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Amerigroup, Centene, Molina Are Big Texas Medicaid Winners

By Jon Kamp Of DOW JONES NEWSWIRES Medicaid insurers Amerigroup Corp. (AGP), Centene Corp. (CNC) and Molina Healthcare Inc. (MOH) were big winners in a closely watched contest for business in Texas that could add billions in new revenue for the industry. The Texas wins helped some companies regain ground Tuesday after slumping in recent days on concerns about pressure on premiums and the state of Georgia taking back money after record-keeping problems caused overpayments. Shares of Amerigroup--which dropped 29% between Friday and Monday after it disclosed the Georgia issues--recently traded up 4.2% to $50.09. Centene rose 3% to $32.55, while Molina slipped six cents to $22.13. "The Texas announcement will remind the market that Medicaid is a growth industry, and despite the vicious stock movements recently, the overall thesis of these plans doubling revenue between now and 2014 hasn't changed," Citigroup analyst Carl McDonald said. Amerigroup, Centene and Molina could pick up the most new business in Texas, which announced on Monday tentative awards to several public and private health firms that will play an expanding role in providing Medicaid coverage for the poor. Bigger, diversified insurers UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET) also won new business, but not as much, according to analyst estimates, while nonprofits also picked up new members. HealthSpring Inc. (HS) also added a modest amount of new business, analysts estimated. The state said insurers will start providing service in expanded areas on March 1 next year. The awards are subject to working out final contracts with the state. Analysts' initial estimates varied, but they generally saw big potential revenue gains for the Medicaid insurers. Citigroup's McDonald, for example, estimated Centene will add $1.1 billion while Amerigroup adds $1 billion and Molina adds $625 million. Stifel analyst Thomas Carroll had similar estimates for Amerigroup and Molina, but estimated $666 million in added revenue for Centene. He said estimates are preliminary, since rates are not yet final. He also upgraded his rating on Amerigroup to buy from hold WellCare Health Plans Inc. (WCG) was surprisingly excluded from the market expansion, Carroll added, though he acknowledged that "there is plenty of future Medicaid business to go around." The Texas Medicaid awards follow wins in Louisiana last week for Amerigroup, Centene and UnitedHealth and wins earlier in July in Kentucky for WellCare, Coventry Health Care Inc. (CHV) and Centene. Among the Texas winners, Centene reiterated its earnings guidance for 2011, which it said incorporates start-up costs associated with the Texas award. The big managed-care companies didn't fare as well in Texas as the Medicaid-specialized firms, though McDonald estimated about $489 million in added revenue for United and $28 million for Aetna. He thinks WellPoint Inc. (WLP), meantime, lost $65.6 million in revenue there. Their performance raises the question "of whether the Medicaid M&A strategies of these companies need to evolve before they miss out on one of the few significant growth opportunities in the industry," McDonald said. WellPoint shares recently traded down 1.7% to $64.35 while Aetna traded down 1.9% to $39.55 and UnitedHealth slipped 2.2% to $46.96. -By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

Stock News for Coventry Hlth Care (CVH)
DateTimeHeadline
05/06/201309:22:52U.S. HOT STOCK FUTURES: HOT STOCKS TO WATCH
02/13/201315:27:24WellPoint Shares Slide as CEO Pick Surprises Investors
02/12/201310:20:11Coventry Gets Kentucky Medicaid Rate Increase
02/12/201310:10:09Coventry Gets Kentucky Medicaid Rate Increase; Aetna, WellCare...
12/11/201218:10:10Aetna Sees Higher Sales, Operating Earnings In 2013
11/13/201215:10:47Aetna, Coventry to Tweak Agreement to Resolve Some Lawsuits
11/09/201210:12:56Aetna, Coventry Get Second Request in Antitrust Review
10/26/201207:28:15Coventry Health 3rd-Quarter Net Falls 14% on Higher Patient Bills
10/10/201213:31:05Walgreen Signs New Limited Network Deals for Medicare Plans
10/04/201218:42:40WellCare, Humana, Coventry Win Medicaid Business in Kentucky
09/28/201212:40:10Amerigroup to Sell Va. Unit amid WellPoint Deal
08/27/201217:38:17Ohio Chooses Insurers Including Aetna, Molina to Cover 'Dual-Eligible...
08/23/201218:00:07U.S. Extends Review of WellPoint, Amerigroup Deal
08/23/201217:41:37WellPoint, Amerigroup Get Second Request in Antitrust Review
08/20/201217:10:05Aetna to Buy Coventry Health
08/20/201211:10:21MARKET SNAPSHOT: U.S. Stocks Fall; Europe Bond Report Dismissed
06/28/201217:22:50Big Health Insurers Under Pressure After Court Ruling
06/07/201218:48:14Molina, Centene Win Back Ohio Medicaid Business After Protests
05/18/201209:22:29US STOCK FUTURES: HOT STOCKS TO WATCH
04/21/201200:20:37MARKET SNAPSHOT: U.S. Stock Gains Hinge On Apple, Blue-chip Results

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