Health insurer Centene Corp on Monday agreed to buy Magellan Health Inc. in a $ 2.2 billion deal, including debt, to build its mental health services as more Americans struggle with COVID-19 behavioral and anxiety issues.
Centene offered $ 95 per share in cash, a 14.7% premium to the Pharmacy Benefit Manager’s closing price for Thursday.
Shares of Magellan Health, which also provides mental health services to patients with severe mental illness, autism and opioids and drug use, rose 13.1% to $ 93.70 on Monday afternoon on Nasdaq.
The move by Centene to expand mental health support comes as more than two in five Americans are struggling with mental or behavioral health issues related to the pandemic, the company said.
“I thought about it long before the pandemic, the pandemic just highlighted it,” said Michael Neidorff, president, president and CEO of Centene.
Magtoran’s sale of a business unit earlier this year that was similar to that of Centene was the catalyst that kept an agreement going, Neidorff said.
After a serious illness, such as cancer, patients will benefit from having greater access to mental health care, Neidorff added.
The business will add 2 million members of pharmacy benefits and 16 million medical pharmacy members to the portfolio.
It will also deliver 18 million third-party clients from special health services to Centene, which includes physical medicine and rehabilitation for people with disabilities.
There has been a wave of consolidation in the healthcare industry between insurers and pharmacist benefit managers over the past few years, driven by pressure from governments and large corporations to reduce rising medical costs.
Major transactions include the $ 69 billion acquisition of CVS Health Corp by health insurer Aetna Inc and Cigna Corp.’s $ 52 billion transaction to PBM Express Scripts Holding Co.
Centene and Magellan Health expect to complete the transaction in the second half of 2021.
(Reporting by Manas Mishra and Dania Nadeem in Bengaluru and Rebecca Spalding in New York Editing by Arun Koyyur and Matthew Lewis)
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