Molina Healthcare Inc. said Wednesday it will exit the Affordable Care Act's insurance marketplaces in Utah and Wisconsin by the end of this year, citing costs that contributed to hefty losses for the health insurer in the second quarter.
The Long Beach, California-based company also expects the performance of its remaining ACA marketplaces will fall substantially short of previous expectations in the second half of the year.
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Its withdrawal from the ACA public exchanges in Utah and Wisconsin comes ahead of a September deadline for insurers to pull out of the markets or commit to participating in the exchanges in 2018.
Steep losses have prompted some health insurers to back away from ACA public marketplaces. Others have been waiting for signs of stability before committing to staying on next year.
Molina said Wednesday that it is reviewing its participation in other state health exchanges, noting that the performance of its marketplaces in Florida and Washington have been among the most disappointing. It also plans to increase 2018 premiums for its remaining ACA marketplace plans by 55 percent.
The moves are part of a restructuring plan that Molina hopes will begin to right the company. In May, the insurer ousted CEO J. Mario Molina and his brother, John Molina, who was chief financial officer, citing the company's poor financial performance.
As part of the restructuring plan, the company will be laying off 1,500 employees, or 7 percent of its workforce. The job cuts are expected to be completed by the end of this year.
In addition to selling individual coverage in several states on the ACA public insurance exchanges, Molina specializes in administering the state- and federally funded Medicaid programs for poor people and the disabled.
It has about 4.7 million customers, which makes it much smaller than other publicly traded health insurers, such as Aetna Inc. or the Blue Cross-Blue Shield carrier Anthem Inc.
The insurer has said that it has been hurt by a shortfall in support from government programs designed to stabilize insurers during their initial years on the exchanges. It filed a lawsuit earlier this year, seeking to recover about $52 million in payments from the federal government for one of the programs.
All told, Molina slid to a loss of $230 million, or $4.10 per share, in the second quarter. That compares with net income of $33 million, or 58 cents per share, a year earlier.
Analysts' consensus forecast called for earnings of 85 cents per share, according to FactSet.
Molina's revenue came in ahead of Wall Street's projections, climbing to almost $5 billion from $4.36 billion.
The company's stock tumbled $7.24, almost 11 percent, to $59 in extended trading Wednesday following the release of the earnings report.
This story has been corrected reflect that Molina's planned layoffs will represent 7 percent of the company's total workforce, not 10 percent.