Centene to Buy Magellan Health for $2.2B

Magellan, the Scottsdale–based for-profit managed care company, also recently completed its sale of Magellan Complete Care to Molina Healthcare.

Centene Corporation announced Monday morning that it has entered into a definitive agreement to acquire Magellan Health for $2.2 billion.

The deal has already been approved by the boards of directors at both companies. As part of the acquisition, Magellan CEO Kenneth J. Fasola and company leadership will remain in their current positions.

According to a company press release, Centene will add 5.5 million members to its robust government-sponsored plans. Additionally, the St. Louis-based insurer will add 2 million pharmacy benefit manager members and 16 million medical pharmacy members through the transaction.

The announcement came nearly a year after the insurer closed its $17.3 billion megamerger with WellCare Health Plans and days after Centene completed its acquisition of PANTHERx, a specialty pharmacy. 

Related: Centene Revenues Top $29B, Membership Eclipses 25M

"This acquisition accelerates our diversification strategy and enhances our ability to build next generation capabilities in our specialty care business by leveraging our scale and investments in technology," Michael F. Neidorff, CEO of Centene, said in a statement. "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."

Despite the financial pressures related to the COVID-19 pandemic, Centene posted several strong financial reports throughout 2020, including $29 billion in total revenues for Q3, according to its latest earnings report released in October.

However, Magellan, the Scottsdale–based for-profit managed care company, reported a net loss of $17.3 million in its Q3 report.

The Centene announcement came days after Magellan completed its sale of Magellan Complete Care to Molina Healthcare for $850 million in cash and $158 million in closing adjustments.

"We're thrilled to bring together two businesses with complementary capabilities and a shared commitment to driving higher quality care for our members while lowering overall healthcare costs," Fasola said in a statement.