News Release

Contact:

Juan José Orellana

Investor Relations

562-435-3666, ext. 111143

MOLINA HEALTHCARE REPORTS

THIRD QUARTER 2008 RESULTS

● Net earnings of $0.62 per diluted share, consistent with the third quarter of 2007.

● Year-to-date earnings of $1.67 per diluted share, up 17% over 2007.

● Quarterly premium revenues of $792 million, up 26% over 2007.

●  Aggregate membership up nearly 16% over 2007.

●  2008 guidance confirmed at range of $2.20 to $2.40 per diluted share.

Long Beach, California (October 22, 2008) – Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results for the third quarter and nine months ended September 30, 2008.

Net income for the third quarter ended September 30, 2008 was $17.2 million, or $0.62 per diluted share, compared with net income of $17.5 million, or $0.62 per diluted share, for the quarter ended September 30, 2007.  Net income for the nine months ended September 30, 2008 increased to $46.9 million, or $1.67 per diluted share, compared with net income of $40.4 million, or $1.43 per diluted share, for the nine months period ended September 30, 2007.

In commenting on the results, J. Mario Molina, M.D., president and chief executive officer of Molina Healthcare, said, “Our results continue to reflect strong revenue growth, continued enrollment growth, and consistent administrative efficiency.  In addition, as we have observed during our 28-year history, a weakening economy is generally accompanied by an increase in the number of Medicaid beneficiaries.  We stand ready to assist our state and federal partners in providing high quality accessible healthcare to those most deeply affected by the current economic downturn.”

2008 Earnings Per Share Guidance

The Company confirms the guidance it had previously issued on July 23, 2008 for fiscal year 2008 earnings per diluted share of between $2.20 and $2.40.  For the fourth quarter and year ended 2008, the Company expects its effective tax rate to be approximately 41%.  The Company expects its shares outstanding, for the purpose of calculating diluted EPS, to be approximately 27.1 million for the quarter ended December 31, 2008 and 27.9 million for the year ended December 31, 2008.

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MOH Reports Third Quarter 2008 Results

Page 2

October 22, 2008

Financial Results – Comparison of Quarters Ended September 30, 2008 and 2007

Premium revenue for the third quarter of 2008 was $791.6 million, an increase of $163.2 million, or 26%, over the $628.4 million of premium revenue for the third quarter of 2007.  Medicare premium revenue for the third quarter of 2008 was $28.1 million compared with $12.7 million in the third quarter of 2007.  Excluding the impact of the November 1, 2007 acquisition of the Missouri plan, consolidated membership increased 8.6% between September 30, 2008 and September 30, 2007.

Significant contributors to the $163.2 million increase in quarterly premium revenue included the following:

●  A $59.2 million increase as a result of the acquisition of the Company’s Missouri health plan on November 1, 2007.  The Missouri health plan received a blended rate increase of approximately 8.5% effective July 1, 2008.

● A $37.1 million increase at the Ohio health plan due to higher enrollment, particularly in the Covered Families and Children (CFC) population.  Effective September 1, 2008, the Ohio health plan added approximately 4,000 Aged, Blind or Disabled (ABD) members in the Central and West Central regions.

● A $15.4 million increase in Medicare premium revenue across all health plans, primarily due to increased enrollment and the recognition of $2.6 million in risk adjustment revenue.

● An $8.2 million increase in Medicaid revenue at the California health plan, primarily due to increased membership.  The California health plan’s Medicaid revenue decreased $1.3 million from the second quarter of 2008.  Sequentially, premium revenue on a per member per month basis declined approximately 3%, reflecting the rate cuts implemented by the state of California for the period July 1, 2008 through August 17, 2008.  Premium revenue for the California health plan has been recorded at rates in effect immediately prior to July 1, 2008 for the period August 18, 2008 through September 30, 2008, as the result of a court injunction issued on August 18, 2008.

● A $4.3 million increase in Medicaid premium revenue at the Michigan health plan, primarily due to $3.7 million in supplemental revenue from the Michigan Department of Community Health. The supplemental revenue is intended to offset the unintended effects of the Michigan Business Tax (MBT) that replaced Michigan’s Single Business Tax (SBT) as of January 1, 2008.

The unintended effect of the MBT is the taxation of both the premiums and the net income of health plans, driving the effective federal and state combined tax rate on the Company’s Michigan health plan to nearly 49%.  The supplemental revenue is intended to offset MBT’s taxation of gross receipts for the nine months ended September 30, 2008.

Effective October 1, 2008, the Michigan health plan received an estimated blended rate increase of approximately 5.5%, plus an additional increase of approximately 0.9% for ongoing MBT relief.  The rate increase is tied to an expansion of benefits and coverage that will result in increased medical care costs for the Michigan health plan in the future.

After allowing for the supplemental revenue and the aforementioned ongoing MBT relief, we anticipate our 2008 Michigan tax expense will be approximately $0.5 million higher (before federal tax benefit) than the amount computed using the SBT methodology.

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MOH Reports Third Quarter 2008 Results

Page 3

October 22, 2008

Medical care costs as a percentage of premium revenue (the medical care ratio) increased to 84.6% in the third quarter of 2008 from 83.7% in the third quarter of 2007.  Sequentially, the medical care ratio increased from 84.2% for the quarter ended June 30, 2008.  Excluding Medicare, the Company’s medical care ratio was 84.9% in the third quarter of 2008, 83.8% in the third quarter of 2007, and 84.2% in the second quarter of 2008.

●  The medical care ratio of the Missouri health plan was 80.6% for the quarter, down from 83.0% in the second quarter of 2008.  The premium increase discussed above was partially offset by increased unit costs due to revised provider contracts and a fee schedule increase effective July 1, 2008.

● The medical care ratio of the California health plan increased to 89.1% in the third quarter of 2008 from 82.1% in the third quarter of 2007 and 84.9% in the second quarter of 2008.  The increase in the plan’s medical care ratio was caused primarily by a decrease in premium rates as discussed above and higher fee-for-service and pharmacy costs.

● The medical care ratio of the New Mexico health plan increased to 87.4% in the third quarter of 2008 from 78.6% in the third quarter of 2007 and 78.0% in the second quarter of 2008.  The sequential increase was primarily due to the reduced benefit from the release of amounts reserved as a result of the minimum medical cost ratio provision in the New Mexico health plan’s state contract.  The Company recognized $6.2 million under this provision in the second quarter of 2008, and none for the third quarter of 2008.  Additionally, the New Mexico health plan received a blended rate decrease of approximately 3% effective July 1, 2008 for its non-Medicare programs.

● The medical care ratio of the Ohio health plan, by line of business, was as follows:

	Three Months Ended
	Sept. 30, 2008			June 30, 2008			Sept. 30, 2007
Covered Families and Children (CFC)		89.9	%		90.7	%		85.5	%
Aged, Blind or Disabled (ABD)		94.6			91.5			94.4
Aggregate		91.5	%		91.0	%		88.8	%

Sequentially, the medical care ratio for the CFC line of business decreased 80 basis points primarily due to lower capitation and pharmacy costs.  The sequential increase in the medical care ratio for the ABD line of business was due primarily to higher specialist fee-for-service costs.

Effective September 1, 2008, the Ohio health plan will receive risk adjustments to its ABD premium rates.  The Company estimates that these adjustments will result in a net increase to premium revenue of approximately $500,000 per month from September 1st onward.  Additionally, the Company has re-negotiated certain provider contracts in the Central region of Ohio, which it believes will reduce unit costs beginning in the fourth quarter of 2008.

● The medical care ratio of the Texas health plan increased to 79.8% in the third quarter of 2008 from 76.2% in the third quarter of 2007.  This increase was primarily due to higher hospital fee-for-service costs.  During the third quarter of 2008, the Texas health plan increased revenue $1.3 million to record adjustments relating to its profit-sharing agreement with the state of Texas.

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MOH Reports Third Quarter 2008 Results

Page 4

October 22, 2008

● The medical care ratio of the Washington health plan decreased to 76.5% in the third quarter of 2008 from 79.2% in the third quarter of 2007, primarily due to lower fee-for-service hospital costs.

Days in medical claims and benefits payable were 44 days at September 30, 2008, a 6% decrease from the 47 days reported at June 30, 2008, and a 19% decrease from the 54 days reported at September 30, 2007.  As of September 30, 2008, medical claims inventory (measured as the total billed charges of all claims received but not paid as of the reporting date) has decreased approximately 30% since June 30, 2008, and 37% since September 30, 2007.  The Company’s reserving methodology is consistently applied across all periods presented.

General and administrative expenses were $88.0 million, or 11.1% of total revenue, for the third quarter of 2008 compared with $74.2 million, or 11.7% of total revenue, for the third quarter of 2007.

Core G&A expenses (defined as G&A expenses less premium taxes) were 8.0% of revenue in the third quarter of 2008 compared with 8.4% in the third quarter of 2007 and 8.2% in the second quarter of 2008.  The decrease in core G&A compared with the third quarter of 2007 was primarily due to lower administrative payroll as a percentage of revenue, as indicated in the table below.

	Three Months Ended September 30,
(in thousands)	2008					2007
	Amount		% of Total Revenue			Amount		% of Total Revenue
Medicare-related administrative costs	$	4,112		0.5	%	$	2,330		0.4	%
Non Medicare-related administrative costs:
Administrative payroll, including employee incentive compensation		49,429		6.2			43,326		6.8
Florida health plan start up expenses		804		0.1			–		–
All other administrative expense		9,125		1.2			7,450		1.2
Core G&A expenses	$	63,470		8.0	%	$	53,106		8.4	%

Income taxes were recorded at an effective rate of 39.6% in the third quarter of 2008 compared with38.1% in the third quarter of 2007.  The increase in the Company’s effective tax rate was primarily the result of a change in Michigan state taxes effective January 1, 2008.  The Company expects its effective tax rate for the fourth quarter and all of fiscal year 2008 to be approximately 41%.

Cash Flow

Cash used in operating activities for the nine months ended September 30, 2008 was $20.3 million compared with cash provided by operating activities of $112.8 million for the same period in 2007, a decrease of $133.1 million.  Significant contributors to this decrease included the following:

● A $40.5 million increase in the California health plan receivable as of September 30, 2008, due to the delayed passage of the California state budget for 2008-2009.  Until the budget was passed on September 23, 2008, the state of California had ceased paying its vendors for the previous two months’ billings.  Substantially all receivables due the California health plan at September 30, 2008 were collected in October 2008.

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MOH Reports Third Quarter 2008 Results

Page 5

October 22, 2008

● The timing of the receipt of premiums recorded as deferred revenue in the Ohio and Utah health plans, netting to a total decline of $44.9 million year-over-year.

● In 2007, the ramp up of operations and medical claims and benefits payable of the Company’s Texas and Ohio health plans compared with less significant changes in medical claims and benefits payable for these plans in 2008, netting to a decline of $31.5 million year-over-year.

● The reversal of $12.9 million of accrued costs relating to the minimum medical care ratio contract provision in New Mexico in the first six months of 2008.

At September 30, 2008, the Company had cash and investments (not including restricted investments) of approximately $609.9 million, including auction rate securities with a fair value of $63.8 million that were reclassified as non-current assets in the first quarter of 2008.  While these auction rate securities are collateralized by student loan portfolios guaranteed by the U.S. government, the Company believes that the market for these may take in excess of 12 months to fully recover.  At September 30, 2008, the parent company had cash and investments of approximately $83.4 million, including auction rate securities with a fair value of $18.5 million.

EBITDA (1)

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Operating income	$	30,429	$	28,815	$	85,138	$	67,694
Add back:
Depreciation and amortization expense		8,515		7,082		24,997		20,274
EBITDA	$	38,944	$	35,897	$	110,135	$	87,968

(1) The Company calculates EBITDA by adding back depreciation and amortization expense to operating income.  EBITDA is not prepared in conformity with GAAP since it excludes depreciation and amortization expense, as well as interest expense, and the provision for income taxes.  This non-GAAP financial measure should not be considered as an alternative to net income, operating income, operating margin, or cash provided by operating activities.  Management uses EBITDA as a supplemental metric in evaluating our financial performance, in evaluating financing and business development decisions, and in forecasting and analyzing future periods. For these reasons, management believes that EBITDA is a useful supplemental measure to investors in evaluating our performance and the performance of other companies in our industry.

Share Repurchase Program

During the third quarter of 2008, the Company repurchased approximately 91,000 shares of its common stock for $2.7 million (average cost of approximately $29.97 per share).  Shares used for computing diluted earnings per share for the third quarters of 2008 and 2007 were 27.6 million and 28.4 million, respectively.

Through October 17, 2008, the Company has repurchased approximately 1.7 million shares at an aggregate purchase price of $45 million pursuant to the two share repurchase programs announced during the year.

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MOH Reports Third Quarter 2008 Results

Page 6

October 22, 2008

Conference Call

The Company’s management will host a conference call and webcast to discuss its third quarter results at 5:00 p.m. Eastern Time on Wednesday, October 22, 2008.  The telephone number for this interactive conference call is 212-896-6134, and the live webcast of the call can be accessed on the Company’s website at www.molinahealthcare.com, or at www.earnings.com.  An online replay will be available beginning approximately one hour following the conclusion of the call and webcast.

Molina Healthcare, Inc. is a multi-state managed care organization that arranges for the delivery of healthcare services to persons eligible for Medicaid, Medicare, and other government-sponsored programs for low-income families and individuals.  Molina Healthcare’s ten licensed health plan subsidiaries in California, Florida, Michigan, Missouri, Nevada, New Mexico, Ohio, Texas, Utah, and Washington currently serve approximately 1.2 million members.  More information about Molina Healthcare can be obtained at www.molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains “forward-looking statements” identified by words such as “will,” “should,” “believes,” “expects” or ”expectations,” “anticipates,” “plans,” “projects,” “estimates,” “intends,” and similar words and expressions.  In addition, any statements that explicitly or implicitly refer to earnings guidance, expectations, projections, or their underlying assumptions, or other characterizations of future events or circumstances, are forward-looking statements.  All of our forward-looking statements are based on our current expectations and assumptions which are subject to numerous known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially.  Such factors include, without limitation, risks related to: the successful management of our medical costs and the achievement of our projected medical care ratios in all health plans in 2008, including the reduction of the medical care ratio of our Ohio health plan; the achievement of projected growth in both Medicaid and Medicare enrollment; increased administrative costs in support of the Company’s efforts to expand its Medicare membership; risks related to our more limited experience with Ohio, Texas, Florida, and dual eligible members and attendant claims estimation difficulties; funding decreases in the Medicaid, Medicare, or SCHIP programs or the failure to fully fund the SCHIP program; the outcome of the pending litigation regarding cuts in California provider rates, including the extension of the court injunction regarding those rate cuts; the final implementation of the Rogers Amendment to the Federal Deficit Reduction Act regarding the rates to be paid to non-contracting hospitals by our California health plan; the securing of projected premium rate increases that are consistent with our expectations; our ability to accurately estimate incurred but not reported medical costs across all health plans; the successful renewal and continuation of the government contracts of all of our health plans; the realization of projected income from invested cash balances; the successful and cost-effective integration of our acquisitions; earnings seasonality consistent with our expectations; the availability of adequate financing to fund and/or capitalize our acquisitions and start-up activities; risks related to our auction rate securities; risks related to the ceded life and annuity insurance contracts of our indemnity insurance subsidiary, Molina Healthcare Insurance Company, Inc.; high profile qui tam matters and negative publicity regarding Medicaid managed care and Medicare Advantage; changes in funding under our contracts as a result of regulatory or programmatic adjustments and reforms; approval by state regulators of dividends and distributions by our subsidiaries; the imposition of fines or assessments by state or federal regulators for perceived operating deficiencies; membership eligibility processes and methodologies; unexpected changes in member utilization patterns, healthcare practices, or healthcare technologies; high dollar claims related to catastrophic illness; changes in federal or state laws or regulations or in their interpretation; failure to maintain effective and efficient information systems and claims processing technology; the favorable resolution of litigation or arbitration; competition; epidemics such as the avian flu; and other risks and uncertainties as detailed in our reports and filings with the Securities and Exchange Commission and available on its website at www.sec.gov.  All forward-looking statements in this release represent our judgment as of October 22, 2008.  We disclaim any obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

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MOH Reports Third Quarter 2008 Results

Page 7

October 22, 2008

MOLINA HEALTHCARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per-share data) (Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Revenue:
Premium revenue	$	791,554		$	628,402		$	2,282,345		$	1,791,764
Investment income		4,775			7,632			17,517			21,061
Total operating revenue		796,329			636,034			2,299,862			1,812,825
Expenses:
Medical care costs		669,355			525,902			1,936,531			1,519,244
General and administrative expenses		88,030			74,235			253,196			204,831
Depreciation and amortization		8,515			7,082			24,997			20,274
Impairment charge on purchased software		–			–			–			782
Total expenses		765,900			607,219			2,214,724			1,745,131
Operating income		30,429			28,815			85,138			67,694
Interest expense		(1,980	)		(530	)		(6,559	)		(2,380	)
Income before income taxes		28,449			28,285			78,579			65,314
Provision for income taxes		11,263			10,772			31,722			24,895
Net income	$	17,186		$	17,513		$	46,857		$	40,419
Net Income Per Share:
Basic	$	0.63		$	0.62		$	1.68		$	1.43
Diluted	$	0.62		$	0.62		$	1.67		$	1.43
Weighted average number of common shares and     potentially dilutive common shares outstanding		27,582			28,441			28,087			28,356
Operating Statistics:
Ratio of direct medical care costs to premium revenue		82.1	%		81.0	%		82.4	%		82.1	%
Ratio of administrative costs included in medical care costs to premium revenue		2.5			2.7			2.5			2.7
Medical care ratio (1)		84.6	%		83.7	%		84.9	%		84.8	%
General and administrative expense ratio (2) excluding premium taxes (core G&A ratio)		8.0	%		8.4	%		8.0	%		8.0	%
Premium taxes included in general and administrative expenses		3.1			3.3			3.0			3.3
Total general and administrative expense ratio		11.1	%		11.7	%		11.0	%		11.3	%
Depreciation and amortization expense ratio (2)		1.1	%		1.1	%		1.1	%		1.1	%
Effective tax rate		39.6	%		38.1	%		40.4	%		38.1	%

(1) Medical care ratio represents medical care costs as a percentage of premium revenue.

(2) Computed as a percentage of total revenue.

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MOH Reports Third Quarter 2008 Results

Page 8

October 22, 2008

MOLINA HEALTHCARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per-share data)
	Sept. 30, 2008			Dec. 31, 2007
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	382,436		$	459,064
Investments		163,676			242,855
Receivables		169,760			111,537
Deferred income taxes		14,172			8,616
Prepaid expenses and other current assets		14,402			12,521
Total current assets		744,446			834,593
Property and equipment, net		64,633			49,555
Goodwill and intangible assets, net		200,783			207,223
Investments		63,827			−
Restricted investments		36,510			29,019
Receivable for ceded life and annuity contracts		27,828			29,240
Other assets		19,846			21,675
Total assets	$	1,157,873		$	1,171,305
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	298,787		$	311,606
Accounts payable and accrued liabilities		70,918			69,266
Deferred revenue		19,153			40,104
Income taxes payable		7,755			5,946
Total current liabilities		396,613			426,922
Long-term debt		200,000			200,000
Deferred income taxes		6,598			10,136
Liability for ceded life and annuity contracts		27,828			29,240
Other long-term liabilities		18,740			14,529
Total liabilities		649,779			680,827
Stockholders’ equity:
Common stock, $0.001 par value; 80,000 shares authorized, outstanding 27,393 shares at September 30, 2008, and 28,444 shares at December 31, 2007		27			28
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares outstanding		−			−
Additional paid-in capital		163,648			185,808
Accumulated other comprehensive (loss) income		(4,537	)		272
Retained earnings		371,617			324,760
Treasury stock, at cost; 1,292 shares at September 30, 2008 and 1,201 shares at December 31, 2007		(22,661	)		(20,390	)
Total stockholders’ equity		508,094			490,478
Total liabilities and stockholders’ equity	$	1,157,873		$	1,171,305

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MOH Reports Third Quarter 2008 Results

Page 9

October 22, 2008

MOLINA HEALTHCARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Nine Months Ended September 30,
	2008			2007
Operating activities:
Net income	$	46,857		$	40,419
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,997			20,274
Amortization of deferred financing costs		1,219			646
Deferred income taxes		(6,135	)		(4,139	)
Stock-based compensation		5,769			5,238
Tax provision from employee stock compensation recorded as additional paid-in capital		(247	)		−
Changes in operating assets and liabilities:
Receivables		(58,223	)		(13,310	)
Prepaid expenses and other current assets		(1,881	)		(2,161	)
Medical claims and benefits payable		(12,819	)		18,674
Accounts payable and accrued liabilities		(666	)		14,283
Deferred revenue		(20,951	)		23,923
Income taxes		1,809			8,989
Net cash (used in) provided by operating activities		(20,271	)		112,836
Investing activities:
Purchases of property and equipment		(28,314	)		(16,514	)
Purchases of investments		(181,377	)		(85,252	)
Sales and maturities of investments		188,896			59,292
Increase in restricted cash		(7,491	)		(7,608	)
Cash paid in business purchase transaction		(1,000	)		−
Increase in other assets		(578	)		(2,921	)
Increase in other long-term liabilities		4,211			6,569
Net cash used in investing activities		(25,653	)		(46,434	)
Financing activities:
Treasury stock purchases		(32,237	)		−
Repayment of amounts borrowed under credit facility		−			(25,000	)
Payment of credit facility fees		−			(551	)
Excess tax benefits from employee stock compensation		43			554
Proceeds from exercise of stock options and employee stock plan purchases		1,490			2,539
Net cash used in financing activities		(30,704	)		(22,458	)
Net (decrease) increase in cash and cash equivalents		(76,628	)		43,944
Cash and cash equivalents at beginning of period		459,064			403,650
Cash and cash equivalents at end of period	$	382,436		$	447,594

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MOH Reports Third Quarter 2008 Results

Page 10

October 22, 2008

MOLINA HEALTHCARE, INC.

MEMBERSHIP DATA

(Unaudited)

Total Ending Membership by Health Plan:	Sept. 30, 2008		June 30, 2008		Sept. 30, 2007
California		313,000		310,000		288,000
Michigan		207,000		212,000		211,000
Missouri (1)		77,000		76,000		–
Nevada (2)		–		–		–
New Mexico		84,000		81,000		69,000
Ohio		179,000		173,000		138,000
Texas		29,000		29,000		30,000
Utah		55,000		57,000		50,000
Washington		295,000		296,000		284,000
Total		1,239,000		1,234,000		1,070,000

(1)   The Company’s Missouri health plan was acquired effective November 1, 2007.

(2)   Less than 1,000 members.

Total Ending Membership by State for the Medicare Advantage Plans:	Sept. 30, 2008		June 30, 2008		Sept. 30, 2007
California		1,560		1,452		875
Michigan		1,663		1,469		814
Nevada		627		680		178
New Mexico		249		149		–
Texas		458		430		–
Utah		2,162		2,056		1,802
Washington		967		911		446
Total		7,686		7,147		4,115

Total Ending Membership by State for the Aged, Blind or Disabled Population:	Sept. 30, 2008		June 30, 2008		Sept. 30, 2007
California		12,523		12,092		10,912
Michigan		30,396		30,896		31,488
New Mexico		6,464		6,716		6,844
Ohio		19,647		15,355		14,965
Texas		16,221		15,999		16,515
Utah		7,025		6,993		7,056
Washington		3,002		3,049		2,715
Total		95,278		91,100		90,495

	Quarter Ended						Nine Months Ended
Total Member Months (1) by Health Plan:	Sept. 30, 2008		June 30, 2008		Sept. 30, 2007		Sept. 30, 2008		Sept. 30, 2007
California		936,000		921,000		859,000		2,765,000		2,619,000
Michigan		627,000		639,000		640,000		1,904,000		1,967,000
Missouri (2)		228,000		227,000		–		678,000		–
Nevada		2,000		2,000		–		6,000		–
New Mexico		249,000		239,000		200,000		716,000		589,000
Ohio		530,000		522,000		416,000		1,465,000		1,155,000
Texas		87,000		85,000		90,000		257,000		247,000
Utah		161,000		164,000		142,000		482,000		438,000
Washington		884,000		879,000		854,000		2,622,000		2,570,000
Total		3,704,000		3,678,000		3,201,000		10,895,000		9,585,000

(1) Total member months is defined as the aggregate of each month’s ending membership for the period.

(2) The Company’s Missouri health plan was acquired effective November 1, 2007.

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MOH Reports Third Quarter 2008 Results

Page 11

October 22, 2008

MOLINA HEALTHCARE, INC.

SELECTED FINANCIAL DATA BY HEALTH PLAN

(Dollars in thousands except PMPM amounts)

(Unaudited)

	Three Months Ended September 30, 2008
	Premium Revenue				Medical Care Costs				Medical Care Ratio			Premium Tax Expense
	Total		PMPM		Total		PMPM
California	$	102,383	$	109.37	$	91,224	$	97.45		89.1	%	$	2,995
Michigan		127,535		203.39		101,596		162.03		79.7			6,412
Missouri		59,223		259.17		47,730		208.88		80.6			–
Nevada		2,196		1,053.04		2,499		1198.68		113.8			–
New Mexico		84,386		338.65		73,723		295.86		87.4			2,838
Ohio		162,553		306.74		148,660		280.52		91.5			8,851
Texas		30,986		357.01		24,730		284.93		79.8			510
Utah		41,860		260.24		36,012		223.88		86.0			–
Washington		178,639		202.19		136,609		154.62		76.5			2,959
Other (1)		1,793		–		6,572		–		–			(5	)
Consolidated	$	791,554	$	213.70	$	669,355	$	180.71		84.6	%	$	24,560

	Three Months Ended September 30, 2007
	Premium Revenue				Medical Care Costs				Medical Care Ratio			Premium Tax Expense
	Total		PMPM		Total		PMPM
California	$	93,154	$	108.39	$	76,443	$	88.95		82.1	%	$	2,382
Michigan		119,752		187.19		100,378		156.90		83.8			7,069
New Mexico		72,543		361.23		56,984		283.76		78.6			2,828
Ohio		125,452		302.02		111,387		268.16		88.8			5,645
Texas		24,997		279.39		19,041		212.82		76.2			450
Utah		27,513		193.52		26,534		186.63		96.4			–
Washington		164,367		192.43		130,216		152.45		79.2			2,748
Other (1)		624		–		4,919		–		–			7
Consolidated	$	628,402	$	196.29	$	525,902	$	164.27		83.7	%	$	21,129

	Nine Months Ended September 30, 2008
	Premium Revenue				Medical Care Costs				Medical Care Ratio			Premium Tax Expense
	Total		PMPM		Total		PMPM
California	$	308,139	$	111.44	$	269,328	$	97.40		87.4	%	$	9,195
Michigan		377,669		198.36		304,769		160.08		80.7			19,976
Missouri		165,509		244.00		139,462		205.60		84.3			–
Nevada		6,382		1,184.30		6,632		1,230.61		103.9			–
New Mexico		262,314		366.55		215,242		300.77		82.1			8,523
Ohio		434,272		296.40		395,013		269.60		91.0			21,127
Texas		80,159		311.84		62,229		242.08		77.6			1,446
Utah		114,591		237.69		100,935		209.37		88.1			–
Washington		531,457		202.71		426,962		162.85		80.3			8,797
Other (1)		1,853		–		15,959		–		–			19
Consolidated	$	2,282,345	$	209.49	$	1,936,531	$	177.75		84.9	%	$	69,083

	Nine Months Ended September 30, 2007
	Premium Revenue				Medical Care Costs				Medical Care Ratio			Premium Tax Expense
	Total		PMPM		Total		PMPM
California	$	280,796	$	107.22	$	228,952	$	87.42		81.5	%	$	8,614
Michigan		364,945		185.54		306,163		155.66		83.9			21,942
New Mexico		191,073		324.23		159,152		270.07		83.3			6,438
Ohio		311,853		270.08		282,164		244.37		90.5			14,033
Texas		64,406		260.88		55,163		223.44		85.6			1,140
Utah		88,473		201.87		81,535		186.04		92.2			–
Washington		489,254		190.36		392,201		152.60		80.2			8,117
Other (1)		964		–		13,914		–		–			21
Consolidated	$	1,791,764	$	186.93	$	1,519,244	$	158.50		84.8	%	$	60,305

(1) “Other” medical care costs represent primarily medically related administrative costs at the parent company.

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MOH Reports Third Quarter 2008 Results

Page 12

October 22, 2008

MOLINA HEALTHCARE, INC.

SELECTED FINANCIAL DATA BY HEALTH PLAN (Continued)

(Dollars in thousands except PMPM amounts)

(Unaudited)

The following tables provide the details of the Company’s medical care costs for the periods indicated:

	Three Months Ended September 30, 2008							Three Months Ended September 30, 2007
	Amount		PMPM		% of Total Medical Care Costs			Amount		PMPM		% of Total Medical Care Costs
Fee-for-service	$	439,699	$	118.71		65.7	%	$	339,841	$	106.15		64.6	%
Capitation		113,920		30.76		17.0			95,879		29.95		18.2
Pharmacy		88,414		23.86		13.2			67,844		21.19		12.9
Other		27,322		7.38		4.1			22,338		6.98		4.3
Total	$	669,355	$	180.71		100.0	%	$	525,902	$	164.27		100.0	%

	Nine Months Ended September 30, 2008							Nine Months Ended September 30, 2007
	Amount		PMPM		% of Total Medical Care Costs			Amount		PMPM		% of Total Medical Care Costs
Fee-for-service	$	1,262,327	$	115.87		65.2	%	$	984,375	$	102.70		64.8	%
Capitation		335,418		30.79		17.3			276,742		28.87		18.2
Pharmacy		263,372		24.17		13.6			194,354		20.28		12.8
Other		75,414		6.92		3.9			63,773		6.65		4.2
Total	$	1,936,531	$	177.75		100.0	%	$	1,519,244	$	158.50		100.0	%

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MOH Reports Third Quarter 2008 Results

Page 13

October 22, 2008

MOLINA HEALTHCARE, INC.

CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE

(Dollars in thousands)

(Unaudited)

The Company’s claims liability includes an allowance for adverse claims development based on historical experience and other factors including, but not limited to, variation in claims payment patterns, changes in utilization and cost trends, known outbreaks of disease, and large claims.  The Company’s reserving methodology is consistently applied across all periods presented.  The negative amounts displayed for “Components of medical care costs related to: Prior years” represent the amount by which our original estimate of claims and benefits payable at the beginning of the period exceeded the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported.  The benefit of this prior period development may be offset by the addition of a reserve for adverse claims development when estimating the liability at the end of the period (captured in “Components of medical care costs related to: Current year”).  The following table shows the components of the change in medical claims and benefits payable for the nine months ended September 30, 2008 and 2007 (dollar amounts in thousands):

	Nine Months Ended September 30,
	2008			2007
Balances at beginning of period	$	311,606		$	290,048
Components of medical care costs related to:
Current year		1,996,385			1,568,949
Prior years		(59,854	)		(49,705	)
Total medical care costs		1,936,531			1,519,244
Payments for medical care costs related to:
Current year		1,721,191			1,278,321
Prior years		228,159			222,249
Total paid		1,949,350			1,500,570
Balances at end of period	$	298,787		$	308,722
Benefit from prior period as a percentage of:
Balance at beginning of period		19.2	%		17.1	%
Premium revenue		2.6	%		2.8	%
Total medical care costs		3.1	%		3.3	%
Days in claims payable		44			54
Number of members at end of period		1,239,000			1,070,000
Number of claims in inventory at end of period		131,100			179,200
Billed charges of claims in inventory at end of period	$	147,100		$	231,800
Claims in inventory per member at end of period		0.11			0.17
Number of claims received during the period		8,234,500			6,959,000
Billed charges of claims received during the period	$	5,754,700		$	4,477,500

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