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 2022 Annual Report on Form 10-K, including without limitation
risks related to the following matters:

•the impact of Medicaid redeterminations across the country following the ending
of the Public Health Emergency ("PHE") for the COVID-19 pandemic, including the
accuracy of our projections regarding the number of members we expect to retain,
their health acuity levels, and the scale of the transition of members out of
the Medicaid program and the actuarially sound adjustment of rates with regard
to the remaining population;
•budget pressures on state governments following the ending of the PHE and
reduced federal matching funds, and states' efforts to reduce rates or limit
rate increases;
•the constantly evolving market dynamics surrounding the Affordable Care Act
("ACA") Marketplaces, including issues impacting enrollment, special enrollment
periods, member choice, risk adjustment estimates and results, Marketplace plan
insolvencies or receiverships, and the potential for disproportionate enrollment
of higher acuity members;
•the success of our efforts to retain existing or awarded government contracts,
the success of our bid submissions in response to requests for proposal, and our
ability to identify merger and acquisition targets to support our continued
growth over time;
•the success of the scaling up of our operations in California, Iowa, Nebraska,
and Indiana in connection with our recent request for proposal ("RFP") wins;
•our ability to close, integrate, and realize benefits from acquisitions,
including the acquisitions of AgeWell New York and My Choice Wisconsin;
•subsequent adjustments to reported premium revenue based upon subsequent
developments or new information, including changes to estimated amounts payable
or receivable related to Marketplace risk adjustment;
•effective management of our medical costs;
•our ability to predict with a reasonable degree of accuracy utilization rates,
including utilization rates associated with COVID-19;
•cyber-attacks, ransomware attacks, or other privacy or data security incidents
involving either ourselves or our contracted vendors that result in an
inadvertent unauthorized disclosure of protected information, and the extent to
which our working in a remote work environment heightens our exposure to these
risks;
•the ability to manage our operations, including maintaining and creating
adequate internal systems and controls relating to authorizations, approvals,
provider payments, and the overall success of our care management initiatives;
•the impact of our transition to a permanent remote work environment, including
any associated impairment charges or contract termination costs;
•our receipt of adequate premium rates to support increasing pharmacy costs,
including costs associated with specialty drugs and costs resulting from
formulary changes that allow the option of higher-priced non-generic drugs;
•our ability to operate profitably in an environment where the trend in premium
rate increases lags behind the trend in increasing medical costs;
•the interpretation and implementation of federal or state medical cost
expenditure floors, administrative cost and profit ceilings, premium
stabilization programs, profit-sharing arrangements, and risk adjustment
provisions and requirements;
                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 19
--------------------------------------------------------------------------------
  Table of Contents
•our estimates of amounts owed for such minimum annual medical loss ratio
("Minimum MLR"), administrative cost and profit ceilings, premium stabilization
programs, profit-sharing arrangements, and risk adjustment provisions and
requirements;
•the Medicaid expansion medical cost corridor, and any other retroactive
adjustment to revenue where methodologies and procedures are subject to
interpretation or dependent upon information about the health status of
participants other than Molina members;
•the interpretation and implementation of at-risk premium rules and state
contract performance requirements regarding the achievement of certain quality
measures, and our ability to recognize revenue amounts associated therewith;
•the success and continuance of programs in California, Illinois, Michigan,
Ohio, South Carolina, and Texas serving those dually eligible for both Medicaid
and Medicare;
•the accurate estimation of incurred but not reported or paid medical costs
across our health plans;
•efforts by states to recoup previously paid and recognized premium amounts;
•changes in our annual effective tax rate, due to federal and/or state
legislation, or changes in our mix of earnings and other factors;
•the efficient and effective operations of the vendors on whom our business
relies;
•complications, member confusion, eligibility redeterminations, or enrollment
backlogs related to the renewal of Medicaid coverage;
•fraud, waste and abuse matters, government audits or reviews, comment letters,
or potential investigations, and any fine, sanction, enrollment freeze,
corrective action plan, monitoring program, or premium recovery that may result
therefrom;
•the success of our providers, including delegated providers, the adequacy of
our provider networks, the successful maintenance of relations with our
providers, and the potential loss of providers;
•approval by state regulators of dividends and distributions by our health plan
subsidiaries;
•changes in funding under our contracts as a result of regulatory changes,
programmatic adjustments, or other reforms;
•high dollar claims related to catastrophic illness;
•the resolution of litigation, arbitration, or administrative proceedings;
•the greater scale and revenues of our health plans in California, New York,
Ohio, Texas, and Washington, and risks related to the concentration of our
business in those states;
•the failure to comply with the financial or other covenants in our credit
agreement or the indentures governing our outstanding senior notes;
•the availability of adequate financing on acceptable terms to fund and
capitalize our expansion and growth, repay our outstanding indebtedness at
maturity, and meet our general liquidity needs;
•the failure of a state in which we operate to renew its federal Medicaid
waiver;
•changes generally affecting the managed care industry, including any new
federal or state legislation that impacts the business space in which we
operate;
•increases in government surcharges, taxes, and assessments;
•the impact of inflation on our medical costs and the cost of refinancing our
outstanding indebtedness;
•the unexpected loss of the leadership of one or more of our senior executives;
and
•increasing competition and consolidation in the Medicaid industry.

Each of the terms "Molina Healthcare, Inc." "Molina Healthcare," "Company,"
"we," "our," and "us," as used herein, refers collectively to Molina Healthcare,
Inc. and its wholly owned subsidiaries, unless otherwise stated. The Company
assumes no obligation to revise or update any forward-looking statements for any
reason, except as required by law.

Readers should refer to the section entitled "Risk Factors" in our 2022 Annual
Report on Form 10-K, for a discussion of certain risk factors that could
materially affect our business, financial condition, cash flows, or results of
operations. Given these risks and uncertainties, we can give no assurance that
any results or events projected or contemplated by our forward-looking
statements will in fact occur.

This Quarterly Report on Form 10-Q and the following discussion of our financial
condition and results of operations should be read in conjunction with the
accompanying consolidated financial statements and the notes to those statements
appearing elsewhere in this report, and the audited financial statements and
Management's Discussion and Analysis appearing in our 2022 Annual Report on Form
10-K.

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 20

--------------------------------------------------------------------------------

Table of Contents

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 5.3 million members as of March 31, 2023, located across 19
states.

FIRST QUARTER 2023 HIGHLIGHTS

We reported net income of $321 million, or $5.52 per diluted share, for the
first quarter of 2023, which reflected the following:

•Membership increased 181,000, or 4%, compared with March 31, 2022, and
increased sequentially by 8,000 compared to December 31, 2022;
•Premium revenue of $7.9 billion increased 5% compared with the first quarter of
2022, reflecting the increased organic membership in Medicaid and Medicare, and
the impact of acquisitions, partially offset by the impact of expected attrition
in Marketplace membership;
•Consolidated medical care ratio ("MCR") was 87.1%, consistent with the first
quarter of 2022, which we believe demonstrates continued strong operating
performance;
•General and administrative expense ("G&A") ratio of 7.2%, which improved
compared with 7.4% in the first quarter of 2022, reflecting the benefits of
scale produced by our increase in revenue and disciplined cost management; and
•After-tax margin of 3.9%, which was in line with our expectations.


                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 21
--------------------------------------------------------------------------------

Table of Contents

CONSOLIDATED FINANCIAL SUMMARY

                                                                              Three Months Ended March 31,
                                                                                2023                    2022

                                                                         (In millions, except per-share amounts)
Premium revenue                                                         $          7,885            $    7,531
Less: medical care costs                                                           6,871                 6,563
Medical margin                                                                     1,014                   968
MCR (1)                                                                             87.1  %               87.1  %

Other revenues:
Premium tax revenue                                                                  172                   208

Investment income                                                                     71                    11
Other revenue                                                                         21                    20

General and administrative expenses                                                  591                   571
G&A ratio (2)                                                                        7.2  %                7.4  %

Premium tax expenses                                                                 172                   208

Depreciation and amortization                                                         44                    40
Other                                                                                 16                    16
Operating income                                                                     455                   372
Interest expense                                                                      28                    28

Income before income tax expense                                                     427                   344
Income tax expense                                                                   106                    86
Net income                                                              $            321            $      258

Net income per share - Diluted                                          $           5.52            $     4.39

Diluted weighted average shares outstanding                                         58.0                  58.7

Other Key Statistics
Ending membership                                                                    5.3                   5.1
Effective income tax rate                                                           25.0  %               25.0  %
After-tax margin (3)                                                                 3.9  %                3.3  %


________________________

(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 first quarter of 2023 amounted to $321 million, or $5.52 per
diluted share, compared with $258 million, or $4.39 per diluted share, in the
first quarter of 2022. The 24% increase in net income is consistent with the
improvement in operating income, which increased to $455 million in the first
quarter of 2023, compared with $372 million in the first quarter of 2022.

The improvement in operating income was mainly due to membership growth that
drove higher premium revenues, and medical margin, and increased investment
income.

PREMIUM REVENUE

Premium revenue increased $354 million, or 5%, in the first quarter of 2023,
when compared with the first quarter of 2022. The higher premium revenue
reflects increased organic membership in the Medicaid and Medicare segments and
the impact of our recent acquisitions, partially offset by a decline in the
Marketplace segment.

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 22
--------------------------------------------------------------------------------

Table of Contents

MEDICAL CARE RATIO

The consolidated MCR in the first quarter of 2023 was 87.1%, and was consistent
with the first quarter of 2022. The Medicaid and Medicare MCRs increased
slightly, while the Marketplace MCR decreased.

The prior year reserve development in the first quarter of 2023 was favorable,
but its impact on earnings was mostly absorbed by minimum MLRs and medical cost
corridors.

PREMIUM TAX REVENUE AND EXPENSES

The premium tax ratio (premium tax expense as a percentage of premium revenue
plus premium tax revenue) was 2.1% and 2.7% for the first quarter of 2023 and
2022, respectively. The current year ratio decrease was mainly due to changes in
business mix.

INVESTMENT INCOME

Investment income increased to $71 million in the first quarter of 2023,
compared with $11 million in the first quarter of 2022, mainly due to an
increase in interest rates and, to a lesser extent, higher levels of invested
assets.

OTHER REVENUE

Other revenue amounted to $21 million in the first quarter of 2023, compared
with $20 million in the first quarter of 2022. Other revenue mainly includes
service revenue associated with long-term services and supports consultative
services we provide in Wisconsin.

G&A EXPENSES

The G&A expense ratio was 7.2% in the first quarter of 2023, compared with 7.4%
in the first quarter of 2022, mainly reflecting the benefits of scale produced
by our increase in revenue and continued disciplined cost management, net of
deployment costs for new business implementation associated with our recent
contract wins that will start in mid-2023 and January 2024.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased to $44 million in the first quarter of
2023, compared with $40 million in the first quarter of 2022, due primarily to
amortization associated with the AgeWell acquisition completed in the fourth
quarter of 2022.

OTHER OPERATING EXPENSES

Other operating expenses totaled $16 million in the first quarter of 2023 and
were consistent with the first quarter of 2022. Other operating expenses mainly
include service costs associated with long-term services and supports
consultative services we provide in Wisconsin, as noted above.

INTEREST EXPENSE

Interest expense totaled $28 million in the first quarter of 2023 and was
consistent with the first quarter of 2022.

INCOME TAXES

Income tax expense amounted to $106 million in the first quarter of 2023, or
25.0% of pretax income, compared with income tax expense of $86 million, or
25.0% of pretax income in the first quarter of 2022.

TRENDS AND UNCERTAINTIES

COVID-19 PANDEMIC

Federal Economic Stabilization and Other Programs

On January 30, 2023, the Biden Administration issued a Statement of
Administration Policy declaring its intent to end the PHE on May 11, 2023. While
the Consolidated Appropriations Act of 2023 decoupled Medicaid eligibility
redeterminations from the PHE, there are several other healthcare programs tied
to the PHE which will be impacted by this change in policy. These include
coverage of COVID-19 testing and vaccines, changes to the Medicare fee schedule
for COVID-related treatments, and free coverage of at-home COVID-19 diagnostic
tests. Upon the end of the PHE on May 11, 2023, per federal statutory and
regulatory requirements, some of these policies will end immediately, some will
continue for the rest of 2023 or through 2024, and some will remain in place
permanently.

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 23

--------------------------------------------------------------------------------

Table of Contents

Operations

Enrollment and Premium Revenue

Excluding acquisitions and our exit from Puerto Rico, we added approximately
800,000 new Medicaid members since March 31, 2020, when we first began to report
on the impacts of the pandemic. We believe this membership increase was mainly
due to the suspension of redeterminations for Medicaid eligibility. The recently
passed Consolidated Appropriations Act of 2023 authorizes states to resume
redeterminations and terminate coverage for ineligible enrollees starting on
April 1, 2023, irrespective of the status of the PHE. Consequently, Medicaid
enrollment continued to benefit from the pause on membership redeterminations
through March 31, 2023, and then is expected to decline as states resume normal
enrollment and renewal operations on April 1, 2023. We expect to retain
approximately half the membership gained since March 31, 2020 through a variety
of well-established operational protocols where allowed.

OTHER RECENT DEVELOPMENTS

Indiana Procurement-Medicaid. In March 2023, we announced that the Indiana
Department of Administration has recommended that contract negotiations begin
with our Indiana health plan. Under the proposed contract with the Indiana
Family and Social Services Administration ("FSSA"), we are expected to provide
risk-based managed care long term services and supports as part of the Indiana
Pathways for Aging LTSS program pursuant to the request for proposal issued by
FSSA in February 2022. The new contract is expected to have an initial four-year
term, with the potential for two one-year renewal terms.

For a discussion of additional segment trends, uncertainties and other
developments, refer to our 2022 Annual Report on Form 10-K, "Item 1.
Business-Our Business," and "-Legislative and Political Environment."

REPORTABLE SEGMENTS

As of March 31, 2023, we served approximately 5.3 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 4 reportable segments consisting of: 1) Medicaid; 2) Medicare;
3) Marketplace; and 4) Other.

The Medicaid, Medicare, and Marketplace segments represent the government-funded
or sponsored programs under which we offer managed healthcare services. The
Other segment, which is insignificant to our consolidated results of operations,
includes long-term services and supports consultative services in Wisconsin.

HOW WE ASSESS PERFORMANCE

We derive our revenues primarily from health insurance premiums. Our primary
customers are state Medicaid agencies and the federal government.

The key metrics used to assess the performance of our Medicaid, Medicare, and
Marketplace segments are premium revenue, medical margin and medical care ratio
("MCR"). MCR represents the amount of medical care costs as a percentage of
premium revenue. Therefore, the underlying medical margin, or the amount earned
by the Medicaid, Medicare, and Marketplace segments after medical costs are
deducted from premium revenue, represents the most important measure of earnings
reviewed by management, and is used by our chief executive officer to review
results, assess performance, and allocate resources. The key metric used to
assess the performance of our Other segment is service margin. The service
margin is equal to service revenue minus cost of service revenue.

Management's discussion and analysis of the change in medical margin is
discussed below under "Segment Financial Performance." For more information, see
Notes to Consolidated Financial Statements, Note 8, "Segments."

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 24
--------------------------------------------------------------------------------

Table of Contents

SEGMENT MEMBERSHIP

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

                 March 31,         December 31,         March 31,
                   2023                2022               2022
Medicaid       4,834,000          4,754,000           4,566,000
Medicare         161,000            156,000             148,000
Marketplace      271,000            348,000             371,000
Total          5,266,000          5,258,000           5,085,000

SEGMENT FINANCIAL PERFORMANCE

The following table summarizes premium revenue, medical margin, and MCR by
segment for the periods indicated (dollars in millions):

                                                  Three Months Ended March 31,
                                           2023                                  2022
                             Premium      Medical                  Premium      Medical
                             Revenue      Margin        MCR        Revenue       Margin        MCR
              Medicaid      $ 6,349      $   734       88.4  %    $ 5,980      $    710       88.1  %
              Medicare        1,046          126       88.0           943           128       86.5
              Marketplace       490          154       68.6           608           130       78.6
              Total         $ 7,885      $ 1,014       87.1  %    $ 7,531      $    968       87.1  %


Medicaid

Medicaid premium revenue increased $369 million, or 6%, in the first quarter of
2023, when compared with the first quarter of 2022. The increase was mainly due
to organic membership growth and the impact from the AgeWell acquisition that
closed in the fourth quarter of 2022, partially offset by the impact of minimum
MLR and medical cost corridors. Excluding the AgeWell acquisition, membership
growth was across several states and was mainly driven by the extension of the
PHE period and the associated suspension of membership redeterminations due to
COVID-19.

The medical margin in our Medicaid program increased $24 million, or 3%, in the
first quarter of 2023 when compared with the first quarter of 2022. The increase
was driven by increased premium revenues and margin associated with the
membership growth discussed above, partially offset by an increase in the MCR.

The Medicaid MCR increased to 88.4% in the first quarter of 2023, from 88.1% in
the first quarter of 2022, or 30 basis points. The increase was mainly
attributable to certain state rate actions and retrospective premium
adjustments, and changes in business mix, partially offset by improved
operations, including medical cost management. The Medicaid MCR for the first
quarter of 2023 is consistent with our long-term target range.

Medicare

Medicare premium revenue increased $103 million, or 11%, in the first quarter of
2023 when compared to the first quarter of 2022. The increase was primarily due
to the impact of MAPD and D-SNP membership expansion, including organic
membership growth in existing states.

The medical margin for Medicare decreased $2 million in the first quarter of
2023, when compared with the first quarter of 2022, mainly due to the increase
in MCR discussed below, partially offset by the increase in premium revenues.

The Medicare MCR increased to 88.0% in the first quarter of 2023, from 86.5% in
the first quarter of 2022, or 150 basis points. The increase was primarily
driven by higher non-COVID utilization and the impact of lower risk-adjusted
premiums associated with first year MAPD members, partially offset by higher
risk scores on renewing members that more closely reflect the acuity of our
membership, and strong medical cost management. The Medicare MCR for the first
quarter of 2023 is within our long-term target range.
                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 25
--------------------------------------------------------------------------------

Table of Contents

Marketplace

Marketplace premium revenue in the first quarter of 2023 decreased $118 million,
compared with the first quarter of 2022, mainly due to an expected reduction in
membership, partially offset by an increase in premium revenue PMPM. Our
Marketplace membership as of March 31, 2023 amounted to 271,000 members,
representing a decline of 77,000 members compared to December 31, 2022, which is
in line with our product and pricing strategy to achieve our target margins in
this segment. The increase in premium revenue PMPM is consistent with the
product and pricing strategy.

The Marketplace medical margin increased $24 million in the first quarter of
2023, when compared with the first quarter of 2022, primarily due to the
decrease in the MCR discussed below, partially offset by the decrease in
membership and premiums.

The Marketplace MCR decreased to 68.6% in the first quarter of 2023, from 78.6%
in the first quarter of 2022. The decrease resulted mainly from our product and
pricing strategy to achieve our target margins and a favorable change in the
2022 risk adjustment payable, partially offset by changes in membership mix
discussed above. Our first quarter Marketplace MCR was significantly below full
year expectations, but consistent with seasonality patterns. Silver metal tier
products incur less MCR seasonality than bronze metal tier products due to lower
deductibles.

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 in the first quarters of 2023 and 2022, respectively.

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.

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 three
months ended March 31, 2023, the parent company received $100 million 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 three months ended March 31, 2023, the
parent company contributed capital in the aggregate amount of $16 million, to
certain of the regulated health plan subsidiaries.

Cash, cash equivalents and investments at the parent company amounted to
$283 million and $375 million as of March 31, 2023, and December 31, 2022,
respectively. The decrease as of March 31, 2023, was primarily due to 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.

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 26

--------------------------------------------------------------------------------

Table of Contents

Our investment policies are designed to provide liquidity, preserve capital, and
maximize total return on invested assets, all in a manner consistent with state
requirements that prescribe the types of instruments in which our subsidiaries
may invest. These investment policies require that our investments have final
maturities of less than 15 years, or less than 15 years average life for
structured securities. Professional portfolio managers operating under
documented guidelines manage our investments and a portion of our cash
equivalents. Our portfolio managers must obtain our prior approval before
selling investments where the loss position of those investments exceeds certain
levels.

The overall rating of our portfolio remains strong and is rated A+. Our
investment policy has directives in conjunction with state guidelines to
minimize risks and exposures in volatile markets. Additionally, our portfolio
managers assist us in navigating volatility in the capital markets.

Our restricted investments are invested principally in cash, cash equivalents,
U.S. Treasury securities, and corporate debt securities; we have the ability to
hold such restricted investments until maturity. All of our unrestricted
investments are classified as current assets.

Cash Flow Activities

Our cash flows are summarized as follows:

                                                                  Three Months Ended March 31,
                                                          2023                2022              Change

                                                                         (In millions)
Net cash provided by operating activities             $      916          $     363          $      553
Net cash (used in) provided by investing activities         (302)                74                (376)
Net cash used in financing activities                        (65)               (77)                 12
Net increase in cash, cash equivalents, and
restricted cash and cash equivalents                  $      549          $     360          $      189


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 three months ended March 31, 2023 was
$916 million, compared with $363 million in the three months ended March 31,
2022. The $553 million increase in cash flow was due to the net impact of timing
differences in government receivables and payables and the growth in operations
and net earnings.

Investing Activities

Net cash used in investing activities was $302 million in the three months ended
March 31, 2023, compared with $74 million cash provided by investing activities
in the three months ended March 31, 2022, a decrease in cash flow of $376
million. This decrease in cash flow was primarily due to the net activity of
proceeds and purchases of investments in the three months ended March 31, 2023.

Financing Activities

Net cash used in financing activities was $65 million in the three months ended
March 31, 2023, compared with $77 million used in the three months ended March
31, 2022, an increase in cash flow of $12 million. In the three months ended
March 31, 2023, financing cash outflows included $58 million for common stock
withheld to settle employee tax obligations. In the three months ended March 31,
2022, financing cash outflows included $52 million for common stock withheld to
settle employee tax obligations. Additionally, we paid $20 million in the three
months ended March 31, 2022, to settle contingent consideration liabilities.

FINANCIAL CONDITION

We believe that our cash resources, borrowing capacity available under the
Credit Agreement as discussed further below in "Future Sources and Uses of
Liquidity-Future Sources," and internally generated funds will be sufficient to
support our operations, regulatory requirements, debt repayment obligations and
capital expenditures for at least the next 12 months.

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 27
--------------------------------------------------------------------------------

Table of Contents

On a consolidated basis, at March 31, 2023, our working capital was $3.5
billion, compared with $3.2 billion at December 31, 2022. At March 31, 2023, our
cash and investments amounted to $8.6 billion, compared with $7.7 billion at
December 31, 2022. A significant portion of our portfolio is held in cash and
cash equivalents and we do not anticipate the fluctuations in the aggregate fair
value of our financial assets to have a material impact on our liquidity or
capital position since we intend to hold our securities to maturity. Net
unrealized losses on our investments classified as current and available for
sale decreased to $164 million at March 31, 2023 compared to $210 million at
December 31, 2022. We have determined that the unrealized losses primarily
resulted from fluctuating interest rates, rather than a deterioration of the
creditworthiness of the issuers.

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 March 31, 2023, compared with $2.3 billion at December 31, 2022.
The aggregate capital and surplus of our regulated, wholly owned subsidiaries
was in excess of these minimum capital requirements as of both dates.

Under applicable regulatory requirements, the amount of dividends that may be
paid by our regulated, wholly owned subsidiaries without prior approval by
regulatory authorities as of March 31, 2023, was approximately $270 million in
the aggregate. These subsidiaries may pay dividends over this amount, but only
after approval is granted by the regulatory authorities.

Based on our cash and investments balances as of March 31, 2023, management
believes that our regulated, wholly owned subsidiaries remain well capitalized
and exceed their regulatory minimum requirements. We have the ability, and have
committed to provide, additional capital to each of our health plans as
necessary to ensure compliance with statutory capital and surplus requirements.

Debt Ratings

Each of our senior notes is rated "BB-" by Standard & Poor's, and "Ba3" by
Moody's Investor Service, Inc. A downgrade in our ratings could adversely affect
our borrowing capacity and increase our future borrowing costs.

Financial Covenants

The Credit Agreement contains customary non-financial and financial covenants,
including a net leverage ratio and an interest coverage ratio. Such ratios are
computed as defined by the terms of the Credit Agreement.

In addition, the indentures governing each of our outstanding senior notes
contain cross-default provisions that are triggered upon default by us or any of
our subsidiaries on any indebtedness in excess of the amount specified in the
applicable indenture. As of March 31, 2023, we were in compliance with all
financial and non-financial covenants under the Credit Agreement and the
indentures governing our senior notes.

FUTURE SOURCES AND USES OF LIQUIDITY

Future Sources

Our regulated subsidiaries generate significant cash flows from premium revenue,
which is generally received a short time before related healthcare services are
paid. Premium revenue is our primary source of liquidity. Thus, any decline in
the receipt of premium revenue, and our profitability, could have a negative
impact on our liquidity.

Potential Impact of COVID-19 Pandemic. Excluding acquisitions and our exit from
Puerto Rico, we added approximately 800,000 new Medicaid members since March 31,
2020, when we first began to report on the impacts of the pandemic. We believe
this membership increase was mainly due to the suspension of redeterminations
for Medicaid eligibility. The recently passed Consolidated Appropriations Act of
2023 authorizes states to resume redeterminations and terminate coverage for
ineligible enrollees starting on April 1, 2023, irrespective of the status of
the PHE. Consequently, Medicaid enrollment continued to benefit from the pause
on membership redeterminations through March 31, 2023, and then is expected to
decline as states resume normal enrollment and renewal operations on April 1,
2023. We expect to retain approximately half the membership gained since March
31, 2020 through a variety of well-established operational protocols where
allowed.

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.

                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 28
--------------------------------------------------------------------------------

Table of Contents

Credit Agreement Borrowing Capacity. As of March 31, 2023, we had available
borrowing capacity of $1 billion under the revolving credit facility of our
Credit Agreement. In addition, the Credit Agreement provides for a $15 million
swingline sub-facility and a $100 million letter of credit sub-facility, as well
as incremental term loans available to finance certain acquisitions up to
$500 million, plus an unlimited amount of such term loans as long as our
consolidated net leverage ratio is not greater than a defined maximum. See
further discussion in the Notes to Consolidated Financial Statements, Note 7,
"Debt."

Future Uses

Common Stock Purchases. In November 2022, our board of directors authorized the
purchase of up to $500 million, in the aggregate, of our common stock. This new
program, which superseded the stock purchase program approved by our board of
directors in September 2021, will be funded with cash on hand and extends
through December 31, 2023. The exact timing and amount of any repurchase is
determined by management based on market conditions and share price, in addition
to other factors, and subject to the restrictions relating to volume, price, and
timing under applicable law. As of March 31, 2023, $300 million remained
available to purchase our common stock under this program through December 31,
2023.

Acquisitions. On July 13, 2022, we announced a definitive agreement to acquire
substantially all the assets of My Choice Wisconsin ("MCW"). The purchase price
for the transaction is approximately $150 million, net of expected tax benefits
and required regulatory capital, which we intend to fund with cash on hand. The
transaction is subject to receipt of applicable federal and state regulatory
approvals, and the satisfaction of other customary closing conditions. We
currently expect the transaction to close in mid-2023.

Regulatory Capital Requirements. We have the ability, and have committed to
provide, additional capital to each of our health plans as necessary to ensure
compliance with statutory capital and surplus requirements.

CONTRACTUAL OBLIGATIONS

A summary of future obligations under our various contractual obligations and
commitments as of December 31, 2022, was disclosed in our 2022 Annual Report on
Form 10-K.

There were no significant changes to our contractual obligations and commitments
outside the ordinary course of business during the three months ended March 31,
2023.

CRITICAL ACCOUNTING ESTIMATES

When we prepare our consolidated financial statements, we use estimates based on
assumptions that may affect reported amounts and disclosures; actual results
could differ from these estimates. Our critical accounting estimates relate to:

•Medical claims and benefits payable. Refer to Notes to Consolidated Financial
Statements, Note 6, "Medical Claims and Benefits Payable," for a table that
presents the components of the change in medical 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 three
months ended March 31, 2023 there were no significant changes to our disclosure
reported in "Critical Accounting Estimates" in our 2022 Annual Report on Form
10-K.

•Contractual provisions that may adjust or limit revenue or profit. For a
discussion of this topic, including amounts recorded in our consolidated
financial statements, refer to Notes to Consolidated Financial Statements, Note
2, "Significant Accounting Policies."

•Quality incentives. In the three months ended March 31, 2023, there were no
significant changes to our disclosure reported in "Critical Accounting
Estimates" in our 2022 Annual Report on Form 10-K.

•Business combinations, goodwill, and intangible assets, net. In the three
months ended March 31, 2023, there were no significant changes to our disclosure
reported in "Critical Accounting Estimates" in our 2022 Annual Report on Form
10-K.


                           Molina Healthcare, Inc. March 31, 2023 Form 10-Q | 29

--------------------------------------------------------------------------------

Table of Contents