- Magellan Complete Care divestiture provides Magellan with
compelling value for stockholders, improves strategic focus and
enhances flexibility to fund future growth initiatives
- Transaction includes purchase price of $850 million
- Magellan Health will receive an amount equal to any excess
capital above regulatory requirements at Magellan Complete Care
subsidiaries at closing, which was approximately $75 million at
December 31, 2019
- Commercial agreements with Molina include an integrated
behavioral health pilot program, specified utilization management
and medical pharmacy services
- Magellan will continue to provide certain pharmacy benefit
management services for Magellan Complete Care
- Magellan to strategically focus on enhancing behavioral and
specialty health, as well as continued growth of pharmacy
business
Magellan Health, Inc. (NASDAQ: MGLN), one of the nation’s
leaders in managing complex, high cost healthcare, today announced
that it has entered into a definitive agreement with Molina
Healthcare, Inc. to sell its Magellan Complete Care (MCC) business
to Molina for a cash purchase price of $850 million, subject to
regulatory approvals and other customary closing conditions.
“The $850 million purchase price is a strong multiple on MCC’s
$33 million segment profit in 2019, which reflects the earnings
potential of the business we’ve built, a portion of which we are
expecting to capture in 2020 as a result of our profitability
improvement initiatives,” said Ken Fasola, chief executive officer
of Magellan Health. “Additionally, the sale eliminates the risk of
Magellan’s ability to execute on its MCC profitability improvement
initiatives and allows the leadership team to focus on the
remaining businesses, improving the services we provide to our
customers and members and further enhancing our ability to succeed
in these areas.”
MCC, with revenue of over $2.7 billion in 2019, manages
full-service Medicaid and Medicare health plans including Magellan
Complete Care in Arizona, Florida and Virginia; Senior Whole Health
in Massachusetts and New York; and TMG by Magellan in
Wisconsin.
“The novel coronavirus pandemic has served to highlight that the
behavioral health needs of states, health plans and individuals
remain a critical societal need. In addition, Magellan’s payer
partners are having limited success in managing high cost
populations, notably in fully integrating behavioral and physical
health and managing high cost specialty drugs,” said Fasola.
“Magellan has deep experience in managing some of the most complex,
highest cost areas of healthcare spend and this transaction will
enable us to better focus on these core strengths and our payer
partners.”
Commercial Relationship with Molina
Demonstrating the value of Magellan’s service offerings, Molina
has concurrently entered into agreements with Magellan for the
following services after the close of the MCC transaction:
- New medical pharmacy and musculoskeletal management contracts
for over three million Molina members,
- New integrated behavioral health pilot in Virginia that will
seek to establish a best practice model using data, technology and
care coordination processes to improve quality and lower total
medical costs. In the future, the model may be used in other Molina
markets and as a basis for Magellan offerings to the broader
market, and
- Retaining Magellan for behavioral health, radiology, and
musculoskeletal management services in certain MCC markets.
Magellan Rx Management will continue the existing pharmacy
benefit management relationships within MCC.
The transaction is expected to be completed by the end of the
first quarter of 2021 and is subject to expiration or termination
of waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act, receipt of insurance and other regulatory
approvals, and other customary closing conditions. The transaction
is not subject to a financing condition.
Moelis & Company LLC acted as lead financial advisor to
Magellan, Goldman Sachs & Co. LLC acted as financial advisor,
and Weil, Gotshal & Manges LLP acted as legal advisor.
Magellan Conference Call
Magellan will hold a conference call and webcast about the
transaction on Friday, May 1, 2020 at 10:00 a.m. Eastern. The
call-in numbers and passcode for the conference call are as
follows:
Call 1-888-848-6712 Passcode: 7398174
Replay 1-888-562-2923 (Domestic) 1-203-369-3750
(International)
To listen to the conference call, dial in approximately 10
minutes before the start of the call. The conference call will also
be available via webcast at Magellan's investor relations page at
MagellanHealth.com.
A telephonic replay will be available shortly after the
conclusion of the call through May 31, 2020. A replay of the
webcast will also be available at the site listed above for 30
days, beginning approximately two hours after its conclusion.
About Magellan Health
Magellan Health, Inc., a Fortune 500 company, is a leader in
managing the fastest growing, most complex areas of health,
including special populations, complete pharmacy benefits and other
specialty areas of healthcare. Magellan supports innovative ways of
accessing better health through technology, while remaining focused
on the critical personal relationships that are necessary to
achieve a healthy, vibrant life. Magellan's customers include
health plans and other managed care organizations, employers, labor
unions, various military and governmental agencies and third-party
administrators. For more information, visit MagellanHealth.com.
FORWARD-LOOKING STATEMENTS
This press release includes statements which may constitute
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
the accuracy of which are necessarily subject to risks,
uncertainties, and assumptions as to future events that may not
prove to be accurate. All statements, other than statements of
current or historical fact, contained in this press release may be
forward-looking statements. Without limiting the foregoing, the
words “believes,” “anticipates,” “plans,” “expects,” “may,”
“should,” “could,” “estimate,” “intend” and other similar
expressions are intended to identify forward-looking statements.
These statements include, but are not limited to, express or
implied forward-looking statements relating to our expectations
regarding the benefits to the Company of the transaction to sell
the Magellan Complete Care business (the “transaction”), the
ability of the Company to obtain regulatory approvals for the
transaction and to satisfy other closing conditions, the
anticipated timing of the closing of the transaction, the benefits
to the Company of the commercial agreements entered into in
connection with the transaction, the ability of the Company to use
the proceeds of the transaction to fund future growth initiatives
or otherwise create value for the Company, the ability of the
Company to strategically focus on enhancing its behavioral and
specialty health business, as well as the continued growth of its
pharmacy business, and the ability of the Company to achieve our
strategic and growth goals. These statements are neither promises
nor guarantees, but are subject to a variety of risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from those contemplated
in these forward-looking statements. Existing and prospective
investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Factors that could cause actual results to differ materially from
those expressed or implied include the effectiveness of business
continuity plans during the COVID-19 pandemic, the possible
election of certain of the Company’s customers to manage the
healthcare services of their members directly; changes in rates
paid to and/or by the Company by customers and/or providers; higher
utilization of healthcare services by the Company’s members; risks
and uncertainties associated with the pharmacy benefits management
industry; delays, higher costs or inability to implement new
business or other Company initiatives; the impact of changes in the
contracting model for Medicaid contracts; termination or
non-renewal of customer contracts; the impact of new or amended
laws or regulations; governmental inquiries; litigation;
competition; operational issues; healthcare reform; general
business conditions; and the other factors discussed in our most
recent Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise, except as may be required under applicable securities
law.
(MGLN-GEN)
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version on businesswire.com: https://www.businesswire.com/news/home/20200430005980/en/
Media: Lilly Ackley, ackleyl@magellanhealth.com, (860)
507-1923 Investors: Joe Bogdan, jbogdan@magellanhealth.com,
(860) 507-1910
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