Dive Brief:
- Molina Healthcare's first-quarter earnings bested Wall Street's expectations. Net income soared 85% to $198 million, or $2.99 per share. Still, the company reported a 9% dip in premium revenue, compared with the first quarter of 2018, though executives said this was in line with their expectations.
- Molina attributed the premium decline to fewer Medicaid beneficiaries, including a previously disclosed loss of a Medicaid contract in New Mexico, and mostly exiting Florida's Medicaid market.
- The Long Beach, California-based insurer reported a staggering 16% margin for its Affordable Care Act marketplace business — once described as an albatross around the neck of the company. It also reported a 7.5% margin for its Medicare line of business.
Dive Insight:
One year after launching a profit improvement plan, Molina has significantly increased its after-tax margin to 4.8%, compared with a 2.3% margin from a year prior.
As Molina continues with its plan, CEO Joseph Zubretsky has tried to reassure investors that Medicaid margins have not peaked. He delivered on that promise Monday when the company reported a Medicaid margin of 2.8%, projected to improve to 3% for the full year.
"These results demonstrate we can sustain the attractive margin position we built in 2018," Zubretsky said during the call with investors Tuesday, referencing the company's financial turnaround last year. The payer also raised its guidance, backed by the momentum of the first quarter.
Molina increased its full-year 2019 guidance. The company now expects to generate between $680 million and $710 million in income compared with the previous guidance range of between $600 million and $630 million.
Molina reported a staggering 16% margin for its Affordable Care Act marketplace business — once described as an albatross around the neck of the company. It also reported a 7.5% margin for its Medicare line of business.
Now, the focus will be growing the topline, Zubretsky said. As the company begins to plan for the 2020 health plan year, it intends to expand into 150 new counties in 2020 for its Medicare business. The company is also preparing to submit an RFP for Kentucky's Medicaid contract.
Molina's membership dipped to 3.4 million, compared with 3.8 million members in the first quarter of 2018.
As its competitors Centene and WellCare are merging, Zubretsky said the company potentially would be interested in divestitures.
"Everybody has written on the speculation of which assets in that combination might have to be divested," he said. "I would say this, if that is true and assets have to be divested, if we are invited in to participate in looking at those assets and we are not ... conflicted then we certainly would want to compete to secure some of those assets."