Magellan Health Services Inc
) inked a deal with New York based AlphaCare to make investments
and subsequently own 65% stake in the latter. This agreement also
marks Magellan Health's foray into the New York market.
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Founded in 2012, AlphaCare is a Medicaid Managed Long Term Care
HMO and Medicare Plan providing service to New York's long-term
care and dual eligible populations. AlphaCare obtained necessary
license and contracts in New York State, including an HMO license
as well as a managed long term care contract with the state. It
operates a Managed Long-Term Care Plan in Bronx, Kings, New York,
Queens and Westchester Counties and Medicare Plans in Bronx,
Kings, New York and Queens Counties. It started enrolling members
Magellan Health, with its suite of products and services, expects
to offer better health care at reasonable costs. This in turn
will help it expand its customer base, so as to eventually help
the company ramp up its growth profile.
Magellan Health has a long standing relation with AlphaCare. It
already holds 7% equity stake via its previous equity investment
of $2 million in preferred membership units of AlphaCare's
current holding company, AlphaCare Holdings LLC. Additionally,
Magellan Health also loaned $6 million to AlphaCare Holdings,
LLC. Following the current investment, Magellan will have $25.5
million invested in AlphaCare.
Magellan will have an option to buy the remaining stake of
AlphaCare at a price determined by an agreed upon formula
beginning on Jan 1, 2017. AlphaCare's shareholders also will have
the right to sell their stake to Magellan or to AlphaCare
beginning on Jan 1, 2017 with the same agreed upon formula. They
will also have the additional right, subject to certain
conditions, to sell 50% of interest to Magellan or AlphaCare
prior to Jan 1, 2017, this time at a price determined by a
different agreed upon formula.
Magellan Health carries a Zacks Rank #3 (Hold). Healthcare
Molina Healthcare, Inc
), among others, carry favorable Zacks Rank #2 (Buy).