Centene Agrees To Divest Magellan Specialty Health To Evolent Health

Evolent Health Inc EVH has agreed to acquire NIA (also known as Magellan Specialty Health), the specialty benefit management organization owned by Centene Corporation CNC.
The organization focuses on managing cost and quality in radiology, musculoskeletal, physical medicine, and genetics.
Deal consideration includes $650 million at the close plus additional contingent consideration of up to $150 million based on 2023 performance.
The upfront consideration will be partly funded by $250 million in Evolent shares issued at $29.50, a 24% premium to the prior day's closing price.
Upon close, the NIA team and platform will be fully integrated into Evolent's value-based specialty care business, which includes New Century Health, Vital Decisions, and IPG.
NIA has revenues of approximately $250 million and a standalone adjusted EBITDA of approximately $50 million.
The transaction is anticipated to be immediately accretive to adjusted EBITDA margins and cash flow.
Highly complementary business is expected to add $85 million of high-visibility Adjusted EBITDA by 2024.
Diversifies Evolent's revenue base and increases cross-sell opportunity from $16 billion to $50 billion.
In addition to the NIA acquisition, Evolent and Centene are expanding Centene's relationship with NIA and extending NIA's contracts with Centene through 2027. These expansions will generate at least $20 million of Adjusted EBITDA by the fourth quarter of 2024.
Price Action: EVH shares closed at $23.86 on Thursday.