Molina Healthcare, which is struggling to regain its footing after a management shakeup and amid an ongoing restructuring effort, said Tuesday that it lost $512 million in 2017.
For the fourth quarter alone, the California-based insurer reported a net loss of $262 million, or $4.59 per diluted share. Comparatively, the company reported a $47 million loss in Q4 2016 and a $52 million profit for that full year.
One factor that worsened Molina’s fourth-quarter 2017 results was the Trump administration’s decision to stop funding cost-sharing reduction (CSR) payments. The company said that move increased its loss before income tax benefit by about $73 million.
Indeed, the performance of Molina’s Affordable Care Act marketplace plans played a big role in setting its earnings on a downward spiral in the first place. That resulted in the ouster of J. Mario Molina, M.D., and John Molina, who are the sons of the company’s founder and had served as its CEO and CFO, respectively.
Molina’s new CEO, Joseph Zubretsky, said in his prepared remarks during Tuesday’s earnings call that the company’s fourth-quarter results are “emblematic of the significant transition Molina is undertaking.”
“The disappointment of contract losses and related goodwill charges, continued restructuring costs, and catch up adjustments to unacceptable marketplace results are legacies of the past,” he said.
Zubretsky said the company has take steps to mitigate its ACA exchange losses by taking steps such as reducing its marketplace footprint and increasing premiums by an average of 59% for 2018.
And on the subject of CSR payments, CFO Joseph White added that “we believe that we are legally entitled to these federal payments and we will pursue all means to collect them.” Notably, four other insurers have sued the Trump administration over the CSR funding stoppage.
On top of Molina’s ACA exchange troubles, the company also recently lost a bid to renew its Medicaid managed care contract in New Mexico, and disclosed that in Florida, it was selected to bid for a contract in just one region out of the eight that it currently services.
Relating to Florida, Zubretsky said the company is “taking urgent and focused actions to secure this revenue base,” starting by securing the contract for the selected region and then appealing if necessary. He added that Molina is in the appeals process regarding the New Mexico decision. But if either contract loss stands, he warned, it will have “significant negative impact” on the company’s revenue.
Those concerns, aside, however, Zubretsky stressed that the overall performance of the company’s Medicaid and Medicare business lines was “respectable.” He noted that its medical loss ratio, excluding the marketplaces, declined from 90.9% in the third quarter of 2017 to 88.8% in Q4.
“Looking forward, the core business results showed improvement quarter over quarter,” Zubretsky said.