News Briefs

✦ Molina Healthcare, Inc. on April 30 said it entered into a definitive agreement to purchase Magellan Complete Care (MCC) for approximately $820 million, net of certain tax benefits. MCC is the managed care arm of Magellan Health, Inc. serving approximately 155,000 members in six states, including dual-eligible and managed long-term care individuals, according to a press release from Molina. Jefferies analysts David Styblo and David Windley said the move was unexpected and “dramatically changes” Magellan’s business mix, as the company will shed its Medicaid/duals assets to focus on growing its behavioral health, specialty pharmacy and pharmacy benefits holdings. With the addition of MCC, Molina will serve more than 3.6 million members in government-sponsored health care programs in 18 states and expects to achieve annual revenue of $20 billion. The deal is subject to federal and state approvals, among other closing conditions. Contact Styblo at dstyblo@jefferies.com. Go to https://bit.ly/2Wx1RzD.

✦ Although first-quarter 2020 results exceeded the company’s expectations, Molina Healthcare, Inc. saw its net income decline from $198 million, or $2.99 per diluted share, a year ago to $178 million, or $2.92 per share. The company in an April 30 press release attributed those results to medical cost pressure in its Medicaid line of business early in the quarter stemming from a slightly higher-than-normal flu season, compared with “early, but largely undetected COVID-19 costs diagnosed as severe respiratory illness and pneumonia.” Its Medicaid medical loss ratio rose from 88.5% in the year-ago quarter to 88.9%, while its Medicare MLR improved from 84.7% in the first quarter of 2019 to 81.7%. Molina reaffirmed its full year earnings guidance range of $11.20 to $11.79 per share, which does not include membership increases stemming from COVID-19-related unemployment or acquisitions that have not yet closed. Visit https://bit.ly/2z7leqZ

© 2021 MMIT

Lauren Flynn Kelly Managing Editor, Radar on Medicare Advantage

Lauren has been covering health business issues, including drug benefits and specialty pharmacy, for more than a decade. She served as editor of Drug Benefit News (the predecessor to Radar on Drug Benefits) from 2004 to 2005 and again from 2011 to 2016, and now manages Radar on Medicare Advantage. Lauren graduated from Vassar College with a B.A. in English.

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