United States: Centene, a healthcare insurer, is set to buy Magellan Health which is a provider of next generation pharmacy solutions and mental health related services for USD 2.2 billion inclusive of the company’s debt. According to the deal, Centene has offered to buy all the outstanding shares of Magellan Health common stock for USD 95 per share. This USD 95 per share acquisition price represents around 14.7% premium to Magellan’s stocks closing price as on December 31, 2020. The acquisition is expected to close by the second half of 2021. The company was planning this buyout since last few months but the increasing mental health problems, behavioral and anxiety issues within Americans in light of the spread of pandemic COVID-19 acted as a driving force for the closure of deal. This acquisition will help Centene in establishing its behavioral health platform.

Chairman & CEO of Centene stated that, “There is a critical need for a fundamentally better approach to supporting people with complex, chronic conditions through better integration of physical and mental health care. This has become even more evident in light of the pandemic which has driven a dramatic rise in behavioral health needs. This acquisition accelerates our diversification strategy and enhances our ability to build next generation capabilities in our specialty care business by leveraging our scale and investments in technology.”

According to TechSci Research, a lot of healthcare industry consolidation between healthcare insurers and pharmacy benefit managers have been witnessed in the recent times. One such deal was the acquisition of health insurer Aetna Inc. in November 2020 by CVS Health Corporation for USD 69 billion. Additionally, mergers and acquisitions have always been Centene’s key growth strategies. The company also acquired a national health plan provider company, WellCare Health Plans in 2019. This buyout of Magellan Health by Centene will help Centene to broaden its whole health capabilities and establish itself in mental health platforms. This buyout will add 2 million pharmacy benefit members and 16 million medical pharmacy members to Centene’s portfolio. This will also bring around 18 million third-party customers of specialty health services including physical medicine and rehabilitation to people with disabilities to Centene. Also, Centene’s patients suffering from various chronic diseases including cancer, cardiovascular diseases, renal disorders, among others will get an increased access to mental health care. 

According to a report published by TechSci Research, “Global Health Insurance Market By Type of Insurance Provider (Public, Private, Standalone Health Insurers), By Insurance Type (Disease, Medical, Income Protection), By Type of Scheme (Voluntary, Mandatory, Community-based, Employer based), By Type of Coverage (Individual v/s Family), By Term of Coverage (Term v/s Lifetime), By Mode of Purchase (Direct Company Representatives, Online Portal, Insurance Agent), By End Users (Minors, Adults, Senior Citizens), By Region, Forecast & Opportunities, 2025”, the global health insurance market is expected to grow at a steady rate during the forecast period. The global health insurance market is driven by the growing prevalence of chronic diseases such as diabetes, cardiovascular diseases, renal disorders, cancer, among others, and has drastically increased the patient pool and rate of hospitalization. This in turn increases the healthcare expenditure incurred by the patients, thereby increasing the demand for healthcare policies covering critical illnesses and treatments. Additionally, mandates pertaining to health insurance of employees in different private and public sectors are further expected to fuel the market growth. Furthermore, sudden outbreak and spread of pandemic COVID-19 has made many health insurance policy provider companies to expand coverage for the novel disease in healthcare policies, especially in the United States.