The deal is expected to help the US health insurer to broaden and deepen its whole health capabilities and create a major behavioural health platform
US health insurance company Centene has agreed to acquire Magellan Health, an Arizona-based managed care company, for $95 per share in cash or $2.2bn.
Magellan Health is engaged in managing special populations, complete pharmacy benefits, and other speciality areas of healthcare.
The company caters to health plans and other managed care organisations, labour unions, employers, military and governmental agencies, and also third-party administrators.
Centene said that the acquisition will enlarge and deepen its whole health capabilities, besides helping it establish a major behavioural health platform. It will also bring together the complementary capabilities of the two firms in behavioural health, speciality healthcare, and pharmacy management, said the health insurer.
Furthermore, the combined platform will provide the base for Centene to continue to invest and innovate for its members for driving better health outcomes and faster, diversified growth.
Magellan Health will add 5.5 million new members on government-sponsored plans to Centene. The company also offers speciality health services for 18 million third-party customer members apart from Centene’s own members.
The deal also adds two million pharmacy benefit manager (PBM) members and 16 million medical pharmacy members to Centene.
Centene chairman, president, and CEO Michael Neidorff said: “This acquisition accelerates our diversification strategy and enhances our ability to build next-generation capabilities in our speciality care business by leveraging our scale and investments in technology.
“Furthermore, we are very familiar with the range of Magellan Health’s healthcare solutions as we have been one of their customers over many years, and our shared commitment to taking care of the most vulnerable populations makes this transaction a natural step.”
Magellan Health will become a part of Centene’s Health Care Enterprises and will continue to support its existing customers independently while pursuing growth opportunities.
Magellan Health CEO Kenneth Fasola said: “By joining Centene under the Health Care Enterprises umbrella, we will maintain the independence necessary to ensure continued service to our third-party customers while accelerating the introduction of innovative solutions and reimagining behavioural health.”
The deal is expected to close in the second half of 2021, subject to approval from Magellan Health’s stockholders, the receipt of the necessary state regulatory approvals, and other conditions.
In December 2020, Centene closed its acquisition of Apixio, a healthcare analytics company that provides artificial intelligence (AI) technology solutions.