Molina Healthcare Trims Fiscal-Year Guidance Days After Centene Withdraws Its Outlook

Molina Healthcare reduced its fiscal-year guidance, citing “medical cost pressures in all three lines of business.” (Joe Raedle/Getty Images)

Molina Healthcare cut its full-year earnings guidance by 10% on Monday, days after fellow insurer Centene set off a managed care earthquake by pulling its financial guidance.

Molina’s announcement comes two weeks before it was scheduled to roll out its second-quarter results. The company said medical costs were higher than expected across all of its businesses.

Molina offers Medicare, Medicaid, and health insurance marketplace plans, and is one of the largest insurers in the U.S.

For investors, the announcement didn’t seem to materially worsen the picture for Molina. The stock fell 22% on Wednesday after Centene announced that preliminary data about its marketplace plans implied the company’s 2025 profits would be far below its earlier guidance.

On Monday, Molina shares were up 0.5% to $240.73—still 21.4% below where they was trading before last week’s selloff. Other insurers were roughly flat after also falling last week on the Centene announcement.

The latest pre-announcement highlights the jitters spreading through the managed-care sector.

The Centene blowup, which saw Centene stock fall 40.4% in a single day, is just the latest steep selloff to hit a large insurer. A series of Medicare Advantage disappointments have buffeted stocks like UnitedHealth Group and Humana over the past couple of years.

The latest worries come against a worsening political backdrop. The budget bill signed last week by President Donald Trump, and the impending expiration of health insurance marketplace subsidies, are expected to lead to a major drop in Medicaid and marketplace plan enrollments in the coming years.

Molina said it expects second-quarter adjusted earnings of about $5.50 a share, which it called “modestly below its prior expectations.” While it doesn’t appear to have previously issued second-quarter guidance, consensus estimates had pointed to earnings of $6.20 a share, according to FactSet.

For the full year, the company now expects adjusted earnings of $21.50 to $22.50 a share, down from its April guidance of “at least” $24.50 a share.

The company didn’t provide detailed results, which will come with its official earnings announcement on July 24.

In a statement, Molina CEO Joseph Zubretsky blamed “a temporary dislocation between premium rates and medical cost trend which has recently accelerated.” He suggested the issues were “temporary,” and the long-term outlook remains in tact.

For now, investors are waiting to see how widespread the pain is, and whether the higher costs that Molina is seeing are being felt across the sector. That will start to become clear in a couple of weeks, as insurer earning season kicks off.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com