Molina Healthcare has more acquisition opportunities in its pipeline, its CEO says.
On July 23, Molina Healthcare said it plans to acquire ConnectiCare, a subsidiary of EmblemHealth, for $350 million.
On a July 25 earnings call transcribed by Seeking Alpha, Molina Healthcare CEO Joseph Zubretsky said the ConnectiCare acquisition is a departure from its previous M&A strategies. Historically, the company has only established marketplace and Medicare lines in areas where Molina already operates Medicaid business.
ConnectiCare operates Medicare, marketplace and some commercial plans in Connecticut.
"While that option is not available to us in Connecticut, a Medicaid fee-for-service state, we believe this is a great opportunity to execute the time-tested Molina M&A playbook: Acquire a stable revenue stream in our core products, deploy capital efficiently and improve the assets' performance in the proven and reliable Molina way," Mr. Zubretsky said.
ConnectiCare would be the second major acquisition for Molina in less than a year. In January, the company closed the purchase of Bright Healthcare's Medicare Advantage business for $500 million, adding over 100,000 members.
Over 80% of Molina's 5.6 million members are in Medicaid. Though its past two acquisitions were not Medicaid plans, they are still core acquisitions for Molina's business, Mr. Zubretsky said.
Molina has a "very active" pipeline of Medicaid acquisition opportunities, Mr. Zubretsky said.
"You'll hopefully see Medicaid transactions here over the next 12 to 18 months," Mr. Zubretksy said. "We're still very active in that space. The last two we did were non-Medicaid, but that doesn't mean we're not actively pursuing them and working on them."