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California and the West

Molina Gains Chance to Keep Counties' Contracts

October 18, 2005|Debora Vrana | Times Staff Writer

Molina Healthcare Inc., which specializes in arranging healthcare for Medicaid recipients, said Monday that it won a chance to retain contracts with two California counties valued at a combined $111 million in annual revenue.

In May, Long Beach-based Molina learned the California Department of Health Services planned to take away two contracts it had with Riverside and San Bernardino counties and award them instead to Blue Cross of California.

Molina appealed, and now the state has told Molina it will reevaluate its decision. The contracts cover more than 96,000 members and would have expired in March 2006. It is unclear when the state will make a decision, the company said.

"There's a pretty good chance they will get these contracts, and that's good news for a company that is struggling," said Patrick Hojlo, an analyst with Credit Suisse in New York who follows Molina.

Indeed, stock prices at the beleaguered insurer plummeted 43% one day in July after the company cut its profit forecast, blaming rising medical costs. Molina will release third-quarter results Nov. 3.

On Monday, Molina's stock -- down 47% this year -- closed up 46 cents at $24.76.

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