Back to top

Analyst Blog

Magellan Health Services Inc. (MGLN - Snapshot Report) inked a deal to acquire Partners Rx for $100 million. The acquisition is expected to culminate in the final quarter of 2013, pending closing conditions along with expiration of the Hart-Scott-Rodino Antitrust Act waiting period.

Magellan Health intends to fund the acquisition from its available cash. Strong cash balance well supports its acquisitions. Additionally, some of the principal owners of Partners Rx will buy $10 million of Magellan Health’s restricted common stock.

Headquartered in Scottsdale, AZ, and founded in 2001, Partners Rx is a full-service commercial pharmacy benefits management company (PBM), covering more than 0.3 million core commercial PBM lives. Partners Rx sells its health plans primarily through third party administrators (TPAs), consultants and brokers.

As part of its growth strategies, Magellan Health undertakes acquisitions that complement its operations, and contributes toward strengthening its presence in the pharmacy marketplace. The acquisition, thus, is a strategic fit for the company, augmenting its full-service PBM capabilities. Partners Rx is expected to generate $240 million in revenue in 2013, adding to Magellan Health’s top line that has been exhibiting solid growth.

Following the acquisition, Partners Rx will be a part of Magellan Pharmacy Solutions.

This acquisition comes after a long gap. Earlier in 2009, Magellan Health acquired First Health Services Corporation (‘‘FHS’’), FHC, Inc. (‘‘FHC’’) and Provider Synergies, LLC for a total cash consideration of $114.5 million. All these entities are direct and indirect subsidiaries of Coventry.

Acquisitions have helped Magellan Health widen its portfolio. Via the inorganic route, the company expanded into radiology benefits management and specialty pharmaceutical management in 2006, and into Medicaid administration in 2009.

Among others in the same space, recently WellCare Health Plans, Inc. (WCG - Snapshot Report) announced its plans to acquire Windsor Health Group Inc. from German insurer Munich Re AG. for an undisclosed amount. In July, Humana Inc. (HUM - Analyst Report) entered into an agreement to acquire American Eldercare Inc. for an undisclosed amount.  Earlier, in May, Aetna Inc. (AET - Analyst Report) closed the acquisition of Coventry Health Care, Inc.

Magellan Health carries a Zacks Rank #3 (Hold).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%