Revenue sagged for insurer Molina Healthcare as the company generated $196 million in profit in the second quarter, a year-over-year decline of 3%.
Molina reported in its latest financial data Tuesday that premium revenue for the 2019 second quarter was $4 billion, a roughly 10% decrease compared with the second quarter of 2018. However, the decline was in line with the company’s expectations after losing several Medicaid contracts.
The insurer was also optimistic about the risk profile for its Affordable Care Act exchange population.
"The risk pool has seasoned and our medical costs is stable and being well managed stabled," said CEO Joseph Zubretsky on an investor call Wednesday. "We are capturing more accurate risk scores and as a result we are paying less into the risk pools."
He added that membership in the exchanges for Molina is lapsing at an expected rate of less than 2%.
Zubretsky added that Molina has submitted its 2020 coverage year bids but declined to reveal the rates which don't get finalized until this fall.
"Our approach is to perform a very detailed market by market analysis to evaluate our competitive pricing position," he said.
Molina had a medical care ratio of 64.7% and an after-tax margin of 13.6% in the first half of 2019. The consolidated medical care ratio for the second quarter for all of Molina's business (which includes Medicare and Medicaid) was roughly in line with 2018 (85.6% compared to 85.3%).
For the first six months of 2019, premium revenue overall decreased by nearly 10% from $8.8 billion in 2018 to roughly $8 billion this year.
The consolidated medical care ratio for the second quarter was roughly in line with 2018 (85.6% compared to 85.3%). The insurer raised its full-year 2019 earnings guidance from $10.50 to $11 in income per share to $11.20 to $11.50.
It also slightly raised its revenue guidance from $16.4 billion to $16.7 billion and its net income to $725 million to $740 million compared to an earlier estimate of $680 million to $710 million.
The dip in premium revenue comes as Molina retreats from several Medicaid markets, including the loss of its Medicaid contract with New Mexico.
The insurer also resized its Florida Medicaid contract and transitioned out of all but two Florida regions throughout 2018. Molina is attempting to claw its way back from a tumultuous 2017 that saw the ouster of founder and CEO Jose Molina.