Molina Healthcare to Acquire Certain Medicare Advantage Assets from Aetna and Humana
August 02 2016 - 6:30AM
Business Wire
- Adds greater program and geographic
diversification within government-sponsored programs
- Increases product offering in existing
states and expands Medicare footprint to new states
- Substantial expansion into fast growing
Medicare Advantage market
- Transactions expected to be immediately
accretive to earnings following close
Molina Healthcare, Inc. (NYSE:MOH) today announced that it has
entered into definitive agreements to acquire certain Medicare
Advantage assets from both Aetna Inc. (NYSE:AET) and Humana Inc.
(NYSE:HUM). These transactions are related to Aetna’s proposed
acquisition of Humana. Molina’s acquisition of such Medicare
Advantage assets is subject to CMS approvals and actions, customary
closing conditions including state and other regulatory approvals,
as well as the resolution, in a manner permitting the acquisition,
of the pending litigation brought by the United States Department
of Justice challenging Aetna’s proposed acquisition of Humana.
“We view this as an exceptional opportunity to significantly
expand our health plan product portfolio in new and existing
geographies, while maintaining our commitment to
government-sponsored programs,” said J. Mario Molina M.D.,
president and chief executive officer of Molina Healthcare, Inc.
“Medicare Advantage patients require a significant amount of care
coordination. Through our experience in coordinating the care for
members in our existing Medicare Advantage, Medicare Special Needs,
and Medicare-Medicaid Plan offerings, we have developed a unique
understanding of the challenges Medicare patients face every day
and the tools required to provide them with the highest quality of
service. This experience and insight will be invaluable as we
integrate and continue to grow this business. We look forward to
working closely with Aetna and Humana to ensure a smooth
transition.”
Under the terms of the agreements, Molina will acquire, in
all-cash transactions, certain assets related to Aetna and Humana’s
Medicare Advantage businesses in 21 states which will result in
approximately 290,000 Medicare Advantage members transitioning to
Molina.
The consideration for the transactions is currently estimated to
be approximately $117 million, exclusive of any required regulatory
capital, subject to adjustment based on actual membership at
closing. The transactions are expected to be accretive to Molina’s
earnings upon closing. Molina expects to fund the transactions with
available cash, but has also received a debt commitment letter from
Barclays in support of Molina’s financing obligations under the
agreements.
As of June 30, 2016, Molina Healthcare served 44,000 Medicare
Advantage Special Needs Plan members and 51,000 Medicare-Medicaid
Plan members.
Molina was advised on financial matters by Barclays and on legal
matters by Sheppard, Mullin, Richter & Hampton LLP.
About Molina Healthcare, Inc.
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed
health care services under the Medicaid and Medicare programs and
through the state insurance marketplaces. Through our locally
operated health plans in 12 states across the nation and in the
Commonwealth of Puerto Rico, Molina currently serves approximately
4.3 million members. Dr. C. David Molina founded our company
in 1980 as a provider organization serving low-income families in
Southern California. Today, we continue his mission of providing
high quality and cost-effective health care to those who need it
most. For more information about Molina Healthcare, please visit
our website at molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains
“forward-looking statements” regarding the proposed transactions
between Molina Healthcare and Aetna and between Molina Healthcare
and Humana. All forward-looking statements are based on current
expectations that are subject to numerous risk factors that could
cause actual results to differ materially. Such risk factors
include, without limitation, risks related to: the pending
litigation brought by the Department of Justice challenging Aetna’s
acquisition of Humana, the closing of which is a condition
precedent to the consummation of the transactions described herein;
the satisfaction or waiver of closing conditions for the
transactions, including the need to obtain regulatory approvals,
satisfy licensing requirements, and receive other third party
consents; any conditions imposed on the parties by regulators in
connection with consummating the transactions described herein;
successfully transitioning membership into Molina’s health plans
and the success of the transition and administrative services to be
provided by Aetna and Humana to Molina; attrition in membership
pending the completion of and following the transition; maintaining
provider relations and potential medical cost increases resulting
from unfavorable changes in contracting or re-contracting with
providers; and the possibility that the transactions will not be
completed on a timely basis or at all. Additional information
regarding the risk factors to which we are subject is provided in
greater detail in our periodic reports and filings with the
Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K. These reports can be accessed under the
investor relations tab of our website or on the SEC’s website at
sec.gov. Given these risks and uncertainties, we cannot give
assurances that our forward-looking statements will prove to be
accurate, or that any other results or events projected or
contemplated by our forward-looking statements will in fact occur,
and we caution investors not to place undue reliance on these
statements. All forward-looking statements in this release
represent our judgment as of the date hereof, and we disclaim any
obligation to update any forward-looking statements to conform the
statement to actual results or changes in our expectations that
occur after the date of this release.
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version on businesswire.com: http://www.businesswire.com/news/home/20160802005734/en/
Molina Healthcare, Inc.Investor Relations:Juan José Orellana,
562-435-3666orPublic Relations:Sunny Yu, 562-901-1039
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