Centene has agreed to sell Magellan Specialty Health to Evolent Health, the latest move in its broad value creation plan.
The government insurer said in an announcement that it expects to bank $750 million in the aggregate from the deal. Centene added Magellan Specialty Health, a leading specialty benefit management company, as part of its acquisition of Magellen Health, which closed in January.
Magellan Specialty Health provides utilization management tools to insurers, including for radiology, musculoskeletal, physical medicine and genetic testing. When the transaction closes, Centene and Evolent will enter a multiyear partnership that enables the insurer to extend and build on its work with Magellan Specialty.
"This transaction is another significant milestone in our ongoing portfolio review and value creation plan," said Sarah London, CEO of Centene, in the release.
"Magellan Specialty Health has been a trusted partner of Centene and its health plans for more than a decade," London added. "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 said it expects to receive $600 million in proceeds from the sale at closing, including at least $400 million in cash and the remainder in Evolent stock. The insurer said it will bring in an additional $150 million in 2024 should specific performance metrics be reached.
The deal is subject to regulatory approval, and the company expects it will close in the first half of 2023. Centene said it plans to use the majority of the proceeds to repurchase stock, and the balance will be put toward debt.