Welcome to the Molina Healthcare Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, October 23, 2012. And I would now like to turn the conference over to Mr. Juan José Orellana, VP of Investor Relations. Please go ahead, sir.

Thank you, Chantal. Hello, everyone, and thank you for joining us. The purpose of this call is to discuss Molina Healthcare's financial results for the third quarter ended September 30, 2012. The company's earnings release reporting its results was issued today after the market closed and is now posted for viewing on our company website. Participating for Molina today will be 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. [Operator Instructions] Our comments today contain forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act regarding our Texas cost-containment efforts and year-end profitability, our Ohio Duals expansion, our transition of ABD members into managed care at our California, Washington and Texas health plants, our MMS operations and other matters. 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 for fiscal year 2011, 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's website or on the SEC's website. All forward-looking statements made during today's call represent our judgment as of October 23, 2012, and we disclaim any obligation to update such statements. This call is being recorded, and a 30-day replay of the conference call will be available over the Internet through the company's website at molinahealthcare.com. I would now like to turn the call over to Dr. Mario Molina.

Thank you, Juan José. Hello, everyone. Today, we reported earnings of $3 million or $0.07 per diluted share for the third quarter of 2012. We are pleased with the progress we made during the third quarter. Both revenue and enrollment were strong, which bodes well for our company's future as we improve our margins. More importantly, in Texas, we saw incremental improvement this quarter as the implementation of our utilization and unit cost initiatives gained momentum. We are seeing continued stability in our Molina Medicaid Solutions business, and it is making the kind of contribution we expected when we made the acquisition. So let's start with Texas. Since reporting our second quarter results, we have made considerable progress toward achieving our objective of reaching a breakeven run rate by the end of the year. Our medical care ratio in Texas decreased from 109% in the second quarter to 90% in the third quarter. This improvement is even better than the medical care ratio we reported in Texas for the second -- third quarter of 2011. However, we are not yet out of the woods. There is still a considerable amount of work to be done and we must remember that this early success does not constitute trend. The improvement in our Texas medical care ratio was due to the implementation of initiatives aimed at reducing utilization and unit costs. As Terry Bayer outlined at our Investor Day in September, this included changes to contracts with providers to lower unit costs and the implementation of state-required changes to fee schedules. In addition, a blended 4% premium rate increase that went into effect on September 1 also contributed to the improvement. Ohio was also in the headlines this past quarter. Molina Healthcare Ohio was selected to participate in Ohio's Integrated Care Delivery…

Thank you, Mario. It's always a pleasure to celebrate your birthday with 58 of your analytical friends. Hello, everyone. As Mario pointed out, today we reported net income of $3 million or $0.07 per diluted share, a substantial improvement over the loss of $0.80 per diluted share that we reported in the second quarter. Of course, our turnaround in Texas is the big story for this quarter. Our medical care ratio dropped from 109% in the second quarter to 90% this quarter. I want to be clear that we still have work to do in Texas. But we are delivering on the commitment we made 3 months ago that Texas would be breakeven on a run rate basis by the end of 2012. It is my belief that we will be able to report success in reaching that goal when we announce our fourth quarter results. With that said, I want to talk for a moment about our third quarter results from my broader perspective. Premium revenue for the third quarter grew to $1.5 billion, representing a 31% increase over the third quarter of 2011. All of the key factors driving our business forward position us well for the implementation of the Affordable Care Act. Revenue grew due to membership increases, more ABD members and the addition of more benefits into managed care. And the growth in our business is not just year-over-year. We can actually see the changes happening from last quarter to this quarter. We were able to maintain revenue between the second and the third quarters despite the loss of our contract in Missouri. Put another way, our growth in Washington this quarter was enough to offset the loss of all of our membership from Missouri. The growth in Washington came from 2 initiatives, the transition of…

[Operator Instructions] And we have our first question from the line of Josh Raskin with Barclays.

So Texas question for you. It sounds like the 90.3% MLR would have been -- if you would have the rate increase for the full quarter instead of just 1 month, I'm calculating about 88% and I'm getting a profit for September. So it sounds like your goal of breakeven by year-end, is it fair to say you're kind of already there? Is there something that you're anticipating in the fourth quarter? Is it seasonality of costs or something that could potentially bring you back under that?

So Josh, this is John. As Terry Bayer likes to say, "One point doesn't constitute a trend, but every trend starts with one point." We had a good September in Texas. I think you calculated it correctly. We do have issues such as seasonality that will creep up in the fourth quarter, so we're not ready to say that Texas has reached our goal, but we're confident that we can get there.

Okay, so not declaring victory I guess. Second question, just around capital needs and stuff. And I guess the first question, just around Missouri and the exit there. The claims runout, is that in line with expectations? And are you expecting any additional capital freeing up over the next, I don't know how long it takes, 6, 9, maybe even 12 months? And then maybe you could just update us on your overall thoughts around capital adequacy and any potential needs for additional capital as you continue to see the top line accelerate?

It's Joe. In terms of Missouri, it's playing out essentially as we expected it would. And, yes, sometime between now and first half of next year, we'll be able to withdraw -- I think we've talked about there's somewhere between $20 million and $25 million for Missouri. Regarding overall capital, I think John talked about that in New York quite a bit. I don't know if John wants to add anything.

Josh, I mean nothing has changed in our thinking right now.

Okay, okay. I would have thought the quarter obviously -- that's positive, but it sounds like the growth is coming in a little bit stronger. So net-net, sort of no change to the overall thoughts around capital?

Correct.

And our next question comes from the line of Justin Lake with JPMorgan. Justin Lake - JP Morgan Chase & Co, Research Division: Just first in the -- obviously the Texas improvement is fairly dramatic there. I know the rate helps in September, and -- but can you talk us through a little bit about what -- maybe a few of the drivers that you saw in the quarter in terms of what you were able to implement that got that MLR to improve so much. And what you still have left to put in place, maybe in terms of further cost and medical management?

This is Terry. We always share with you that we use a very basic and simple formula to improve our medical costs. We had unit cost changes, we had utilization changes, we had claims processing changes, and then we had a rate increase. And all of that combined came into play to bring down that MCR. I think the details are simply that we looked at our highest cost providers and we brought them back closer to the Medicaid fee schedule or made the adjustments we needed to there. We greatly enhanced our active utilization management and increased our activities so that only appropriate care was being authorized, and we did implement a number of claims processing changes that relate to implementation of state fee schedules. So you're quite correct that the rate increase helped. At this point, we continue on as we do in all of our markets, we'll continue to monitor our unit costs, we'll continue to manage the utilization and implement other changes as they come. So there's nothing dramatic to share with you except a continuation of the same. Justin Lake - JP Morgan Chase & Co, Research Division: Can you delineate for us what the unit cost versus utilization, just to give us some idea of where the bigger --

We haven't looked at it in that greater detail. Justin Lake - JP Morgan Chase & Co, Research Division: Okay. Just a follow-up then on the California dual rollout and kind of what you're seeing now at ABD. So first, can you remind us what the -- when the ABD rates were set here, and as you're kind of relooking at them now, what was the assumed savings versus fee-for-service in these rates?

We've heard -- this is Terry again. We've heard that the state was looking upwards of 20% to 30% for savings, but that was not shared early on with us as overtly as it was for instance in the Texas market. So there was a cost savings embedded there, and all of the health plans have -- brought together their combined experience and are working with the state actuaries at the state's recognition that they're going to reevaluate the rates now that we are post-16 months into that population rollout. Justin Lake - JP Morgan Chase & Co, Research Division: Okay and just -- and then thinking about the California dual rollout, any update there on timing? And what kind of savings that California might be looking at with the duals? Would it be similar? Would it be materially different there?

The state had not updated us beyond what we shared with you folks in September.

And our next question is from the line of Chris Rigg with Susquehanna.

Just to come back to California real quickly. On the 6,000 members in the unprofitable service area, what will that do to the MLR perspectively? Or I guess, at a minimum, can you give us a sense for how much of a drag they were on the current quarter?

Chris, this is John. We didn't separately quantify what the profitability was for those members. It's a relatively small number out of the 350,000 that we've got. Suffice to say that, for that group though, on the MLR side, the medical care costs were exceeding 100% of premium.

How many of the 6,000 were ABD? Or any of them ABD?

I couldn't tell you. I would imagine that some of them probably were, but I couldn't tell you how many of them were.

Okay. And then more broadly in California, on the rate side, I believe a portion of your membership was supposed to receive a rate update October 1. Did that happen? Or have you been given any color as to what that rate change might look like?

The 2-plan model contracts, L.A., Riverside, San Bernardino, have an October 1 rate year. I think the state has given out draft rates that folks are looking at and looking at the methodology and commenting on. They're not final yet. And so we don't typically comment on draft rates.

I mean anything directionally? Or are you expecting a positive rate update?

Right now, I think that they are still in negotiations. If it was dramatic, I think we would have said something. Other plans would have said something. But the fact that no one is doing much in the way commenting would suggest that it's probably what we expected. If you recall at the January Investor Day, we're talking about rates flat to slightly down.

Okay. And then changing gears. I know you don't have a lot of members in Wisconsin, and it's not a big part of your business right now, but obviously United has left there. And you saw a pretty big sequential drop in MLR. Is this now a business that you would be actively soliciting? Or any color on what's going on there would be great.

This is Mario. No, we're not actively soliciting any of that business. The state will reassign those members beginning, I believe, in February, we are still working with the state trying to determine what the rates will be for next year. We don't yet have the rates. And that's going to have a big impact on our decision whether or not to stay in Wisconsin. Obviously, we would pick up a portion of those members. And unless we get an appropriate rate increase, we probably will not be able to remain in Wisconsin.

Our next question is from the line of Ralph Giacobbe with Credit Suisse. Ralph Giacobbe - Crédit Suisse AG, Research Division: Seems like you've done well with Washington considering bringing on the ABD population, is this a situation of familiarity with the state and population that kind of helped you manage it out of the gate? And I guess your comfort level, just in terms of the unlikeliness of seeing any hiccups there, relative to maybe some of the other states where you have seen issues within this population?

Yes, this is Mario again. I want to go back to the comments I made earlier, and that is that having an established provider network and experience in the market is really helpful when you're transitioning new populations. We have a very strong provider network in Washington. It's a plant with a lot of experience. We've been operating there since 2000. Good reputation, good relationships, and that has made a big difference. I think that any time we're in a situation where we can transition members to an existing service area, like the upcoming situation in Ohio, that's certainly our preference. Ralph Giacobbe - Crédit Suisse AG, Research Division: Okay. And then just going back to California sort of higher MLR there, and state to review the premiums. Does that -- I guess does that give you any pause around the duals? Or how you think about the ability to manage that population at all? And then how do we think about startup costs and initial MLRs for the California duals?

Well, first of all -- this is Mario again. I think everyone has struggled in California with the implementation of the ABD patients, and that's why there's been a lot of discussion back and forth with the state over the rates. The other thing to remember, as John pointed out, that, that these patients were rolled in 1 month at a time over a 12-month period. And while the costs have been lower for those that entered early, as they've come down, we still have -- of patients that came in later and we're still experiencing higher medical costs. If you look at all the states though, one of the things we've pointed out is that the ABD patients have pushed up the medical costs somewhat. And that's to be expected, when you got relatively sick patients who are higher utilizers than the TANF patients, and these are patients that are new to managed care. I think the same applies for the duals. And when we get the ABD members in who are duals, we're going to have similar issues and it's going to take time to work down the medical costs. So we have said before, we expect higher medical costs for certain populations in the future. We think we can bring them down over time. And we also think that a big key to managing the duals is going to be managing the long-term care benefits, which are less medical and more social and supportive in nature.

Our next question comes from the line of Tom Carol with Stifel. Thomas A. Carroll - Stifel, Nicolaus & Co., Inc., Research Division: Sticking with Washington state, enrollment was much higher there than we expected. I guess 2-part question. Did you retain more than you expected? Or did members voluntarily stay with Molina, given your presence in the state? And secondly, is there anything to suggest that this enrollment will become more costly as claims mature a bit more over the next couple months?

Tom, this is John. With respect to your first question, we did get a greater retention and we did get greater new enrollment, which is why enrollment is higher than what we had guided to back in January. Not quite sure what you mean by the second part of your question. Will this enrollment be more expensive? Could you clarify? Thomas A. Carroll - Stifel, Nicolaus & Co., Inc., Research Division: So you have new enrollment coming in, and we're seeing a slight increase in the MLR in the market, and I'm just wondering if there's any other data points you can give us to provide some comfort that we won't see another 3 or 4 or 5 or whatever percent increase -- percentage point increase in the MLR in that market, with a bolus of new members coming in.

I apologize, Tom. I heard disenrollment, not this enrollment. Perhaps I need a hearing aid for my birthday. Right now the data that we've got -- the claims data from the first 3 months suggest that the costs are not running up higher than we expected. I think we actually got a little bit of positive development for Washington, so we're feeling that the costs are in line.

[Operator Instructions] Our next question is from the line of Peter Costa with Wells Fargo Securities.

Getting back to the Texas question again, your ABD MLR is from 119% down to 94%. I think you said maybe 1/3 of that comes from the rate in September, but the other 2/3 comes from other things. Are there some onetime items in there that we can sort of back out or timing things that we can back out? Or should we look at that as the current run rate trend? I know you don't talk a lot about prior period development, but if you can discuss that, perhaps that would help us understand it? Or maybe is there a timing differential between when you got the rate increase versus when you have to pass some of that rate increase along to providers?

Now I think part of what's changing that is you have to factor in the premium deficiency reserve that we took in the second quarter. So I think you're going to see this from some other folks in the future, as these new contracts come online, if other organizations take a premium with the efficiency reserve in one period, then they push costs from a future period into the current period. We did that in second quarter, so we didn't have those costs occurring in the third quarter.

So there's none to be backed out that you didn't over reserve perhaps at that point?

The premium deficiency reserve, it has an impact. I think that we are very adequately reserved from a pure claims standpoint in Texas. If you look at the days in claims payable, if you look at our cash flow, which you see is an increase in the medical claims benefit line, a lot of that is coming from increasing the reserves in Texas. So I don't think it's a case that we're going to be under-reserved in Texas. I also don't think that the 90-plus% MCR that we experienced is the run rate. I think that what Terry talked about in terms of decreasing utilization and having some of the provider contract changes take -- have full effect. We should see continued improvement there medical care ratio for the ABD members.

And then can you talk about the timing on the California rate review process? Like what's the time frame on that?

We've submitted our data. I don't know who else has yet. Obviously, we're pushing the state to get us an answer as quick as possible. But we also want to make sure that we don't exchange expediency for accuracy. We want the right rate, not a quick one.

And if you had a handicap, what's the likelihood that, that rate goes higher versus goes lower?

If I had a handicap stuff, I'd be at the racetrack, I think. I mean it's really hard to know. Our data suggest that they were too aggressive in the rate assumptions.

And our next question is from the line of Melissa McGinnis with Morgan Stanley.

One more thing on Texas, just to understand as well some of the things that might be driving the margin improvement there. Was there any disproportionate loss of membership of some of the higher-cost members? Because it actually looks like despite the rate increase, your premiums PMPM came down sequentially. I'm just trying to understand what might be the driver of that.

Sure, this is Terry. We shared with you at Investor Day about an 8% drop in our ABD enrollment, about close to 10,000 members over the last 3 or 4 months. And yes, those that dropped out were running a significantly higher MCR.

Okay, great. And then --

Let me just add this. This is Terry again. That also impacted the mix on the rate increase we received. So we received slightly over 4% rate increase and it would have been greater if we would have had more higher cost members. So that was calculated very thoughtfully by the state to pick up the gap where the higher costs were.

Right, great. And then maybe switching to a different market. If we look at Michigan, the MOR there has come up pretty significantly over the last 9 months. And I was just wondering, if I'm remembering right, Michigan actually carved in or started assigning some of their duals on the Medicaid side. Is that having any impact on the MLR there? And I guess, just wanting to understand the margin change in that market.

Melissa, this is John. The margin change primarily due to the change in the premium tax, it used to be, I believe 6%. And so it had the effect of bumping up the revenue, and then we would take the premium tax line out of admin, not out of the medical cost. So that's had the biggest change in what appears to be MCR margin.

And our next question is from the line of Dave Windley with Jefferies. David H. Windley - Jefferies & Company, Inc., Research Division: So I wanted to follow up on Peter Costa's question, ask one more directly on -- as I look at your claims and benefits payable schedule for the 3 months ended September of 2012, the prior period positive development is $47 million and is from a negative development number on the last quarter. And I guess I wanted to understand more directly how much of that, if any, affected the income statement in the current quarter.

This is Joe speaking. Without going into a state-by-state basis. I think it's fair to say that much of the -- we talked in the second quarter about the negative impact of prior period development in Texas. We think we've restored those reserves in the second quarter and then carried on into the third. So if you look at the $46 million of prior period development from Q2 to Q3, that's pretty consistent with what we've shown in the past, if you look out the runout from 2010 -- 2009. So again, I would say, I think we caught up in the second quarter and we've maintained those margins in the third. David H. Windley - Jefferies & Company, Inc., Research Division: Okay. So as I think about the change, then in MLR is the sequential change in MLR not attributable to some of this positive development?

I think we talked in -- I think we talked at length that you go back to our second quarter release, we talked about the impact of the PVR and unfavorable development in the second quarter, I think it was $10 million on the PVR and $12 million in unfavorable development. I think the better approach is to go back and relook at your calculation at the second quarter MCR rather than the third. David H. Windley - Jefferies & Company, Inc., Research Division: Okay, all right, I'll do that. So then, here's another follow-up on Washington. In light of this -- you've kind of answer this question already, but I'll ask it again. So in light of a couple other states where you're highlighting MLRs above 93% on ABD populations, can you talk about maybe how much visibility you have? How much claims inventory you have in hand today to give you the confidence on the 93%? Or how you would expect to track and that and play that out over the next several months or perhaps by comparison, how did the MLRs progress in those other states to get to this level? Some over 100%, like California and Texas?

This is John. I think in Texas, we got the membership all at once. So just to sort that out was difficult. In California -- and little bit different because the enrollment progressed over a period of 12 months. I think in California, what the bigger driver is in terms of the MCR for that particular population is the rate giveback that we have accrued. So if you think that we want to give back a significant premium to the state, we've got to record it at $15 million, but we didn't drop the provider rates because the state didn't. You've got a mismatch there, which you don't see necessarily in other states. It's hard to take the experience in 1 state and necessarily translate it to the other. What we've got in Washington is stable provider base, rates that we believe having looked at it, are adequate for the population and frankly, some pretty aggressive UM up in Washington that has provided us with the confidence as we watched the claims run out now for 90 days at least that we're not going to have a significant negative development in the future.

This is Mario. Let me just comment on California, to be sure you understand. In California, there was supposed to have been a provider fee schedule cut. There were some issues in the court that prevented that, but the issue is not resolved. And so we have been reserving, as if we were going to have to give money back to the state, because of this provider fee schedule change. Because our contracts, many of our contracts in California are tied to that Medicaid fee schedule. Until the state changes it, we don't change it either. So we've understood there's mismatch.

Our next question is from the line of Carl McDonald from Citigroup.

Just wanted to follow up on that $15 million accrual in California. And my understanding from some others was that it didn't sound like that rate cut was actually going to be implemented, so I'd be interested in your latest conversations with the state, if you have a bias one way or the other.

We certainly do have a bias, Carl. And that is, until we see the final rate sheets, we're just going to keep doing what we've been doing. So we know that other plans have had discussions with the state about reversing that. And if that's the decision the state makes, then we will reverse it. Otherwise, we are confident that we're well protected against the state coming back and asking us for money.

And our next question comes from the line of Scott Green from Merrill Lynch.

Can you tell us, did you make an accrual in the current period for lower California provider rate? Or is that kind of annualized now?

The accrual is running about $1 million a month.

Okay. All right. And then one more on the California ABD MLR. You said it was higher, mostly attributable to the recently-added lives. But it looks like in the press release, you only added 3,000 sequentially. So I was hoping you could elaborate, whether just those most recently added that are driving that or was there some unfavorable developments in the current period California MLR?

Scott, this is Mario. If you go back to our investor day, there was a slide where we showed a cohort of patients that we followed forward for 10 months, and you saw how their cost went down. Well, the more recent patients are still running at higher costs so it's going to take a while to work through that. And that's what we're talking about here. So that, that group that came on in the first month, we think has -- their costs have flattened out. But it's going to take 10 to 12 months for each cohort to kind of flatten out again. And that's what we mean. So there are continued upward pressure and it's going to level off and then go down.

Okay. I thought you had said before that ABD MLR in California was around 95% and now we are seeing a step-up to 110% and I wasn't sure what was driving that because it didn't seem like you added so many new members. But you're saying it's kind of been and remains elevated?

It's sort of a blended number, and it's going to take time for that to come down, but we think that it will come down over time next year.

Scott, it's Joe. There are a couple of items though that were, I think are driving that number higher than we would the California MCR than we would expect in a run rate. First thing I'd like to point out, it's the California has removed its premium tax this quarter. So this would apply not just to the ABD to SBDs, but across the California population. That's probably driving MCR of about 1.5%. This is analogous to the situation in Michigan in the start of the second quarter. We've also had some catch-up in California on capitation payments, specific to the STDs. We've had to go out and recontract with some of our cap providers to allow for the higher premium. So you do have some factors in there that are spiking at this quarter, but I wouldn't call run rate issues.

Okay, that's really helpful. Would you say the run rate maybe is a couple hundred basis points less or any way to estimate that?

When I take an estimate of the premium tax, 1.5%; the cap issue in unfavorable prior period development, probably another 2.5%. This is all on the California consolidated MCR. So we definitely saw a little bit of an uptick this quarter, but not nearly as much as the financials suggest.

Okay. And then can you talk about the MMIS revenue trajectory? What drove the sequential increase and how you see that trending going forward?

The sequential increase in MMS revenue is really just accounting. If you recall, we've been deferring revenue and expense recognition for the Idaho MMIS. We went through some accounting exercises with that last year you'll recall, where we had some write-offs. So upon receipt of CMS certification and acceptance of the system by the state of Idaho in July, we started recognizing both revenue and expense in MMIS. The P&L impact is pretty much 0 because, as you'll recall, we were booking revenue and expense at very similar amounts. But it will drive higher revenue and higher expense.

Okay. And then one last one, real quick. Any update on California's -- it was thinking about integrating the CHIP and Medi-Cal programs? I was just curious whatever happened with that?

It is definitely happening and it will begin I believe in January. You will see those former CHIP members will roll over to Medicaid.

Okay. And do you view that as a positive or a neutral or a risk for your business?

I think it's largely neutral.

And we have time for one more question. It comes from the line of Sarah James with Wedbush.

I wanted to speak about contract opportunities and I guess I would break it up into 3 buckets here: Ohio, Michigan and MMIS. On Ohio, that was just -- Ohio duals was just pushed back. And I was wondering if you had any thoughts on the reasoning and if there had been any resolution there on some of the unknowns like Day 1 savings or rates?

This is Terry. So you know what we know, we are just at the mercy of the state letting us know when their startup dates. We know they're in negotiation with CMS. This is really a new venture for these states to work out with CMS, how these 3-part contracts are going to go. And I think they're learning as they go, and as glitches in their rollout process occur, they just turn to us and let us know it's delayed. But we have had no further official delay, although we've heard as well.

And then on Michigan, as we're getting close to the end of the year here, are you still expecting to hear an update on awards in 2012?

No. We haven't even embarked on that RFP process. Michigan did note originally was attempting to go forth with an RFP this year for 2013. They then let us know mid-process that it would be a 1/1/2014, but the RFP process for the duals has not yet been rolled out. And we've heard nothing further about a further delay. So as far as we're concerned, they're still targeting 1/1/2014 for their duals launch.

Do have a date when you expect the RFP to be rolled out?

No. Sorry, we don't. We don't have any further information.

And then the last bucket would be for MMIS if you could just talk about some of the opportunities that you're evaluating, the CMS MMIS fiscal agent contract status report suggested about 4 to 5 contracts were coming up for rebid a year. So just any thoughts on how active we may be pursuing this new contracts and as some of them coming up for rebid in 2012 and 2013 are in states where you have a managed care contracts, if you could just speak to which contracts may be of more interest to you?

Sarah, this is John. When we bought the business, we wanted it to target the states where we didn't have a managed care presence. We have plenty of growth opportunities in the health plan business, so there's no reason to cannibalize ourselves and there are enough states for the MMS business to pursue RFPs, I think that frankly, the Virgin Island example might give us real innovative and competitive target or competitive advantages in some of these applications. But right now, we're not disclosing where we're playing.

And Dr. Molina, I will now turn the call back to you to continue with your presentation or closing remarks.

Well, thanks, everyone. I have nothing else to add. We look forward to being with you again at the next quarterly earnings call.

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation and ask that you please disconnect your lines. Have a great evening, everyone.