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Molina Healthcare Pens Deal to Acquire First Coast Advantage

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Although Molina Healthcare Inc.’s (MOH - Free Report) decision to acquire Florida Medicaid Assets from First Coast Advantage, LLC has failed to drive the share price in the last trading session, no one can deny the importance of the news after considering the immense opportunity the acquisition holds.

Pursuant to a definitive agreement between Molina Healthcare of Florida, Inc. – a wholly owned subsidiary of Molina healthcare – and First Coast Advantage, the former will assume Medicaid contracts and some of the provider agreements of the latter for Region 4 under the Statewide Medicaid Managed Care (SMMC) Managed Medical Assistance (MMA) program in Florida. The deal is currently pending approval from the Florida Agency for Health Care Administration (AHCA).    

Last year, First Coast Advantage was selected to participate in the MMA program and was placed under the Region 4 counties which comprise Baker, Clay, Duval, Flagler, Nassau, St. Johns and Volusia. This provider service network currently serving 65,500 individuals is affiliated with the University of Florida Jacksonville Healthcare and UF Health Jacksonville, and thus boasts a strong reputation as a health care coverage provider in the aforementioned region. Therefore, acquiring this entity will help Molina Healthcare tap its resources and capitalize on the strong brand name, paving the way for an alliance with the University of Florida Health Care Network.

Molina Healthcare of Florida is a popular name when it comes to providing managed health care services under the Medicaid and Medicare programs. It had been selected by the AHCA to participate in the MMA Program for counties like Palm Beach, Miami-Dade, Orange, Brevard, Osceola, St. Lucie, Seminole, Indian River, Martin, Okeechobee and Monroe. On culmination, the aforementioned acquisition will facilitate this health care services provider’s entry into Northeastern Florida. This will not only benefit Molina Healthcare in terms of scale but will also accentuate the company’s capacity to offer superior quality healthcare services.

Molina Healthcare had reported second-quarter 2014 financial results last month which showed that enrollment at the Florida health plan had deteriorated sequentially. This downside stemmed from a membership reassignment under the Florida MMA program. However, management remained affirmative regarding an improvement in Florida health plan enrollment in the remaining part of the year. We believe the aforementioned acquisition to help the company recover from this membership trench.

Molina Healthcare currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare services space that are worth considering include Centene Corp. (CNC - Free Report) , Chemed Corp. (CHE - Free Report) and Gentiva Health Services Inc. . While Chemed and Gentiva sport a Zacks Rank #1 (Strong Buy), Centene has a Zacks Rank #2 (Buy).

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