1179929--3/16/2010--MOLINA_HEALTHCARE

related topics

{regulation, government, change}

{cost, contract, operation}

{financial, litigation, operation}

{system, service, information}

{acquisition, growth, future}

{capital, credit, financial}

{operation, natural, condition}

{regulation, change, law}

{debt, indebtedness, cash}

{stock, price, operating}

{stock, price, share}

{tax, income, asset}

{control, financial, internal}

{product, market, service}

{personnel, key, retain}

{loan, real, estate}

{provision, law, control}

{loss, insurance, financial}

{condition, economic, financial}

{cost, operation, labor}

Risks Related to our Health Plan Business State and federal budget deficits may result in Medicaid, CHIP, or Medicare funding cuts or changes in member eligibility thresholds or criteria which could compress our profit margins. Our profitability depends on our ability to accurately predict and effectively manage our medical care costs. Our business may be negatively affected by the enactment of health care or health insurance reforms. A failure to accurately estimate incurred but not reported medical care costs may negatively impact our results of operations. If our government contracts are not renewed or are terminated, or if the responsive bids of our health plans for new Medicaid contracts are not successful, our premium revenues could be materially reduced and our operating results could be negatively impacted. Restrictions and covenants in our credit facility may limit our ability to make certain acquisitions or reduce our liquidity and capital resources. Adverse equity and credit market conditions may have a material adverse affect on our liquidity or our ability to obtain financing on acceptable terms. We derive our premium revenues from a relatively small number of state health plans. Portions of our premium revenue are subject to accounting estimates or retroactive adjustment. Minimum medical cost floors could limit our profitability. Failure to attain profitability in any new start-up operations could negatively affect our results of 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. 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. We face periodic routine and non-routine reviews, audits, and investigations by government agencies, and these reviews and audits could have adverse findings, which could negatively impact our business. 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. Because our corporate headquarters are located in Southern California, our business operations may be significantly disrupted as a result of a major earthquake. 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. The insolvency of a delegated provider could obligate us to pay their referral claims which could have an adverse effect on our business, cash flows, or results of operations. Regulatory actions and negative publicity regarding Medicaid managed care and Medicare Advantage may lead to programmatic changes and intensified regulatory scrutiny and regulatory burdens. If a state fails to renew its federal waiver application for mandated Medicaid enrollment into managed care or such application is denied, our membership in that state will likely decrease. We face claims related to litigation which could result in substantial monetary damages. We are subject to competition which negatively impacts our ability to increase penetration in the markets we serve. 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. 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. We do not anticipate paying any cash dividends in the foreseeable future. Changes in accounting may affect our results of operations. Our investments in auction rate securities are subject to risks that may cause losses and have a material adverse effect on our liquidity. The value of our investments is influenced by varying economic and market conditions, and a decrease in value could have an adverse effect on our results of operations, liquidity and financial condition. Another flu epidemic in 2010 or other kind of epidemic in one or more of the states in which we operate a health plan could significantly increase utilization rates and medical costs. An unauthorized disclosure of sensitive or confidential member information could have an adverse effect on our business. Unanticipated changes in our tax rates or exposure to additional income tax liabilities could affect our profitability. We are dependent on our executive officers and other key employees. Risks Related to the Operation of the Health Information Management Business We have not previously operated a health information management business. We may have difficulty integrating the HIM business and its operations. We may be unable to retain or renew the state government contracts of the HIM business on terms consistent with our expectations or at all. If we have underestimated the operating cost and capital outlay projections for the HIM business, our profitability could be adversely affected. Because of the complexity and duration of the services and systems required to be delivered under the government contracts of the HIM business, there are substantial risks associated with full performance under the contracts. If we fail to comply with our state government contracts or government contracting regulations, our business may be adversely affected. System security risks and systems integration issues that disrupt our internal operations or information technology services provided to customers could adversely affect our financial results or damage our reputation.

Full 10-K form ▸

1179929--3/16/2010--MOLINA_HEALTHCARE_INC