Centene to divest two pharmacy businesses for $2.8 billion after legal woes
Centene to divest two pharmacy businesses for $2.8 billion after legal woes
May 5, 2022; 10:45 AM EDT
(Reuters) – Centene Corp (CNC.N) said on Thursday it has agreed to divest two of its pharmacy businesses for about $2.8 billion, in line with the health insurer’s strategy to exit the pharmacy benefit management space.
In 2021, Centene had to shell out $144 million to settle claims by Ohio and Mississippi that it overcharged their Medicaid programs for pharmacy benefit management services.
Pharmacy benefit managers (PBMs) are companies that act as intermediaries between drug sellers, health plans and pharmacies to negotiate prices.
Centene will sell pharmacy solution organization Magellan Rx to Prime Therapeutics LLC, while its PANTHERx pharmacies will go to a consortium of private equity firms including The Vistria Group, General Atlantic and Nautic Partners.
Used blister packets that contained medicines, tablets and pills are seen, in this picture illustration taken June 30, 2018. REUTERS/Russell Boyce
Magellan Rx was a part of Centene’s $2.2 billion acquisition of Magellan Health in 2021.
Centene said it expects to complete the sale of PANTHERx in the next two to four months and of Magellan Rx by the fourth quarter, with the net proceeds to be used for stock repurchases and debt reduction.
“These transactions demonstrate significant progress in our ongoing portfolio review … we are confident this will position the company to effectively grow,” newly appointed Chief Executive Officer Sarah London said in a statement.
Each of the transactions is expected to be neutral to slightly accretive to Centene’s adjusted earnings per share in the 12 months after the deal closes.
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