Centene Becomes Major Behavioral Health Player, Finalizes $2.2 Billion Purchase of Magellan Health

A year ago today, Centene Corporation (NYSE: CNC) announced its intentions to expand its behavioral health offerings with the purchase of Magellan Health. Exactly one year later, the deal is now official.

In one of the health care industry’s first significant closings in the new year, managed care organization (MCO) Centene completed its $2.2 billion purchase Tuesday of Magellan, which operates the behavioral and specialty health division Magellan Healthcare.

Centene originally entered into a definitive agreement on January 4, 2021 to buy fellow MCO Magellan, a deal which at the time was expected to close in the second half of last year. Last week, Centene announced that they had received all necessary regulatory approvals to finalize the acquisition.

The deal adds an estimated 41 million users to the behavioral health platform of Centene, which offers a mix of commercial and government-sponsored plans to almost 1 in 15 individuals nationwide.

Centene provides products and services to individuals such as Medicare and Medicaid recipients, as well as those served by the Health Insurance Marketplace and the U.S. Department of Defense’s TRICARE program.

“Our combined company will have expanded reach in a variety of specialty services and will provide increased access to behavioral health care during a time of need for the communities we serve,” Centene Chairman and CEO Michael Neidorff said in a press release issued a day before New Year’s Eve noting the regulatory approval.

Last year, Centene cited the need to integrate behavioral health offerings with physical care as a major driver of the deal.

“Our aim … with this combination is to deliver improved health outcomes at lower total medical costs through the better integration of behavioral health capabilities and physical health service,” Neidorff told attendees at the JP Morgan Healthcare Conference, which was held exactly one week after the Magellan purchase was made.

In announcing the deal’s official completion, Neidorff stated that the newly combined company would be able to deliver services to more individuals at a lower cost.

“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,” Neidorff said in a press release issued by Centene on Tuesday. “This transaction establishes a strong foundation from which we will innovate and reimagine behavioral and specialty health to provide comprehensive and integrated healthcare to our members, while generating value for our state partners and shareholders.”

Last month, Neidorff announced his intention to retire as Centene’s chairman and CEO this year. Upon retiring as CEO, Neidorff will stay on as Centene’s executive chairman until the end of 2022.

Centene this week is also expected to announce the appointments of Ken Burdick, Christopher Coughlin, Wayne DeVeydt and Theodore Samuels to its board. An as-yet-unnamed fifth director will also be appointed.