Feb. 12, 2019
Dive
Brief:
- Molina
Healthcare on Monday reported
a 14% drop in 2018 membership compared with the year prior leading to a
dip in premium revenue for both the fourth quarter and full year.
- However,
net income did improve substantially from a significant net loss of $512
million in 2017 to a gain of $707 million in 2018.
- Analysts at Jefferies
characterized the better-than-expected results as "eye-popping."
Dive
Insight:
The Long Beach,
California-based managed care company reported dips in key membership lines,
including its Affordable Care Act marketplace
business. However, improved margins led to a strong quarter, CEO
Joseph Zubretsky said during a call with investors Tuesday.
The marketplace
business reported a steep decline in members but delivered an after tax margin
of 11.4%, Zubretsky said. It represents a significant improvement from the
years prior. Zubretsky has previously described that unit as an "albatross
around the neck of the company."
At the beginning
of 2018, the company said 25% of its revenue was in plans that were not
profitable. A profit improvement plan has made significant strides throughout
this year, however, Zubretsky said. "In 2018, all those plans were
profitable," he said.
Analysts with
Jefferies said in a note, "The company also plans to extract more of
its remaining $500-600 (million) cost savings target."
The investment
bank also cited Molina's improving medical loss ratio across Medicaid, Medicare
and the exchange, a metric of how well an insurer is controlling health costs.
The turnaround
plan cut nearly 800 full-time employees in 2018, or 7% of the company's
workforce. Outsourcing initiatives have also been implemented, Zubretsky said.
During the J.P.
Morgan conference earlier this year, he said the company sees $1 billion worth
of "revenue lift" this year through its existing book of
business.
While Molina
reported a dip in membership, its rival Centene added 1.8 million members in
2018 compared to the year prior. Centene attributed the gains to its exchange
business and additional Medicaid members.
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