Molina Healthcare, Inc. (MOH - Free Report) has witnessed a price surge on the back of Democratic candidate Bernie Sanders’ drop-out of the presidential race.
Despite the coronavirus impact on the global economy, the leading industry players gained as Sanders’ policies including Medicare for All weren’t complementing this key segment. He favored Medicare for All and intended to abolish private insurance, which had cast a shadow on health insurance companies like Molina Healthcare for months.
With the race now narrowing down to President Donald Trump and Joe Biden, companies like Molina Healthcare can relax as both candidates opposed Medicare-For-All. Shares of other industry biggies, such as UnitedHealth Group Incorporated (UNH - Free Report) , Anthem, Inc. (ANTM - Free Report) and Humana Inc. (HUM - Free Report) also gained following Sanders' quitting the campaign.
Biden, in particular, wants to expand Obamacare and looks forward to individuals buying health insurance similar to Medicare. Likewise, for health insurers, this plan looks far more attractive. No doubt, health insurance biggies did well under Obamacare and may continue to flourish under Biden’s healthcare plan as well.
Notably, Molina Healthcare’s Medicaid business contributed to around 77% of the company’s overall premium revenues in 2019, which is likely to gain further from this new plan if implemented.
Moreover, Molina Healthcare has been gaining traction from the restructuring and profitability improvement plan started in 2017. The plan included streamlining of organizational structure to improve efficiency as well as the speed and quality of decision-making. This helped reducing its expenditure by 13.2% and 11% in 2018 and 2019, respectively. As part of this initiative, the company sold its units, namely Pathways Health and Community Support, LLC and Molina Medicaid Solutions. This, in turn, is expected to help it focus on core growth areas.
Its solid balance sheet also impresses. Owing to its financial strength, the company has been deploying capital to enhance shareholder value. Its operating cash flow also increased significantly in 2019 on premium receipt timing and government payments.
This Zacks Rank #3 (Hold) company has rallied 23.7% in the past year, outperforming its industry’s growth of 8.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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