10-Q 1 moh-20220630.htm 10-Q moh-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number: 001-31719
moh-20220630_g1.jpg
MOLINA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-4204626
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
200 Oceangate, Suite 100
 
Long Beach,California90802
(Address of principal executive offices) (Zip Code)
(562) 435-3666
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par Value MOHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer   Accelerated Filer Non-Accelerated Filer Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
The number of shares of the issuer’s Common Stock, $0.001 par value, outstanding as of July 22, 2022, was approximately 58,100,000.


MOLINA HEALTHCARE, INC. FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

TABLE OF CONTENTS




CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(Dollars in millions, except per-share amounts)
(Unaudited)
Revenue:
Premium revenue$7,799 $6,583 $15,330 $12,889 
Premium tax revenue215 185 423 372 
Investment income 22 10 33 19 
Other revenue18 22 38 42 
Total revenue8,054 6,800 15,824 13,322 
Operating expenses:
Medical care costs6,872 5,819 13,435 11,293 
General and administrative expenses551 484 1,122 957 
Premium tax expenses215 185 423 372 
Depreciation and amortization44 31 84 64 
Other11 8 27 28 
Total operating expenses7,693 6,527 15,091 12,714 
Operating income361 273 733 608 
Other expenses, net:
Interest expense27 30 55 60 
Total other expenses, net27 30 55 60 
Income before income tax expense334 243 678 548 
Income tax expense86 58 172 135 
Net income$248 $185 $506 $413 
Net income per share - Basic $4.29 $3.20 $8.74 $7.14 
Net income per share - Diluted $4.25 $3.16 $8.63 $7.05 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(In millions)
(Unaudited)
Net income$248 $185 $506 $413 
Other comprehensive loss:
Unrealized investment (loss) gain(62)1 (162)(14)
Less: effect of income taxes
(15)1 (39)(3)
Other comprehensive loss, net of tax (47) (123)(11)
Comprehensive income$201 $185 $383 $402 
See accompanying notes.
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 3

CONSOLIDATED BALANCE SHEETS
June 30,
2022
December 31,
2021
(Dollars in millions,
except per-share amounts)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$4,312 $4,438 
Investments3,567 3,202 
Receivables2,240 2,177 
Prepaid expenses and other current assets213 247 
Total current assets10,332 10,064 
Property, equipment, and capitalized software, net401 396 
Goodwill, and intangible assets, net1,286 1,252 
Restricted investments219 212 
Deferred income taxes 141 106 
Other assets193 179 
Total assets$12,572 $12,209 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable$3,775 $3,363 
Amounts due government agencies 2,722 2,472 
Accounts payable, accrued liabilities and other715 842 
Deferred revenue13 370 
Total current liabilities7,225 7,047 
Long-term debt2,175 2,173 
Finance lease liabilities216 219 
Other long-term liabilities126 140 
Total liabilities9,742 9,579 
Stockholders’ equity:
Common stock, $0.001 par value, 150 million shares authorized; outstanding: 58 million shares at June 30, 2022 and December 31, 2021
  
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding
  
Additional paid-in capital251 236 
Accumulated other comprehensive loss(128)(5)
Retained earnings2,707 2,399 
Total stockholders’ equity2,830 2,630 
Total liabilities and stockholders’ equity$12,572 $12,209 
See accompanying notes.
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
OutstandingAmount
(In millions)
(Unaudited)
Balance at December 31, 202158 $ $236 $(5)$2,399 $2,630 
Net income— — — — 258 258 
Other comprehensive loss, net— — — (76)— (76)
Share-based compensation1 — (18)— — (18)
Balance at March 31, 202259  218 (81)2,657 2,794 
Net income— — — — 248 248 
Common stock purchases (1)— (2)— (198)(200)
Other comprehensive loss, net— — — (47)— (47)
Share-based compensation— — 35 — — 35 
Balance at June 30, 202258 $ $251 $(128)$2,707 $2,830 

Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
OutstandingAmount
(In millions)
(Unaudited)
Balance at December 31, 202059 $ $199 $37 $1,860 $2,096 
Net income— — — — 228 228 
Common stock purchases(1)— (2)— (120)(122)
Other comprehensive loss, net— — — (11)— (11)
Share-based compensation— — (27)— — (27)
Balance at March 31, 202158  170 26 1,968 2,164 
Net income— — — — 185 185 
Share-based compensation— — 21 — — 21 
Balance at June 30, 202158 $ $191 $26 $2,153 $2,370 
See accompanying notes.
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 5

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
 20222021
(In millions)
(Unaudited)
Operating activities:
Net income$506 $413 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization84 64 
Deferred income taxes3 7 
Share-based compensation57 35 
Other, net(6)10 
Changes in operating assets and liabilities:
Receivables(43)(192)
Prepaid expenses and other current assets(64)(6)
Medical claims and benefits payable405 272 
Amounts due government agencies 247 792 
Accounts payable, accrued liabilities and other(147)(15)
Deferred revenue(357)(333)
Income taxes46 14 
Net cash provided by operating activities731 1,061 
Investing activities:
Purchases of investments(1,413)(1,006)
Proceeds from sales and maturities of investments879 622 
Purchases of property, equipment and capitalized software(50)(29)
Other, net(7)5 
Net cash used in investing activities(591)(408)
Financing activities:
Common stock purchases(200)(128)
Common stock withheld to settle employee tax obligations(53)(52)
Contingent consideration liabilities settled(20)(20)
Other, net5  
Net cash used in financing activities(268)(200)
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents(128)453 
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period4,506 4,223 
Cash, cash equivalents, and restricted cash and cash equivalents at end of period$4,378 $4,676 

Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2022

1. Organization and Basis of Presentation
Organization and Operations
Molina Healthcare, Inc. provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.
As of June 30, 2022, we served approximately 5.1 million members eligible for government-sponsored healthcare programs, located across 19 states.
Our state Medicaid contracts typically have terms of three to five years, contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause. Such contracts are subject to risk of loss in states that issue requests for proposal (“RFPs”) open to competitive bidding by other health plans. If one of our health plans is not a successful responsive bidder to a state RFP, its contract may not be renewed.
In addition to contract renewal, our state Medicaid contracts may be periodically amended to include or exclude certain health benefits (such as pharmacy services, behavioral health services, or long-term care services); populations such as the aged, blind or disabled (“ABD”); and regions or service areas.
Recent Developments
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”). As of May 2022, MCW served over 44,000 managed long-term services and supports and core Medicaid members throughout Wisconsin, delivering approximately $1 billion in premium revenue for the 12 months ended March 31, 2022. 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 2022.
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. See Note 4, “Business Combinations,” for further information.
New York Acquisition—Medicaid. On October 7, 2021, we announced a definitive agreement to acquire the Medicaid Managed Long Term Care business of AgeWell New York. The purchase price for the transaction is approximately $106 million, net of certain tax benefits and target allocation of required regulatory capital, which we intend to fund with cash on hand. The transaction is subject to applicable federal and state regulatory approvals and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the fourth quarter of 2022.
California Procurement—Medicaid. In April 2022, we submitted our RFP response. We expect the award to be announced in early August 2022, with an effective date of January 2024.
Texas Procurement—Medicaid. In March 2022, the Texas Health and Human Services Commission posted the ABD program (known in Texas as STAR+PLUS) RFP, with awards estimated to be announced in the first quarter of 2023, and start of operations in February 2024.
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. The four year contract with a possible two-year extension was ratified in September 2021.
Consolidation and Interim Financial Information
The consolidated financial statements include the accounts of Molina Healthcare, Inc., and its subsidiaries. In the opinion of management, these financial statements reflect all normal recurring adjustments, which are considered necessary for a fair presentation of the results as of the dates and for the interim periods presented have been included. All significant intercompany balances and transactions have been eliminated. The consolidated results of
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 7

operations for the six months ended June 30, 2022 are not necessarily indicative of the results for the entire year ending December 31, 2022.
The unaudited consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read or have access to our audited consolidated financial statements for the fiscal year ended December 31, 2021. Accordingly, certain disclosures that would substantially duplicate the disclosures contained in our December 31, 2021, audited consolidated financial statements have been omitted. These unaudited consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements for the fiscal year ended December 31, 2021.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

2. Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term, highly liquid investments that are both readily convertible into known amounts of cash and have a maturity of three months or less on the date of purchase. The following table provides a reconciliation of cash and cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets.
June 30,
 20222021
(In millions)
Cash and cash equivalents$4,312 $4,608 
Restricted cash and cash equivalents66 68 
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows
$4,378 $4,676 
Receivables
Receivables consist primarily of premium amounts due from government agencies, which are subject to potential retroactive adjustments. Because substantially all of our receivable amounts are readily determinable and substantially all of our creditors are governmental authorities, our allowance for credit losses is insignificant. Any amounts determined to be uncollectible are charged to expense when such determination is made.
June 30,
2022
December 31,
2021
(In millions)
Government receivables$1,628 $1,566 
Pharmacy rebate receivables272 276 
Other340 335 
Total$2,240 $2,177 
Premium Revenue Recognition and Amounts Due Government Agencies
Premium revenue is generated from our contracts with state and federal agencies, in connection with our participation in the Medicaid, Medicare, and Marketplace programs. Premium revenue is generally received based on per member per month (“PMPM”) rates established in advance of the periods covered. These premium revenues are recognized in the month that members are entitled to receive healthcare services, and premiums collected in advance are deferred. State Medicaid programs and the federal Medicare program periodically adjust premium rates.
Certain components of premium revenue are subject to accounting estimates and are described in further detail below, and in our 2021 Annual Report on Form 10-K, Note 2, “Significant Accounting Policies,” under “Contractual Provisions That May Adjust or Limit Revenue or Profit,” and “Quality Incentives.”
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 8

Contractual Provisions That May Adjust or Limit Revenue or Profit
Many of our contracts contain provisions that may adjust or limit revenue or profit, as described below. Consequently, we recognize premium revenue as it is earned under such provisions. Liabilities accrued for premiums to be returned under such provisions are reported in the aggregate as “Amounts due government agencies,” in the accompanying consolidated balance sheets.
The following table sets forth amounts due government agencies, categorized by program:
June 30,
2022
December 31,
2021
(In millions)
Medicaid program:
Minimum MLR and profit sharing$1,018 $1,016 
Other402 263 
Medicare program:
Risk adjustment and Part D risk sharing68 89 
Minimum MLR and profit sharing 115 101 
Other22 35 
Marketplace program:
Risk adjustment1,037 902 
Minimum MLR7 18 
Other53 48 
Total amounts due government agencies$2,722 $2,472 
Medicaid Program
Minimum MLR and Retroactive Premium Adjustments. State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we adjust our premium revenue in the period in which we determine that the adjustment is probable and reasonably estimable, based on our best estimate of the ultimate premium we expect to realize for the period being adjusted.
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 six months ended June 30, 2022, we recognized approximately $94 million and $122 million, respectively, related to such risk corridors, primarily in the Medicaid segment, compared to $56 million and $166 million, respectively, recognized in the three and six months ended June 30, 2021. The decrease is due to the elimination of several 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.
Marketplace Program
Risk Adjustment. Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score (risk adjustment payable), and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score (risk adjustment receivable). We estimate our ultimate premium based on insurance policy year-to-date experience, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of income. As of June 30, 2022, Marketplace risk adjustment payables amounted to $1,037 million and related receivables amounted to $61 million, for a net payable of $976 million. As of December 31, 2021, Marketplace risk adjustment payables amounted to $902 million and related receivables amounted to $7 million, for a net payable of $895 million.
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 9

Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, receivables, and restricted investments. Our investments and a portion of our cash equivalents are managed by professional portfolio managers operating under documented investment guidelines. Our portfolio managers must obtain our prior approval before selling investments where the loss position of those investments exceeds certain levels. Our investments consist primarily of investment-grade debt securities with final maturities of less than 15 years, or less than 15 years average life for structured securities. Restricted investments are invested principally in cash, cash equivalents, and U.S. Treasury securities. Concentration of credit risk with respect to accounts receivable is limited because our payors consist principally of the federal government, and governments of each state in which our health plan subsidiaries operate.
Income Taxes
The provision for income taxes is determined using an estimated annual effective tax rate, which generally differs from the U.S. federal statutory rate primarily because of foreign and state taxes, and nondeductible expenses such as certain compensation and other general and administrative expenses.
The effective tax rate may be subject to fluctuations during the year as new information is obtained. Such information may affect the assumptions used to estimate the annual effective tax rate, including projected pretax earnings, the mix of pretax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, the recognition or the reversal of the recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where we conduct business. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities, along with net operating loss and tax credit carryovers.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not have, nor does management expect such pronouncements to have, a significant impact on our present or future consolidated financial statements.

3. Net Income Per Share
The following table sets forth the calculation of basic and diluted net income per share:
Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
 (In millions, except net income per share)
Numerator:
Net income$248 $185 $506 $413 
Denominator:
Shares outstanding at the beginning of the period58.1 57.7 57.9 58.0 
Weighted-average number of shares issued:
Stock-based compensation  0.2 0.2 
Stock purchases(0.3) (0.2)(0.5)
Denominator for basic net income per share57.8 57.7 57.9 57.7 
Effect of dilutive securities: (1)
Stock-based compensation0.6 0.7 0.7 0.8 
Denominator for diluted net income per share58.4 58.4 58.6 58.5 
Net income per share - Basic (2)
$4.29 $3.20 $8.74 $7.14 
Net income per share - Diluted (2)
$4.25 $3.16 $8.63 $7.05 
______________________________
(1)    The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method.
(2)    Source data for calculations in thousands.
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 10

    
4. Business Combinations
Cigna. On January 1, 2022, we closed on our acquisition of Cigna Corporation’s Texas Medicaid and Medicare-Medicaid Plan contracts, along with certain operating assets, for purchase consideration of approximately $60 million. We acquired membership and a provider network with a preliminary fair value of approximately $36 million. We allocated the remaining $24 million of purchase consideration to goodwill, primarily in the Medicaid segment, which relates to future economic benefits arising from expected synergies from the use of our existing infrastructure to support the added membership, and from the assembled workforce. The goodwill is deductible for income tax purposes.
Affinity. On October 25, 2021, we closed on our acquisition of substantially all of the assets of Affinity Health Plan, Inc., a Medicaid health plan in New York, for initial purchase consideration of approximately $176 million. In the six months ended June 30, 2022, we recorded various measurement period adjustments, including an increase of $7 million to “Medical claims and benefits payable,” and an increase of $17 million to “Receivables” net of “Amounts due government agencies.” In the aggregate, we recorded a net increase of $11 million to goodwill for these measurement period adjustments and various purchase price adjustments.

5. Fair Value Measurements
We consider the carrying amounts of current assets and current liabilities to approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization or payment. For our financial instruments measured at fair value on a recurring basis, we prioritize the inputs used in measuring fair value according to the three-tier fair value hierarchy. For a description of the methods and assumptions used to: a) estimate the fair value; and b) determine the classification according to the fair value hierarchy for each financial instrument, refer to our 2021 Annual Report on Form 10-K, Note 5, “Fair Value Measurements.”
The net changes in fair value of Level 3 financial instruments are reported in “Other” operating expenses in our consolidated statements of income. In the six months ended June 30, 2022 and 2021, we recognized a loss of $4 million and $3 million, respectively, for the increase in the fair value of the contingent consideration liabilities described below.
Our financial instruments measured at fair value on a recurring basis at June 30, 2022, were as follows:
Observable InputsDirectly or Indirectly Observable InputsUnobservable Inputs
Total(Level 1) (Level 2) (Level 3)
 (In millions)
Corporate debt securities$2,268 $ $2,268 $ 
Mortgage-backed securities717  717  
Asset-backed securities293  293  
Municipal securities146  146  
U.S. Treasury notes96  96  
Other
47  47  
Total assets$3,567 $ $3,567 $ 
Contingent consideration liabilities$8 $ $ $8 
Total liabilities$8 $ $ $8 
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 11

Our financial instruments measured at fair value on a recurring basis at December 31, 2021, were as follows:
Observable InputsDirectly or Indirectly Observable InputsUnobservable Inputs
Total(Level 1)(Level 2)(Level 3)
 (In millions)
Corporate debt securities$1,833 $ $1,833 $ 
Mortgage-backed securities614  614  
Asset-backed securities247  247  
Municipal securities123  123  
U.S. Treasury notes353  353  
Other
32  32  
Total assets $3,202 $ $3,202 $ 
Contingent consideration liabilities $47 $ $ $47 
Total liabilities$47 $ $ $47 
Contingent Consideration Liabilities
Our Level 3 financial instruments at June 30, 2022 are comprised solely of contingent consideration liabilities of $8 million, in connection with our 2020 acquisition of certain assets of Passport Health Plan, Inc., a Medicaid health plan in Kentucky. Such liabilities are recorded at fair value on a recurring basis. In the six months ended June 30, 2022, the estimated fair value of contingent purchase consideration increased by approximately $4 million, relating to an operating income guarantee.
In the six months ended June 30, 2022, we paid the seller $43 million, of which $23 million was for the remaining half of the consideration due for minimum member enrollment targets and $20 million was for the first payment of the consideration due for the operating income guarantee. For the amounts paid in the six months ended June 30, 2022, $20 million has been presented in “Financing activities” in the accompanying consolidated statements of cash flows, with the balance reflected in “Operating activities.” The remaining balance of the liabilities is reported in “Accounts payable, accrued liabilities and other” in the accompanying consolidated balance sheets.
Fair Value Measurements – Disclosure Only
The carrying amounts and estimated fair values of our notes payable are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted market prices for similar securities in active markets or quoted prices for identical securities in inactive markets.
 June 30, 2022December 31, 2021
 Carrying
Amount
Fair Value Carrying
Amount
Fair Value
 (In millions)
4.375% Notes due 2028
$792 $724 $791 $829 
3.875% Notes due 2030
642 550 642 675 
3.875% Notes due 2032
741 630 740 760 
Total$2,175 $1,904 $2,173 $2,264 

Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 12

6. Investments
Available-for-Sale
We consider all of our investments classified as current assets to be available-for-sale. The following tables summarize our current investments as of the dates indicated:
 June 30, 2022
Amortized CostGross UnrealizedEstimated Fair Value
 GainsLosses
 (In millions)
Corporate debt securities$2,372 $2 $106 $2,268 
Mortgage-backed securities759  42 717 
Asset-backed securities306  13 293 
Municipal securities153  7 146 
U.S. Treasury notes
96   96 
Other49  2 47 
Total$3,735 $2 $170 $3,567 
 December 31, 2021
 Amortized CostGross UnrealizedEstimated Fair Value
 GainsLosses
 (In millions)
Corporate debt securities$1,836 $9 $12 $1,833 
Mortgage-backed securities616 2 4 614 
Asset-backed securities248  1 247 
Municipal securities123 1 1 123 
U.S. Treasury notes
353   353 
Other32   32 
Total$3,208 $12 $18 $3,202 
The contractual maturities of our current investments as of June 30, 2022 are summarized below:
Amortized CostEstimated
Fair Value
 (In millions)
Due in one year or less$340 $338 
Due after one year through five years2,276 2,175 
Due after five years through ten years377 358 
Due after ten years742 696 
Total$3,735 $3,567 
Gross realized gains and losses from sales of available-for-sale securities are calculated under the specific identification method and are included in investment income. Gross realized investment gains and losses were insignificant for the six months ended June 30, 2022, and 2021.
We have determined that unrealized losses at June 30, 2022, and December 31, 2021, primarily resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers. Therefore, we determined that an allowance for credit losses was not necessary. So long as we maintain the intent and ability to hold these securities to maturity, we are unlikely to experience losses. In the event that we dispose of these securities before maturity, we expect that realized losses, if any, will be insignificant.
Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 13

The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of June 30, 2022:
In a Continuous Loss Position
for Less than 12 Months
In a Continuous Loss Position
for 12 Months or More
Estimated
Fair
Value
Unrealized
Losses
Total Number of PositionsEstimated
Fair
Value
Unrealized
Losses
Total Number of Positions
 (Dollars in millions)
Corporate debt securities$1,971 $104 921 $36 $2 19 
Mortgage-backed securities
647 40 273 50 2 26 
Asset-backed securities264 13 134    
Municipal securities100 7 124    
Other
27 2 14    
Total$3,009 $166 1,466 $86 $4 45 

The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of December 31, 2021:
In a Continuous Loss Position
for Less than 12 Months
In a Continuous Loss Position
for 12 Months or More
Estimated
Fair
Value
Unrealized
Losses
Total Number of PositionsEstimated
Fair
Value
Unrealized
Losses
Total Number of Positions
 (Dollars in millions)
Corporate debt securities$1,063 $12 395 $ $  
Mortgage-backed securities
408 4 146    
Asset-backed securities166 1 75    
Municipal securities69 1 61    
Total$1,706 $18 677 $ $  

Restricted Investments Held-to-Maturity
Pursuant to the regulations governing our state health plan subsidiaries, we maintain statutory deposits and deposits required by government authorities primarily in cash, cash equivalents, and U.S. Treasury securities. We also maintain restricted investments as protection against the insolvency of certain capitated providers. The use of these funds is limited as required by regulations in the various states in which we operate, or as needed in the event of insolvency of capitated providers. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets.
We have the ability to hold these restricted investments until maturity and, as a result, we would not expect the value of these investments to decline significantly due to a sudden change in market interest rates. Our held-to-maturity restricted investments are carried at amortized cost, which approximates fair value. Such investments amounted to $219 million at June 30, 2022, of which $191 million will mature in one year or less, and $28 million will mature in one through five years.

Molina Healthcare, Inc. June 30, 2022 Form 10-Q | 14

7. Medical Claims and Benefits Payable
The following table provides the details of our medical claims and benefits payable as of the dates indicated:
June 30,
2022
December 31,
2021
 (In millions)
Claims incurred but not paid (“IBNP”)$2,719 $2,486 
Pharmacy payable229 219 
Capitation payable94 82 
Other733 576 
Total$3,775 $3,363 

“Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various government agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of income. Non-risk provider payables amounted to $229 million and $226 million as of June 30, 2022, and December 31, 2021, respectively.
The following tables present the components of the change in our medical claims and benefits payable for the periods indicated. The amounts presented for “Components of medical care costs related to: Prior years” represent the amount by which our original estimate of medical claims and benefits payable at the beginning of the year varied from the actual liabilities, based on information (principally the payment of claims) developed since those liabilities were first reported.
Six Months Ended June 30, 2022
Medicaid Medicare MarketplaceConsolidated
 (In millions)
Medical claims and benefits payable, beginning balance$2,580 $404 $379 $