Cover Page
Cover Page - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 07, 2020 | Jun. 30, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 1-31719 | ||
Entity Registrant Name | MOLINA HEALTHCARE, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 13-4204626 | ||
Entity Address, Address Line One | 200 Oceangate | ||
Entity Address, Address Line Two | Suite 100 | ||
Entity Address, City or Town | Long Beach | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 90802 | ||
City Area Code | 562 | ||
Local Phone Number | 435-3666 | ||
Title of 12(b) Security | Common Stock, $0.001 Par Value | ||
Trading Symbol | MOH | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,928.7 | ||
Entity Common Stock, Shares Outstanding | 60,800 | ||
Documents Incorporated by Reference | Portions of the registrant’s Proxy Statement for the 2020 Annual Meeting of Stockholders to be held on May 7, 2020 , are incorporated by reference into Part III of this Form 10-K, to the extent described therein. | ||
Entity Central Index Key | 0001179929 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | |||
Premium revenue | $ 16,208 | $ 17,612 | $ 18,854 |
Premium tax revenue | 489 | 417 | 438 |
Health insurer fees reimbursed | 0 | 329 | 0 |
Service revenue | 0 | 407 | 521 |
Investment income and other revenue | 132 | 125 | 70 |
Total revenue | 16,829 | 18,890 | 19,883 |
Operating expenses: | |||
General and administrative expenses | 1,296 | 1,333 | 1,594 |
Premium tax expenses | 489 | 417 | 438 |
Health insurer fees | 0 | 348 | 0 |
Depreciation and amortization | 89 | 99 | 137 |
Restructuring costs | 6 | 46 | 234 |
Impairment losses | 0 | 0 | 470 |
Total operating expenses | 15,785 | 17,744 | 20,438 |
Loss on sales of subsidiaries, net of gain | 0 | (15) | 0 |
Operating income (loss) | 1,044 | 1,131 | (555) |
Other expenses, net: | |||
Interest expense | 87 | 115 | 118 |
Other (income) expenses, net | (15) | 17 | (61) |
Total other expenses, net | 72 | 132 | 57 |
Income (loss) before income tax expense (benefit) | 972 | 999 | (612) |
Income tax expense (benefit) | 235 | 292 | (100) |
Net income (loss) | $ 737 | $ 707 | $ (512) |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 11.85 | $ 11.57 | $ (9.07) |
Diluted (in dollars per share) | $ 11.47 | $ 10.61 | $ (9.07) |
Weighted average shares outstanding: | |||
Basic (in shares) | 62.2 | 61.1 | 56.4 |
Diluted (in shares) | 64.2 | 66.6 | 56.4 |
Medical care costs | |||
Operating expenses: | |||
Cost of revenue | $ 13,905 | $ 15,137 | $ 17,073 |
Cost of service revenue | |||
Operating expenses: | |||
Cost of revenue | $ 0 | $ 364 | $ 492 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||||||||||
Net income (loss) | $ 168 | $ 175 | $ 196 | $ 198 | $ 201 | $ 197 | $ 202 | $ 107 | $ 737 | $ 707 | $ (512) |
Other comprehensive income (loss): | |||||||||||
Unrealized investment income (loss) | 16 | (3) | (5) | ||||||||
Less: effect of income taxes | 4 | (1) | (2) | ||||||||
Other comprehensive income (loss), net of tax | 12 | (2) | (3) | ||||||||
Comprehensive income (loss) | $ 749 | $ 705 | $ (515) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 2,452 | $ 2,826 |
Investments | 1,946 | 1,681 |
Receivables | 1,406 | 1,330 |
Prepaid expenses and other current assets | 134 | 149 |
Derivative asset | 29 | 476 |
Total current assets | 5,967 | 6,462 |
Property, equipment, and capitalized software, net | 385 | |
Property, equipment, and capitalized software, net | 241 | |
Goodwill and intangible assets, net | 172 | 190 |
Restricted investments | 79 | 120 |
Deferred income taxes | 79 | 117 |
Other assets | 105 | 24 |
Total assets | 6,787 | 7,154 |
Current liabilities: | ||
Medical claims and benefits payable | 1,854 | 1,961 |
Amounts due government agencies | 664 | 967 |
Accounts payable and accrued liabilities | 455 | 390 |
Deferred revenue | 249 | 211 |
Current portion of long-term debt | 18 | 241 |
Derivative liability | 29 | 476 |
Total current liabilities | 3,269 | 4,246 |
Long-term debt | 1,237 | 1,020 |
Finance lease liabilities | 231 | |
Finance lease liabilities | 197 | |
Other long-term liabilities | 90 | 44 |
Total liabilities | 4,827 | 5,507 |
Stockholders’ equity: | ||
Common stock, $0.001 par value per share; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018 | 0 | 0 |
Preferred stock, $0.001 par value per share; 20 million shares authorized, no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 175 | 643 |
Accumulated other comprehensive income (loss) | 4 | (8) |
Retained earnings | 1,781 | 1,012 |
Total stockholders’ equity | 1,960 | 1,647 |
Total liabilities and stockholders’ equity | $ 6,787 | $ 7,154 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares outstanding | 62,000,000 | 62,000,000 |
Preferred stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
Beginning Balance (in shares) at Dec. 31, 2016 | 55.8 | 57 | |||
Beginning Balance at Dec. 31, 2016 | $ 1,649 | $ 0 | $ 841 | $ (2) | $ 810 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (512) | (512) | |||
Exchange of convertible senior notes (in shares) | 3 | ||||
Exchange of convertible senior notes | 161 | 161 | |||
Other comprehensive income (loss), net | (3) | (3) | |||
Share-based compensation | $ 42 | 42 | |||
Ending Balance (in shares) at Dec. 31, 2017 | 59.3 | 60 | |||
Ending Balance at Dec. 31, 2017 | $ 1,337 | $ 0 | 1,044 | (5) | 298 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 707 | 707 | |||
Exchange of convertible senior notes (in shares) | 2 | ||||
Exchange of convertible senior notes | 108 | 108 | |||
Other comprehensive income (loss), net | (2) | (2) | |||
Share-based compensation | 37 | 37 | |||
Partial termination of warrants | (550) | (550) | |||
Conversion of convertible senior notes | $ 4 | 4 | |||
Ending Balance (in shares) at Dec. 31, 2018 | 62.1 | 62 | |||
Ending Balance at Dec. 31, 2018 | $ 1,647 | $ 0 | 643 | (8) | 1,012 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 737 | 737 | |||
Common stock purchases | (54) | $ (54) | (1) | (53) | |
Exchange of convertible senior notes | 0 | ||||
Other comprehensive income (loss), net | 12 | 12 | |||
Share-based compensation | 47 | 47 | |||
Partial termination of warrants | (514) | (514) | |||
Ending Balance (in shares) at Dec. 31, 2019 | 62 | ||||
Ending Balance at Dec. 31, 2019 | $ 1,960 | $ 0 | $ 175 | $ 4 | $ 1,781 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | |||
Net income (loss) | $ 737 | $ 707 | $ (512) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 89 | 127 | 178 |
Deferred income taxes | 10 | (6) | (94) |
Share-based compensation | 39 | 27 | 46 |
Amortization of convertible senior notes and finance lease liabilities | 5 | 22 | 32 |
(Gain) loss on debt extinguishment | (15) | 22 | 14 |
Loss on sales of subsidiaries, net of gain | 0 | 15 | 0 |
Non-cash restructuring charges | 0 | 17 | 60 |
Impairment losses | 0 | 0 | 470 |
Other, net | (5) | 4 | 21 |
Changes in operating assets and liabilities: | |||
Receivables | (76) | (530) | 103 |
Prepaid expenses and other current assets | 28 | 6 | (56) |
Medical claims and benefits payable | (107) | (226) | 263 |
Amounts due government agencies | (303) | (574) | 341 |
Accounts payable and accrued liabilities | 2 | 45 | (12) |
Deferred revenue | 38 | (21) | (34) |
Income taxes | (15) | 51 | (16) |
Net cash provided by (used in) operating activities | 427 | (314) | 804 |
Investing activities: | |||
Purchases of investments | (2,536) | (1,444) | (2,697) |
Proceeds from sales and maturities of investments | 2,302 | 2,445 | 1,759 |
Purchases of property, equipment and capitalized software | (57) | (30) | (86) |
Net cash received from sale of subsidiaries | 0 | 190 | 0 |
Other, net | (2) | (18) | (38) |
Net cash provided by (used in) investing activities | (293) | 1,143 | (1,062) |
Financing activities: | |||
Repayment of principal amount of convertible senior notes | (240) | (362) | 0 |
Cash paid for partial settlement of conversion option | (578) | (623) | 0 |
Cash received for partial settlement of call option | 578 | 623 | 0 |
Cash paid for partial termination of warrants | (514) | (549) | 0 |
Proceeds from borrowings under term loan facility | 220 | 0 | 0 |
Common stock purchases | (47) | 0 | 0 |
Repayment of credit facility | 0 | (300) | 0 |
Proceeds from senior notes offerings, net of issuance costs | 0 | 0 | 325 |
Proceeds from borrowings under credit facility | 0 | 0 | 300 |
Other, net | 29 | 18 | 11 |
Net cash (used in) provided by financing activities | (552) | (1,193) | 636 |
Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents | (418) | (364) | 378 |
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of period | 2,926 | 3,290 | 2,912 |
Cash and cash equivalents at end of period | 2,508 | 2,926 | 3,290 |
Cash paid during the period for: | |||
Income taxes | 239 | 240 | 7 |
Interest | 78 | 93 | 78 |
Schedule of non-cash investing and financing activities: | |||
Common stock issued in exchange for convertible senior notes | 0 | 131 | 193 |
Component of convertible senior notes allocated to additional paid-in capital, net of income taxes | 0 | (23) | (32) |
Net increase to additional paid-in capital | 0 | 108 | 161 |
Common stock used for stock-based compensation | (7) | (6) | (22) |
Common stock purchases not settled at end of period | 7 | 0 | 0 |
Details of sales of subsidiaries: | |||
Decrease in carrying amount of assets | 0 | (327) | 0 |
Decrease in carrying amount of liabilities | 0 | 85 | 0 |
Transaction costs | 0 | (15) | 0 |
Cash received from buyers | 0 | 242 | 0 |
Loss on sale of subsidiaries, net of gain | 0 | (15) | 0 |
Details of change in fair value of derivatives, net: | |||
Change in fair value of derivatives, net | 0 | 0 | 0 |
Call Option | |||
Details of change in fair value of derivatives, net: | |||
Change in fair value of derivatives, net | 132 | 577 | 255 |
Conversion Option | |||
Details of change in fair value of derivatives, net: | |||
Change in fair value of derivatives, net | $ (132) | $ (577) | $ (255) |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | 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 two reportable segments: the Health Plans segment and the Other segment. Our reportable segments are consistent with how we currently manage the business and view the markets we serve. The Health Plans segment consists of health plans operating in 14 states and the Commonwealth of Puerto Rico. As of December 31, 2019, these health plans served approximately 3.3 million members eligible for Medicaid, Medicare, and other government-sponsored health care programs for low-income families and individuals including Marketplace members, most of whom receive government subsidies for premiums. The health plans are generally operated by our respective wholly owned subsidiaries in those states, each of which is licensed as a health maintenance organization (“HMO”). 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 (“RFP”) 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; and regions or service areas. Recent Developments – Health Plans Segment Kentucky. On December 2, 2019, we announced that our Kentucky health plan subsidiary had been selected as an awardee pursuant to the Kentucky Medicaid managed care organizations RFP issued by the Kentucky Finance and Administration Cabinet in May 2019. However, in late December 2019, the newly elected Governor of Kentucky announced that he was canceling the Medicaid contracts that had been awarded by the outgoing Governor, including the contract that had been awarded to our Kentucky health plan subsidiary, and that he was reissuing the RFP for rebidding. We submitted a bid under the new RFP on February 6, 2020. Texas. In October 2019, the Texas Health and Human Services Commission (“HHSC”) awarded contracts to our Texas health plan for the ABD program (known in Texas as “STAR+PLUS”) in two service areas, consisting of one legacy service area and one new service area. This would be a reduction from our current footprint of six service areas. We believe the initial term of each contract is expected to be three years , and such contracts are currently anticipated to be operational beginning on January 1, 2021, at the earliest. Under our existing STAR+PLUS and related Medicare-Medicaid Plan (“MMP”) contracts, we served approximately 97,000 members as of December 31, 2019, representing premium revenue of approximately $2,062 million in 2019 . We are currently exercising our protest rights of the STAR+PLUS RFP awards with HHSC. In 2019, our Texas health plan submitted an RFP response for the TANF and CHIP programs (known in Texas as “STAR/CHIP”). HHSC has announced that the STAR/CHIP contract awards are delayed to late February 2020. Under our existing STAR/CHIP contracts, we served approximately 114,000 members as of December 31, 2019 , representing premium revenue of approximately $315 million in 2019. Illinois. On December 31, 2019, we entered into a definitive agreement to purchase NextLevel Health Partners, Inc., a Medicaid managed care organization. Upon the closing of this transaction, expected to occur in the first half of 2020, we will assume the right to serve approximately 50,000 Medicaid and Managed Long-Term Services and Supports members in Cook County, Illinois. The purchase price of approximately $50 million will be funded with available cash, and the closing is subject to customary closing conditions. New York . In October 2019, we entered into a definitive agreement to acquire certain assets of YourCare Health Plan, Inc. Upon the closing of this transaction, expected to occur in the first half of 2020, we will serve approximately 46,000 Medicaid members in seven counties in western New York. The purchase price of approximately $40 million will be funded with available cash, and the closing is subject to customary closing conditions. Consolidation and Presentation The consolidated financial statements include the accounts of Molina Healthcare, Inc., and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Financial information related to subsidiaries acquired during any year is included only for periods subsequent to their acquisition. In the opinion of management, all adjustments considered necessary for a fair presentation of the results as of the date and for the periods presented have been included; such adjustments consist of normal recurring adjustments. 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. Principal areas requiring the use of estimates include: • The determination of medical claims and benefits payable of our Health Plans segment; • Health Plans segment contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract; • Health Plans segment quality incentives that allow us to recognize incremental revenue if certain quality standards are met; • Settlements under risk or savings sharing programs; • The assessment of long-lived and intangible assets, and goodwill, for impairment; • The determination of reserves for potential absorption of claims unpaid by insolvent providers; • The determination of reserves for the outcome of litigation; • The determination of valuation allowances for deferred tax assets; and • |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 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, 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. December 31, 2019 2018 2017 (In millions) Cash and cash equivalents $ 2,452 $ 2,826 $ 3,186 Restricted cash and cash equivalents, non-current 56 100 95 Restricted cash and cash equivalents, current — — 9 Total cash and cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows $ 2,508 $ 2,926 $ 3,290 Investments Our investments are principally held in debt securities, which are grouped into two separate categories for accounting and reporting purposes: available-for-sale securities, and held-to-maturity securities. Available-for-sale (“AFS”) securities are recorded at fair value and unrealized gains and losses, if any, are recorded in stockholders’ equity as other comprehensive income, net of applicable income taxes. Held-to-maturity securities are recorded at amortized cost, which approximates fair value, and unrealized holding gains or losses are not generally recognized. Realized gains and losses and unrealized losses judged to be other than temporary with respect to available-for-sale and held-to-maturity securities are included in the determination of net income (loss). The cost of securities sold is determined using the specific-identification method. Our investment policy requires that all of our investments have final maturities of less than 10 years, or less than 10 years average life for structured securities. Investments and restricted investments are subject to interest rate risk and will decrease in value if market rates increase. Declines in interest rates over time will reduce our investment income. In general, our AFS securities are classified as current assets without regard to the securities’ contractual maturity dates because they may be readily liquidated. We monitor our investments for other-than-temporary impairment. For comprehensive discussions of the fair value and classification of our investments, see Note 4 , “ Fair Value Measurements ,” and Note 5 , “ Investments .” Long-Lived Assets, including Intangible Assets Long-lived assets consist primarily of property, equipment, capitalized software (see Note 7 , “ Property, Equipment, and Capitalized Software, Net ”), and intangible assets resulting from acquisitions. Finite-lived, separately-identified intangible assets acquired in business combinations are assets that represent future expected benefits but lack physical substance (such as purchased contract rights and provider contracts). Intangible assets are initially recorded at fair value and are then amortized on a straight-line basis over their expected useful lives, generally between five and 15 years. Our intangible assets are subject to impairment tests when events or circumstances indicate that a finite-lived intangible asset’s (or asset group’s) carrying value may not be recoverable. Consideration is given to a number of potential impairment indicators, including the ability of our health plan subsidiaries to obtain the renewal by amendment of their contracts in each state prior to the actual expiration of their contracts. However, there can be no assurance that these contracts will continue to be renewed. Following the identification of any potential impairment indicators, to determine whether an impairment exists, we would compare the carrying amount of a finite-lived intangible asset with the greater of the undiscounted cash flows that are expected to result from the use of the asset or related group of assets, or its value under the asset liquidation method. If it is determined that the carrying amount of the asset is not recoverable, the amount by which the carrying value exceeds the estimated fair value is recorded as an impairment. Refer to Note 9 , “ Goodwill and Intangible Assets, Net ,” for further details. Leases Right-of-use (“ROU”) assets represent our right to use the underlying assets over the lease term, and lease liabilities represent our obligation for lease payments arising from the related leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease terms may include options to extend or terminate the lease when we believe it is reasonably certain that we will exercise such options. If applicable, we account for lease and non-lease components within a lease as a single lease component. Because most of our leases do not provide an implicit interest rate, we generally use our incremental borrowing rate to determine the present value of lease payments. Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term, and the related ROU assets and liabilities are reduced to the present value of the remaining lease payments at the end of each period. Finance lease payments reduce finance lease liabilities, the related ROU assets are amortized on a straight-line basis over the lease term, and interest expense is recognized using the effective interest method. The significant majority of our operating leases consist of long-term operating leases for office space. Short-term leases (those with terms of 12 months or less) are not recorded as ROU assets or liabilities in the consolidated balance sheets. For certain leases that represent a portfolio of similar assets, such as a fleet of vehicles, we apply a portfolio approach to account for the related ROU assets and liabilities, rather than account for such assets and the related liabilities individually. A nominal number of our lease agreements include rental payments that adjust periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. For further information, including the amount and location of the ROU assets and lease liabilities recognized in the accompanying consolidated balance sheet, see Note 8 , “ Leases .” For further information regarding our adoption and implementation of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), see “Recent Accounting Pronouncements Adopted, ” below. Goodwill and Business Combinations Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment on an annual basis and more frequently if impairment indicators are present. Such events or circumstances may include experienced or expected operating cash-flow deterioration or losses, significant losses of membership, loss of state funding, loss of state contracts, and other factors. Goodwill is impaired if the carrying amount of the reporting unit (one of our state health plans) exceeds its estimated fair value. This excess is recorded as an impairment loss and adjusted if necessary for the impact of tax-deductible goodwill. The loss recognized may not exceed the total goodwill allocated to the reporting unit. When testing goodwill for impairment, we may first assess qualitative factors, such as industry and market factors, the dynamic economic and political environments in which we operate, cost factors, and changes in overall performance, to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. If our qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, we perform the quantitative assessment. We may also elect to bypass the qualitative assessment and proceed directly to the quantitative assessment. If performing a quantitative assessment, we generally estimate the fair values of our reporting units by applying the income approach, using discounted cash flows. For the annual impairment test under a quantitative assessment, the base year in the reporting units’ discounted cash flows is derived from the annual financial planning cycle, which commences in the fourth quarter of the year. When computing discounted cash flows, we make assumptions about a wide variety of internal and external factors, and consider what the reporting unit’s selling price would be in an orderly transaction between market participants at the measurement date. Significant assumptions include financial projections of free cash flow (including significant assumptions about membership, premium rates, healthcare and operating cost trends, contract renewal and the procurement of new contracts, capital requirements and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted periods, and discount rates. When determining the discount rate, we consider the overall level of inherent risk of the reporting unit, and the expected rate an outside investor would expect to earn. As part of a quantitative assessment, we may also apply the asset liquidation method to estimate the fair value of individual reporting units, which is computed as total assets minus total liabilities, excluding intangible assets and deferred taxes. Finally, we apply a market approach to reconcile the value of our reporting units to our consolidated market value. Under the market approach, we consider publicly traded comparable company information to determine revenue and earnings multiples which are used to estimate our reporting units’ fair values. The assumptions used are consistent with those used in our long-range business plan and annual planning process. However, if these assumptions differ from actual results, the outcome of our goodwill impairment tests could be adversely affected. Accounting for business combinations requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the final determination of the values of assets acquired or liabilities assumed, or one year after the date of acquisition, whichever comes first, any subsequent adjustments are recorded within our consolidated statements of operations. Refer to Note 9 , “ Goodwill and Intangible Assets, Net ,” for further details. Premium Revenue Premium revenue is generated from our Health Plans segment contracts, including agreements with other managed care organizations for which we operate as a subcontractor. 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. The state Medicaid programs and the federal Medicare program periodically adjust premiums. Additionally, 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. The following table summarizes premium revenue by health plan for the periods presented: Year Ended December 31, 2019 2018 2017 Amount % of Total Amount % of Total Amount % of Total (Dollars in millions) California $ 2,266 14.0 % $ 2,150 12.2 % $ 2,701 14.3 % Florida 734 4.5 1,790 10.2 2,568 13.6 Illinois 1,002 6.2 793 4.5 593 3.1 Michigan 1,624 10.0 1,601 9.1 1,596 8.5 New Mexico (1) — — 1,356 7.7 1,368 7.3 Ohio 2,553 15.8 2,388 13.6 2,216 11.8 Puerto Rico 474 2.9 696 3.9 732 3.9 South Carolina 583 3.6 495 2.8 445 2.4 Texas 2,991 18.5 3,244 18.4 2,813 14.9 Washington 2,695 16.6 2,361 13.4 2,608 13.8 Other (1) 1,286 7.9 738 4.2 1,214 6.4 Total $ 16,208 100.0 % $ 17,612 100.0 % $ 18,854 100.0 % _______________________ (1) “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results. In 2019, “Other” also includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its results are not individually significant to our consolidated operating results in 2019. Certain components of premium revenue are subject to accounting estimates and fall into the following categories: Contractual Provisions That May Adjust or Limit Revenue or Profit Medicaid Program Medical Cost Floors (Minimums), and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded liabilities under the terms of such contract provisions of $74 million and $103 million at December 31, 2019 , and December 31, 2018 , respectively. Approximately $69 million and $87 million of the liabilities accrued at December 31, 2019 , and December 31, 2018 , respectively, relates to our participation in Medicaid Expansion programs. In certain circumstances, the health plans may receive additional premiums if amounts spent on medical care costs exceed a defined maximum threshold. Receivables relating to such provisions were insignificant at December 31, 2019 , and December 31, 2018 . Profit Sharing and Profit Ceiling. Our contracts with certain states contain profit-sharing or profit ceiling provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any. Liabilities for profits in excess of the amount we are allowed to retain under these provisions were insignificant at December 31, 2019 , and December 31, 2018 . Retroactive Premium Adjustments. State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, based on our best estimate of the ultimate premium we expect to realize for the period being adjusted. Medicare Program Risk Adjusted Premiums: Our Medicare premiums are subject to retroactive increase or decrease based on the health status of our Medicare members (as measured by member risk score). We estimate our members’ risk scores and the related amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health status, risk scores and CMS practices. Consolidated balance sheet amounts related to anticipated Medicare risk adjusted premiums and Medicare Part D settlements were insignificant at December 31, 2019 , and December 31, 2018 . Minimum MLR: The Affordable Care Act (“ACA”) has established a minimum annual medical loss ratio (“Minimum MLR”) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations. The amounts payable for the Medicare Minimum MLR were insignificant at December 31, 2019 , and December 31, 2018 . 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 operations. As of December 31, 2019 , Marketplace risk adjustment payables amounted to $368 million and related receivables amounted to $63 million , for a net payable of $305 million . As of December 31, 2018, Marketplace risk adjustment payables amounted to $466 million and related receivables amounted to $34 million , for a net payable of $432 million . Minimum MLR: The ACA has established a Minimum MLR of 80% for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations. Aggregate balance sheet amounts related to the Minimum MLR were insignificant at December 31, 2019 , and December 31, 2018. A summary of the categories of amounts due government agencies is as follows: December 31, 2019 2018 (In millions) Medicaid program: Medical cost floors and corridors $ 74 $ 103 Other amounts due to states 84 81 Marketplace program: Risk adjustment 368 466 Cost sharing reduction — 183 Other 138 134 Total $ 664 $ 967 Quality Incentives At many of our health plans, revenue ranging from approximately 1% to 4% of certain health plan premiums is earned only if certain performance measures are met. Such performance measures are generally found in our Medicaid and MMP contracts. As described in Note 1 , “ Organization and Basis of Presentation –Use of Estimates,” recognition of quality incentive premium revenue is subject to the use of estimates. The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the periods presented and prior periods. Year Ended December 31, 2019 2018 2017 (In millions) Maximum available quality incentive premium - current period $ 186 $ 182 $ 150 Amount of quality incentive premium revenue recognized in current period: Earned current period $ 156 $ 133 $ 97 Earned prior periods 38 31 10 Total $ 194 $ 164 $ 107 Quality incentive premium revenue recognized as a percentage of total premium revenue 1.2 % 0.9 % 0.6 % Medical Care Costs, Medical Claims and Benefits Payable Medical care costs are recognized in the period in which services are provided and include fee-for-service claims, pharmacy benefits, capitation payments to providers, and various other medically-related costs. Under fee-for-service claims arrangements with providers, we retain the financial responsibility for medical care provided and incur costs based on actual utilization of hospital and physician services. Such medical care costs include amounts paid by us as well as estimated medical claims and benefits payable for costs that were incurred but not paid as of the reporting date (“IBNP”). Pharmacy benefits represent payments for members' prescription drug costs, net of rebates from drug manufacturers. We estimate pharmacy rebates based on historical and current utilization of prescription drugs and contractual provisions. Capitation payments represent monthly contractual fees paid to providers, who are responsible for providing medical care to members, which could include medical or ancillary costs like dental, vision and other supplemental health benefits. Such capitation costs are fixed in advance of the periods covered and are not subject to significant accounting estimates. Other medical care costs include all medically-related administrative costs, amounts due to providers pursuant to risk-sharing or other incentive arrangements, provider claims, and other healthcare expenses. Examples of medically-related administrative costs include expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses. Additionally, we include an estimate for the cost of settling claims incurred through the reporting date in our medical claims and benefits payable liability . Medical claims and benefits payable consist mainly of fee-for-service IBNP, unpaid pharmacy claims, capitation costs, other medical costs, including amounts payable to providers pursuant to risk-sharing or other incentive arrangements and amounts payable to providers on behalf of certain state agencies for certain state assessments in which we assume no financial risk . IBNP includes the costs of claims incurred as of the balance sheet date which have been reported to us, and our best estimate of the cost of claims incurred but not yet reported to us. We also include an additional reserve to ensure that our overall IBNP liability is sufficient under moderately adverse conditions. We reflect changes in these estimates in the consolidated results of operations in the period in which they are determined. The estimation of the IBNP liability requires a significant degree of judgment in applying actuarial methods, determining the appropriate assumptions and considering numerous factors. Of those factors, we consider estimated completion factors and the assumed healthcare cost trend to be the most critical assumptions. Other relevant factors also include, but are not limited to, healthcare service utilization trends, claim inventory levels, changes in membership, product mix, seasonality, benefit changes or changes in Medicaid fee schedules, provider contract changes, prior authorizations and the incidence of catastrophic or pandemic cases. Because of the significant degree of judgment involved in estimation of our IBNP liability, there is considerable variability and uncertainty inherent in such estimates. Each reporting period, the recognized IBNP liability represents our best estimate of the total amount of unpaid claims incurred as of the balance sheet date using a consistent methodology in estimating our IBNP liability. We believe our current estimates are reasonable and adequate; however, the development of our estimate is a continuous process that we monitor and update as more complete claims payment information and healthcare cost trend data becomes available. Actual medical care costs may be less than we previously estimated (favorable development) or more than we previously estimated (unfavorable development), and any differences could be material. Any adjustments to reflect favorable development would be recognized as a decrease to medical care costs, and any adjustments to reflect unfavorable development would be recognized as an increase to medical care costs , in the period in which the adjustments are determined. Refer to Note 10 , “ Medical Claims and Benefits Payable ,” for a table presenting the components of the change in our medical claims and benefits payable, for all periods presented in the accompanying consolidated financial statements. Reinsurance We limit our risk of catastrophic losses by maintaining high deductible reinsurance coverage. Such reinsurance coverage does not relieve us of our primary obligation to our policyholders. We report reinsurance premiums as a reduction to premium revenue, while related reinsurance recoveries are reported as a reduction to medical care costs. Reinsurance premiums amounted to $17 million , $16 million , and $20 million for the years ended December 31, 2019, 2018, and 2017, respectively. Reinsurance recoveries amounted to $18 million , $33 million , and $24 million for the years ended December 31, 2019, 2018, and 2017, respectively. Reinsurance recoverable of $21 million , $31 million , and $16 million , as of December 31, 2019, 2018, and 2017, respectively, is included in “Receivables” in the accompanying consolidated balance sheets. Marketplace Cost Share Reduction (“CSR”) In the year ended December 31, 2018, we recognized a benefit of approximately $81 million in reduced medical care costs related to 2017 dates of service, as a result of the federal government’s confirmation that the reconciliation of 2017 Marketplace CSR subsidies would be performed on an annual basis. In the fourth quarter of 2017, we had assumed a nine-month reconciliation of this item pending confirmation of the time period to which the 2017 reconciliation would be applied. Premium Deficiency Reserves on Loss Contracts We assess the profitability of our contracts to determine if it is probable that a loss will be incurred in the future by reviewing current results and forecasts. For purposes of this assessment, contracts are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts. A premium deficiency is recognized if anticipated future medical care and administrative costs exceed anticipated future premium revenue, investment income and reinsurance recoveries. No premium deficiency reserves were recorded as of December 31, 2019 and 2018. Income Taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. For further discussion and disclosure, see Note 13 , “ Income Taxes .” Taxes Based on Premiums Health Insurer Fee (“HIF”). The federal government under the ACA imposes an annual fee, or excise tax, on health insurers for each calendar year. The HIF is based on a company’s share of the industry’s net premiums written during the preceding calendar year and is non-deductible for income tax purposes. We recognize expense for the HIF over the year on a straight-line basis. Within our Medicaid program, we must secure additional reimbursement from our state partners for this added cost. We recognize the related revenue when we have obtained a contractual commitment or payment from a state to reimburse us for the HIF, and such HIF revenue is recognized ratably throughout the year. The Consolidated Appropriations Act of 2016 provided for the HIF moratorium in 2017, and Public Law No. 115-120 provided for the HIF moratorium in 2019. Therefore, there were no health insurer fees reimbursed, nor health insurer fees incurred, in those years. Premium and Use Tax. Certain of our health plans are assessed a tax based on premium revenue collected. The premium revenues we receive from these states include the premium tax assessment. We have reported these taxes on a gross basis, as premium tax revenue and as premium tax expenses in the consolidated statements of operations. 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 10 years, or less than 10 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 or commonwealth in which our health plan subsidiaries operate. See further information below, under “Recent Accounting Pronouncements Not Yet Adopted” regarding our adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , effective January 1, 2020. Risks and Uncertainties Our profitability depends in large part on our ability to accurately predict and effectively manage medical care costs. We continually review our medical costs in light of our underlying claims experience and revised actuarial data. However, several factors could adversely affect medical care costs. These factors, which include changes in health care practices, inflation, new technologies, major epidemics, natural disasters, and malpractice litigation, are beyond our control and may have an adverse effect on our ability to accurately predict and effectively control medical care costs. Costs in excess of those anticipated could have a material adverse effect on our financial condition, results of operations, or cash flows. We operate health plans primarily as a direct contractor with the states (or Commonwealth), and in Los Angeles County, California, as a subcontractor to another health plan holding a direct contract with the state. We are therefore dependent upon a small number of contracts to support our revenue. The loss of any one of those contracts could have a material adverse effect on our financial position, results of operations, or cash flows. In addition, our ability to arrange for the provision of medical services to our members is dependent upon our ability to develop and maintain adequate provider networks. Our inability to develop or maintain such networks might, in certain circumstances, have a material adverse effect on our financial position, results of operations, or cash flows. Recent Accounting Pronouncements Adopted Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Topic 842, which was subsequently modified by several ASUs issued in 2017 and 2018. Topic 842 was issued to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet. Most prominent among the changes in Topic 842 is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. In addition, Topic 842’s disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Topic 842’s transition provisions are applied using a modified retrospective approach; entities may elect whether to apply the transition provisions, including disclosure requirements, at the beginning of the earliest comparative period presented or on the adoption date. We adopted Topic 842 effective January 1, 2019, and elected to apply the transition provisions as of that date. Accordingly, we recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings on January 1, 2019. In addition, we elected the available practical expedients and implemented internal controls and information systems functionality to enable the preparation of financial information on adoption. As indicated in the accompanying consolidated statements of stockholders’ equity, the cumulative effect adjustment was an increase of $85 million to retained earnings ( $110 million , net of $25 million deferred income tax expense), relating primarily to the transition provisions for sale-leaseback arrangements that did not qualify for sale treatment. Accordingly, such arrangements were de-recognized and recorded as finance lease ROU assets and lease liabilities. The difference between the de-recognized assets and lease financing obligations resulted in an increase to retained earnings. The recognition of these arrangements as finance lease ROU assets and lease liabilities will not materially impact our consolidated results of operations ove |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The following table sets forth the calculation of basic and diluted net income (loss) per share: Year Ended December 31, 2019 2018 2017 (In millions, except net income (loss) per share) Numerator: Net income (loss) $ 737 $ 707 $ (512 ) Denominator: Shares outstanding at the beginning of the period 62.1 59.3 55.8 Weighted-average number of shares issued: Exchange of convertible senior notes (1) — 1.4 0.1 Conversion of convertible senior notes (1) — 0.2 — Stock-based compensation 0.1 0.2 0.5 Denominator for basic net income (loss) per share 62.2 61.1 56.4 Effect of dilutive securities: Warrants (2) 1.4 4.8 — Convertible senior notes (1) — 0.4 — Stock-based compensation 0.6 0.3 — Denominator for diluted net income (loss) per share 64.2 66.6 56.4 Net income (loss) per share: (3) Basic $ 11.85 $ 11.57 $ (9.07 ) Diluted $ 11.47 $ 10.61 $ (9.07 ) Potentially dilutive common shares excluded from calculations: (2) Warrants — — 1.9 Convertible senior notes (1) — — 0.4 Stock-based compensation — — 0.3 _______________________________ (1) “Convertible senior notes” in this table refer to the 1.625% convertible senior notes due 2044 that were settled in 2018. (2) For more information regarding the warrants, including partial termination transactions, refer to Note 14 , “ Stockholders' Equity .” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method. Certain potentially dilutive common shares issuable are not included in the computation of diluted net income (loss) per share because to do so would have been anti-dilutive. (3) |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We consider the carrying amounts of current assets and current liabilities (not including derivatives and the current portion of long-term debt) 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 a three-tier fair value hierarchy as follows: Level 1 — Observable Inputs. Level 1 financial instruments are actively traded and therefore the fair value for these securities is based on quoted market prices for identical securities in active markets. Level 2 — Directly or Indirectly Observable Inputs. Fair value for these investments is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets. Level 3 — Unobservable Inputs. Level 3 financial instruments are valued using unobservable inputs that represent management’s best estimate of what market participants would use in pricing the financial instrument at the measurement date. Our Level 3 financial instruments consist primarily of derivative financial instruments. The derivatives include the 1.125% Call Option derivative asset and the 1.125% Conversion Option derivative liability (for detailed descriptions of these instruments, see Note 12 . “ Derivatives ”). These derivatives are not actively traded and are valued based on an option pricing model that uses observable and unobservable market data for inputs. Significant market data inputs used to determine fair value as of December 31, 2019 , included the price of our common stock, the time to maturity of the derivative instruments, the risk-free interest rate, and the implied volatility of our common stock. The 1.125% Call Option asset and the 1.125% Conversion Option liability were designed such that changes in their fair values offset, with minimal impact to the consolidated statements of operations. Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such instruments is mitigated. The net changes in fair value of Level 3 financial instruments were insignificant to our results of operations for the years ended December 31, 2019 , and 2018. Our financial instruments measured at fair value on a recurring basis at December 31, 2019 , were as follows: Total Level 1 Level 2 Level 3 (In millions) Corporate debt securities $ 1,178 $ — $ 1,178 $ — Mortgage-backed securities 420 — 420 — Asset-backed securities 127 — 127 — U.S. Treasury notes 86 — 86 — Municipal securities 78 — 78 — Government-sponsored enterprise securities (“GSEs”) 49 — 49 — Foreign securities 7 — 7 — Certificates of deposit 1 — 1 — Subtotal 1,946 — 1,946 — 1.125% Call Option derivative asset 29 — — 29 Total assets $ 1,975 $ — $ 1,946 $ 29 1.125% Conversion Option derivative liability $ 29 $ — $ — $ 29 Total liabilities $ 29 $ — $ — $ 29 Our financial instruments measured at fair value on a recurring basis at December 31, 2018 , were as follows: Total Level 1 Level 2 Level 3 (In millions) Corporate debt securities $ 1,123 $ — $ 1,123 $ — Asset-backed securities 82 — 82 — U.S. Treasury notes 181 — 181 — Municipal securities 114 — 114 — GSEs 163 — 163 — Foreign securities 4 — 4 — Certificates of deposit 14 — 14 — Subtotal 1,681 — 1,681 — 1.125% Call Option derivative asset 476 — — 476 Total assets $ 2,157 $ — $ 1,681 $ 476 1.125% Conversion Option derivative liability $ 476 $ — $ — $ 476 Total liabilities $ 476 $ — $ — $ 476 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. The carrying amount and estimated fair value of the Term Loan Facility is classified as a Level 3 financial instrument, because certain inputs used to determine its fair value are not observable. As of December 31, 2019 , the carrying amount of the Term Loan Facility approximated fair value because its interest rate is a variable rate that approximates rates currently available to us. December 31, 2019 December 31, 2018 Carrying Fair Value Carrying Fair Value Amount Amount (In millions) 5.375% Notes $ 696 $ 745 $ 694 $ 674 4.875% Notes 327 340 326 301 Term Loan Facility 220 220 — — 1.125% Convertible Notes (1) 12 42 240 732 Total $ 1,255 $ 1,347 $ 1,260 $ 1,707 _______________________________ (1) The fair value of the 1.125% Conversion Option (the embedded cash conversion option), which is reflected in the fair value amounts presented above, amounted to $29 million and $476 million as of December 31, 2019 and 2018, respectively. For more information, including information on debt repayments in 2019 and 2020, see Note 11 , “ Debt ,” and Note 12 , “ Derivatives .” |
Investments
Investments | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available-for-Sale Investments 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: December 31, 2019 Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value (In millions) Corporate debt securities $ 1,174 $ 5 $ 1 $ 1,178 Mortgage-backed securities 420 1 1 420 Asset-backed securities 126 1 — 127 U.S. Treasury notes 86 — — 86 Municipal securities 78 — — 78 GSEs 49 — — 49 Foreign securities 7 — — 7 Certificates of deposit 1 — — 1 Total $ 1,941 $ 7 $ 2 $ 1,946 December 31, 2018 Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses (In millions) Corporate debt securities $ 1,131 $ — $ 8 $ 1,123 Asset-backed securities 83 — 1 82 U.S. Treasury notes 181 — — 181 Municipal securities 115 — 1 114 GSEs 164 — 1 163 Foreign securities 4 — — 4 Certificates of deposit 14 — — 14 Total $ 1,692 $ — $ 11 $ 1,681 The contractual maturities of our current investments as of December 31, 2019 are summarized below: Amortized Cost Estimated Fair Value (In millions) Due in one year or less $ 453 $ 453 Due after one year through five years 957 962 Due after five years through ten years 171 171 Due after ten years 360 360 Total $ 1,941 $ 1,946 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 amounted to $13 million in the year ended December 31, 2019 . Gross realized investment losses were insignificant in the year ended December 31, 2019 . Gross realized investment gains and losses for the years ended December 31, 2018 and 2017 were insignificant. We have determined that unrealized losses at December 31, 2019 and 2018 are temporary in nature, because the change in market value for these securities resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers. 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. 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, 2019 : 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 Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 222 $ 1 167 $ — $ — — Mortgage-backed securities 143 1 72 — — — Total $ 365 $ 2 239 $ — $ — — 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, 2018 : 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 Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 509 $ 3 285 $ 412 $ 5 298 Asset-backed securities — — — 68 1 52 Municipal securities — — — 87 1 90 GSEs — — — 127 1 76 Total $ 509 $ 3 285 $ 694 $ 8 516 Held-to-Maturity Investments Pursuant to the regulations governing our Health Plans segment 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 regulation 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, and mature in one year or less. The following table presents the balances of restricted investments: December 31, 2019 2018 (In millions) Florida $ 12 $ 32 New Mexico 21 43 Ohio 12 12 Puerto Rico 11 10 Other 23 23 Total Health Plans segment $ 79 $ 120 |
Receivables
Receivables | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Receivables | Receivables Receivables consist primarily of amounts due from government agencies, which may be 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 doubtful accounts is insignificant. Any amounts determined to be uncollectible are charged to expense when such determination is made. December 31, 2019 2018 (In millions) Government receivables $ 1,056 $ 872 Pharmacy rebate receivables 150 146 Health insurer fee reimbursement receivables 5 141 Other 195 171 Total $ 1,406 $ 1,330 |
Property, Equipment, and Capita
Property, Equipment, and Capitalized Software, Net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment, and Capitalized Software, Net | Property, Equipment, and Capitalized Software, Net Property and equipment are stated at historical cost. Replacements and major improvements are capitalized, and repairs and maintenance are charged to expense as incurred. Furniture and equipment are generally depreciated using the straight-line method over estimated useful lives ranging from three to seven years . Software developed for internal use is capitalized. Software is generally amortized over its estimated useful life of three years . Leasehold improvements are amortized over the term of the lease, or over their useful lives from five to 10 years, whichever is shorter. Buildings are depreciated over their estimated useful lives of 31.5 to 40 years. A summary of property, equipment, and capitalized software is as follows: December 31, 2019 2018 (In millions) Capitalized software $ 421 $ 373 Furniture and equipment 213 231 Building and improvements 49 154 Land 4 16 Total cost 687 774 Less: accumulated amortization - capitalized software (351 ) (320 ) Less: accumulated depreciation and amortization - furniture, equipment, building, and improvements (179 ) (213 ) Total accumulated depreciation and amortization (530 ) (533 ) ROU assets - finance leases 228 — Property, equipment, and capitalized software, net $ 385 $ 241 The following table presents all depreciation and amortization recognized in our consolidated statements of operations: Year Ended December 31, 2019 2018 2017 (In millions) Recorded in depreciation and amortization: Amortization of capitalized software $ 33 $ 42 $ 64 Depreciation and amortization of furniture, equipment, building, and improvements 21 36 42 Amortization of intangible assets 18 21 31 Amortization of finance leases 17 — — Subtotal 89 99 137 Recorded in cost of service revenue: Amortization of capitalized software and deferred contract costs — 28 41 Total depreciation and amortization recognized $ 89 $ 127 $ 178 |
Leases Leases
Leases Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases As discussed in Note 2 , “ Significant Accounting Policies ,” we elected the Topic 842 transition provision that allows entities to continue to apply the legacy guidance in Topic 840, Leases , including its disclosure requirements, in the comparative periods presented in the year of adoption. Accordingly, the Topic 842 disclosures below are presented as of and for the year ended December 31, 2019 , only. We are a party to operating and finance leases primarily for our corporate and health plan offices. Our operating leases have remaining lease terms up to 9 years, some of which include options to extend the leases for up to 10 years. As of December 31, 2019 , the weighted average remaining operating lease term is 4 years . Our finance leases have remaining lease terms of 2 years to 19 years, some of which include options to extend the leases for up to 25 years. As of December 31, 2019 , the weighted average remaining finance lease term is 16 years. As of December 31, 2019 , the weighted-average discount rate used to compute the present value of lease payments was 5.6% for operating lease liabilities, and 6.5% for finance lease liabilities. The components of lease expense were as follows: Year Ended December 31, 2019 (In millions) Operating lease expense $ 34 Finance lease expense: Amortization of ROU assets $ 17 Interest on lease liabilities 15 Total finance lease expense $ 32 Rental expense related to operating leases amounted to $62 million and $75 million for the years ended December 31, 2018 and 2017, respectively. Supplemental consolidated cash flow information related to leases follows: Year Ended December 31, 2019 (In millions) Cash used in operating activities: Operating leases $ 36 Finance leases 15 Cash used in financing activities: Finance leases 6 ROU assets recognized in exchange for lease obligations: Operating leases 99 Finance leases 245 Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows: December 31, 2019 (In millions) Operating leases: ROU assets Other assets $ 65 Lease liabilities Accounts payable and accrued liabilities (current) $ 25 Other long-term liabilities (non-current) 48 Total operating lease liabilities $ 73 Finance leases: ROU assets Property, equipment, and capitalized software, net $ 228 Lease liabilities Accounts payable and accrued liabilities (current) $ 8 Finance lease liabilities (non-current) 231 Total finance lease liabilities $ 239 Maturities of lease liabilities as of December 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2020 $ 28 $ 23 2021 20 24 2022 14 21 2023 10 21 2024 5 22 Thereafter 3 289 Subtotal - undiscounted lease payments 80 400 Less imputed interest (7 ) (161 ) Total $ 73 $ 239 |
Leases | Leases As discussed in Note 2 , “ Significant Accounting Policies ,” we elected the Topic 842 transition provision that allows entities to continue to apply the legacy guidance in Topic 840, Leases , including its disclosure requirements, in the comparative periods presented in the year of adoption. Accordingly, the Topic 842 disclosures below are presented as of and for the year ended December 31, 2019 , only. We are a party to operating and finance leases primarily for our corporate and health plan offices. Our operating leases have remaining lease terms up to 9 years, some of which include options to extend the leases for up to 10 years. As of December 31, 2019 , the weighted average remaining operating lease term is 4 years . Our finance leases have remaining lease terms of 2 years to 19 years, some of which include options to extend the leases for up to 25 years. As of December 31, 2019 , the weighted average remaining finance lease term is 16 years. As of December 31, 2019 , the weighted-average discount rate used to compute the present value of lease payments was 5.6% for operating lease liabilities, and 6.5% for finance lease liabilities. The components of lease expense were as follows: Year Ended December 31, 2019 (In millions) Operating lease expense $ 34 Finance lease expense: Amortization of ROU assets $ 17 Interest on lease liabilities 15 Total finance lease expense $ 32 Rental expense related to operating leases amounted to $62 million and $75 million for the years ended December 31, 2018 and 2017, respectively. Supplemental consolidated cash flow information related to leases follows: Year Ended December 31, 2019 (In millions) Cash used in operating activities: Operating leases $ 36 Finance leases 15 Cash used in financing activities: Finance leases 6 ROU assets recognized in exchange for lease obligations: Operating leases 99 Finance leases 245 Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows: December 31, 2019 (In millions) Operating leases: ROU assets Other assets $ 65 Lease liabilities Accounts payable and accrued liabilities (current) $ 25 Other long-term liabilities (non-current) 48 Total operating lease liabilities $ 73 Finance leases: ROU assets Property, equipment, and capitalized software, net $ 228 Lease liabilities Accounts payable and accrued liabilities (current) $ 8 Finance lease liabilities (non-current) 231 Total finance lease liabilities $ 239 Maturities of lease liabilities as of December 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2020 $ 28 $ 23 2021 20 24 2022 14 21 2023 10 21 2024 5 22 Thereafter 3 289 Subtotal - undiscounted lease payments 80 400 Less imputed interest (7 ) (161 ) Total $ 73 $ 239 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill The following table presents the changes in the carrying amounts of goodwill by segment, for the periods presented. Health Plans Other Total (In millions) Balance, December 31, 2017 $ 143 $ 43 $ 186 Acquisitions — — — Dispositions — (43 ) (43 ) Impairment and other — — — Balance, December 31, 2018 143 — 143 Acquisitions — — — Dispositions — — — Impairment and other — — — Balance, December 31, 2019 $ 143 $ — $ 143 For the Health Plans segment, gross goodwill amounted to $445 million , and accumulated impairment losses amounted to $302 million , at each of December 31, 2019, and 2018. 2017 Impairment Losses. As a result of reporting unit quantitative goodwill assessments using discounted cash flows and/or asset liquidation analyses, we recorded goodwill impairment losses of $244 million and $190 million for the Health Plans segment and Other segment, respectively, in the year ended December 31, 2017. The Health Plans segment impairment losses were due primarily to certain health plans’ Medicaid contract terminations, and insufficient estimated future cash flows. The Other segment impairment losses were due to the expectation of fewer future benefits, and related lower cash flows, to be derived from certain subsidiaries. Such subsidiaries were disposed in 2018. Intangible Assets, Net The following table provides the details of identified intangible assets, by major class, for the periods indicated: December 31, 2019 December 31, 2018 Cost Accumulated Carrying Amount Cost Accumulated Carrying Amount (In millions) Contract rights and licenses $ 179 $ 156 $ 23 $ 201 $ 162 $ 39 Provider networks 20 14 6 20 12 8 Total $ 199 $ 170 $ 29 $ 221 $ 174 $ 47 As of December 31, 2019 , we estimate that our intangible asset amortization will be approximately $14 million in 2020 , $5 million in 2021 , and $3 million in 2022 , 2023 and 2024 . For a presentation of our intangible assets by reportable segment, refer to Note 18 , “ Segments .” 2017 Impairment Losses . For the reasons described above, reporting unit undiscounted cash flow analyses produced intangible asset impairment losses of $25 million and $11 million for the Health Plans segment and Other segment, respectively, in the year ended December 31, 2017. |
Medical Claims and Benefits Pay
Medical Claims and Benefits Payable | 12 Months Ended |
Dec. 31, 2019 | |
Insurance [Abstract] | |
Medical Claims and Benefits Payable | Medical Claims and Benefits Payable The following table provides the details of our medical claims and benefits payable as of the dates indicated. December 31, 2019 2018 2017 (In millions) Fee-for-service claims incurred but not paid (“IBNP”) $ 1,406 $ 1,562 $ 1,717 Pharmacy payable 126 115 112 Capitation payable 55 52 67 Other 267 232 296 Total $ 1,854 $ 1,961 $ 2,192 “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 operations. Non-risk provider payables amounted to $132 million , $107 million and $122 million , as of December 31, 2019 , 2018 , and 2017 , respectively. The following table presents 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 periods” represent the amount by which our original estimate of medical claims and benefits payable at the beginning of the period were (more) less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. Year Ended December 31, 2019 2018 2017 (In millions) Medical claims and benefits payable, beginning balance $ 1,961 $ 2,192 $ 1,929 Components of medical care costs related to: Current period 14,176 15,478 17,037 Prior periods (1) (271 ) (341 ) 36 Total medical care costs 13,905 15,137 17,073 Change in non-risk and other provider payables 24 13 (106 ) Payments for medical care costs related to: Current period 12,554 13,671 15,130 Prior periods 1,482 1,710 1,574 Total paid 14,036 15,381 16,704 Medical claims and benefits payable, ending balance $ 1,854 $ 1,961 $ 2,192 ________________ (1) December 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81 million . The following tables provide information about incurred and paid claims development as of December 31, 2019 , as well as cumulative claims frequency and the total of incurred but not paid claims liabilities. The cumulative claim frequency is measured by claim event, and includes claims covered under capitated arrangements. Incurred Claims and Allocated Claims Adjustment Expenses Total IBNP Cumulative number of reported claims Benefit Year 2017 2018 2019 (Unaudited) (Unaudited) (In millions) 2017 $ 17,037 $ 16,728 $ 16,704 $ 18 119 2018 15,478 15,245 25 110 2019 14,176 1,348 93 $ 46,125 $ 1,391 Cumulative Paid Claims and Allocated Claims Adjustment Expenses Benefit Year 2017 2018 2019 (Unaudited) (Unaudited) (In millions) 2017 $ 15,130 $ 16,671 $ 16,686 2018 13,752 15,220 2019 12,554 $ 44,460 The following table represents a reconciliation of claims development to the aggregate carrying amount of the liability for medical claims and benefits payable. 2019 (In millions) Incurred claims and allocated claims adjustment expenses $ 46,125 Less: cumulative paid claims and allocated claims adjustment expenses (44,460 ) All outstanding liabilities before 2017 15 Non-risk and other provider payables 174 Medical claims and benefits payable $ 1,854 Our estimates of medical claims and benefits payable recorded at December 31, 2018, 2017 and 2016 developed favorably (unfavorably) by approximately $271 million , $341 million and $(36) million in 2019, 2018 and 2017, respectively. The favorable prior year development recognized in 2019 was primarily due to lower than expected utilization of medical services by our Medicaid members, and improved operating performance. Consequently, the ultimate costs recognized in 2019 were lower than our original estimates in 2018, which was not discernible until additional information was provided, and as claims payments were processed. The favorable prior year development recognized in 2018 includes a benefit of approximately $81 million in reduced medical care costs relating to Marketplace CSR subsidies for 2017 dates of service. The remainder of the favorable prior period development was primarily due to lower than expected utilization of medical services by our Medicaid and Marketplace members and improved operating performance. The differences between our original estimates in 2017 and the ultimate costs in 2018 were not discernable until additional information was provided to us in 2018 and the effect became clearer over time as claim payments were processed. The unfavorable prior year development in 2017 was primarily due to higher than expected costs for settling certain claims with certain providers in states where we had recently commenced operations, such as in Illinois and Puerto Rico, or had instituted significant changes due to provider contract changes, such as in Florida and New Mexico. The differences between our original estimates in 2016 and the ultimate costs in 2017 were not discernible until additional information was provided to us in 2017, and the effect became clearer over time as claim payments were processed. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Contractual maturities of debt, as of December 31, 2019 , are illustrated in the following table. All amounts represent the principal amounts of the debt instruments outstanding. Total 2020 2021 2022 2023 2024 Thereafter (In millions) 5.375% Notes $ 700 $ — $ — $ 700 $ — $ — $ — 4.875% Notes 330 — — — — — 330 Term Loan Facility 220 6 16 22 22 154 — 1.125% Convertible Notes 12 12 — — — — — Total $ 1,262 $ 18 $ 16 $ 722 $ 22 $ 154 $ 330 All debt is held at the parent which is reported, for segment purposes, in the Other segment. The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets: December 31, 2019 2018 (In millions) Current portion of long-term debt: 1.125% Convertible Notes, net of unamortized discount $ 12 $ 241 Term Loan Facility 6 — Lease financing obligations — 1 Debt issuance costs — (1 ) Total, current portion $ 18 $ 241 Non-current portion of long-term debt: 5.375% Notes $ 700 $ 700 4.875% Notes 330 330 Term Loan Facility 214 — Debt issuance costs (7 ) (10 ) Total, non-current portion $ 1,237 $ 1,020 Credit Agreement We are party to a Credit Agreement, which provides for an unsecured delayed draw term loan facility (the “Term Loan Facility”), and an unsecured $500 million revolving credit facility (the “Credit Facility”). Borrowings under our Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case the applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, we are required to pay a quarterly commitment fee. The Credit Agreement contains customary non-financial and financial covenants, including a net leverage ratio and an interest coverage ratio. As of December 31, 2019, we were in compliance with all financial and non-financial covenants under the Credit Agreement and other long-term debt. Effective as of the date of the Sixth Amendment to the Credit Agreement described below, there are no guarantors as parties to the Credit Agreement. Term Loan Facility. In January 2019, we entered into a Sixth Amendment to the Credit Agreement that provided for a delayed draw Term Loan Facility in the aggregate principal amount of $600 million , under which we may request up to ten advances, each in a minimum principal amount of $50 million , until July 31, 2020. The Term Loan Facility will amortize in quarterly installments, commencing on September 30, 2020, equal to the principal amount of the Term Loan Facility outstanding multiplied by rates ranging from 1.25% to 2.50% (depending on the applicable fiscal quarter) for each fiscal quarter. The Term Loan Facility expires on January 31, 2024; any remaining outstanding balance under the Term Loan Facility will be due and payable on that date. As of December 31, 2019, $220 million was outstanding under the Term Loan Facility. Each advance under the Term Loan Facility results in a permanent reduction to its borrowing capacity; therefore, our borrowing capacity under the Term Loan Facility as of December 31, 2019, was $380 million . Credit Facility. The Credit Facility expires on January 31, 2022; therefore, any amounts outstanding under the Credit Facility will be due and payable on that date. As of December 31, 2019, no amounts were outstanding under the Credit Facility, and outstanding letters of credit amounting to $1 million reduced our remaining borrowing capacity under the Credit Facility to $499 million . 5.375% Notes due 2022 We have $700 million aggregate principal amount of senior notes (the “ 5.375% Notes”) outstanding as of December 31, 2019 , which are due November 15, 2022, unless earlier redeemed. Interest at a rate of 5.375% per annum, is payable semiannually in arrears on May 15 and November 15. The 5.375% Notes contain customary non-financial covenants and change of control provisions. 4.875% Notes due 2025 We had $330 million aggregate principal amount of senior notes (the “ 4.875% Notes”) outstanding as of December 31, 2019 , which are due June 15, 2025, unless earlier redeemed. Interest at a rate of 4.875% per annum, is payable semiannually in arrears on June 15 and December 15. The 4.875% Notes contain customary non-financial covenants and change of control provisions. 1.125% Cash Convertible Senior Notes due 2020 In the years ended December 31, 2019 and 2018, we entered into privately negotiated note purchase agreements and, in 2019, received conversion requests, with certain holders of our outstanding 1.125% cash convertible senior notes due January 15, 2020 (the “ 1.125% Convertible Notes”). For each transaction, the difference between the principal amount extinguished and the total cash paid primarily represented the settlement of the 1.125% Convertible Notes’ embedded cash conversion option feature at fair value (which is a derivative liability we refer to as the “ 1.125% Conversion Option”). During 2019, we paid $794 million to settle $240 million aggregate principal amount, or $232 million aggregate carrying amount, of the 1.125% Convertible Notes. During 2018, we paid $911 million to settle $298 million aggregate principal amount, or $278 million aggregate carrying amount of the 1.125% Convertible Notes. In both years, the cash payments included settlement of the related 1.125% Conversion Option, and the mark-to-market valuation adjustments discussed below. In the years ended December 31, 2019 and 2018, we recorded a (gain) loss on debt extinguishment of approximately $(15) million and $12 million , respectively, for the 1.125% Convertible Notes transactions (net of accelerated original issuance discount amortization), primarily relating to mark-to-market valuations on the partial terminations of the Call Spread Overlay executed in connection with the related debt repayments. These amounts are reported in “Other (income) expenses, net” in the accompanying consolidated statements of operations. No common shares were issued in connection with the transaction. In connection with the 1.125% Convertible Notes transactions, we also entered into privately negotiated agreements in 2019, to partially terminate the Call Spread Overlay, defined and further discussed in Notes 12 , “ Derivatives ,” and 14 , “ Stockholders' Equity .” The net cash proceeds from the Call Spread Overlay partial termination transactions partially offset the cash paid to settle the 1.125% Convertible Notes. As of December 31, 2019, $12 million aggregate principal amount of the 1.125% Convertible Notes were outstanding. Interest at a rate of 1.125% per annum is payable semiannually in arrears on January 15 and July 15. The 1.125% Convertible Notes are convertible only into cash, and not into shares of our common stock or any other securities. The initial conversion rate is 24.5277 shares of our common stock per $1,000 principal amount, or approximately $40.77 per share of our common stock. Holders may convert their 1.125% Convertible Notes under certain circumstances and upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per $1,000 principal amount, equal to the settlement amount, determined in the manner set forth in the indenture. We may not redeem the 1.125% Convertible Notes prior to the maturity date. The 1.125% Convertible Notes matured on January 15, 2020; therefore, they were reported in current portion of long-term debt as of December 31, 2019. (See “Subsequent Event,” below.) Concurrent with the issuance of the 1.125% Convertible Notes, the 1.125% Conversion Option was separated from the 1.125% Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the 1.125% Conversion Option settled. This initial liability simultaneously reduced the carrying value of the 1.125% Convertible Notes’ principal amount (effectively an original issuance discount), which was amortized to the principal amount through the recognition of non-cash interest expense over the expected life of the debt. The effective interest rate of 6% approximates the interest rate we would have incurred had we issued nonconvertible debt with otherwise similar terms. As of December 31, 2019 , the 1.125% Convertible Notes had a remaining amortization period of less than one month , and their ‘if-converted’ value exceeded their principal amount by approximately $26 million and $581 million as of December 31, 2019 , and 2018, respectively. Interest cost recognized relating to our convertible senior notes for the periods presented was as follows: Years Ended December 31, 2019 2018 2017 (In millions) Contractual interest at coupon rate $ 1 $ 6 $ 11 Amortization of the discount 5 21 32 Total $ 6 $ 27 $ 43 Subsequent Event In January 2020, we paid $39 million to settle the outstanding 1.125% Convertible Notes, which amount included settlement of the 1.125% Conversion Option. Cross-Default Provisions The indentures governing the 4.875% Notes and the 5.375% 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. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the consolidated balance sheets: December 31, Balance Sheet Location 2019 2018 (In millions) Derivative asset: 1.125% Call Option Current assets: Derivative asset $ 29 $ 476 Derivative liability: 1.125% Conversion Option Current liabilities: Derivative liability $ 29 $ 476 Our derivative financial instruments do not qualify for hedge treatment; therefore, the change in fair value of these instruments is recognized immediately in our consolidated statements of operations, and reported in “Other (income) expenses, net.” Gains and losses for our derivative financial instruments are presented individually in the accompanying consolidated statements of cash flows, “Supplemental cash flow information.” 1.125% Convertible Notes Call Spread Overlay Concurrent with the issuance of the 1.125% Convertible Notes in 2013, we entered into privately negotiated hedge transactions (collectively, the “ 1.125% Call Option”) and warrant transactions (collectively, the “ 1.125% Warrants”), with certain of the initial purchasers of the 1.125% Convertible Notes (the “Counterparties”). We refer to these transactions collectively as the Call Spread Overlay. Under the Call Spread Overlay, the cost of the 1.125% Call Option we purchased to cover the cash outlay upon conversion of the 1.125% Convertible Notes was reduced by proceeds from the sale of the 1.125% Warrants. Assuming full performance by the Counterparties (and 1.125% Warrants strike prices in excess of the conversion price of the 1.125% Convertible Notes), these transactions are intended to offset cash payments in excess of the principal amount of the 1.125% Convertible Notes due upon any conversion of such notes. In the year ended December 31, 2019 , in connection with the 1.125% Convertible Notes purchases (described in Note 11 , “ Debt ”), we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the year ended December 31, 2019 , we received $578 million for the settlement of the 1.125% Call Option (which is a derivative asset), and paid $514 million for the partial termination of the 1.125% Warrants, for an aggregate net cash receipt of $64 million from the Counterparties. 1.125% Call Option The 1.125% Call Option, which is indexed to our common stock, is a derivative asset that requires mark-to-market accounting treatment due to cash settlement features until the 1.125% Call Option settles or expires. For further discussion of the inputs used to determine the fair value of the 1.125% Call Option, refer to Note 4 , “ Fair Value Measurements .” 1.125% Conversion Option The embedded cash conversion option within the 1.125% Convertible Notes is accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the cash conversion option settles or expires. For further discussion of the inputs used to determine the fair value of the 1.125% Conversion Option, refer to Note 4 , “ Fair Value Measurements .” As of December 31, 2019 , the 1.125% Call Option and the 1.125% Conversion Option were classified as a current asset and current liability, respectively, because the 1.125% Convertible Notes matured on January 15, 2020. Subsequent Event As described in Note 11 , “ Debt ,” we repaid the aggregate principal amount of the 1.125% Convertible Notes, including settlement of the related 1.125% Conversion Option. In addition, in January 2020 we received $27 million for the settlement of the 1.125% |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense (benefit) consisted of the following: Year Ended December 31, 2019 2018 2017 (In millions) Current: Federal $ 204 $ 272 $ (9 ) State 12 18 3 Foreign 9 8 — Total current 225 298 (6 ) Deferred: Federal 5 (3 ) (85 ) State 6 (3 ) (9 ) Foreign (1 ) — — Total deferred 10 (6 ) (94 ) Income tax expense (benefit) $ 235 $ 292 $ (100 ) The Tax Cuts and Jobs Act of 2017 (“TCJA”), in part, reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. TCJA’s change in the federal rate required that we revalue deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally the new 21% federal corporate tax rate plus applicable state tax rate. We applied the guidance in SEC Staff Accounting Bulletin No. 118 when accounting for the enactment-date effects of the TCJA in 2017 and throughout 2018. As of December 31, 2017, we recorded a provisional amount of $54 million for the revaluation of deferred tax assets and liabilities because we had not yet completed our accounting for all of the enactment-date income tax effects of the TJCA under ASC 740, Income Taxes. Upon further analysis of certain aspects of the TCJA and refinement of our calculations in the year ended December 31, 2018, we reduced this provisional amount by $4 million , which is included as a component of income tax expense in the accompanying consolidated statement of operations. As of December 31, 2018, the accounting for all of the enactment-date income tax effects of the TCJA was complete. A reconciliation of the U.S. federal statutory income tax rate to the combined effective income tax rate is as follows: Year Ended December 31, 2019 2018 2017 Statutory federal tax (benefit) rate 21.0 % 21.0 % (35.0 )% State income provision (benefit), net of federal 1.4 1.2 (0.7 ) Nondeductible health insurer fee (“HIF”) — 7.3 — Nondeductible compensation 1.2 0.7 2.8 Nondeductible goodwill impairment — — 6.6 Worthless stock deduction — (1.0 ) — Revaluation of net deferred tax assets — (0.4 ) 8.8 Other 0.6 0.4 1.1 Effective tax expense (benefit) rate 24.2 % 29.2 % (16.4 )% The effective tax rate was not impacted by the HIF in 2019 and 2017, given the HIF moratorium in each of those years. Our effective tax rate is based on expected income (loss), statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Management estimates and judgments are required in determining our effective tax rate. We are routinely under audit by federal, state, or local authorities regarding the timing and amount of deductions, nexus of income among various tax jurisdictions, and compliance with federal, state, foreign, and local tax laws. Deferred tax assets and liabilities are classified as non-current. Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows: December 31, 2019 2018 (In millions) Accrued expenses and reserve liabilities $ 35 $ 39 Other accrued medical costs 11 12 Net operating losses 13 16 Fixed assets and intangibles 26 30 Unearned premiums 11 9 Lease financing obligation 5 30 Tax credit carryover 11 12 Other — 3 Valuation allowance (24 ) (28 ) Total deferred income tax assets, net of valuation allowance 88 123 Prepaid expenses (6 ) (6 ) Other (3 ) — Total deferred income tax liabilities (9 ) (6 ) Net deferred income tax asset $ 79 $ 117 At December 31, 2019 , we had state net operating loss carryforwards of $310 million , which begin expiring in 2028. At December 31, 2019 , we had California research and development and enterprise zone tax credit carryovers of $8 million , which will begin to expire in 2024, and foreign tax credit carryovers of $5 million , which expire in 2030. We evaluate the need for a valuation allowance taking into consideration the ability to carry back and carry forward tax credits and losses, available tax planning strategies and future income, including reversal of temporary differences. We have determined that as of December 31, 2019 , $24 million of deferred tax assets did not satisfy the recognition criteria. Therefore, we decreased our valuation allowance by $4 million , from $28 million at December 31, 2018 , to $24 million as of December 31, 2019 . We recognize tax benefits only if the tax position is more likely than not to be sustained. We are subject to income taxes in the United States, Puerto Rico, and numerous state jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. The roll forward of our unrecognized tax benefits is as follows: Year Ended December 31, 2019 2018 2017 (In millions) Gross unrecognized tax benefits at beginning of period $ (20 ) $ (13 ) $ (11 ) Increases in tax positions for current year (9 ) (1 ) Increases in tax positions for prior years — — (4 ) Decreases in tax positions for prior years — — 3 Lapse in statute of limitations 2 — Gross unrecognized tax benefits at end of period $ (20 ) $ (20 ) $ (13 ) The total amount of unrecognized tax benefits at December 31, 2019 , 2018 and 2017 that, if recognized, would affect the effective tax rates is $18 million , $18 million , and $12 million , respectively. We expect that during the next 12 months it is reasonably possible that unrecognized tax benefit liabilities may decrease by as much as $5 million due to resolution of a state refund claim. The state refund claim will not result in a cash payment for income taxes if our claim is denied. Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. Amounts accrued for the payment of interest and penalties as of December 31, 2019 , 2018 and 2017 were insignificant. We are under examination by the IRS for calendar years 2015 through 2017 and may be subject to examination for calendar year 2018. With a few exceptions, which are immaterial in the aggregate, we no longer are subject to state, local, and Puerto Rico tax examinations for years before 2015. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Stock Purchase Program In early December 2019, our board of directors authorized the purchase of up to $500 million , in the aggregate, of our common stock. This program is funded by existing cash on hand and extends through December 31, 2021. 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. Under this program, pursuant to a Rule 10b5-1 trading plan, we purchased approximately 400,000 shares of our common stock for $54 million in December 2019 (average cost of $135.30 per share), including approximately 55,000 shares purchased for $7 million in late December 2019, and settled in early January 2020. Subsequent Event In January 2020 through February 7, 2020, we purchased 1,533,000 shares for $203 million (average cost of $132.69 per share). 1.125% Warrants In connection with the Call Spread Overlay transaction described in Note 12 , “ Derivatives ,” in 2013, we issued 13.5 million of the 1.125% Warrants with a strike price of $53.8475 per share. Under certain circumstances, beginning in April 2020, if the price of our common stock were to exceed the strike price of the 1.125% Warrants, we would be obligated to issue shares of our common stock subject to a share delivery cap. The 1.125% Warrants could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the 1.125% Warrants. Refer to Note 3 , “ Net Income (Loss) Per Share ,” for dilution information for the periods presented. We will not receive any additional proceeds if the 1.125% Warrants are exercised. Following the transactions described below, approximately 310,000 of the 1.125% Warrants were outstanding at December 31, 2019. As described in Note 12 , “ Derivatives ,” in the year ended December 31, 2019, we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the year ended December 31, 2019, we paid $514 million to the Counterparties for the termination of 5.9 million of the 1.125% Warrants outstanding which resulted in a reduction of additional paid-in-capital for the same amount. Share-Based Compensation Total share-based compensation expense is presented in the following table. Except as described in the note to the table, we record share-based compensation as “General and administrative expenses” in the accompanying consolidated statements of operations. Year Ended December 31, 2019 2018 2017 (In millions) Pretax Net-of-Tax Pretax Net-of-Tax Pretax (1) Net-of-Tax RSAs, PSAs and PSUs (defined below) $ 29 $ 28 $ 17 $ 17 $ 39 $ 35 Employee stock purchase plan and stock options 10 9 10 9 7 5 Total $ 39 $ 37 $ 27 $ 26 $ 46 $ 40 _______________________ (1) Includes $23 million relating to acceleration of share-based compensation for former executives in the year ended December 31, 2017. This amount is reported in “Restructuring costs” in the accompanying consolidated statements of operations. Equity Incentive Plans In the second quarter of 2019, our stockholders approved the Molina Healthcare, Inc. 2019 Equity Incentive Plan (the “2019 EIP”). The 2019 EIP provides for awards, in the form of restricted and performance stock awards (“RSAs” and “PSAs”), performance units (“PSUs”), stock options, and other stock– or cash–based awards, to eligible persons who perform services for us. The 2019 EIP will remain in effect until its termination by the board of directors; provided, however, that all awards will be granted no later than May 8, 2029. Concurrent with the adoption of the 2019 EIP, the Molina Healthcare, Inc. 2011 Equity Incentive Plan was amended, restated and merged into the 2019 EIP. A maximum of 2.9 million shares of our common stock may be issued under the 2019 EIP. Stock-based awards . RSAs, PSAs and PSUs are granted with a fair value equal to the market price of our common stock on the date of grant, and generally vest in equal annual installments over periods up to four years from the date of grant. Certain PSUs may vest in their entirety at the end of three-year performance periods, if their performance conditions are met. We generally recognize expense for RSAs, PSAs and PSUs on a straight-line basis. Activity for stock-based awards in the year ended December 31, 2019 is summarized below: RSAs PSAs PSUs Total Shares Weighted Unvested balance as of December 31, 2018 399,795 3,132 201,383 604,310 $ 71.50 Granted 243,353 — 146,425 389,778 136.23 Vested (139,828 ) (3,132 ) (10,528 ) (153,488 ) 73.98 Forfeited (55,640 ) — (13,202 ) (68,842 ) 90.45 Unvested balance as of December 31, 2019 447,680 — 324,078 771,758 $ 102.01 As of December 31, 2019 , total unrecognized compensation expense related to unvested RSAs and PSUs was $49 million , which we expect to recognize over a remaining weighted-average period of 2.2 years , and 1.6 years , respectively. This unrecognized compensation cost assumes an estimated forfeiture rate of 15.9% for non-executive employees as of December 31, 2019 , based on actual forfeitures over the last 4 years. The total grant date fair value of awards granted and vested is presented in the following table: Year Ended December 31, 2019 2018 2017 (In millions) Granted: RSAs $ 33 $ 28 $ 20 PSUs 20 16 16 Total granted $ 53 $ 44 $ 36 Vested: RSAs $ 19 $ 15 $ 23 PSAs — 3 15 PSUs 2 — 9 Total vested $ 21 $ 18 $ 47 Stock Options. Stock option awards generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest in equal annual installments over periods up to four years from the date of grant, and have a maximum term of ten years from the date of grant. Stock option activity for the year ended December 31, 2019 is summarized below: Shares Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual term (In millions) (Years) Stock options outstanding as of December 31, 2018 405,000 $ 64.79 Granted — — Exercised — — Stock options outstanding as of December 31, 2019 405,000 64.79 $ 29 7.4 Stock options exercisable and expected to vest as of December 31, 2019 405,000 64.79 $ 29 7.4 Exercisable as of December 31, 2019 280,000 63.65 $ 20 7.3 The weighted-average grant date fair value per share of stock options awarded in 2017 was $41.43 . We estimate the fair value of each stock option award on the grant date using the Black-Scholes option pricing model. To determine the fair value of the stock options awarded in 2017 we applied a risk-free interest rate of 2.3% , expected volatility of 38.4% , dividend yield of 0% and expected life of 8.4 years . No stock options were granted in 2019 and 2018. As of December 31, 2019 , total unrecognized compensation expense related to unvested stock options was $4 million , which we expect to recognize over a weighted-average period of 0.8 years . The total intrinsic value of options exercised during the year ended December 31, 2017 was $2 million . No stock options were exercised in 2019 and 2018. The following is a summary of information about stock options outstanding and exercisable at December 31, 2019: Options Outstanding Options Exercisable Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted-Average Exercise Price Number Exercisable Weighted-Average Exercise Price Range of Exercise Prices $33.02 30,000 3.2 $ 33.02 30,000 $ 33.02 $67.33 375,000 7.8 67.33 250,000 67.33 Total 405,000 280,000 Employee Stock Purchase Plans (“ESPPs”) In the second quarter of 2019, our stockholders approved the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan (the “2019 ESPP”), which superseded the Molina Healthcare, Inc. 2011 Employee Stock Purchase Plan (the “2011 ESPP”). A maximum of 3.0 million shares of our common stock may be issued under the 2019 ESPP, the terms of which are substantially similar to the 2011 ESPP. The 2019 ESPP will continue until the earliest of: termination of the 2019 ESPP by the board of directors (which may occur at any time); issuance of all of the shares reserved for issuance under the 2019 ESPP; or May 8, 2029. Under our ESPPs, eligible employees may purchase common shares at 85% of the lower of the fair market value of our common stock on either the first or last trading day of each six-month offering period. Each participant is limited to a maximum purchase of $25,000 (as measured by the fair value of the stock acquired) per year through payroll deductions. We estimate the fair value of the stock issued using the Black-Scholes option pricing model. For the years ended December 31, 2019 , 2018 , and 2017 , the inputs to this model were as follows: risk-free interest rates of approximately 0.6% to 2.3% ; expected volatilities ranging from approximately 31% to 45% , dividend yields of 0% , and an average expected life of 0.5 years. We issued approximately 142,000 , 216,000 and 351,000 shares of our common stock under the ESPPs during the years ended December 31, 2019 , 2018 , and 2017 , respectively. In connection with our employee stock plans, approximately 242,000 shares and 365,000 shares of common stock were purchased or vested, net of shares used to settle employees’ income tax obligations, during the years ended December 31, 2019 , and 2018, respectively. |
Restructuring Costs
Restructuring Costs | 12 Months Ended |
Dec. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs Restructuring costs are reported by the same name in the accompanying consolidated statements of operations. IT Restructuring Plan Management’s margin recovery plan identified and implemented various profit improvement initiatives. This included the plan to restructure our information technology department (the “IT Restructuring Plan”) in 2018, which is reported in the Other segment. In connection with this plan, in early 2019, we entered into services agreements with an outsourcing vendor who manages certain of our information technology services. As of December 31, 2019, the IT Restructuring Plan was substantially complete. Under this plan, we incurred cumulative restructuring costs of $12 million , including $7 million of one-time termination benefits and $5 million of other restructuring costs (primarily consulting fees). The final amount of costs incurred is lower than the $20 million we originally estimated and reported in our Annual Report on Form 10-K for the year ended December 31, 2018. Because more of our IT employees transitioned to our outsourcing vendor than originally contemplated, such employees were no longer included in the IT Restructuring Plan, resulting in lower one-time termination costs. As of December 31, 2018, $6 million was accrued under the IT Restructuring Plan, primarily for one-time termination benefits that require cash settlement. In the year ended December 31, 2019 , we incurred $3 million of other restructuring costs, paid $5 million to settle one-time termination benefits, and paid $3 million to settle other restructuring costs. As of December 31, 2019 , $1 million was accrued under the IT Restructuring Plan. 2017 Restructuring Plan As of December 31, 2018, $18 million was accrued for the restructuring and profitability improvement plan approved by the board of directors in June 2017 (the “2017 Restructuring Plan”). In the year ended December 31, 2019 , we incurred $3 million of restructuring costs for adjustments to previously recorded lease contract termination costs, and paid $9 million to settle one-time termination and lease contract termination costs. As of December 31, 2019 , $12 million |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Postemployment Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans We sponsor defined contribution 401(k) plans that cover substantially all employees of our company and its subsidiaries. Eligible employees are permitted to contribute up to the maximum amount allowed by law. We generally match up to the first 4% of compensation contributed by employees. Expense recognized in connection with our contributions to the 401(k) plans amounted to $28 million , $36 million , and $43 million in the years ended December 31, 2019 , 2018 , and 2017 , respectively. We also have a non-qualified deferred compensation plan for certain key employees. Under this plan, eligible participants may defer up to 100% of their base salary and 100% of their bonus to provide tax-deferred growth. The funds deferred are invested in corporate-owned life insurance, under a rabbi trust. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Regulatory Capital Requirements and Dividend Restrictions Our health plans, which are operated by our respective wholly owned subsidiaries in those states, are subject to state laws and regulations that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state. The National Association of Insurance Commissioners (“NAIC”), has adopted rules which, if implemented by the states, set minimum capitalization requirements for insurance companies, HMOs, and other entities bearing risk for health care coverage. The requirements take the form of risk-based capital (“RBC”) rules which may vary from state to state. All of the states in which our health plans operate, except California, Florida and New York, have adopted these rules. Such requirements, if adopted by California, Florida and New York, may increase the minimum capital required for those states. Regulators in some states may also enforce capital requirements that require the retention of net worth in excess of amounts formally required by statute or regulation. As of December 31, 2019 , our health plans had aggregate statutory capital and surplus of approximately $1,852 million compared with the required minimum aggregate statutory capital and surplus of approximately $1,110 million . All of our health plans were in compliance with the minimum capital requirements at December 31, 2019 . We have the ability and commitment to provide additional capital to each of our health plans when necessary to ensure that statutory capital and surplus continue to meet regulatory requirements. Such statutes, regulations and informal capital requirements also restrict the timing, payment, and amount of dividends and other distributions 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 on current statutes and regulations, the net assets in these subsidiaries (after intercompany eliminations) which may not be transferable to us in the form of loans, advances, or cash dividends was approximately $1,811 million at December 31, 2019 , and $2,262 million at December 31, 2018 . Because of the statutory restrictions that inhibit the ability of our health plans to transfer net assets to us, the amount of retained earnings readily available to pay dividends to our stockholders is generally limited to cash, cash equivalents and investments held by the parent company – Molina Healthcare, Inc. Such cash, cash equivalents and investments amounted to $997 million and $170 million as of December 31, 2019 and 2018 , respectively. Legal Proceedings The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. Penalties associated with violations of these laws and regulations include significant fines and penalties, exclusion from participating in publicly funded programs, and the repayment of previously billed and collected revenues. We are involved in legal actions in the ordinary course of business including, but not limited to, various employment claims, vendor disputes and provider claims. Some of these legal actions seek monetary damages, including claims for punitive damages, which may not be covered by insurance. We review legal matters and update our estimates of reasonably possible losses and related disclosures, as necessary. We have accrued liabilities for legal matters for which we deem the loss to be both probable and reasonably estimable. These liability estimates could change as a result of further developments of the matters. The outcome of legal actions is inherently uncertain. An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations, or cash flows. Professional Liability Insurance |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segments | Segments We currently have two reportable segments: the Health Plans segment and the Other segment. Our reportable segments are consistent with how we currently manage the business and view the markets we serve. Our Other segment, which was insignificant to our consolidated results of operations in 2018 and 2019, includes the historical results of the MMIS and behavioral health subsidiaries we sold in late 2018, as well as certain corporate amounts not allocated to the Health Plans segment. Margin is the appropriate earnings measure for our reportable segments, based on how our chief operating decision maker currently reviews results, assesses performance, and allocates resources. The key metrics used to assess the performance of our Health Plans segment are premium revenue, medical margin and MCR. MCR represents the amount of medical care costs as a percentage of premium revenue. Therefore, the underlying margin, or the amount earned by the Health Plans segment after medical costs are deducted from premium revenue, is the most important measure of earnings reviewed by management. Margin for our Health Plans segment is referred to as “Medical Margin.” Health Plans Other Consolidated (In millions) 2019 Total revenue $ 16,815 $ 14 16,829 Margin 2,303 — 2,303 Goodwill, and intangible assets, net 172 — 172 Total assets 5,265 1,522 6,787 2018 Total revenue $ 18,471 $ 419 $ 18,890 Margin 2,475 43 2,518 Goodwill, and intangible assets, net 190 — 190 Total assets 6,165 989 7,154 2017 Total revenue $ 19,352 $ 531 $ 19,883 Margin 1,781 29 1,810 Goodwill, and intangible assets, net 212 43 255 Total assets 6,347 2,124 8,471 The following table reconciles margin by segment to consolidated income (loss) before income tax expense (benefit): Year Ended December 31, 2019 2018 2017 (In millions) Margin: Health Plans $ 2,303 $ 2,475 $ 1,781 Other — 43 29 Total margin 2,303 2,518 1,810 Add: other operating revenues (1) 621 871 508 Less: other operating expenses (2) (1,880 ) (2,243 ) (2,873 ) Less: loss on sales of subsidiaries, net of gain — (15 ) — Operating income (loss) 1,044 1,131 (555 ) Less: other expenses, net 72 132 57 Income (loss) before income tax expense (benefit) $ 972 $ 999 $ (612 ) ______________________ (1) Other operating revenues include premium tax revenue, health insurer fees reimbursed, investment income and other revenue. (2) Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, impairment losses, and restructuring costs. |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results of Operations (Unaudited) | Quarterly Results of Operations (Unaudited) The following table summarizes quarterly unaudited results of operations for the periods presented. For The Quarter Ended March 31, June 30, Sept. 30, 2019 December 31, (In millions, except per-share data) Total revenue $ 4,119 $ 4,193 $ 4,243 $ 4,274 Margin 581 583 561 578 Net income 198 196 175 168 Net income per share - Basic (1) $ 3.19 $ 3.15 $ 2.81 $ 2.70 Net income per share - Diluted (1) $ 2.99 $ 3.06 $ 2.75 $ 2.67 For The Quarter Ended March 31, June 30, Sept. 30, 2018 December 31, (In millions, except per-share data) Total revenue $ 4,646 $ 4,883 $ 4,697 $ 4,664 Margin 615 673 566 664 Gain (loss) on sales of subsidiaries — — 37 (52 ) Net income 107 202 197 201 Net income per share - Basic (1) $ 1.79 $ 3.29 $ 3.22 $ 3.24 Net income per share - Diluted (1) $ 1.64 $ 3.02 $ 2.90 $ 3.01 ________________________ (1) |
Condensed Financial Information
Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Financial Information of Registrant | Condensed Financial Information of Registrant The condensed balance sheets as of December 31, 2019 and 2018 , and the related condensed statements of operations, comprehensive income (loss) and cash flows for each of the three years in the period ended December 31, 2019 for our parent company Molina Healthcare, Inc. (the “Registrant”), are presented below. Condensed Balance Sheets December 31, 2019 2018 (In millions, except per-share data) ASSETS Current assets: Cash and cash equivalents $ 836 $ 70 Investments 161 100 Receivables 2 2 Due from affiliates 49 90 Prepaid expenses and other current assets 46 47 Derivative asset 29 476 Total current assets 1,123 785 Property, equipment, and capitalized software, net 327 176 Goodwill and intangible assets, net 13 13 Investments in subsidiaries 2,225 2,768 Deferred income taxes 10 39 Advances to related parties and other assets 76 40 Total assets $ 3,774 $ 3,821 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Medical claims and benefits payable $ — $ 4 Accounts payable and accrued liabilities 260 223 Current portion of long-term debt 18 241 Derivative liability 29 476 Total current liabilities 307 944 Long-term debt 1,237 1,020 Finance lease liabilities 231 197 Other long-term liabilities 39 13 Total liabilities 1,814 2,174 Stockholders’ equity: Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018 — — Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding — — Additional paid-in capital 175 643 Accumulated other comprehensive income (loss) 4 (8 ) Retained earnings 1,781 1,012 Total stockholders’ equity 1,960 1,647 Total liabilities and stockholders’ equity $ 3,774 $ 3,821 See accompanying notes. Condensed Statements of Operations Year Ended December 31, 2019 2018 2017 (In millions) Revenue: Administrative services fees $ 1,038 $ 1,138 $ 1,317 Investment income and other revenue 18 17 16 Total revenue 1,056 1,155 1,333 Expenses: General and administrative expenses 937 1,007 1,082 Depreciation and amortization 63 69 93 Other operating expenses — 8 16 Restructuring costs 4 35 153 Impairment losses — — 39 Total operating expenses 1,004 1,119 1,383 Gain on sale of subsidiary — 37 — Operating income (loss) 52 73 (50 ) Interest expense 87 114 117 Other (income) expense, net (15 ) 17 (61 ) Loss before income tax (benefit) expense and equity in net earnings (losses) of subsidiaries (20 ) (58 ) (106 ) Income tax expense (benefit) 9 (14 ) 8 Net loss before equity in net earnings (losses) of subsidiaries (29 ) (44 ) (114 ) Equity in net earnings (losses) of subsidiaries 766 751 (398 ) Net income (loss) $ 737 $ 707 $ (512 ) Condensed Statements of Comprehensive Income (Loss) Year Ended December 31, 2019 2018 2017 (In millions) Net income (loss) $ 737 $ 707 $ (512 ) Other comprehensive income (loss): Unrealized investment income (loss) 16 (3 ) (5 ) Less: effect of income taxes 4 (1 ) (2 ) Other comprehensive income (loss), net of tax 12 (2 ) (3 ) Comprehensive income (loss) $ 749 $ 705 $ (515 ) See accompanying notes. Condensed Statements of Cash Flows Year Ended December 31, 2019 2018 2017 (In millions) Operating activities: Net cash provided by operating activities $ 64 $ 118 $ 166 Investing activities: Capital contributions to subsidiaries (43 ) (145 ) (370 ) Dividends received from subsidiaries 1,373 298 286 Purchases of investments (152 ) (136 ) (331 ) Proceeds from sales and maturities of investments 93 388 156 Purchases of property, equipment and capitalized software (56 ) (22 ) (67 ) Net cash received from sale of subsidiaries — 242 — Change in amounts due to/from affiliates 38 6 (49 ) Other, net 1 — — Net cash provided by (used in) investing activities 1,254 631 (375 ) Financing activities: Repayment of principal amount of convertible notes (240 ) (362 ) — Cash paid for partial settlement of conversion option (578 ) (623 ) — Cash received for partial settlement of call option 578 623 — Cash paid for partial termination of warrants (514 ) (549 ) — Proceeds from borrowings under term loan facility 220 — — Common stock purchases (47 ) — — Repayment of credit facility — (300 ) — Proceeds from senior notes offerings, net of issuance costs — — 325 Proceeds from borrowings under credit facility — — 300 Other, net 29 19 11 Net cash (used in) provided by financing activities (552 ) (1,192 ) 636 Net (decrease) increase in cash and cash equivalents 766 (443 ) 427 Cash and cash equivalents at beginning of period 70 513 86 Cash and cash equivalents at end of period $ 836 $ 70 $ 513 Notes to Condensed Financial Information of Registrant Note A - Basis of Presentation The Registrant was incorporated in 2002. Prior to that date, Molina Healthcare of California (formerly known as Molina Medical Centers) operated as a California health plan and as the parent company for three other state health plans. In June 2003, the employees and operations of the corporate entity were transferred from Molina Healthcare of California to the Registrant. The Registrant’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. The accompanying condensed financial information of the Registrant should be read in conjunction with the consolidated financial statements and accompanying notes. Note B - Transactions with Subsidiaries The Registrant provides certain centralized medical and administrative services to our subsidiaries pursuant to administrative services agreements that include, but are not limited to, information technology, product development and administration, underwriting, claims processing, customer service, certain care management services, human resources, marketing, purchasing, risk management, actuarial, underwriting, finance, accounting, legal and public relations. Fees are based on the fair market value of services rendered and are recorded as operating revenue. Payment is subordinated to the subsidiaries’ ability to comply with minimum capital and other restrictive financial requirements of the states in which they operate. Charges in 2019 , 2018 , and 2017 for these services amounted to $1,038 million , $1,137 million , and $1,317 million , respectively, and are included in operating revenue. The Registrant and its subsidiaries are included in the consolidated federal and state income tax returns filed by the Registrant. Income taxes are allocated to each subsidiary in accordance with an intercompany tax allocation agreement. The agreement allocates income taxes in an amount generally equivalent to the amount which would be expensed by the subsidiary if it filed a separate tax return. Net operating loss benefits are paid to the subsidiary by the Registrant to the extent such losses are utilized in the consolidated tax returns. Note C - Dividends and Capital Contributions When the Registrant receives dividends from its subsidiaries, such amounts are recorded as a reduction to the investments in the respective subsidiaries. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Consolidation and Presentation | Consolidation and Presentation The consolidated financial statements include the accounts of Molina Healthcare, Inc., and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Financial information related to subsidiaries acquired during any year is included only for periods subsequent to their acquisition. In the opinion of management, all adjustments considered necessary for a fair presentation of the results as of the date and for the periods presented have been included; such adjustments consist of normal recurring adjustments. |
Use of Estimates | 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. Principal areas requiring the use of estimates include: • The determination of medical claims and benefits payable of our Health Plans segment; • Health Plans segment contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract; • Health Plans segment quality incentives that allow us to recognize incremental revenue if certain quality standards are met; • Settlements under risk or savings sharing programs; • The assessment of long-lived and intangible assets, and goodwill, for impairment; • The determination of reserves for potential absorption of claims unpaid by insolvent providers; • The determination of reserves for the outcome of litigation; • The determination of valuation allowances for deferred tax assets; and • |
Cash and Cash Equivalents | 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, 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. |
Investments | Investments Our investments are principally held in debt securities, which are grouped into two separate categories for accounting and reporting purposes: available-for-sale securities, and held-to-maturity securities. Available-for-sale (“AFS”) securities are recorded at fair value and unrealized gains and losses, if any, are recorded in stockholders’ equity as other comprehensive income, net of applicable income taxes. Held-to-maturity securities are recorded at amortized cost, which approximates fair value, and unrealized holding gains or losses are not generally recognized. Realized gains and losses and unrealized losses judged to be other than temporary with respect to available-for-sale and held-to-maturity securities are included in the determination of net income (loss). The cost of securities sold is determined using the specific-identification method. Our investment policy requires that all of our investments have final maturities of less than 10 years, or less than 10 years average life for structured securities. Investments and restricted investments are subject to interest rate risk and will decrease in value if market rates increase. Declines in interest rates over time will reduce our investment income. |
Long-Lived Assets | Long-Lived Assets, including Intangible Assets Long-lived assets consist primarily of property, equipment, capitalized software (see Note 7 , “ Property, Equipment, and Capitalized Software, Net ”), and intangible assets resulting from acquisitions. Finite-lived, separately-identified intangible assets acquired in business combinations are assets that represent future expected benefits but lack physical substance (such as purchased contract rights and provider contracts). Intangible assets are initially recorded at fair value and are then amortized on a straight-line basis over their expected useful lives, generally between five and 15 years. Our intangible assets are subject to impairment tests when events or circumstances indicate that a finite-lived intangible asset’s (or asset group’s) carrying value may not be recoverable. Consideration is given to a number of potential impairment indicators, including the ability of our health plan subsidiaries to obtain the renewal by amendment of their contracts in each state prior to the actual expiration of their contracts. However, there can be no assurance that these contracts will continue to be renewed. Following the identification of any potential impairment indicators, to determine whether an impairment exists, we would compare the carrying amount of a finite-lived intangible asset with the greater of the undiscounted cash flows that are expected to result from the use of the asset or related group of assets, or its value under the asset liquidation method. If it is determined that the carrying amount of the asset is not recoverable, the amount by which the carrying value exceeds the estimated fair value is recorded as an impairment. Property and equipment are stated at historical cost. Replacements and major improvements are capitalized, and repairs and maintenance are charged to expense as incurred. Furniture and equipment are generally depreciated using the straight-line method over estimated useful lives ranging from three to seven years . Software developed for internal use is capitalized. Software is generally amortized over its estimated useful life of three years . Leasehold improvements are amortized over the term of the lease, or over their useful lives from five to 10 years, whichever is shorter. Buildings are depreciated over their estimated useful lives of 31.5 to 40 years. |
Intangible Assets | Long-Lived Assets, including Intangible Assets Long-lived assets consist primarily of property, equipment, capitalized software (see Note 7 , “ Property, Equipment, and Capitalized Software, Net ”), and intangible assets resulting from acquisitions. Finite-lived, separately-identified intangible assets acquired in business combinations are assets that represent future expected benefits but lack physical substance (such as purchased contract rights and provider contracts). Intangible assets are initially recorded at fair value and are then amortized on a straight-line basis over their expected useful lives, generally between five and 15 years. Our intangible assets are subject to impairment tests when events or circumstances indicate that a finite-lived intangible asset’s (or asset group’s) carrying value may not be recoverable. Consideration is given to a number of potential impairment indicators, including the ability of our health plan subsidiaries to obtain the renewal by amendment of their contracts in each state prior to the actual expiration of their contracts. However, there can be no assurance that these contracts will continue to be renewed. Following the identification of any potential impairment indicators, to determine whether an impairment exists, we would compare the carrying amount of a finite-lived intangible asset with the greater of the undiscounted cash flows that are expected to result from the use of the asset or related group of assets, or its value under the asset liquidation method. If it is determined that the carrying amount of the asset is not recoverable, the amount by which the carrying value exceeds the estimated fair value is recorded as an impairment. |
Leases | Leases Right-of-use (“ROU”) assets represent our right to use the underlying assets over the lease term, and lease liabilities represent our obligation for lease payments arising from the related leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease terms may include options to extend or terminate the lease when we believe it is reasonably certain that we will exercise such options. If applicable, we account for lease and non-lease components within a lease as a single lease component. Because most of our leases do not provide an implicit interest rate, we generally use our incremental borrowing rate to determine the present value of lease payments. Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term, and the related ROU assets and liabilities are reduced to the present value of the remaining lease payments at the end of each period. Finance lease payments reduce finance lease liabilities, the related ROU assets are amortized on a straight-line basis over the lease term, and interest expense is recognized using the effective interest method. |
Goodwill and Business Combinations | Goodwill and Business Combinations Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment on an annual basis and more frequently if impairment indicators are present. Such events or circumstances may include experienced or expected operating cash-flow deterioration or losses, significant losses of membership, loss of state funding, loss of state contracts, and other factors. Goodwill is impaired if the carrying amount of the reporting unit (one of our state health plans) exceeds its estimated fair value. This excess is recorded as an impairment loss and adjusted if necessary for the impact of tax-deductible goodwill. The loss recognized may not exceed the total goodwill allocated to the reporting unit. When testing goodwill for impairment, we may first assess qualitative factors, such as industry and market factors, the dynamic economic and political environments in which we operate, cost factors, and changes in overall performance, to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. If our qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, we perform the quantitative assessment. We may also elect to bypass the qualitative assessment and proceed directly to the quantitative assessment. If performing a quantitative assessment, we generally estimate the fair values of our reporting units by applying the income approach, using discounted cash flows. For the annual impairment test under a quantitative assessment, the base year in the reporting units’ discounted cash flows is derived from the annual financial planning cycle, which commences in the fourth quarter of the year. When computing discounted cash flows, we make assumptions about a wide variety of internal and external factors, and consider what the reporting unit’s selling price would be in an orderly transaction between market participants at the measurement date. Significant assumptions include financial projections of free cash flow (including significant assumptions about membership, premium rates, healthcare and operating cost trends, contract renewal and the procurement of new contracts, capital requirements and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted periods, and discount rates. When determining the discount rate, we consider the overall level of inherent risk of the reporting unit, and the expected rate an outside investor would expect to earn. As part of a quantitative assessment, we may also apply the asset liquidation method to estimate the fair value of individual reporting units, which is computed as total assets minus total liabilities, excluding intangible assets and deferred taxes. Finally, we apply a market approach to reconcile the value of our reporting units to our consolidated market value. Under the market approach, we consider publicly traded comparable company information to determine revenue and earnings multiples which are used to estimate our reporting units’ fair values. The assumptions used are consistent with those used in our long-range business plan and annual planning process. However, if these assumptions differ from actual results, the outcome of our goodwill impairment tests could be adversely affected. |
Premium Revenue - Health Plans | Premium Revenue Premium revenue is generated from our Health Plans segment contracts, including agreements with other managed care organizations for which we operate as a subcontractor. 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. The state Medicaid programs and the federal Medicare program periodically adjust premiums. Additionally, 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. The following table summarizes premium revenue by health plan for the periods presented: Year Ended December 31, 2019 2018 2017 Amount % of Total Amount % of Total Amount % of Total (Dollars in millions) California $ 2,266 14.0 % $ 2,150 12.2 % $ 2,701 14.3 % Florida 734 4.5 1,790 10.2 2,568 13.6 Illinois 1,002 6.2 793 4.5 593 3.1 Michigan 1,624 10.0 1,601 9.1 1,596 8.5 New Mexico (1) — — 1,356 7.7 1,368 7.3 Ohio 2,553 15.8 2,388 13.6 2,216 11.8 Puerto Rico 474 2.9 696 3.9 732 3.9 South Carolina 583 3.6 495 2.8 445 2.4 Texas 2,991 18.5 3,244 18.4 2,813 14.9 Washington 2,695 16.6 2,361 13.4 2,608 13.8 Other (1) 1,286 7.9 738 4.2 1,214 6.4 Total $ 16,208 100.0 % $ 17,612 100.0 % $ 18,854 100.0 % _______________________ (1) “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results. In 2019, “Other” also includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its results are not individually significant to our consolidated operating results in 2019. Certain components of premium revenue are subject to accounting estimates and fall into the following categories: Contractual Provisions That May Adjust or Limit Revenue or Profit Medicaid Program Medical Cost Floors (Minimums), and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded liabilities under the terms of such contract provisions of $74 million and $103 million at December 31, 2019 , and December 31, 2018 , respectively. Approximately $69 million and $87 million of the liabilities accrued at December 31, 2019 , and December 31, 2018 , respectively, relates to our participation in Medicaid Expansion programs. In certain circumstances, the health plans may receive additional premiums if amounts spent on medical care costs exceed a defined maximum threshold. Receivables relating to such provisions were insignificant at December 31, 2019 , and December 31, 2018 . Profit Sharing and Profit Ceiling. Our contracts with certain states contain profit-sharing or profit ceiling provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any. Liabilities for profits in excess of the amount we are allowed to retain under these provisions were insignificant at December 31, 2019 , and December 31, 2018 . Retroactive Premium Adjustments. State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, based on our best estimate of the ultimate premium we expect to realize for the period being adjusted. Medicare Program Risk Adjusted Premiums: Our Medicare premiums are subject to retroactive increase or decrease based on the health status of our Medicare members (as measured by member risk score). We estimate our members’ risk scores and the related amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health status, risk scores and CMS practices. Consolidated balance sheet amounts related to anticipated Medicare risk adjusted premiums and Medicare Part D settlements were insignificant at December 31, 2019 , and December 31, 2018 . Minimum MLR: The Affordable Care Act (“ACA”) has established a minimum annual medical loss ratio (“Minimum MLR”) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations. The amounts payable for the Medicare Minimum MLR were insignificant at December 31, 2019 , and December 31, 2018 . 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 operations. As of December 31, 2019 , Marketplace risk adjustment payables amounted to $368 million and related receivables amounted to $63 million , for a net payable of $305 million . As of December 31, 2018, Marketplace risk adjustment payables amounted to $466 million and related receivables amounted to $34 million , for a net payable of $432 million . Minimum MLR: The ACA has established a Minimum MLR of 80% for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations. Aggregate balance sheet amounts related to the Minimum MLR were insignificant at December 31, 2019 , and December 31, 2018. A summary of the categories of amounts due government agencies is as follows: December 31, 2019 2018 (In millions) Medicaid program: Medical cost floors and corridors $ 74 $ 103 Other amounts due to states 84 81 Marketplace program: Risk adjustment 368 466 Cost sharing reduction — 183 Other 138 134 Total $ 664 $ 967 Quality Incentives At many of our health plans, revenue ranging from approximately 1% to 4% |
Medical Care Costs - Health Plans | Medical Care Costs, Medical Claims and Benefits Payable Medical care costs are recognized in the period in which services are provided and include fee-for-service claims, pharmacy benefits, capitation payments to providers, and various other medically-related costs. Under fee-for-service claims arrangements with providers, we retain the financial responsibility for medical care provided and incur costs based on actual utilization of hospital and physician services. Such medical care costs include amounts paid by us as well as estimated medical claims and benefits payable for costs that were incurred but not paid as of the reporting date (“IBNP”). Pharmacy benefits represent payments for members' prescription drug costs, net of rebates from drug manufacturers. We estimate pharmacy rebates based on historical and current utilization of prescription drugs and contractual provisions. Capitation payments represent monthly contractual fees paid to providers, who are responsible for providing medical care to members, which could include medical or ancillary costs like dental, vision and other supplemental health benefits. Such capitation costs are fixed in advance of the periods covered and are not subject to significant accounting estimates. Other medical care costs include all medically-related administrative costs, amounts due to providers pursuant to risk-sharing or other incentive arrangements, provider claims, and other healthcare expenses. Examples of medically-related administrative costs include expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses. Additionally, we include an estimate for the cost of settling claims incurred through the reporting date in our medical claims and benefits payable liability . Medical claims and benefits payable consist mainly of fee-for-service IBNP, unpaid pharmacy claims, capitation costs, other medical costs, including amounts payable to providers pursuant to risk-sharing or other incentive arrangements and amounts payable to providers on behalf of certain state agencies for certain state assessments in which we assume no financial risk . IBNP includes the costs of claims incurred as of the balance sheet date which have been reported to us, and our best estimate of the cost of claims incurred but not yet reported to us. We also include an additional reserve to ensure that our overall IBNP liability is sufficient under moderately adverse conditions. We reflect changes in these estimates in the consolidated results of operations in the period in which they are determined. The estimation of the IBNP liability requires a significant degree of judgment in applying actuarial methods, determining the appropriate assumptions and considering numerous factors. Of those factors, we consider estimated completion factors and the assumed healthcare cost trend to be the most critical assumptions. Other relevant factors also include, but are not limited to, healthcare service utilization trends, claim inventory levels, changes in membership, product mix, seasonality, benefit changes or changes in Medicaid fee schedules, provider contract changes, prior authorizations and the incidence of catastrophic or pandemic cases. Because of the significant degree of judgment involved in estimation of our IBNP liability, there is considerable variability and uncertainty inherent in such estimates. Each reporting period, the recognized IBNP liability represents our best estimate of the total amount of unpaid claims incurred as of the balance sheet date using a consistent methodology in estimating our IBNP liability. We believe our current estimates are reasonable and adequate; however, the development of our estimate is a continuous process that we monitor and update as more complete claims payment information and healthcare cost trend data becomes available. Actual medical care costs may be less than we previously estimated (favorable development) or more than we previously estimated (unfavorable development), and any differences could be material. Any adjustments to reflect favorable development would be recognized as a decrease to medical care costs, and any adjustments to reflect unfavorable development would be recognized as an increase to medical care costs , in the period in which the adjustments are determined. Refer to Note 10 , “ Medical Claims and Benefits Payable ,” for a table presenting the components of the change in our medical claims and benefits payable, for all periods presented in the accompanying consolidated financial statements. Reinsurance We limit our risk of catastrophic losses by maintaining high deductible reinsurance coverage. Such reinsurance coverage does not relieve us of our primary obligation to our policyholders. We report reinsurance premiums as a reduction to premium revenue, while related reinsurance recoveries are reported as a reduction to medical care costs. Reinsurance premiums amounted to $17 million , $16 million , and $20 million for the years ended December 31, 2019, 2018, and 2017, respectively. Reinsurance recoveries amounted to $18 million , $33 million , and $24 million for the years ended December 31, 2019, 2018, and 2017, respectively. Reinsurance recoverable of $21 million , $31 million , and $16 million , as of December 31, 2019, 2018, and 2017, respectively, is included in “Receivables” in the accompanying consolidated balance sheets. Marketplace Cost Share Reduction (“CSR”) In the year ended December 31, 2018, we recognized a benefit of approximately $81 million in reduced medical care costs related to 2017 dates of service, as a result of the federal government’s confirmation that the reconciliation of 2017 Marketplace CSR subsidies would be performed on an annual basis. In the fourth quarter of 2017, we had assumed a nine-month reconciliation of this item pending confirmation of the time period to which the 2017 reconciliation would be applied. Premium Deficiency Reserves on Loss Contracts We assess the profitability of our contracts to determine if it is probable that a loss will be incurred in the future by reviewing current results and forecasts. For purposes of this assessment, contracts are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts. A premium deficiency is recognized if anticipated future medical care and administrative costs exceed anticipated future premium revenue, investment income and reinsurance recoveries. No premium deficiency reserves were recorded as of December 31, 2019 and 2018. |
Income Taxes | Income Taxes |
Taxes Based on Premiums | Taxes Based on Premiums Health Insurer Fee (“HIF”). The federal government under the ACA imposes an annual fee, or excise tax, on health insurers for each calendar year. The HIF is based on a company’s share of the industry’s net premiums written during the preceding calendar year and is non-deductible for income tax purposes. We recognize expense for the HIF over the year on a straight-line basis. Within our Medicaid program, we must secure additional reimbursement from our state partners for this added cost. We recognize the related revenue when we have obtained a contractual commitment or payment from a state to reimburse us for the HIF, and such HIF revenue is recognized ratably throughout the year. The Consolidated Appropriations Act of 2016 provided for the HIF moratorium in 2017, and Public Law No. 115-120 provided for the HIF moratorium in 2019. Therefore, there were no health insurer fees reimbursed, nor health insurer fees incurred, in those years. Premium and Use Tax. |
Concentrations of Credit Risk | 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 10 years, or less than 10 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 or commonwealth in which our health plan subsidiaries operate. See further information below, under “Recent Accounting Pronouncements Not Yet Adopted” regarding our adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , effective January 1, 2020. |
Risks and Uncertainties | Risks and Uncertainties Our profitability depends in large part on our ability to accurately predict and effectively manage medical care costs. We continually review our medical costs in light of our underlying claims experience and revised actuarial data. However, several factors could adversely affect medical care costs. These factors, which include changes in health care practices, inflation, new technologies, major epidemics, natural disasters, and malpractice litigation, are beyond our control and may have an adverse effect on our ability to accurately predict and effectively control medical care costs. Costs in excess of those anticipated could have a material adverse effect on our financial condition, results of operations, or cash flows. We operate health plans primarily as a direct contractor with the states (or Commonwealth), and in Los Angeles County, California, as a subcontractor to another health plan holding a direct contract with the state. We are therefore dependent upon a small number of contracts to support our revenue. The loss of any one of those contracts could have a material adverse effect on our financial position, results of operations, or cash flows. In addition, our ability to arrange for the provision of medical services to our members is dependent upon our ability to develop and maintain adequate provider networks. Our inability to develop or maintain such networks might, in certain circumstances, have a material adverse effect on our financial position, results of operations, or cash flows. |
Recent Accounting Pronouncements Adopted and Not Yet Adopted | Recent Accounting Pronouncements Adopted Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Topic 842, which was subsequently modified by several ASUs issued in 2017 and 2018. Topic 842 was issued to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet. Most prominent among the changes in Topic 842 is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. In addition, Topic 842’s disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Topic 842’s transition provisions are applied using a modified retrospective approach; entities may elect whether to apply the transition provisions, including disclosure requirements, at the beginning of the earliest comparative period presented or on the adoption date. We adopted Topic 842 effective January 1, 2019, and elected to apply the transition provisions as of that date. Accordingly, we recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings on January 1, 2019. In addition, we elected the available practical expedients and implemented internal controls and information systems functionality to enable the preparation of financial information on adoption. As indicated in the accompanying consolidated statements of stockholders’ equity, the cumulative effect adjustment was an increase of $85 million to retained earnings ( $110 million , net of $25 million deferred income tax expense), relating primarily to the transition provisions for sale-leaseback arrangements that did not qualify for sale treatment. Accordingly, such arrangements were de-recognized and recorded as finance lease ROU assets and lease liabilities. The difference between the de-recognized assets and lease financing obligations resulted in an increase to retained earnings. The recognition of these arrangements as finance lease ROU assets and lease liabilities will not materially impact our consolidated results of operations over the terms of the leases. Software Licenses. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We early adopted ASU 2018-15 effective January 1, 2019, using the prospective method , with no material impact to our financial condition, results of operations or cash flows. Adoption of this guidance may be significant to us in the future depending on the extent to which we use cloud computing arrangements that qualify as service contracts. Recent Accounting Pronouncements Not Yet Adopted Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which was subsequently modified by several ASUs issued in 2018 and 2019. This standard introduces a new current expected credit loss (“CECL”) model for measuring expected credit losses for certain types of financial instruments measured at amortized cost and replaces the incurred loss model. The CECL model requires an entity to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount the entity expects to collect over the instrument’s contractual life after consideration of historical experience, current conditions, and reasonable and supportable forecasts. This standard also introduces targeted changes to the AFS debt securities impairment model. It eliminates the concept of other-than-temporary impairment and requires an entity to determine whether any impairment is the result of a credit loss or other factors. We will adopt Topic 326 effective January 1, 2020, using the modified retrospective approach. Under this method we will recognize the cumulative effect of adopting the standard as an adjustment to the opening balance of retained earnings on January 1, 2020. Under Topic 326, we will record an allowance for credit losses for financial assets subject to the CECL model. The most significant type of financial instrument reported in our consolidated balance sheets, subject to the CECL model, is “Receivables.” As of December 31, 2019, approximately 75% , or $1,056 million of the receivables balance constitutes receivables from state and federal government agencies. Based on our analysis, we believe that the credit risk associated with such receivables is nominal due to a very low risk of default. The AFS debt securities impairment model will apply to “Investments” reported in our consolidated balance sheets. We believe that the credit risk associated with our non-government issued Investments is nominal due to the high quality of such investments. The adoption of Topic 326 will be immaterial to our consolidated results of operations and financial condition. Other 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. |
Receivables | Receivables consist primarily of amounts due from government agencies, which may be 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 doubtful accounts is insignificant. Any amounts determined to be uncollectible are charged to expense when such determination is made. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets. December 31, 2019 2018 2017 (In millions) Cash and cash equivalents $ 2,452 $ 2,826 $ 3,186 Restricted cash and cash equivalents, non-current 56 100 95 Restricted cash and cash equivalents, current — — 9 Total cash and cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows $ 2,508 $ 2,926 $ 3,290 |
Restricted cash and cash equivalents | The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets. December 31, 2019 2018 2017 (In millions) Cash and cash equivalents $ 2,452 $ 2,826 $ 3,186 Restricted cash and cash equivalents, non-current 56 100 95 Restricted cash and cash equivalents, current — — 9 Total cash and cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows $ 2,508 $ 2,926 $ 3,290 |
Summarized premium revenue | The following table summarizes premium revenue by health plan for the periods presented: Year Ended December 31, 2019 2018 2017 Amount % of Total Amount % of Total Amount % of Total (Dollars in millions) California $ 2,266 14.0 % $ 2,150 12.2 % $ 2,701 14.3 % Florida 734 4.5 1,790 10.2 2,568 13.6 Illinois 1,002 6.2 793 4.5 593 3.1 Michigan 1,624 10.0 1,601 9.1 1,596 8.5 New Mexico (1) — — 1,356 7.7 1,368 7.3 Ohio 2,553 15.8 2,388 13.6 2,216 11.8 Puerto Rico 474 2.9 696 3.9 732 3.9 South Carolina 583 3.6 495 2.8 445 2.4 Texas 2,991 18.5 3,244 18.4 2,813 14.9 Washington 2,695 16.6 2,361 13.4 2,608 13.8 Other (1) 1,286 7.9 738 4.2 1,214 6.4 Total $ 16,208 100.0 % $ 17,612 100.0 % $ 18,854 100.0 % _______________________ (1) “Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results. |
Amounts due to government agencies | A summary of the categories of amounts due government agencies is as follows: December 31, 2019 2018 (In millions) Medicaid program: Medical cost floors and corridors $ 74 $ 103 Other amounts due to states 84 81 Marketplace program: Risk adjustment 368 466 Cost sharing reduction — 183 Other 138 134 Total $ 664 $ 967 |
Quality incentive premium revenue recognized | The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the periods presented and prior periods. Year Ended December 31, 2019 2018 2017 (In millions) Maximum available quality incentive premium - current period $ 186 $ 182 $ 150 Amount of quality incentive premium revenue recognized in current period: Earned current period $ 156 $ 133 $ 97 Earned prior periods 38 31 10 Total $ 194 $ 164 $ 107 Quality incentive premium revenue recognized as a percentage of total premium revenue 1.2 % 0.9 % 0.6 % |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Summary of denominators for the computation of basic and diluted earnings per share | The following table sets forth the calculation of basic and diluted net income (loss) per share: Year Ended December 31, 2019 2018 2017 (In millions, except net income (loss) per share) Numerator: Net income (loss) $ 737 $ 707 $ (512 ) Denominator: Shares outstanding at the beginning of the period 62.1 59.3 55.8 Weighted-average number of shares issued: Exchange of convertible senior notes (1) — 1.4 0.1 Conversion of convertible senior notes (1) — 0.2 — Stock-based compensation 0.1 0.2 0.5 Denominator for basic net income (loss) per share 62.2 61.1 56.4 Effect of dilutive securities: Warrants (2) 1.4 4.8 — Convertible senior notes (1) — 0.4 — Stock-based compensation 0.6 0.3 — Denominator for diluted net income (loss) per share 64.2 66.6 56.4 Net income (loss) per share: (3) Basic $ 11.85 $ 11.57 $ (9.07 ) Diluted $ 11.47 $ 10.61 $ (9.07 ) Potentially dilutive common shares excluded from calculations: (2) Warrants — — 1.9 Convertible senior notes (1) — — 0.4 Stock-based compensation — — 0.3 _______________________________ (1) “Convertible senior notes” in this table refer to the 1.625% convertible senior notes due 2044 that were settled in 2018. (2) For more information regarding the warrants, including partial termination transactions, refer to Note 14 , “ Stockholders' Equity .” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method. Certain potentially dilutive common shares issuable are not included in the computation of diluted net income (loss) per share because to do so would have been anti-dilutive. (3) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value of assets measured on recurring basis | Our financial instruments measured at fair value on a recurring basis at December 31, 2019 , were as follows: Total Level 1 Level 2 Level 3 (In millions) Corporate debt securities $ 1,178 $ — $ 1,178 $ — Mortgage-backed securities 420 — 420 — Asset-backed securities 127 — 127 — U.S. Treasury notes 86 — 86 — Municipal securities 78 — 78 — Government-sponsored enterprise securities (“GSEs”) 49 — 49 — Foreign securities 7 — 7 — Certificates of deposit 1 — 1 — Subtotal 1,946 — 1,946 — 1.125% Call Option derivative asset 29 — — 29 Total assets $ 1,975 $ — $ 1,946 $ 29 1.125% Conversion Option derivative liability $ 29 $ — $ — $ 29 Total liabilities $ 29 $ — $ — $ 29 Our financial instruments measured at fair value on a recurring basis at December 31, 2018 , were as follows: Total Level 1 Level 2 Level 3 (In millions) Corporate debt securities $ 1,123 $ — $ 1,123 $ — Asset-backed securities 82 — 82 — U.S. Treasury notes 181 — 181 — Municipal securities 114 — 114 — GSEs 163 — 163 — Foreign securities 4 — 4 — Certificates of deposit 14 — 14 — Subtotal 1,681 — 1,681 — 1.125% Call Option derivative asset 476 — — 476 Total assets $ 2,157 $ — $ 1,681 $ 476 1.125% Conversion Option derivative liability $ 476 $ — $ — $ 476 Total liabilities $ 476 $ — $ — $ 476 |
Fair value measurements of senior notes | As of December 31, 2019 , the carrying amount of the Term Loan Facility approximated fair value because its interest rate is a variable rate that approximates rates currently available to us. December 31, 2019 December 31, 2018 Carrying Fair Value Carrying Fair Value Amount Amount (In millions) 5.375% Notes $ 696 $ 745 $ 694 $ 674 4.875% Notes 327 340 326 301 Term Loan Facility 220 220 — — 1.125% Convertible Notes (1) 12 42 240 732 Total $ 1,255 $ 1,347 $ 1,260 $ 1,707 _______________________________ (1) The fair value of the 1.125% Conversion Option (the embedded cash conversion option), which is reflected in the fair value amounts presented above, amounted to $29 million and $476 million as of December 31, 2019 and 2018, respectively. For more information, including information on debt repayments in 2019 and 2020, see Note 11 , “ Debt ,” and Note 12 , “ Derivatives .” |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | The following tables summarize our current investments as of the dates indicated: December 31, 2019 Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value (In millions) Corporate debt securities $ 1,174 $ 5 $ 1 $ 1,178 Mortgage-backed securities 420 1 1 420 Asset-backed securities 126 1 — 127 U.S. Treasury notes 86 — — 86 Municipal securities 78 — — 78 GSEs 49 — — 49 Foreign securities 7 — — 7 Certificates of deposit 1 — — 1 Total $ 1,941 $ 7 $ 2 $ 1,946 December 31, 2018 Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses (In millions) Corporate debt securities $ 1,131 $ — $ 8 $ 1,123 Asset-backed securities 83 — 1 82 U.S. Treasury notes 181 — — 181 Municipal securities 115 — 1 114 GSEs 164 — 1 163 Foreign securities 4 — — 4 Certificates of deposit 14 — — 14 Total $ 1,692 $ — $ 11 $ 1,681 |
Contractual maturities of investments | The contractual maturities of our current investments as of December 31, 2019 are summarized below: Amortized Cost Estimated Fair Value (In millions) Due in one year or less $ 453 $ 453 Due after one year through five years 957 962 Due after five years through ten years 171 171 Due after ten years 360 360 Total $ 1,941 $ 1,946 |
Available-for-sale investments | 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, 2019 : 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 Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 222 $ 1 167 $ — $ — — Mortgage-backed securities 143 1 72 — — — Total $ 365 $ 2 239 $ — $ — — 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, 2018 : 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 Positions Estimated Fair Value Unrealized Losses Total Number of Positions (Dollars in millions) Corporate debt securities $ 509 $ 3 285 $ 412 $ 5 298 Asset-backed securities — — — 68 1 52 Municipal securities — — — 87 1 90 GSEs — — — 127 1 76 Total $ 509 $ 3 285 $ 694 $ 8 516 |
Balances of restricted investments | The following table presents the balances of restricted investments: December 31, 2019 2018 (In millions) Florida $ 12 $ 32 New Mexico 21 43 Ohio 12 12 Puerto Rico 11 10 Other 23 23 Total Health Plans segment $ 79 $ 120 |
Receivables (Tables)
Receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Summary of accounts receivable | December 31, 2019 2018 (In millions) Government receivables $ 1,056 $ 872 Pharmacy rebate receivables 150 146 Health insurer fee reimbursement receivables 5 141 Other 195 171 Total $ 1,406 $ 1,330 |
Property, Equipment, and Capi_2
Property, Equipment, and Capitalized Software, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment and depreciation and amortization recognized | A summary of property, equipment, and capitalized software is as follows: December 31, 2019 2018 (In millions) Capitalized software $ 421 $ 373 Furniture and equipment 213 231 Building and improvements 49 154 Land 4 16 Total cost 687 774 Less: accumulated amortization - capitalized software (351 ) (320 ) Less: accumulated depreciation and amortization - furniture, equipment, building, and improvements (179 ) (213 ) Total accumulated depreciation and amortization (530 ) (533 ) ROU assets - finance leases 228 — Property, equipment, and capitalized software, net $ 385 $ 241 The following table presents all depreciation and amortization recognized in our consolidated statements of operations: Year Ended December 31, 2019 2018 2017 (In millions) Recorded in depreciation and amortization: Amortization of capitalized software $ 33 $ 42 $ 64 Depreciation and amortization of furniture, equipment, building, and improvements 21 36 42 Amortization of intangible assets 18 21 31 Amortization of finance leases 17 — — Subtotal 89 99 137 Recorded in cost of service revenue: Amortization of capitalized software and deferred contract costs — 28 41 Total depreciation and amortization recognized $ 89 $ 127 $ 178 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Components of lease expense and supplemental consolidated cash flow information | Supplemental consolidated cash flow information related to leases follows: Year Ended December 31, 2019 (In millions) Cash used in operating activities: Operating leases $ 36 Finance leases 15 Cash used in financing activities: Finance leases 6 ROU assets recognized in exchange for lease obligations: Operating leases 99 Finance leases 245 Year Ended December 31, 2019 (In millions) Operating lease expense $ 34 Finance lease expense: Amortization of ROU assets $ 17 Interest on lease liabilities 15 Total finance lease expense $ 32 |
Supplemental lease information | Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows: December 31, 2019 (In millions) Operating leases: ROU assets Other assets $ 65 Lease liabilities Accounts payable and accrued liabilities (current) $ 25 Other long-term liabilities (non-current) 48 Total operating lease liabilities $ 73 Finance leases: ROU assets Property, equipment, and capitalized software, net $ 228 Lease liabilities Accounts payable and accrued liabilities (current) $ 8 Finance lease liabilities (non-current) 231 Total finance lease liabilities $ 239 |
Operating lease maturities | Maturities of lease liabilities as of December 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2020 $ 28 $ 23 2021 20 24 2022 14 21 2023 10 21 2024 5 22 Thereafter 3 289 Subtotal - undiscounted lease payments 80 400 Less imputed interest (7 ) (161 ) Total $ 73 $ 239 |
Finance lease maturities | Maturities of lease liabilities as of December 31, 2019 , were as follows: Operating Leases Finance Leases (In millions) 2020 $ 28 $ 23 2021 20 24 2022 14 21 2023 10 21 2024 5 22 Thereafter 3 289 Subtotal - undiscounted lease payments 80 400 Less imputed interest (7 ) (161 ) Total $ 73 $ 239 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table presents the changes in the carrying amounts of goodwill by segment, for the periods presented. Health Plans Other Total (In millions) Balance, December 31, 2017 $ 143 $ 43 $ 186 Acquisitions — — — Dispositions — (43 ) (43 ) Impairment and other — — — Balance, December 31, 2018 143 — 143 Acquisitions — — — Dispositions — — — Impairment and other — — — Balance, December 31, 2019 $ 143 $ — $ 143 |
Summary of identified intangible assets, by major class | The following table provides the details of identified intangible assets, by major class, for the periods indicated: December 31, 2019 December 31, 2018 Cost Accumulated Carrying Amount Cost Accumulated Carrying Amount (In millions) Contract rights and licenses $ 179 $ 156 $ 23 $ 201 $ 162 $ 39 Provider networks 20 14 6 20 12 8 Total $ 199 $ 170 $ 29 $ 221 $ 174 $ 47 |
Medical Claims and Benefits P_2
Medical Claims and Benefits Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Insurance [Abstract] | |
Schedule of liability for unpaid claims and claims adjustment expense | The following table provides the details of our medical claims and benefits payable as of the dates indicated. December 31, 2019 2018 2017 (In millions) Fee-for-service claims incurred but not paid (“IBNP”) $ 1,406 $ 1,562 $ 1,717 Pharmacy payable 126 115 112 Capitation payable 55 52 67 Other 267 232 296 Total $ 1,854 $ 1,961 $ 2,192 |
Components of the change in medical claims and benefits payable | The following table presents 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 periods” represent the amount by which our original estimate of medical claims and benefits payable at the beginning of the period were (more) less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported. Year Ended December 31, 2019 2018 2017 (In millions) Medical claims and benefits payable, beginning balance $ 1,961 $ 2,192 $ 1,929 Components of medical care costs related to: Current period 14,176 15,478 17,037 Prior periods (1) (271 ) (341 ) 36 Total medical care costs 13,905 15,137 17,073 Change in non-risk and other provider payables 24 13 (106 ) Payments for medical care costs related to: Current period 12,554 13,671 15,130 Prior periods 1,482 1,710 1,574 Total paid 14,036 15,381 16,704 Medical claims and benefits payable, ending balance $ 1,854 $ 1,961 $ 2,192 ________________ (1) December 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81 million . |
Incurred and paid claims development | The following tables provide information about incurred and paid claims development as of December 31, 2019 , as well as cumulative claims frequency and the total of incurred but not paid claims liabilities. The cumulative claim frequency is measured by claim event, and includes claims covered under capitated arrangements. Incurred Claims and Allocated Claims Adjustment Expenses Total IBNP Cumulative number of reported claims Benefit Year 2017 2018 2019 (Unaudited) (Unaudited) (In millions) 2017 $ 17,037 $ 16,728 $ 16,704 $ 18 119 2018 15,478 15,245 25 110 2019 14,176 1,348 93 $ 46,125 $ 1,391 Cumulative Paid Claims and Allocated Claims Adjustment Expenses Benefit Year 2017 2018 2019 (Unaudited) (Unaudited) (In millions) 2017 $ 15,130 $ 16,671 $ 16,686 2018 13,752 15,220 2019 12,554 $ 44,460 |
Reconciliation of claims development to liability | The following table represents a reconciliation of claims development to the aggregate carrying amount of the liability for medical claims and benefits payable. 2019 (In millions) Incurred claims and allocated claims adjustment expenses $ 46,125 Less: cumulative paid claims and allocated claims adjustment expenses (44,460 ) All outstanding liabilities before 2017 15 Non-risk and other provider payables 174 Medical claims and benefits payable $ 1,854 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Maturities of long-term debt | Contractual maturities of debt, as of December 31, 2019 , are illustrated in the following table. All amounts represent the principal amounts of the debt instruments outstanding. Total 2020 2021 2022 2023 2024 Thereafter (In millions) 5.375% Notes $ 700 $ — $ — $ 700 $ — $ — $ — 4.875% Notes 330 — — — — — 330 Term Loan Facility 220 6 16 22 22 154 — 1.125% Convertible Notes 12 12 — — — — — Total $ 1,262 $ 18 $ 16 $ 722 $ 22 $ 154 $ 330 |
Long term debt | The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets: December 31, 2019 2018 (In millions) Current portion of long-term debt: 1.125% Convertible Notes, net of unamortized discount $ 12 $ 241 Term Loan Facility 6 — Lease financing obligations — 1 Debt issuance costs — (1 ) Total, current portion $ 18 $ 241 Non-current portion of long-term debt: 5.375% Notes $ 700 $ 700 4.875% Notes 330 330 Term Loan Facility 214 — Debt issuance costs (7 ) (10 ) Total, non-current portion $ 1,237 $ 1,020 |
Interest costs | Interest cost recognized relating to our convertible senior notes for the periods presented was as follows: Years Ended December 31, 2019 2018 2017 (In millions) Contractual interest at coupon rate $ 1 $ 6 $ 11 Amortization of the discount 5 21 32 Total $ 6 $ 27 $ 43 |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair values of derivative financial instruments | The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the consolidated balance sheets: December 31, Balance Sheet Location 2019 2018 (In millions) Derivative asset: 1.125% Call Option Current assets: Derivative asset $ 29 $ 476 Derivative liability: 1.125% Conversion Option Current liabilities: Derivative liability $ 29 $ 476 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | Income tax expense (benefit) consisted of the following: Year Ended December 31, 2019 2018 2017 (In millions) Current: Federal $ 204 $ 272 $ (9 ) State 12 18 3 Foreign 9 8 — Total current 225 298 (6 ) Deferred: Federal 5 (3 ) (85 ) State 6 (3 ) (9 ) Foreign (1 ) — — Total deferred 10 (6 ) (94 ) Income tax expense (benefit) $ 235 $ 292 $ (100 ) |
Effective income tax rate reconciliation to the statutory federal income tax rate | A reconciliation of the U.S. federal statutory income tax rate to the combined effective income tax rate is as follows: Year Ended December 31, 2019 2018 2017 Statutory federal tax (benefit) rate 21.0 % 21.0 % (35.0 )% State income provision (benefit), net of federal 1.4 1.2 (0.7 ) Nondeductible health insurer fee (“HIF”) — 7.3 — Nondeductible compensation 1.2 0.7 2.8 Nondeductible goodwill impairment — — 6.6 Worthless stock deduction — (1.0 ) — Revaluation of net deferred tax assets — (0.4 ) 8.8 Other 0.6 0.4 1.1 Effective tax expense (benefit) rate 24.2 % 29.2 % (16.4 )% |
Significant components of deferred tax assets and liabilities | Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows: December 31, 2019 2018 (In millions) Accrued expenses and reserve liabilities $ 35 $ 39 Other accrued medical costs 11 12 Net operating losses 13 16 Fixed assets and intangibles 26 30 Unearned premiums 11 9 Lease financing obligation 5 30 Tax credit carryover 11 12 Other — 3 Valuation allowance (24 ) (28 ) Total deferred income tax assets, net of valuation allowance 88 123 Prepaid expenses (6 ) (6 ) Other (3 ) — Total deferred income tax liabilities (9 ) (6 ) Net deferred income tax asset $ 79 $ 117 |
Unrecognized tax benefits roll forward | The roll forward of our unrecognized tax benefits is as follows: Year Ended December 31, 2019 2018 2017 (In millions) Gross unrecognized tax benefits at beginning of period $ (20 ) $ (13 ) $ (11 ) Increases in tax positions for current year (9 ) (1 ) Increases in tax positions for prior years — — (4 ) Decreases in tax positions for prior years — — 3 Lapse in statute of limitations 2 — Gross unrecognized tax benefits at end of period $ (20 ) $ (20 ) $ (13 ) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stock based compensation expense | Total share-based compensation expense is presented in the following table. Except as described in the note to the table, we record share-based compensation as “General and administrative expenses” in the accompanying consolidated statements of operations. Year Ended December 31, 2019 2018 2017 (In millions) Pretax Net-of-Tax Pretax Net-of-Tax Pretax (1) Net-of-Tax RSAs, PSAs and PSUs (defined below) $ 29 $ 28 $ 17 $ 17 $ 39 $ 35 Employee stock purchase plan and stock options 10 9 10 9 7 5 Total $ 39 $ 37 $ 27 $ 26 $ 46 $ 40 _______________________ (1) Includes $23 million |
Restricted and performance stock activity | Activity for stock-based awards in the year ended December 31, 2019 is summarized below: RSAs PSAs PSUs Total Shares Weighted Unvested balance as of December 31, 2018 399,795 3,132 201,383 604,310 $ 71.50 Granted 243,353 — 146,425 389,778 136.23 Vested (139,828 ) (3,132 ) (10,528 ) (153,488 ) 73.98 Forfeited (55,640 ) — (13,202 ) (68,842 ) 90.45 Unvested balance as of December 31, 2019 447,680 — 324,078 771,758 $ 102.01 |
Stock options, activity | The total grant date fair value of awards granted and vested is presented in the following table: Year Ended December 31, 2019 2018 2017 (In millions) Granted: RSAs $ 33 $ 28 $ 20 PSUs 20 16 16 Total granted $ 53 $ 44 $ 36 Vested: RSAs $ 19 $ 15 $ 23 PSAs — 3 15 PSUs 2 — 9 Total vested $ 21 $ 18 $ 47 Stock Options. Stock option awards generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest in equal annual installments over periods up to four years from the date of grant, and have a maximum term of ten years from the date of grant. Stock option activity for the year ended December 31, 2019 is summarized below: Shares Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual term (In millions) (Years) Stock options outstanding as of December 31, 2018 405,000 $ 64.79 Granted — — Exercised — — Stock options outstanding as of December 31, 2019 405,000 64.79 $ 29 7.4 Stock options exercisable and expected to vest as of December 31, 2019 405,000 64.79 $ 29 7.4 Exercisable as of December 31, 2019 280,000 63.65 $ 20 7.3 |
Stock option plans, by exercise price range | The following is a summary of information about stock options outstanding and exercisable at December 31, 2019: Options Outstanding Options Exercisable Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted-Average Exercise Price Number Exercisable Weighted-Average Exercise Price Range of Exercise Prices $33.02 30,000 3.2 $ 33.02 30,000 $ 33.02 $67.33 375,000 7.8 67.33 250,000 67.33 Total 405,000 280,000 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Operating segment information | Health Plans Other Consolidated (In millions) 2019 Total revenue $ 16,815 $ 14 16,829 Margin 2,303 — 2,303 Goodwill, and intangible assets, net 172 — 172 Total assets 5,265 1,522 6,787 2018 Total revenue $ 18,471 $ 419 $ 18,890 Margin 2,475 43 2,518 Goodwill, and intangible assets, net 190 — 190 Total assets 6,165 989 7,154 2017 Total revenue $ 19,352 $ 531 $ 19,883 Margin 1,781 29 1,810 Goodwill, and intangible assets, net 212 43 255 Total assets 6,347 2,124 8,471 The following table reconciles margin by segment to consolidated income (loss) before income tax expense (benefit): Year Ended December 31, 2019 2018 2017 (In millions) Margin: Health Plans $ 2,303 $ 2,475 $ 1,781 Other — 43 29 Total margin 2,303 2,518 1,810 Add: other operating revenues (1) 621 871 508 Less: other operating expenses (2) (1,880 ) (2,243 ) (2,873 ) Less: loss on sales of subsidiaries, net of gain — (15 ) — Operating income (loss) 1,044 1,131 (555 ) Less: other expenses, net 72 132 57 Income (loss) before income tax expense (benefit) $ 972 $ 999 $ (612 ) ______________________ (1) Other operating revenues include premium tax revenue, health insurer fees reimbursed, investment income and other revenue. (2) Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, impairment losses, and restructuring costs. |
Quarterly Results of Operatio_2
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of quarterly results of operations | The following table summarizes quarterly unaudited results of operations for the periods presented. For The Quarter Ended March 31, June 30, Sept. 30, 2019 December 31, (In millions, except per-share data) Total revenue $ 4,119 $ 4,193 $ 4,243 $ 4,274 Margin 581 583 561 578 Net income 198 196 175 168 Net income per share - Basic (1) $ 3.19 $ 3.15 $ 2.81 $ 2.70 Net income per share - Diluted (1) $ 2.99 $ 3.06 $ 2.75 $ 2.67 For The Quarter Ended March 31, June 30, Sept. 30, 2018 December 31, (In millions, except per-share data) Total revenue $ 4,646 $ 4,883 $ 4,697 $ 4,664 Margin 615 673 566 664 Gain (loss) on sales of subsidiaries — — 37 (52 ) Net income 107 202 197 201 Net income per share - Basic (1) $ 1.79 $ 3.29 $ 3.22 $ 3.24 Net income per share - Diluted (1) $ 1.64 $ 3.02 $ 2.90 $ 3.01 ________________________ (1) |
Condensed Financial Informati_2
Condensed Financial Information of Registrant (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed balance sheets | Condensed Balance Sheets December 31, 2019 2018 (In millions, except per-share data) ASSETS Current assets: Cash and cash equivalents $ 836 $ 70 Investments 161 100 Receivables 2 2 Due from affiliates 49 90 Prepaid expenses and other current assets 46 47 Derivative asset 29 476 Total current assets 1,123 785 Property, equipment, and capitalized software, net 327 176 Goodwill and intangible assets, net 13 13 Investments in subsidiaries 2,225 2,768 Deferred income taxes 10 39 Advances to related parties and other assets 76 40 Total assets $ 3,774 $ 3,821 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Medical claims and benefits payable $ — $ 4 Accounts payable and accrued liabilities 260 223 Current portion of long-term debt 18 241 Derivative liability 29 476 Total current liabilities 307 944 Long-term debt 1,237 1,020 Finance lease liabilities 231 197 Other long-term liabilities 39 13 Total liabilities 1,814 2,174 Stockholders’ equity: Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018 — — Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding — — Additional paid-in capital 175 643 Accumulated other comprehensive income (loss) 4 (8 ) Retained earnings 1,781 1,012 Total stockholders’ equity 1,960 1,647 Total liabilities and stockholders’ equity $ 3,774 $ 3,821 |
Condensed statements of income | Condensed Statements of Operations Year Ended December 31, 2019 2018 2017 (In millions) Revenue: Administrative services fees $ 1,038 $ 1,138 $ 1,317 Investment income and other revenue 18 17 16 Total revenue 1,056 1,155 1,333 Expenses: General and administrative expenses 937 1,007 1,082 Depreciation and amortization 63 69 93 Other operating expenses — 8 16 Restructuring costs 4 35 153 Impairment losses — — 39 Total operating expenses 1,004 1,119 1,383 Gain on sale of subsidiary — 37 — Operating income (loss) 52 73 (50 ) Interest expense 87 114 117 Other (income) expense, net (15 ) 17 (61 ) Loss before income tax (benefit) expense and equity in net earnings (losses) of subsidiaries (20 ) (58 ) (106 ) Income tax expense (benefit) 9 (14 ) 8 Net loss before equity in net earnings (losses) of subsidiaries (29 ) (44 ) (114 ) Equity in net earnings (losses) of subsidiaries 766 751 (398 ) Net income (loss) $ 737 $ 707 $ (512 ) |
Condensed statements of comprehensive (loss) | Condensed Statements of Comprehensive Income (Loss) Year Ended December 31, 2019 2018 2017 (In millions) Net income (loss) $ 737 $ 707 $ (512 ) Other comprehensive income (loss): Unrealized investment income (loss) 16 (3 ) (5 ) Less: effect of income taxes 4 (1 ) (2 ) Other comprehensive income (loss), net of tax 12 (2 ) (3 ) Comprehensive income (loss) $ 749 $ 705 $ (515 ) |
Condensed statements of cash flows | Condensed Statements of Cash Flows Year Ended December 31, 2019 2018 2017 (In millions) Operating activities: Net cash provided by operating activities $ 64 $ 118 $ 166 Investing activities: Capital contributions to subsidiaries (43 ) (145 ) (370 ) Dividends received from subsidiaries 1,373 298 286 Purchases of investments (152 ) (136 ) (331 ) Proceeds from sales and maturities of investments 93 388 156 Purchases of property, equipment and capitalized software (56 ) (22 ) (67 ) Net cash received from sale of subsidiaries — 242 — Change in amounts due to/from affiliates 38 6 (49 ) Other, net 1 — — Net cash provided by (used in) investing activities 1,254 631 (375 ) Financing activities: Repayment of principal amount of convertible notes (240 ) (362 ) — Cash paid for partial settlement of conversion option (578 ) (623 ) — Cash received for partial settlement of call option 578 623 — Cash paid for partial termination of warrants (514 ) (549 ) — Proceeds from borrowings under term loan facility 220 — — Common stock purchases (47 ) — — Repayment of credit facility — (300 ) — Proceeds from senior notes offerings, net of issuance costs — — 325 Proceeds from borrowings under credit facility — — 300 Other, net 29 19 11 Net cash (used in) provided by financing activities (552 ) (1,192 ) 636 Net (decrease) increase in cash and cash equivalents 766 (443 ) 427 Cash and cash equivalents at beginning of period 70 513 86 Cash and cash equivalents at end of period $ 836 $ 70 $ 513 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) member in Thousands, $ in Millions | Dec. 31, 2019USD ($)memberstate | Oct. 31, 2019 | Jun. 30, 2020USD ($)membercounty | Dec. 31, 2019USD ($)membersegmentstate | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Basis Of Presentation [Line Items] | ||||||
Number of reportable segments | segment | 2 | |||||
Premium revenue | $ 16,208 | $ 17,612 | $ 18,854 | |||
Texas | ||||||
Basis Of Presentation [Line Items] | ||||||
Number of members served, approximately (in member) | member | 97 | 97 | ||||
Premium revenue | $ 2,062 | |||||
Texas Health and Human Services Commission, STARPLUS Program | ||||||
Basis Of Presentation [Line Items] | ||||||
Contract term | 3 years | |||||
Health Plans | ||||||
Basis Of Presentation [Line Items] | ||||||
Number of states in which company operates (in state) | state | 14 | 14 | ||||
Number of members eligible for the health care programs | member | 3,300 | 3,300 | ||||
Minimum contract terms | 3 years | |||||
Maximum contract term | 5 years | |||||
Premium revenue | $ 16,208 | 17,612 | 18,854 | |||
Health Plans | Texas | ||||||
Basis Of Presentation [Line Items] | ||||||
Premium revenue | 2,991 | 3,244 | 2,813 | |||
Health Plans | Illinois | ||||||
Basis Of Presentation [Line Items] | ||||||
Premium revenue | $ 1,002 | $ 793 | $ 593 | |||
Health Plans | STAR/CHIP Contracts | Texas | ||||||
Basis Of Presentation [Line Items] | ||||||
Number of members served, approximately (in member) | member | 114 | 114 | ||||
Premium revenue | $ 315 | |||||
NextLevel Health Partners, Inc. | Illinois | ||||||
Basis Of Presentation [Line Items] | ||||||
Number of members served, approximately (in member) | member | 50 | 50 | ||||
Purchase price of assets | $ 50 | |||||
YourCare Health Plan | Forecast | New York | ||||||
Basis Of Presentation [Line Items] | ||||||
Number of members served, approximately (in member) | member | 46 | |||||
Purchase price of assets | $ 40 | |||||
Number of countries | county | 7 |
Significant Accounting Polici_4
Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 2,452 | $ 2,826 | $ 3,186 | |
Restricted cash and cash equivalents, non-current | 56 | 100 | 95 | |
Restricted cash and cash equivalents, current | 0 | 0 | 9 | |
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows | $ 2,508 | $ 2,926 | $ 3,290 | $ 2,912 |
Significant Accounting Polici_5
Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2019 | Jan. 01, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Final maturities of investments | 10 years | ||||
Average maturity of investments | 10 years | ||||
Medical premium liability based on medical costs threshold | $ 74 | $ 103 | |||
Amounts due government agencies | 664 | 967 | |||
Risk adjustment payable | 368 | 466 | |||
Risk adjustment receivable | 63 | 34 | |||
Risk adjustment, net payable | 305 | 432 | |||
Prepaid reinsurance premiums | 17 | 16 | $ 20 | ||
Reinsurance recoveries | 18 | 33 | 24 | ||
Reinsurance recoverable for unpaid claims adjustments | 21 | 31 | $ 16 | ||
Adoption of new accounting standard | $ 85 | $ 6 | |||
Receivables from state and federal government agencies | 1,406 | 1,330 | |||
Retained Earnings | |||||
Property, Plant and Equipment [Line Items] | |||||
Adoption of new accounting standard | 85 | ||||
Retained Earnings, Including Deferred Income Tax | |||||
Property, Plant and Equipment [Line Items] | |||||
Adoption of new accounting standard | 110 | ||||
Deferred Income Tax | |||||
Property, Plant and Equipment [Line Items] | |||||
Adoption of new accounting standard | $ 25 | ||||
CMS Subsidies | |||||
Property, Plant and Equipment [Line Items] | |||||
Disposal group, operating expense | 81 | ||||
Medicaid Expansion | |||||
Property, Plant and Equipment [Line Items] | |||||
Amounts due government agencies | $ 69 | 87 | |||
Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Useful life | 5 years | ||||
Minimum | California, Illinois, New Mexico, Ohio, South Carolina, Texas, Washington, and Wisconsin | |||||
Property, Plant and Equipment [Line Items] | |||||
Percentage of additional incremental revenue earned | 1.00% | ||||
Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Useful life | 15 years | ||||
Maximum | California, Illinois, New Mexico, Ohio, South Carolina, Texas, Washington, and Wisconsin | |||||
Property, Plant and Equipment [Line Items] | |||||
Percentage of additional incremental revenue earned | 4.00% | ||||
Structured Securities | |||||
Property, Plant and Equipment [Line Items] | |||||
Average maturity of investments | 10 years | ||||
Government receivables | |||||
Property, Plant and Equipment [Line Items] | |||||
Concentration risk, percentage | 75.00% | ||||
Receivables from state and federal government agencies | $ 1,056 | $ 872 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Premium Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 16,208 | $ 17,612 | $ 18,854 |
Texas | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | 2,062 | ||
Health Plans | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 16,208 | $ 17,612 | $ 18,854 |
Premium revenue percentage | 100.00% | 100.00% | 100.00% |
Health Plans | California | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 2,266 | $ 2,150 | $ 2,701 |
Premium revenue percentage | 14.00% | 12.20% | 14.30% |
Health Plans | Florida | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 734 | $ 1,790 | $ 2,568 |
Premium revenue percentage | 4.50% | 10.20% | 13.60% |
Health Plans | Illinois | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 1,002 | $ 793 | $ 593 |
Premium revenue percentage | 6.20% | 4.50% | 3.10% |
Health Plans | Michigan | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 1,624 | $ 1,601 | $ 1,596 |
Premium revenue percentage | 10.00% | 9.10% | 8.50% |
Health Plans | New Mexico | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 0 | $ 1,356 | $ 1,368 |
Premium revenue percentage | 0.00% | 7.70% | 7.30% |
Health Plans | Ohio | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 2,553 | $ 2,388 | $ 2,216 |
Premium revenue percentage | 15.80% | 13.60% | 11.80% |
Health Plans | Puerto Rico | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 474 | $ 696 | $ 732 |
Premium revenue percentage | 2.90% | 3.90% | 3.90% |
Health Plans | South Carolina | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 583 | $ 495 | $ 445 |
Premium revenue percentage | 3.60% | 2.80% | 2.40% |
Health Plans | Texas | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 2,991 | $ 3,244 | $ 2,813 |
Premium revenue percentage | 18.50% | 18.40% | 14.90% |
Health Plans | Washington | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 2,695 | $ 2,361 | $ 2,608 |
Premium revenue percentage | 16.60% | 13.40% | 13.80% |
Health Plans | Other | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Premium revenue | $ 1,286 | $ 738 | $ 1,214 |
Premium revenue percentage | 7.90% | 4.20% | 6.40% |
Significant Accounting Polici_7
Significant Accounting Policies - Due to Government Agencies (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Medicaid program: | ||
Medical cost floors and corridors | $ 74 | $ 103 |
Other amounts due to states | 84 | 81 |
Marketplace program: | ||
Risk adjustment | 368 | 466 |
Cost sharing reduction | 0 | 183 |
Other | 138 | 134 |
Total | $ 664 | $ 967 |
Significant Accounting Polici_8
Significant Accounting Policies - Quality Incentive Premium Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Maximum available quality incentive premium - current period | $ 186 | $ 182 | $ 150 |
Amount of quality incentive premium revenue recognized in current period: | |||
Earned current period | 156 | 133 | 97 |
Earned prior periods | 38 | 31 | 10 |
Total quality incentive premium revenue recognized | $ 194 | $ 164 | $ 107 |
Quality incentive premium revenue recognized as a percentage of total premium revenue | 1.20% | 0.90% | 0.60% |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | ||||||||||||
Net income (loss) | $ 168 | $ 175 | $ 196 | $ 198 | $ 201 | $ 197 | $ 202 | $ 107 | $ 737 | $ 707 | $ (512) | |
Denominator: | ||||||||||||
Shares outstanding at the beginning of the period (in shares) | 62.1 | 62.1 | 59.3 | 55.8 | ||||||||
Weighted-average number of shares issued: | ||||||||||||
Exchange of convertible senior notes (in shares) | 0 | 1.4 | 0.1 | |||||||||
Conversion of convertible senior notes (in shares) | 0 | 0.2 | 0 | |||||||||
Stock-based compensation (in shares) | 0.1 | 0.2 | 0.5 | |||||||||
Denominator for basic net income (loss) per share (in shares) | 62.2 | 61.1 | 56.4 | |||||||||
Effect of dilutive securities: | ||||||||||||
Warrants (in shares) | 1.4 | 4.8 | 0 | |||||||||
Convertible senior notes (in shares) | 0 | 0.4 | 0 | |||||||||
Share-based compensation (in shares) | 0.6 | 0.3 | 0 | |||||||||
Denominator for diluted net (loss) income per share (in shares) | 64.2 | 66.6 | 56.4 | |||||||||
Net income (loss) per share: | ||||||||||||
Basic (in dollars per share) | $ 2.70 | $ 2.81 | $ 3.15 | $ 3.19 | $ 3.24 | $ 3.22 | $ 3.29 | $ 1.79 | $ 11.85 | $ 11.57 | $ (9.07) | |
Diluted (in dollars per share) | $ 2.67 | $ 2.75 | $ 3.06 | $ 2.99 | $ 3.01 | $ 2.90 | $ 3.02 | $ 1.64 | $ 11.47 | $ 10.61 | $ (9.07) | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||||||||
Stock-based compensation (in shares) | 0 | 0 | 0.3 | |||||||||
Convertible senior notes | ||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||||||||
Potentially dilutive common shares excluded from calculations (in shares) | 0 | 0 | 0.4 | |||||||||
Stated interest rate | 1.625% | 1.625% | ||||||||||
Warrants | ||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||||||||
Potentially dilutive common shares excluded from calculations (in shares) | 0 | 0 | 1.9 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | Dec. 31, 2019 |
1.125% Call Option | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Percentage of contractual interest rate on derivative | 1.125% |
1.125% Conversion Option | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Percentage of contractual interest rate on derivative | 1.125% |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments on a Recurring Basis (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | $ 1,946 | $ 1,681 |
Total assets | 1,975 | 2,157 |
Total liabilities | 29 | 476 |
Corporate debt securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 1,178 | 1,123 |
Mortgage-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 420 | |
Asset-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 127 | 82 |
U.S. Treasury notes | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 86 | 181 |
Municipal securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 78 | 114 |
Government-sponsored enterprise securities (“GSEs”) | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 49 | 163 |
Foreign securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 7 | 4 |
Certificates of deposit | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 1 | 14 |
1.125% Call Option derivative asset | ||
Fair value of assets measured on recurring basis | ||
1.125% Call Option derivative asset | $ 29 | 476 |
Percentage of contractual interest rate on derivative | 1.125% | |
Conversion Option | ||
Fair value of assets measured on recurring basis | ||
1.125% Conversion Option derivative liability | $ 29 | 476 |
Percentage of contractual interest rate on derivative | 1.125% | |
Level 1 | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | $ 0 | 0 |
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Level 1 | Corporate debt securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | Mortgage-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | |
Level 1 | Asset-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | U.S. Treasury notes | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | Municipal securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | Government-sponsored enterprise securities (“GSEs”) | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | Foreign securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | Certificates of deposit | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 1 | 1.125% Call Option derivative asset | ||
Fair value of assets measured on recurring basis | ||
1.125% Call Option derivative asset | 0 | 0 |
Level 1 | Conversion Option | ||
Fair value of assets measured on recurring basis | ||
1.125% Conversion Option derivative liability | 0 | 0 |
Level 2 | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 1,946 | 1,681 |
Total assets | 1,946 | 1,681 |
Total liabilities | 0 | 0 |
Level 2 | Corporate debt securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 1,178 | 1,123 |
Level 2 | Mortgage-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 420 | |
Level 2 | Asset-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 127 | 82 |
Level 2 | U.S. Treasury notes | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 86 | 181 |
Level 2 | Municipal securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 78 | 114 |
Level 2 | Government-sponsored enterprise securities (“GSEs”) | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 49 | 163 |
Level 2 | Foreign securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 7 | 4 |
Level 2 | Certificates of deposit | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 1 | 14 |
Level 2 | 1.125% Call Option derivative asset | ||
Fair value of assets measured on recurring basis | ||
1.125% Call Option derivative asset | 0 | 0 |
Level 2 | Conversion Option | ||
Fair value of assets measured on recurring basis | ||
1.125% Conversion Option derivative liability | 0 | 0 |
Level 3 | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Total assets | 29 | 476 |
Total liabilities | 29 | 476 |
Level 3 | Corporate debt securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | Mortgage-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | |
Level 3 | Asset-backed securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | U.S. Treasury notes | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | Municipal securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | Government-sponsored enterprise securities (“GSEs”) | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | Foreign securities | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | Certificates of deposit | ||
Fair value of assets measured on recurring basis | ||
Debt securities, available-for-sale | 0 | 0 |
Level 3 | 1.125% Call Option derivative asset | ||
Fair value of assets measured on recurring basis | ||
1.125% Call Option derivative asset | 29 | 476 |
Level 3 | Conversion Option | ||
Fair value of assets measured on recurring basis | ||
1.125% Conversion Option derivative liability | $ 29 | $ 476 |
Fair Value Measurements - Long-
Fair Value Measurements - Long-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 1,255 | $ 1,260 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 1,347 | 1,707 |
5.375% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 5.375% | |
4.875% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 4.875% | |
1.125% Convertible Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 1.125% | |
Senior Notes | 5.375% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 5.375% | |
Senior Notes | 5.375% Notes | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 696 | 694 |
Senior Notes | 5.375% Notes | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 745 | 674 |
Senior Notes | 4.875% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 4.875% | |
Senior Notes | 4.875% Notes | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 327 | 326 |
Senior Notes | 4.875% Notes | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 340 | 301 |
Senior Notes | 1.125% Convertible Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 1.125% | |
Term Loan Facility | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 220 | 0 |
Term Loan Facility | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 220 | 0 |
1.125% Convertible Notes | 4.875% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 4.875% | |
1.125% Convertible Notes | 1.125% Convertible Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate | 1.125% | |
1.125% Convertible Notes | 1.125% Convertible Notes | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 12 | 240 |
1.125% Convertible Notes | 1.125% Convertible Notes | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated fair values of long-term debt | $ 42 | 732 |
1.125% Conversion Option | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Percentage of contractual interest rate on derivative | 1.125% | |
1.125% Conversion Option | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
1.125% Conversion Option derivative liability | $ 29 | $ 476 |
Percentage of contractual interest rate on derivative | 1.125% |
Investments - Schedule of Inves
Investments - Schedule of Investments (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 1,941 | $ 1,692 |
Gross Unrealized Gains | 7 | 0 |
Gross Unrealized Losses | 2 | 11 |
Estimated Fair Value | 1,946 | 1,681 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,174 | 1,131 |
Gross Unrealized Gains | 5 | 0 |
Gross Unrealized Losses | 1 | 8 |
Estimated Fair Value | 1,178 | 1,123 |
Mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 420 | |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | 1 | |
Estimated Fair Value | 420 | |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 126 | 83 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | 0 | 1 |
Estimated Fair Value | 127 | 82 |
U.S. Treasury notes | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 86 | 181 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 86 | 181 |
Municipal securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 78 | 115 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 1 |
Estimated Fair Value | 78 | 114 |
GSEs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 49 | 164 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 1 |
Estimated Fair Value | 49 | 163 |
Foreign securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 7 | 4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 7 | 4 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1 | 14 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 1 | $ 14 |
Investments - Contractual Matur
Investments - Contractual Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 453 | |
Due after one year through five years | 957 | |
Due after five years through ten years | 171 | |
Due after ten years | 360 | |
Amortized Cost | 1,941 | $ 1,692 |
Estimated Fair Value | ||
Due in one year or less | 453 | |
Due after one year through five years | 962 | |
Due after five years through ten years | 171 | |
Due after ten years | 360 | |
Estimated Fair Value | $ 1,946 |
Investments - Narrative (Detail
Investments - Narrative (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |
Gross realized investment gains | $ 13 |
Investments - Available-for-Sal
Investments - Available-for-Sale (Details) $ in Millions | Dec. 31, 2019USD ($)Security | Dec. 31, 2018USD ($)Security |
Estimated Fair Value | ||
In a Continuous Loss Position for Less than 12 Months | $ 365 | $ 509 |
In a Continuous Loss Position for 12 Months or More | 0 | 694 |
Unrealized Losses | ||
In a Continuous Loss Position for Less than 12 Months | 2 | 3 |
In a Continuous Loss Position for 12 Months or More | $ 0 | $ 8 |
Total Number of Positions | ||
In a Continuous Loss Position for Less than 12 Months | Security | 239 | 285 |
In a Continuous Loss Position for 12 Months or More | Security | 0 | 516 |
Corporate debt securities | ||
Estimated Fair Value | ||
In a Continuous Loss Position for Less than 12 Months | $ 222 | $ 509 |
In a Continuous Loss Position for 12 Months or More | 0 | 412 |
Unrealized Losses | ||
In a Continuous Loss Position for Less than 12 Months | 1 | 3 |
In a Continuous Loss Position for 12 Months or More | $ 0 | $ 5 |
Total Number of Positions | ||
In a Continuous Loss Position for Less than 12 Months | Security | 167 | 285 |
In a Continuous Loss Position for 12 Months or More | Security | 0 | 298 |
Mortgage-backed securities | ||
Estimated Fair Value | ||
In a Continuous Loss Position for Less than 12 Months | $ 143 | |
In a Continuous Loss Position for 12 Months or More | 0 | |
Unrealized Losses | ||
In a Continuous Loss Position for Less than 12 Months | 1 | |
In a Continuous Loss Position for 12 Months or More | $ 0 | |
Total Number of Positions | ||
In a Continuous Loss Position for Less than 12 Months | Security | 72 | |
In a Continuous Loss Position for 12 Months or More | Security | 0 | |
Asset-backed securities | ||
Estimated Fair Value | ||
In a Continuous Loss Position for Less than 12 Months | $ 0 | |
In a Continuous Loss Position for 12 Months or More | 68 | |
Unrealized Losses | ||
In a Continuous Loss Position for Less than 12 Months | 0 | |
In a Continuous Loss Position for 12 Months or More | $ 1 | |
Total Number of Positions | ||
In a Continuous Loss Position for Less than 12 Months | Security | 0 | |
In a Continuous Loss Position for 12 Months or More | Security | 52 | |
Municipal securities | ||
Estimated Fair Value | ||
In a Continuous Loss Position for Less than 12 Months | $ 0 | |
In a Continuous Loss Position for 12 Months or More | 87 | |
Unrealized Losses | ||
In a Continuous Loss Position for Less than 12 Months | 0 | |
In a Continuous Loss Position for 12 Months or More | $ 1 | |
Total Number of Positions | ||
In a Continuous Loss Position for Less than 12 Months | Security | 0 | |
In a Continuous Loss Position for 12 Months or More | Security | 90 | |
GSEs | ||
Estimated Fair Value | ||
In a Continuous Loss Position for Less than 12 Months | $ 0 | |
In a Continuous Loss Position for 12 Months or More | 127 | |
Unrealized Losses | ||
In a Continuous Loss Position for Less than 12 Months | 0 | |
In a Continuous Loss Position for 12 Months or More | $ 1 | |
Total Number of Positions | ||
In a Continuous Loss Position for Less than 12 Months | Security | 0 | |
In a Continuous Loss Position for 12 Months or More | Security | 76 |
Investments - Balances of Restr
Investments - Balances of Restricted Investments (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments | $ 79 | $ 120 |
Florida | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments | 12 | 32 |
New Mexico | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments | 21 | 43 |
Ohio | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments | 12 | 12 |
Puerto Rico | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments | 11 | 10 |
Other | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Restricted investments | $ 23 | $ 23 |
Receivables (Details)
Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Past Due [Line Items] | ||
Total receivables | $ 1,406 | $ 1,330 |
Government receivables | ||
Financing Receivable, Past Due [Line Items] | ||
Total receivables | 1,056 | 872 |
Pharmacy rebate receivables | ||
Financing Receivable, Past Due [Line Items] | ||
Total receivables | 150 | 146 |
Health insurer fee reimbursement receivables | ||
Financing Receivable, Past Due [Line Items] | ||
Total receivables | 5 | 141 |
Other | ||
Financing Receivable, Past Due [Line Items] | ||
Total receivables | $ 195 | $ 171 |
Property, Equipment, and Capi_3
Property, Equipment, and Capitalized Software, Net - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Furniture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 3 years |
Furniture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 7 years |
Software | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 3 years |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 5 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 10 years |
Building and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 31 years 6 months |
Building and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life of property plant and equipment | 40 years |
Property, Equipment, and Capi_4
Property, Equipment, and Capitalized Software, Net - Summary of Property, Equipment, and Capitalized Software (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 687 | $ 774 |
Less: accumulated amortization - capitalized software | (351) | (320) |
Less: accumulated depreciation and amortization - furniture, equipment, building, and improvements | (179) | (213) |
Total accumulated depreciation and amortization | (530) | (533) |
ROU assets - finance leases | 228 | |
Property, equipment, and capitalized software, net | 385 | |
Property, equipment, and capitalized software, net | 241 | |
Capitalized software | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 421 | 373 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 213 | 231 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 49 | 154 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 4 | $ 16 |
Property, Equipment, and Capi_5
Property, Equipment, and Capitalized Software, Net - Depreciation and Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Recorded in depreciation and amortization: | |||
Amortization of capitalized software | $ 33 | $ 42 | $ 64 |
Depreciation and amortization of furniture, equipment, building, and improvements | 21 | 36 | 42 |
Amortization of intangible assets | 18 | 21 | 31 |
Amortization of finance leases | 17 | ||
Subtotal | 89 | 99 | 137 |
Recorded in cost of service revenue: | |||
Amortization of capitalized software and deferred contract costs | 0 | 28 | 41 |
Total depreciation and amortization recognized | $ 89 | $ 127 | $ 178 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease term | 9 years | ||
Operating lease renewal term | 10 years | ||
Operating leases, weighted average remaining lease term | 4 years | ||
Finance lease renewal term | 25 years | ||
Finance leases, weighted average remaining lease term | 16 years | ||
Operating leases, weighted average discount rate | 5.60% | ||
Finance leases, weighted average discount rate | 6.50% | ||
Rent expense | $ 62 | $ 75 | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Finance lease term | 2 years | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Finance lease term | 19 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease expense | $ 34 |
Finance lease expense: | |
Amortization of ROU assets | 17 |
Interest on lease liabilities | 15 |
Total finance lease expense | $ 32 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash used in operating activities: | |
Operating leases | $ 36 |
Finance leases | 15 |
Cash used in financing activities: | |
Finance leases | 6 |
ROU assets recognized in exchange for lease obligations: | |
Operating leases | 99 |
Finance leases | $ 245 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) $ in Millions | Dec. 31, 2019USD ($) |
ROU assets | |
Other assets | $ 65 |
Lease liabilities | |
Accounts payable and accrued liabilities (current) | 25 |
Other long-term liabilities (non-current) | 48 |
Total operating lease liabilities | 73 |
ROU assets | |
Property, equipment, and capitalized software, net | 228 |
Lease liabilities | |
Accounts payable and accrued liabilities (current) | 8 |
Finance lease liabilities (non-current) | 231 |
Total finance lease liabilities | $ 239 |
Leases - Lease Maturities (Deta
Leases - Lease Maturities (Details) $ in Millions | Dec. 31, 2019USD ($) |
Operating Leases | |
2020 | $ 28 |
2021 | 20 |
2022 | 14 |
2023 | 10 |
2024 | 5 |
Thereafter | 3 |
Subtotal - undiscounted lease payments | 80 |
Less imputed interest | (7) |
Total operating lease liabilities | 73 |
Finance Leases | |
2020 | 23 |
2021 | 24 |
2022 | 21 |
2023 | 21 |
2024 | 22 |
Thereafter | 289 |
Subtotal - undiscounted lease payments | 400 |
Less imputed interest | (161) |
Total finance lease liabilities | $ 239 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Balances of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | |||
Beginning balance | $ 143 | $ 186 | |
Acquisitions | 0 | 0 | |
Dispositions | 0 | (43) | |
Impairment and other | 0 | 0 | |
Ending balance | 143 | 143 | $ 186 |
Health Plans | |||
Goodwill [Roll Forward] | |||
Beginning balance | 143 | 143 | |
Acquisitions | 0 | 0 | |
Dispositions | 0 | 0 | |
Impairment and other | 0 | 0 | (244) |
Ending balance | 143 | 143 | 143 |
Other | |||
Goodwill [Roll Forward] | |||
Beginning balance | 0 | 43 | |
Acquisitions | 0 | 0 | |
Dispositions | 0 | (43) | |
Impairment and other | 0 | 0 | (190) |
Ending balance | $ 0 | $ 0 | $ 43 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment charges | $ 0 | $ 0 | |
Future Amortization Expenses | |||
Future amortization expense, 2020 | 14 | ||
Future amortization expense, 2021 | 5 | ||
Future amortization expense, 2022 | 3 | ||
Future amortization expense, 2023 | 3 | ||
Future amortization expense, 2024 | 3 | ||
Health Plans | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross goodwill | 445 | 445 | |
Accumulated impairment loss | 302 | 302 | |
Goodwill impairment charges | 0 | 0 | $ 244 |
Future Amortization Expenses | |||
Impairment of intangible assets | 25 | ||
Other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment charges | $ 0 | $ 0 | 190 |
Future Amortization Expenses | |||
Impairment of intangible assets | $ 11 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Intangible Assets Balances (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 199 | $ 221 |
Accumulated Amortization | 170 | 174 |
Carrying Amount | 29 | 47 |
Contract rights and licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 179 | 201 |
Accumulated Amortization | 156 | 162 |
Carrying Amount | 23 | 39 |
Provider networks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 20 | 20 |
Accumulated Amortization | 14 | 12 |
Carrying Amount | $ 6 | $ 8 |
Medical Claims and Benefits P_3
Medical Claims and Benefits Payable - Medical Claims and Future Benefits (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Insurance [Abstract] | ||||
Fee-for-service claims incurred but not paid (“IBNP”) | $ 1,406 | $ 1,562 | $ 1,717 | |
Pharmacy payable | 126 | 115 | 112 | |
Capitation payable | 55 | 52 | 67 | |
Other | 267 | 232 | 296 | |
Total | $ 1,854 | $ 1,961 | $ 2,192 | $ 1,929 |
Medical Claims and Benefits P_4
Medical Claims and Benefits Payable - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Insurance [Abstract] | |||
Medical claims and benefits payable | $ 132 | $ 107 | $ 122 |
Favorable (unfavorable) adjustment | $ (271) | (341) | $ 36 |
CMS Subsidies | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Disposal group, operating expense | $ 81 |
Medical Claims and Benefits P_5
Medical Claims and Benefits Payable - Components of the Change (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Medical claims and benefits payable, beginning balance | $ 1,961 | $ 2,192 | $ 1,929 |
Components of medical care costs related to: | |||
Current period | 14,176 | 15,478 | 17,037 |
Prior periods | (271) | (341) | 36 |
Total medical care costs | 13,905 | 15,137 | 17,073 |
Change in non-risk and other provider payables | 24 | 13 | (106) |
Payments for medical care costs related to: | |||
Current period | 12,554 | 13,671 | 15,130 |
Prior periods | 1,482 | 1,710 | 1,574 |
Total paid | 14,036 | 15,381 | 16,704 |
Medical claims and benefits payable, ending balance | $ 1,854 | 1,961 | $ 2,192 |
CMS Subsidies | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Disposal group, operating expense | $ 81 |
Medical Claims and Benefits P_6
Medical Claims and Benefits Payable - Incurred Claims and Allocated Adjustment Expense (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)claim | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Product Information [Line Items] | |||
Incurred Claims and Allocated Claims Adjustment Expenses | $ 13,905 | $ 15,137 | $ 17,073 |
Incurred Claims and Allocated Claims Adjustment Expenses | 46,125 | ||
Total IBNP | 1,391 | ||
Benefit Year 2017 | |||
Product Information [Line Items] | |||
Incurred Claims and Allocated Claims Adjustment Expenses | 16,704 | 16,728 | $ 17,037 |
Total IBNP | $ 18 | ||
Cumulative number of reported claims (in claim) | claim | 119,000,000 | ||
Benefit Year 2018 | |||
Product Information [Line Items] | |||
Incurred Claims and Allocated Claims Adjustment Expenses | $ 15,245 | $ 15,478 | |
Total IBNP | $ 25 | ||
Cumulative number of reported claims (in claim) | claim | 110,000,000 | ||
Benefit Year 2019 | |||
Product Information [Line Items] | |||
Incurred Claims and Allocated Claims Adjustment Expenses | $ 14,176 | ||
Total IBNP | $ 1,348 | ||
Cumulative number of reported claims (in claim) | claim | 93,000,000 |
Medical Claims and Benefits P_7
Medical Claims and Benefits Payable - Cumulative Paid Claims and Allocated Claims Adjustment Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Product Information [Line Items] | |||
Claims paid | $ 44,460 | ||
Benefit Year 2017 | |||
Product Information [Line Items] | |||
Claims paid | 16,686 | $ 16,671 | $ 15,130 |
Benefit Year 2018 | |||
Product Information [Line Items] | |||
Claims paid | 15,220 | $ 13,752 | |
Benefit Year 2019 | |||
Product Information [Line Items] | |||
Claims paid | $ 12,554 |
Medical Claims and Benefits P_8
Medical Claims and Benefits Payable - Reconciliation of Claims Development (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Insurance [Abstract] | ||||
Incurred claims and allocated claims adjustment expenses | $ 46,125 | |||
Less: cumulative paid claims and allocated claims adjustment expenses | (44,460) | |||
All outstanding liabilities before 2017 | 15 | |||
Non-risk and other provider payables | 174 | |||
Total | $ 1,854 | $ 1,961 | $ 2,192 | $ 1,929 |
Debt - Maturities (Details)
Debt - Maturities (Details) $ in Millions | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |
Net carrying amount | $ 1,262 |
2020 | 18 |
2021 | 16 |
2022 | 722 |
2023 | 22 |
2024 | 154 |
Thereafter | $ 330 |
5.375% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 5.375% |
4.875% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 4.875% |
1.125% Convertible Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 1.125% |
Senior Notes | 5.375% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 5.375% |
Net carrying amount | $ 700 |
2020 | 0 |
2021 | 0 |
2022 | 700 |
2023 | 0 |
2024 | 0 |
Thereafter | $ 0 |
Senior Notes | 4.875% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 4.875% |
Net carrying amount | $ 330 |
2020 | 0 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Thereafter | $ 330 |
Senior Notes | 1.125% Convertible Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 1.125% |
Term Loan Facility | Term Loan Facility | |
Debt Instrument [Line Items] | |
Net carrying amount | $ 220 |
2020 | 6 |
2021 | 16 |
2022 | 22 |
2023 | 22 |
2024 | 154 |
Thereafter | $ 0 |
Convertible Debt | 4.875% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 4.875% |
Convertible Debt | 1.125% Convertible Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate | 1.125% |
Net carrying amount | $ 12 |
2020 | 12 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Thereafter | $ 0 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Lease financing obligations | $ 0 | $ 1 |
Debt issuance costs | 0 | (1) |
Total, current portion | 18 | 241 |
Debt issuance costs | (7) | (10) |
Total, non-current portion | $ 1,237 | 1,020 |
1.125% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 1.125% | |
5.375% Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 5.375% | |
4.875% Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 4.875% | |
Convertible Debt | 1.125% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 1.125% | |
Current portion of long-term debt | $ 12 | 241 |
Convertible Debt | 4.875% Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 4.875% | |
Senior Notes | 1.125% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 1.125% | |
Senior Notes | 5.375% Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 5.375% | |
Non-current portion of long-term debt | $ 700 | 700 |
Senior Notes | 4.875% Notes | ||
Debt Instrument [Line Items] | ||
Percentage of contractual interest rate | 4.875% | |
Non-current portion of long-term debt | $ 330 | 330 |
Term Loan Facility | Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Current portion of long-term debt | 6 | 0 |
Non-current portion of long-term debt | $ 214 | $ 0 |
Debt - Credit Agreement (Detail
Debt - Credit Agreement (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Jan. 31, 2019 | |
Line of Credit Facility [Line Items] | ||
Aggregate principal amount of notes outstanding | $ 1,262,000,000 | |
Term Loan Facility | Term Loan Facility | ||
Line of Credit Facility [Line Items] | ||
Aggregate principal amount of notes outstanding | 220,000,000 | |
Current borrowing capacity | 380,000,000 | |
Term Loan Facility | Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | 500,000,000 | $ 600,000,000 |
Minimum principal amount of advancements | $ 50,000,000 | |
Current borrowing capacity | 499,000,000 | |
Amount outstanding under Letter of Credit | 0 | |
Term Loan Facility | Letter of Credit | ||
Line of Credit Facility [Line Items] | ||
Amount outstanding under Letter of Credit | $ 1,000,000 | |
Minimum | Term Loan Facility | Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Amortization payment percentage | 1.25% | |
Maximum | Term Loan Facility | Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Amortization payment percentage | 2.50% |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) | Dec. 31, 2019USD ($) |
5.375% Senior Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate on notes | 5.375% |
4.875% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate on notes | 4.875% |
Senior Notes | 5.375% Senior Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate on notes | 5.375% |
Aggregate principal amount of notes outstanding | $ 700,000,000 |
Senior Notes | 4.875% Notes | |
Debt Instrument [Line Items] | |
Percentage of contractual interest rate on notes | 4.875% |
Aggregate principal amount of notes outstanding | $ 330,000,000 |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2020USD ($) | Dec. 31, 2019USD ($)$ / shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | ||||
(Gain) loss on debt extinguishment | $ (15) | $ 22 | $ 14 | |
Net carrying amount of debt | $ 1,262 | |||
1.125% Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Percentage of contractual interest rate on notes | 1.125% | |||
4.875% Notes | ||||
Debt Instrument [Line Items] | ||||
Percentage of contractual interest rate on notes | 4.875% | |||
5.375% Notes | ||||
Debt Instrument [Line Items] | ||||
Percentage of contractual interest rate on notes | 5.375% | |||
Convertible Debt | 1.125% Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Percentage of contractual interest rate on notes | 1.125% | |||
Repayments of debt | $ 794 | 911 | ||
Repayments of principal | 240 | 298 | ||
Repayment of aggregate carrying amount | 232 | 278 | ||
(Gain) loss on debt extinguishment | 15 | (12) | ||
Net carrying amount of debt | $ 12 | |||
Debt instrument, conversion ratio | 0.0245277 | |||
Debt instrument conversion price per share (in dollars per share) | $ / shares | $ 40.77 | |||
Senior note effective interest rate | 6.00% | |||
Senior notes amortization period | 1 month | |||
If-converted value in excess of principal on convertible debt | $ 26 | $ 581 | ||
Convertible Debt | 4.875% Notes | ||||
Debt Instrument [Line Items] | ||||
Percentage of contractual interest rate on notes | 4.875% | |||
Convertible Debt | Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, conversion ratio | 0.0172157 | |||
Convertible Debt | Subsequent Event | 1.125% Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Percentage of contractual interest rate on notes | 1.125% | |||
Repayments of principal | $ 39 |
Debt - Interest Cost (Details)
Debt - Interest Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest cost recognized for the period relating to the: | |||
Contractual interest coupon rate | $ 1 | $ 6 | $ 11 |
Amortization of the discount | 5 | 21 | 32 |
Total interest cost recognized | $ 6 | $ 27 | $ 43 |
Derivatives (Details)
Derivatives (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative [Line Items] | ||||
Cash received for partial settlement of call option | $ 578 | $ 623 | $ 0 | |
Cash paid for partial termination of 1.125% Warrants | 514 | 549 | $ 0 | |
Convertible debt, converted amount of instrument | $ 64 | |||
1.125% Convertible Notes | ||||
Derivative [Line Items] | ||||
Percentage of contractual interest rate | 1.125% | |||
1.125% Convertible Notes | Subsequent Event | ||||
Derivative [Line Items] | ||||
Cash received for partial settlement of call option | $ 27 | |||
1.125% Call Option | ||||
Derivative [Line Items] | ||||
Percentage of contractual interest rate on derivative | 1.125% | |||
1.125% Call Option | Subsequent Event | ||||
Derivative [Line Items] | ||||
Percentage of contractual interest rate on derivative | 1.125% | |||
1.125% Call Option | Current assets | ||||
Derivative [Line Items] | ||||
Derivative asset | $ 29 | 476 | ||
1.125% Conversion Option | ||||
Derivative [Line Items] | ||||
Percentage of contractual interest rate on derivative | 1.125% | |||
1.125% Conversion Option | Current liabilities | ||||
Derivative [Line Items] | ||||
Derivative liability | $ 29 | $ 476 | ||
1.125% Warrants | ||||
Derivative [Line Items] | ||||
Percentage of contractual interest rate on derivative | 1.125% | |||
Cash paid for partial termination of 1.125% Warrants | $ 514 |
Income Taxes - Provision for in
Income Taxes - Provision for income taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
Federal | $ 204 | $ 272 | $ (9) |
State | 12 | 18 | 3 |
Foreign | 9 | 8 | 0 |
Total current | 225 | 298 | (6) |
Deferred: | |||
Federal | 5 | (3) | (85) |
State | 6 | (3) | (9) |
Foreign | (1) | 0 | 0 |
Total deferred | 10 | (6) | (94) |
Income tax expense (benefit) | $ 235 | $ 292 | $ (100) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | |||
Change in tax rate, deferred tax asset, income tax expense (benefit) | $ 54 | ||
Measurement period adjustment, income tax expense (benefit) | $ (4) | ||
Deferred tax assets | $ 24 | ||
Decrease in deferred tax asset valuation allowance | 4 | ||
Valuation allowance | 24 | 28 | |
Impact on effective tax rate if tax benefits are recognized | 18 | $ 18 | $ 12 |
Liability for unrecognized tax benefits, potential decrease | 5 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 310 | ||
Tax credit carryovers | 8 | ||
Foreign | |||
Operating Loss Carryforwards [Line Items] | |||
Tax credit carryovers | $ 5 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the U.S. Federal Statutory Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal tax (benefit) rate | 21.00% | 21.00% | 35.00% |
State income provision (benefit), net of federal | 1.40% | 1.20% | 0.70% |
Nondeductible health insurer fee (“HIF”) | 0.00% | 7.30% | 0.00% |
Nondeductible compensation | 1.20% | 0.70% | (2.80%) |
Nondeductible goodwill impairment | 0.00% | 0.00% | (6.60%) |
Worthless stock deduction | 0.00% | (1.00%) | 0.00% |
Revaluation of net deferred tax assets | 0.00% | (0.40%) | (8.80%) |
Other | 0.60% | 0.40% | (1.10%) |
Effective tax expense (benefit) rate | 24.20% | 29.20% | 16.40% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Accrued expenses and reserve liabilities | $ 35 | $ 39 |
Other accrued medical costs | 11 | 12 |
Net operating losses | 13 | 16 |
Fixed assets and intangibles | 26 | 30 |
Unearned premiums | 11 | 9 |
Lease financing obligation | 5 | 30 |
Tax credit carryover | 11 | 12 |
Other | 0 | 3 |
Valuation allowance | (24) | (28) |
Total deferred income tax assets, net of valuation allowance | 88 | 123 |
Prepaid expenses | (6) | (6) |
Other | (3) | 0 |
Total deferred income tax liabilities | (9) | (6) |
Net deferred income tax asset | $ 79 | $ 117 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Unrecognized tax benefits roll forward | |||
Gross unrecognized tax benefits at beginning of period | $ (20) | $ (13) | $ (11) |
Increases in tax positions for current year | (9) | (1) | |
Increases in tax positions for prior years | 0 | 0 | (4) |
Decreases in tax positions for prior years | 0 | 0 | 3 |
Lapse in statute of limitations | 2 | 0 | |
Gross unrecognized tax benefits at end of period | $ (20) | $ (20) | $ (13) |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | Dec. 31, 2019 | Feb. 07, 2020 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2013 | Jun. 30, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Repurchased of common stock | $ 54,000,000 | |||||||
Cash paid for partial termination of 1.125% Warrants | 514,000,000 | $ 549,000,000 | $ 0 | |||||
Unrecognized compensation expense | $ 49,000,000 | $ 49,000,000 | $ 49,000,000 | |||||
Unrecognized compensation forfeited rate | 15.90% | |||||||
Weighted average grant date fair value of stock options granted (usd per share) | $ 41.43 | |||||||
Common stock issued during period (in shares) | 142,000 | 216,000 | 351,000 | |||||
RSAs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Maximum award vesting period | 4 years | |||||||
Weighted average period of unrecognized compensation expense | 2 years 2 months 12 days | |||||||
PSUs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Weighted average period of unrecognized compensation expense | 1 year 7 months 6 days | |||||||
Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Maximum award vesting period | 4 years | |||||||
Unrecognized compensation expense | $ 4,000,000 | $ 4,000,000 | $ 4,000,000 | |||||
Weighted average period of unrecognized compensation expense | 9 months 18 days | |||||||
Stock option expiration period | 10 years | |||||||
Risk free interest rate | 2.30% | |||||||
Expected volatility rate | 38.40% | |||||||
Dividend yield | 0.00% | |||||||
Expected term of awards | 8 years 4 months 24 days | |||||||
Options exercised, intrinsic value | $ 2,000,000 | |||||||
Employee Stock Purchase Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Dividend yield | 0.00% | 0.00% | 0.00% | |||||
Expected term of awards | 6 months | 6 months | 6 months | |||||
Employee purchase price as a percentage of stock price | 85.00% | |||||||
Maximum annual contribution per employee | $ 25,000 | |||||||
Risk-free interest rate, minimum | 0.60% | 0.60% | 0.60% | |||||
Risk-free interest rate, maximum | 2.30% | 2.30% | 2.30% | |||||
Minimum expected volatility rate inputs for fair value measurement | 31.00% | 31.00% | 31.00% | |||||
Maximum expected volatility rate inputs for fair value measurement | 45.00% | 45.00% | 45.00% | |||||
2019 EIP | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares issued under ESPP (in shares) | 2,900,000 | |||||||
2019 ESPP | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares issued under ESPP (in shares) | 3,000,000 | |||||||
1.125% Warrants | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stated interest rate | 1.125% | 1.125% | 1.125% | |||||
Number of warrants issued (in shares) | 13,500,000 | |||||||
Striking price of warrants (USD per share) | $ 53.8475 | |||||||
Class of warrant | 310,000 | 310,000 | 310,000 | |||||
Cash paid for partial termination of 1.125% Warrants | $ 514,000,000 | |||||||
Number of warrants terminated (in shares) | 5,900,000 | |||||||
Common Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock authorized | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | |||||
Repurchased of common stock (in shares) | 55,000 | 400,000 | ||||||
Repurchased of common stock | $ 7,000,000 | $ 54,000,000 | ||||||
Average cost (USD per share) | $ 135.30 | |||||||
Share-based compensation (in shares) | 242,000 | 365,000,000 | ||||||
Subsequent Event | Common Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Repurchased of common stock (in shares) | 1,533,000 | |||||||
Repurchased of common stock | $ 203,000,000 | |||||||
Average cost (USD per share) | $ 132.69 |
Stockholders' Equity - Componen
Stockholders' Equity - Components of Share-based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Pretax Charges | $ 39 | $ 27 | $ 46 |
Net-of-Tax Amount | 37 | 26 | 40 |
Restructuring settled without cash | 23 | ||
RSAs, PSAs and PSUs (defined below) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Pretax Charges | 29 | 17 | 39 |
Net-of-Tax Amount | 28 | 17 | 35 |
Employee stock purchase plan and stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Pretax Charges | 10 | 10 | 7 |
Net-of-Tax Amount | $ 9 | $ 9 | $ 5 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted and Performance Stock Activity (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested, shares beginning of period (in shares) | 604,310 |
Granted (in shares) | 389,778 |
Vested (in shares) | (153,488) |
Forfeited (in shares) | (68,842) |
Unvested, shares end of period (in shares) | 771,758 |
Weighted Average Grant Date Fair Value | |
Unvested, beginning balance (USD per share) | $ / shares | $ 71.50 |
Granted (USD per share) | $ / shares | 136.23 |
Vested (USD per share) | $ / shares | 73.98 |
Forfeited (USD per share) | $ / shares | 90.45 |
Unvested, ending balance (USD per share) | $ / shares | $ 102.01 |
RSAs | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested, shares beginning of period (in shares) | 399,795 |
Granted (in shares) | 243,353 |
Vested (in shares) | (139,828) |
Forfeited (in shares) | (55,640) |
Unvested, shares end of period (in shares) | 447,680 |
PSAs | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested, shares beginning of period (in shares) | 3,132 |
Granted (in shares) | 0 |
Vested (in shares) | (3,132) |
Forfeited (in shares) | 0 |
Unvested, shares end of period (in shares) | 0 |
PSUs | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested, shares beginning of period (in shares) | 201,383 |
Granted (in shares) | 146,425 |
Vested (in shares) | (10,528) |
Forfeited (in shares) | (13,202) |
Unvested, shares end of period (in shares) | 324,078 |
Stockholders' Equity - Fair Val
Stockholders' Equity - Fair Value of Awards Granted and Vested (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of restricted shares granted | $ 53 | $ 44 | $ 36 |
Fair value of restricted shares vested | 21 | 18 | 47 |
RSAs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of restricted shares granted | 33 | 28 | 20 |
Fair value of restricted shares vested | 19 | 15 | 23 |
PSAs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of restricted shares vested | 0 | 3 | 15 |
PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of restricted shares granted | 20 | 16 | 16 |
Fair value of restricted shares vested | $ 2 | $ 0 | $ 9 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Shares | ||
Beginning balance, outstanding (in shares) | 405,000 | |
Granted (in shares) | 0 | 0 |
Exercised (in shares) | 0 | |
Ending balance, outstanding (in shares) | 405,000 | 405,000 |
Weighted Average Exercise Price | ||
Beginning balance, outstanding (usd per share) | $ 64.79 | |
Granted (usd per share) | 0 | |
Exercised (usd per share) | 0 | |
Ending balance, outstanding (usd per share) | $ 64.79 | $ 64.79 |
Outstanding, Aggregate Intrinsic Value | $ 29 | |
Outstanding, Weighted Average Remaining Contractual term | 7 years 4 months 24 days | |
Stock options exercisable and expected to vest (in shares) | 405,000 | |
Stock options exercisable and expected to vest (usd per share) | $ 64.79 | |
Exercisable (in shares) | 280,000 | |
Exercisable (usd per share) | $ 63.65 | |
Exercisable, Aggregate Intrinsic Value | $ 20 | |
Exercisable, Weighted Average Remaining Contractual term | 7 years 3 months 18 days |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Options by Exercise Price (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Options Outstanding, Number Outstanding | 405,000 |
Options Exercisable, Number Exercisable | 280,000 |
$33.02 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Options Outstanding, Number Outstanding | 30,000 |
Options Outstanding, Weighted Average Remaining Contractual Life (Years) | 3 years 2 months 12 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 33.02 |
Options Exercisable, Number Exercisable | 30,000 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 33.02 |
$67.33 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Options Outstanding, Number Outstanding | 375,000 |
Options Outstanding, Weighted Average Remaining Contractual Life (Years) | 7 years 9 months 18 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 67.33 |
Options Exercisable, Number Exercisable | 250,000 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 67.33 |
Restructuring Costs (Details)
Restructuring Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 6 | $ 46 | $ 234 |
IT Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative restructuring costs | 12 | ||
Decrease to estimated expected costs remaining | 20 | ||
Accrued liabilities under restructuring plan | 1 | 6 | |
Other restructuring costs | 3 | ||
IT Restructuring | One-Time Termination Benefits | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative restructuring costs | 7 | ||
Payments for restructuring | 5 | ||
IT Restructuring | Consulting Fees | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative restructuring costs | 5 | ||
Payments for restructuring | 3 | ||
2017 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Accrued liabilities under restructuring plan | $ 18 | ||
2017 Restructuring Plan | Contract Termination | |||
Restructuring Cost and Reserve [Line Items] | |||
Accrued liabilities under restructuring plan | 12 | ||
Payments for restructuring | 9 | ||
Restructuring costs | $ 3 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Postemployment Benefits [Abstract] | |||
Maximum matching contribution by employer under defined contribution plan | 4.00% | ||
Expense recognized in connection with contributions | $ 28 | $ 36 | $ 43 |
Deferred compensation plan deferral percentage of basic salary | 100.00% | ||
Deferred compensation plan deferral percentage of bonus | 100.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Statutory Accounting Practices [Line Items] | ||
Aggregate statutory capital and surplus | $ 1,852 | |
Required minimum statutory capital surplus | 1,110 | |
Net assets of subsidiaries subject to restrictions | 1,811 | $ 2,262 |
Parent Company | ||
Statutory Accounting Practices [Line Items] | ||
Cash, cash equivalents, and investments | $ 997 | $ 170 |
Segments - Narrative (Details)
Segments - Narrative (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segments - Schedule of Operatin
Segments - Schedule of Operating Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | $ 4,274 | $ 4,243 | $ 4,193 | $ 4,119 | $ 4,664 | $ 4,697 | $ 4,883 | $ 4,646 | $ 16,829 | $ 18,890 | $ 19,883 |
Margin | 578 | $ 561 | $ 583 | $ 581 | 664 | $ 566 | $ 673 | $ 615 | 2,303 | 2,518 | 1,810 |
Goodwill and intangible assets, net | 172 | 190 | 172 | 190 | 255 | ||||||
Total assets | 6,787 | 7,154 | 6,787 | 7,154 | 8,471 | ||||||
Health Plans | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 16,815 | 18,471 | 19,352 | ||||||||
Goodwill and intangible assets, net | 172 | 190 | 172 | 190 | 212 | ||||||
Total assets | 5,265 | 6,165 | 5,265 | 6,165 | 6,347 | ||||||
Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 14 | 419 | 531 | ||||||||
Margin | 0 | 43 | 29 | ||||||||
Goodwill and intangible assets, net | 0 | 0 | 0 | 0 | 43 | ||||||
Total assets | $ 1,522 | $ 989 | $ 1,522 | $ 989 | $ 2,124 |
Segments - Reconciliation of Gr
Segments - Reconciliation of Gross Margin to Consolidated Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||||||||
Total margin | $ 578 | $ 561 | $ 583 | $ 581 | $ 664 | $ 566 | $ 673 | $ 615 | $ 2,303 | $ 2,518 | $ 1,810 |
Add: Other operating revenues | $ 4,274 | $ 4,243 | $ 4,193 | $ 4,119 | 4,664 | 4,697 | 4,883 | 4,646 | 16,829 | 18,890 | 19,883 |
Less: Other operating expenses | (15,785) | (17,744) | (20,438) | ||||||||
Less: loss on sales of subsidiaries, net of gain | $ (52) | $ 37 | $ 0 | $ 0 | 0 | (15) | 0 | ||||
Operating income (loss) | 1,044 | 1,131 | (555) | ||||||||
Less: other expenses, net | 72 | 132 | 57 | ||||||||
Income (loss) before income tax expense (benefit) | 972 | 999 | (612) | ||||||||
Health Plans | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Add: Other operating revenues | 16,815 | 18,471 | 19,352 | ||||||||
Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total margin | 0 | 43 | 29 | ||||||||
Add: Other operating revenues | 14 | 419 | 531 | ||||||||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total margin | 2,303 | 2,518 | 1,810 | ||||||||
Operating Segments | Health Plans | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total margin | 2,303 | 2,475 | 1,781 | ||||||||
Operating Segments | Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total margin | 0 | 43 | 29 | ||||||||
Other Operating | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Add: Other operating revenues | 621 | 871 | 508 | ||||||||
Less: Other operating expenses | (1,880) | (2,243) | (2,873) | ||||||||
Less: loss on sales of subsidiaries, net of gain | $ 0 | $ (15) | $ 0 |
Quarterly Results of Operatio_3
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue | $ 4,274 | $ 4,243 | $ 4,193 | $ 4,119 | $ 4,664 | $ 4,697 | $ 4,883 | $ 4,646 | $ 16,829 | $ 18,890 | $ 19,883 |
Margin | 578 | 561 | 583 | 581 | 664 | 566 | 673 | 615 | 2,303 | 2,518 | 1,810 |
Gain (loss) on sales of subsidiaries | (52) | 37 | 0 | 0 | 0 | (15) | 0 | ||||
Net income (loss) | $ 168 | $ 175 | $ 196 | $ 198 | $ 201 | $ 197 | $ 202 | $ 107 | $ 737 | $ 707 | $ (512) |
Net income per share - Basic (in dollars per share) | $ 2.70 | $ 2.81 | $ 3.15 | $ 3.19 | $ 3.24 | $ 3.22 | $ 3.29 | $ 1.79 | $ 11.85 | $ 11.57 | $ (9.07) |
Net income per share - Diluted (in dollars per share) | $ 2.67 | $ 2.75 | $ 3.06 | $ 2.99 | $ 3.01 | $ 2.90 | $ 3.02 | $ 1.64 | $ 11.47 | $ 10.61 | $ (9.07) |
Condensed Financial Informati_3
Condensed Financial Information of Registrant - Condensed Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||||
Cash and cash equivalents | $ 2,452 | $ 2,826 | $ 3,186 | |
Investments | 1,946 | 1,681 | ||
Receivables | 1,406 | 1,330 | ||
Prepaid expenses and other current assets | 134 | 149 | ||
Derivative asset | 29 | 476 | ||
Total current assets | 5,967 | 6,462 | ||
Property, equipment, and capitalized software, net | 241 | |||
Goodwill and intangible assets, net | 172 | 190 | 255 | |
Deferred income taxes | 79 | 117 | ||
Total assets | 6,787 | 7,154 | 8,471 | |
Current liabilities: | ||||
Medical claims and benefits payable | 1,854 | 1,961 | 2,192 | $ 1,929 |
Accounts payable and accrued liabilities | 455 | 390 | ||
Current portion of long-term debt | 18 | 241 | ||
Derivative liability | 29 | 476 | ||
Total current liabilities | 3,269 | 4,246 | ||
Long-term debt | 1,237 | 1,020 | ||
Finance lease liabilities | 231 | |||
Finance lease liabilities | 197 | |||
Other long-term liabilities | 90 | 44 | ||
Total liabilities | 4,827 | 5,507 | ||
Stockholders’ equity: | ||||
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018 | 0 | 0 | ||
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding | 0 | 0 | ||
Additional paid-in capital | 175 | 643 | ||
Accumulated other comprehensive income (loss) | 4 | (8) | ||
Retained earnings | 1,781 | 1,012 | ||
Total stockholders’ equity | 1,960 | 1,647 | $ 1,337 | $ 1,649 |
Total liabilities and stockholders’ equity | 6,787 | 7,154 | ||
Parent Company | ||||
Current assets: | ||||
Cash and cash equivalents | 836 | 70 | ||
Investments | 161 | 100 | ||
Receivables | 2 | 2 | ||
Due from affiliates | 49 | 90 | ||
Prepaid expenses and other current assets | 46 | 47 | ||
Derivative asset | 29 | 476 | ||
Total current assets | 1,123 | 785 | ||
Property, equipment, and capitalized software, net | 327 | 176 | ||
Goodwill and intangible assets, net | 13 | 13 | ||
Investments in subsidiaries | 2,225 | 2,768 | ||
Deferred income taxes | 10 | 39 | ||
Advances to related parties and other assets | 76 | 40 | ||
Total assets | 3,774 | 3,821 | ||
Current liabilities: | ||||
Medical claims and benefits payable | 0 | 4 | ||
Accounts payable and accrued liabilities | 260 | 223 | ||
Current portion of long-term debt | 18 | 241 | ||
Derivative liability | 29 | 476 | ||
Total current liabilities | 307 | 944 | ||
Long-term debt | 1,237 | 1,020 | ||
Finance lease liabilities | 231 | |||
Finance lease liabilities | 197 | |||
Other long-term liabilities | 39 | 13 | ||
Total liabilities | 1,814 | 2,174 | ||
Stockholders’ equity: | ||||
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018 | 0 | 0 | ||
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding | 0 | 0 | ||
Additional paid-in capital | 175 | 643 | ||
Accumulated other comprehensive income (loss) | 4 | (8) | ||
Retained earnings | 1,781 | 1,012 | ||
Total stockholders’ equity | 1,960 | 1,647 | ||
Total liabilities and stockholders’ equity | $ 3,774 | $ 3,821 |
Condensed Financial Informati_4
Condensed Financial Information of Registrant - Condensed Balance Sheets - Additional Information (Details) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Condensed Financial Statements, Captions [Line Items] | ||
Common stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares outstanding | 62,000,000 | 62,000,000 |
Preferred stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Parent Company | ||
Condensed Financial Statements, Captions [Line Items] | ||
Common stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares outstanding | 62,000,000 | 62,000,000 |
Preferred stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Financial Informati_5
Condensed Financial Information of Registrant - Condensed Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | |||||||||||
Investment income and other revenue | $ 132 | $ 125 | $ 70 | ||||||||
Total revenue | $ 4,274 | $ 4,243 | $ 4,193 | $ 4,119 | $ 4,664 | $ 4,697 | $ 4,883 | $ 4,646 | 16,829 | 18,890 | 19,883 |
Expenses: | |||||||||||
General and administrative expenses | 1,296 | 1,333 | 1,594 | ||||||||
Depreciation and amortization | 89 | 99 | 137 | ||||||||
Restructuring costs | 6 | 46 | 234 | ||||||||
Impairment losses | 0 | 0 | 470 | ||||||||
Total operating expenses | 15,785 | 17,744 | 20,438 | ||||||||
Gain (loss) on sales of subsidiaries | (52) | 37 | 0 | 0 | 0 | (15) | 0 | ||||
Operating income (loss) | 1,044 | 1,131 | (555) | ||||||||
Interest expense | 87 | 115 | 118 | ||||||||
Other (income) expense, net | (15) | 17 | (61) | ||||||||
Income tax expense (benefit) | 235 | 292 | (100) | ||||||||
Net income (loss) | $ 168 | $ 175 | $ 196 | $ 198 | $ 201 | $ 197 | $ 202 | $ 107 | 737 | 707 | (512) |
Parent Company | |||||||||||
Revenue: | |||||||||||
Administrative services fees | 1,038 | 1,138 | 1,317 | ||||||||
Investment income and other revenue | 18 | 17 | 16 | ||||||||
Total revenue | 1,056 | 1,155 | 1,333 | ||||||||
Expenses: | |||||||||||
General and administrative expenses | 937 | 1,007 | 1,082 | ||||||||
Depreciation and amortization | 63 | 69 | 93 | ||||||||
Other operating expenses | 0 | 8 | 16 | ||||||||
Restructuring costs | 4 | 35 | 153 | ||||||||
Impairment losses | 0 | 0 | 39 | ||||||||
Total operating expenses | 1,004 | 1,119 | 1,383 | ||||||||
Gain (loss) on sales of subsidiaries | 0 | 37 | 0 | ||||||||
Operating income (loss) | 52 | 73 | (50) | ||||||||
Interest expense | 87 | 114 | 117 | ||||||||
Other (income) expense, net | (15) | 17 | (61) | ||||||||
Loss before income tax (benefit) expense and equity in net earnings (losses) of subsidiaries | (20) | (58) | (106) | ||||||||
Income tax expense (benefit) | 9 | (14) | 8 | ||||||||
Net loss before equity in net earnings (losses) of subsidiaries | (29) | (44) | (114) | ||||||||
Equity in net earnings (losses) of subsidiaries | 766 | 751 | (398) | ||||||||
Net income (loss) | $ 737 | $ 707 | $ (512) |
Condensed Financial Informati_6
Condensed Financial Information of Registrant - Condensed Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income (loss) | $ 168 | $ 175 | $ 196 | $ 198 | $ 201 | $ 197 | $ 202 | $ 107 | $ 737 | $ 707 | $ (512) |
Unrealized investment income (loss) | 16 | (3) | (5) | ||||||||
Less: effect of income taxes | 4 | (1) | (2) | ||||||||
Other comprehensive income (loss), net of tax | 12 | (2) | (3) | ||||||||
Comprehensive income (loss) | 749 | 705 | (515) | ||||||||
Parent Company | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income (loss) | 737 | 707 | (512) | ||||||||
Unrealized investment income (loss) | 16 | (3) | (5) | ||||||||
Less: effect of income taxes | 4 | (1) | (2) | ||||||||
Other comprehensive income (loss), net of tax | 12 | (2) | (3) | ||||||||
Comprehensive income (loss) | $ 749 | $ 705 | $ (515) |
Condensed Financial Informati_7
Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | |||
Net cash provided by operating activities | $ 427 | $ (314) | $ 804 |
Investing activities: | |||
Purchases of investments | (2,536) | (1,444) | (2,697) |
Proceeds from sales and maturities of investments | 2,302 | 2,445 | 1,759 |
Purchases of property, equipment and capitalized software | (57) | (30) | (86) |
Net cash received from sale of subsidiaries | 0 | 190 | 0 |
Other, net | (2) | (18) | (38) |
Net cash provided by (used in) investing activities | (293) | 1,143 | (1,062) |
Financing activities: | |||
Repayment of principal amount of convertible notes | (240) | (362) | 0 |
Cash paid for partial settlement of conversion option | (578) | (623) | 0 |
Cash received for partial settlement of call option | 578 | 623 | 0 |
Cash paid for partial termination of warrants | (514) | (549) | 0 |
Proceeds from borrowings under term loan facility | 220 | 0 | 0 |
Common stock purchases | (47) | 0 | 0 |
Repayment of credit facility | 0 | (300) | 0 |
Proceeds from senior notes offerings, net of issuance costs | 0 | 0 | 325 |
Other, net | 29 | 18 | 11 |
Net cash (used in) provided by financing activities | (552) | (1,193) | 636 |
Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents | (418) | (364) | 378 |
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of period | 2,926 | 3,290 | 2,912 |
Cash and cash equivalents at end of period | 2,508 | 2,926 | 3,290 |
Parent Company | |||
Operating activities: | |||
Net cash provided by operating activities | 64 | 118 | 166 |
Investing activities: | |||
Capital contributions to subsidiaries | (43) | (145) | (370) |
Dividends received from subsidiaries | 1,373 | 298 | 286 |
Purchases of investments | (152) | (136) | (331) |
Proceeds from sales and maturities of investments | 93 | 388 | 156 |
Purchases of property, equipment and capitalized software | (56) | (22) | (67) |
Net cash received from sale of subsidiaries | 0 | 242 | 0 |
Change in amounts due to/from affiliates | 38 | 6 | (49) |
Other, net | 1 | 0 | 0 |
Net cash provided by (used in) investing activities | 1,254 | 631 | (375) |
Financing activities: | |||
Repayment of principal amount of convertible notes | (240) | (362) | 0 |
Cash paid for partial settlement of conversion option | (578) | (623) | 0 |
Cash received for partial settlement of call option | 578 | 623 | 0 |
Cash paid for partial termination of warrants | (514) | (549) | 0 |
Proceeds from borrowings under term loan facility | 220 | 0 | 0 |
Common stock purchases | (47) | 0 | 0 |
Repayment of credit facility | 0 | (300) | 0 |
Proceeds from senior notes offerings, net of issuance costs | 0 | 0 | 325 |
Proceeds from borrowings under credit facility | 0 | 0 | 300 |
Other, net | 29 | 19 | 11 |
Net cash (used in) provided by financing activities | (552) | (1,192) | 636 |
Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents | 766 | (443) | 427 |
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of period | 70 | 513 | 86 |
Cash and cash equivalents at end of period | $ 836 | $ 70 | $ 513 |
Condensed Financial Informati_8
Condensed Financial Information of Registrant - Notes to Condensed Financial Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Parent Company | |||
Related Party Transaction [Line Items] | |||
Services revenue from subsidiaries | $ 1,038 | $ 1,137 | $ 1,317 |
Uncategorized Items - moh-12312
Label | Element | Value |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (1,000,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 7,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 85,000,000 |