Sharesof Molina HealthcareInc. dropped sharply in early trading, a day after the managed carecompany reported far lower-than-expected quarterly earnings.

The California-basedinsurer said April 28 that it failed to control costs tied to health plans inOhio and Texas, where rapid growth and staff turnover stretched its resourcestoo thin. Molina Healthcare also got hit by higher pharmaceutical expenses thatit could not offset with rate increases, executives said on a conference call.

Thosefactors combined to pressure the company's first-quarter profits, which came inwell below analysts' expectations. Molina Healthcare also its full-year earnings guidance,cutting its projected adjusted net income per share range to between $2.50 and$2.95, from the target of $3.86 per share that it in February.

"Ithink, first, we did trip," Chairman, President and CEO Joseph Molina saidon the call. "There's no question that a fair amount of this was our ownfault, and that's what led to some of the problem."

MolinaHealthcare shares fell 18.84% to $52.12 as of 10:51 a.m. ET on April 29.

Theinsurer still plans to hit its longer-term after-tax margin target of 1.5% to2.0% by the end of 2017. Molina Healthcare is making improvements in its caremanagement systems for the Ohio and Texas plans and expects its new enrollmentto slow after a period that Molina described as "hyper growth acrossmultiple geographies and multiple programs."

Thecompany completed four acquisitions in 2015 and another four in 2016 aimed atbuilding out its Medicaid operations, which boosted its customer population.Molina Healthcare's health plan membership overall jumped to 4.2 million, fromabout 3.0 million as of March 31, 2015.  

Itsstate exchange population also surged, which executives indicated could be duelargely to customers switching between Medicaid and exchange-based plans basedon what they qualify for at a given time. Molina Healthcare's exchange efforts,which more than doubled year over year to serving 630,000 individuals at theend of the first quarter, specifically target low-income enrollees who qualifyfor government subsidies.

"Ifit had just been dealing with integrating the acquisitions, probably not anissue," Molina said of the added workload that contributed to thecompany's underperformance. "But we had, on top of that, a large increasein the marketplace that put an additional strain on the systems and on thepeople."