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Molina Healthcare Unit to Buy Some Assets from HAP Midwest

Molina Healthcare of Michigan, Inc., a wholly owned subsidiary of Molina Healthcare Inc.MOH recently inked an acquisition agreement with HAP Midwest Health Plan, Inc. (HAP Midwest). Per the agreement, Molina Healthcare of Michigan will buy some Medicaid and MIChild business assets from HAP Midwest. These assets pertain to Region 9 and 10 of the State of Michigan comprising Livingston, Macomb, Oakland, Washtenaw and Wayne counties.

The deal is pending regulatory approvals and is expected to close on Jan 1, 2016. Notably, on the same date Molina Healthcare is scheduled to commence its managed care contract with the State of Michigan for the Comprehensive Health Care Program. On culmination, Molina Healthcare of Michigan will also assume around 85,000 members associated with the Medicaid and MIChild businesses of HAP Midwest.

Although the government has decided to reduce the number of Medicaid plans in Region 9 and 10, assumption of the aforementioned assets of a complementary company should enhance Molina Healthcare's market share. Additionally, the concurrent managed care contract commencement will be beneficial for the easy transition of the new members to Molina Healthcare.

The company has had an experience in similar ventures before and has gained from them. Earlier, the buyout of the Florida Medicaid Assets from First Coast Advantage in Dec 2014 added 62,000 members, thereby accentuating the operating scale and capacity to offer superior quality healthcare services. The acquisition of the Medicaid and MiChild businesses of HealthPlus of Michigan (entered in May 2015), once approved should boost Molina Healthcare of Michigan's operations. Also, the pending acquisitions of Medicaid assets from Preferred Medical Plan, Inc., MyCare Chicago, Loyola Physician Partners and Columbia United Providers should strengthen the parent company's presence in Florida, Chicago and Washington, in the Medicaid space.

Molina Healthcare currently holds a Zacks Rank #2 (Buy). Other stocks from the health care space that warrant a look are Triple-S Management Corporation GTS , Centene Corp. CNC and VCA Inc. WOOF . While Triple-S Management sports a Zacks Rank #1 (Strong Buy), both Centene and VCA Inc. have the same Zacks Rank as Molina Healthcare.

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MOLINA HLTHCR (MOH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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