The 5 Dumbest Things on Wall Street This Week: April 13
3. Molina's Messy Monday
Hold everything! Stop the presses! The Buckeye state has produced yet another political casualty, and boy is this one a real knock-out blow.
We're not talking about Mitt Romney vanquishing his rival Rick Santorum in last month's Ohio Republican primary of course. Heck, that's ancient history at this point. No, we're referring to the state's Medicaid decisions which totally floored a once-prominent provider.Seriously, forget "Super Tuesday." It was "Molina (MOH) Monday" that was the real game changer this week. Shares of Molina Healthcare sank almost 27% Monday after the state of Ohio neglected to include it on the list of companies selected to administer its Medicaid program for more than 1.5 million people. Also snubbed by the state was fellow provider Centene (CNC), which saw its stock drop 15.4% on the news. Among the companies making the cut were Aetna Better Health of Ohio, CareSource, Meridian Health Plan, Paramount Advantage and United Healthcare Community Plan of Ohio. And to add insult to injury, Aetna and Meridian Health are new entrants to the Ohio program while the incumbent Molina, now mulling an appeal, has been in the state for years. Molina generated more than $1.2 billion in premiums in the state, or about 22% of the company's total revenue and reportedly 30% of its profits. Perhaps Citigroup analyst Carl McDonald summed up Molina's situation best in his note to clients when he wrote, "Ouch." Ouch indeed. We don't have to put that up for a vote.
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