Molina to acquire Brand New Day, Central Health Plan of California for $510M

Molina Healthcare announced that it has entered into a definitive agreement to acquire 100% of the issued and outstanding capital stock of Brand New Day and Central Health Plan of California, each of which is a wholly owned subsidiary of Bright Health Company of California, or BHCA. Relevant transaction terms and features are as follows: The purchase price for the transaction is approximately $510M, net of certain tax benefits, representing 28% of expected 2023 premium revenue of $1.8B. BHCA currently offers MAPD, D-SNP, and C-SNP products in 23 counties in California, with 60% overlap with Molina’s Medicaid footprint. As of March 31, 2023, BHCA served approximately 125,000 members. The transaction represents a strong strategic fit with Molina’s expanded 2024 Medi-Cal contract. It accelerates Molina’s D-SNP growth initiatives and activates the Los Angeles County 2024 D-SNP option the company had negotiated with the state. Today’s announcement is expected to add $1.00 per share to new store embedded earnings, bringing the expected total to $5.50 per share. Molina intends to fund the purchase with available funds including cash on hand. The transaction is subject to federal and state regulatory approvals, the solvency and continued operation as a going concern of Bright Health Group throughout the pre-closing period, and other closing conditions. It is expected to close in the first quarter of 2024.