Molina Healthcare has dismissed President and CEO Dr. J. Mario Molina and CFO John C. Molina. The board named Molina's Chief Accounting Officer Joseph W. White as interim president and CEO, as well as CFO.
Board of Directors Chairman Dale B. Wolf said the board made the decision because of a "disappointing financial performance" and “in order to drive profitability through operational improvements.” The changes look to “enhance the company’s focus and improve its competitive position within the healthcare industry.”
The board will search for a permanent CEO. The Molinas will continue to serve as directors of the board. Dr. Molina remains a candidate for re-election as a director at the company’s upcoming annual meeting.
The dismissal of the Molina brothers, who are the sons of the company founder C. David Molina, is shocking.
J. Mario Molina has advocated for the ACA exchanges and spoken out about a Republican plan to repeal and replace the ACA. Molina was especially concerned about the current state of the ACA and the possibility that Republicans might stop funding cost-sharing reduction subsidies. The subsidies help payers provide care for lower-income Americans in exchanges.
When President Donald Trump met with health insurance executives in February to discuss healthcare reform, the White House didn’t invite a Molina Healthcare representative despite Molina being an advocate for the ACA exchanges.
Molina Healthcare didn’t have a great year in the ACA exchanges last year. The payer reportedly lost at least $110 million before income taxes last year in the marketplace. Though supportive of the marketplace, Molina said in February that the company wasn’t committing to the marketplace beyond this year because there are “too many unknowns.”
In addition to making changes at the top of the company, Molina Healthcare also announced its first-quarter earnings on Tuesday. Despite mentioning “disappointing financial performance” as the reason for the changes, Molina Healthcare said that its income before taxes increased from $64 million in the first quarter of 2016 to $131 million in the first quarter of 2017.
Molina Healthcare also said its plans in the ACA exchanges, Medicaid and Medicare programs were “consistent with management expectations” except for one unfavorable medical claims liability issue in Illinois.
The insurer provides coverage to 4.2 million members in 12 states and Puerto Rico for Medicare, Medicaid and the ACA exchanges.