Molina to buy Magellan Complete Care in $820M deal

Molina Healthcare website
Molina Healthcare released its first-quarter earnings late Thursday. (Molina Healthcare)

Molina Healthcare announced it will purchase Magellan Complete Care, a managed care organization, in a deal worth about $820 million.

MCC is a business line of Magellan Health, which also offers care management solutions and operates a pharmacy benefit manager. Molina said in an announcement that MCC accounted for $2.7 billion in revenue last year.

“Acquiring MCC expands our geographic footprint in our core businesses of managed Medicaid, dual eligibles, and long-term services and supports,” said Joe Zubretsky, CEO of Molina, in a statement. “We believe it will allow us to scale our enterprise-wide platforms and benefit from both operating and fixed cost leverage."

"The acquisition plays to our strengths where our demonstrated operating capabilities put us in a unique position to improve the business’s margins,” he added. “We will also intensely focus on maintaining the continuity of care for MCC’s members and stability for its state partners. These considerations have added importance in this current and challenging environment.”

RELATED: CVS' Merlo was the top paid health insurance CEO in 2019. Here's a look at what other payer CEOs earned

Magellan Complete Care offers full-service Medicare and Medicaid plans in six states. Magellan Health will continue to offer some of its care management solutions in MCC plans in those markets.

In addition, Magellan will provide pharmacy and musculoskeletal care management to Molina's members and will kick-start a new integrated behavioral health pilot in Virginia.

The parties expect the deal to close in the first quarter of 2021, subject to regulatory approvals.

Molina unveiled the acquisition alongside its first-quarter earnings late Thursday. The insurer posted $198 million in profit for the quarter and $4.5 billion in total revenue.

The majority of that number is in premium revenue; Molina earned $4.3 billion in premiums, an increase of 8.9% year over year. The boost was largely due to rate increases in Medicare and Medicaid, Molina said.

The financial performance led Molina to reaffirm its 2020 guidance of between $11.20 and $11.70 in earnings per share. Molina also forecasts total revenue of about $18 billion for the year.

The insurer cautioned that these figures do not account for any impacts related to COVID-19.

Suggested Articles

Insurers are concerned about how CMS will calculate Medicare Advantage star ratings in 2021 and 2022 due to the COVID-19 pandemic.

The COVID-19 pandemic has forced health plans to take the resources they have and adapt them to fit the needs of a global health crisis. 

CVS Health began testing drone delivery last year, and now the company is moving on to try self-driving vehicles.