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QS Research · Michael Burry's Scion Capital analyst template · 2006

MOLINA HEALTHCARE, INC. (MOH)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: LONG

Conviction medium · base case +38% · downside -8% · upside +76%

The market is pricing MOH on its TTM net loss of -$48M and the 2026 trough, ignoring normalized FY2020-FY2025 earnings power of $811M/year, or $15.54/share. At a conservative 18x normalized earnings—below managed-care peers such as CNC/CVS at ~23x and consistent with a normalized ROE of ~24%—the stock is worth $279.66, +37.6% from $203.32. The downside case at CI's 12x multiple is $186.44, only -8.3%, while the upside at 23x is +75.8%. Net cash of roughly $4.7B (~45% of market cap) supports the balance sheet. We are long because the risk/reward is skewed to the upside; conviction is medium because current TTM earnings are still negative and the OBBBA-driven Medicaid shrinkage could structurally lower normalized earnings.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    Molina Healthcare is a pure-play government-sponsored managed care insurer operating Medicaid, Medicare, and Marketplace segments across 21 states; FY2025 premium revenue was $43.05B on ~5.49M members. The business scaled rapidly—total revenue per XBRL rose from $19.42B in FY2020 to $45.43B in FY2025—but margins compressed sharply in 2025 (MCR 91.7%, net income $472M vs $1.18B in 2024). The company is shrinking Marketplace and non-dual Medicare (MAPD exit by 2027) to restore margins, while Medicaid faces OBBBA enrollment cuts of 15-20% by 2029.

  2. ✓ 2. Competitive advantage

    Molina has a relative cost advantage from its provider networks and has historically run margins slightly above direct competitors, but the advantage is not durable. Profit margins are low single-digit, Medicaid contracts are rebid with incumbency no guarantee, and major competitors include Centene, UnitedHealth, CVS, Elevance, and Humana. Revenue grew from $19.42B in FY2020 to $45.43B in FY2025, yet operating income fell from $1.71B in FY2024 to $781.0M in FY2025, reflecting the cyclical, low-margin nature. Overall, no durable moat, only relative cost/quality strengths in a highly competitive, state-regulated industry.

  3. ✓ 3. 10-Q takeaways

    Molina's Q3 2026 10-Q shows a shrinking book: membership down 14% y/y to 4.9 million and premium revenue down 4% to $10.5 billion. Consolidated MCR rose to 92.9% in Q3 and 92.1% for nine months, while Q3 net income fell to $38 million from $79 million; the 2026 nine-month result also includes a $93 million MAPD-exit impairment. Management guides to further Medicaid, Medicare and Marketplace enrollment declines and estimates Marketplace premiums will drop about $1 billion in 2027. Parent liquidity improved to $608 million cash/investments at September 30, 2026.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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