Molina Healthcare finalizes $231M sale of Medicaid management system

Handshake business deal executives
DXC Technology, based in northern Virginia, is the new owner of Molina Medicaid Solutions. (Pixabay)

Molina Healthcare closed the $231 million sale of its Medicaid management solution Monday to DXC Technology. The insurer plans to reinvest the money as it continues its financial rebound.

“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 brief statement.​

​​​​​​RELATED:  With a stunning Q2 performance, Molina is officially a comeback story

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The divestiture of Molina Medicaid Solutions (MMS) isn't expected to have any impact on the company's earnings per share, but it will free up cash to pay down debt and invest in core businesses, according to (PDF) Ana Gupte of the healthcare-focused investment bank Leerink Partners.

Molina CEO Joseph Zubretsky has previously said the transaction would generate up to $180 million in additional cash. 

The funds will help with Molina's continued rebuild. At the end of the second quarter this year, the company reported net income of $202 million—a number that stands in stark contrast to the $512 million loss it reported just six months earlier.

Zubretsky has suggested Molina will use the individual market to regrow as well.

MMS is used by state Medicaid agencies for business and administrative purposes, as well as for digital development. The platform can process claims and handle business functions such as program administration or provider inquiries. 

The acquisition adds DXC's services to government agencies in five more states, the company said in a release. It also expands DXC's capabilities to offer more services, including pharmacy and drug rebate support.

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