Health insurance takes another hit with Molina Healthcare
US health insurance stocks have been going through a turbulent time for several quarters now. After a recent lull, marked by a rebound from the sector leader UnitedHealth (whose stock remains well down over the past year), Molina Healthcare is now faltering. The group, which, although smaller, still generates nearly $45bn in revenue, is falling sharply.
Molina derives most of its revenue from the Medicaid program, which is aimed at low-income households. The rest comes from Medicare, which covers people over the age of 65 and people with disabilities.
With a market capitalization now below $10bn, Molina's stock price has halved in value this year. The entire sector has been shaken by a series of events: criticism of the excessive profitability of health insurance in the US following the murder of Brian Thompson in December last year, alleged Medicare fraud at UnitedHealth, the sudden departure of its CEO, mixed results from competitors Cigna, Humana, Elevance Health, and CVS Health, not to mention difficult negotiations with the federal government over reimbursement terms.
Molina is now reducing its forecasts due to rising medical costs. The situation remains tense and is unlikely to improve before the end of the year. The group points the finger at its Marketplace business, which includes insurance sold on public platforms under the Affordable Care Act (ACA). This program, also known as Obamacare, offers income-based subsidized coverage and is aimed at people who are too wealthy to qualify for Medicaid but who do not have corporate insurance. Molina now forecasts adjusted EPS of around $14 for 2025, down from at least $19 previously.
Molina Healthcare, Inc. specializes in the provision of health care services managed within the Medicaid and Medicare health insurance and coverage programs, and through the health insurance marketplace, financed by the States and the Federal Government of the United States. Revenues break down by activity as follows:
- Health care services within the Medicaid program (79.2%): services for low-income individuals, families and people with disabilities;
- health care services within the Medicare program (14.3%): services for the elderly and people with certain diseases, covered by the Medicare health insurance program;
- operating a health insurance marketplace (6.5%; Marketplace): a platform for offering health insurance plans, and allowing members of the Medicaid program, whose rising incomes have taken them out of eligibility, to purchase federally subsidized health insurance policies. The group also offers virtual care services.
At the end of 2024, Molina Healthcare, Inc. had approximately 5.5 million members broken down by program between Medicaid (4.9 million members), Medicare (0.2 million) and Marketplace (0.4 million).
The United States accounts for all revenues.
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