Molina reports $100 million year-over-year drop in profits in 2020
Molina reported a $100 million year-over-year drop in profits in 2020, with a rise in COVID-19 costs, acquisition expenses and the extension of the risk-sharing corridors during the public health crisis cutting into the Long Beach, Calif.-based insurer’s bottom line.
During the fourth quarter ended Dec. 31, Molina reported $34 million in profits, down nearly 80% from the $168 million generated in 2019. The payer’s profits dipped to $673 million at the end of the year, down 8% from the $737 million reported for 2019.
CEO Joe Zubretsky said California, Michigan and Ohio all submitted surprise risk-sharing payments to CMS in December, which added a $400 million expense to the insurer’s bottom line. For the year, the company incurred $565 million in risk-sharing corridor expenses. As more people get vaccinated, and the public health emergency subsides, Zubretsky said more people will return to doctor’s offices, and the uptick in utilization will cause a decline in these expenses. Right now, the lack of utilization also impacted the company’s ability to collect risk scores.
“Seniors didn’t access healthcare so interacting with them was a challenge for many of our companies,” Zubretsky said. “Next year, we’ll either attain the risk scores because they’ll be getting served, or if we aren’t satisfied with that, then we can include that in our bids.”
Revenue proved a bright spot for the insurer. The company’s revenue reached $5.2 billion during its fourth quarter, up 23% from $4.2 billion year-over-year. For calendar 2020, Molina generated $19.4 billion in revenue, up 15% from $16.8 billion the year before, reflecting growth in Medicaid thanks to its acquisition of Passport in Kentucky and YourCare in New York. The public health crisis also caused a rise in the number of lower-income adults and children on the company’s rolls, Zubretsky said.
The insurer ended the year with nearly 3.6 million Medicaid enrollees, up from 2.9 million in 2019. Zubretsky said the company added at least 100,000 people during every quarter of the public health crisis. If the emergency extends beyond April, the company could add up to $150 million in revenue every month. Acting HHS Secretary Norris Cochran recently sent a letter to governors saying he expected the public health emergency to extend through 2021.
In addition to the pause on Medicaid redeterminations, Zubretsky said he hoped the federal government’s move to open a special enrollment period for the Affordable Care Act exchanges would boost the company’s marketplace business, which remained essentially flat year-over-year with approximately 400,000 members. Zubretsky said more companies offering more plans made the ACA very competitive in 2020. Molina also reported a $128 million risk-corridor judgment loss in its marketplace business. Through the special enrollment period, Zubretsky estimated Molina could add up to 30,000 new marketplace members.
“Just what’s come out of the White House these past three weeks is incredibly bullish on government-sponsored healthcare,” Zubretsky said.
The company is still waiting to hear from New York authorities about its $380 million plan to acquire Affinity Health Plan. Zubretsky said he expects the acquisition to close during the second quarter and, if approved, it could add up to $600 million to the company’s balance sheet.
The company is also open to acquiring even more companies in new markets that offer Medicare Advantage or Dual Eligible Special Needs Plans this year, Zubretsky said.
“We love high acuity,” Zubretsky said. “And if it’s underperforming but not broken, all the better.”