Why Molina Healthcare Stock Dived by Almost 18% Today

Managed care company Molina Healthcare (NYSE: MOH) had a Thursday to forget on the stock market. Its shares suffered a more than 17% sell-off as investors digested its latest quarterly earnings report. That decline went against the general trend of the market that day, which featured the S&P 500 (SNPINDEX: ^GSPC) landing in positive territory with a 0.6% gain.

One big miss

In its third quarter, Molina's total revenue came in at nearly $11.5 billion, representing an 11% improvement year over year. Going in the completely opposite direction was net income according to generally accepted accounting principles (GAAP) standards, which withered to $97 million ($1.84 per share) from the year-ago profit of $347 million.

Image source: Getty Images.

Although the veteran healthcare company beat the average analyst estimate of $10.94 billion for revenue, it whiffed badly on the bottom line. The pundit consensus for adjusted net income was $3.91 per share.

Molina quoted CEO Joseph Zubretsky as saying, "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."

The company's marketplace segment is where it offers potentially subsidized healthcare plans to its members who don't qualify for Medicaid.

Guidance revised

In the earnings release, Molina revised its guidance for the entirety of 2025, slightly raising the top-line forecast but lowering that for adjusted net income.

The company expects to book total revenue of $44.5 billion, filtering down into an adjusted net profit figure of $742 million, or roughly $14 per share. Like the trailing quarter, however, those numbers don't quite reach the consensus analyst projections -- in this case, just under $45.6 billion and $18.62 per share, respectively.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.