Centene, Cigna, Others Drop As Molina's Results Rattle Sector
Molina Healthcare Inc. (NYSE:MOH) missed Wall Street expectations in its second-quarter earnings report Wednesday, triggering a selloff across the healthcare insurance sector.
Shares of Alignment Healthcare, Inc. (NASDAQ:ALHC), The Cigna Group (NYSE:CI), Centene Corporation (NYSE:CNC), CVS Health Corp (NYSE:CVS), Elevance Health, Inc. (NYSE:ELV), Humana Inc. (NYSE:HUM), and Tenet Healthcare Corp (NYSE:THC) all traded lower Thursday as investors reacted to Molina's earnings miss and lowered 2025 guidance, citing rising medical costs and utilization trends.
What Happened: On Wednesday after close, Molina reported second-quarter adjusted earnings of $5.48 per share, missing the consensus of $6.21 and the preliminary expectation of approximately $5.50 per share.
The insurance company reported sales of $11.43 billion, beating the consensus of $10.93 billion.
Molina’s second quarter results reflect a “challenging medical cost trend environment," said Joseph Zubretsky, President and Chief Executive Officer. "The current 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.”
Molina is still performing near its long-term target ranges, and the long-term outlook remains the same, he added.
- The consolidated Medical Care Ratio (MCR) for the second quarter of 2025 was 90.4%.
- The Medicaid MCR was 91.3%. The company experienced medical cost pressure due to continued utilization of behavioral health, pharmacy, and inpatient and outpatient services.
- The Medicare MCR was 90.0%, reflecting higher utilization among high-acuity members, particularly for long-term services, supports, and pharmacy.
- The Marketplace MCR was 85.4%. Approximately 300 basis points were due to prior-year member reconciliations and a higher "new store" MCR related to the ConnectiCare acquisition.
Also Read: Elevance Steps In As UnitedHealth Delays — Will It Set The Tone For Insurers?
On Wednesday, Molina further revised its 2025 earnings guidance from $21.50-$22.50 to over $19 per share.
Notably, Centene withdrew its 2025 GAAP and adjusted diluted EPS guidance. This stems from its initial review of 2025 industry data from Wakely, an independent actuarial firm.
Molina Healthcare forecasts fiscal 2025 sales of $44 billion compared to the consensus of $44.19 billion.
It forecasts a 2025 consolidated MCR of 90.2%, with Medicaid MCR of 90.9%, Medicare MCR of 90% and Marketplace MCR of 85.1%.
Readers should also note that the largest insurance company, UnitedHealth Group Inc. (NYSE:UNH), is also trading lower on Thursday. In an SEC filing on Thursday, the company said it has now begun complying with the Department's formal criminal and civil requests. UnitedHealth says it has full confidence in its practices and is committed to working cooperatively with the Department throughout this process.
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