National health insurer Centene Corp. said on Monday it will acquire Magellan Health, creating what will be one of the nation’s largest behavioral health platforms with 41 million members.
The St. Louis-based insurer will pay $2.2 billion for the Phoenix-based managed healthcare company.
The COVID-19 pandemic has created a “dramatic rise” in the number of people seeking behavioral health services, according to Centene CEO Michael Neidorff. Magellan’s services will help address Centene members’ behavioral and specialty health needs, the company’s pharmaceutical offerings and build up Centene’s public plan business — all areas Centene has previously looked to grow.
Last year, Centene beefed up its Medicare Advantage and Medicaid managed care offerings through its $17 billion merger with WellCare Health Plans, creating one of the largest providers of government-sponsored health plans with roughly 22 million members. The acquisition of Magellan will add another 5.5 million members to this business, Centene said.
The purchase will also expand Centene’s specialty drug management services and add 2 million pharmacy benefit management members and 16 million medical pharmacy members to its portfolio.
Neidorff said these additions will ultimately help the payer provide care to more complex — and often more costly — patient populations. The company noted that the sickest 5% of the population comprises 50% of all healthcare spend. By focusing on growing its behavioral health, specialty health and pharmacy offerings, Centene aims to lower the cost of this care for its more than 25 million members.
“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,” Neidorff said.
Magellan will operate independently under the Centene umbrella. The acquisition is subject to regulatory approval, and Centene expects it to close in the second quarter of 2021. In a separate announcement, Magellan announced on Monday that it closed the sale of its Complete Care business to Molina Healthcare for $820 million.