The state of Washington has named five health insurers, including Amerigroup Corp. (AGP), Centene Corp. (CNC), UnitedHealth Group Inc. (UNH) and Molina Healthcare Inc. (MOH), as preliminary winners in a Medicaid bidding process that could be worth around $2.5 billion in industry revenue.

The 18-month contracts, which are subject to finalization, represent new-market entries for three of those firms but fresh competition for Molina, which already has a big presence in Washington. The state also picked a nonprofit group, Community Health Plan of Washington, in the bidding process to serve an expanding program for low-income health-care recipients.

The contracts in question are expected to cover about 840,000 people and go into effect July 1. The Washington process is the latest in a string of contests around the U.S. that are creating new revenue sources for Medicaid-focused insurers.

Market-share breakdowns for Washington aren't available before the state finalizes contracts--anticipated by the end of February--according to the state's Health Care Authority. But with three sizable competitors entering the market, while replacing two private local firms which didn't win new contracts, Molina could see its market share slip from current levels, analysts said.

Molina currently serves nearly half the Washington market, which represents, in turn, around 18% of the Long Beach, Calif., company's revenue. Community Health Plan is also an incumbent Medicaid provider in Washington.

Glen Bogner, president of Molina Healthcare of Washington, said in a statement that the Medicaid-focused insurer is proud to have been selected to continue its long-standing relationship with the state. The company will disclose more details when it knows more about which counties it was awarded and how membership will be allocated, Bogner said.

Molina shares declined 1.3% to $27.93 on Wednesday, following the state's late-Tuesday announcement. Shares among the other winners in the bidding process were mixed Wednesday amid more modest percentage changes.

The Washington announcement "is clearly positive" for the three publicly traded firms winning new business, but with market-share breakdowns still unclear, the news isn't yet a catalyst for stocks, Susquehanna analyst Chris Rigg said.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

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