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Centene (CNC) Concludes Magellan Rx Divestment to Prime

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Centene Corporation (CNC - Free Report) announced that it concluded the Magellan Rx divestiture to Prime Therapeutics LLC. Centene received Magellan Rx while purchasing Magellan Health in January 2022.

The divestment has been completed within the scheduled time. Despite Magellan Rx being equipped with cutting-edge capabilities, Centene decided to divest the business to intensify its focus on its core Managed Care business. The news follows its agreement in November to divest Magellan Specialty Health to Evolent Health for $750 million.

The company has a strong inorganic growth strategy in place, targeted at expanding the company’s markets and increasing its Medicaid membership. Nevertheless, it does not shy away from shedding non-core and less profitable operations to improve efficiency and profitability.

In July 2022, the company divested its pharmacy business, PANTHERx, which it acquired in 2020. It was expected to receive a total of $2.8 billion from the PANTHERx and Magellan Rx divestments. Centene also sold its Spanish and Central European businesses to Vivalto Sante.

While these divestments help the company to focus on more profitable assets, the proceeds from the deals enable it to buy back shares and reduce debt. At third-quarter end, its long-term debt amounted to $18.1 billion, down 2.6% from Dec 31, 2021. The current portion of long-term debt was $249 million.

Price Performance

Centene’s shares have gained 20.3% in the past year compared with the industry’s 18.3% rise.

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Zacks Rank & Key Picks

Centene currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Elevance Health Inc. (ELV - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Elevance Health’s full-year earnings is currently pegged at $29.02 per share, indicating a year-over-year increase of 11.7%. ELV beat earnings estimates in all the past four quarters, with an average surprise of 4.1%.

The Zacks Consensus Estimate for AMN Healthcare’s current year bottom line indicates a 44% improvement from the prior-year reported number. The consensus estimate for AMN’s top line also indicates 30.1% year-over-year growth.

The Zacks Consensus Estimate for UnitedHealth’s 2022 bottom line indicates a 15.8% year-over-year improvement. UNH has witnessed three upward estimate revisions in the past 30 days against none in the opposite direction.

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