TSX gains after CPI shows US inflation rose 3%
Investing.com -- Molina Healthcare Inc (NYSE:MOH) shares plunged 17% after the health insurer reported third-quarter earnings that significantly missed analyst expectations, weighed down by higher-than-expected medical costs across all segments, particularly in its Marketplace business.
The Long Beach, California-based company reported adjusted earnings of $1.84 per share for the third quarter, well below the analyst estimate of $3.91. Revenue came in at $11.48 billion, exceeding the consensus estimate of $10.94 billion and representing a 12% increase YoY from $10.34 billion.
Molina’s medical care ratio (MCR) – the percentage of premium revenue spent on medical costs – jumped to 92.6% in the quarter, compared to 89.2% in the same period last year. The company cited "unprecedented medical cost trend" in its Marketplace segment, where the MCR soared to 95.6% from 73.0% a year earlier.
"The headline for the quarter is that approximately half of our underperformance is driven by the Marketplace business, and that Medicaid, while experiencing some pressure, is producing strong margins," said Joseph Zubretsky, President and Chief Executive Officer.
The company lowered its full-year 2025 adjusted earnings guidance to approximately $14.00 per share from a previous implied guidance of $18.62. For the fourth quarter, Molina expects adjusted earnings of just $0.35 per share.
Molina’s membership grew modestly to 5.6 million members as of September 30, 2025, an increase of 30,000 members compared to the same period last year. The company’s Marketplace enrollment showed significant growth, reaching 713,000 members compared to 410,000 a year ago.
Looking ahead to 2026, Molina provided a preliminary outlook suggesting earnings per share would approximate the revised 2025 guidance, with reduced exposure to the Marketplace segment and expectations for that business to at least break even.