Question-and-Answer Session
Operator
Thank you.
(Operator Instructions)
Our first question comes from the line of Joshua Raskin of Lehman Brothers. Please proceed with your question.
Joshua Raskin
Thanks, good evening. First question, it looks like you are talking about $10 million in investment in Medicare in 2007. I am curious what the expectations in terms of 2008, where you think you are going to be expanding in 2009? How would you think about that investment level?
Joseph Molina
Well, Josh, I think that we are not planning to do as major of an expansion on 2009 as we did in 2008. We talked about adding the MAPD in all the markets, and we entered two new markets, those being New Mexico and Texas; and we did bring in a more experienced management team in the fourth quarter. We will continue to see investment in Medicare because it is a product that, for the long term, we believed in. We think it fits very well with our profile but I do not expect to see the same sort of ramp up as we did in 2007.
Joshua Raskin
Got you, that makes sense. And then the second question on Tennessee. Could you just run us through the relationship that you guys are forming with the UAHC, and how the economics play out? Is that just in investment; should we think about that as earnings in equity in an affiliate or is there going to actually be a P&L impact? How do we sort of think about that?
Joseph Molina
Well, let me start with saying that when we looked at the Tennessee opportunity we thought it was important to link arms with a group that has got experience in the Ten Care Program, and that partner was United American Healthcare. They have been in Western Tennessee for 12 years. We are operating together a joint bid and we will be finalizing our definitive renewal with them before that bid is in place. So, I really do not want to get into the economics of the deal until we are able to have a full sign up on that, but it would be our intention to make sure that, that agreement aligns our objectives with the United American's. So it will not be just a passive investment for us. We will be providing some administrative service for them so that we can work on this project jointly.
- To read the full transcript on Seeking Alpha, click here »
