- Molina Healthcare on Monday reported a 14% drop in 2018 membership compared with the year prior leading to a dip in premium revenue for both the fourth quarter and full year.
- However, net income did improve substantially from a significant net loss of $512 million in 2017 to a gain of $707 million in 2018.
- Analysts at Jefferies characterized the better-than-expected results as "eye-popping."
The Long Beach, California-based managed care company reported dips in key membership lines, including its Affordable Care Act marketplace business. However, improved margins led to a strong quarter, CEO Joseph Zubretsky said during a call with investors Tuesday.
The marketplace business reported a steep decline in members but delivered an after tax margin of 11.4%, Zubretsky said. It represents a significant improvement from the years prior. Zubretsky has previously described that unit as an "albatross around the neck of the company."
At the beginning of 2018, the company said 25% of its revenue was in plans that were not profitable. A profit improvement plan has made significant strides throughout this year, however, Zubretsky said. "In 2018, all those plans were profitable," he said.
Analysts with Jefferies said in a note, "The company also plans to extract more of its remaining $500-600 (million) cost savings target."
The investment bank also cited Molina's improving medical loss ratio across Medicaid, Medicare and the exchange, a metric of how well an insurer is controlling health costs.
The turnaround plan cut nearly 800 full-time employees in 2018, or 7% of the company's workforce. Outsourcing initiatives have also been implemented, Zubretsky said.
During the J.P. Morgan conference earlier this year, he said the company sees $1 billion worth of "revenue lift" this year through its existing book of business.
While Molina reported a dip in membership, its rival Centene added 1.8 million members in 2018 compared to the year prior. Centene attributed the gains to its exchange business and additional Medicaid members.