Centene to sell Magellan Specialty Health to Evolent
Another milestone in Centene’s value creation program and ongoing portfolio review
Centene and Evolent to create a national strategic partnership
Centene expects to receive over $750 million in aggregate proceeds, including potential earnout
ST. LOUIS, November 17, 2022 — Centene Corporation (NYSE: CNC) announced today that it has signed a definitive agreement to sell Magellan Specialty Health to Evolent Health, Inc. (Evolent). Subject to customary purchase price adjustments, Centene expects to receive over $750 million in the aggregate from the transaction.
Centene acquired Magellan Specialty Health, also known as NIA, in January 2022 as part of its acquisition of Magellan Health, Inc. Magellan Specialty Health is a leading specialty benefit management organization that offers industry-leading utilization management solutions to health plans, including radiology management, musculoskeletal management, physical medicine management, and genetic testing solutions.
Upon closing of the transaction, Centene and Evolent will launch a multi-year, national strategic partnership, in which Centene will continue and expand its relationship with Magellan Specialty Health. In addition, Centene will continue its ongoing expansion of Evolent’s Oncology and End of Life Solutions, as well as evaluate other Evolent specialty solutions.
“This transaction is another significant milestone in our ongoing portfolio review and value creation plan,” said Sarah London, Chief Executive Officer of Centene. “Magellan Specialty Health has been a trusted partner of Centene and its health plans for more than a decade. By combining Magellan Specialty Health with Evolent, who is also a trusted partner, Centene will have access to a broad and integrated portfolio of value-based specialty solutions across Centene’s geographies and lines of business.”
Centene 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. In addition, Centene will receive up to $150 million in cash and Evolent common stock in 2024 if certain performance metrics are achieved. The transaction is subject to U.S. federal antitrust clearance, and satisfaction of other customary closing conditions, and is expected to close in the first half of 2023.
J.P. Morgan Securities LLC is serving as financial advisor to Centene, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as its legal counsel. Goldman Sachs is serving as financial advisor to Evolent, and Bass Berry & Sims PLC is serving as its legal counsel.
Centene intends to use the majority of the net proceeds from the sale to repurchase stock and the balance to reduce debt. The transaction is expected to be neutral to Centene’s Adjusted Earnings Per Share in the 12-month period post-closing.
About Centene Corporation
Centene Corporation, a Fortune 500 company, is a leading healthcare enterprise that is committed to helping people live healthier lives. The Company takes a local approach – with local brands and local teams – to provide fully integrated, high-quality, and cost-effective services to government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. Centene offers affordable and high-quality products to nearly 1 in 15 individuals across the nation, including Medicaid and Medicare members (including Medicare Prescription Drug Plans) as well as individuals and families served by the Health Insurance Marketplace, the TRICARE program, and individuals in correctional facilities. The Company also serves several international markets, and contracts with other healthcare and commercial organizations to provide a variety of specialty services focused on treating the whole person. Centene focuses on long-term growth and value creation as well as the development of its people, systems, and capabilities so that it can better serve its members, providers, local communities, and government partners.
Centene uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Centene is routinely posted and is accessible on Centene’s investor relations website, https://investors.centene.com/.
