Molina sees Q1 profit boost even as membership declines 

Molina Healthcare saw a profit boost in the first quarter of 2019 even as revenues sagged, according to the company’s latest financial data. 

Molina held its quarterly earnings call Tuesday and reported an 85% increase in net income year over year from $107 million to $198 million, according to the data. However, total revenue declined by about $500 million from the first quarter of 2018, dipping from $4.6 billion to $4.1 billion. 

The financial results can be chalked up to a decline in membership alongside a decline in expenses. Total membership across Molina’s plans decreased from nearly 4.1 million to close to 3.4 million, but its medical cost ratio also declined by about 1% from the first quarter of 2018, lowering costs. 

As a result, Molina increased its 2019 outlook. It now projects between $10.50 and $11 in income per share, up from a projected $9.25 to $9.75. It estimates net income for the coming year at between $680 million and $710 million, an increase from between $600 million and $630 million. 

“These results are a testament to the achievability of the second phase of our strategy, which is to sustain the attractive margin position we built in 2018,” CEO Joseph Zubretsky said.  

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Molina has been on a financial upswing following a rough 2017 that saw the ouster of its then-CEO J. Mario Molina and Chief Financial Officer John Molina, sons of the insurer’s founder, amid a significant decline in its Affordable Care Act business. 

Analysts put a positive spin on Molina’s ongoing financial performance. In a report, Moody’s Investors Service upgraded its ratings for the company and changed its outlook to positive. 

Moody’s attributes much of that change to the new management team’s pivot to new processes and its reduced focused on expansion, which dominated much of its business in 2015 and 2016. 

Dean Ungar, Moody’s vice president, said in a statement that Molina could also be a benefactor if finalizing the planned merger between Centene and WellCare requires either company to divest part of their Medicaid portfolio. 

“A key credit driver for Molina is the sustainability of its much-improved earnings and margins,” Ungar said. “A credit positive first quarter was underpinned by stronger earnings and margin growth driven by medical management and operational efficiency.”