The Long Beach, California–based insurer reported total revenue above $4.5 billion for Q1.
Molina Healthcare released its Q1 2020 earnings report Thursday afternoon and reaffirmed its full year financial guidance despite the uncertainties surrounding the ongoing coronavirus disease 2019 (COVID-19) outbreak.
The Long Beach, California–based insurer reported premium revenue of $4.3 billion, an increase of 8.9% year-over-year, while total revenue hit $4.5 billion, compared to $4.1 billion in Q1 2019.
Molina's medical care ratio increased to 86.3% in Q1, though the company stated that the impact of COVID-19 was "limited" during the quarter. Additionally, the company's net income was $178 million during Q1, down $20 million year-over-year.
Though the insurer acknowledged that the ultimate impact of COVID-19 on the bottom line is "not entirely predictable," Molina reaffirmed its guidance for full year 2020 on both earnings per share (EPS) and total revenue. The company projected that its EPS will be in a range between $11.20 to $11.70, with a total revenue of $18.3 billion.
"During this unprecedented time, our team has worked tirelessly to ensure that the needs of all of our constituencies continue to be addressed quickly and effectively," Joe Zubretsky, CEO of Molina, said in a statement. "While our financial results slightly exceeded our expectations, the true highlight of the quarter was the performance of our entire workforce and their rapid operational and clinical response across every dimension of the healthcare ecosystem: truly inspirational. Going forward, while COVID-19’s impact on the U.S. healthcare system and the overall economy may develop in unanticipated ways, we believe that, under all scenarios, government-sponsored health care will continue to play a critical role in addressing the crisis."
Beyond its financial performance to start 2020, Molina announced that it entered into a definitive agreement to purchase Magellan Complete Care (MCC) from Magellan Health for $820 million, net of certain tax benefits.
With the purchase of MCC, Molina is expected to serve more than 3.6 million members in government-sponsored healthcare programs across 18 states. According to its earnings report, the MCC deal is expected to close during Q1 2021.
Molina's deal to acquire MCC comes weeks after its major transaction to start 2020 fell apart.
Two weeks following the conclusion of Q1, Molina announced that it was no longer buying NextLevel Health Partners Inc., a Chicago-based Medicaid managed care organization.
Molina terminated its agreement to purchase NextLevel due to "the seller’s stated unwillingness to close pursuant to the terms of the acquisition agreement."
"Molina Healthcare, Inc’s earnings in Q1 2020, were not materially impacted by the coronavirus. Its EBITDA margin of 6.6% compares favorably with its government-focused peers," Dean Ungar, vice president of Moody's Investors Service, said in a statement. "We believe the company is well-positioned to manage the coronavirus, even if its severity and duration are worse than suggested by current trends. As a Medicaid-focused company, membership growth is likely to be driven by the economic downturn. Molina’s announced acquisition of Magellen Complete Care, will expand its Medicaid footprint and boost earnings."
For complete financial information, review Molina's filing with the Securities and Exchange Commission.
Editor's note: This story has been updated to include commentary from Moody's Investors Service.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.
Photo credit: KIEV, UKRAINE - Dec 18, 2018: Molina Healthcare company logo seen displayed on smartphone - Image / Editorial credit: IgorGolovniov / Shutterstock.com