Bank of America Positive on MOH, CNC, AGP, UNH, CI

Bank of America has published a research report on Medicaid Managed Care stocks, including Molina Healthcare

Centene

and AMERIGROUP

after Texas published a dual eligible care coordination design similar to those present in California and Tennessee. In the report, Bank of America writes, "Most Texas counties would participate in the dual eligible pilot except rural service areas where there is no STAR+PLUS infrastructure. Specifically, we estimate potential annual revenues for AGP, MOH, CNC, UNH and CI are $770 million, $750 million, $645 million, $375 million and $145 million based on current Medicaid market share, respectively, assuming $1,300 PMPM before considering 8% of duals are already enrolled in SNPs operated by STAR+PLUS HMOs, a 5-10% savings rate and a 5% voluntary opt out rate (see Table 1). We note that plans must build and operate local Medicare Advantage SNPs to participate in particular counties. AGP is the only pure play Medicaid HMOs that operates profitably in STAR+PLUS, but at company average margins, the EPS boost could be $0.43, $0.25, $0.23, $0.01 and $0.04, respectively."