Molina Healthcare beat profit expectations in the second quarter following a brutal start to the year, but the Medicaid managed-care insurer still reported lower overall net income.
Molina's stock crashed in late April after reporting a dismal first quarter. The Medicaid company posted lower first-quarter net income despite huge gains in revenue. Molina covered more Medicaid lives thanks to the Affordable Care Act's Medicaid expansion and the push from states to move toward privatized Medicaid.
But Medicaid payment rates to Long Beach, Calif.-based Molina did not keep up with increasing medical costs and more people visiting their hospital or doctor, especially in Molina's Ohio, Puerto Rico and Texas markets.
“Two years of hyper-growth across multiple geographies and multiple programs has created a bit of a strain,” CEO Dr. J. Mario Molina said in April.
Molina called second-quarter results Wednesday a “significant improvement” as the insurer recorded lower medical-loss ratios in those markets. Molina's medical-loss ratio in Texas, for example, fell from 92.8% in the first quarter this year to 78.5% in the most recent quarter. Molina's net income decreased 15% to $33 million in the quarter, while revenue rose 24% year over year to nearly $4.4 billion.
As of June 30, Molina had 4.23 million members, a vast majority of whom are enrolled in some type of Medicaid managed-care plan. Molina also covered 597,000 people in the Affordable Care Act's exchanges, down from this year's first quarter but more than double the enrollment from the same time last year.
Molina, which covers 336,000 Puerto Ricans, said in the first quarter that it confirmed only one of its members had been infected with Zika. The insurer did not say if any more members were affected but showed concern about containing the virus.
“This is not a Medicaid-specific risk, but a general public health threat, and the concern now is a lack of adequate funding to local government agencies to respond to Zika in a comprehensive manner,” Molina said Wednesday.