QS Research · Michael Burry's Scion Capital analyst template · 2006
MOLINA HEALTHCARE, INC. (MOH)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -28% · upside +75%
At $208.99 and a $10.91B market cap, the FY2020-FY2025 average net income base of $811M is about 13.5x, so the base case at today's multiple is essentially today's price (0.0%); TTM net income is -$48.0M and TTM ROE is -1.2%, so the stock is not cheap on current earnings but is already capitalizing normalized earnings. The downside case at 9.7x normalized earnings is $150.7 (-27.9%) and the upside at 23.6x is $366.7 (+75.4%), which is asymmetric but requires both earnings normalization and a re-rating. Because the base is not +30% and the downside is worse than -25%, the rule gives watch, not long. The catalyst is a Medicaid margin trough, 2027 rate catch-up and the claimed $4/share embedded 2027 earnings; without proof, this is interesting but not yet.
Key numbers
- Share price: $208.99
- Market cap: $10.91B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $44.13B
- Price / book: 2.63x
The 15 boxes
- ✓ 1. Long-form business notes
Molina is a pure-play government-sponsored managed care insurer: FY2025 total revenue $45,426M (premium $43,052M) with Medicaid at 75% of consolidated premium revenue, 5.49 million members in 21 states at December 31, 2025. The revenue line has grown every year in the six-year data (FY2020 $19.42B to FY2025 $45.43B), but the margin is what cycles: MCR rose to 91.7% in FY2025 from 89.1% in FY2024 and 86.5% in FY2020, pulling net income to $472M ($8.92 diluted) from $1,179M ($20.42) and operating cash flow to -$535M. Management's own 10-K frames the next two to three years as contraction (OBBBA Medicaid Expansion reduction, MAPD exit for 2027, roughly 50% Marketplace premium revenue decline in 2026), so the normalized-earnings case rests on the 11%-13% long-term growth targets and rate catch-up, not on the current margin. No quarterly or TTM figures, share price or book-value multiple were provided in these sources.
- ✓ 2. Competitive advantage
Molina shows no durable moat: it wins state Medicaid contracts by rebid, the FY2025 10-K says incumbency does not guarantee retention, and it competes with Centene, CVS Health, Elevance and UnitedHealth. Its claimed edge is a low-cost provider network plus single-digit margins that it says have run above direct competitors' — but FY2025 shows how thin that is, with operating income falling to $781.0M from $1.71B in FY2024 even as revenue rose to $45.43B, and a one-point rise in the 91.7% medical care ratio would have cut FY2025 diluted EPS from $8.92 to about $2.72. Revenue is fixed by state contracts, 75% of FY2025 premium revenue was Medicaid, and the top four state plans supplied about 54% of it.
- ✓ 3. 10-Q takeaways
Q3 2026 was a shrinking, thinner-margin quarter: premium revenue fell 4% to $10,457 million on membership down 766,000 (14%) to 4.9 million, the consolidated MCR rose 30 bp to 92.9%, and GAAP net income dropped 52% to $38 million ($0.73 diluted; adjusted $0.89). Nine-month GAAP net income of $112 million ($2.19) carries a $93 million impairment booked in Q1 2026 tied to the MAPD exit, so it is not a Q3 item. Management reaffirmed FY2026 guidance of ~$42 billion premium revenue, GAAP EPS at least $2.38 and adjusted EPS at least $5.25. Liquidity improved (parent cash and investments $608 million from $223 million at December 31, 2025) and nine-month operating cash flow swung to +$629 million from a $237 million outflow, but no shares were repurchased in the nine months versus $1,000 million in 2025.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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