Molina Healthcare to Snap Up AgeWell Assets for $100M


Molina Healthcare, Inc. (MOH) has inked a deal to acquire the Medicaid Managed Long Term Care business from specialty managed care company AgeWell New York for $100 million.

Shares of the California-based managed care company that provides health insurance to individuals through government programs such as Medicaid and Medicare have gained 38% over the past year. (See Molina Healthcare stock charts on TipRanks)

The addition of AgeWell’s assets will enhance Molina’s existing senior whole health of New York MLTSS business. Furthermore, the acquisition will aid in leveraging Molina’s fixed cost base.

The deal will be funded by available cash and is expected to be immediately accretive to Molina’s adjusted earnings.

The acquisition is expected to close by the third quarter of 2022, subject to certain regulatory approvals.

Molina Healthcare CEO Joe Zubretsky commented, “The addition of AgeWell to Molina’s expanding New York footprint is not only complementary to our existing MLTSS business, but also representative of our strategic growth strategy.”

He further added, “Our highest priority is to serve all Molina members with quality care and compassion, and we anticipate a seamless integration.”

Following the company’s Investor Day last month, BMO Capital analyst Matthew Borsch increased the price target on Molina Healthcare from $315 to $350 (26.3% upside potential) and reiterated a Buy rating.

Borsch continues to be optimistic on Molina Healthcare “led by multi-year growth targets of 13%-15% top-line, 15%-18% EPS based on margin/MCR targets that look more long-term sustainable than previous plans, particularly for Obamacare exchanges.”

Consensus among analysts is a Moderate Buy based on 7 Buys and 2 Holds. The average Molina Healthcare price target of $311.22 implies 12.3% upside potential to current levels.

MOH scores a 7out of 10 on TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations.

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