Medicaid contract losses weigh on Molina’s top line

Long Beach, Calif.-based insurer Molina Healthcare reported lower revenue but higher profit in the first quarter of 2019 compared with the same period a year ago as it served fewer patients but had fewer expenses.

Molina’s membership decreased by almost 700,000 from the first quarter last year after losing its managed Medicaid contracts in New Mexico and Florida last year. While the company successfully protested the loss in Florida, it still is serving only two regions in the state, whereas it served eight regions previously.

The contract losses, coupled with lower membership in its Medicare and Affordable Care Act exchange plans, brought total membership down to 3.4 million, a decrease of 16.4%. Molina collected less premium revenue for the same reasons. Its total revenue was $4.1 billion, down 11.3%.

Even so, Molina said it had lower expenses in the first quarter, including lower medical care costs, general and administrative expenses, and restructuring costs. Its medical loss ratio, which represents the percentage of premiums spent on medical claims and quality improvement activities, dropped to 85.3% from 86.1% largely because of “improvements” in the company’s temporary assistance for needy families and aged, blind or disabled programs, the company reported.

Molina’s net income increased about 85% to $198 million from $107 million in the first quarter of 2018. Its profit margin after taxes was 4.8% compared with 2.3% a year ago.

“These results are a testament to the achievability of the second phase of our strategy, which is to sustain the attractive margin position we had built in 2018,” Molina CEO Joseph Zubretsky said in the announcement. “While certainly not conclusive, our first quarter results validate our position that durable financial and operational improvement can and should allow us to sustain these margins, all while we begin to grow the top line again.”

https://www.modernhealthcare.com/insurance/medicaid-contract-losses-weigh-molinas-top-line