Molina Healthcare has entered into a definitive agreement to acquire all of the capital stock of NextLevel Health Partners, a Medicaid managed care organization, for about $50 million, the company said this week.
As part of the transaction, Molina will assume the right to serve approximately 50,000 Medicaid and Managed Long-Term Services and Supports members in Illinois' Cook County, significantly expanding the managed healthcare services company's footprint in the state.
WHAT'S THE IMPACT
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Molina Healthcare, a Fortune 500 company, provides managed healthcare services under the Medicare and Medicaid programs and through the state insurance marketplaces. Through its locally operated health plans, Molina Healthcare served upwards of 3.3 million members as of September 30, 2019.
The $50 million purchase price will be funded through Molina's available cash. Subject to all of the customary regulatory approvals and the satisfaction of other conditions, the closing of the transaction is expected to occur early this year.
NextLevel Health's estimated premium revenue for the full year 2019 is about $270 million.
Even after the two entities are conjoined, Molina will lag behind other large insurers when it comes to enrollment. In 2018, Illinois expanded its Medicaid managed care model to cover all of the state's counties.
THE LARGER TREND
In 2017, the Molina Board of Directors fired its CEO and CFO due to the company's disappointing financial results. Molina Healthcare was active in the Affordable Care Act market, with former CEO J. Mario Molina, MD an outspoken opponent of the Republican plan to repeal and replace the ACA.
Currently, Illinois boasts six managed care organizations. If Molina's NextLevel acquisition is made final, that number will be whittled down to five.
One of those plans, the Centene-owned IlliniCare, will be sold to CVS Health. While not explicitly detailed in the agreement, the deal helps to avoid antitrust concerns in the approval of the Centene and WellCare merger. The transaction entails the sale of Centene's Medicaid and Medicare Advantage lines of business in Illinois.
Centene will retain IlliniCare's Medicare-Medicaid Alignment Initiative business and IlliniCare's statewide YouthCare foster care contract, set to commence in February. Centene's Ambetter business in Illinois is not affected. The companies said they are committed to ensuring that there is a smooth transition for members.
ON THE RECORD
"We are delighted to expand our presence in Illinois as the state's higher acuity populations skew toward Molina's strengths," said Pam Sanborn, president of Molina Healthcare of Illinois. "Acquiring NextLevel Health increases our footprint in the state of Illinois, enables us to scale our existing business platform, and provides additional operating cost leverage. The existing base of acquired assets also provides Molina with expansion opportunities for our Medicare-Medicaid Plan and Marketplace offerings."
"NextLevel Health's community-based approach combines a culturally sensitive lens and the recognition of social determinants of health to provide Medicaid members access to quality care," said Dr. Cheryl Whitaker, CEO of NextLevel Health Partners. "We are proud to join Molina and continue to positively impact our communities."