- Molina is set to acquire Cigna's Medicaid business in the state of Texas for about $60 million in cash.
- The two announced Thursday that they signed a definitive agreement that also includes Cigna's dual Medicare-Medicaid plan and other operating assets.
- The deal is expected to close in the second half of this year and is subject to federal and state approvals, the companies said in the statement.
The deal is set to boost Molina's existing footprint in the state of Texas as the managed care company continues to execute on its strategy of growth through bolt-on acquisitions.
The acquisition represents an additional $1 billion in annual revenue, the Long Beach, Calif.-based insurer said, and it adds about 48,000 Medicaid members and 2,000 dual Medicare-Medicaid plan members. Molina currently has about 357,000 members in Texas, according to its latest annual filing with the Securities and Exchange Commission.
Overall, Molina ended 2020 with nearly 3.6 million Medicaid members, by far its largest segment compared with its enrollment in Medicare and the Affordable Care Act exchanges.
The payer is strictly focused on growing its business that exclusively offers coverage for government plans; Medicaid, Medicare and marketplace plans.
CEO Joe Zubretsky said during last year's J.P. Morgan conference that the company is uninterested in venturing beyond those core capabilities.
"We are a managed care company. We like membership. We like premium. We like capitated risk. That's what we do, that's who we are," Zubretsky told the crowd in San Francisco.
Zubretsky outlined the company's strategy, pointing to acquisitions as a key way to grow its three business units. The company has had a string of acquisitions over the past year. In the fall, Molina said it planned to buy a New York Medicaid managed care plan for $380 million to boost its footprint there. Prior to that, Molina completed an acquisition of another New York Medicaid managed care plan and purchased Kentucky's second-largest Medicaid plan.
Government programs are poised to grow, including marketplace plans, as President Joe Biden's administration has opened up a special enrollment period to help those get coverage who lost insurance as a result of the COVID-19 pandemic.
Anthem said this week during its first quarter earnings call that it saw a large jump in Medicaid enrollment. Some payers had braced for such a hike as the pandemic spurred an economic downturn, which would likely make some adults (or their children) eligible for Medicaid coverage.