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2017-05-03 06:35:03
Molina, Key Provider Under Obamacare, Ousts C.E.O., a Trump Critic

Dr. J. Mario Molina, the outspoken chief executive of the California health insurance company founded by his father, was abruptly removed from his position at Molina Healthcare, according to an announcement by the company on Tuesday. His brother, John, the company’s chief financial officer, was also immediately replaced.

Dr. Molina, the subject of a profile in The New York Times earlier this year, was one of the foremost critics of the steps taken by the Trump administration and Republicans in Congress to overhaul the federal health care law. Under his leadership, Molina, which specializes in providing care to low-income individuals under the Medicaid program, had become a mainstay of the individual insurance markets created by the law. The company signed up about one million customers in the state marketplaces, and it offers Medicaid plans in 12 states and Puerto Rico.

Attempts to reach Dr. Molina for comment were unsuccessful, and the company declined to make any executives available for interviews.

But Molina had been struggling financially in the individual marketplaces and stunned investors when it reported that it had lost hundreds of millions of dollars last year, for which executives blamed a flawed government formula. Dr. Molina repeatedly warned that the company could withdraw from the markets if federal officials failed to make changes to the program. Molina’s stock fell significantly on the news of its 2016 results.

The ouster of two brothers did not seem to be an indication that the company’s financial performance in the marketplaces had worsened, with executives emphasizing on a call with analysts on Tuesday that its results had improved this year and were in line with earlier expectations.

Like other insurers, Molina also stressed the uncertainty over the individual market’s future, pointing to the lack of clarity over whether the federal government will provide critical funding for low-income customers. Just last week, Dr. Molina had written a letter to Congress urging them to fund the subsidies.

“We are currently evaluating all our options,” said Joseph W. White, who had been the company’s chief accounting officer. He will temporarily fill the role of chief executive. He was also named the company’s chief financial officer as part of the management changes.

Like other insurers, Molina indicated it would make decisions about whether to sell plans and at what price in the coming weeks, although Mr. White said it would be difficult to continue without the subsidies.

Analysts on the conference call Tuesday pressed for an explanation as to why the Molinas were removed, and were told that the board wanted to improve the company’s performance and pay more attention to day-to-day details. Dale B. Wolf, a former health insurance executive and board director who was named chairman as part of the changes, assured analysts that the company’s “business remains strong.”

“It was just our sense, all things considered, that this was necessary and a right thing to do,” he said. Mr. Wolf declined to specify any further changes Molina might be contemplating.

The company said it would be conducting a search for a chief executive. The Molina brothers remain directors, and Dr. Molina is up for re-election at the next annual meeting, which was postponed until next week.

The family no longer has a majority ownership in the company, founded by Dr. C. David Molina in 1980.

On Tuesday, analysts speculated that the board could also be preparing the company for a possible sale. The megamergers by some of the nation’s largest health insurers, including Anthem and Aetna, were blocked by the Justice Department as being harmful to consumers. As a result, the large insurers remain on the prowl for possible acquisitions.

Among the potential buyers, according to Ana Gupte, an analyst with Leerink Partners, is WellCare Health Plans or Aetna, although UnitedHealth Group, Anthem and Centene could also be interested if they thought they could pass the possible regulatory scrutiny.

Molina’s shares rose sharply on the news, closing Tuesday at $59.75 a share, an increase of about 18 percent.