Magellan Health, Inc. MGLN is in talks for a possible sale to private-equity firm Centerbridge Partners, per reports.
Due to its prolonged underperformance, Magellan Heath, in February, came under pressure from activist hedge fund Starboard Value, which owns nearly 10% stakes in the company,
In a year’s time, the stock has lost 25% compared with the industry’s decline of 1.3%.
Until recently, UnitedHealth Group, Inc. UNH and Anthem Inc. ANTM were the two top companies competing to acquire Magellan. But UnitedHealth’s recent acquisition of Davita’s Medical Group and Anthem’s buyout of Beacon Options got these players off the table.
Reasons Behind the Company’s Sale
Slowing Down of Top-line Growth: The company has been witnessing a slowdown in its revenues. For 2019, it assumes total revenues to be in the band of $7 billion to $7.2 billion (down from the earlier guidance of $7.2-$7.5 billion), implying year-over-year decline of 3% (calculated at the mid-point). This decline in revenues growth can be attributed to challenges in the company’s Complete Care business and stiff competition in the Pharmacy Benefit Management business.
Pharmacy Management Earnings Under Pressure: This segment’s profit declined 25% year over year in 2018 and further down 47%, in the first quarter of 2019, driven by specialty formulary management contract losses, non-recurring items, and lower PBM membership. Owing to contract terminations and aggressive pricing in the segment, the company expects revenues and earnings to be lower in 2019 as well.
Profitability: Magellan Heath’s return on equity (ROE) undermines its growth potential. The company’s trailing 12-month ROE of 3.9% compared with the industry’s average of 23%, indicates that it is less efficient in using shareholders’ funds.The sale of Magellan Health seems to be as a viable option now to provide returns to its shareholders.The deal, if closed, will further consolidate the health insurance industry, which is concentrated in the hands of a few big players. Another deal in the process is that of the acquisition of WellCare Health Plans by Centene Corp. CNC.In the recent years, the healthcare industry has witnessed a flurry of mergers and acquisitions, as players aim to boost their growth and diversify operations in the wake of continued uncertainty posed by the changing regulatory policies.
据报道，麦哲伦健康公司（ MagellanHealth , Inc .）正就可能出售给私募股权公司 CenterbridgePartners 进行谈判。
由于长期表现不佳，麦哲伦·希思( Magellan Heath )今年2月受到维权对冲基金 Starboard Value 的压力，该基金持有该公司近10%的股份。
直到最近，联合健康集团（ UnitedHealth Group ， Inc .）和安泰姆集团（ AnthemInc .）都是竞争收购麦哲伦的两大公司。但联合健康最近收购了戴维塔医疗集团( Davita's Medical Group )和安泰姆( Anthem )对 Beacon Options 的收购，让这些球员脱身。
药店管理盈利承压:受特色处方药管理合同亏损、非经常性项目、 PBM 会员减少等因素影响，该板块2018年利润同比下降25%，2019年一季度进一步下降47%。由于合同终止和该部门定价激进，该公司预计2019年的收入和收益也将下降。
盈利能力：麦哲伦•希思( Magellan Heath )的股本回报率( ROE )削弱了其增长潜力。该公司过去12个月的净资产收益率为3.9%，而行业平均水平为23%，这表明它在使用股东资金方面效率较低。出售麦哲伦健康似乎是一个可行的选择，现在提供回报的股东。这笔交易一旦完成，将进一步巩固医疗保险行业，该行业集中在少数几家大公司手中。这一过程中的另一项交易是 Centene 公司 CNC 收购医疗保健计划。近年来，医疗行业出现了一系列并购活动，在不断变化的监管政策带来的不确定性持续存在后，各企业希望推动自身增长并实现业务多元化。