What Happened?
Shares of healthcare insurance company Molina Healthcare (NYSE: MOH) fell 20.8% in the afternoon session after the company reported third-quarter earnings that missed Wall Street's expectations and cut its full-year profit forecast.
The health insurer's adjusted earnings of $1.84 per share were 52.7% below analyst projections of $3.89. The sharp drop in profitability overshadowed a bright spot in revenue, which grew 11% year over year to $11.48 billion, beating estimates. The company's profitability issues were reflected in its operating margin, which fell to 1.2% from 4.5% in the same quarter last year, indicating that its expenses grew faster than its revenue. In response, Molina lowered its full-year 2025 adjusted earnings guidance to a midpoint of $14 per share, a 26.3% decrease from its previous outlook, signaling that profitability challenges may persist.
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What Is The Market Telling Us
Molina Healthcare’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Molina Healthcare and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 20.8% on the news that a sector-wide sell-off as competitor Centene Corp pulled its full-year financial guidance.
The sharp decline in Molina's shares appears to be a reaction to troubles at fellow health insurer Centene, which saw its stock plummet after withdrawing its financial outlook. Centene cited that market growth was "lower than expected" and the number of people making claims was much higher than forecast. This news has sparked fears among investors that the entire health insurance sector could be facing similar headwinds of rising costs and challenging market conditions. The negative sentiment quickly spread, impacting peers like Molina, UnitedHealth Group, and Elevance Health. Investors are now concerned that Molina, which also has significant exposure to government-sponsored health plans, could face similar pressures on its profitability, leading to a broad sell-off across the industry.
Molina Healthcare is down 46% since the beginning of the year, and at $155.15 per share, it is trading 56.1% below its 52-week high of $353.24 from April 2025. Investors who bought $1,000 worth of Molina Healthcare’s shares 5 years ago would now be looking at an investment worth $729.95.
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