Molina Healthcare, Inc. (MOH): A Bull Case Theory 

We came across a bullish thesis on Molina Healthcare, Inc. on Deep-Value Stocks’s Substack. In this article, we will summarize the bulls’ thesis on MOH. Molina Healthcare, Inc.’s share was trading at $188.88 as of January 14th. MOH’s trailing and forward P/E were 11.63 and 13.50 respectively according to Yahoo Finance.

Molina Healthcare (MOH) is a U.S. health insurance holding company focused on government-sponsored programs, operating health plans that serve Medicaid, Medicare, and ACA Marketplace members across 21 states. Its subsidiaries function like regulated insurance companies, receiving fixed per-member-per-month premiums from government agencies that are actuarially adjusted for risk factors such as age and health status, and using those premiums to fund medical care while retaining the spread as profit.

Medicaid is the core of the business, contributing roughly 79% of revenues, with management deliberately positioning Molina as a specialist in this segment, which historically offers the most attractive margins. The business has demonstrated strong earnings power, generating positive free cash flow in around 90% of years, growing revenues to over $40 billion, and compounding tangible book value over time, all under an experienced management team led by CEO Joseph Zubretsky since 2017.

Despite this, the stock has fallen sharply from roughly $400 to around $137, driven by broad pessimism toward U.S. healthcare, political uncertainty around Medicaid and Medicare, and company-specific issues including higher-than-expected medical cost trends and multiple guidance cuts that compressed near-term earnings expectations.

These pressures appear cyclical rather than structural, with management expecting normalization over the next 12–24 months through premium adjustments and contract seasoning. At current levels, the valuation looks optically distressed across multiple metrics and the stock trades well below historical multiples, prompting management to increase buybacks.

However, the investment is complicated by heavy regulation that traps most cash at the subsidiary level, limiting parent-level cash extraction and forcing reliance on debt for capital returns. As a result, while Molina appears fundamentally solid and likely to rerate if growth stabilizes, the opportunity is best suited to investors comfortable with the regulatory and capital-structure nuances of insurance businesses.

Previously, we covered a bullish thesis on Molina Healthcare, Inc. (MOH) by Long-Term Pick in February 2025, highlighting strong Marketplace growth and expansion potential from new Medicaid and Medicare contracts. MOH’s stock price has depreciated by roughly 29% since then due to multiple earnings misses and downward guidance revisions. Deep-Value Stocks shares a similar bullish view but emphasizes long-term earnings power, regulatory constraints, and cyclical Medicaid challenges affecting near-term cash flow.

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Disclosure: None.