Centene Announces Sale of Pharmacy Benefit Manager, Pharmacy

Centene Corporation (Centene) has announced that the payer organization will sell both the pharmacy benefit manager Magellan Rx and pharmacy PANTHERx Rare. 

Centene expects to make $2.8 billion in proceeds from the two sales combined.

“These transactions demonstrate significant progress in our ongoing portfolio review and represent key milestones in our value creation plan,” said Sarah London, chief executive officer of Centene. 

“Last year, Centene announced our strategic plan to exit the Pharmacy Benefit Management (PBM) space. Magellan Rx is a valuable asset, and under different ownership we believe it will continue to thrive as a next-generation pharmacy solutions organization. Likewise, PANTHERx is a leader in rare and specialty pharmacy, and we are confident this transaction will position the company to effectively grow while ensuring patients get the critical, specialized care they deserve.”

Magellan Rx will go to Prime Therapeutics LLC (Prime). Centene’s ownership of Magellan Rx was brief: the payer acquired Magellan Rx in January 2022 and expects to close the sale of the pharmacy solutions company in the final quarter of the same year.

Magellan Rx deals with specialty drug management as well as pharmacy benefit management and serves Medicaid.

The PANTHERx deal is considered a separate sale. A consortium of The Vistria Group, General Atlantic, and Nautic Partners have purchased the company.

“PANTHERx is one of the largest and fastest growing specialty and rare pharmacies in the United States,” the press release explained.

Centene’s ownership of PANTHERx was longer than Magellan Rx but it will still have owned the company for only a little over a year by the time the deal closes if all goes according to Centene’s plan. Centene acquired the pharmacy in December 2020.

The payer expects to close the deal in the summer or early fall of 2022.

Both of these sales will require US federal antitrust clearance, which could impact the timeline of closing.

The press release predicted that the sales’ impact on adjusted earrings per share would be either neutral or that they would spur slight growth.

“Centene intends to use the majority of the net proceeds from the sales to repurchase stock and the balance to reduce debt,” the press release stated.

The news comes on the heels of another major announcement in the payer mergers and acquisitions space: Change Healthcare and UnitedHealth Group delayed their merger due to the Department of Justice’s lawsuit.

Apart from these acquisitions and sales in the pharmaceutical and pharmacy benefit manager spaces, Centene also pursued and acquired Magellan Health. The payer announced its plans to acquire the behavioral healthcare platform in January 2021. 

The deal was finalized approximately a year later, allowing Centene to improve members’ access to care for behavioral and mental healthcare.

Other major changes at Centene include changes to the payer’s Medicare offerings, which Centene has grouped under the Wellcare brand.

Additionally, the payer received a health equity innovation award from the National Committee for Quality Assurance in March 2022, in response to the payer’s efforts to lower barriers to HbA1c testing in Arizona as well as its implementation of a Health Equity Dashboard which incorporates HEDIS data and other social determinants of health data.