(Bloomberg) — Molina Healthcare Inc. will remove its top two executives in a surprise shake-up at the family-run insurer, raising speculation that the company could be sold and sending its shares soaring.
The company said it is replacing Chief Executive Officer J. Mario Molina and Chief Financial Officer John C. Molina, who are brothers. They’ll be succeeded by Chief Accounting Officer Joseph White, who will become permanent CFO and serve as interim CEO while the company searches for a new chief. The Molinas will remain on the insurer’s board for now, the company said in a statement Tuesday.
“In light of the company’s disappointing financial performance, the board has determined to change leadership,” Chairman Dale Wolf said in the statement.
The shares jumped 16% to $58.83 at 2:04 p.m. in New York, after earlier rising as much as 20 percent, the biggest intraday gain since June 2012.
Analysts have long speculated that Molina could be a target for an acquisition, though the Molina family’s role was seen as a potential barrier.
Ana Gupte, an analyst at Leerink Partners, said the departure of the Molina brothers could lead to improved financial results, and increases the chance the company will be sold. Aetna Inc. and WellCare Health Plans Inc. are the most likely acquirers, she said.
Tom Carroll, an analyst at Stifel Financial, said the company will probably need to improve its results before it can be sold. He said Molina’s margins have lagged behind those of rivals, even as it added customers.