Health insurer Centene said on Monday it would buy Magellan Health in a $2.2 billion deal, looking to build up its mental health services as more Americans struggle with Covid-19-related behavioral and anxiety issues.
Centene has offered $95 per share in cash, a 14.7% premium to the pharmacy benefits manager's Thursday closing price, the companies said in a statement on Monday.
Shares of Magellan Health, which also provides mental health services to patients with serious mental illness, autism and opioid and substance use, were up about 11% to $92 before the bell.
The move by Centene to expand mental health support comes as more than two out of five Americans are struggling with mental or behavioral health issues associated with the pandemic, the company said.
The deal, which also includes debt, will add two million pharmacy benefit members and 16 million medical pharmacy members to Centene's portfolio.
It would also bring to Centene 18 million third-party customers of specialty health services, which includes physical medicine and rehabilitation to people with disabilities.
Centene said it would raise debt to fund the cash portion of the deal and that J.P. Morgan has provided a $2.38 billion as financing commitment.
The healthcare industry has seen a wave of consolidation between insurers and pharmacy benefit managers, driven by pressure from governments and large corporations to lower soaring medical costs.
Benefit managers administer prescription drug programs for health insurers, self-insured companies and government agencies, negotiating deals with drug manufacturers, working with pharmacies and processing claims.
Centene and Magellan Health expect to complete the transaction in the second half of 2021.