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

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