In a surprise shake-up, Molina Healthcare Inc.—a major player in the Obamacare health insurance markets—ousted its two top executives, both sons of the firm’s founder, on grounds of poor financial results, it was reported on Wednesday.
The growing Long Beach-based health insurer has nearly 5 million customers in 12 states and Puerto Rico, most of them insured through Medicaid, the government program for the poor, according to the Los Angeles Times.
In California, Molina insures 765,000 people and operates its own clinics around the state. The company also has Medicare programs, and more than 1 million customers who purchased a plan on one of the marketplace exchanges created by the Affordable Care Act, or Obamacare.
The company’s shares soared as much as 20 percent on Tuesday after it said that J. Mario Molina, the company’s chief executive and an outspoken critic of Republican efforts to repeal the ACA, and his brother John C. Molina, the chief financial officer, had been fired, according to The Times.
Analysts have long viewed Molina as a potential acquisition target of a larger insurer. Removing the brothers could make such a deal easier, analysts told The Times.
In remarks reported in Long Beach by the Press-Telegram, John Molina said he and his brother were not provided an official reason for their ouster.
“The resolution just said that we were terminated without cause,” he said.
The two brothers will be replaced by Joseph White, currently the company’s chief accounting officer. White will serve as chief financial officer and interim chief executive while the board seeks a replacement for the top post. The board also named Dale Wolf, a director, as the company’s new chairman.