Molina Healthcare has announced it has entered into a definitive agreement to acquire managed Medicaid organization Affinity Health Plan for $380 million.
Molina intends to fund the purchase with cash on hand.
The transaction is expected to close in the second quarter of 2021.
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WHY THIS MATTERS
The deal is another in Molina's plan for strategic growth and to fend off competition from other insurers in the business of state Medicaid and federal government contracts.
Molina is also in the Affordable Care Act market.
Molina CEO and President Joe Zubretsky said Affinity has the perfect product line and geographic fit. Affinity serves members in New York City, Westchester, Orange, Nassau, Suffolk, and Rockland counties in New York.
THE LARGER TREND
Affinity is the latest acquisition for Molina.
In July, Molina entered into a definitive agreement to acquire certain assets related to the Medicaid lines of business of Passport Health Plan for $20 million.
Earlier this year, Molina reportedly bought Magellan Complete Care from Magellan Health for $820 million, expanding its Medicaid and Medicare business.
The growth comes after a reorganization of executives three years ago. In 2017, the Molina Healthcare Board of Directors fired CEO J. Mario Molina, and his brother and CFO John C. Molina, sons of company founder C. David Molina, due to the company's disappointing financial results. The board then named former Aetna and Hanover Insurance Group executive Joseph M. Zubretsky as the company's new president and CEO.
ON THE RECORD
"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," Zubretsky said. "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."
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