Molina Healthcare’s acquisition of Bright Healthcare’s California Medicare Advantage business, valued at $600 million, is expected to add $1.8 billion in premium revenue. While the purchase won’t immediately contribute to earnings, Molina aims to reach its target margins by the end of the second year after closing the deal. The transaction, financed by Molina’s cash reserves, is subject to regulatory approval and is set to conclude in Q1 2024.
Molina Healthcare anticipates a significant boost of $1.8 billion in premium revenue following its acquisition of Bright Healthcare’s Medicare Advantage business, which currently serves 125,000 members. The acquisition, valued at $600 million, pertains to Bright Healthcare’s California operations and represents a strategic move for Molina Healthcare.
During a recent investor call on July 27, Molina Healthcare’s CEO, Joseph Zubretsky, shared insights about the financial impact of the deal. He stated that the acquisition is projected to add $1 in earnings per share for the company, although this benefit won’t be apparent in the first year. The exact timeline for the acquisition to yield profits remains uncertain.
Mr. Zubretsky assured investors that despite the lack of early earnings contribution, Molina Healthcare remains confident about achieving its target margins by the end of the second year. He explained that the company can’t predict the financial and margin status of the acquired plan at the time of closing, but it is prepared to navigate potential challenges to meet its goals.
To finance the transaction, Molina Healthcare will use its available cash reserves. However, the deal is still pending regulatory approval and is expected to be finalized in the first quarter of 2024. This acquisition is poised to enhance Molina Healthcare’s position in the Medicare Advantage market and pave the way for potential long-term benefits.