Molina Healthcare's New Deal to Boost Its Medicaid Business

Molina Healthcare, Inc. MOH unveiled that its Kentucky health plan subsidiary was awarded a new Medicaid managed care contract. The new agreement is likely to benefit enrollees of the company’s Medicaid programs in Kentucky.

Per the new terms, the deal is likely to come into force from Jan 1 of the next year. The agreement will expire through Dec 31, 2024, and it even holds the potential to get six contract extensions of two years each.

The contract win was in accordance with the statewide Medicaid-managed care request for proposals (RFP) issued by the Kentucky Cabinet for Health and Family Services (CHFS) andDepartment for Medicaid Services (DMS) as of Jan 10, 2020.

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. Notably, the companies will manage healthcare services for more than 1.4 million people via TANF, CHIP and ABD Medicaid programs.

Shares of this Zacks Rank #3 (Hold) healthcare provider have gained 26.2% in a year compared with the industry’s rise of 19.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



Other Initiatives to Boost its Medicaid Business

Moreover, Molina Healthcare has constantly undertaken efforts to expand its presence in the Medicaid market. In line with such initiatives, the healthcare provider inked a deal worth $820 million this April to acquire Magellan Complete Care (MCC), which is yet another managed care organization. It also entered an all-cash deal value of around $50 million with NextLevel Health Partners, Inc. this January. We expect such moves to boost the company’s revenues from its Medicaid line of business in the days ahead.

Further, the entire United States is grappling with financial woes brought about by the COVID-19 pandemic. At a time when unemployment levels are remaining high, Molina’s Medicaid business is likely to witness increased membership. This is because Medicaid health plans generally provide coverage to low-income groups across the United States.

Also, the Health Maintenance Organization industry, to which Molina Healthcare belongs, remains well-poised to benefit from strong demand for health insurance products, owing to a high percentage of the aging population in the United States.

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