Dive Brief:
- Molina Healthcare has entered into a definitive agreement to buy Connecticut payer ConnectiCare for $350 million, the insurer said Tuesday.
- ConnectiCare, a subsidiary of New York-based nonprofit health plan EmblemHealth, serves about 140,000 beneficiaries across Affordable Care Act marketplace and Medicare plans, as well as certain commercial offerings, according to a press release.
- The acquisition, which is expected to close in the first half of 2025, will bring a “well-rounded” government-sponsored health plan and a new state market, Connecticut, into the insurer’s portfolio, Molina CEO Joe Zubretsky said in a statement.
Dive Insight:
The deal is a strategic fit for Molina, which primarily focuses on administering Medicaid benefits but also runs smaller Medicare and ACA exchange businesses. By buying ConnectiCare, the Long Beach, California-based payer adds an established government business, recognized brand and statewide provider network, the insurer said in a press release.
The insurer served about 5.7 million members eligible for government-sponsored healthcare programs — including marketplace beneficiaries — across 21 states as of the end of March, according to a securities filing. Molina expects the acquisition will add $1.00 per share to new store embedded earnings.
The purchase marks a second acquisition for Molina this year. In January, the payer closed its deal to buy Bright Health’s Medicare Advantage plans in California for about $425 million, net of certain tax benefits.
Molina has also recently faced some turbulence in Medicaid. The payer lost 550,000 members to date, executives said on a first-quarter earnings call in April, due to redeterminations, where states begin rechecking beneficiaries’ eligibility for the safety-net program after a period of continuous enrollment during the COVID-19 pandemic. The company also said during the April call it expected to lose another 50,000 in the second quarter.
The payer held off increasing its earnings expectations for the year due to potential Medicaid contact losses in Florida and Virginia. Molina eventually won an award in Florida, which will serve about 90,000 beneficiaries, the insurer said last week.
Still, Molina beat investor expectations on earnings and revenue in the first quarter, reporting revenue of $9.9 billion and net income of $301 million.
The insurer will report second-quarter financial results this week.
