8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): 01/18/2007

MOLINA HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 001-31719

DE	134204626
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

One Golden Shore Drive

Long Beach, CA 90802-4202

(Address of principal executive offices, including zip code)

562 435 3666

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Information to be included in the report

Item 7.01. Regulation FD Disclosure

On January 18, 2007, Molina Healthcare, Inc. issued a press release announcing its guidance for fiscal year 2007. The full text of the Company’s press release is attached as Exhibit 99.1 to this report. The information contained in the websites cited in the press release is not part of this report.

In addition, on January 18, 2007, in connection with the Company’s presentation given at its Investor Day Conference held at Le Parker Meridien Hotel in New York City, the Company’s displayed and webcast certain slides. A copy of the Company’s complete slide presentation is included as Exhibit 99.2 to this report. An audio replay of the live broadcast of the Company’s Investor Day presentation will be available for 30 days at the Company’s website, www.molinahealthcare.com.

The information in this Form 8-K and Exhibits 99.1 and 99.2 attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press release of Molina Healthcare, Inc. issued January 18, 2007 reporting guidance for fiscal year 2007.

99.2 Slide presentation given at Company’s Investor Day Conference on January 18, 2007.

Signature(s)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MOLINA HEALTHCARE, INC.
Date: January 18, 2007	By:	/s/ Mark L. Andrews
		Mark L. Andrews
		Chief Legal Officer, Corporate Secretary

EX-99.1

Exhibit 99.1

News Release

Contact:

Juan José Orellana

Investor Relations

Molina Healthcare, Inc.

562-435-3666, ext. 111143

MOLINA HEALTHCARE ANNOUNCES 2007 GUIDANCE

LONG BEACH, California (January 18, 2007) — Molina Healthcare, Inc. (NYSE: MOH) today announced its guidance for 2007. For its 2007 fiscal year, the Company expects:

Earnings per diluted share of approximately	$1.75 - $1.90
Net income of approximately	$50.5 - $54.9 million
Premium revenue of approximately	$2.6 billion
Medical care costs as a percentage of premium revenue of approximately	86.2%
Core G&A (administrative expenses excluding premium taxes) as a percentage of total revenue of approximately	7.0%
Administrative expenses (including premium taxes) as a percentage of total revenue of approximately	10.3%

The Company’s claims reserving methodology remains consistently applied. Accordingly, the Company’s guidance does not anticipate any net impact from out-of-period claims development for the 2007 fiscal year.

Guidance for 2007 assumes an effective tax rate of 38.4%, and weighted average diluted shares outstanding of 28.9 million.

The Company will report its results for the fourth quarter and year ended December 31, 2006, after the market closes on Tuesday, February 13, 2007. The Company’s management will host a conference call and webcast to discuss its results at 5:00 p.m. Eastern time on the same day. The number to call for this interactive conference call is 212-748-2799, and the webcast can be accessed on the Company’s website at www.molinahealthcare.com, or at www.earnings.com. A 30-day online replay will be available approximately one hour following the conclusion of the webcast.

Molina Healthcare, Inc. is a multi-state managed care organization that arranges for the delivery of healthcare services to persons eligible for Medicaid and other government-sponsored programs for low-income families and individuals. Molina Healthcare, Inc. currently operates health plans in California, Michigan, New Mexico, Ohio, Texas, Utah, and Washington. More information about Molina Healthcare, Inc. can be obtained at www.molinahealthcare.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains numerous “forward-looking statements”. All of the Company’s forward-looking statements are based on current expectations and assumptions that 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 achievement of a decrease in the medical care ratio of our start-up health plans in Ohio and Texas; the achievement of projected savings from a decrease in the medical care ratio of our California health plan; an increase in enrollment in our Ohio and Texas health plans and in our dually eligible population consistent with our expectations; the Company’s ability to reduce administrative costs in the event enrollment or revenue is lower than expected; higher than expected costs associated with the addition of new members in Ohio or Texas or dually eligible members and risks related to the Company’s lack of experience with such members; the Company’s ability to accurately estimate incurred but not reported medical costs; the securing of premium rate increases consistent with our expectations; costs associated with the non-renewal of the Medicaid contract of the Company’s Indiana health plan; the successful renewal and continuation of the government contracts of the Company’s health plans; the availability of adequate financing to fund and/or capitalize the Company’s acquisitions and start-up activities; 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; potential reductions in funding for Medicaid and other government-sponsored healthcare programs; and other risks and uncertainties as detailed in the Company’s 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 the Company’s judgment as of January 18, 2007. The Company disclaims any obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

-END-

EX-99.2

2007 Investor Day

January 18, 2007

New York, NY

Molina Healthcare, Inc.

Exhibit 99.2

2

Cautionary Statement

“Safe Harbor”

Statement under the Private Securities Litigation Reform

Act of 1995:

This presentation contains "forward-looking statements". All

of the Company's forward-looking statements are subject to numerous

known and unknown risks, uncertainties, and other factors that could

cause

our

actual

results

to

differ

materially.

Anyone

viewing

or

listening

to this presentation is expected to have read Molina’s Form 10-K for the

year ended December 31, 2005, and its Forms 10-Q for the quarters ended

March 31, 2006, June 30, 2006, and September 30, 2006. All forward-

looking statements should be considered in connection with the risk

factors and cautionary statements contained in our reports and filings

with the Securities and Exchange Commission. Unless otherwise

indicated, all forward-looking statements represent our judgment as of

January 18, 2007, and we disclaim any obligation to update such

statements.

Important Note:

Unless otherwise indicated, statements regarding the

Company’s results as of December 31, 2006 are annualized based on the

Company’s results as of September 30, 2006, and do not represent actual

fourth-quarter or 2006 year-end results.

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

J. Mario Molina, MD

President & Chief Executive Officer

Molina Healthcare, Inc.

4

Competitive Advantage

Operational

Efficiency

Membership

Growth

Medical

Management

5

About Us

Our goal is to be the industry leader with a reputation for

excellence and sustainable financial performance.

Revenues $2.0 Billion*

Over one million members

1,950 employees 

NCQA Accredited

1

Billion

in

Market

Cap

28

million

shares

outstanding

Founded over 25 years ago

*Annualized figure based on September 30, 2006 results.

~

~

~

~

6

Business Snapshot

405

489

788

893

564

1,020

298

'00

'01

'02

'03

'04

'05

'06

Washington

281,000

California

300,000

New Mexico

64,000

Utah

52,000

Michigan

228,000

Ohio

76,000

Texas

19,000

Membership growth

Markets and members served

TANF

89%

ABD

5%

SCHIP

6%

MASNP

<1%

Our members

1

1.

Estimated membership December 31, 2006. Excludes discontinued operation in Indiana.

1

7

Sizeable Market with Continued Opportunities for Growth

TANF

75%

Aged

11%

Disabled

14%

Medicaid

Eligibles:

45.6 M

1.

Urban Institute estimates based on data from MSIS, Kaiser Commission on Medicaid and the Uninsured 2005, CMS, & Company Estimates

Managed care is an alternative to state’s rising Medicaid costs

Migration of new populations to managed care

Growing diversity and complexity of social and healthcare needs

Medicaid

Expenditures:

$300B

1

TANF

30%

Aged

28%

Disabled

42%

1

~

~

~

~

8

Membership Growth: Managed Care Expansions

Time

Choice

Default

Steady State

Re-Certifications

Expansion Stages

9

Membership Growth: Segmentation

LTC

Duals

ABD

TANF

= patients in need of more complex care; for illustrative purposes only not an actual percentage

number of potential enrollees

25+ years of Medicaid experience

& provider roots

NCQA accredited in 5 states

Management team

Administrative efficiency

Cultural & linguistic

services

Sizeable market with continued opportunities for growth

Medicaid  Expenditures:

$300B

Competencies

Other Opportunities

Staff  model offices

Medicare

Long term care

Molina

Healthcare

Insurance

TANF

30%

Aged

28%

Disabled

42%

~

~

Growth & Focus

2003

2004

2005

2006

$2.0

FY 2002

Revenues

(billions)

maintain prior

years initiatives

+

case & disease

mgmt

administrative

leverage

margin

expansion

differentiation

diversification

medical mgmt

-

UM

-

unit costs

Start-ups

new populations

-

ABD, Duals

TANF platform

consolidation

acquisitions

$1.0

Strategic Positioning

Investment in  Quality

Standard

Superior

Low

High

Commercial HMOs

Medicaid HMOs

©

2007 Molina Healthcare, Inc.

Business Strategy

Network & Contract

Mgmt.

Case & Health

Mgmt.

Utilization

Mgmt.

Claims Payout

Mgmt.

Standardized Policies

& Procedures

Leveraging Technology

Management

Depth

New Populations

Acquisitions

Organic Growth

Appropriate

Quality Care

Cost

Advantage

Long-Term Profitable Growth

1

Membership

Growth

2

3

Operational

Efficiency

Medical

Management

©

2007 Molina Healthcare, Inc.

Top Line

Growth

Scale Economies

Stakeholders

Corporate Culture

Recognized for Quality, Innovation, and Success

All of Molina’s eligible health plans

named among the nation’s Top 50

Medicaid health plans

by US News &

World Report

Recognized  for innovation in multi-

cultural

healthcare

by

The

Robert

Wood

Johnson

Foundation, NCQA and CHCS

A Fortune 1000 Company

Ranked among Forbes 400 Best Big

Company’s

in America

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Terry P. Bayer

Chief Operating Officer

Molina Healthcare, Inc.

Health Plan

Executive Panel

Health Plan Executive Panel

Stephen T. O’Dell

President

Molina Healthcare of California

Ann O. Wehr

President

Molina Healthcare of New Mexico

Jesse L. Thomas

President

Molina Healthcare of Ohio

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Stephen T. O’Dell

President

Molina Healthcare of California

California Update

About Molina Healthcare of California

254,000

253,000

302,000

321,000

253,000

'02

'03

'04

'05

'06

Membership history

1

1.

Estimated membership December 31, 2006

First company health plan

Serves 6 counties

Multiple government contracts

Acquired Medicaid business from Sharp and

Universal Care in San Diego County in 2005

Staff model presence

Sacramento

Sacramento

San Diego

San Diego

Los Angeles

Los Angeles

California Topics

Short Term Profitability Priorities

2007 Initiatives

Prospects for Coverage Expansion in California

California Priorities

Decrease Medical Care Costs with focus on San Diego

Increase Revenue by negotiating rate increases

Membership Stabilization

Case Study: Reducing Costs in San Diego

Savings

Contract

Termination

$0.8M

Medical

Management

$0.3M

Contract

Re-Negotiation

$1.7M

$2.8M

Annually

$2.8M

Annually

~

~

Medi-Cal Revenue PMPM

$98.07

$94.68

$91.21

$91.23

$91.95

$0

$50

$100

$150

2002

2003

2004

2005

YTD 3Q06

Revenue PMPM

Quality Improvement Fee (QIF)

Effective  July 2005

1

1.

Excludes

San

Diego

operations

acquired

June

2005;

From

Molina

Healthcare

of

California

PMPM

2007 Initiatives

Profitable growth in membership

SCHIP

Staff Model Offices

Medicare

Provider network strategic partnerships

Achieve operational competence leading to excellence

Establish position as best plan in the counties we serve

Prospects for Coverage Expansion

Governor Schwarzenegger’s coverage expansion proposal

Increasing Medi-Cal rates significantly

Requiring individual coverage

Guaranteeing coverage

Encouraging personal responsibility for health and wellness

Providing low-income individuals affordable coverage

Improving insurer and hospital efficiency

Enhancing tax breaks for purchasing coverage

Contributing to the cost of coverage

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Ann O. Wehr, MD

President

Molina Healthcare of New Mexico

New Mexico:

Acquisition & Integration

About Molina Healthcare of New Mexico

62,249

65,381

64,000

63,262

60,401

'02

'03

'04

'05

'06

Membership history

Presbyterian

50%

Lovelace

26%

Molina

24%

Market Share

1

1.

Estimated membership as of December 31, 2006

Santa Fe

Santa Fe

Albuquerque

Albuquerque

Las Cruces

Las Cruces

Health plan acquired by Molina in 2004

3:1 Federal to State match

Statewide service area including ABD

11% of membership are ABD members

Refocusing on Medicaid

Change of contract structure

Commercial

Medicaid

Network Alignment

Administrative Resource Realignment

Serving Elderly & Disabled Medicaid Members

\

TANF

89%

ABD

11%

ABD

11%

Caring for the ABD population

since inception of Medicaid

Managed Care (Salud!) in NM in

July 1, 1997

LTC, Native American, and Duals

are only populations excluded

from NM managed care.

Care of these members

is integrated into that of

entire membership

All Diagnosis included in

managed care (except

behavioral health carve out

effective July 1, 2005)

Molina Healthcare of New Mexico

Membership Profile

Appropriate Management of Medicaid ABD Population

Utilization

Management

Utilization

Management

Medical

Case

Management

Medical

Case

Management

Care

Coordination

Care

Coordination

Disease

Management

Disease

Management

Provider

Contracting

Provider

Contracting

Staff

Selection

Staff

Selection

1.

Identification of  High Risk Members

2.

Managing their conditions

TANF

EPISODIC CARE

TANF Common Conditions*

Pregnancy

Perinatal

complications

Respiratory Illness

Injury & poisoning

ABD

CHRONIC CARE

ABD Common

Conditions

*

Circulatory System Diseases

Respiratory System Diseases

Digestive System Diseases

Neoplasm

Injury

&

poisoning

* Based on New Mexico FFS Claims for 12 months ended 9/2006

How you do identify High Risk Members?

Identify members through a variety of methodologies:

Prior authorization request,

concurrent review, specific drug

utilization, etc

Claims reports

Risk Stratification Software

Referrals from employees, providers,

and vendors

Enrollment surveys

Welcome calls

Management

of TANF

vs. ABD

Specialty Contracting

Behavioral Health Contracting

LTC Co-ordinations

Hospital Contracting

Home Health

I.V. Therapy 

Durable Medical Equipment (DME)

PCP contracting, Pediatric

contracting

Episodic, Acute Hospital

Admission

Pregnancy related conditions

and providers (OB-GYNs)

Provider

Contracting

Cardiac

Diabetes

Pregnancy, Motherhood

Matters

Asthma, Breathe with Ease

Disease

Management

Aggressive Concurrent Review

Level of Care Management

Behavioral Health Conditions

Episodic, Acute, Pregnancy-

related conditions

Utilization

Management

Chronic Complex Conditions

Behavioral Health Coordination

Pharmacy

Emergency Room

Episodic, Acute, Pregnancy-

related condition

Care 

Coordination

ABD

TANF

Medical

Management

Levers

Summary

Caring for the ABD population

requires a broader range of

staff skills

than the traditional

Medicaid population

Programmatic differences will

have an impact: Benefits vary

by state

Successful coordination of care

results in positive financial

impact

for the company and

more efficient use of healthcare

resources

LTC

Duals

ABD

TANF

Number of potential enrollees

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Jesse L. Thomas

President

Molina Healthcare of Ohio

Story of a Start-up

About Molina Healthcare of Ohio

27,000

30,000

76,000

33,000

250

4Q05

1Q06

2Q06

3Q06

4Q06

Membership history

1

1.

Estimated membership as of December  31, 2006

Began discussions with the State in 2004

Selected to serve 4 regions for TANF & ABD population

Began operations in December 2005

\

TANF

90%

ABD

10%

ABD

10%

Eligibles

in four (awarded)

regions:

682K

Cincinnati

Cincinnati

Columbus

Columbus

Dayton

Dayton

~

~

Expansion Timeline

2004

2005

2006

2007

Initial county-specific

Covered Families and

Children (CFC) Request

for application (RFA)

submitted

March

Entered ODJFS Readiness

Review Phase

June

Opened permanent office

November

Provider Agreement effective for      

Montgomery and Clark counties

December

Provider Agreement effective

for Franklin County

February

Submitted application for Regional CFC RFA

August

Provider Agreement effective for West 

Central and Southwest  CFC regions

Submitted response to 

Regional Aged, Blind, and Disabled (ABD) RFA

September

Provider Agreement effective for Southeast region

October

Received Approval for ABD regional expansion

December

Provider Agreement effective  for Central

CFC region

January

Provider Agreement effective for

Southwest ABD region

Vulnerable Without Care Management

Growing case loads

Uncontrolled spending

Geographically   

dispersed population

Poor access to care

Pent up demand for

services

Over utilization of

Emergency Room (ER)

Improved Health and Quality of Life with Care Management

Quality of care

Improved access to care

Cost savings

Case management

Disease management

Pharmacy management

Medical home

Quality of care

Transition

of care

Understanding

my condition

Psycho-social

Fostering

patient

family/provider

relationships

Lessons Learned from a Start-Up

Transition

Contracting challenges

Expansion time frame

Lack of claims experience

Lessons Learned

Molina

Transition to Molina

from former company

Culture

Difficult to enter market;

membership now

supports re-contracting

Membership permitted

re-contracting effort

Provider Contracting

100% Medicaid focus

Exit of commercial

business

Product Focus

Transition from

development to

operations

Transition from multiple

products to Medicaid

only

Management

Ohio Start-Up

NM Acquisition

Lessons Learned

Executive Panel 1 Q&A

Break

Next: Guest Speaker

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Terry P. Bayer

Chief Operating Officer

Molina Healthcare, Inc.

Increasing Administrative

Efficiency

“You can manage

your medical

costs, but you can control

your

administrative costs.”

-

C. David Molina, MD, MPH

Membership & Infrastructure Growth

405

489

788

893

564

1,020

298

'00

'01

'02

'03

'04

'05

'06

Membership

1.

Estimated membership December  31, 2006. Excludes discontinued Indiana operation.

1

Provider Contracting Efficiency

Why?

Unit cost reduction

Network expansion

How?

Contract templates

Language library

Contract management tracking software

Contract modeling software

Negotiation training

Reducing the “Hassle”

Factor

Why?

Strengthening relationships with providers & members

Reducing cost in provider offices and at Molina

How?

Electronic Access via ePortal

Eligibility inquiry

Claims submission and status inquiry

Authorization submission and status inquiry

Member ID cards

ePortal: Providers

Total Provider Enrollment

1,736

2,951

3,965

4,146

5,745

6,952

7,850

8,394

3,657

1,020

619

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Provider Payment Efficiency

Why?

Reduce labor cost & increase accuracy

How?

Reduce paper claims submission

Increasing EDI

Reducing vendor costs to scan paper

Contract standardization

System configuration

Pre-adjudication logic

Provider match

Member match

Auto-Adjudication of Claims

Operational Efficiency

Administrative Expense Leverage

©

2007 Molina Healthcare, Inc.

Standard Policies &

Procedures

Core Systems

Standardization

Infrastructure

Optimization

Intelligent

EDI Gateway

Encounter Engine

VoIP

Expansion

Customer Relations

Management (CRM)

Self Service

Portal for

Providers

and Members

Standardized

contract templates

Standardized

configuration models

Centralization of

Key Functions

Consistent

Processing of input

Automated claims

workflow

Contract modeling

Contract library

Document

Composition

Leveraging Technology

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Enabling Administrative

Efficiency

Amir Desai

Vice President, Core Systems

Molina Healthcare, Inc.

IT Focus

Adopting Next

Generation Technology

Extending our

Application

Footprint

Enhancing

Organizational

Efficiency

Services oriented technology

Virtualization

Enterprise Capabilities

-

Workflow

-

Document composition

-

Customer Relationship Management

-

Encounters engine

-

Self-Service portal

-

Intelligent EDI

Architectural governance

Portfolio management

ITIL®

Next Generation of Technology

Services Oriented Architecture (SOA)

-

Creating abstracted logic that can be leveraged

multiple times across the organization to speed

development and reduce costs.

-

Ensuring scalability to keep up with growth.

Virtualization

-

Deploying virtualization technology to decrease

hardware costs.

Claims

Medical Management

Enterprise

Utilities

Document

Generation

Intelligent

EDI

Workflow

Customer

Relationship

Management

Encounter

Engine

Reusable technology assets to be

leveraged across Molina health plans

Reusable technology assets to be

leveraged across Molina health plans

Extending Our Application Footprint

ePortal

Risk-adjustment

Analytics

Community Outreach

Medicare Sales

New features to

promote Self-Service

Medical Management

Claims

Member Services

Pre-Adjudication Logic

Trading Partner Management

Enhancing IT Organization Efficiency

Architectural Governance

Portfolio Management

Adoption of IT Infrastructure Library (ITIL®)

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

Joseph W. White

Chief Accounting Officer

Molina Healthcare, Inc.

Leveraging Administrative

Efficiency

Continued Investment in our Infrastructure

Growth related investments as well as strengthening our existing

operational efficiency

1. Core Admin as a percentage of revenue is admin expenses excluding premium taxes as a percentage of total revenue

6.6%

5.9%

7.2%

8.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2003

2004

2005

3Q06YTD

$0

$4

$8

$12

$16

Core Admin-

%of Total Revenue

Core Admin PM PM

Administrative Expense Leverage

Long-Ter

m

Profitable

Growth

©

2007 Molina Healthcare, Inc.

Lower Capex

Lower depreciation

Reduced

software fees

Reduced

integration costs

Reduced

telecom  costs

Reduced EDI

transaction costs

Reduced staffing

costs/more

consistent

processing

Reduced IT staff

intervention % costs

Flexible

deployment

of staff

Easier system

contract

configuration

Reduced training

costs

More accurate &

timely initial

processing

Reduced

re-work costs

Leveraging Technology

Standardized Policies and

Procedures

Increased member

& provider

satisfaction

Executive Panel 2: Q&A

Break: Lunch

Next: Financial Review

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

John C. Molina

Chief Financial Officer

Molina Healthcare, Inc.

Financial Review

Molina Healthcare, Inc.

2007 Investor Day

January 18, 2007

New York, NY

John C. Molina

Chief Financial Officer

Molina Healthcare, Inc.

Outlook for 2007

2

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This presentation contains numerous "forward-looking statements" regarding the Company’s 2007

earnings guidance. Any statements that refer to guidance, projections, expectations, strategies,

challenges, and opportunities, or their underlying assumptions, or other characterizations of future

events or circumstances, are forward-looking statements. All of the Company's forward-looking

statements are subject to numerous known and unknown risks, uncertainties, and other factors that

could cause our actual results to differ materially. Such factors include, without limitation, risks

related to: the achievement of a decrease in the medical care ratio of our start-up health plans in

Ohio and Texas; the achievement of projected savings from a decrease in the medical care ratio of

our California health plan; an increase in enrollment in our Ohio and Texas health plans and in our

dually

eligible

population

consistent

with

our

expectations;

the

Company's

ability

to

reduce

administrative

costs

in

the

event

enrollment

or

revenue

is

lower

than

expected;

higher

than

expected costs associated with the addition of new member in Ohio or Texas or dually eligible

members and risks related to the Company’s lack of experience with such members; the Company's

ability to accurately estimate incurred but not reported medical

costs; the securing of premium rate

increases consistent with our expectations; costs associated with the non-renewal of the Medicaid

contract of the Company's Indiana health plan; the successful renewal and continuation of the

government contracts of the Company's health plans; the availability of adequate financing to fund

and/or capitalize the Company's acquisitions and start-up activities; membership eligibility

processes and methodologies; unexpected changes in member utilization patterns, healthcare

practices, or healthcare technologies; changes in federal or state laws or regulations or in their

interpretation; failure to maintain effective and efficient information systems and claims processing

technology;

and

other

risks

and

uncertainties

as

detailed

in

the

Company's

reports

and

filings

with

the Securities and Exchange Commission and available on its website at www.sec.gov. All forward-

looking statements in this presentation represent the Company's judgment as of January 18, 2007.

The Company disclaims any obligation to update any forward-looking statement to conform the

statement to actual results or changes in the Company's expectations.

3

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

$2.6B

86.2%

10.3%

7.0%

$50.5M -

$54.9M

$1.75 -

$1.90

28.9M

38.4%

Revenue

Medical Care Ratio

G&A Ratio

Core G&A 

Net Income

Diluted EPS

Diluted Shares Outstanding

Effective Tax Rate

2007 Earnings Guidance

$470K pre tax equals $0.01 diluted EPS

~

~

~

~

~

~

~

~

~

~

~

~

~

~

~

~

4

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

What will change in 2007?

•Higher invested balances off setting 

lower interest rates

$25.0M

Investment Income

Interest Expense

Core SG&A

Medical Care Ratio

Revenue

•Borrowing to fund capital infusions

into OH, IN, TX and CA

$7.0M

•Higher premium revenue

•Core SG&A flat PMPM

7.0%

•OH and TX expansions

•Dual eligible expansion

•Pent up demand in OH and TX

•CA Improvement

86.2%

•Full Year of CAPE

•OH and TX expansions

•Dual eligible expansion

•Loss of IN contract   

$2.6B

Drivers

2007

Guidance

5

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

How will we grow in 2007?

Membership

(in thousands)

Membership growth will come from Ohio, Texas and Dual Eligibles

564K

1,145K

1,075K

788K

893K

1.

“E”

represents estimated

2.

Legacy health plans include California, Indiana, Michigan, New Mexico, Utah and Washington. Indiana operations terminated 12/31/2006.

3.

“Start-Ups”

health plans include Ohio and Texas.

1

-

200

400

600

800

1,000

1,200

2003

2004

2005

2006 E

2007 E

Legacy Health Plans

Start-Ups

Dual Eligibles

2

3

6

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

How will we grow in 2007?

Premium Revenue

(dollars in  millions)

Premium revenue growth will come from Ohio, Texas and Dual Eligibles

1

$1,640M

$2,000M

$2,600M

$1,171M

$792M

1.

“E”

represents estimated

2.

Legacy health plans include California, Indiana, Michigan, New Mexico, Utah and Washington. Indiana operations terminated 12/31/2006.

3.

“Start-Ups”

health plans include Ohio and Texas.

$0

$500

$1000

$1500

$2000

$2500

$3000

2003

2004

2005

2006 E

2007 E

Legacy Health Plans

Start-Ups

Dual Eligibles

3

2

7

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

93.5%

90.4%

70%

80%

90%

100%

3Q06 YTD

2007 E

83.1%

84.1%

86.9%

84.4%

86.2%

75%

80%

85%

90%

2003

2004

2005

3Q06 YTD

2007 E

Medical Care Ratio

Our guidance assumes a decrease in our Start-Ups’

medical care ratios.

1.

“Start-Ups”

include operations in Ohio and Texas.

2.

“E”

represents estimated

Consolidated Medical Care Ratio

Start-Up¹

Medical Care Ratio

2

8

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

Continued Investment in our Infrastructure

Investing in growth and strengthening our existing operational efficiency

Core

Admin

is

administrative

expenses

excluding

premium

taxes.

“E”

represents

estimated.

7.0%

6.6%

5.9%

7.2%

8.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2003

2004

2005

3Q06YTD

2007 E

$0

$4

$8

$12

$16

Core Admin -

%of Total Revenue

Core Admin PM PM

9

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

Selected Health Plan Outlook

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

300K

300K

321K

253K

0

100

200

300

400

'04

'05

'06 E

'07 E

84.2%

88.0%

86.2%

83.7%

50%

69%

88%

107%

'04

'05

3Q06

YTD

'07 E

California excluding Dual Eligibles

Membership

(in thousands)

Opportunities:

In 2007 a one percent change in the MCR changes

medical costs by $3.6M (

$0.07 -$0.08 EPS).

Guidance includes only a 1.75% rate increase.

Utilization is well managed.

Re-contracting efforts have shown success in the

second half of 2006.

Excess clinic capacity can reduce capitation expense.

Challenges:

Termination of certain contracts may decrease enrollment.

Guidance assumes savings of $7.4M (

$0.16 EPS) as the

MCR drops  from anticipated 2006 levels to approximately

84.2%.

Most savings will need to come from contracting.

Projected decrease in MCR may be difficult to achieve

with limited premium increases.

Medical Care Ratio

~

~

~

~

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

93.2%

90.6%

30%

50%

70%

90%

3Q06 YTD

'07 E

160K

76K

0

50

100

150

200

'06 E

'07 E

Ohio

Membership

(in thousands)

Opportunities:

Large TANF and ABD populations.

Ohio PMPM revenue is higher than Company average.

TANF rate increase for 2007 is minimal (1.0%); but  ABD members will increase blended

PMPM by 35%.

Management of ABD population may yield savings.

In

2007

a

one

percent

change

in

the

MCR

changes

medical

costs

by

$5.2M

(

$0.11

EPS)

Medical Care Ratio

~

~

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

93.2%

90.6%

30%

50%

70%

90%

3Q06 YTD

'07 E

160K

76K

0

50

100

150

200

'06 E

'07 E

Ohio

Membership

(in thousands)

Medical Care Ratio

Challenges:

Guidance assumes 31% TANF penetration.

Each 1% of TANF penetration equates to approximately $16.0M of revenue on an

annualized basis.

Guidance projects improved medical costs due to re-contracting and lower costs in new

regions.

Guidance assumes savings of $3.5M (

$0.07-$0.08 EPS) as the MCR drops from

anticipated 2006 levels to approximately 90.6%.

Guidance assumes a decreasing MCR through the year. Delays in re-contracting and

membership rollout may delay improvements in the MCR.

~

~

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

86.6%

85.1%

50%

60%

70%

80%

90%

3Q06 YTD

'07 E

2K

11K

0

2

4

6

8

10

12

'06 E

'07 E

Dual Eligibles

Membership

(in thousands)

Opportunities:

High per member per month revenue.

Each 1,000 additional members add $14M in annualized

premium

revenue

(Revenue

PMPM

is

$1,100

-

$1,200).

Large populations in CA and MI.

Providers have extensive managed care experience.

Medical costs in UT have been better than expected.

In 2007 a one percent change in the MCR changes

medical costs by $1.0M. (

$0.02 EPS)

Challenges:

Members are acquired one at a time.

High member acquisition cost.

Limited Company experience with product.

Limited cost data to set rate bids and claims reserves.

FY 2007 costs will depend heavily on two new

markets (CA and MI).

Medical Care Ratio

~

~

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

31K

19K

0

10

20

30

40

'06 E

'07 E

Texas

Membership

(in thousands)

89.0%

50%

80%

110%

140%

'07E

Medical Care Ratio

Opportunities:

LTC benefit for STAR Plus.

TX PMPM revenue is higher than Company average.

Guidance includes no TANF or SCHIP rates increase.

Challenges:

Guidance assumes improved medical care ratio.

In 2007 a one percent change in the MCR is expected

to change medical costs by $0.8M (

$0.02 EPS).

There may be delays in the roll out of membership.

~

~

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

Investing in Growth

1Q06

2Q06

3Q06

4Q06 E

1Q07 E

2Q07 E

3Q07 E

4Q07 E

Ohio

Indiana

Texas

“Start-Up”

Net Worth Requirement

Start-Ups require statutory and contractual capital commitments

1.

For

the

purpose

of

this

slide

Start-Up

health

plans

include

Ohio,

Texas

and

Indiana.

2.

“E”

represents estimated.

$7.5M

$56.4M

$25.0M

$51.9M

$7.5M

$38.1M

$68.3M

$7.5M

By December 31, 2007,  we project we will have drawn approximately $75M on our

credit

facility,

principally

to

fund

the

capital

requirements

of

our

California

and

Start-Up health plans. Increased interest expense is expected to exceed increased

interest income.

1

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

Risks and Opportunities

Reducing Interest

Costs

Start-Up Capital

Requirements

Utah Savings Sharing

SNP Growth

Admin Leverage

California Medical Costs

Start-Up Medical Costs

including SNP

Start-Up Enrollment

New Mexico

Contract Amendment

Start-Up Medical Costs

Opportunities

Risks

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

EPS Build Out: Illustrative Example Based on Guidance Mid-Point

$1.21

$0.40

($0.11)

$1.50

$0.21

$0.18

$0.12

$0.09

($0.09)

($0.19)

$1.82

1

1

1.

IMPORTANT DISCLAIMER; these figure represents our annualized earnings per share (based 9/30/06 results) for  illustrative

purposes only and are NOT to be construed or interpreted as our actual fourth quarter or 2006 year end results.

(All figures and estimates are approximate)

Earnings per diluted share for nine months ended

September 30, 2006

Additional Increment required to annualize net income for nine

months ended September 30, 2006

Exclude 2006 positive prior period development

Starting Point

Expected Incremental changes in 2007:

Ohio Enrollment & Lower Medical Costs

Lower Medical Cost in California

Texas Enrollment & Lower Medical Costs

Termination of Indiana Contract

Additional Corporate Interest Expense, Net of Investment Income

Net Changes in Other Plans

2007 Guidance Mid-Point Diluted EPS

See

cautionary language regarding the Company’s guidance and other forward-looking statements.

Q&A