If you have not done so already, please take the time to read the transcript which includes Q&A conducted during the meeting yesterday (see link below). I hope this helps.
https://www.google.com/amp/s/seekingalpha.com/amp/article/4094096-molina-healthcare-moh-q2-2017-results-earnings-call-transcript
Agreed. Molina was ill-prepared to resolve rapid growth pains and projected unrealistic quarterly earnings in 2016 which bled over into 2017. The company lacked an efficient organizational structure, roadmaps aligned with business growth, and oversight of resources to effectuate lean business strategies in frontline operations, quality improvement, business development, systems management, and administrative support.
Let's be honest and fair. The company grew really fast, but along the way got too bloated. Additionally, a culture of nepotism prevailed. Old timers were protected even though they were not ready to run a $20B company. Some blood letting was inevitable. Too bad it had to come all at once. Had been better if management had been more results oriented all along and kept the company lean and trim. This is a necessary step. As to the way it is being executed ... well the uncertainty is stressful, but I don't see any other way to do this.
What I found most interesting are the target areas for the RIF and hints of what departments will be "redesigned" to increase cost savings so that they can push forward with more business ventures. The plan to strip Molina down to the bone and rebuild it with focus on the basic fundamentals tells me this company is going to continue layoffs until attract more investors and increase their ratings. They even said they may have to continue backing out of more states in the future (if needed). From what I read, Molina's future outlook is grim. The ship is listing and expendables are being thrown overboard to prolonge the inevitable. I apologize, but it's bit difficult for me to stay positive right now. Best wishes to all.
Pft.... Sounds like those emails we get are not all that truthful.
Everyone should take the time to READ the transcript, it provided insight and answers to many questions asked throughout this thread. Below are a few of the experts from the transcript folks - if you want to know more, go to the previously provided.
Per SVP of Investor Relations:
"...We are streamlining our organizational structure to improve efficiency and the speed and quality of decision-making. We expect those changes to be largely complete by the end of 2017 and anticipate that this effort will ultimately yield an estimated $200 million in annual run rate savings...re-designing core operating processes such as provider payment, utilization management, Marketplace risk adjustment, and quality monitoring and improvement to achieve more effective and cost-efficient outcomes. While this effort will extend well into 2018, we hope to see our first meaningful results by the end of 2017...remediating high-cost provider contracts and building around high-quality, cost-effective networks. This initiative will take time and will likely not show meaningful benefits until 2018...restructuring our direct delivery operations. We expect these changes to be complete by the end of 2017. Finally, we are reviewing our vendor base to ensure that we are partnering with the lowest-cost, most effective vendors."
Per the COO/acting CEO (during Q&A):
"...Your third question, I think, was about the nature of staffing reductions we've implemented. I don't think you can say they reach into any specific areas more than others, with a general caveat that most of these reductions are reflecting managers and affect people leaders, individuals higher up in the organization. As part of this effort, we are trying to expand spans of control for managers, which unfortunately is resulting in the exit of a large number of our management personnel."
"...The strategic review initiated very early this year, back in February. I think we're done with the outlines of the plan and the path forward and the setting of savings targets. Of course, there's going to be modifications as we go along. And many of these activities, such as provider re-contracting, vendor re-contracting, will continue well into 2018. But I am confident in saying the plan is fleshed out and is built and is complete in terms of planning and design. Now, again, the operation and the roll-out of the plan will continue through 2018."
"...There's no doubt performance in Texas has been very nice. Performance in some of the smaller states, Michigan and New Mexico, has been nice. California has been okay. Florida, though, has not been a good market for us. We're going to have to look closely at it."
"...there are pockets of the company where we will see additional resources directed. So, for example, contract procurement, business development, RFP team, we'll see more resources directed in that area."
"...There was $55 million of cost take-out last Thursday and that is, obviously, not reflected in these numbers because it was a July event. So we're already $55 million down the path to that $200 million we've committed to for the full year."