A trader works beneath a monitor displaying Anthem Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Dec. 4, 2017. U.S. stock-index futures rose as European stocks advanced, led by a rally in banks and
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News Anthem is in the hunt to acquire Magellan Health would seem to fit the health insurer’s desire to add specialty services.
Magellan is known for its behavioral health services though it also has a pharmacy benefit management (PBM) business and Medicaid health plans. Anthem is an operator of Blue Cross and Blue Shield health plans in 14 states and is rolling out its own new PBM, IngenioRx, that could benefit from additional scale of enrollees from an acquisition.
Reports late this week say Anthem, the nation’s second-largest health insurer, and UnitedHealth Group, the nation’s largest health insurer, are in a late round of bidders for Magellan, which could also be sold to private equity interests, these reports say. Analysts are also speculating Anthem and UnitedHealth are in the lead to get Magellan.
“We see Anthem and UnitedHealth Group as the most likely buyers in light of their synergies with Medicaid in Complete Care, and the PBM across IngenioRx and OptumRx.,” SVBLeerink analyst Ana Gupte wrote in a research note Thursday. “OptumRx is seeking specialty Rx and we expect UnitedHealth is looking for regional players to shore up Medicaid. Anthem is poised as well to build their third-party services platform.”
Neither UnitedHealth nor Anthem would comment on the reports or their interest in Magellan.
But Anthem executives told analysts at its annual investor day a month ago they were looking to “expand specialty and differentiated services.”
“We are doing this by providing market-leading solutions and care delivery models that personalize care for those with complex and chronic conditions,” Anthem CEO Gail Boudreaux said at the company’s annual investor day last month. “We possess a solid foundation with AIM, Aspire, CareMore and HealthCore. We’ll continue to drive growth by being the go-to partner for non-Anthem Blue plans, care providers and other health care systems.”
Magellan has an array of customers including health plans, employers and government agencies and its PBM has a specialty pharmacy management business, according to the company’s web site.
Anthem began transitioning its health plan members away from Express Scripts to IngenioRx last month.
IngenioRx is smaller than bigger PBMs like UnitedHealth’s OptumRx, CVS Health’s Caremark PBM and Cigna’s Express Scripts PBM and could benefit by additional enrollees during a period of consolidation and scrutiny on drug pricing. The Trump administration and Congress are working to increase regulation of the PBM’s role as a middleman between drug makers and consumers and its share of rebates — the portion of the drug returned by the seller to the buyer. Some believe there will be more PBM consolidation as bigger players are forced to grow by acquisition given new government rules could limit other revenue growth.