LONG BEACH, Calif. - Molina Healthcare, Inc. (NYSE: MOH), a major provider of managed healthcare services, announced its agreement to purchase ConnectiCare Holding Company, Inc., a subsidiary of EmblemHealth, Inc., for $350 million. This move is set to expand Molina's government managed care presence into Connecticut.
ConnectiCare, a prominent health plan in Connecticut, currently serves around 140,000 members and is recognized for its marketplace, Medicare, and certain commercial products. The transaction, expected to close in the first half of 2025, is projected to add $1.00 per share to Molina's new store embedded earnings.
Molina Healthcare, a FORTUNE 500 company, is known for providing managed healthcare services under Medicaid and Medicare programs, as well as through state insurance marketplaces.
President and CEO of Molina, Joe Zubretsky, highlighted the acquisition as a continuation of the company's strategy to acquire stable revenue streams and deliver value through efficient capital deployment and the application of Molina's standard operating playbook.
Moreover, the acquisition is subject to customary closing conditions and the receipt of federal and state regulatory approvals. Molina plans to fund the purchase with cash on hand.
InvestingPro Insights
Molina Healthcare (NYSE: MOH) is making strategic moves to enhance its market position with the recent agreement to acquire ConnectiCare. This expansion into Connecticut aligns with Molina's aim to deepen its footprint in government managed care. For investors considering Molina's stock, here are some insights based on the latest data and analysis from InvestingPro:
InvestingPro Data highlights a solid financial base for Molina, with a market capitalization of approximately $16.97 billion and a P/E ratio of 15.36 on a last twelve months basis as of Q1 2024. This valuation metric is particularly noteworthy when combined with the company's near-term earnings growth, suggesting that the stock could be trading at a low P/E ratio relative to its growth potential.
Revenue growth also remains robust, with a 9.98% increase over the last twelve months as of Q1 2024, and an even more impressive quarterly revenue growth of 20.77% in Q1 2024. Such figures point to a healthy expansion trajectory, which could be further bolstered by the ConnectiCare acquisition.
Among the InvestingPro Tips, two are especially relevant in light of the recent news:
1. Molina holds more cash than debt on its balance sheet, which is a strong indicator of financial health and supports the company's ability to fund the ConnectiCare purchase with cash on hand.
2. Analysts predict the company will be profitable this year, which may reassure investors of Molina's capacity to integrate ConnectiCare effectively and capitalize on the new revenue streams.
For interested investors, there are 11 additional InvestingPro Tips available, which offer deeper insights into Molina's market position and performance. The full suite of tips can be accessed at https://www.investing.com/pro/MOH, and by using the promo code PRONEWS24, users can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. These tips could provide valuable guidance for those looking to make informed investment decisions regarding Molina Healthcare.
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