Molina sinks on earnings miss and guidance cut, drags down peers Centene and Oscar

Molina Healthcare reported quarterly earnings Thursday morning that severely missed Wall Street estimates, bringing down its stock as well as several of its peers’ that provide coverage for government-sponsored plans.

Molina reported adjusted earnings per share of $1.84, less than half of the $3.90 analysts polled by FactSet were expecting. The company slashed its full-year profit guidance to roughly $14 a share, down from its previous guidance of $19 a share and less than the $18.50 a share analysts are penciling in.

One of the factors driving the underperformance was its Affordable Care Act plans, which were used at higher rates than expected, the company said. A higher portion of Molina’s revenue comes from other federal programs, such as Medicaid.

Molina dropped about 18% in premarket trading. Insurance companies that focus on providing ACA plans, like Oscar Health and Centene, also fell.

ACA plans, which are government-subsidized health insurance for the poor, have roiled insurers this year amid higher-than-expected costs. ACA extensions are at the center of budget negotiations as the government shutdown stretches on.