Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of health insurer Molina Healthcare
So what: As a result of the decision, Molina's existing contract with the state will expire without renewal at the end of the year. Peers Amerigroup, Centene, and WellCare will also lose their Ohio contracts, but the news seems particularly troublesome for Molina, which generates about 20% of its premium revenue from the state.
Now what: I'd look into this plunge as a possible buying opportunity. While the contract loss will certainly deal a blow to Molina's near-term results, the good news is that management will now have the capital to grow into other areas. After all, Molina was already looking to expand and lighten its exposure to Ohio anyway, so this might be an attractive entry point for long-term investors.
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