(Reuters) -Molina Healthcare on Wednesday cut annual profit forecast for the second time this month, anticipating higher medical care costs to weigh on its results, sending the health insurer’s shares down more than 4% in extended trading. Health insurers offering government-backed health plans, including Medicare for older adults and Medicaid for the low-income population, have […]
Health
Molina Healthcare lowers annual profit forecast again on rising medical costs
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(Reuters) -Molina Healthcare on Wednesday cut annual profit forecast for the second time this month, anticipating higher medical care costs to weigh on its results, sending the health insurer’s shares down more than 4% in extended trading.
Health insurers offering government-backed health plans, including Medicare for older adults and Medicaid for the low-income population, have faced higher-than-expected medical claims over the past two years, increasing their costs.
The elevated costs were driven by increased demand for healthcare among older adults covered under Medicare, as well as changes in Medicaid eligibility, which have resulted in insurers handling a higher number of sick patients requiring more medical services.
The latest forecast cut is “disproportionately attributed” to Molina’s health insurance plans under the federal Obamacare marketplace and reflects medical cost trend assumptions for the second half of the year, the company said.
Earlier this month, Molina and larger peer Elevance Health cut their annual profit forecasts due to persistently high medical costs, while Centene withdrew its 2025 forecast following a significant decline in expected revenue from marketplace health insurance plans.
Shares of Elevance Health and Centene dropped over 1% in after-hours trading.
Molina now expects adjusted full-year profit to be at least $19.00 per share, compared to its previous range of $21.50 to $22.50 per share.
The health insurer projected a full-year medical cost ratio, the percentage of premiums spent on medical services, of 90.2%, higher than analysts’ expectations of 88.83%.
For the second quarter, Molina reported a medical cost ratio of 90.4%, exceeding estimates of 88.65%.
Adjusted earnings for the quarter stood at $5.48 per share, falling short of analysts’ average estimate of $5.79 per share, according to data compiled by LSEG.
(Reporting by Mariam Sunny in Bengaluru; Editing by Mohammed Safi Shamsi)