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Molina buys up Cigna's Medicaid business in Texas for $60M

With this deal, Molina will expand upon its existing services in Texas as a part of its growth strategy.

Mallory Hackett, Associate Editor

Photo by Martin Barraud/Getty ImagesPhoto by Martin Barraud/Getty Images

Molina Healthcare has entered into a definitive agreement to purchase Cigna's Texas Medicaid business for approximately $60 million in cash.

Also included in the transaction are Cigna's Medicare-Medicaid Plan contracts in the state, as well as certain operating assets, the companies said in the announcement.

The deal is expected to close in the second half of 2021, subject to federal and state regulatory approvals.

WHY THIS MATTERS

With this deal, Molina will expand upon its existing services in Texas as a part of its growth strategy. It will gain about 48,000 Medicaid members and roughly 2,000 dual enrollment members across the state.

Additionally, Molina expects to capture about $1 billion in new annual revenue through the purchase.

"Acquiring Cigna's Texas Medicaid business provides us with a stable base of membership and revenue that will deepen Molina's service offerings in Texas, allowing us to meet the needs of thousands of additional Medicaid and MMP members," Molina said by statement. "The transaction demonstrates continued execution and is nicely representative of our growth strategy."

Amid the ongoing economic fallout of the COVID-19 pandemic, more people are becoming eligible and enrolling in Medicaid and CHIP, according to the Kaiser Family Foundation. By its estimates, total enrollment grew to 78.9 million last November – an increase of 10.8%, or 7.7 million, from February 2020.

THE LARGER TREND

Molina experienced company growth throughout 2020, despite the pandemic, according to its fourth-quarter and full-year financial report. It ended the year with $19.4 billion in revenue, up 15% from 2019, and more than 4 million members across its health plans.

Its growth was driven, in part, by a number of acquisitions it completed over the course of last year. In January, it announced plans to acquire all of the capital stock of NextLevel Health Partners.

Then last summer it entered into a definitive agreement to acquire certain assets related to the Medicaid and DSNP lines of business of Passport Health Plan. Rounding out the year, it shared plans to buy up Affinity Health Plan for $380 million.

ON THE RECORD

"We are proud of the positive impact we have made on customer lives through our Texas Medicaid business, and are confident that Molina will build on our work to improve their health, well-being, and peace of mind," Cigna said by statement.

"We remain fully committed to the state of Texas, and look forward to continuing to bring affordable, predictable, and simple health care solutions to the millions of Texans we serve through our Medicare, Commercial, and Health Services businesses."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org