Molina Extends CEO Joe Zubretsky’s Contract Through 2027

Dive Brief:

• Molina Healthcare has entered into a contract to keep CEO Joe Zubretsky at the helm of the insurer through the end of 2027.
• Under the deal, Zubretsky received more than 146,000 performance-based restricted stock units that will vest if the company meets adjusted earnings per share goals in 2027, according to a Tuesday securities filing. The shares would be worth nearly $51 million based on Molina’s stock price at market close on Tuesday.
• His annual compensation is unchanged, Molina said in a press release. Zubretsky earned $21.5 million in total compensation last year, according to a March proxy statement. 

Dive Insight: 

Zubretsky took the reins at Molina in 2017. His appointment came months after the payer abruptly removed former CEO Mario Molina and CFO John Molina, citing the company’s disappointing finances and the need to drive profitability. 

Since then, the insurer has significantly boosted its stock performance. The company’s share price increased more than 500% since early 2017. 

Molina has faced some turbulence in Medicaid this year, the safety-net insurance program from which the company draws most of its revenue.

Medicaid rolls swelled during the COVID-19 pandemic as states kept beneficiaries continuously enrolled in exchange for increased federal funding. 

But that pandemic-era policy ended more than a year ago, setting off the redeterminations process — and states have since removed nearly 25 million Medicaid enrollees from the program, according to health policy research firm KFF. 

Molina expects to lose 600,000 of its Medicaid members once redeterminations are complete, the insurer said on a second-quarter earnings call last month. 

But the insurer still beat investor expectations on earnings and revenue in the second quarter, increasing its topline nearly 19% as it scored new Medicaid contracts and grew its existing businesses. 

The company is interested in more acquisitions too, Zubretsky said on the earnings call. Last month, Molina entered into an agreement to buy insurer ConnectiCare for $350 million, bringing the payer into Connecticut.

The company also closed a deal to buy Bright Health’s Medicare Advantage plans in California early this year.