Centene is divesting Magellan Rx and PANTHERx Rare in separate transactions collectively valued at $2.8 billion, the company announced Thursday.
Less than six months after closing the Magellan Health acquisition, the insurer will sell its Magellan Rx pharmacy services arm to Prime Therapeutics, a pharmacy benefit manager. The company will sell PANTHERx Rare to private equity firms Vistria Group, General Atlantic and Nautic Partners. Centene acquired the PANTHERx Rare specialty pharmacy in December 2020.
Centene expects the Magellan Rx transaction to close during the fourth quarter and the PANTHERx Rare deal to finalize within next two months. Both are subject to antitrust reviews.
The insurer will use the proceeds to repurchase stock and pay down debt, Centene said in a news release. The deals are expected to be "neutral to slightly accretive" to the company's earnings once closed.
Centene didn't immediately respond to an interview request.
The deals are part of the company's "value-creation" plan, an initiative announced in November 2021. Activist hedge fund Politan Capital Management pushed Centene to execute a strategy to boost profits through divestitures and to make leadership changes after investing $900 million in the insurer.
Centene is exiting the PBM space after reserving $1.25 billion to settle allegations from at least nine states that it overcharged their Medicaid programs for prescription drugs.
The company seeking a PBM vendor to manage its $40 billion in annual pharmaceutical spending. Centene issued a request for proposals during the first quarter and plans to award a contract by the end of the year.
As part of its value-creation plan, Centene sold a majority stake in home health provider U.S. Medical Management to a group of private equity firms for an undisclosed sum. The company is "evaluating strategic alternatives" for its $2 billion international business, and plans to shed more than half of its leased real estate footprint in the U.S.. The insurer is also working to automate its call center operations and consolidate its information technology services.
The Magellan Rx sale follows Centene's announcement last month that former Magellan Health CEO Ken Fasola would join the company's office of the CEO and manage its healthcare services business.
The same month, Leslie Norwalk, a former Magellan Health board member who was acting administrator for the Centers for Medicaid and Medicare Services under President George W. Bush, resigned from Centene's board. Norwalk cited a disagreement about the governance process "surrounding a recent important decision," she wrote in her resignation letter. Norwalk didn't specify what decision.