Molina sees shares drop 11% after filing for stock sale

Shares of Molina Healthcare Inc. fell after the managed healthcare provider, controlled by a family and its trusts, filed for a stock sale.

Molina declined $3.40, or 11%, to $28.31, the biggest single-day drop since Dec. 1, 2008.

The Long Beach company is selling 4 million shares through underwriters, and together with the Molina Siblings Trust may sell an additional 600,000, according to a filing Wednesday. The filing didn’t specify the price at which shares in the offering would be sold. Molina provides managed healthcare and related services through government-sponsored programs for low-income people, such as Medicaid.

The prospect that the Molina family is trimming holdings “will likely eclipse” the company’s report Wednesday of second-quarter profit that topped analysts’ estimates, Brian Wright, an analyst at Collins Steward in New York, said in a note to investors.

The company will use the proceeds from the offering to repay debt from its $200-million senior secured credit facility, Molina Healthcare said in a statement.

Molina Siblings Trust holds 2.48 million shares, a 9% stake, according to the prospectus. The trust may sell 250,000 shares, reducing its holding to 8.1%. Members of the Molina family and their trusts own about 57% of the company, according to the filing with the Securities and Exchange Commission.

The company’s second-quarter net income fell 27% to $10.6 million, or 41 cents a share, from $14.6 million, or 56 cents, a year earlier, the company reported.

The earnings exceeded the average estimate of 32 cents a share by analysts tracked by Bloomberg.

Revenue rose 7.7% to $999.3 million, from $927.6 million, the company said in its statement.