What Happened?
Shares of healthcare insurance company Molina Healthcare (NYSE: MOH) fell 7% in the afternoon session after President Donald Trump proposed a significant change to the Affordable Care Act (ACA), suggesting federal funds should go directly to people instead of health insurance companies. In social media posts, Trump called insurance companies “money sucking” and argued that people could purchase “much better, healthcare” if the funds were sent directly to them. This proposal posed a substantial risk to health insurers like Molina, which get a large part of their revenue from government-sponsored programs. The comments triggered a broad sell-off across the healthcare sector, with Molina, Centene, and HCA Healthcare all listed among the S&P 500's worst-performing stocks during the session. The negative market sentiment was also reflected in unusual options activity, where large traders took a notably bearish stance on the company.
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What Is The Market Telling Us
Molina Healthcare’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago when the stock dropped 20.8% on the news that 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.
Molina Healthcare is down 51.1% since the beginning of the year, and at $140.34 per share, it is trading 60.3% 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 $637.84.
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