Troubled insurance giant Molina Health Care Inc. on Feb. 12 reported a more than $500 million loss last year, with more than half occurring in the fourth quarter.
The Long Beach Fortune 500 firm, now in the midst of a wholesale makeover, announced the loss after the afternoon closing bell on Wall Street.
“Our fourth quarter results are emblematic of the significant transition Molina is undertaking,” said Joe Zubretsky, the chief executive hired in November to turn around the company, in a statement. “The disappointment of contract losses and related goodwill charges, continued restructuring costs and catch-up adjustments to unacceptable marketplace results are legacies of the past.”
Molina Health 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, Molina was forced to fire its top executives and lay off 1,400 employees – 10 percent of its workforce – to cut costs.
On Feb. 12, the company reported a net loss of $512 million in 2017, compared with $52 million in net earnings the year before.
In the three months ended Dec. 31, it posted a net loss of $262 million ($4.59 a share), compared with a $97 million loss in the third quarter ($1.70 per share).
Total fourth quarter revenue climbed to $4.7 billion from $4.2 billion. Total revenue for 2017 climbed to $18.85 billion from $16.45 billion in 2016.
The Q4 loss included $356 million of impairment loses, restructuring and separation costs, and loss on debt extinguishment, according to Molina. Another $53 million was lost because of increased medical care costs after the end of cost sharing reduction subsidies for low-income enrollees in Affordable Care Act health plans, the company reported.
On the upside, the company reported that its medical care ratio, or insurance loss ratio that measures medical cost as a fraction of premium revenue, had declined from 90.9 percent to 88.8, while its general and administrative costs had dipped.
“Looking forward, the core business results showed improvement quarter over quarter and we took steps to strengthen the quality of the balance sheet,” Zubretsky said.
The share price for Molina after the announcement was $75, with a more than 4 percent loss in after-hours trading. Its market cap was $4.68 billion.
Health business reporter Dana Bartholomew can be reached at firstname.lastname@example.org. Follow him on Twitter @_DanaBart.