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(Sharecast News) - Shares in Molina Healthcare plunged on Thursday, after the US insurer slashed profit guidance for the third time this year.
In an update posted after the bell on Wednesday, Molina said full-year adjusted earnings were now expected to come in at $14 per diluted share. It had previously guided for $19 per share.
It attributed the reduced guidance to "unprecedented" medical costs in its federal Marketplace health plans, which are used by people under the Affordable Care Act.
Health insurers are currently seeing higher-than-expected claims from government-backed plans such as Medicare and Medicaid.
Molina, which has already cut its annual profit guidance twice this year, both times in July, said it expected costs to remain high throughout the current financial year.
As at 1230 BST, the stock had slumped 20% in pre-market trading.
The updated guidance was published alongside third-quarter figures, which showed an 11% jump in total revenue to $11.48bn.
However, while revenues were comfortably ahead of Wall Street forecasts, earnings per share plummeted 69% to $1.84, well below expectations for $3.90.
Joseph Zubretsky, chief executive, said the cost trend environment had been "challenging".
He continued: "The headline for the quarter is that approximately half of our underperformance is driven by the Marketplace business.
"We continue to grow, we believe the margin challenges will not persist, and we are encouraged by the margin improvement potential in 2026."
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