USA – – Centene Corp announced that it has agreed to sell two of its pharmacy businesses for approximately US$2.8 billion as part of the health insurer’s strategy to exit the pharmacy benefit management space.
Centene had to pay US$144 million in 2021 to settle claims from Ohio and Mississippi that it overcharged their Medicaid programs for pharmacy benefit management services.
Pharmacy benefit managers (PBMs) are companies that act as price negotiators between drug sellers, health plans, and pharmacies.
Centene will sell its pharmacy solution company Magellan Rx to Prime Therapeutics LLC, while its PANTHERx pharmacies will be sold to a group of private equity firms led by The Vistria Group, General Atlantic, and Nautic Partners.
Magellan Rx, a pharmacy benefit manager, was acquired by Centene for US$2.2 billion in January 2021 as part of Centene’s acquisition of Magellan Health. PANTHERx, a specialty pharmacy, was acquired by Centene in 2020.
Centene expects to complete the sale of PANTHERx within the next two to four months and of Magellan Rx by the fourth quarter, with the net proceeds going toward stock repurchases and debt reduction.
Centene announced last fall that it was embarking on a long-term plan to improve its profit margin, dubbed the “value creation plan” internally.
Executives stated that they were analyzing the company’s entire asset portfolio and determining whether Centene is the best owner for non-core assets.
“These transactions demonstrate significant progress in our ongoing portfolio review and represent key milestones in our value creation plan,” Centene CEO Sarah London said in a statement.
Centene has already made headway on the plan and sold its majority stake in US Medical Management, a home care provider.
According to a statement at the time, Centene executives indicated as part of the plan that they were rethinking the company’s international business and looking for “strategic alternatives.”
In addition, Centene has already stated that it will no longer operate an in-house pharmacy benefit manager and is looking for a third-party to manage its more than US$30 billion pharmacy business each year.
On the company’s first-quarter earnings call, London stated that the request for proposals had already been issued and that the company was looking for proposals.
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