Centene Selling Magellan Specialty Health to Evolent Health
Fortune 500 managed care company Centene Corp. (NYSE: CNC) has signed an agreement to sell Magellan Specialty Health to Evolent Health Inc. (NYSE: EVH) for approximately $750 million.
St. Louis-based Centene acquired Magellan Specialty Health, also known as NIA, in January 2022 as part of its acquisition of Magellan Health Inc. Magellan Specialty Health is a specialty benefit management organization that offers utilization management solutions to health plans, including radiology management, musculoskeletal management, physical medicine management, and genetic testing solutions. It has revenues of approximately $250 million, according to Evolent.
Centene bought Magellan Health Inc., a for-profit managed care company focused on special populations and pharmacy benefits, for approximately $2.2. billion.
Last November, Centene also announced the acquisition of Apixio, a company that provides a technology suite that mines, compiles and analyzes large volumes of disparate, unstructured patient data (such as physician notes and medical charts), and creates and refines algorithms to extract insights to support payers' and providers' administrative activities. Last December Centene announced it would acquire PANTHERx, one of the largest specialty pharmacies in the United States specializing in orphan drugs and rare diseases.
Centene is the largest Medicaid managed care organization in the country, serve nearly 1 in 15 individuals in the nation. When it made the purchase of Phoenix-based Magellan Health Inc. (NASDAQ: MGLN), Centene said it would broaden and deepen its whole health capabilities and establish a leading behavioral health platform. The company said the combined platform lays the foundation by which the company will continue to invest and innovate for its members, enabling improved health outcomes and faster, diversified growth.
Upon closing of the transaction with Evolent, Centene and Evolent will launch a multi-year, national strategic partnership, in which Centene will continue and expand its relationship with Magellan Specialty Health. In addition, Centene will continue its ongoing expansion of Evolent's Oncology and End of Life Solutions, as well as evaluate other Evolent specialty solutions.
"This transaction is another significant milestone in our ongoing portfolio review and value creation plan," said Sarah London, CEO of Centene, in a statement. "Magellan Specialty Health has been a trusted partner of Centene and its health plans for more than a decade. By combining Magellan Specialty Health with Evolent, who is also a trusted partner, Centene will have access to a broad and integrated portfolio of value-based specialty solutions across Centene's geographies and lines of business."
The transaction is subject to U.S. federal antitrust clearance, and satisfaction of other customary closing conditions, and is expected to close in the first half of 2023. Centene intends to use the majority of the net proceeds from the sale to repurchase stock and the balance to reduce debt. The transaction is expected to be neutral to Centene's Adjusted Earnings Per Share in the 12-month period post-closing.
Seth Blackley, CEO of Evolent, stated, “Today’s announcement represents another step forward in Evolent’s journey to become a national leader in value-based specialty care, and we believe it will also improve our financial profile, customer diversification and scale. I am also excited to significantly expand our strategic partnership with Centene, and I look forward to the opportunity to further grow our relationship in the time ahead.”
