Long Beach, Calif.-based Molina Healthcare recorded a $230 million net loss in the second quarter of fiscal year 2017, compared to a net profit of $33 million in the same period last year.
"We are disappointed with our bottom-line results for this quarter and have taken aggressive and urgent steps to substantially improve our financial performance going forward," Joseph White, CFO and interim president and CEO of Molina, said.
Last week, Molina declared it would eliminate about 1,400 jobs over the next few months, with the first round of layoff notices signaling 54 cuts in California by Oct. 1.
While Molina reported a year-over-year increase in revenue to $5 billion in the second quarter compared to $4.4 billion during the same period last year, expenses grew. The payer's operating expenses inflated from $4.3 billion in the second quarter of fiscal year 2016 to $5.3 billion in the second quarter of this fiscal year.
"Based upon revenue and cost trends observed in the second quarter of 2017, we now believe that marketplace performance in the second half of 2017 will fall substantially short of previous expectations. Marketplace performance has been most disappointing," Molina said.
To address the payer's poor financial results, Mr. White unveiled a companywide restructuring plan. In addition to cutting 10 percent of its workforce, Molina will drop ACA exchange plans in Utah and Wisconsin and scale back its footprint in Washington. Molina will also raise premiums for 2018 coverage by 55 percent for remaining exchange products. The premium increase assumes federal cost-sharing reduction subsidies will not be funded.