Citing poor financial results, Molina Healthcare has removed its top two executives, both sons of its former founder.
Molina is one of the major publicly-traded insurers still active on the health care exchanges, with more than 1 million customers enrolled, according to the LA Times.
The shake-up could mean one of two things for the future of the company, or possibly both. First, the company could be for sale, or preparing to sell. Second, we’re likely to see it become much more conservative, which could mean major rate increases on its ACA business or leaving the exchanges entirely.
On February 15, Molina issued their 2016 earnings report which estimated their annual loss from the Marketplace program at approximately $110 million before taxes. In a letter CEO J. Mario Molina sent to Congress just last week, he threatened to withdraw from the marketplace if the government drops cost-sharing subsidy payments for those plans. He wrote that Molina currently covers about 9 percent of all Americans enrolled through the exchanges.
The LA Times reports that shares rose as much as 20 percent as news broke that CEO J. Mario Molina and his brother John C. Molina (CFO) were let go.
In August 2016, Molina entered separate agreements with Humana and Aetna to purchase $117 million worth of Medicare Advantage business (about 290,000 customers) as the two latter companies attempted to merge.
The transactions were subject to the completion of Aetna’s $34 billion acquisition of Humana, a merger that was called off on February 14.