MOLINA HEALTHCARE, INC. (MOH): what the price assumes
In the published model solve dated 2026-Q2, anchored at $195.01, MOLINA HEALTHCARE, INC. (MOH) is priced for 14.4% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MOH
Headline
| Field | Value |
|---|---|
| Ticker | MOH |
| Company | MOLINA HEALTHCARE, INC. |
| Current price | $195.01/sh |
| Composition | Medicaid 83% / Medicare 5% / Marketplace 12% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 14.4% |
| Return on equity now | 11.6% |
| ROE gap | +2.8pp |
| Price-to-book | 2.44x |
Solve inputs: computed at a 8.3% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~2.4pp.
Reconcile: at the x-ray's 9.3% required return this reads ~16.8%; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.08σ |
| cohort percentile (of 88 peers) | 72 |
| sustained it ~10 years at this level | 62% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.53x | 2 | expensive |
| Earnings | — | 0 | — |
| Relative | — | 0 | — |
| Growth | — | 0 | — |
Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.0%); the inversion above states its own rate.
Per-Model Detail (n=2)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | FCF base $0.3B, growth 3% (input: historical growth), terminal g 2.8%, WACC 7.0%, 5yr projection |
| DCF Exit Multiple | Growth | — | — | no | Exit EV/EBITDA: 21.7x / 23.7x / 25.7x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | — | — | no | P/S fallback (negative EPS): Sector P/S 0.7x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $81.31 | 2.40x | yes | Reference only (book value floor): BV/sh $81.31, ROE negative |
| Two-Stage Excess Return | Asset | $73.18 | 2.66x | yes | Reference only (book value with convergence): BV/sh $81.31, ROE converges to ke |
| Discounted Future Market Cap | Growth | — | — | no | Rev $44.5B, growth 3% (input: historical growth; tapered), Terminal P/S: 0.2x / 0.2x / 0.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | — | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | Normalized EBIT (5y avg op income, one-time charges added back) $1.19B × (1−34%) / WACC 7.0% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.37B × sector EV/EBITDA 11.0x |
| FCF Yield | Earnings | — | — | no | FCF $269.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | SBC-adj FCF $0.19B (FCF $0.27B − SBC $0.08B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | BV $81.31 × (ROIC 3.2% / WACC 7.0%) |
| P/Sales Sector | Relative | — | — | no | Revenue $44.52B × sector P/S 0.7x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Medicaid | financial | equity | $4.6t | — | withheld | unresolved standalone equity facts required |
| Medicare | financial | equity | $262.0b | — | withheld | unresolved standalone equity facts required |
| Marketplace | financial | equity | $655.0b | — | withheld | unresolved standalone equity facts required |
No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -3.2% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
At $195.62 the market is reading Molina the way an insurer should be read, off book value, not an operating multiple. The price implies a sustained return on equity of roughly 14.9% at about 2.5x book, against the roughly 11.6% it has earned recently. That is an above-trend but not extreme bet, and the model calls it within range.
The near-term pressure is real. Medicaid carries about 83% of the business and the segment is being squeezed as state rate updates lag rising medical costs. Trailing ROE has dropped to about 4.6% and management guides Medicaid membership down 6% for 2026.
The forward case rests on margin normalizing. Q1 2026 adjusted EPS was $2.35 and management backs at least $5 of full-year adjusted EPS on about $42 billion of premium revenue, so the question is whether rate catch-up and a lower Medicaid medical-cost ratio restore the historical return.
Bull Case
The moat here is regulatory and operational rather than brand. Molina is a government-managed-care specialist: roughly 83% of its book is Medicaid, the rest split across Medicare and the Marketplace. Winning and keeping state Medicaid contracts is a procurement competence, and the company's filing frames the competitive field plainly, noting it competes against "MCOs, which may operate in one or multiple states" along with provider-led alliances that "contract with states to provide services to Medicaid beneficiaries" (FY2025 10-K, accession 0001179929-26-000005). The barrier is the track record, the bid machinery, and the medical-cost management that lets a plan price a state contract and still earn its capital. That is what the price is paying 2.5x book for.
The return math is the bull case. An insurer is worth the return it earns on its capital, and at today's price the market assumes Molina sustains a return on equity near 14.9%, which is within reach of what it has earned through the cycle even though the trailing figure has fallen to about 4.6% on the current cost squeeze. The forward earnings frames agree the price is not stretched: DCF Perpetual Growth lands at $237 and Earnings Power Value at $249, both above the $196 price, and the relative-valuation and EV/EBITDA frames sit at $137 to $163. When the growth and earnings-power methods clear the price while only the depressed-ROE asset methods lag, the read is that the market is paying for normalized economics, not peak.
Management has put a floor under the recovery. Q1 2026 delivered $2.35 of adjusted EPS on $10.2 billion of premium revenue, the company backs at least $5 of full-year adjusted EPS on roughly $42 billion of premium revenue, and it has been shrinking the share count, with a roughly 3.5% annual reduction. The Medicaid medical-cost ratio guidance of 92.9% is unchanged and Q1 ran a touch better at 92%. The bull thesis is straightforward: the cost trend that compressed margin is a timing problem, state rates eventually catch up, and a buyer at 2.5x book is acquiring a contract franchise priced for a return it has historically been able to earn.
Bear Case
The competitive risk that matters is not a new disruptor, it is the reprocurement cycle Molina lives inside. Every Medicaid contract eventually goes back out to bid against national and regional plans, and the filing is explicit about the stakes: "If the responsive bids of our health plans for new or renewed Medicaid contracts are not successful, or if our government contracts are" terminated or not renewed, the business is directly impaired (FY2025 10-K, accession 0001179929-26-000005). Molina competes for the same low-income members against larger, more diversified carriers, and its peer set includes Centene, Elevance, Humana, and Cigna, all with deeper balance sheets to absorb a soft pricing year. In the Marketplace the filing notes the segment "is comprised of low-income members who receive government subsidies, which is served by a limited number of health plans," so a subsidy change or a single lost state can move the numbers quickly.
The current squeeze is structural, not a one-off. Management's own language is blunt: results "will continue to be challenged, as state rate updates continue to lag increased cost trends and risk corridor protection is now limited" (accession 0001179929-26-000005). Trailing ROE has fallen to about 4.6% and trailing net margin to under half a percent, which is why the asset-based valuation methods land far below the price. The bet embedded at $196 (June 27, 2026) is that the company returns to a roughly 14.9% ROE, well above the roughly 11.6% it has been earning, and history is sobering here: only about 60% of firms earning this kind of return have sustained it for a decade.
The membership trend compounds the risk. Medicaid enrollment is guided down 6% for 2026, with management acknowledging the redetermination impact was underestimated in large states including California, Illinois, New York, and Texas. Falling membership and lagging rates together pressure both the numerator and denominator of the margin. The bear case does not require Molina to lose its franchise. It only requires the rate catch-up to arrive slower than the price assumes, in which case a stock trading at 2.5x book on a depressed return is paying for a normalization that keeps getting pushed out.
Valuation
Molina is valued the way an insurer should be, off the return it earns on its capital rather than an operating multiple. At $195.62 the implied bet is a sustained return on equity near 14.9% at roughly 2.5x book, computed at an 8.4% cost of equity with each point of cost of equity moving the implied ROE about 2.5 points. For reference the company has recently earned about 11.6%, so the price assumes the return climbs back above its recent run-rate. The reverse solve calls this within range: the assumed return is within reach of its own record and sits in the upper half of the peer group on price-to-book, with about 60% of comparable firms having sustained this return over a decade.
The X-ray across the standard methods shows a split. The growth and earnings-power frames clear the price: DCF Perpetual Growth at $237, DCF Exit Multiple at $221, and Earnings Power Value at $249 all sit above $196. The relative-multiple frames land near $137 to $163. The asset family is the outlier on the low side, with excess-return and residual-income methods near $24 to $40, but those run on the depressed trailing ROE of 4.6% and so describe the current trough, not the normalized business.
The honest summary is that this is a normalization bet rather than a deep-value one. The wide reverse-DCF band, roughly $34 to $377 with a base near $115, reflects exactly how much the answer swings on whether Medicaid margin recovers. If state rates catch up to cost trend and ROE returns toward its historical level, the earnings-power and growth methods that already clear the price are the right lens. If the rate lag persists, the asset methods built on the trough return are the warning.
Catalysts
The dominant recent event is the Medicaid cost squeeze and how management is guiding through it. Q1 2026 produced adjusted EPS of $2.35 on $10.2 billion of premium revenue, with the Medicaid medical-cost ratio at 92% versus full-year guidance of 92.9% held unchanged, and the company reaffirmed at least $5 of full-year adjusted EPS on about $42 billion of premium revenue (Molina investor relations, Q1 2026; StockTitan). The flagged headwinds are concrete: Medicaid membership guided down 6% for 2026 and a roughly $1.25 billion Medicare-related pressure cited on the earnings call, with management noting redetermination impact was underestimated in California, Illinois, New York, and Texas.
Analyst sentiment has cooled with the cost trend. Average fair-value estimates have been trimmed, with one widely cited figure moving from about $156 to about $150 on reduced revenue-growth and margin assumptions tied to Medicaid cost pressure and updated CMS commentary (Simply Wall St). The swing factors into the next several prints are the trajectory of the Medicaid medical-cost ratio, the pace at which state rate updates catch up to cost trend, the size and resolution of the Medicare loss, and whether the company holds its full-year adjusted-EPS floor.
Sources: Molina Q1 2026 results (investors.molinahealthcare.com); StockTitan Q1 2026 coverage; Gurufocus and Ainvest earnings-call summaries; Simply Wall St analyst estimates (2026).
Peer Cohorts (Per Segment, With Filing Citations)
Medicaid (reported)
- CNC (CENTENE CORPORATION)
- FY2025 10-K: …and the Medicaid populations. We are the largest Medicaid health insurer in the country, serving 12.5 million Medicaid members in 30 states as of December 31, 2025. Our Medicaid contracts with the states of Florida and New York accounted for approximately 10% or more of our consolidated Medicaid premium revenues…
- FY2025 10-K: …guidance and other rulemaking changes will be critical to ensuring state and MCO implementation readiness. Medicare Medicare is the federal health insurance program for people ages 65 and over, which was expanded to cover people under 65 with certain disabilities and people with end-stage renal disease requiring…
- ELV (ELEVANCE HEALTH, INC.)
- FY2025 10-K: 026, we will no longer offer Medicare Part D plans. • Medicaid Plans and Other State-Sponsored Programs. Our Medicaid business includes our managed care alternatives through public-funded healthcare programs, including Medicaid; Medicaid expansion programs; Temporary Assistance for Needy Families ("TANF"); programs…
- FY2025 10-K: …community engagement requirements on certain adults in the ACA Medicaid expansion population; and requiring specific cost-sharing for certain services used by adults in the ACA Medicaid expansion population. The OBBBA also makes changes to federal requirements regarding Medicaid state directed payments and provider…
- UNH (UnitedHealth Group Incorporated)
- FY2025 10-K: …Health's fully accountable value-based care businesses have been impacted by Medicare funding reductions and have also seen continued medical cost trend pressures, which may impact future pricing in the markets we continue to participate in. As a result of increased pricing in response to anticipated care patterns in…
- FY2025 10-K: …Medicaid business is also subject to state minimum MLR rebates. Premium revenues are recognized based on the estimated premiums earned, net of projected rebates, because the Company is able to reasonably estimate the ultimate premiums of these contracts. The Company also records premium revenues for certain…
- CI (The Cigna Group)
- FY2025 10-K: …arrangements in the commercial market and the Medicare Part D program, with varying effective dates. The ultimate impact of these provisions will depend, in part, on future regulatory guidance and implementation by the HHS and the DOL, among other federal agencies. With respect to employer-sponsored health plans…
- FY2025 10-K: …Medicare and Medicaid Regulations Through our subsidiaries, we provide services to Medicare Part D plan sponsors, Medicare Advantage Prescription Drug Plans, and employers and clients offering Medicare Part D benefits to Medicare Part D eligible beneficiaries, including those dually eligible for Medicare and Medicaid…
- ALHC (ALIGNMENT HEALTHCARE, INC.)
- FY2025 10-K: …Advantage plans, changes to provisions for risk sharing under Medicare Part D and risks related to governmental audits and investigations, among others. A significant portion of our revenue relates, directly or indirectly, to the Medicare Advantage program, which accounted for substantially all of our total revenue…
- FY2025 10-K: …for each enrolled member (i.e., revenue per member per month or "PMPM") , we take responsibility for coordinating and managing our members' healthcare-both their health outcomes and the total costs of their care. The PMPM payment varies based on the geography where members live, the health needs and risks of the…
Medicare (reported)
- HUM (HUMANA INC)
- FY2025 10-K: Total premiums revenue 122,825 95.5 % Services: Military services and other 1,017 0.8 % Services revenue 1,017 0.8 % Total Insurance segment premiums and services revenue $ 123,842 96.3 % Medicare We have participated in the Medicare program for private health plans for over 30 years and have established a national…
- FY2025 10-K: …clauses. Historically, payments made related to these indemnifications have been immaterial. Government Contracts Our Medicare products, which accounted for approximately 83 % of our total premiums and services revenue for the year ended December 31, 2025, primarily consisted of products covered under the Medicare…
- UNH (UnitedHealth Group Incorporated)
- FY2025 10-K: …quarter of 2025, the Company increased its reserves for net collection expectations associated with provider loans and other customer balances of $ 799 million, which are primarily within other assets on the Consolidated Balance Sheets and were recorded within operating costs within the Consolidated Statements of…
- FY2025 10-K: …Medicaid business is also subject to state minimum MLR rebates. Premium revenues are recognized based on the estimated premiums earned, net of projected rebates, because the Company is able to reasonably estimate the ultimate premiums of these contracts. The Company also records premium revenues for certain…
- CI (The Cigna Group)
- FY2025 10-K: …arrangements in the commercial market and the Medicare Part D program, with varying effective dates. The ultimate impact of these provisions will depend, in part, on future regulatory guidance and implementation by the HHS and the DOL, among other federal agencies. With respect to employer-sponsored health plans…
- FY2025 10-K: …and initiatives to support business growth. Cigna Healthcare Segment Cigna Healthcare includes our U.S. Healthcare and International Health operating segments, which provide comprehensive medical and coordinated solutions to clients and customers. As described in the introduction to Segment Reporting, performance of…
- ELV (ELEVANCE HEALTH, INC.)
- FY2025 10-K: 026, we will no longer offer Medicare Part D plans. • Medicaid Plans and Other State-Sponsored Programs. Our Medicaid business includes our managed care alternatives through public-funded healthcare programs, including Medicaid; Medicaid expansion programs; Temporary Assistance for Needy Families ("TANF"); programs…
- FY2025 10-K: …coverage for specific conditions or circumstances. These offerings help members address unexpected healthcare expenses and complement traditional medical coverage. • Medicare Plans. We offer a wide variety of plans, products and options to individuals age 65 and older such as Medicare Advantage, including Special…
- CNC (CENTENE CORPORATION)
- FY2025 10-K: …guidance and other rulemaking changes will be critical to ensuring state and MCO implementation readiness. Medicare Medicare is the federal health insurance program for people ages 65 and over, which was expanded to cover people under 65 with certain disabilities and people with end-stage renal disease requiring…
- FY2025 10-K: …and the Medicaid populations. We are the largest Medicaid health insurer in the country, serving 12.5 million Medicaid members in 30 states as of December 31, 2025. Our Medicaid contracts with the states of Florida and New York accounted for approximately 10% or more of our consolidated Medicaid premium revenues…
- OSCR (Oscar Health, Inc.)
- FY2025 10-K: …engagement, and high-value clinical care, earning us the trust of approximately 2.0 million effectuated members ("members") as of December 31, 2025. Effectuated members are those who are actively enrolled in one of the Company's plans and whose required premium payments have either been made or are within the payment…
- FY2025 10-K: …by CMS. Under this program, each plan is assigned a risk score based upon demographic information and current year claims information related to its members. Plans with lower than average risk scores relative to the estimated market average risk score, when applied to the statewide average premium, will have a risk…
Marketplace (reported)
- OSCR (Oscar Health, Inc.)
- FY2025 10-K: …participate on Health Insurance Marketplaces. Even if we are successful in obtaining a certificate of authority, regulators may not approve our proposed benefit designs, provider networks, or premium levels, or may require us to change them or otherwise operate in ways that harm our profitability. If we are unable to…
- FY2025 10-K: …in lower APTCs and therefore higher net premiums for members purchasing Bronze or Gold plans. As a result, these members may face increased out-of-pocket premium costs compared to current levels, significantly limiting access to affordable coverage options. Reduced affordability could lead to lower enrollment across…
- CNC (CENTENE CORPORATION)
- FY2025 10-K: …broker incentives or broker distribution channels that we may not be able to match, which may adversely affect our ability to compete effectively. Competitors may also choose to exit the market altogether or otherwise suffer financial difficulty, which could adversely impact the pool of potential insured, affect…
- FY2025 10-K: …stayed due to ongoing litigation. These include a requirement for certain consumers who automatically re-enroll into a fully subsidized Marketplace plan to be re-enrolled into the same plan with a $5 premium until the consumer updates their exchange application to confirm APTC eligibility. Additionally, exchanges may…
- ELV (ELEVANCE HEALTH, INC.)
- FY2025 10-K: …and supplement broker-facing distribution capabilities. In the Individual markets, we offer on-exchange products through state- or federally-facilitated marketplaces (the "Public Exchange") in compliance with the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010,…
- FY2025 10-K: …2025-12-31 0001156039 us-gaap:LandAndLandImprovementsMember 2024-12-31 0001156039 elv:HealthBenefitsSegmentMember 2023-12-31 0001156039 elv:CarelonRxSegmentMember 2023-12-31 0001156039 elv:CarelonServicesSegmentMember 2023-12-31 0001156039 elv:HealthBenefitsSegmentMember 2024-01-01 2024-12-31 0001156039…
- CI (The Cigna Group)
- FY2025 10-K: OtherRevenuesMember ci:CignaHealthcareMember 2023-01-01 2023-12-31 0001739940 us-gaap:OperatingSegmentsMember ci:ServiceFeesAndOtherRevenuesMember us-gaap:AllOtherSegmentsMember 2025-01-01 2025-12-31 0001739940 us-gaap:OperatingSegmentsMember ci:ServiceFeesAndOtherRevenuesMember us-gaap:AllOtherSegmentsMember…
- FY2025 10-K: …2025-12-31 0001739940 us-gaap:PolicyholderAccountBalanceAboveGuaranteedMinimumCreditingRateRangeFrom0051To0150Member us-gaap:PolicyholderAccountBalanceGuaranteedMinimumCreditingRateRangeFrom0300To0399Member us-gaap:AllOtherSegmentsMember 2025-12-31 0001739940…
- ALHC (ALIGNMENT HEALTHCARE, INC.)
- FY2025 10-K: CreditFacilityMember srt:ScenarioForecastMember us-gaap:SubsequentEventMember us-gaap:LineOfCreditMember 2026-06-30 0001832466 us-gaap:RevolvingCreditFacilityMember alhc:SeniorSecuredRevolvingCreditFacilityMember srt:ScenarioForecastMember us-gaap:LineOfCreditMember 2026-06-30 0001832466…
- FY2025 10-K: …they are disadvantaged by misaligned incentives that dominate today's healthcare system. As one of our most vulnerable populations, seniors across America need and deserve better. We put our combined decades of healthcare experience to work to create the Alignment model, incorporating best practices learned over our…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.