Magellan Complete Care is a managed care organisation that caters to members across six US states including Arizona and Virginia
Magellan Health to sell Magellan Complete Care to Molina Healthcare.(Credit: Tumisu from Pixabay)
Molina Healthcare, a US-based managed care company, has agreed to acquire Magellan Health’s Magellan Complete Care (MCC) line of business for about $820m.
Magellan Complete Care is a managed care organisation that caters to members across six US states including Arizona and Virginia.
The business, through its Senior Whole Health branded plans, is said to offer fully integrated plans for Medicaid and Medicare dual beneficiaries across Massachusetts along with Managed Long Term Care (MLTC) in New York.
Magellan Complete Care is claimed to have served nearly 155,000 members, as of 31 December 2019, and in the previous year had registered revenues of more than $2.7bn.
Why Magellan Health is selling its Magellan Complete Care business
Magellan Health CEO Ken Fasola said: “The $850 million purchase price is a strong multiple on MCC’s $33 million segment profit in 2019, which reflects the earnings potential of the business we’ve built, a portion of which we are expecting to capture in 2020 as a result of our profitability improvement initiatives.
“Additionally, the sale eliminates the risk of Magellan’s ability to execute on its MCC profitability improvement initiatives and allows the leadership team to focus on the remaining businesses, improving the services we provide to our customers and members and further enhancing our ability to succeed in these areas.”
Through the acquisition, Molina Healthcare will get to serve over 3.6 million members in government-sponsored healthcare programmes across 18 states besides having a 2020 pro-forma projected revenue in excess of $20bn.
The California-based managed care company said that the assets of Magellan Complete Care are a strong strategic fit with its portfolio of core Medicaid, high-acuity, and duals businesses. The company said that the acquisition will help in creating new markets for pursuing growth in Medicare and Marketplace in an expanded Medicaid footprint.
Molina Healthcare president and CEO Joe Zubretsky said: “Acquiring MCC expands our geographic footprint in our core businesses of managed Medicaid, dual eligibles, and long-term services and supports.
“We believe it will allow us to scale our enterprise-wide platforms and benefit from both operating and fixed cost leverage. The acquisition plays to our strengths where our demonstrated operating capabilities put us in a unique position to improve the business’s margins.”
Expected to be completed in the first quarter of 2021, the transaction will be subject to approvals from federal and state regulatory bodies apart from the meeting of other customary closing conditions.