Molina Healthcare reported an increase in Medicaid membership during a tumultuous time for the line of business — and hinted that more acquisitions could be on the horizon.
The insurance company, which operates Medicaid, Medicare and exchange plans, said during its second-quarter earnings call Thursday that its successes in winning state contracts and expanding into new areas have softened the losses resulting from the redeterminations process.
Related: Why the Medicaid 'unwinding' dinged insurer finances
Given its positioning, executives told financial analysts the company is focused on growing organically, winning new state contracts and pursuing mergers and acquisitions.
“You'll hopefully see Medicaid transactions here over the next 12 to 18 months. We're still very active in that space,” President and CEO Joseph Zubretsky told financial analysts. “The last two we did were non-Medicaid, but that doesn't mean we're not actively pursuing them.”
Molina announced plans Tuesday to acquire marketplace- and Medicare-focused health insurance company ConnectiCare for $350 million. In January, Molina finalized its $425 million purchase of Bright Health Group’s California Medicare Advantage business.
Molina Chief Financial Officer Mark Keim said the company anticipates medical cost trend up 1.5% for the full year across its business. Medicaid managed care organizations, including Molina and competitors UnitedHealth Group and Elevance Health, have been vocal about challenges related to higher-than-expected medical costs in their Medicaid books following acuity shifts from the redeterminations process. Carriers are collaborating with states to set rates accounting for the higher costs.
“[Medical cost trends are] nothing out of the ordinary and nothing that can't be dealt with, particularly as our corridor position absorbs these trends, and then [state] rates kick in to pick up the slack,” Zubretsky said on the call.
Executives remain bullish on Medicaid, the company’s flagship program. They reaffirmed the insurer’s full-year 2024 Medicaid membership expectation of 5.1 million members, which would include an estimated loss of 600,000 members from the Medicaid redeterminations process.
Membership growth during redeterminations was linked to expansion into new markets, executives said.The company was awarded a new Florida contract this month. It received a notice of intent from Wisconsin on a contract win in May and one from Michigan in April. Its other Florida and Virginia contracts were also extended through this year.
Molina recorded higher second-quarter membership across all its insurance businesses. Its Medicaid business grew to 4.9 million members, up 4.2% from the year-ago period. In contrast, UnitedHealth Group and Elevance Health reported last week Medicaid membership declines of 11.3% and 23.2%, respectively.
For the quarter, Molina’s net income slipped 2.6% to $301 million as total revenue rose 18.7% to nearly $9.9 billion compared with the prior year period. Executives linked revenue growth to new contracts, acquisitions and growth in their footprint, slightly offset by Medicaid redeterminations.
Molina’s overall medical loss ratio, which measures the amount of premiums spent on claims, was 88.6%, versus 87.5% a year ago.
Molina’s Medicare membership ballooned 51.2% from the year-ago period to reach 251,000 customers, and its marketplace book grew 43.5% from year-ago period to 386,000 members. In total, Molina counts about 5.6 million members, up 7.8% from the year-ago period.