- Members again used more healthcare services during the third quarter, weighing on Molina Healthcare's bottom line. Still, the insurer largely beat Wall Street expectations, and Jefferies analysts said the company delivered "solid overall results."
- The insurer reported a profit of $143 million, a drop from $185 million during the prior-year period in which there was widespread deferral of care among members.
- The company reported its Medicaid and marketplace businesses fueled a higher medical care ratio, partly due to higher COVID-19 inpatient costs, which started to taper off late last month, and higher non-COVID-19 utilization among marketplace members who joined during the special enrollment period.
The delta variant of the coronavirus put pressure on both providers and payers during the third quarter, a period that experienced a high level of hospitalizations and cases. However, hospitalizations have been trending down nationally since September, a welcome signal for the industry.
Still, while Molina largely beat analyst expectations, the virus continued to weigh on its results and decreased net income by about $1 per diluted share in the quarter.
However, policies that were put in place to counter balance the effects of the pandemic are aiding the Long Beach, California-based insurer.
For example, states are barred from removing people from Medicaid coverage while the COVID-19 public health emergency is still in place. For Molina, it has resulted in an increase of 700,000 Medicaid members since the beginning of the pandemic.
And Molina added 81,000 marketplace members just from the second quarter as the Biden administration has allowed for a continued special enrollment period to ensure people have coverage amid the pandemic.
Molina ended the quarter with 4.8 million members, a 20% increase from the prior-year period.
However, the special enrollment period has also led to an uptick in non-COVID-19 utilization among those members, CEO Joseph Zubretsky said during Thursday's call with investors.
Even still, Medicaid and marketplace did experience higher medical care ratios due to the effect of COVID-19.
"Our marketplaces just happened to be in places that were hit hard — particularly by the delta variant — Florida, Texas, California, Washington," Zubretsky said. As a whole, the marketplace population tends to skew younger, a population "that tends to be unvaccinated."
Molina's Medicare MCR actually decreased and COVID-19 had a lower negative effect on that segment, executives said.
The pandemic and return for care also weighed on Molina's bottom line during the second quarter. Although the insurer did post a profit, it fell from the prior-year period when payers were benefiting from a widespread decline in utilization.
Molina experienced high COVID-19 inpatient costs at the beginning of the second quarter, but executives said those tapered off as the quarter progressed.
However, the severity of those cases were a lot lower than earlier in the pandemic, executives said at the time, pointing to shorter lengths of stays and fewer members ending up in the ICU.