Molina Healthcare Inc.

Molina Healthcare, Inc. (MOH) Accused of Wrongly Touting High Expectations for Its Administrative Infrastructure

According to the complaint, Molina Healthcare, Inc. (MOH) predicted that the company would grow revenues from $6 billion to $12 billion with the help of a scalable administrative infrastructure designed to accommodate Medicaid expansion. Despite these optimistic forecasts, the company’s administrative infrastructure could not support rapid growth into existing Medicaid markets and new Patient Protection and Affordable Care Act health insurance marketplaces (“ACA Health Exchanges”) in a cost-effective manner. On April 28, 2016, Molina reported a sharp earnings miss for the first quarter of 2016 and drastically cut full-year 2016 earnings guidance, citing higher costs associated with administrative capacity issues. Then, on February 15, 2017, Molina cautioned that the company could not commit to ACA Health Exchange participation beyond 2017. Finally, on August 2, 2017, Molina reported a net loss of $230 million for the second quarter of 2017, admitting that its administrative infrastructure was never designed to sustain rapid growth.

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