Represents Excellent Fit with Existing
Portfolio
Immediately Accretive to Adjusted Earnings Per
Share
Maintains Stability for New York State
Partner
Molina Healthcare, Inc. (NYSE: MOH) (“Molina”) announced today
that it has entered into a definitive agreement to acquire
substantially all of the assets of Affinity Health Plan
(“Affinity”). The purchase price for the transaction is
approximately $380 million, net of expected tax benefits and
inclusive of an amount representing Molina’s target allocation of
required regulatory capital. Molina intends to fund the purchase
with cash on hand.
Affinity is a Medicaid managed care organization serving members
in New York City, Westchester, Orange, Nassau, Suffolk, and
Rockland counties in New York. It has a 35 year history of
supporting Medicaid managed care populations and has long
demonstrated a deep commitment to the communities it serves. As of
August 31, 2020, Affinity served approximately 284,000 Medicaid
members. Affinity’s premium revenue for the trailing twelve months
ended July 31, 2020, was approximately $1.3 billion.
“The addition of Affinity is yet another important marker in
activating our growth strategy, and is a perfect product line and
geographic fit. We believe Molina’s strengths, including its strong
balance sheet and demonstrated operating capabilities, will allow
us to strengthen the financial base of Affinity and improve the
business’s cost structure and operating margins,” said Joe
Zubretsky, president and chief executive officer of Molina.
Mr. Zubretsky continued, “The acquisition of Affinity provides
us with a stable base of membership and revenue and will deepen
Molina’s service offerings in New York, allowing us to meet the
needs of hundreds of thousands of additional Medicaid members. The
transaction provides added stability to Affinity’s Medicaid members
and its state partner during this critical time.”
The net purchase price of approximately $380 million represents
less than 30% of premium revenues for the twelve months ended July
31, 2020, and the transaction is expected to be immediately
accretive to adjusted earnings per share. The transaction is
subject to receipt of applicable federal and state regulatory
approvals, and satisfaction of other customary closing conditions.
It is expected to close in the second quarter of 2021.
Advisors
Deutsche Bank Securities Inc. acted as financial advisor, and
Milbank LLP, Ropes & Gray LLP, and Latham & Watkins LLP
served as legal advisors to Molina.
About Molina Healthcare
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 its locally
operated health plans, Molina Healthcare served approximately 3.6
million members as of June 30, 2020. For more information about
Molina Healthcare, please visit molinahealthcare.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This press release contains “forward-looking statements”
regarding the proposed acquisition by Molina of certain assets of
Affinity Health Plan. 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 following:
(i)
the possibility that the proposed
transaction will not be completed on a timely basis or at all;
(ii)
the risk that regulatory or other
approvals required for the proposed transaction may be delayed or
not obtained, or are obtained subject to conditions that are not
anticipated that could have an adverse effect on Molina;
(iii)
the exertion of management’s time and
resources, and other expenses incurred and business changes
required, in connection with complying with the undertakings in
connection with any regulatory, governmental, or third-party
consents or approvals for the proposed transaction;
(iv)
the disruption from the announcement,
pendency, and/or completion of the proposed transaction, including
potential adverse reactions or changes to business relationships
with customers, employees, suppliers, or regulators, making it more
difficult to maintain business and operational relationships;
(v)
the possible attrition in Affinity’s
membership pending the completion of and following the closing of
the proposed transaction;
(vi)
the risk that Molina is unable to
successfully retain or integrate the employees and operations of
Affinity;
(vii)
the risk that, following the closing of
the proposed transaction, the combined company may not be able to
effectively manage its expanded operations;
(viii)
the possibility that the expected
synergies and value creation from the proposed transaction will not
be realized, or will not be realized to the extent expected or
within the expected time period;
(ix)
the risk that unexpected costs will be
incurred in connection with the completion and/or integration of
the proposed transaction or that the integration of the acquired
assets will be more difficult or time consuming than expected;
(x)
the difficulty of maintaining provider
relations and managing potential medical cost increases resulting
from unfavorable changes in contracting or re-contracting with
providers; and
(xi)
the uncertainty around the duration and
breadth of the COVID-19 pandemic, and the ultimate impact thereof
on the benefits Molina expects to realize from the proposed
transaction, which impact Molina cannot reasonably estimate at this
time.
Additional information regarding the risk factors to which
Molina is subject is provided in greater detail in its periodic
reports and filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K. These reports
can be accessed under the investor relations tab of Molina’s
website or on the SEC’s website at sec.gov. Given these risks and
uncertainties, Molina cannot give assurances that its
forward-looking statements will prove to be accurate, or that any
other results or events projected or contemplated by its
forward-looking statements will in fact occur, and Molina cautions
investors not to place undue reliance on these statements. All
forward-looking statements in this release represent Molina’s
judgment as of the date hereof, and it disclaims any obligation to
update any forward-looking statements to conform the statement to
actual results or changes in its expectations that occur after the
date of this release. Given these risks and uncertainties, Molina
can give no assurances that its forward-looking statements will
prove to be accurate, or that any other results or events projected
or contemplated by its forward-looking statements will in fact
occur, and it cautions investors not to place undue reliance on
these statements. All forward-looking statements in this release
represent Molina’s judgment as of the date of this press release,
and, except as otherwise required by law, Molina disclaims any
obligation to update any forward-looking statements to conform the
statement to actual results or changes in its expectations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200929005288/en/
Investor Contact: Julie Trudell,
Julie.Trudell@molinahealthcare.com, 562-912-6720 Media
Contact: Caroline Zubieta,
Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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