Friday, the Agency for Health Care Administration announced contracts to five health plans due for the re-procurement of the Statewide Medicaid Managed Care (SMMC) program. 

Florida has finally announced its long-awaited Medicaid contract awards, keeping Centene Inc (NYSE:CNC), Elevance Health Inc (NYSE:ELV), and Humana Inc (NYSE:HUM) as the only providers in each state region. 

Stephens noted that Centene and Elevance Health re-procured specialty contracts (MMASC) while Centene also retained its child welfare (MMACC) contract.

This decision sidelines UnitedHealth Group Inc (NYSE:UNH), CVS Health Corp (NYSE:CVS), and Molina Healthcare Inc (NYSE:MOH) from the state’s Medicaid market. Centene stands to benefit the most, maintaining its dominant position. 

The contract spans six years and is slated to commence in October.

Florida law mandates that SMMC health plans be re-procured every six years; this was the second re-procurement. 

Through a regular, established competitive procurement process, the Agency negotiated and selected health plans to provide Managed Medical Assistance (MMA) and Long-term Care (LTC) services to the more than 3.4 million Florida people enrolled in the SMMC program.

Stephens adds that the results suggest the best possible outcome in Centene’s expected scenario of member loss. 

They recommend increasing the company’s overall share of Florida Medicaid. Additionally, the analyst anticipates Elevance Health and Humana will increase their membership by approximately 28% and 26%, respectively.

Oppenheimer writes that this outcome is ideal for Centene as it maintains its market share, exceeding expectations of substantial losses despite its high market presence.

Oppenheimer notes that Humana was a large beneficiary with around 147k members.

CVS Health, UnitedHealth, and Molina missed out, possibly prompting protests that could delay the implementation start date until January 1, 2025. 

Overall, the market will likely view the re-procurement as a major success for CNC, which should boost its stock, particularly considering recent letdowns in smaller re-procurements.

Price Action: CNC shares are up 3.23% at $73.02, and MOH shares are down 4.65% at $359.07 on the last check Monday.

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