8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

July 13, 2017

MAGELLAN HEALTH, INC.

(Exact Name of Registrant as Specified in Charter)

DELAWARE	1-6639	58-1076937
(State or Other Jurisdiction	(Commission File	(IRS Employer
of Incorporation)	Number)	Identification No.)

4800 N. SCOTTSDALE RD, SUITE 4400
SCOTTSDALE, ARIZONA	85251
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (602) 572-6050

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Item 1.01. Entry into a Material Definitive Agreement

On July 13, 2017, Magellan Healthcare, Inc., a Delaware corporation (“Magellan Healthcare”) and a wholly-owned subsidiary of Magellan Health, Inc., a Delaware corporation (“Magellan”), SWH Holdings, Inc., a Delaware corporation (“SWH Holdings”), certain of the stockholders of SWH Holdings (the “Signing Stockholders”), certain of the vested optionholders of SWH Holdings, TA Associates Management, L.P., as Securityholders’ Agent and Silver Merger Sub Inc., a wholly owned subsidiary of Magellan Healthcare (“Merger Sub”), entered into an Agreement and Plan of Merger, dated as of July 13, 2017 (the “Agreement”), pursuant to which Magellan Healthcare will acquire SWH Holdings. The Agreement provides that, on the terms and subject to satisfaction of the conditions set forth therein, Merger Sub will be merged with and into SWH Holdings (the "Merger"), and SWH Holdings will continue as the surviving company of the Merger as a wholly-owned subsidiary of Magellan Healthcare.

Subject to the terms and conditions of the Agreement, the aggregate merger consideration to be paid by Magellan Healthcare to the holders of the outstanding capital stock of SWH Holdings and the holders of certain vested options to purchase capital stock of SWH Holdings is equal to $390.0 million, subject to adjustment, plus a potential contingent payment of an additional $10.0 million. The contingent payment provisions provide for a cash payment of $10.0 million if the Medicare Plans of Senior Whole Health, LLC, a Delaware limited liability company and an indirect subsidiary of SWH Holdings, earns a Star Rating from Medicare of 4.0 or greater for 2018.

The Agreement sets forth a variety of customary representations and warranties and covenants, including covenants requiring the conduct of the business of SWH Holdings and its subsidiaries in the ordinary course consistent with past practice and other restrictions on the operation of their respective businesses prior to the consummation of the Merger. The covenants are subject to various limitations specified in the Agreement. At the closing of the Merger (the “Closing”), the amount of $30.0 million will be placed in escrow in connection with the indemnification obligations of the securityholders of SWH Holdings under the Agreement. Claims of indemnity which Magellan Healthcare may have under the Agreement (such as those relating to a breach of a representation and warranty) will be paid from the escrow account, subject to certain limitations and exceptions.  To the extent any portion of the escrow amount has not been released or is not reserved for any open and unresolved indemnification claims, such portion will be released to the Securityholders’ Agent for further distribution to the former securityholders of SWH Holdings on the eighteen-month anniversary of the Closing.

Certain members of management of SWH Holdings and/or its subsidiaries have entered into employment agreements with Magellan Healthcare that will become effective upon, and are subject to the occurrence of, the closing of the Merger.

Consummation of the Merger is subject to various conditions, including the termination or expiration of the waiting period under the Hart-Scott Rodino Antitrust Act, the approval of the change of control to be effected by the Merger of Senior Whole Health of New York, Inc., an indirect subsidiary of SWH Holdings, by the New York State Department of Health, in conjunction with the New York State Department of Financial Services, the absence of any law or order prohibiting the Closing or making it illegal, the absence of certain litigation, and the accuracy of the representations and warranties made by the parties. Immediately following the execution and delivery of the Agreement, certain stockholders of SWH Holdings executed and delivered stockholder consents approving the Agreement, which consents constitute the requisite stockholder approval of the Agreement and the Merger by the stockholders of SWH Holdings. The parties anticipate closing the Merger by the end of the first quarter of 2018.

The Agreement may be terminated by the mutual consent of Magellan Healthcare and the Stockholders’ Agent. In addition, subject to the conditions specified in the Agreement, the Agreement may be terminated in certain other circumstances, including for uncured breaches of representations and warranties, or the failure of the Merger to occur on or before March 1, 2018 (subject to possible extension for an additional 90 days in certain circumstances).

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The representations, warranties and covenants contained in the Agreement were made only for purposes of the Agreement and as of specific dates, were solely for the benefit of the parties to the Agreement, and are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of SWH Holdings, Magellan Healthcare or their respective subsidiaries. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Agreement, which subsequent information may or may not be fully reflected in Magellan’s public disclosures.

Item 8.01. Other Events.

On July 13, 2017, Magellan issued a press release announcing the execution of the Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial  Statements and  Exhibits

(d) Exhibits

Exhibit Number		Description of Exhibit
	99.1	Press release dated July 13, 2017.

.1

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MAGELLAN HEALTH, INC.

Date: July 13, 2017	By:	/s/ Jonathan N. Rubin
		Name:	Jonathan N. Rubin
		Title:	Chief Financial Officer

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Exhibit Index

Exhibit Number		Description of Exhibit
	99.1	Press release dated July 13, 2017.

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EX-99.1

Exhibit 99.1

NEWS RELEASE

Media Contact: Colleen Flanagan Johnson, cefjohnson@magellanhealth.com, (860) 507-1923

Investor Contact: Joe Bogdan, jbogdan@magellanhealth.com,(860) 507-1910

Magellan Health to Acquire Senior Whole Health

Acquisition will advance Magellan’s capabilities in long-term care

Scottsdale, Ariz. – July 13, 2017 – Magellan Health, Inc. (NASDAQ: MGLN) today announced it has entered into a definitive agreement to acquire Senior Whole Health (SWH), a healthcare company focused on serving complex, high-risk populations,  providing both Medicare and Medicaid dual-eligible benefits to more than 22,000 members in Massachusetts and New York.  

The acquisition will provide Magellan with an opportunity to expand into the Massachusetts Senior Care Options (SCO) program, as well as further presence in New York City’s managed long-term care (MLTC) market. Magellan Health plans to leverage SWH’s sound, culturally competent clinical model and expertise as it seeks continued expansion in managed long-term services and supports (MLTSS). As of August 1, Magellan will operate specialized managed care plans focused on complex populations in three states, including Florida, New York and Virginia.

“Senior Whole Health is a well-regarded, quality health plan that has served government-sponsored programs since 2004,” said Barry M. Smith, chairman and chief executive officer of Magellan Health. “This acquisition will enhance Magellan’s geographic reach, membership and expertise in the MLTC market, leveraging Senior Whole Health’s intimate knowledge of both the Massachusetts and New York markets. Our companies are a great fit culturally, with an individualized approach to member care and service, as well as an eye toward new and innovative ways of helping our members live healthy, vibrant lives.”

“We are excited to be joining Magellan at such an opportune time,” said Wayne Lowell, chairman and chief executive officer of Senior Whole Health.  “Magellan’s commitment to integrated, member-centric care is exactly how we’ve approached our work over the past 13 years. As states look to managed care organizations to help improve care and better manage costs, Magellan is uniquely positioned to lead across the long-term care space.”

Under the terms of the agreement, Magellan will acquire SWH, a privately held company, for approximately $400 million cash, inclusive of a $10 million contingent payment. Magellan anticipates paying the purchase price from the proceeds of new debt offerings. 

“Senior Whole Health has an outstanding reputation, strong track record of growth and extensive experience facilitating high-quality, cost-effective healthcare for its members,” said Sam Srivastava, chief executive officer of Magellan Healthcare. “Combining the experience, capabilities and services of our two

companies enhances our strategy of becoming a leading healthcare company focused on the most complex, high-cost populations. We look forward to welcoming Senior Whole Health’s team to Magellan.”

The acquisition is expected to close by the end of the first quarter of 2018 and is subject to certain state and federal regulatory approvals, as well as standard closing conditions and customary approvals required under the Hart-Scott-Rodino Antitrust Improvements Act. Magellan expects full year 2017 revenue for SWH of approximately $1 billion and segment profit of approximately $60 million. Management will provide additional details about this acquisition during its second quarter 2017 earnings call, scheduled for July 28, 2017.  

About Magellan Health: Magellan Health, Inc. is a leader in managing the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits and other specialty areas of healthcare. Magellan supports innovative ways of accessing better health through technology, while remaining focused on the critical personal relationships that are necessary to achieve a healthy, vibrant life. Magellan's customers include health plans and other managed care organizations, employers, labor unions, various military and governmental agencies and third-party administrators. For more information, visit MagellanHealth.com.

Cautionary Statement

This release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, as amended, which involve a number of risks and uncertainties. All statements, other than statements of historical information provided herein, may be deemed to be forward-looking statements including, without limitation, statements regarding the timing of closing the acquisition, SWH’s 2017 revenue and segment profit, growth opportunities and strategy. These statements are based on management’s analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, the possible election of certain of the Company’s customers to manage the healthcare services of their members directly; changes in rates paid to and/or by the Company by customers and/or providers; higher utilization of health care services by the Company’s risk members; delays, higher costs or inability to implement new business or other Company initiatives; the impact of changes in the contracting model for Medicaid contracts; termination or non-renewal of customer contracts; the impact of new or amended laws or regulations; governmental inquiries; litigation; competition; operational issues; health care reform; and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on February 24, 2017, and the Company’s subsequent Quarterly Reports on Form 10-Q filed during 2017. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this release. Segment profit, adjusted net income, and adjusted EPS information referred to herein may be considered a non-GAAP financial measure. Further information regarding these measures, including the reasons management considers this information useful to investors, are included in the Company’s most recent Annual Report on Form 10-K and on subsequent Form 10-Qs.

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