Leerink Remains Positive on Molina (MOH) Following Move to Acquire Providence Human Services Assets

Leerink affirms Molina Healthcare (NYSE: MOH) with an Outperform rating and $95 price target following news that the company was going to acquire all the outstanding ownership interests of Providence Human Services, LLC (PHS) and Providence Community Services, LLC (PCS), both wholly owned subsidiaries of The Providence Service Corporation for about $200 million.

Analyst Ana Gupte, PhD, commented, The transaction which is expected to close during 4Q15 will be funded by available cash on MOH's balance sheet. We expect the transaction to yield an annual EPS upside of ~10 c for MOH or ~3% of 2016 consensus EPS. We now expect MOH to end FY15 with ~$300 MM in parent cash or ~$5.5/share. This acquisition is similar to Cenpatico by CNC (OP) and supports the ongoing trend toward Carve In Behavioral Health in Managed Medicaid with States of LA, and now Iowa having carved in, and the potential for AR, NE and PA to follow suit.

For an analyst ratings summary and ratings history on Molina Healthcare click here. For more ratings news on Molina Healthcare click here.

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