S&P puts Magellan Health on positive watch

S&P said it placed the ratings of Magellan Health Inc., including its BB+ issuer rating, on CreditWatch with positive implications.

The placement follows the announcement Magellan is selling its managed-care operation, Magellan Complete Care, to Molina Healthcare for $850 million, before expenses and taxes and about an added $75 million, S&P said.

“The CreditWatch placement reflects our expectation that MGLN's financial profile will show material improvements upon the close of the transaction from sale proceeds. We could raise the ratings by one notch at the time of sale (in first-quarter 2021) if MGLN deploys sale proceeds so that leverage falls at least below S&PGR adjusted levels of 2x, and we expect (based on financial policy and earnings momentum) that it will sustain this improvement,” the agency said in a press release.

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