Molina Healthcare

Molina Healthcare renders medical services within the state program of Medicaid assuming assistance to the American families with low income. Medicaid is one of the largest items of expenditure in the federal budget of the USA. Molina Healthcare works also with other state programs in the field of health care.

Performance Indicators

2019: Revenue - $16.83 billion, net profit - $737 million

The Molina Healthcare company completed 2019 with revenue in the amount of $16.83 billion that it is less, than the previous year when sales were measured by $18.89 billion. The company got net profit at the level of $737 million, having increased with $707 million in the 2018th.

Almost all turnover of Molina Healthcare forms due to insurance and tax payments when rendering medical services. In 2019 the amount of this business reached $16.21 billion, having decreased from $17.61 of an indicator of year prescription. Tax payments increased from $417 million up to $489 million.

Financial performance of Molina Healthcare

In the columns "return of payments to insurance companies" and "service revenue" there are zero at the end of 2019. In the 2018th indicators equaled $329 million and $407 million respectively. Earnings on investments and other sources of income in 2019 rose to $132 million from $125 million in 2018.

Revenue of Molina Healthcare from the program of health insurance  Medicaid in 2019 made $12.47 billion that it is less, than the previous year ($13.62 billion). In the Medicare program income, on the contrary, increased — from $2.07 billion in 2018 up to $2.24 billion a year later.

Expenses of Molina Healthcare in the Medicaid program at the end of 2019 were equal $10.97 billion, having decreased with $12.26 billion costs of year prescription. Expenses within Medicare rose from $1.75 billion to $1.91 billion.

According to the CEO of Molina Healthcare  Joseph Zubretsky,  the company is happy with annual results as profitability according to the Medicaid and Medicare programs was improved.

By the end of 2019 of Molina Healthcare  money and investments in the amount of $997 million accumulated that it is significantly more, than three months before ($796 million). The Board of Directors approved the program for share repurchase of stocks for the amount to $500 million. The large volume of dividends is also paid.^[1]

2017

Revenue in $20 billion and losses in $512 million

In 2017 revenue of Molina Healthcare reached $19.88 billion, having increased with $17.78 billion the previous year. At the same time the company left at a loss, having recorded it at the level of $512 million whereas in 2016 profit equal to $52 million took place.

Molina Healthcare explained severe monetary losses with expenses on restructuring and the fact that the federal government stopped payments of subsidies which as consider in the company, still should be paid.

According to the CEO of Molina Healthcare Joe Zubretsky, loss of contracts and the related write-offs in connection with impairment of goodwill (the asset characterizing non-material advantages of the company over the competitors in the market) and also the remaining restructuring costs and correction of unacceptable results in the direction of Marketplace (the exchange of medical insurance) became heritage of the past.

Financial performance of Molina Healthcare

In 2017 the company started the program of optimization Project Nickel within which, in particular, hundreds of employees were dismissed and management of 17 clinics in California is stopped.

Annual losses of Molina Healthcare from impairment reached $470 million, expenses on restructuring and departments of assets — $234 million, loss because of canceling of subsidies by Washington — $73 million.

Though insurance companies are legally obliged to prolong reduction of prices for participants of the exchange of health insurance who satisfied terms of the contract, Washington stopped providing compensations to insurers, noted in Kaiser Family Foundation.

Almost all revenues of Molina Healthcare fall on insurance premiums which volume in 2017 was $18.85 billion against $16.45 billion in the 2016th. Service revenue decreased from 539 to 521 million dollars. By the end of 2017 the company serviced about 4.5 million clients that is 300 thousand more than an indicator of year prescription.^[2]

Joseph Zubretsky — the new CEO

In October, 2017 the Molina Healthcare company appointed Joseph Zubretsky the new head within restructuring. Read more here.

Legal case prize for $52 million at the American authorities

In August, 2017 Molina Healthcare won court against the American authorities. The company will receive the compensation for expenses relying it within Obamacare — the Law on available medical care (Affordable Care Act, ACA)

By the end of 2016 of ACA helped to provide an insurance coverage for 9.9 million Americans through the private medical insurance companies subsidized by the state. But in some cases this law delivered before insurers and hospitals complex and formidable problems.

Molina Healthcare seized $52 million payments for the program of medical insurance of Obama from U.S. authorities

For the purpose of decrease in financial load of insurance companies the American government entered assignments for them — so-called "corridors of risk". Their essence is that insurance to the companies damages (if they are) within the first three years after the accession to Obamacare are paid. First of all, such initiative is expected the help to those insurers who had too many sick clients and an unbalanced insurance pool.

Molina sustained monetary losses during the period from 2014 to 2015, however did not receive the relying compensation from the authorities.

On August 4, 2017 the Federal Court of Claims  of the USA made the decision according to which into accounts of Molina from the budget of the Obamacare program money in the amount of $52 million should arrive.

The government bears responsibly for violation of legal and contract commitments on annual payments to the insurance companies participating in the program of a corridor of risk — the judge said.

Republican opponents of Obamacare claimed that funds for a covering of corridors of risk are allocated by the Congress, and the amendments in the bill connected with appropriations for 2015 and 2016 prohibited such payments. The court rejected these arguments.

Earlier payments along corridors of risk were reviewed by the authorities towards reduction that led to severe losses of insurers and closing of the non-profit insurance cooperatives created according to the Law on available medical care.^[3]

Reduction of 1400 jobs

In July, 2017 it became known of mass layoffs in Molina Healthcare. The company reduces number of staff after losses from the medical state programs created by the former U.S. President Bark Obama (Barack Obama).

According to Reuters agency with reference to the internal document Molina, the company reduces about 1400 jobs. Process will last several months.

Molina Healthcare reduces 1400 jobs because of programs of medical insurance of Obama

It is going to liquidate about 10% from 7700 working positions connected with health insurance and also to dismiss 10% from 6400 people who are carrying out corporate tasks in the company. The purpose of this personnel cleaning is the attempt to optimize expenses by 2018.

The program of reductions will not concern division of psychological and mental health services of Pathways in which about 5500 employees work.

We should undertake measures exclusive strategically, doing more with smaller costs — the acting as general and financial directors of Molina Joe White in the letter sent to employees of the company said.

According to Whyte, Molina faced uncertainty both in the company, and beyond its limits.

Dismissals became known several months later after Molina announced losses in the amount of $91 million according to the results of the fourth quarter 2017. Monetary losses were in many respects connected with heavy expenses on patients within the program of preferential medical insurance Obamacare.

In May, 2017 the CEO of Molina Mario Molin and his brother chief financial officer John Molin resigned.

From the moment of dismissal of heads by July 24, 2017 the quotations of the company jumped by 38%. In day when it was announced reduction of 1400 jobs, actions fell in price by 0.8%.^[4]

Vulnerability in the IT system

In May, 2017 the specialist in information security field Ben Krebs announced that the web portal for patients of Molina Healthcare had vulnerability which allowed to obtain information on any patient without input in its account.

According to Krebs, for the first time he learned about a lack of the IT system of Molina Healthcare from one of the sources in April, 2017. The problem was that by simple change of digits in the link (URL) to the portal anyone could open the patient's card. Access was completely open and did not require authorization in a system under other account.

The web portal for patients of Molina Healthcare had vulnerability which allowed to obtain information on any patient without input in its account

As a result of simple manipulations it was possible to obtain such information as a name of the patient, residence, date of birth, the diagnosis and the prescribed drugs. Though social security numbers could not be learned thus, data retrieveds could be enough for swindlers for implementation of criminal schemes.

Extremely inadmissibly, that such simple error existed at the large supplier of medical services today. However, the more I write about these trivial omissions which actually are very serious vulnerabilities in medical institutions, the more I hear about them from readers — Ben Krebs reported.

Molina Healthcare fixed a problem, but at the same time disconnected the portal to make investigation and additional system testing of security. The company did not reveal number of patients whose data theoretically could get to free access. By the end of May, 2017 Molina Healthcare has 4.8 million clients.^[5]

Notes