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,"
"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 2021 Annual Report on Form 10-K, including without limitation
the following:

•the impact of the COVID-19 pandemic and its associated or indirect effects on
our business, operations, and financial results, including without limitation
the duration of the Public Health Emergency Declaration ("PHE") and associated
suspension in redeterminations, and the potential impact on our workforce or
contractors of federal or state vaccine mandates;
•significant budget pressures on state governments from diminished tax revenues
incidental to the COVID-19 pandemic and their efforts to reduce rates or limit
rate increases, to impose profit caps or risk corridors, or to recoup previously
paid premium amounts on a retroactive basis;
•the numerous political, judicial, and market-based uncertainties associated
with the Affordable Care Act (the "ACA");
•the market dynamics surrounding the ACA Marketplaces, including issues
impacting enrollment, risk adjustment estimates and results, the potential for
disproportionate enrollment of higher acuity members, and the discontinuation of
premium tax credits;
•the outcome of the legal proceedings in Kentucky with regard to the Medicaid
contract award to our Kentucky health plan and our acquisition of certain assets
of Passport;
•the success of our efforts to retain existing or awarded government contracts,
including our awarded contracts in California, Iowa, and Nebraska, and the
success of any bid submissions in response to requests for proposal, including
our contracts in Texas;
•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;
•our ability to consummate, integrate, and realize benefits from acquisitions,
including the completed acquisitions of Magellan Complete Care, Passport,
Affinity, the Medicaid assets of Cigna in Texas, AgeWell New York and the
announced acquisition of My Choice Wisconsin;
•effective management of our medical costs;
•our ability to predict with a reasonable degree of accuracy utilization rates,
including utilization rates associated with COVID-19;
•cyber-attacks, ransomware attacks, or other privacy or data security incidents
resulting in an inadvertent unauthorized disclosure of protected information;
•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;
•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;
•our estimates of amounts owed for such cost expenditure floors, administrative
cost and profit ceilings, premium stabilization programs, profit-sharing
arrangements, and risk adjustment provisions and requirements;
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•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 renewal of our duals demonstration programs in California,
Illinois, Michigan, Ohio, South Carolina, and Texas;
•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;
•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;
•our exit from Puerto Rico, including the payment in full of our outstanding
accounts receivable, the effective run-out of claims, the return of our capital,
and the outcome of the claims filed against our Puerto Rico health plan and us
by the Puerto Rico Health Insurance Administration, or ASES;
•changes with respect to our provider contracts and the 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, favorable or unfavorable, of litigation, arbitration, or
administrative proceedings;
•the relatively small number of states in which we operate health plans,
including the greater scale and revenues of our California, Ohio, Texas, and
Washington health plans;
•the failure to comply with the financial or other covenants in our credit
agreement or the indentures governing our outstanding 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 sufficiency of funds on hand to pay the amounts due upon maturity of our
outstanding notes;
•the failure of a state in which we operate to renew its federal Medicaid
waiver;
•changes generally affecting the managed care industry;
•increases in government surcharges, taxes, and assessments;
•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 2021 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 2021 Annual Report on Form
10-K.

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OVERVIEW

Molina Healthcare, Inc., a FORTUNE 500 company (currently ranked 125), 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 September 30, 2022, located across 19
states.

THIRD QUARTER 2022 HIGHLIGHTS

We reported net income of $230 million, or $3.95 per diluted share, for the
third quarter of 2022, which reflected the following:

•Membership increase of 337,000, or 7%, compared with September 30, 2021, and a
57,000 sequential increase compared to June 30, 2022;
•Premium revenue of $7.6 billion increased 12% compared with the third quarter
of 2021, reflecting the impact of acquisitions, increased organic membership in
Medicaid and Medicare, partially offset by the impact of expected attrition in
Marketplace membership;
•Consolidated medical care ratio ("MCR") was 88.4%, compared with 88.9% for the
third quarter of 2021;
•General and administrative expense ("G&A") ratio of 7.1%, which compared with
7.5% in the third quarter of 2021, reflecting the benefits of scale produced by
our increase in revenue and disciplined cost management; and
•After-tax margin of 2.9%, which was in line with our expectations.

We note the following factors impacting the 2022 third quarter financial
results:

•The net effect of COVID decreased net income by approximately $0.59 per diluted
share and increased the MCR by 60 basis points in the third quarter of 2022. The
net effect of COVID decreased net income by approximately $1.00 per diluted
share and increased the MCR by 110 basis points in the third quarter of 2021;
and
•Higher net investment income that was mainly driven by recent Federal Reserve
interest rate increases.

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CONSOLIDATED FINANCIAL SUMMARY

                                                  Three Months Ended September 30,              Nine Months Ended September 30,
                                                       2022                  2021                  2022                   2021

                                                                      (In millions, except per-share amounts)
Premium revenue                                 $        7,636           $   6,800          $        22,966           $   19,689
Less: medical care costs                                 6,748               6,049                   20,183               17,342
Medical margin                                             888                 751                    2,783                2,347
MCR (1)                                                   88.4  %             88.9  %                  87.9  %              88.1  %

Other revenues:
Premium tax revenue                                        223                 204                      646                  576

Investment income                                           49                  20                       82                   39
Other revenue                                               19                  16                       57                   58

General and administrative expenses                        560                 532                    1,682                1,489
G&A ratio (2)                                              7.1  %              7.5  %                   7.1  %               7.3  %

Premium tax expenses                                       223                 204                      646                  576

Depreciation and amortization                               45                  32                      129                   96
Other                                                       16                   2                       43                   30
Operating income                                           335                 221                    1,068                  829
Interest expense                                            28                  30                       83                   90

Income before income tax expense                           307                 191                      985                  739
Income tax expense                                          77                  48                      249                  183
Net income                                      $          230           $     143          $           736           $      556

Net income per share - Diluted                  $         3.95           $    2.46          $         12.58           $     9.51

Diluted weighted average shares outstanding               58.3                58.5                     58.5                 58.5

Other Key Statistics
Ending membership                                          5.2                 4.8                      5.2                  4.8
Effective income tax rate                                 24.9  %             24.8  %                  25.2  %              24.7  %
After-tax margin (3)                                       2.9  %              2.0  %                   3.1  %               2.7  %


________________________

(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 third quarter of 2022 amounted to $230 million, or $3.95 per
diluted share, compared with $143 million, or $2.46 per diluted share, in the
third quarter of 2021. The 61% increase in net income is consistent with the
improvement in operating income, which increased to $335 million in the third
quarter of 2022, compared with $221 million in the third quarter of 2021.

Net income in the nine months ended September 30, 2022 amounted to $736 million,
or $12.58 per diluted share, compared with $556 million, or $9.51 per diluted
share, in the nine months ended September 30, 2021. The 32% increase in net
income is consistent with the improvement in operating income of $1,068 million
in the nine months ended September 30, 2022, compared with $829 million in the
nine months ended September 30, 2021.

The improvement in operating income for both periods was mainly due to
membership growth and higher premium revenues, and a decrease in MCR for the
three and nine months ended September 30, 2022 compared to the prior year
periods.

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Net income per share in the third quarter and nine months ended September 30,
2022 was favorably impacted by the reduction in common shares outstanding as a
result of our share repurchases in the second quarter of 2022. See further
discussion in "Liquidity and Financial Condition," below.

PREMIUM REVENUE

Premium revenue increased $836 million, or 12%, in the third quarter of 2022,
when compared with the third quarter of 2021, and increased $3.3 billion, or
17%, in the nine months ended September 30, 2022, when compared with the nine
months ended September 30, 2021. The higher premium revenue reflects the impact
of acquisitions, increased organic membership in the Medicaid and Medicare
segments partially offset by a decline in the Marketplace segment.

MEDICAL CARE RATIO

The consolidated MCR in the third quarter of 2022 decreased to 88.4%, compared
with 88.9% in the third quarter of 2021, or 50 basis points. The improvement
mainly relates to our Medicaid and Marketplace segments, partially offset by an
increase in the Medicare segment. The results reflect a favorable year-over-year
change in the net effect of COVID, which impacted all of our segments and
increased the consolidated MCR by approximately 60 basis points in the third
quarter of 2022, compared to approximately 110 basis points in the third quarter
of 2021. The year-over-year change in the net effect of COVID mainly reflects
lower COVID inpatient costs, partially offset by lower COVID-related utilization
curtailment.

The consolidated MCR in the nine months ended September 30, 2022 decreased to
87.9%, compared with 88.1% MCR for the nine months ended September 30, 2021, or
20 basis points. Similar to the quarter-to-date consolidated MCR, net effect of
COVID impacted each period; however, the results were varied by segment. See
further explanation in "Segment Financial Performance," below.

The prior year reserve development in the third quarter and nine months ended
September 30, 2022 was favorable, and its impact on earnings was partially
absorbed by the COVID-related risk corridors.

PREMIUM TAX REVENUE AND EXPENSES

The premium tax ratio (premium tax expense as a percentage of premium revenue
plus premium tax revenue) was 2.8% and 2.9% for the third quarter of 2022 and
2021, respectively, and 2.7% and 2.8% for the nine months ended September 30,
2022 and 2021, respectively. The current year ratio decrease was mainly due to
changes in business mix.

INVESTMENT INCOME

Investment income increased to $49 million in the third quarter of 2022,
compared with $20 million in the third quarter of 2021, and increased to $82
million in the nine months ended September 30, 2022, compared with $39 million
in the nine months ended September 30, 2021.The improvement in both periods was
driven by recent increases in market interest rates and higher invested assets.
Additionally, investment yields were lower in the first half of 2021 due to a
temporary allocation in shorter-term invested assets due to the COVID-19
pandemic, which was rescinded in the second quarter of 2021.

OTHER REVENUE

Other revenue increased to $19 million in the third quarter of 2022, compared
with $16 million in the third quarter of 2021, and decreased to $57 million in
the nine months ended September 30, 2022, compared with $58 million in the nine
months ended September 30, 2021. 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 decreased to 7.1% in the third quarter of 2022, compared
with 7.5% in the third quarter of 2021. The G&A expense ratio was 7.1% in the
nine months ended September 30, 2022, compared with 7.3% in the nine months
ended September 30, 2021, which reflects the benefits of scale produced by our
increase in revenue and disciplined cost management.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased to $45 million in the third quarter of
2022, compared with $32 million in the third quarter of 2021, and increased to
$129 million in the nine months ended September 30, 2022, compared with $96
million in the nine months ended September 30, 2021. The increases in both
periods were due primarily to amortization associated with acquisitions
completed in the fourth quarter of 2021 and the first quarter of 2022.

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OTHER OPERATING EXPENSES

Other operating expenses increased to $16 million in the third quarter of 2022,
compared with $2 million in the third quarter of 2021, and increased to $43
million in the nine months ended September 30, 2022, compared with $30 million
in the nine months ended September 30, 2021. 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 decreased to $28 million in the third quarter of 2022, compared
with $30 million in the third quarter of 2021, and to $83 million in the nine
months ended September 30, 2022, compared with $90 million in the nine months
ended September 30, 2021. The decrease resulted from our early redemption of
$700 million aggregate principal amount of our 5.375% senior notes due 2022 in
the fourth quarter of 2021, partially offset by interest related to the private
offering of the 3.875% Notes due 2032 in the same period.

INCOME TAXES

Income tax expense amounted to $77 million in the third quarter of 2022, or
24.9% of pretax income, compared with income tax expense of $48 million, or
24.8% of pretax income in the third quarter of 2021. Income tax expense amounted
to $249 million in the nine months ended September 30, 2022, or 25.2% of pretax
income, compared with income tax expense of $183 million, or 24.7% of pretax
income in the nine months ended September 30, 2021. The difference in the
effective tax rate is primarily due to an increase in nondeductible expenses and
differences in discrete tax benefits recognized in the respective periods.


TRENDS AND UNCERTAINTIES

COVID-19 PANDEMIC

As the COVID-19 pandemic continues to evolve, its ongoing impact to our
business, results of operations, financial condition, and cash flows is
uncertain and difficult to predict. Specific trends and uncertainties related to
our Medicaid, Medicare, and Marketplace segments follow.

Federal Economic Stabilization and Other Programs

Effective October 13, 2022, the Biden Administration extended the PHE for
another 90 days and it will remain in effect until January 11, 2023, unless
extended.

Due to the uncertainty as to the duration and breadth of the pandemic, we are
unable to reasonably estimate the ultimate impact of the economic stabilization
and other programs to our business, financial condition, and operating results.

Operations

Enrollment and Premium Revenue

Excluding acquisitions and our exit from Puerto Rico, we added over 750,000 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. We expect Medicaid
enrollment to continue to benefit from the extension of the PHE period, and the
associated pause on membership redeterminations, at least through mid-January
2023.

Beginning in 2020, various states enacted temporary risk corridors in response
to the reduced demand for medical services stemming from COVID-19, which have
resulted in a reduction of our medical margin. The current rate environment is
stable and rational. We continue to believe that the risk-sharing corridors
previously introduced are related to the declared PHE and will likely be
eliminated as the COVID pandemic subsides. However, the risk corridors continue
to contribute an added level of variability to our results of operations. In the
three and nine months ended September 30, 2022, we recognized approximately
$34 million and $156 million, respectively, for the impact of these risk
corridors, compared to $17 million and $183 million, respectively, recognized in
the three and nine months ended September 30, 2021. The decrease in 2022 is due
to the elimination of most of the COVID-19 risk corridors.

It is possible that certain states could change the structure of existing risk
corridors, implement new risk corridors in the future or discontinue existing
risk corridors. Due to these uncertainties, the ultimate outcomes could differ
materially from our estimates as a result of changes in facts or further
developments, which could have an adverse effect on our consolidated financial
position, results of operations, or cash flows.

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Medical Care Costs

We expect continued uncertainty regarding utilization trends as the pandemic
continues. The speed and extent to which utilization rebounds will be greatly
impacted by the economy and consumer behavior, provider capacity, and the
potential resurgence of COVID-19 infection rates. We believe that some portion
of the utilization curtailment experienced in the nine months ended September
30, 2022 is likely the result of service deferrals, and so these services will
likely be provided to members over the remainder of the year.

Capital and Financial Resources

We continue to monitor and assess the estimated operating and financial impact
of the COVID-19 pandemic on our business and, as it evolves, we continue to
process, assemble, and assess member utilization information. We believe that
our cash resources, borrowing capacity available under the Credit Agreement, and
cash flow generated from operations will be sufficient to withstand the
financial impact of the pandemic, and will enable us to continue to support our
operations, regulatory requirements, debt repayment obligations, and capital
expenditures for the foreseeable future. Refer to "Liquidity and Financial
Condition" below for further discussion of our capital and financial resources.

OTHER RECENT DEVELOPMENTS

New York Acquisition-Medicaid. On October 1, 2022, we closed on our acquisition
of the Medicaid Managed Long Term Care business of AgeWell New York.

Nebraska Procurement-Medicaid. In September 2022, we announced that our Nebraska
health plan had been selected by the Nebraska Department of Health and Human
Services (DHHS) to provide health care services to Nebraskans under the state's
Medicaid managed care program. The new five-year contract is expected to begin
on January 1, 2024, and may be extended for an additional two-years.

Iowa Procurement-Medicaid. In August 2022, we announced that our Iowa health
plan had been notified by the Iowa Department of Health and Human Services (HHS)
of its intent to award a Medicaid managed care contract pursuant to the Request
for Proposal issued by HHS on February 17, 2022. The new four-year contract is
expected to begin on July 1, 2023, and may be extended for an additional four
years.

California Procurement-Medicaid. In August 2022, we announced that our
California health plan had been notified by the California Department of Health
Care Services of its intent to award a Medi-Cal contract in each of Los Angeles,
Riverside, San Bernardino, Sacramento, and San Diego Counties. The 5 Medi-Cal
contracts are expected to commence on January 1, 2024, which enables us to
continue serving Medi-Cal members in our existing counties and expand footprint
with the addition of the Los Angeles County contract.

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
early 2023.

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 on
December 10, 2021. The four-year contract is expected to begin on July 1, 2023,
and may be extended for an additional two years. The award enables us to
continue serving Medicaid members across the state.

Texas Procurement-Medicaid. In March 2022, the Texas Health and Human Services
Commission posted the ABD program (known in Texas as STAR+PLUS) RFP. We
submitted our proposal in June 2022 to continue serving STAR+PLUS members, with
awards estimated to be announced in the first quarter of 2023, and start of
operations in February 2024. Further, in October 2022, the draft RFP was posted
for the TANF and CHIP programs (known as the STAR & CHIP programs, and both
existing contracts for us), with awards expected in late Q4 2023 or early Q1
2024 and the start of operations in late Q4 2024 or early Q1 2025.

Nevada Procurement-Medicaid. Our new contract in Clark and Washoe Counties
commenced on January 1, 2022, and offers health coverage to TANF, CHIP and
Medicaid Expansion beneficiaries. This new contract is four years with a
potential two-year extension.

Texas Acquisition-Medicaid and Medicare. On January 1, 2022, we closed on our
acquisition of Cigna Corporation's Texas Medicaid and Medicare-Medicaid Plan
("MMP") contracts, along with certain operating assets.

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Marketplace Enrollment. We expect to end 2022 with approximately 315,000
members, reflecting normal attrition over the remainder of the year and limited
special enrollment period growth based on revised eligibility rules and our
product design and distribution strategy.

Infosys. On September 29, 2022, we amended each of the master service agreements
governing our relationship with our managed information technology ("IT")
services provider, Infosys Limited (collectively, the "Infosys Agreements").
Significant changes to the Infosys Agreements include (i) the extension of the
expiration date of each Infosys Agreement to September 30, 2029 (extended from
prior expiration dates in 2024), (ii) expansions in the scope of certain support
services, and (iii) changes to the pricing model for certain services. As a
result of these changes, we expect improvements in certain service level
objectives, as well as a reduction in our IT spend.

Pharmacy. We have entered into an early renewal of our long-standing pharmacy
benefit management ("PBM") agreement with CVS Caremark ("Caremark"). Under the
renewal, Caremark will continue to be the exclusive PBM provider to us and our
health plan subsidiaries through December 31, 2026. The renewal includes
improvements to network rates and administrative costs as well as improved terms
around performance standards. Caremark's services to Molina include, among other
things, pharmacy network management, mail order, specialty pharmacy, pharmacy
claims processing, and pharmaceutical rebate management.

Real Estate. We intend to move permanently to a remote work environment, a model
we have been working under successfully for over two years. As a result, we
expect to complete a plan to reduce our real estate footprint by the end of the
year, which we expect will yield substantial and sustainable G&A expense
savings.

For a discussion of additional segment trends, uncertainties and other
developments, refer to our 2021 Annual Report on Form 10-K, "Item 1.
Business-Our Business," and "-Legislative and Political Environment."

REPORTABLE SEGMENTS

As of September 30, 2022, 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 certain corporate amounts not associated with or allocated to the
Medicaid, Medicare, or Marketplace segments. Additionally, the Other segment
includes service revenues and service costs associated with the long-term
services and supports consultative services we provide 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 10, "Segments."

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SEGMENT MEMBERSHIP

The following table sets forth our membership by segment as of the dates
indicated:

                September 30,        December 31,        September 30,
                    2022                 2021                2021
Medicaid       4,667,000            4,329,000           3,981,000
Medicare         155,000              142,000             138,000
Marketplace      353,000              728,000             719,000
Total          5,175,000            5,199,000           4,838,000

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 September 30,
                                           2022                                       2021
                            Premium           Medical                   Premium      Medical
                            Revenue            Margin        MCR        Revenue       Margin        MCR
         Medicaid      $    6,125            $    703       88.5  %    $ 5,146      $    532       89.6  %
         Medicare             947                 108       88.7           875           151       82.8
         Marketplace          564                  77       86.3           779            68       91.3
         Total         $    7,636            $    888       88.4  %    $ 6,800      $    751       88.9  %


                                                Nine Months Ended September 30,
                                          2022                                   2021
                            Premium       Medical                  Premium       Medical
                            Revenue       Margin        MCR        Revenue       Margin        MCR
             Medicaid      $ 18,406      $ 2,168       88.2  %    $ 15,020      $ 1,687       88.8  %
             Medicare         2,847          360       87.4          2,488          329       86.8
             Marketplace      1,713          255       85.1          2,181          331       84.8
             Total         $ 22,966      $ 2,783       87.9  %    $ 19,689 

    $ 2,347       88.1  %


Medicaid

Medicaid premium revenue increased $979 million, or 19% in the third quarter of
2022, when compared with the third quarter of 2021. Medicaid premium revenue
increased $3.4 billion, or 23% in the nine months ended September 30, 2022, when
compared with the nine months ended September 30, 2021. The increases in both
periods were mainly due to organic membership growth, including our entry into
Nevada, the impact from the Affinity and Cigna acquisitions that closed in the
fourth quarter of 2021 and in January 2022, respectively, and state directed
payments in our Texas health plan. The organic membership growth was across
several states, driven mainly by the extension of the PHE period and the
associated suspension of membership redeterminations due to COVID-19.

As described above in "Trends and Uncertainties," we recognized approximately
$34 million and $156 million in the third quarter and nine months ended
September 30, 2022, respectively, for the impact of risk corridors enacted in
several states since the second quarter of 2020, in response to the lower
utilization of medical services resulting from COVID-19. We recognized
approximately $17 million and $183 million, respectively, for the impact of such
risk corridors in the third quarter and nine months ended September 30, 2021.
The decrease was due to the elimination of most of the COVID-19 risk corridors.

The medical margin in our Medicaid program increased $171 million, or 32%, in
the third quarter of 2022 when compared with the third quarter of 2021, and
increased $481 million, or 29%, in the nine months ended September 30, 2022 when
compared with the nine months ended September 30, 2021. The increase in margin
in both periods was driven by the increased membership growth and premium
revenues discussed above and the MCR decrease discussed below.

The Medicaid MCR decreased 110 basis points to 88.5% in the third quarter of
2022, from 89.6% in the third quarter of 2021, and decreased 60 basis points to
88.2% in the nine months ended September 30, 2022, from 88.8% in the

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nine months ended September 30, 2021. The decrease for both periods is mainly
attributable to medical cost management, lower utilization and the
year-over-year change in the net effect of COVID, partially offset by the impact
of state directed payments in our Texas health plan. The year-over-year change
in the net effect of COVID for the third quarter of 2022 reflects lower COVID
inpatient costs, partially offset by lower COVID-related utilization
curtailment. The 2022 Medicaid MCR is at the lower end of our long-term target
despite the net effect of COVID and other impacts.

Medicare

Medicare premium revenue increased $72 million, or 8%, in the third quarter of
2022 compared to the third quarter of 2021, and increased $359 million, or 14%,
in the nine months ended September 30, 2022 compared to the nine months ended
September 30, 2021. The increase was primarily due to the impact of product
expansion and organic membership growth in existing states, partially offset by
lower premium revenue PMPM from the change in business mix.

The medical margin for Medicare decreased $43 million in the third quarter of
2022, and increased $31 million in the nine months ended September 30, 2022,
when compared to the same periods in 2021. The decrease in the third quarter is
due to the increase in MCR discussed below, partially offset by the increase in
premium revenues. The year-over-year increase for the nine months is mainly due
to the increase in premium revenues, partially offset by the increase in the MCR
discussed below.

The Medicare MCR increased to 88.7% in the third quarter of 2022, from 82.8% in
the third quarter of 2021, or 590 basis points. The Medicare MCR increased to
87.4% in the nine months ended September 30, 2022, compared to 86.8% in the nine
months ended September 30, 2021, or 60 basis points. The MCR increase in both
periods was primarily driven by the year-over-year change in the net effect of
COVID. COVID-related utilization curtailment and corridor adjustments drove a
lower MCR for the 2021 periods. Additionally, the increase in MCR was driven by
higher non-COVID utilization, partially offset by higher risk scores that more
closely reflect the acuity of our membership, and strong medical cost
management. The 2022 year-to-date Medicare MCR is in line with our long-term
target.

Marketplace

Marketplace premium revenue decreased $215 million in the third quarter of 2022
compared to the third quarter of 2021, and decreased $468 million in the nine
months ended September 30, 2022 compared to the nine months ended September 30,
2021. The decrease in both periods was mainly due to expected attrition of
membership, partially offset by an increase in premium revenue PMPM. Our
Marketplace membership as of September 30, 2022, amounted to 353,000 members,
representing a decrease of 366,000 members compared to September 30, 2021. The
increase in premium revenue PMPM is consistent with the product and pricing
strategy, reflecting an increase of members in the silver metal tier and a
decrease of members in the bronze metal tier, partially offset by an increase in
the 2021 risk adjustment payable that was finalized in June 2022.

The Marketplace medical margin increased $9 million in the third quarter of 2022
when compared with the third quarter of 2021, and decreased $76 million in the
nine months ended September 30, 2022 when compared with the nine months ended
September 30, 2021. The improvement in the third quarter is due mainly to the
decrease in MCR discussed below, partially offset by the decrease in premium
revenue. The decrease in year to date results is primarily due to the net
decrease in membership and premiums, and the increase in the MCR described
below.

The Marketplace MCR decreased to 86.3% in the third quarter of 2022, compared to
91.3% in the third quarter of 2021, or 500 basis points, and increased to 85.1%
in the nine months ended September 30, 2022, compared to 84.8% in the nine
months ended September 30, 2021, or 30 basis points. The decrease in MCR for the
third quarter was driven mainly by the year-over-year change in the net effect
of COVID, partially offset by changes in membership mix that includes higher
acuity members. The increase for the nine-month period reflects changes in
membership mix that includes higher acuity members and the unfavorable change in
the 2021 risk adjustment payable recognized in the second quarter of 2022,
partially offset by the year-over-year change in the net effect of COVID. We are
also incurring less MCR seasonality relative to the prior year, due to the lower
deductibles in the silver metal tier product.

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 third quarters of and nine months ended September 30, 2022
and 2021, respectively.

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LIQUIDITY AND FINANCIAL CONDITION

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. In the first half
of 2022, we did not experience noticeable delays to, or changes in, the timing
or level of premium receipts as a result of the COVID-19 pandemic, but there can
be no assurances that we will not experience such delays in the future. See
further discussion below in "Future Sources and Uses of Liquidity-Future
Uses-Potential Impact of COVID-19 Pandemic."

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 third
quarter and nine months ended September 30, 2022, the parent company received
$120 million and $400 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 third quarter and nine months ended
September 30, 2022, the parent company contributed capital of $116 million and
$145 million, respectively, to the regulated health plan subsidiaries.

Cash, cash equivalents and investments at the parent company amounted to
$298 million and $348 million as of September 30, 2022, and December 31, 2021,
respectively. The decrease as of September 30, 2022, was primarily due to our
share repurchase program and the timing of corporate payments and capital
contributions to regulated health plan subsidiaries, partially offset by
dividends received from 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.

We believe that the risks of the COVID-19 pandemic, as they relate to our
investments, are minimal. 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.

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Cash Flow Activities

Our cash flows are summarized as follows:

                                                                Nine Months Ended September 30,
                                                           2022                2021              Change

                                                                         (In millions)
Net cash provided by operating activities             $       985          $   1,522          $    (537)
Net cash used in investing activities                        (938)            (1,106)               168
Net cash used in financing activities                        (258)              (204)               (54)

Net (decrease) increase in cash, cash equivalents,
and restricted cash and cash equivalents

              $      (211)         $     212          $    (423)


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 nine months ended September 30, 2022 was
$985 million, compared with $1,522 million in the nine months ended September
30, 2021. The $537 million decrease in cash flow was due to the net impact of
timing differences in government receivables and payables and partially offset
by an increase in net earnings.

Investing Activities

Net cash used in investing activities was $938 million in the nine months ended
September 30, 2022, compared with $1,106 million used in investing activities in
the nine months ended September 30, 2021, an increase in cash flow of $168
million. This increase in cash flow was primarily due to the net activity of
proceeds and purchases of investments partially, offset by funding of the
AgeWell acquisition, in the nine months ended September 30, 2022.

Financing Activities

Net cash used in financing activities was $258 million in the nine months ended
September 30, 2022, compared with $204 million used in the nine months ended
September 30, 2021, a decrease in cash flow of $54 million. In the nine months
ended September 30, 2022, financing cash outflows included common stock
purchases of $200 million and $53 million for common stock withheld to settle
employee tax obligations. In the nine months ended September 30, 2021, financing
cash outflows included common stock purchases of $128 million and $52 million
for common stock withheld to settle employee tax obligations. Additionally, we
paid $20 million in each of the nine months ended September 30, 2022 and 2021 to
settle contingent consideration liabilities relating to our Kentucky Passport
acquisition that closed in 2020.

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 September 30, 2022, our working capital was $3.3
billion, compared with $3.0 billion at December 31, 2021. At September 30, 2022,
our cash and investments amounted to $8.1 billion, compared with $7.9 billion at
December 31, 2021.

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
$2.2 billion at September 30, 2022, compared with $2.1 billion at December 31,
2021. The aggregate capital and surplus of our regulated, wholly owned
subsidiaries was in excess of these minimum capital requirements as of both
dates.

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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 September 30, 2022, was approximately $170 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 September 30, 2022, 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 September 30, 2022, 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 over 750,000 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. We expect Medicaid enrollment to continue to benefit from
the extension of the PHE period, and the associated pause on membership
redeterminations, at least through mid-January 2023.

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. As a result of the COVID-19 pandemic,
state regulators could further restrict the ability of our regulated health plan
subsidiaries to pay dividends to the parent company, which would reduce the
liquidity of the parent company.

Credit Agreement Borrowing Capacity. As of September 30, 2022, 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 8,
"Debt."

Future Uses

Common Stock Purchases. In September 2021, our board of directors authorized the
purchase of up to $500 million, in the aggregate, of our common stock. This new
program, which superseded the stock purchase program approved by our board of
directors in September 2020, is funded with cash on hand and extends through
December 31, 2022. 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 October 26, 2022, $300 million remained available to
purchase our common stock under this program through December 31, 2022.

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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 early 2023.

Potential Impact of COVID-19 Pandemic. As described above in "Trends and
Uncertainties," we have been subject to Medicaid risk corridors as a result of
the pandemic. Beginning in 2020, various states enacted temporary risk corridors
in response to the reduced demand for medical services stemming from COVID-19,
which have resulted in a reduction of our medical margin. In some cases, these
risk corridors were retroactive to earlier periods in 2020, or as early as the
beginning of the states' fiscal years in 2019. Since the second quarter of 2020,
we have recognized risk corridors that we believe to be probable, and where the
ultimate premium amount is reasonably estimable. For the three and nine months
ended September 30, 2022, we recognized approximately $34 million and
$156 million, respectively, related to such risk corridors, primarily in the
Medicaid segment.

It is possible that certain states could change the structure of existing risk
corridors, implement new risk corridors in the future or discontinue existing
risk corridors. Due to these uncertainties, the ultimate outcomes could differ
materially from our estimates as a result of changes in facts or further
developments, which could have an adverse effect on our consolidated financial
position, results of operations, or cash flows.

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, 2021, was disclosed in our 2021 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 nine months ended September
30, 2022.

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 7, "Medical Claims and Benefits Payable," for a table that
presents the components of the change in medical 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 nine
months ended September 30, 2022 there were no significant changes to our
disclosure reported in "Critical Accounting Estimates" in our 2021 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 nine months ended September 30, 2022, there were no
significant changes to our disclosure reported in "Critical Accounting
Estimates" in our 2021 Annual Report on Form 10-K.

•Business combinations, goodwill, and intangible assets, net. In the nine months
ended September 30, 2022, there were no significant changes to our disclosure
reported in "Critical Accounting Estimates" in our 2021 Annual Report on Form
10-K.


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