Centene divests Magellan Rx to Prime Therapeutics for $1.3 billion

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Centene has sold off Magellan Rx to Prime Therapeutics for $1.5 billion, a move that will add Magellan’s specialty drug management to Prime’s pharmacy benefit management tools.

The end result, the companies said, will be a “diversified pharmacy solutions organization” serving commercial markets and government programs.

“This is a rare opportunity to bring together two highly respected organizations to create an enterprise that is greater than the sum of its parts,” said Ken Paulus, president and CEO of Prime Therapeutics. “Together, we will deliver on the health care Quadruple Aim – affordability, patient service, improved health and engagement with caregivers.”

WHAT’S THE IMPACT

The agreement includes a number of Magellan Rx business segments, including specialty drug management and full-service specialty pharmacies; a state government division serving 28 states and Washington, D.C.; and a pharmacy benefit manager serving about 1.7 million members.

For the time being, Magellan Rx will operate independently to focus on existing customer commitments, and in the coming months will work to integrate select business units and functions, and assess its strategic alignment.

Mostafa Kamal will continue as Magellan Rx CEO and will join Prime’s executive leadership team, the companies said.

The combined enterprise will have a single go-to-market structure built around three distinct lines of business – PBM services, specialty drug management and state government solutions. Prime will also continue to provide select services to smaller PBMs.

Integration planning for the two companies is underway. Both brands will remain in the market for up to a year as the company explores new brand opportunities.

THE LARGER TREND

In November, Centene announced it was selling Magellan Specialty Health to Evolent Health for about $750 million in aggregate proceeds, including potential earnout. Centene said it expects to receive approximately $600 million in proceeds at closing, with at least $400 million paid in cash and the remainder paid in Evolent common stock. Centene will also receive up to $150 million in cash and Evolent common stock in 2024 if certain performance metrics are achieved.

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.

Centene acquired Magellan Specialty Health, also known as NIA, in January as part of its acquisition of Magellan Health.

ON THE RECORD

“We’re bringing some of the brightest minds and most dedicated teams in pharmacy together to develop and deliver a next-generation care model that will transform the industry, unlock new possibilities and deliver even more value to those we serve,” said Kamal.
 

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