Molina Healthcare to Acquire Bright HealthCare’s California Medicare Business
30 Junho 2023 - 9:15AM
Business Wire
Transaction expands Molina’s Medicare presence
in California and is expected to add $1.00 per share to new store
embedded earnings1
Molina Healthcare, Inc. (NYSE: MOH) (“Molina” or the “Company”)
announced today that it has entered into a definitive agreement to
acquire 100% of the issued and outstanding capital stock of Brand
New Day and Central Health Plan of California (collectively, the
“CA Health Plans”), each of which is a wholly owned subsidiary of
Bright Health Company of California, Inc (“BHCA”). Relevant
transaction terms and features are as follows:
- The purchase price for the transaction is approximately $510
million, net of certain tax benefits, representing 28% of expected
2023 premium revenue of $1.8 billion.
- BHCA currently offers MAPD, D-SNP, and C-SNP products in 23
counties in California, with 60% overlap with Molina’s Medicaid
footprint. As of March 31, 2023, BHCA served approximately 125,000
members.
- The transaction represents a strong strategic fit with Molina’s
expanded 2024 Medi-Cal contract. It accelerates Molina’s D-SNP
growth initiatives and activates the Los Angeles County 2024 D-SNP
option the Company had negotiated with the state.
- Today’s announcement is expected to add $1.00 per share to new
store embedded earnings, bringing the expected total to $5.50 per
share2.
“These additions fit perfectly with our strategy of serving
high-acuity, low-income members and represent a textbook execution
of our growth playbook. We acquire viable assets at attractive
valuations, then deploy our proven team of operators to deliver
improved financial results,” said Joe Zubretsky, President and
Chief Executive Officer of Molina. “We are pleased to continue our
meaningful growth in California as the latest realization of our
national growth strategy.”
Molina intends to fund the purchase with available funds
including cash on hand. The transaction is subject to federal and
state regulatory approvals, the solvency and continued operation as
a going concern of Bright Health Group throughout the pre-closing
period, and other closing conditions. It is expected to close in
the first quarter of 2024.
About Molina Healthcare
Molina Healthcare, Inc., a FORTUNE 500 company (currently ranked
126), provides managed healthcare services under the Medicaid and
Medicare programs and through the state insurance marketplaces.
Molina Healthcare served approximately 5.3 million members as of
March 31, 2023, located across 19 states. For more information
about Molina Healthcare, please visit molinahealthcare.com.
1 See Reconciliation note below 2 Idem
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995. This press release contains forward-looking
statements regarding our intended acquisition of Brand New Day and
Central Health Plan of California, including the anticipated timing
of the closing of the acquisition and our expected new store
embedded earnings. 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 that the transaction may not
close on a timely basis or at all, our ability to obtain regulatory
approvals and third-party consents and to satisfy all closing
conditions, our ability to integrate the acquisition as currently
expected without unreasonable delay or cost, and our ultimate
realization, as expected, of embedded earnings and our
non-recurring costs associated with the recently announced
acquisitions. Additional risk factors to which the Company is
subject are provided in our periodic reports and filings with the
Securities and Exchange Commission, including the Company’s most
recent Annual Report on Form 10-K. These reports can be accessed
under the investor relations tab of the Company’s website or on the
SEC’s website at sec.gov. Given these risks and uncertainties, the
Company cannot give assurances that its forward-looking statements
will prove to be accurate. All forward-looking statements represent
the Company’s judgment as of the date hereof.
Non-GAAP Financial Measures
The Company includes in this release the financial measure, “new
store embedded earnings,” which is a non-GAAP measure. The term is
defined as the incremental diluted earnings per share impact that
we expect to achieve in future years related to newly awarded but
not yet commenced state Medicaid contracts, and recently closed and
announced acquisitions. The incremental impact reflects the
expected full-year earnings for the newly-awarded California, Iowa,
Nebraska, and Indiana Medicaid contracts, and the Agewell, MyChoice
Wisconsin, and California Medicare Health Plans acquisitions, not
yet included in the current full-year guidance issued by the
Company. This measure excludes amortization of intangible assets
and non-recurring costs associated with acquisitions, including
various transaction and integration costs. The Company and
management believe this measure is useful to investors in assessing
the Company’s expected performance related to new Medicaid
contracts and acquisitions, and is used internally to enable
management to assess the Company’s performance consistently over
time. New store embedded earnings should be considered as a
supplement to, and not as a substitute for or superior to, GAAP
measures. Management is unable to reconcile this measure to the
growth in GAAP earnings per share, the most directly comparable
GAAP measure, without unreasonable effort due to the unknown impact
from the amortization of intangible assets related to recently
announced acquisitions, which cannot be determined until purchase
accounting valuations are completed. Non-recurring costs associated
with the recently announced acquisitions are estimated at
approximately $15 million.
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version on businesswire.com: https://www.businesswire.com/news/home/20230630231281/en/
Investor Contact: Joseph Krocheski,
Joseph.Krocheski@molinahealthcare.com, 562-549-4100 Media
Contact: Caroline Zubieta,
Caroline.Zubieta@molinahealthcare.com, 562-951-1588
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