Molina Healthcare Inc., which arranges healthcare services for Medicaid recipients, disclosed Wednesday that it had lost contracts with two California counties valued at a combined $111 million in annual revenue.
The news drove the company’s shares down $5.19, or 12%, to $38.95 -- their lowest since November -- in New York Stock Exchange trading. The stock hit a record high of $52.96 in January.
In a filing with the Securities and Exchange Commission, Molina said it learned Monday that the state Department of Health Services would give the contracts for Riverside and San Bernardino counties to another, unnamed healthcare manager.
The Long Beach-based company said it planned to appeal the department’s decision.
The California contracts, which cover 96,492 members, expire March 31, 2006, according to the filing.
Molina, which had total revenue of $1.17 billion in 2004, said it intended to “pursue all of its options” regarding the contracts.
But the firm also said it believed the loss of the contracts would be mitigated by other factors, citing a start-up operation in Indiana, higher interest income and the previously announced acquisition of 70,000 new members in San Diego.
The company said it was maintaining its previous 2005 earnings guidance of $2.40 to $2.45 a share. It did not offer guidance for 2006.
Bloomberg News and Reuters were used in compiling this report.