Centene sells Magellan Rx and PANTHERx Rare for $2.8 billion
The company announced Thursday that Centene is selling Magellan Rx and PANTHERx Rare in separate deals totaling $2.8 billion.
Less than six months after the closing of the acquisition of Magellan Health, the insurance company will sell its Magellan Rx pharmacy business, Prime Therapeutics, to pharmacy benefits manager. The company will sell PANTHERx Rare to private equity firms Vistria Group, General Atlantic and Nautic Partners. Centene acquired PANTHERx Rare Specialty Pharmacy in December 2020.
Centene expects the Magellan Rx deal to close in the fourth quarter and the PANTHERx Rare deal to close within the next two months. Both are subject to antitrust scrutiny.
The insurance company will use the proceeds to buy back shares and pay off debt, Centene said in a statement. The deals are expected to be “neutral or slightly uplifting” for the company’s earnings after closing.
Senten did not immediately respond to a request for an interview.
The deals are part of the company’s “value creation” plan, an initiative announced in November 2021. Hedge fund activist Politan Capital Management pushed Centene to pursue a strategy to increase profits through asset sales and a change in management after investing $900 million in the insurer. .
Centene is pulling out of the PBM space after it set aside $1.25 billion to settle allegations from at least nine states that it overpriced prescription drugs in their Medicaid programs.
The company is looking for a PBM supplier to manage its $40 billion annual pharmaceutical spending. Centene posted a request for proposals in the first quarter and plans to award the contract by the end of the year.
As part of its value creation plan, Centene sold a majority stake in home healthcare provider US Medical Management to a group of private equity firms for an undisclosed amount. The company is “evaluating strategic alternatives” for its $2 billion international business and plans to divest more than half of its US leased properties. The insurance company is also working on automating call center operations and consolidating its information technology.
The sale of Magellan Rx follows Centene’s announcement last month that former Magellan Health CEO Ken Fasola will join the company’s CEO’s office and run its healthcare business.
That same month, Leslie Norwalk, a former Magellan Health board member who served as administrator for President George W. Bush’s Centers for Medicaid and Medicare Services, stepped down from the Centene board. Norwalk cited controversy over the governance process “surrounding a major recent decision,” she wrote in her resignation letter. Norwalk did not specify what the solution was.