Molina Healthcare has warned its investors to expect losses rather than profit for its second quarter. The US company, which sells health plans through the Medicaid health insurance program, has also lowered its earnings forecast for the year in response to the rising costs of medical care in the US.
While Wall Street analysts predicted Q2 earnings of 56 cents per share, Molina has forecast a loss of 15 to 20 cents per share for the quarter and lowered its full-year forecast to 73 cents from 80 cents per share.
Molina said it had slashed its 2005 forecast as a result of increased medical costs in Washington and New Mexico. An increase in the number of catastrophic cases, higher maternity costs in Michigan and rising outpatient traffic in Washington also contributed to the revised forecast.
The company also said that medical care costs as a percentage of operating revenue would reach the 91.3% to 91.8% range. Molina added some of the costs are due to adverse claims arising from Q1 of $13.4 million.