Healthcare stocks displayed sharp divergence in Friday's session, highlighted by Molina Healthcare's dramatic 25.5% plunge to $131.72. The managed care provider shocked investors by forecasting adjusted earnings per share of at least $5 for 2026—significantly below analyst expectations—and announcing plans to exit Medicare Advantage Part D prescription drug plans beginning in 2027. CEO Joseph Zubretsky characterized 2026 as a "trough year" for Medicaid margins, citing losses from its Part D business and a new Florida Medicaid contract.
Managed Care Contrasts
While Molina faced severe selling pressure, the broader Health Care Select Sector SPDR Fund (XLV) managed a 1.8% gain to close at $157.71. The sector's split performance reflects ongoing investor debate about whether pricing in government-backed health plans will adequately align with rising medical costs in the coming years.
Other major managed care players showed mixed results. Centene projected 2026 profit above Wall Street estimates but saw its shares decline 3.7% to $38.46, with analysts suggesting Molina's disappointing outlook weighed on sector sentiment. Conversely, Cigna gained 2.6% to $292.05 after reporting strong fourth-quarter results, though the company cautioned about a softer outlook for 2026, setting adjusted profit expectations at a minimum of $30.25 per share.
Regulatory Pressure on Drug Markets
The FDA issued warnings about "illegal copycat drugs" targeting the weight-loss medication market, specifically mentioning compounded versions of drugs like Novo Nordisk's Wegovy. Hims & Hers saw its shares drop 10% following the regulatory comments after introducing a $49 compounded alternative. The agency promised "swift action" against companies marketing such products, though some analysts remain skeptical about immediate enforcement.
Pharmacy benefit managers are also driving changes in drug pricing. CVS Health's Caremark unit will remove Amgen's Prolia and Eli Lilly's Forteo from certain preferred drug lists starting April 1, opting instead for lower-cost alternatives. CVS estimates this shift to biosimilars and generics could reduce prescription costs by more than 50%.
Friday's broader market rally saw healthcare components including Eli Lilly (+3.7%), Pfizer (+2.7%), UnitedHealth (+3.0%), and Johnson & Johnson (+0.9%) participating in gains. The sector faces continued scrutiny as investors monitor whether Medicaid reimbursement rates will keep pace with actual care costs and whether regulatory warnings will translate into concrete enforcement actions affecting drug pricing dynamics.
