Molina Healthcare’s financial turnaround continues, despite a drop in 2018 membership

Finance earnings stock ticker graph
Molina's stunning financial turnaround continues, according to its fourth-quarter earnings. (Getty/monsitj)

Despite a dip in membership last year, Molina Healthcare’s financials continue to make a significant rebound. 

Molina reported a 14% decrease in 2018 enrollment as part of its fourth-quarter and year-end earnings, but regardless of those losses, income reached $707 million in 2018, following a net loss of $512 million the year prior.  

CEO Joseph Zubretsky said on the company’s earnings call Tuesday morning that the improvement in financial performance has allowed Molina to make significant investments in improving operation and making their processes more efficient. 

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“The margin improvement trajectory we’ve experienced is consistent with both our prior disclosures and a discussion of the profit improvement opportunities we have identified,” Zubretsky said.  

Molina expects to see that momentum continue into fiscal year 2019, Zubretsky said. It’s planning for between $600 million and $630 million in net income this year, with margins between 3.7% and 3.9%. 

RELATED: Molina Healthcare saw a stunning turnaround last year. Can the growth continue? 

2017 was a tumultuous year for the company, as it also ousted its CEO and chief financial officer, cut more than 1,400 jobs and exited two Affordable Care Act exchanges. But the comeback in 2018 also has analysts projecting a much rosier future. 

Dean Ungar, vice president and senior analyst at Moody’s, said in a statement emailed to FierceHealthcare that financial turnaround has Molina now on par with many of its Medicaid peers. 

“After a significant loss in 2017, the company posted strong earnings in 2018 with meaningful margin expansion that now compares favorably to its Medicaid-focused peers, along with reduced leverage,” Ungar said. “We expect positive results to continue in 2019, despite previously disclosed contract losses driven by continued cost savings.” 

RELATED: Molina, Centene face the greatest financial exposure following ACA ruling 

Even with the drop in membership, some of the weakest parts of Molina’s business improved over the course of the year, the company said. 

Molina’s highest-performing plans continue to do well, Zubretsky said, and plans that were previously underperforming turned a profit this year. At the beginning of 2018, a quarter of Molina’s revenue was in plans that were not profitable—by the end of the year, all of these plans were profitable. 

“We vastly improved the performance and balance of our health plan portfolio,” he said. 

The improvements in its ACA plans have led Molina to consider expanding its reach in the exchanges, including a return to markets the company exited in 2017, Zubretsky said at the JPMorgan conference last month.

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