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Molina Healthcare Wins Kentucky Medicaid Managed Care Deal

Zacks Equity Research

Molina Healthcare, Inc. MOH announced that its Kentucky health plan subsidiary was awarded a new five-year Kentucky Medicaid managed care contract.

The contract win was pursuant with its request for proposals (RFP) issued by the Kentucky Finance and Administration Cabinet in May 2019.

Other managed care organizations that won the contracts include Aetna, a subsidiary of CVS Health Corporation CVS, Humana Inc. HUM, UnitedHealthcare Group Inc. UNH and WellCare Health Plans Inc. These companies will manage health care services for more than 1.3 million people via TANF, CHIP and ABD Medicaid programs.

The Medicaid contracts are expected to be launched on Jul 1, 2020 and run through Dec 31, 2025 and may be renewed for up to five additional two year periods through Dec 31, 2035.

Molina is focused on government-sponsored health care programs for families and individuals. The Kentucky Medicaid contract win will be a positive for Molina Healthcare’s 2020 earnings  and comes as a relief for the company, especially after losing Texas Medicaid Star+Plus Program in October 2019 and Florida Medicaid contract earlier during the year.

After losing ground in the Texas Medicaid Star+Plus program, total revenues and net income were affected in the third quarter of 2019. Molina suffered a loss of $1 billion in premium revenues.

The Medicaid contracts in New Mexico and Florida terminated in late 2018 and early 2019, respectively as a result of which Medicaid membership decreased nearly 21% as of Sep 30, 2019 compared with year-end 201 level. The loss also led to a decline in premium revenues.

The company is focused on expanding its Medicaid business. In line with this, in October 2019, it acquired certain assets of New York-based YourCare Health Plan in a $40-million deal to expand the Medicaid business. YourCare serves 46,000 Medicaid members across seven counties in western New York and the Finger Lakes region.

Shares of the Zacks Rank #3 (Hold) company have gained 14.6% year to date, outperforming its industry's rally of 11.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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