Shares of Molina Healthcare Inc. (NYSE:MOH) dropped during trading on Thursday, as the company's small cap stock plunged following news of higher costs in the Texas healthcare sector.
The Wall Street Journal reported that the company suffered from news of significant costs in the state's newly expanded Medicaid market, as usage rates for long-term services rose at too high of a rate when compared with the premium revenue that usually covers these costs.
"With the Ohio and Missouri markets expected to go off line soon, the EPS picture for MOH seems to be rapidly deteriorating," Deutsche Bank analyst Scott Fidel told the news outlet.
The Associated Press reported that the company issued guidance due to these new issues, as the Texas branch of Molina Healthcare has an estimated 300,000 people enrolled in its plans, more than twice what it had last year.
"Utilization of long-term care services, including personal attendant services and adult day health care services, is currently far exceeding the utilization of those services elsewhere in the state, and also far exceeding the utilization assumptions used in the development, and our evaluation, of the premium rates," said the company.
The value of the company's stock dropped $7.39 to $18.37 at 12:33 p.m. on June 7, a decrease of 28.5 percent.
