(Reuters) -Molina Healthcare slashed its annual profit forecast on Wednesday, anticipating that elevated medical care costs will continue to pressure its results through the end of the year. Shares of the health insurer fell more than 18% in extended trading after it said an “unprecedented medical cost trend” in its Marketplace business, which serves individuals […]
Health
Molina Healthcare lowers annual profit forecast as medical costs weigh; shares slump
Audio By Carbonatix
(Reuters) -Molina Healthcare slashed its annual profit forecast on Wednesday, anticipating that elevated medical care costs will continue to pressure its results through the end of the year.
Shares of the health insurer fell more than 18% in extended trading after it said an “unprecedented medical cost trend” in its Marketplace business, which serves individuals under the Affordable Care Act, or ACA, was driving the downgrade.
Molina now expects adjusted profit of about $14.00 per share for 2025, down sharply from its prior view of at least $19.00.
“Approximately half of our underperformance is driven by the Marketplace business,” said CEO Joseph Zubretsky.
He added that while Medicaid is “producing strong margins,” the company continues to face pressure from higher-than-expected healthcare utilization, especially in Medicare and Marketplace plans.
The ACA, also known as Obamacare, provides subsidized health coverage based on income. It includes a risk adjustment system that reimburses insurers who cover a larger share of sicker patients.
Molina said the elevated costs were only partially offset by rate updates.
The company had already lowered its annual forecast twice earlier this year, citing cost pressures in its ACA plans.
Molina said those challenges are expected to persist through the end of the year.
Larger peer Elevance Health said on Tuesday that it expects elevated medical costs in its Medicaid business to persist into 2026, with improvement likely in 2027.
Molina’s quarterly adjusted profit was $1.84 per share, missing analysts’ average estimate of $3.90 per share, according to data compiled by LSEG.
Total revenue for the third quarter was $11.48 billion, compared with the consensus estimate of $10.93 billion.
Its quarterly medical cost ratio, the percentage of premiums spent on medical services, was 92.6%, below estimates of 90.3%.
Shares of other U.S. health insurers also fell in after-hours trading, with Centene down 7% and Cigna losing 2%, while UnitedHealth, Humana and Elevance Health slipped about 1% each.
(Reporting by Kamal Choudhury in Bengaluru; Editing by Alan Barona)