Yahoo Finance Molina Healthcare to Buy Medicaid Assets of MyCare Chicago - Analyst Blog
Molina Healthcare, Inc. MOH continues its spree of acquisitions in the Medicaid business. The company has yet again announced a similar deal with Accountable Care Chicago, LLC, also known as MyCare Chicago. Per the latest deal, a subsidiary of the company – Molina Healthcare of Illinois, Inc. – will acquire some Medicaid assets of MyCare Chicago.
The deal is pending regulatory approval and is expected to culminate in the fourth quarter of 2015. Per the terms of the transaction, apart from some Medicaid assets, Molina Healthcare of Illinois will also assume the Medicaid members of MyCare Chicago in Cook County, IL. Nevertheless, MyCare Chicago will continue operating its provider network and coordinate care for some of the enrollees, with agreement from Molina Healthcare of Illinois.
The acquisition will be funded by the parent company’s available cash on hand. Molina Healthcare has a strong cash position, evident from its financial statements in the last reported quarter. As of Mar 31, 2015, cash and cash equivalents at Molina Healthcare were $1.9 billion, up from $1.5 billion at year-end 2014. Cash from operations amounted to $553.6 million as against $210.9 million in the year-ago quarter.
Molina Healthcare is seeking opportunities in the Medicaid space as it is one of the most thriving areas in the health insurance sector. Toward this end the company has recently announced another acquisition deal, with Preferred Medical Plan, Inc. (Preferred) pertaining to which Molina Healthcare, will acquire some of Preferred’s Floridian Medicaid business assets. This deal is pending regulatory approvals and is slated to culminate in the third quarter of 2015 (read more : Molina Healthcare Unit to Buy Medicaid Assets from Preferred).
Moreover, in May, 2015, Molina Healthcare signed a deal to purchase some assets of the Medicaid and MIChild businesses of HealthPlus of Michigan and its subsidiary – HealthPlus Partners, Inc. (read more: Molina Healthcare Gains on Latest Acquisition Announcement).
MyCare Chicago is one of the 11 Accountable Care Entities operating in Illinois that provides medical services and coordinate care for approximately 61,000 Medicaid enrollees in Cook County, IL. Thus, the acquisition of Medicaid assets from the entity should help Molina Healthcare of Illinois enhance its services in the region, thereby making way for increasing its membership base.
Other stocks in the health care services space that are also seeking to enhance their Medicaid businesses include UnitedHealth Group Inc. UNH, Anthem, Inc. ANTM, Aetna, Inc. AET and Centene Corp.
Molina Healthcare currently carries a Zacks Rank #3 (Hold).
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