Months after the troubled Fortune 500 insurance company announced a wholesale makeover, Molina Healthcare Inc. reported a $97 million third-quarter loss.
It could have been worse. Shares of the Long Beach firm rose 15 percent Friday after income from operations exceeded Wall Street expectations.
“During the third quarter, we made significant progress on our restructuring efforts, bringing us one step closer to becoming a more consistent and profitable company,” said Joseph White, its chief financial officer and interim chief executive, in a statement.
The company develops health plans for needy residents on Medicare or Medicaid who buy insurance through subsidized markets such as Covered California.
But hit by lower enrollments and higher costs, it posted a net loss of $97 million ($1.70 per share) in the third quarter ended Sept. 30. This compares with a $42 million profit (76 cents) a year earlier.
The reported loss included a $3.16 per share in impairment and restructuring costs and a 33 cent per share premium deficiency reserve. Backing those numbers out, operational adjusted earnings came to $1.13 per share. This beat a Zacks Investment Research consensus estimate of 23 cents a share.
Total revenue climbed to $5.03 billion from $4.55 billion.
The news comes during an unstable insurance market rocked by President Donald Trump’s decision to dump billions of dollars in federal subsidies that help insurers discount plans for poor families.
Molina Healthcare announced this summer it would lay off 1,400 employees – 10 percent of its workforce – to cut costs. It followed the abrupt firing of the company founder’s two sons: J. Mario Molina, who was chief executive, and John Molina, who was chief financial officer.
A new chief executive, Joseph Zubretsky, who previously served as head of Hanover Insurance Group, starts Monday.
The company, which has a market capitalization of $4.5 billion, provides managed health plans for about 4.7 million people, mostly low-income patients on Medicare and Medicaid in 12 states and Puerto Rico. Though its membership and revenue grew last year, net income plunged to $52 million from $143 million in 2015, according to the company’s annual financial report.
Molina Healthcare stock closed at $79.18 on Friday, nearly 19 percent higher than the start of the week.
Health business reporter Dana Bartholomew can be reached at firstname.lastname@example.org. Follow him on Twitter @_DanaBart.