Centene introduced plans Thursday to promote its Magellan Specialty well being for better than $600 million in money and inventory to administrator Evolent well being.
The sale is a part of Centene’s ongoing efforts to jettison its non-well being plan companies.
Evolent will pay at the very least $4 hundred million in money and about $200 million in inventory for the specialty administration service, in response to Centene. counting on Magellan Specialty well being’s efficiency in 2023, Centene may receive one other $a hundred and fifty million in money and Evolent frequent inventory in 2024. The insurer did not disclose how that efficiency can be measured.
Centene expects the transaction to close inside the fundamental half of 2023, and plans to make the most of the sale proceeds to repurchase inventory and scale again debt. Federal antitrust regulators should approve the deal. Centene would not anticipate the sale to have an effect on earnings inside the 12 months following the deal’s shut.
the agency will proceed to make the most of Magellan Specialty well being’s companies after the deal closes. Evolent mentioned it expects the 5-12 months partnership to generate $20 million in adjusted earnings earlier than curiosity, taxes and depreciation by the extreme of 2024. The administrator mentioned Magellan Specialty well being will generate $250 million in income in 2023, and expects the acquisition to proper away enhance its earnings.
Centene mentioned it is going to additionally increase its use of Evolent’s completely different oncology, specialty and finish-of-life companies.
The insurer acquired the specialty administration service as a part of its $2.2 billion acquisition of father or mother Magellan well being in January. 4 months after the deal closed, Centene introduced that it deliberate to divest Magellan well being’s pharmacy companies to Prime Therapeutics, a pharmacy revenue supervisor launched by Blue Cross and Blue defend insurers. Now, the insurer is shedding Magellan’s specialty administrative companies arm, which gives utilization administration to insurers for radiology and musculoskeletal procedures, bodily remedy and genetic testing companies.
“The transaction is one other important milestone in our ongoing portfolio evaluation and worth creation plan,” CEO Sarah London mentioned in a information launch. Centene did not immediately reply to an interview request.
the agency initiated its worth creation plan in November 2021 after its comparatively low margins attracted the eye of activist investor Politan Capital administration, which owns a $900 million stake inside the insurer. Politan Capital administration has pushed Centene to overhaul its board of directors and promote subsidiaries.
The insurer on Thursday finalized the sale of its Spanish and central European companies to French private hospital agency Vivalto Santé. Centene did not disclose the sale prices.
Centene purchased a majority stake in house well being supplier U.S. Medical administration to a gaggle of private equity firms for an undisclosed sum in November 2021. the agency divested specialty pharmacy PANTHERx unusual to a gaggle of private equity firms in might. Centene mentioned the mixed sale of PANTHERx unusual and Magellan well being totaled $2.eight billion.
The insurer is inside the approach of shedding better than half of its exact property footprint, which it expects will save $200 million yearly starting subsequent 12 months.