April 2 Vanguard Health Systems Inc,
which lost the bidding for a new Medicaid contract in Arizona
recently, said late on Monday that it will be able to continue
providing healthcare services to a restricted number of
customers there for three years.
Vanguard, whose shares fell 11 percent on March 25 when it
failed to win a new Arizona Medicaid contract,
said Maricopa County had agreed that starting Oct. 1, 2013
Vanguard could operate with capped enrollment. It had 98,300
members in Maricopa County as of Dec. 31. The county includes
Phoenix, the state capital.
In return, Vanguard agreed it would not file a protest
related to losing the contract. Medicaid provides healthcare
services to the poor.
The terms mean that Vanguard can lose members and will not
have more than 98,000 members, but the alternative would have
meant losing most of the $40 million of operating earnings from
the business, an analyst said on Tuesday.
The continued expansion of Medicaid in other states in 2014
and 2015 is likely a bigger positive for the company than the
reduction of earnings in Arizona, analyst Sheryl Skolnick at CRT
Capital Group said in a research note.
"We therefore expect VHS' thinly-trade shares to recover
from recent pressures rather strongly," Skolnick wrote.
Vanguard shares closed at $14.56 on Monday on the New York