Shawshank, VA 4/9/12 (StreetBeat) -- Molina Healthcare Inc. (NYSE: MOH) fell the most in almost seven years yesterday after saying its contract to manage 1.5 million patients in Ohio’s Medicaid program won’t be renewed.Molina plunged 24 percent to $26.53 yesterday at 10:01 a.m. New York time, after dropping 25 percent in its biggest intraday decline since July 2005. Amerigroup Corp. (NYSE: AGP) and Centene Corp. (NYSE: CNC), which also will lose contracts with the state, fell.
Ohio told Molina’s local health plan on April 6 that it was no longer in the running to administer the federal-state program for the poor after the current contract runs out at the end of the year, the Long Beach, California-based company said in an April 6 filing. Ohio was responsible for 22 percent of Molina’s premium revenue and 30 percent of profit, Chris Rigg, an analyst with Susquehanna Financial Group, said in a note to clients.
Centene, based in St. Louis, declined 12 percent to $44.71, while Amerigroup, based in Virginia Beach, Virginia, fell 4.7 percent to $64.29.
Companies like Molina are paid by states to manage benefits for patients, steering them into cheaper services and helping coordinate their care.
Ohio plans to merge eight managed-care regions within the state into three, part of changes that will save taxpayers $1.5 billion, the Job and Family Services Department said in a statement on April 6. Aetna Inc. (NYSE: AET) and UnitedHealth Group Inc. (NYSE: UNH) are among the companies selected to help administer the programs starting next year.
The losing plans are expected to protest the decision, Rigg said in his note.
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