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Molina Healthcare has entered into a definitive agreement to purchase Cigna’s Texas Medicaid business for approximately $ 60 million in cash.
Also included in the transaction are Cigna’s Medicare-Medicaid Plan contracts in the state, as well as certain company assets, the companies said in the announcement.
The deal is expected to close in the second half of 2021, subject to approval by federal and state authorities.
WHY THIS IS IMPORTANT
With this deal, Molina will expand its existing services in Texas as part of its growth strategy. It gets about 48,000 Medicaid members and about 2,000 double enrollment members statewide.
Additionally, Molina expects to generate approximately $ 1 billion in new annual revenue with the purchase.
“The acquisition of Cigna’s Texas Medicaid business provides us with a stable membership and revenue base that will deepen Molina’s service offering in Texas, enabling us to meet the needs of thousands of additional Medicaid and MMP members,” Molina said in a statement. “The transaction demonstrates continued execution and is a good representation of our growth strategy.”
Amid the ongoing economic fallout from the COVID-19 pandemic, more people are becoming eligible and enrolling in Medicaid and CHIP, according to the Kaiser Family Foundation. It is estimated that the total number of enrollments grew to 78.9 million last November – an increase of 10.8%, or 7.7 million, as of February 2020.
THE BIGGER TREND
According to her fourth quarter and full year financial reporting, Molina experienced growth in 2020 despite the pandemic. It closed the year with $ 19.4 billion in revenue, 15% more than in 2019, and more than 4 million members for its health plans.
Growth was partly driven by a number of acquisitions completed in the past year. In January, it announced plans to acquire all shares of NextLevel Health Partners. Last summer, it then entered into a definitive agreement to acquire certain assets related to Passport Health Plan’s Medicaid and DSNP businesses. To wrap up the year, it shared plans to buy up Affinity Health Plan for $ 380 million.
ON THE REPORT
“We are proud of the positive impact we’ve had on our clients’ lives through our Texas Medicaid business, and we believe Molina will continue to build on our work to improve their health, wellness and peace of mind,” Cigna said in a statement. “We remain fully committed to the State of Texas and look forward to continuing to provide affordable, predictable and simple healthcare solutions to the millions of Texans we serve through our Medicare, Commercial and Health Services businesses.”
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