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Molina Healthcare, Inc. Announces Pricing Of $450 Million Of 1.125% Cash Convertible Senior Notes

Molina Healthcare, Inc. (NYSE:MOH) (the “Company”) announced today that it has priced its private offering of $450 million aggregate principal amount of cash convertible senior notes due 2020. The Company also granted the initial purchasers of the notes an option to purchase up to an additional $100 million aggregate principal amount of the notes, solely to cover over-allotments, if any. The notes are being offered and sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The notes will pay interest at a rate of 1.125% per annum, payable semi-annually on January 15 and July 15, and will mature on January 15, 2020. The notes will be convertible only in certain circumstances and solely into cash. The conversion rate for the notes will initially be 24.5277 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $40.77 per share of common stock. The initial conversion price of the notes represents a premium of approximately 32.5% to the $30.77 per share last reported sale price of the Company’s common stock on February 11, 2013. The sale of the notes is expected to close on February 15, 2013, subject to customary closing conditions.

In connection with the pricing of the notes, the Company entered into privately negotiated cash convertible note hedge transactions with one or more of the initial purchasers of the notes or their respective affiliates (the "option counterparties"). The cash convertible note hedge transactions are expected to offset cash payments due upon conversion of the notes. The Company also entered into privately negotiated warrant transactions with the option counterparties, which could have a dilutive effect to the extent that the price of the Company’s common stock exceeds the applicable strike price of the warrants. If the initial purchasers exercise their over-allotment option, the Company may increase the size of the cash convertible note hedge transactions and enter into additional warrant transactions.

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