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Centene Corporation CNC recently disclosed that its Hawaii subsidiary Ohana Health Plan has received a contract from the Hawaii Department of Human Services. The new agreement is likely to benefit eligible members of the company’s Medicaid programs in Hawaii.
With WellCare Health Plans offering Medicaid plans across several U.S. states, its acquisition by Centene during last year also included the buyout of WellCare Health Insurance of Arizona. Notably, Ohana Health Plan functions under WellCare Health Insurance of Arizona. Catering to Hawaii inhabitants via the state’s Medicaid program for more than a decade, Ohana Health Plan has a well-established presence in Hawaii. Catering to the needs of around 50,000 Medicaid and Medicare Advantage members across Hawaii as of Dec 31, 2020 by Ohana Health Plan provides clear-cut indication of the same.
Scheduled to begin on Jul 1 of this year, the new deal is set to expire on Dec 31, 2026, with an option of three contract extensions of one year each.
The agreement aims to benefit the eligible Medicaid members covered under Temporary Assistance for Needy Families (TANF), the Children's Health Insurance Program (CHIP), Aged, Blind and Disabled (ABD) and expansion programs. Through the contract, these members will be entitled to get medical, behavioral health and long-term services as well as assistance.
Moreover, the latest contract win is not only likely to result in improved health outcomes of Hawaii residents but also strengthen Centene’s presence across the state, where it already boasts of a robust Medicaid business. Prior to the recent move, which intends to benefit Medicaid and CHIP members of the state, this Hawaii unit of Centene has joined forces with the Hawaii Department of Human Services in February 2021 to serve Community Care Services (CCS) members. In the same month, Centene’s Oklahoma subsidiary named Oklahoma Complete Health received a contract from the Oklahoma Health Care Authority (OHCA) for benefiting eligible Medicaid members covered under the SoonerSelect and SoonerSelect Specialty Children's Plan (SCP) programs.
Shares of this Zacks Rank #3 (Hold) healthcare provider have gained 8.2% on a year-to-date basis compared with the industry’s rally of 7.2%.
Several contract wins have provided an added boost to the medical membership of Centene, which has been growing for quite some time. The healthcare provider was able to sustain the trend during 2020 as well with a 67% year-over-year surge in managed care membership attributable to the WellCare buyout, a robust Medicaid business and well-established presence in the Health Insurance Marketplace. Notably, the company’s Medicaid membership also grew 56.7% during the same time frame.
The company’s Medicaid business remains well-poised to benefit through constant partnerships and extension of product offerings devised per needs of several communities it serves. Through these initiatives, Centene has been able to reach every corner of the United States including the underserved ones, which in turn bolstered its nationwide presence. Such efforts to boost one’s Medicaid business bode well as the the Centers for Medicare & Medicaid Services (CMS) estimated that Medicare spending is likely to rise at an average of 6% per year over the 2020-27 period.
Stocks to Consider
Some better-ranked stocks in the medical space are Select Medical Holdings Corporation SEM, Tenet Healthcare Corporation THC and HCA Healthcare, Inc. HCA. While Select Medical sports a Zacks Rank #1 (Strong Buy), Tenet Healthcare and HCA Healthcare carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Select Medical, Tenet Healthcare and HCA Healthcare have a trailing four-quarter earnings surprise of 242.41%, 199.09% and 58.50%, respectively, on average.
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