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Analysis

Molina Healthcare Completes $231M Sale of MMS Subsidiary

By John Commins  
   October 02, 2018

Molina CEO Joe Zubretsky says the deal gives the Long Beach-based managed care company 'flexibility to invest and refocus resources in our core health plan business.'

Molina Healthcare, Inc. has completed the previously announced $231 million sale of subsidiary Molina Medicaid Solutions to DXC Technology Company, the two companies said this week.

"The proceeds will provide additional resources and flexibility to invest in and focus on the Company's core health plan business and to continue executing on its margin recovery and sustainability plan," Molina said in a media release.

MMS provides technology platforms for Medicaid agencies in five states and the U.S. Virgin Islands to assist in claims processing, benefits management, administration and other business operations.

When the sale was announced in late June, Molina CEO Joe Zubretsky said the deal would give the Long Beach, California-based managed care company "flexibility to invest and refocus resources in our core health plan business."

DXC Technology provides IT services for government health agencies in 42 states.

"The combination of DXC and MMS significantly strengthens DXC's ability to provide the highest-quality services to state agencies in the administration of Medicaid programs, including what MMS now brings to the table—business processing, information technology development and administrative services," DXC Chairman, President, and CEO Mike Lawrie said in a media release.  

Molina is still recovering from a rocky 2017, which saw a companywide reorganization, top management turnover, and ultimately a $512 million loss for the year, which the company blamed on the cost of the restructuring and the federal government's refusal to pay subsidy payments.

So far, 2018 has been kinder to Molina, which posted Q2 net income of $202 million, compared to a net loss of $230 million in Q2 2017, and saw its net income per diluted share rise to $3.02 from $1.64 in Q1.

“The combination of DXC and MMS significantly strengthens DXC's ability to provide the highest-quality services to state agencies in the administration of Medicaid programs, including what MMS now brings to the table—business processing, information technology development and administrative services. ”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The sale comes as Molina continues its robust recovery from a rocky 2017.

The acquistion expands DXC's footprint to 47 state Medicaid agencies.

Molina will re-invest the money in its core health plan business.


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