of 2012 primarily due to the growth of membership in the Texas health plan. The Texas health plan experienced significant growth of members in its ABD program. These members have higher medical costs than other populations. The percentage of ABD member months in our Texas plan increased from 35% in the first quarter of 2011 to 40% in the first quarter of 2012. Overall, Texas health plan membership more than doubled when compared with the first quarter of 2011. The Company's medical margin deteriorated in the first quarter of 2012, when compared with the first quarter of 2011. The decrease in the medical margin was primarily due to: A shift in member mix to more costly members that are transitioning to a managed care environment, including Texas and California ABD members. These members start out with higher medical care ratios; and Rate decreases of approximately 2% in Ohio effective January 1, 2012, and approximately 3% in California effective July 1, 2011. The medical margin of the California health plan decreased in the three months ended March 31, 2012, primarily due to premium rate reductions of approximately 3% effective July 1, 2011. Additionally, the California health plan has added approximately 23,000 new ABD members since the first quarter of 2011. While this change in member mix has increased blended health plan premium revenue PMPM by 18% to $153 in the first quarter of 2012 from $130 in the first quarter of 2011, associated medical care costs are also higher for these members. The California health plan's aggregate medical care costs increased approximately 22% PMPM in the three months ended March 31, 2012, compared with the same period in 2011, while premiums increased 18% over that same time period. The medical care margin of the Florida health plan increased in the three months ended March 31, 2012, primarily due to initiatives that have reduced pharmacy and behavioral health costs, coupled with a premium rate increase of approximately 7.5% effective September 1, 2011. The medical care margin of the Michigan health plan increased in the three months ended March 31, 2012, primarily due to improved Medicare performance and lower inpatient facility costs. The Michigan health plan received a premium rate increase of approximately 1% effective October 1, 2011. The medical care margin of the Missouri health plan decreased in the three months ended March 31, 2012, primarily due to increased inpatient facility costs associated with an unusually large number of premature infants delivered in late 2011. The health plan received a premium rate increase of approximately 5% effective July 1, 2011. The medical care margin of the New Mexico health plan increased in the three months ended March 31, 2012. The New Mexico health plan received a premium rate reduction of approximately 2.5% effective July 1, 2011. The medical care margin of the Ohio health plan decreased in the three months ended March 31, 2012, partially due to a premium rate reduction of approximately 2% effective January 1, 2012. Additionally, the restoration of the pharmacy benefit to all managed care plans in Ohio effective October 1, 2011, has increased the Ohio health plan's medical care ratio. The medical care ratio attributable to the pharmacy benefit alone was approximately 87%, which resulted in a 180 basis point increase to the Ohio health plan's aggregate medical care ratio for the first quarter of 2012. The medical care margin of the Texas health plan increased in the three months ended March 31, 2012. Additionally, in March 2012 the Texas health plan received rate increases to provide for its assumption of inpatient and pharmacy risk for all existing populations. The Texas health plan has added significant membership since the first quarter of 2011, including approximately 76,000 Temporary Assistance for Needy Families, or TANF, members, 57,800 ABD members, and 18,000 Children's Health Insurance Program, or CHIP, members. At April 30, 2012, the Company's Texas enrollment was approximately 300,000 members. The medical care margin of the Utah health plan increased in the three months ended March 31, 2012, primarily due to reduced fee-for-service inpatient and physician costs. Lower fee-for-service costs were the result of both lower unit costs and lower utilization. The Utah health plan received a premium rate reduction of approximately 2% effective July 1, 2011. The medical care margin of the Washington health plan increased in the three months ended March 31, 2012, primarily due to lower Medicaid fee-for-service utilization. The medical care margin of the Wisconsin health plan increased in the three months ended March 31, 2012. In the first quarter of 2011, the Wisconsin health plan recorded a premium deficiency reserve amounting to $3.35 million; there was no such reserve recorded in the first quarter of 2012. We have undertaken a number of measures – focused on both utilization and unit cost reductions – to improve the profitability of the Wisconsin health plan. Molina Medicaid Solutions Segment Performance of the Molina Medicaid Solutions segment was as follows:     Three Months EndedMarch 31,2012     2011(In thousands) Service revenue before amortization $ 42,358 $ 38,860 Amortization recorded as reduction of service revenue   (153 )   (2,186 ) Service revenue 42,205 36,674 Cost of service revenue 30,494 31,221 General and administrative costs 2,020 2,477 Amortization of customer relationship intangibles recorded as amortization   1,282     1,282   Operating income $ 8,409   $ 1,694     The Company is currently deferring recognition of all revenue as well as all direct costs (to the extent that such costs are estimated to be recoverable) in Idaho until the Medicaid Management Information System, or MMIS, in that state receives certification from the Centers for Medicare and Medicaid Services, or CMS. Consolidated ExpensesGeneral and Administrative Expenses General and administrative, or G&A, expenses for the consolidated entity were $120.2 million, or 8.8% of total revenue, for the three months ended March 31, 2012, compared with $94.4 million, or 8.4% of total revenue, for the three months ended March 31, 2011. The Company incurred additional expenses in the first quarter of 2012 due to investment in administrative infrastructure in anticipation of opportunities in Texas and among the dual-eligible population. Premium Tax Expenses Premium tax expense decreased to 3.3% of premium revenue in the three months ended March 31, 2012, from 3.4% in the three months ended March 31, 2011. Interest Expense Interest expense increased to $4.3 million for the three months ended March 31, 2012, from $3.6 million for the three months ended March 31, 2011, due primarily to interest expense associated with the Company's purchase of its corporate headquarters building in December 2011. Interest expense includes non-cash interest expense relating to our convertible senior notes, which amounted to $1.4 million and $1.3 million for the three months ended March 31, 2012 and 2011, respectively. Income Taxes Income tax expense is recorded at an effective rate of 37.9% for the three months ended March 31, 2012, compared with 37.2% for the three months ended March 31, 2011. The higher rate in 2012 is primarily due to current period share-based compensation expense that is expected to be non-deductible for tax purposes when related awards vest. Cash Flow Cash provided by operating activities was $50.6 million for the three months ended March 31, 2012, compared with $84.1 million for the three months ended March 31, 2011. Deferred revenue was a source of operating cash totaling $44.5 million in 2012, compared with $84.2 million in 2011. At March 31, 2012, the Company had cash and investments of $933.8 million, and the parent company had cash and investments of $37.8 million.     Reconciliation of Non-GAAP (1) to GAAP Financial Measures   EBITDA (2)   Three Months Ended March 31,2012     2011(In thousands) Net income $ 18,089 $ 17,388 Add back: Depreciation and amortization reported in the consolidated statements of cash flows 18,339 18,094 Interest expense 4,298 3,603 Provision for income taxes   11,033   10,309 EBITDA $ 51,759 $ 49,394 ____________ (1) GAAP stands for U.S. generally accepted accounting principles. (2) EBITDA is not prepared in conformity with GAAP because it excludes depreciation and amortization, as well as interest expense, and the provision for income taxes. This non-GAAP financial measure should not be considered as an alternative to the GAAP measures of net income, operating income, operating margin, or cash provided by operating activities, nor should EBITDA be considered in isolation from these GAAP measures of operating performance. Management uses EBITDA as a supplemental metric in evaluating our financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating our performance and the performance of other companies in our industry.   Conference Call The Company's management will host a conference call and webcast to discuss its first quarter results at 5:00 p.m. Eastern time on Monday, April 30, 2012. The number to call for the interactive teleconference is (212) 231-2905. A telephonic replay of the conference call will be available from 7:00 p.m. Eastern time on Monday, April 30, 2012, through 6:00 p.m. on Tuesday, May 1, 2012, by dialing (800) 633-8284 and entering confirmation number 21582930. A live broadcast of Molina Healthcare's conference call will be available on the Company's website, www.molinahealthcare.com, or at www.earnings.com. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast. About Molina Healthcare Molina Healthcare, Inc. provides quality and cost-effective Medicaid-related solutions to meet the health care needs of low-income families and individuals and to assist state agencies in their administration of the Medicaid program. Our licensed health plans in California, Florida, Michigan, Missouri, New Mexico, Ohio, Texas, Utah, Washington, and Wisconsin currently serve approximately 1.8 million members, and our subsidiary, Molina Medicaid Solutions, provides business processing and information technology administrative services to Medicaid agencies in Idaho, Louisiana, Maine, New Jersey, and West Virginia, and drug rebate administration services in Florida. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This earnings release contains “forward-looking statements” regarding the Company's plans, expectations, anticipated future events, and projected earnings per diluted share for fiscal year 2012.Actual results could differ materially due to numerous known and unknown risks and uncertainties, including, without limitation, risk factors related to the following:significant budget pressures on state governments and their potential inability to maintain current rates, to implement expected rate increases, or to maintain existing benefit packages or membership eligibility thresholds or criteria;uncertainties regarding the impact of the Patient Protection and Affordable Care Act, including its possible repeal, judicial overturning of the individual insurance mandate or Medicaid expansion, the effect of various implementing regulations, and uncertainties regarding the impact of other federal or state health care and insurance reform measures;management of our medical costs, including seasonal flu patterns and rates of utilization that are consistent with our expectations, and the reduction over time of the high medical costs associated with new populations;the success of our efforts to retain existing government contracts and to obtain new government contracts in connection with state requests for proposals (RFPs) in both existing and new states, and our ability to grow our revenues consistent with our expectations;the accurate estimation of incurred but not reported medical costs across our health plans;risks associated with the continued growth in new Medicaid and Medicare enrollees, and the development of actuarially sound rates with respect to such new enrollees;retroactive adjustments to premium revenue or accounting estimates which require adjustment based upon subsequent developments, including Medicaid pharmaceutical rebates;the continuation and renewal of the government contracts of both our health plans and Molina Medicaid Solutions and the terms under which such contracts are renewed;the timing of receipt and recognition of revenue and the amortization of expense under the state contracts of Molina Medicaid Solutions in Maine and Idaho;additional administrative costs and the potential payment of additional amounts to providers and/or the state by Molina Medicaid Solutions as a result of MMIS implementation issues in Maine or Idaho;government audits and reviews, and any enrollment freeze or monitoring program that may result therefrom;changes with respect to our provider contracts and the loss of providers;the establishment of a federal or state medical cost expenditure floor as a percentage of the premiums we receive, and the interpretation and implementation of medical cost expenditure floors, administrative cost and profit ceilings, and profit sharing arrangements;the interpretation and implementation of at-risk premium rules regarding the achievement of certain quality measures;approval by state regulators of dividends and distributions by our health plan subsidiaries;changes in funding under our contracts as a result of regulatory changes, programmatic adjustments, or other reforms;high dollar claims related to catastrophic illness;the favorable resolution of litigation, arbitration, or administrative proceedings;restrictions and covenants in our credit facility;the relatively small number of states in which we operate health plans;the availability of financing to fund and capitalize our acquisitions and start-up activities and to meet our liquidity needs;a state's failure to renew its federal Medicaid waiver;an inadvertent unauthorized disclosure of protected health information;changes generally affecting the managed care or Medicaid management information systems industries;increases in government surcharges, taxes, and assessments;changes in general economic conditions, including unemployment rates;and numerous other risk factors, including those discussed in our periodic reports and filings with the Securities and Exchange Commission.These reports can be accessed under the investor relations tab of our Company website or on the SEC's website at www.sec.gov.Given these risks and uncertainties, we can give no assurances that our forward-looking statements will prove to be accurate, or that any other results or events projected or contemplated by our forward-looking statements will in fact occur, and we caution investors not to place undue reliance on these statements.All forward‐looking statements in this release represent our judgment as of April 30, 2012, and we disclaim any obligation to update any forward-looking statements to conform the statement to actual results or changes in our expectations.     MOLINA HEALTHCARE, INC.UNAUDITED CONSOLIDATED STATEMENTS OF INCOME   Three Months EndedMarch 31,2012     2011(In thousands,except per-share data)Revenue: Premium revenue $ 1,327,449 $ 1,081,438 Service revenue 42,205 36,674 Investment income 1,717 1,594 Rental income   2,209     –   Total revenue   1,373,580     1,119,706   Expenses: Medical care costs 1,130,988 913,532 Cost of service revenue 30,494 31,221 General and administrative expenses 120,223 94,436 Premium tax expenses 43,430 36,550 Depreciation and amortization   15,025     12,667   Total expenses   1,340,160     1,088,406   Operating income 33,420 31,300 Interest expense   4,298     3,603   Income before income taxes 29,122 27,697 Provision for income taxes   11,033     10,309   Net income $ 18,089   $ 17,388     Net income per share(1): Basic $ 0.39   $ 0.38   Diluted $ 0.39   $ 0.38   Weighted average shares outstanding(1): Basic   45,998     45,588   Diluted   46,887     46,257     Operating Statistics: Ratio of medical care costs paid directly to providers to premium revenue 82.8 % 82.2 % Ratio of medical care costs not paid directly to providers to premium revenue   2.4 %   2.3 % Medical care ratio(2)   85.2 %   84.5 % General and administrative expense ratio(3) 8.8 % 8.4 % Premium tax ratio(2) 3.3 % 3.4 % Effective tax rate 37.9 % 37.2 %   ____________ (1) All applicable share and per-share amounts reflect the retroactive effects of the three-for-two common stock split in the form of a stock dividend that was effective May 20, 2011. (2) Medical care ratio represents medical care costs as a percentage of premium revenue; premium tax ratio represents premium taxes as a percentage of premium revenue. (3) Computed as a percentage of total operating revenue.         MOLINA HEALTHCARE, INC.UNAUDITED CONSOLIDATED BALANCE SHEETS   March 31,2012Dec. 31,2011(In thousands,except per-share data)ASSETSCurrent assets: Cash and cash equivalents $ 517,723 $ 493,827 Investments 357,981 336,916 Receivables 222,254 167,898 Income tax refundable 15,315 11,679 Deferred income taxes 14,025 18,327 Prepaid expenses and other current assets   24,715     19,435   Total current assets 1,152,013 1,048,082 Property, equipment, and capitalized software, net 198,564 190,934 Deferred contract costs 64,414 54,582 Intangible assets, net 96,090 101,796 Goodwill and indefinite-lived intangible assets 151,088 153,954 Auction rate securities 16,129 16,134 Restricted investments 41,947 46,164 Receivable for ceded life and annuity contracts – 23,401 Other assets   19,759     17,099   $ 1,740,004   $ 1,652,146     LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Medical claims and benefits payable $ 455,833 $ 402,476 Accounts payable and accrued liabilities 124,649 147,214 Deferred revenue 95,490 50,947 Current maturities of long-term debt   1,118     1,197   Total current liabilities 677,090 601,834 Long-term debt 228,150 216,929 Deferred income taxes 37,209 33,127 Liability for ceded life and annuity contracts – 23,401 Other long-term liabilities   22,243     21,782   Total liabilities   964,692     897,073   Stockholders' equity: Common stock, $0.001 par value; 80,000 shares authorized; outstanding: 46,347 shares at March 31, 2012, and 45,815 shares at December 31, 2011 46 46 Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued and outstanding – – Additional paid-in capital 267,876 266,022 Accumulated other comprehensive loss (1,109 ) (1,405 ) Retained earnings   508,499     490,410   Total stockholders' equity   775,312     755,073   $ 1,740,004   $ 1,652,146       MOLINA HEALTHCARE, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   Three Months EndedMarch 31,2012     2011(In thousands)Operating activities: Net income $ 18,089 $ 17,388 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,339 18,094 Deferred income taxes 8,906 1,619 Stock-based compensation 4,666 4,064 Gain on sale of subsidiary (2,390 ) – Non-cash interest on convertible senior notes 1,443 1,340 Amortization of premium/discount on investments 1,850 1,644 Amortization of deferred financing costs 258 503 Tax deficiency from employee stock compensation (31 ) (264 ) Changes in operating assets and liabilities: Receivables (54,356 ) (2,168 ) Prepaid expenses and other current assets (5,287 ) (8,069 ) Medical claims and benefits payable 53,357 (2,974 ) Accounts payable and accrued liabilities (35,149 ) (25,796 ) Deferred revenue 44,543 84,172 Income taxes   (3,663 )   (5,430 ) Net cash provided by operating activities   50,575     84,123     Investing activities: Purchases of equipment (13,505 ) (14,941 ) Purchases of investments (88,199 ) (104,984 ) Sales and maturities of investments 65,767 61,275 Proceeds from sale of subsidiary, net of cash surrendered 9,162 – Net cash paid in business combinations – (3,253 ) Increase in deferred contract costs (12,993 ) (9,635 ) Increase in restricted investments (493 ) (7,207 ) Change in other noncurrent assets and liabilities   (2,457 )   (1,010 ) Net cash used in investing activities   (42,718 )   (79,755 )   Financing activities: Amount borrowed under credit facility 10,000 – Principal payments on term loan (301 ) – Proceeds from employee stock plans 2,748 2,462 Excess tax benefits from employee stock compensation   3,592     1,076   Net cash provided by financing activities   16,039     3,538   Net increase in cash and cash equivalents 23,896 7,906 Cash and cash equivalents at beginning of period   493,827     455,886   Cash and cash equivalents at end of period $ 517,723   $ 463,792     MOLINA HEALTHCARE, INC.UNAUDITED DEPRECIATION AND AMORTIZATION DATA (Dollar amounts in thousands) Depreciation and amortization related to our Health Plans segment is all recorded in “Depreciation and Amortization” in the consolidated statements of income. Depreciation and amortization related to our Molina Medicaid Solutions segment is recorded within three different headings in the consolidated statements of income as follows: Amortization of purchased intangibles relating to customer relationships is reported as amortization within the heading “Depreciation and Amortization;” Amortization of purchased intangibles relating to contract backlog is recorded as a reduction of “Service Revenue;” and Depreciation is recorded within the heading “Cost of Service Revenue.” The following table presents all depreciation and amortization recorded in our consolidated statements of income, regardless of whether the item appears as depreciation and amortization, a reduction of revenue, or as cost of service revenue.     Three Months Ended March 31,2012     2011Amount     % of TotalRevenueAmount     % of TotalRevenue Depreciation, and amortization of capitalized software $ 9,472 0.7 % $ 7,401 0.7 % Amortization of intangible assets   5,553 0.4     5,266 0.4   Depreciation and amortization reported as such in the consolidated statements of income 15,025 1.1 12,667 1.1 Amortization recorded as reduction of service revenue 153 – 2,186 0.2 Amortization of capitalized software recorded as cost of service revenue   3,161 0.2     3,241 0.3   Total $ 18,339 1.3 % $ 18,094 1.6 %             MOLINA HEALTHCARE, INC.UNAUDITED MEMBERSHIP DATA   March 31,2012Dec. 31,2011March 31,2011Total Ending Membership by Health Plan: California 351,000 355,000 347,000 Florida 69,000 69,000 66,000 Michigan 222,000 222,000 225,000 Missouri(1) 81,000 79,000 82,000 New Mexico 89,000 88,000 90,000 Ohio(2) 249,000 248,000 248,000 Texas 280,000 155,000 128,000 Utah 86,000 84,000 80,000 Washington 356,000 355,000 341,000 Wisconsin 42,000 42,000 40,000 Total 1,825,000 1,697,000 1,647,000   Total Ending Membership by State for ourMedicare Advantage Plans: California 6,900 6,900 5,300 Florida 800 800 600 Michigan 8,500 8,200 6,700 New Mexico 900 800 700 Ohio(2) 200 200 400 Texas 800 700 600 Utah 8,100 8,400 6,700 Washington 5,200 5,000 3,300 Total 31,400 31,000 24,300   Total Ending Membership by State for ourAged, Blind or Disabled Population: California 37,300 31,500 14,100 Florida 10,500 10,400 10,300 Michigan 38,800 37,500 32,000 New Mexico 5,600 5,600 5,600 Ohio(2) 29,700 29,100 28,200 Texas 109,000 63,700 51,200 Utah 8,700 8,500 8,200 Washington 4,700 4,800 4,300 Wisconsin 1,700 1,700 1,700 Total 246,000 192,800 155,600 ____________     (1) Our existing contract with the state of Missouri is scheduled to expire without renewal on June 30, 2012. (2) Our existing contract with the state of Ohio is scheduled to expire without renewal on December 31, 2012.     MOLINA HEALTHCARE, INC.UNAUDITED SELECTED FINANCIAL DATA BY HEALTH PLAN(Amounts in thousands except per member per month amounts)   Three Months Ended March 31, 2012MemberMonths(1)     Premium Revenue     Medical Care Costs     MedicalCareRatio     PremiumTaxExpenseTotal     PMPMTotal     PMPM California 1,059 $ 161,685 $ 152.65 $ 141,349 $ 133.45 87.4 % $ 2,309 Florida 208 56,190 269.87 49,569 238.07 88.2 7 Michigan 665 167,906 252.49 134,211 201.82 79.9 9,084 Missouri(2) 243 56,613 233.32 53,120 218.93 93.8 – New Mexico 266 83,261 313.29 67,111 252.52 80.6 1,953 Ohio(3) 746 293,525 393.73 236,701 317.51 80.6 22,853 Texas 592 198,236 334.61 180,089 303.97 90.8 3,197 Utah 252 75,138 297.59 57,881 229.24 77.0 – Washington 1,067 215,610 202.08 181,425 170.04 84.1 3,912 Wisconsin 125 17,142 136.97 16,886 134.92 98.5 – Other(4) –   2,143 –   12,646 – –   115 5,223 $ 1,327,449 $ 254.14 $ 1,130,988 $ 216.53 85.2 % $ 43,430   Three Months Ended March 31, 2011MemberMonths(1)Premium RevenueMedical Care CostsMedicalCareRatioPremiumTaxExpenseTotalPMPMTotalPMPM California 1,041 $ 134,976 $ 129.63 $ 113,737 $ 109.24 84.3 % $ 1,902 Florida 192 49,222 256.63 47,568 248.01 96.6 17 Michigan 678 164,760 243.06 133,728 197.28 81.2 9,846 Missouri(2) 245 55,166 225.33 51,608 210.79 93.6 – New Mexico 271 84,606 311.93 70,038 258.21 82.8 1,965 Ohio(3) 737 230,340 312.68 171,752 233.15 74.6 17,775 Texas 349 80,811 231.49 73,615 210.88 91.1 1,340 Utah 236 67,935 287.77 53,839 228.06 79.3 – Washington 1,034 195,272 188.81 169,116 163.52 86.6 3,642 Wisconsin 120 16,417 137.25 19,380 162.02 118.1 – Other(4) –   1,933 –   9,151 – –   63 4,903 $ 1,081,438 $ 220.58 $ 913,532 $ 186.34 84.5 % $ 36,550   ____________   (1) A member month is defined as the aggregate of each month's ending membership for the period presented. (2) Our existing contract with the state of Missouri is scheduled to expire without renewal on June 30, 2012. (3) Our existing contract with the state of Ohio is scheduled to expire without renewal on December 31, 2012. (4) “Other” medical care costs also include medically related administrative costs at the parent company.     MOLINA HEALTHCARE, INC.UNAUDITED SELECTED FINANCIAL DATA(Amounts in thousands except per member per month amounts)The following tables provide the details of the Company's medical care costs for the periods indicated:     Three Months Ended March 31,2012     2011Amount     PMPM     % ofTotalAmount     PMPM     % ofTotal Fee for service $ 777,267 $ 148.81 68.7 % $ 655,884 $ 133.78 71.8 % Capitation 136,038 26.04 12.0 128,682 26.25 14.1 Pharmacy 173,237 33.17 15.3 91,576 18.68 10.0 Other   44,446   8.51 4.0     37,390   7.63   4.1   Total $ 1,130,988 $ 216.53 100.0 % $ 913,532 $ 186.34   100.0 %   The following table provides the details of the Company's medical claims and benefits payable as of the dates indicated:   Mar. 31,2012Dec. 31,2011Mar. 31,2011 Fee-for-service claims incurred but not paid (IBNP) $ 347,307 $ 301,020 $ 273,378 Capitation payable 37,289 53,532 43,738 Pharmacy 38,443 26,178 16,953 Other   32,794   21,746   17,313   $ 455,833 $ 402,476 $ 351,382       MOLINA HEALTHCARE, INC.CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE(Unaudited)(Dollar amounts in thousands, except per member amounts)   The Company's claims liability includes an allowance for adverse claims development based on historical experience and other factors including, but not limited to, variations in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims. The Company's reserving methodology is consistently applied across all periods presented. The negative amounts displayed for “Components of medical care costs related to: Prior periods” represent the amount by which the Company's original estimate of claims and benefits payable at the beginning of the period exceeding the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. The following table shows the components of the change in medical claims and benefits payable as of the periods indicated:   Three Months Ended March 31,Year EndedDec. 31,20112012   2011   Balances at beginning of period $ 402,476 $ 354,356 $ 354,356 Components of medical care costs related to: Current period 1,167,580 957,909 3,911,803 Prior periods   (36,592 )   (44,377 )   (51,809 ) Total medical care costs   1,130,988     913,532     3,859,994   Payments for medical care costs related to: Current period 750,994 646,428 3,516,994 Prior periods   326,637     270,078     294,880   Total paid   1,077,631     916,506     3,811,874   Balances at end of period $ 455,833   $ 351,382   $ 402,476     Benefit from prior period as a percentage of: Balance at beginning of period 9.1 % 12.5 % 14.6 % Premium revenue 2.8 % 4.1 % 1.1 % Total medical care costs 3.2 % 4.9 % 1.3 %   Claims Data: Days in claims payable, fee for service 44 (1) 41 40 Number of members at end of period 1,825,000 1,647,000 1,697,000 Number of claims in inventory at end of period 260,800 185,300 111,100 Billed charges of claims in inventory at end of period $ 403,800 $ 250,600 $ 207,600 Claims in inventory per member at end of period 0.14 0.11 0.07 Billed charges of claims in inventory per member at end of period $ 221.26 $ 152.16 $ 122.33 Number of claims received during the period 4,855,600 4,342,200 17,207,500 Billed charges of claims received during the period $ 4,337,000 $ 3,386,600 $ 14,306,500   (1) The increase in the days in claims payable is primarily the result of the increased membership in the Texas health plan and the rise in medical claims reserves associated with that increased membership in the first quarter of 2012. Absent the increased Texas health plan membership, the days in claims payable would have been approximately 41 days. Molina Healthcare, Inc.Juan José Orellana, 562-435-3666, ext. 111143Investor Relations