Managed Care EBITDA Multiples: Magellan Acquired by Centene
On January 4th, Centene announced it was purchasing Magellan Health for $95 per share, implying a total enterprise value of $2.2b. The transaction comes shortly after Magellan sold its Medicaid managed care business, Magellan Complete Care, to Molina for $850m in April. Magellan's existing businesses consist of a behavioral health -focused managed care unit and pharmacy benefit manager (PBM). The behavioral health managed care business represents the majority of profits, but both units are significant contributors. According to the fairness opinion prepared in connection with the transaction, Magellan estimates that its remaining businesses generated revenue and EBITDA of $4.6b and $131m in 2020, respectively, representing multiples of 0.48x and 16.8x. Management also projects that EBITDA will increase to $208m in FY 2021 and $254m in FY 2022.
While the trailing multiple is on the high of the range of managed care multiples, the forward multiple is inline with the size-based trendline.