Molina Healthcare is facing a proposed class-action lawsuit from an investor who alleges the company misled shareholders about rising medical costs and its 2025 earnings projections.
The complaint, filed Oct. 3 in the U.S. District Court for the Central District of California by shareholder Jeffrey Hindlemann, names Molina, CEO Joseph Zubretsky and CFO Mark Keim as defendants.
The suit alleges Molina overstated its financial health by failing to disclose that its medical cost trend assumptions were inaccurate and that a growing gap between premium rates and medical costs threatened near-term performance. Plaintiffs argue the company’s financial guidance depended on lower utilization across behavioral health, pharmacy, inpatient and outpatient services, making a reduction in its 2025 earnings outlook “substantially likely.”
According to the complaint, Molina allegedly began issuing misleading statements in February when it reported its fourth-quarter and full-year 2024 earnings and forecast of at least $24.50 in adjusted earnings per share and $42 billion in revenue for 2025. The company reaffirmed those projections in an April earnings report.
On July 7, Molina announced preliminary second-quarter results that were “modestly below its prior expectations” and cut its full-year EPS guidance to between $21.50 and $22.50, citing higher medical costs across all business lines. On July 23, the company reduced its full-year guidance again to “no less than $19.00” per share after reporting adjusted second-quarter EPS of $5.48, prompting the company’s stock to drop nearly 17% the next day.
The complaint argues that those disclosures caused major losses for investors and that the company acted knowingly or recklessly in misleading the market. The lawsuit is seeking class certification, compensatory damages and further relief determined by the court, along with a jury trial.
Becker’s has reached out to Molina for comment and will update this article if more information becomes available.
