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Molina Health Squeezes Infosys, Gets More For Less
Information technology (IT) outsourcer may face increased margin pressure if Molina’s early renewal prompts others to demand similar terms.
October 27, 2022
Two years before its contract with IT services provider Infosys (INFY) expires, Molina Healthcare (MOH), a provider of managed healthcare services to low income families, got what appears to be a better deal for longer. While Infosys likely doesn’t appreciate the disclosure, Molina revealed the new agreement contains “significant changes.”

Though no details were provided— or quantified— Molina characterized the new agreement as an expansion of the scope of services provided. In its latest quarterly filing, Molina also indicated the new deal will benefit the company financially:

“As a result of these changes, we expect improvements in certain service level objectives, as well as a reduction in our IT spend.”

In return, Infosys keeps Molina as a customer through 2029, five years longer than the original contract was set to expire. Unclear is how much margin Infosys had to cede to lock Molina in over a longer period of time.

The real danger is that the disclosure prompts other Infosys clients to demand better service for less money.
Related: UNH, CNC, ELV, CVS, HUM
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