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LONG BEACH - Molina Healthcare, Inc. (NYSE:MOH), a $13 billion market cap healthcare provider, announced Monday it expects lower-than-anticipated second quarter earnings and has reduced its full-year 2025 guidance due to rising medical costs across all business segments. The news has contributed to a steep 19.6% decline in the stock price over the past week, pushing it near its 52-week low. According to InvestingPro analysis, the stock’s RSI suggests oversold conditions, presenting a potential opportunity for value investors.
The managed care company projects second quarter 2025 adjusted earnings of approximately $5.50 per share, below previous expectations. As a result, Molina has lowered its full-year 2025 adjusted earnings guidance to between $21.50 and $22.50 per share, reflecting a consolidated pre-tax margin of just under 4%. Despite these challenges, InvestingPro data shows the company maintains a strong financial health score of "GREAT," with robust cash flows and a favorable P/E ratio of 15.2x.
"The short-term earnings pressure we are experiencing results from what we believe to be a temporary dislocation between premium rates and medical cost trend which has recently accelerated," said Joseph Zubretsky, President and Chief Executive Officer, in the press release.
The company indicated the medical cost pressures affecting its Medicaid, Medicare, and marketplace segments are expected to continue through the second half of 2025.
Molina’s preliminary second quarter GAAP net income is estimated at approximately $4.83 per share. The difference between GAAP and adjusted figures primarily stems from amortization of intangible assets and acquisition-related expenses.
The FORTUNE 500 healthcare provider plans to release complete second quarter results after market close on July 23, followed by a conference call on July 24.
Molina Healthcare provides managed healthcare services under the Medicaid and Medicare programs and through state insurance marketplaces. For detailed analysis including 10+ additional ProTips and comprehensive valuation metrics, investors can access the full company research report on InvestingPro, which is part of their coverage of 1,400+ US stocks.
In other recent news, Molina Healthcare reported robust financial results for Q1 2025, exceeding analysts’ expectations with earnings per share (EPS) of $6.08 compared to the forecasted $5.97. The company’s revenue also surpassed projections, reaching $11.15 billion against a forecast of $10.83 billion. Successful contract awards in Nevada and Illinois are expected to drive further growth for Molina Healthcare. In related developments, Morgan Stanley initiated coverage on Molina Healthcare with an Overweight rating and a $364 price target, highlighting the company’s focus on government-sponsored managed care products and its projected revenue growth. Cantor Fitzgerald maintained its Overweight rating on Molina Healthcare, emphasizing confidence in the company’s valuation and potential for improved margins in Medicaid and Medicare by 2025. Meanwhile, BofA Securities lowered its price target on Centene to $52.00 from $65.00, maintaining a Neutral rating due to concerns over the Marketplace and Medicaid environment. Despite these challenges, Centene experienced better-than-expected trends in its Medicare Advantage business. These recent developments reflect ongoing dynamics in the healthcare sector, particularly for companies like Molina Healthcare and Centene Corporation.
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