Despite the COVID-19 pandemic battering the economy and the larger healthcare industry, Molina’s profit spiked 40% to $276 million for the second quarter ended June 30, according to the results posted Thursday aftermarket. Revenue increased 10%, hitting $4.6 billion, though both revenue and earnings fell short of Wall Street expectations.
Enrollment increased nearly 6% to more than $3.5 million as all its lines of business reported membership gains, though Medicaid, its largest segment, brought in the most lives with 160,000 compared to the second quarter of 2019.
Given the uncertainty brought on by the pandemic, Molina has yet to adjust its full-year earnings guidance of $11.20 to $11.70 per diluted share. Though it has increased its revenue forecast to $18.8 billion from its previous estimate of $18.3 billion.
Molina, alongside the nation’s largest insurers, reported a swell in profits during the second quarter of 2020, a period that experienced the brunt of the pandemic as fewer Americans visited their doctor’s offices and hospitals for care.
Centene, Anthem and UnitedHealthcare all reported a drop in the amount they spent on care for members, which they blamed on significantly depressed utilization as patients either feared venturing to a medical facility or were turned away due to restrictions on elective procedures.
Overall due to the coronavirus, Molina estimates its care spending was down between $90 million and $240 million, CEO Joe Zubretsky said during Friday’s earnings call.
Its medical cost ratio fell to 82.3% from 85.6% during the prior-year period.
The medical cost ratio is an important measure for insurers as it shows the amount a carrier spends on medical claims as compared to the amount it collects from premiums. However, thanks to the Affordable Care Act, there are parameters that limit insurer profits and stipulate how much of a member’s premium must be spent on their care.
Molina outlined on the call that six states in which it operates have retroactively changed rates to Medicaid managed care operators as care usage slows.
The payer estimates the retroactive rate changes represented a total of $75 million in refunded capitation payments, or per member, per month payments, that were received from Ohio, Illinois, California, South Carolina, Mississippi and Washington.
As insurers have benefited from the pandemic, providers have struggled as volumes have waned. The public health crisis is growing more urgent in some areas of the country as cases continue to climb, threatening further shutdowns and restrictions on elective care.
For its part, Zubretsky said that Molina experienced 4,100 COVID-19 hospitalizations among its members in the quarter, representing an average of $9,000 per hospitalization. Though he warned the cost per COVID-19 episode varies widely depending on the acuity of each patient.
Molina has said it expects a significant bump in Medicaid enrollment as the virus chokes the economy and severs Americans from their jobs and employer-based coverage.
Though, similar to its competitor, Centene, Molina said enrollment spurred by the loss of employer-based coverage has trickled in more slowly than initially anticipated.
As the country has been battered by the virus, Molina has continued to execute on its strategy of snapping up health plans to grow the company’s core competencies — government-sponsored health plans.
Most recently, Molina announced its acquisition of Kentucky’s second-largest Medicaid plan. Prior to the $20 million deal in the bluegrass state, Molina completed an acquisition in New York that more than doubles its footprint there, one of the nation’s largest Medicaid markets.