- Molina Healthcare on Tuesday reported second quarter earnings that beat Wall Street expectations on earnings and income despite drops in both measures. Analysts called the results the best among management care organizations for the quarter thus far.
- In line with other payers, Molina saw a slight bump in medical cost ratio — at 85.6% for the second quarter of 2019 from 85.3% the year prior. Still, the number was better than investor expectations of 86.2%.
- The insurer raised its guidance for the full year, suggesting it "isn't experiencing the challenges some MCOs have mentioned" in earlier reports for the second quarter, analysts at Jefferies said. Shares fluctuated in early morning trading Wednesday.
Molina ended the second quarter with net income of $196 million, down about 3% from $202 million the year prior. Total revenue came in slightly above Wall Street expectations at $4.19 billion, down 14% from $4.88 billion in the second quarter of 2018.
Premium revenue fell 10.3%, which the company said was in line with expectations. Overall, membership declined year to year, with losses in Medicaid and ACA plans.
Molina is one of the companies that would be most affected if the Affordable Care Act is eventually struck down by the courts. The case challenging the law's constitutionality without its individual mandate penalty is currently before the U.S Court of Appeals for the Fifth Circuit.
For now, however, Molina is pleased with its exchange business. CEO Joe Zubretsky said medical costs are stable, the company is paying less into risk pools and membership is lapsing at the expected rate. That latter is partially attributed to the improving economy.
Elsewhere in the managed care space, Centene is looking to complete its acquisition of rival WellCare for upward of $17 billion — possibly sooner than expected. That deal will likely face some antitrust scrutiny from state and federal officials. Shareholders voted to approve the deal last month.
In its second quarter earnings report, Centene said it had increased membership and revenue but did note a bump in medical cost ratio, which it blamed on ACA exchange members staying in their plans longer.
Molina executives would not comment on Centene-WellCare but said their business development teams are "working the landscape hard" in search of new opportunities.
The insurer has had its share of struggles in recent years. During a tumultuous and financially disappointing 2017, CEO Mario Molina (son of founder David Molina) and his brother, who was serving as CFO, were ousted. Zubretsky took the post in October of that year.
Since then Zubretsky has attempted a turnaround, and told investors Wednesday the company is well positioned for the rest of 2019 and next year. If all goes according to plan, "We finally have a clean, stable year and can see that as a baseline off which we will grow," he said.