- Centene has completed its $2.2 billion acquisition of managed care organization Magellan Health, moving the insurer further into the behavioral health space, the company said Tuesday.
- Centene and Magellan cleared all regulatory hurdles, both at the state and federal level, a condition of closing the deal. Magellan will operate independently under the Centene umbrella and will continue to be led by CEO Ken Fasola.
- As a leader in government-sponsored plans, Magellan will add 5.5 million members and boost Centene's established presence in specialty healthcare and pharmacy management.
The pandemic highlighted the need for greater access to mental health services as many people reported feeling anxious and depressed. The deal is intended to help St. Louis-based Centene care for the "whole person" and not just the physical health of its members, according to management.
"Magellan will expand Centene's reach to provide increased access to behavioral healthcare for our members at a time when so many Americans are struggling with mental or behavioral health issues," Centene CEO Michael Neidorff said in a statement.
SVB Leerink analysts have previously said Phoenix-based Magellan is a "good strategic fit for [Centene], given its experience providing healthcare services to underserved and medically complex populations," according to note following the announcement of the deal in 2021.
A fraction of the population — usually sick and complex patients — consumes a disproportionate amount of healthcare spending. The deal with Magellan will help rein in that spending, Centene said.
The closing comes at a tumultuous time for Centene. After 25 years at the helm, Neidorff will be stepping down this year after pressure from activist investor group, Politan Capital Management, which has also secured a shakeup to the board.
Centene is also reevaluating its portfolio and looking to offload non-core assets, including its international business. The insurer recently sold its majority stake in U.S. Medical Management, a home care provider.