Molina Healthcare stock falls as medical costs spike, Obamacare worries mount

Core Viewpoint - Molina Healthcare's stock plummeted over 20% following a significant earnings miss for Q3, attributed to rising medical expenses and a lowered guidance for Q4 [1][2]. Financial Performance - Molina's adjusted EPS for Q3 was $1.84, missing analyst expectations of $3.89 by more than 50% [2]. - The company projects Q4 adjusted earnings of $0.35, significantly below analysts' expectations of $2.42 [2]. Medical Care Ratio (MCR) - Molina's consolidated MCR for Q3 was 92.6%, up from 89.2% in the same quarter last year, indicating increased medical expenses impacting profitability [4]. - A 92.6% MCR means the company retained only 7.4 cents per dollar of premium revenue after covering medical expenses [5]. - The MCR for ACA plans was particularly high at 95.6%, exceeding both analyst predictions of 86% and Molina's own 73% from the previous year [6]. Industry Context - The MCR is a critical metric for healthcare providers, reflecting the balance between premium revenue and medical expenses [3]. - Rising medical costs and the structure of ACA plans have posed significant challenges for Molina, affecting its financial stability [5][6].