Molina Healthcare Faces Challenges Despite Investor Interest

Schaffhausen, Switzerland — Famed investor Michael Burry has expressed confidence in Molina Healthcare (MOH), highlighting it as a bullish bet in contrast to his more cautious stance on Palantir Technologies (PLTR). In a recent post on X, Burry stated, “Long MOH stock and Long PLTR puts, like peanut butter and bananas.”

Molina, founded in 1980, focuses on managed healthcare services for low-income individuals and families, totaling around 5.6 million members. The company aims to provide accessible healthcare to underserved populations, reflecting its mission of delivering “care regardless of ability to pay.” However, Molina’s stock has seen a nearly 50% decline in 2025, with a market capitalization now at $7.9 billion.

The company’s third-quarter results surprised some investors as earnings dropped 69.4% year-over-year to $1.84 per share, significantly missing the consensus estimate of $3.90. The declines were largely attributed to challenges in the Medicare and Marketplace segments. Despite these setbacks, Molina reported revenues of $11.48 billion, an 11% increase from the previous year.

Although the company’s financials remain steady, its medical care ratio rose to 92.6% from 89.2%, indicating a higher percentage of premium revenue spent on medical claims, which is generally unfavorable for insurers. Nevertheless, Molina maintains a solid cash position with $4.2 billion on hand and no short-term debt, despite a net cash outflow of $237 million from operating activities in the first nine months of the year.

The stock is currently trading at compelling valuations, with a forward price-to-earnings (P/E) ratio of 10.23 and a price-to-book (P/B) ratio of 1.80. These figures are significantly lower than the sector medians of 19.56 and 3.22. Analysts predict strong growth in the Medicare Advantage segment, representing a considerable opportunity for expansion.

However, Molina faces substantial risks, particularly due to sensitivity to federal and state funding changes. Proposals for Medicaid cuts in the federal budget could impact the company’s financial stability. Additionally, rising medical costs, including pharmaceuticals and behavioral health services, will require careful management to maintain profitability.

Despite the outlook, analysts have rated Molina stock as a “Hold,” with a mean target price suggesting an upside potential of about 16.5%. Out of 18 analysts covering the stock, three have a “Strong Buy” rating, while the majority lean towards “Hold.” With challenges ahead, the ability of Molina to navigate its current landscape remains uncertain.