Ladies and gentlemen, thank you for standing by. Welcome to the Molina Healthcare Fourth Quarter and Year-End 2016 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded Wednesday, February 15, 2017. I will now turn the conference over to Juan José Orellana, SVP of Investors Relations. Please go ahead, sir. Juan José Orellana - Molina Healthcare, Inc.: Thank you, George. Hello, everyone, and thank you for joining us. The purpose of this call is to discuss Molina Healthcare's financial results for the fourth quarter and fiscal year ended December 31, 2016. The company issued its earnings release reporting these results today after the market closed, and this release is now posted for viewing on our company website. On the call with me today are Dr. Mario Molina, our CEO; John Molina, our CFO; Terry Bayer, our COO; and Joseph White, our Chief Accounting Officer. After the completion of our prepared remarks, we will open the call to take your questions. If you've multiple questions, we ask that you get back in the queue, so that others can have an opportunity to ask their questions. As a reminder, we will be discussing the company's outlook for 2017 tomorrow during our Investor Day presentation. Today, we will only be taking questions on our earnings release related to 2016. Additionally, our comments today will contain forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act. All of our forward-looking statements are based on our current expectations and assumptions, which are subject to numerous risk factors that could cause our actual results to differ materially. A description of such risk factors can be found in our earnings release, and in our reports filed with the Securities and Exchange Commission, including our Form 10-K Annual Report, our Form 10-Q Quarterly Reports, and our Form 8-K Current Reports. These reports can be accessed under the Investor Relations tab of our company website or on the SEC's website. All forward-looking statements made during today's call represent our judgment as of February 15, 2017, and we disclaim any obligation to update such statements, except as required by securities laws. This call is being recorded and a 30-day replay of the conference call will be available at our company's website, molinahealthcare.com. I would now like to turn the call over to Dr. Mario Molina.

Thank you, Juan José. While the 2016 results we have announced today are clearly unacceptable, I want to remind everyone that outside of the Marketplace issues, 2016 was, in many respects, a successful year. It marked the third consecutive year in which our earnings (sic) [revenues] (02:38) grew by more than $3 billion. Strong enrollment growth generated 23% more premium revenue, when compared to 2015, despite a 4% decrease in premium revenue per member per month, driven primarily by cuts in Medicaid Expansion rates. We also lowered medical costs by approximately 3% on a per member per month basis. And we continue to reduce our administrative costs. Administrative costs decreased by 5% per member per month for the year. However, ongoing issues related to the Affordable Care Act's insurance Marketplace have continued and have had a significant adverse impact on our financial results during the fourth quarter. I want to emphasize that, while the losses that we incurred in the Marketplace program are likely to capture headlines and overshadow the operational progress we have made during 2016, it has not changed the positive trajectory in our core business. In order to stabilize the Marketplace program for 2017 and beyond, we believe that federal government must do four key things. First, the federal government must continue to provide cost-sharing reductions and premium subsidies. Second, there must be a strong incentive for individuals to purchase health insurance. Third, there must be more strict validation of eligibility for the Special Enrollment Period or SEP. We must not allow the Special Enrollment Period to become a substitute for open enrollment. Higher costs from people enrolling through the SEP force insurance companies to raise premiums for everyone. And finally, the flaws in the risk transfer methodology must be addressed now. Our Marketplace challenges are not…

Thank you, Mario. Before I get into the fourth quarter and year-end results, I wanted to correct what I believe is a misstatement you made, Mario. You said that this was the third consecutive year in which our earnings grew by $3 billion, and in fact, it was our revenues grew by $3 billion, not our earnings. Thank you. Today, we reported full year net income per diluted share of $0.14 and a net loss of $1.64 per diluted share for the fourth quarter. On an adjusted basis, full year net income was $0.50 per diluted share, and a net loss of $1.54 per diluted share during the fourth quarter. As Mario noted earlier, poor results in the Marketplace program was the primary challenge impacting our 2016 results. However, the results of our business is faring better. To be clear, fourth quarter results for our Medicaid and Medicare business were adversely impacted by about $60 million of out-of-period items primarily related to revenue. But even allowing for that, we have good reason to be satisfied with our Medicaid and Medicare performance in 2016. Entering this year, our Medicaid and Medicare programs were under considerable stress as a result of declining Medicaid expansion margins, and disappointing results at our Ohio, Texas and Puerto Rico health plans. For the full year 2016, however, the combined medical care ratio of our TANF, ABD, Medicare, and MMP membership decreased to 91.3% from 92% in 2015. In the past, when we've encountered problems, they were primarily related to medical costs. Our issues in the fourth quarter as we have outlined in the earnings release are predominantly revenue related. In the Marketplace, we continue to suffer from reductions to revenue as a result of a risk transfer payments that far exceed the favorable results we are…

Our first question comes from the line of A.J. Rice with UBS. Please go ahead with your question.

Thanks. Hello, everybody. I'm sure there'll be plenty of discussion about the Marketplace, but I thought I might ask you about some of the other states that you're flagging here. It sounds like more on the Medicaid side, I think you're flagging Ohio which it look like was an issue early in the year, but it sounds like that was turning around, and now, it sounds like the MLR increased 310 basis points. Can you tell us what's going on with that? Any update on – maybe a little more flavor on Puerto Rico? And then, Texas is one you've talked about but it didn't – wasn't flagged today. Any update on what you're seeing there?

Sure, A.J. So, on the Medicaid side, we did talk about Ohio early in the year. The first quarter was a bit rocky for us. And then, we were able to bring the medical cost down in Q2 and Q3. I think that in Q4, it's just normal seasonality as opposed to anything else. In Puerto Rico, we did again flag that early in the year, and have had some very good results in improving the profitability of the Puerto Rico plan. Texas, again, we cited early, but the Texas issues again are largely behind us.

Okay. Thanks a lot.

Our next question comes from the line of Kevin Fischbeck with Bank of America Merrill Lynch. Please go ahead with your question.

Great. Thanks. I guess with the exchange business, if you could go into the little detail about the other items. I guess, there was a $35 million favorable number. What was that related to? And then, I think you said that you would look at exchange in a state-by-state basis. Are there any state exchange products that were profitable in 2016?

Hi. It's Joe speaking. To your first question, that $35 million variance from pricing is a combination of things. It's lower admin costs than we anticipated plus a little bit more revenue around some other aspects of the program, in total, it added up to about $35 million. Regarding the individual state performance, we don't normally give that, but I can speak to Texas particularly as being a state where we're doing relatively well on the Marketplace program. We feel really good about Texas. Florida is hanging in there. California hanging in there. So there's three states.

Okay. Actually, just to clarify that, SG&A will be a little bit lower. The number – is that like a bonus accrual? Like earlier we had like Anthem report worse numbers.

Oh, no. It's just about the usual things, commissions, just allocation of admin costs, things like that.

Okay. All right. Great. Thanks.

Our next question comes from the line of Dave Styblo with Jefferies. Please go ahead with your question.

Sure. Thanks for taking (26:27) the questions. Maybe just to circle back to the exchange and then understand better the pressure, it looks like there's about $1.20 of pressure in full year 2016. Is that sort of the right way to think about it? At the end of the day, you were not able to participate and ultimately had to exit. Is that earnings release that we would think about on 2016 or are there some other puts and takes? And also, I'd like to ask about perhaps any negative SG&A leverage that might be associated with that.

Sure, Dave. I want to be careful, because when you ask what would happen if we got out, we're beginning to get into forward-looking guidance type of things. But the way that you described – the way I would say, the puts and takes for Marketplace, it really relates to the risk transfer. If you look at that, we ended up transferring $350 million in excess of what we priced it at. Now, if the risk transfer methodology were structured in a more accurate way, you would expect almost a one for one decrease in medical expenses, idea being you would have helped your members, so their costs would be lower. But in fact, our costs were only $120 million lower than pricing. So that differential really speaks to where the miss comes in the Marketplace.

Okay. And then, on a CMS release today, they talked about some of the exchange rules, and I didn't get a chance to fully look through that being on the road today. Was there anything in there that really meaningfully will help you on that? I don't think I saw on the quick headlines there was anything on the risk adjusters there, but curious to hear your takes and thoughts about rules around Special Enrollment Period, and what they did right, and got right that should help you versus what else you need besides what you've discussed earlier about the risk transfers?

Hi. This is Mario. We're going to discuss that tomorrow during our outlook discussion. But I do think it is a positive step, but it's not going to solve the really big issue that we have which is risk transfer. It addresses a number of other things and we'll go over those tomorrow.

Thanks.

Our next question comes from the line of Sarah James with Piper Jaffray. Please go ahead with your question. Sarah E. James - Piper Jaffray & Co.: Thank you. I realize that HIQ (29:17) is fluid, so I'd rather focus on the core. You've been talking about high acuity numbers, ABD and MMP contracts continuing to mature towards a run rate in 2016. And if I look at the timing of contract wins that make sense, I can see an absolute improvement on year-over-year MLR, but I'm wondering about the pace. So is MLR on the new high acuity membership, I guess, those gained over the last, call it, two years or so, both ABD and MMP improving at the pace that you would have expected? How long do you think is the path to normal margins on that book? And do you still think that ABD and MMP is 1.5% to 2% net margin business?

That's a great question, Sarah. I would say that we are progressing along the plane that we wanted to for the higher acuity members. We did have a bit of a hiccup, for example, in Washington, when we rolled out the integrated program down in Southwest Washington. I think the state and the state's actuaries realized that they mispriced that business somewhat, and we've been working with them to correct that. But the medical management efforts that Dr. Wilson and his team have put in place have really stabilized utilization, brought it down, and we do think that we're making good progress. Sarah E. James - Piper Jaffray & Co.: Got it. And then just a clarification. You mentioned in the press release some rate pressure being reversed in January 2017. I'm just wondering if that was specific to the fourth quarter, because it's a bit unusual to talk about rate pressure so late in the year for the rate resets. So if you could clarify that a little bit more.

Sarah, it's Joe speaking. What we were just tried to point out there is that, in those three states, where we have seen some margin pressure – Ohio, Illinois and Washington – we did receive some pretty decent rate increases effective January 1, 2017, which we'll go into more detail tomorrow. But I would just say that in today's state funding environment, you generally don't get 4% to 5% rate increases without there being some pressure on margins. Sarah E. James - Piper Jaffray & Co.: Thank you.

Our next question comes from the line of Ana Gupte with Leerink. Please go ahead with your question.

Yeah. Okay. Thanks. The first question is around Medicaid expansion. It does look like you had a pretty big sequential MLR increase just on our early read of this as opposed to TANF and CHIP. I'm just trying to understand what's going on there. And you talked about December being the pressure point, was that flu and more cost-related or something else? And does that a big contributor in the deterioration in loss ratio in some of the states that you had, Ohio, California, Illinois, Q-over-Q?

Well, Ana, it's Joe speaking. Two points I'd make about Medicaid expansion. First, as we spoke about in the first quarter, just we started this year with rates on Medicaid expansion coming down, which lowered margins. We also – if you recall, we had a Medicaid expansion rate cut in California mid-year. The additional item that's happened regarding expansion in the fourth quarter is our determination that we were going to have to take a charge of about $40 million, $45 million out-of-period related to an item in New Mexico involving contractual interpretations on our Medicaid expansion contract.

So, that was the only reason is New Mexico, wasn't anything you saw in some of the other states I just talked about that had the issue?

No. Again, as far as Medicaid expansion, the big dip really took place January 1 of 2016 when new rates rolled in.

Okay. So, you still maintain that the worst of the rate pressure is behind us and you're not going to see pressure going forward on expansion?

Yeah. I think we're certainly seeing – we'll talk more about this tomorrow. We've actually seen a little bit of relief in Washington. I think our point would be our – as you would probably be that over time, as the Fed stops funding expansion so much that those margins are probably going to approach the TANF and ABD margins, which is why we're so pleased with the progress we have made this year in TANF and ABD.

Then, on the exchanges, if I could get a little bit more clarity around, you talk about the risk (34:20) which I'm assuming is risk adjusters and those seem to have come in a lot worse than expected. And then, you talk about risk corridors not delivering and you saw some cost pressures, but you didn't see the relief from risk corridors. Can you talk about what percentage of the miss with risk adjusters relative to risk corridors? And I understand Moda might have won the case and all, but that's a lot more dicey, right, than risk adjusters?

So, this is Mario. First of all, on the risk corridor issue, we do believe that we are owed the money, and our case is very similar to the one that was filed by Moda, so we do believe that we'll prevail in that. The biggest single problem we have, and we started saying this earlier in the year, is the risk corridor methodology. The fact that we are a plan that has relatively low premiums, relative to the state-wide average, really hurts us. And to give you an example, in California where we operate only in Southern California, the costs in Northern California are about 30% higher, so it drags up the statewide average and further magnifies the problems that we have. The basic problem that we have today and going forward is around risk transfer. I think the secondary problem is the Special Enrollment Period, and perhaps the new regulations will address that. But we need to continue to press for some relief on the risk transfer issue.

The risk transfer corridors or adjusters or both? I'm still not clear.

There are three Rs. So there's reinsurance, risk corridors and risk transfer. Right now, the first two have gone away, and the risk transfer remains. So, it's going to be a problem going forward, unless something is done, and that's what our advocacy efforts are focused on.

And if you don't get...

Ana, I'm sorry. It's Joe. Just to be clear, I think from the terminology you're using, you would relate risk transfer to risk adjustment.

Okay. Okay. And if you don't get what you have, what you need with advocacy, might you consider exiting for 2018?

Yes.

Okay. Thank you. I appreciate the color.

Our next question comes from the line of Gary Taylor with JPMorgan. Please go ahead with your question.

Hi. Good afternoon. I just wanted to get a little more color on page 2, and maybe I missed this, and I think Joe White has alluded to one of the items. But items two and three, so when you talk about items – $25 million related to 2014 and 2015, is that prior to your development or is that specific contractual issues? And it sounds like maybe number three was the New Mexico thing you'd just mentioned, but I wanted to clarify.

That's correct. Both of those items relate to unique issues specific to states, one being the New Mexico item I talked about, the second one being in the state of Illinois, where the state cut back on Medicaid rates and risk adjusted been back to the beginning of 2016. So it's not prior period development issue we think of it in terms of the claims liability. It's specific contractual revenue issues.

Got it. And the $1.21 per share loss related to Marketplace, that I presume I'm sure that includes the full risk adjustment payment you're talking about. But the PDR impact is also included in that $1.21?

Bear with us for a second. I'm trying to find the $1.21 you're talking about.

I thought you said...

(38:33) at the very beginning.

Yeah.

Yes. Yes. That is correct. That $1.21 does include the impact of the $30 million PDR.

Okay. Thank you.

Our next question comes from the line of Tom Carroll with Stifel. Please go ahead with your question. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Hey there. So good evening, I guess, for us, and good afternoon to you guys. But your stock is going to be on sale here tomorrow and probably for a little while. Has the management team discussed doing anything like maybe pulling in the share repurchase sometime during the first quarter or discuss the policy like that especially with the breakup fee coming from the Humana deal?

Hi, Tom. This is Mario. We do have an authorization for share repurchase from the board, but we're not planning to do a share repurchase at this time. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: So, you don't think that would be something that would maybe support the stock or show some confidence in your planning and everything that you're doing going forward? There's just hasn't been any talk of that at all?

No. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Okay. Thank you.

There are no further questions at this time. I'll turn the call back to the presenters.

All right. Well, thank you very much for joining us today. And just a reminder that tomorrow we'll be discussing the outlook for 2017; that will be at the Parker Méridien at 12:30 PM. And, please, join us in person. If you can't, it will be webcast. We look forward to talk with you tomorrow.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation, and ask that you please disconnect your lines.