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Molina fires CEO, CFO on disappointing financials

May 2, 2017

Molina Healthcare on Tuesday ousted its outspoken CEO Dr. J. Mario Molina and CFO John Molina after the company’s recent “disappointing financial performance.”

The Long Beach, Calif.-based insurer’s shares spiked by as much as 16% in the wake of the announcement.

Joseph White, Molina’s chief accounting officer, will take over as interim president, CEO and CFO while the company searches for permanent replacements.

The changes are effective immediately.

Both Molina brothers, whose father founded the Medicaid managed care company, will continue to serve as directors on the company board, according to the announcement.

“The board has determined to change leadership in order to drive profitability through operational improvements,” Molina Chairman Dale B. Wolf said in the announcement.

Molina is slated to release earnings information for the first quarter of 2017 on Thursday.

Molina recorded a loss in the fourth quarter of 2016 of $47 million, compared with a profit of $30 million during the same period in 2015. The company’s 2016 profit for totaled $52 million, down from $143 million in 2015.

The company blamed the Affordable Care Act for the big drop in profit when it announced its fourth quarter financial results in February. Namely, Molina said it had to pay about $325 million into the ACA’s risk adjustment program, which requires plans with healthier enrollees to funnel money to insurers with seemingly sicker enrollees.

Molina also said unpaid funds from the ACA’s risk corridor program exacerbated the poor results. The insurer filed a lawsuit in January demanding payment of the $52 million it says it is owed.

“We are clearly disappointed in these results; however, we have identified and are committed to taking decisive steps to stabilize marketplace performance,” Dr. Molina said in the statement announcing the company’s fourth quarter 2016 results.

Dr. Molina is well known for being one of the most outspoken health insurance company CEOs on health policy matters.

While most CEOs of large publicly traded insurers have kept quiet about the ACA repeal-and-replace efforts, Dr. Molina hasn’t held back. Molina is a major player in the ACA’s public insurance exchanges, where it insures about 1,035,000 members.

Dr. Molina last week sent a letter to Congressional leaders urging them to fund the cost-sharing subsidies that help low-income exchange members afford insurance. He warned them that Molina would drop out of the exchanges immediately if the subsidies go unfunded.

Dr. Molina also told Modern Healthcare in March that the GOP’s newly introduced ACA repeal bill, known as the American Health Care Act, would increase premiums and further destabilize the marketplace.


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