1179929--3/14/2007--MOLINA_HEALTHCARE

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{regulation, government, change}

{acquisition, growth, future}

{operation, natural, condition}

{debt, indebtedness, cash}

{stock, price, operating}

{financial, litigation, operation}

{product, market, service}

{cost, contract, operation}

{control, financial, internal}

{operation, international, foreign}

{system, service, information}

{condition, economic, financial}

{loss, insurance, financial}

{personnel, key, retain}

{regulation, change, law}

{provision, law, control}

Our profitability will depend on our ability to accurately predict and effectively manage medical costs. A failure to accurately estimate incurred but not reported medical care costs may negatively impact our results of operations. There are numerous risks associated with the rapid growth of our Ohio and Texas HMOs. We face claims related to litigation which could result in substantial monetary damages. Reductions in Medicaid and SCHIP funding could substantially reduce our profitability. If our government contracts are not renewed or are terminated, our revenues could be materially reduced. Any changes to the laws and regulations governing our business, or the interpretation and enforcement of those laws or regulations, could cause us to modify our operations and could negatively impact our operating results. The new Medicaid citizenship documentation requirements may adversely impact the enrollment levels of our health plans. Our business depends on our information and medical management systems, and our inability to effectively integrate, manage, and keep secure our information and medical management systems could disrupt our operations. Difficulties in executing our acquisition strategy could adversely affect our business. Ineffective management of our growth may negatively affect our business, financial condition, or results of operations. If we are unable to maintain good relations with the physicians, hospitals, and other providers with whom we contract, or if we are unable to enter into cost-effective contracts with such providers, our profitability could be adversely affected. Failure to attain profitability in any new start-up operations could negatively affect our results of operations. We derive a majority of our premium revenues from operations in a small number of states. We are subject to competition which negatively impacts our ability to increase penetration in the markets we serve. Our experience with Medicare members is limited. Restrictions and covenants in our credit facility may limit our ability to make certain acquisitions. We are dependent on our executive officers and other key employees. Negative publicity regarding the managed health care industry could adversely affect our ability to market and sell our products and services. A pandemic, such as a worldwide outbreak of a new influenza virus, could materially and adversely affect our ability to control health care costs. Because our corporate headquarters and claims processing facilities are located in Southern California, our business operations may be significantly disrupted as a result of a major earthquake. The results of our operations could be negatively impacted by both upturns and downturns in general economic conditions. If state regulators do not approve payments of dividends and distributions by our subsidiaries, it may negatively affect our business strategy. Unforeseen changes in regulations or pharmaceutical market conditions may impact our revenues and adversely affect our results of operations. Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business, operating results, and stock price. Volatility of our stock price could adversely affect stockholders. Our directors and officers and members of the Molina family own a majority of our capital stock, decreasing the influence of other stockholders on stockholder decisions. It may be difficult for a third party to acquire our company, which could inhibit stockholders from realizing a premium on their stock price. Our forecasts and other forward-looking statements are based on a variety of assumptions that are subject to significant uncertainties. Our performance may not be consistent with these forecasts and forward-looking statements. SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

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1179929--3/14/2007--MOLINA_HEALTHCARE_INC