Conn. company acquires CDMI for up to $370M

(Updated, 4:23 p.m.)

NEWPORT – Pharmacy benefits-management company Magellan Health Services Inc. said Tuesday it will pay as much as $370 million in cash and stock to acquire CDMI LLC, a clinical consulting company based in Newport.

Founded in 2009, CDMI negotiates and administers drug rebates for managed care organizations. Last year CDMI reported net revenue of approximately $43 million. Magellan, which is headquartered in Avon, Conn., said the acquisition would allow the company to expand its customer base and improve its existing clinical specialty drug and medical management services.

“The clinical programs and services developed by CDMI directly address real issues being confronted by MCOs every day,” said Robert W. Field, CEO of Magellan Rx Management, the division of Magellan Health Services that CDMI will operate under following the acquisition. “Together with our industry-leading medical pharmacy management capabilities, these clinical services will help differentiate us in the market place, which we believe will lead to more rapid growth.”

The base purchase price of $205 million includes $125 million to be paid in cash at closing and $80 million to be reinvested in Magellan restricted common stock, and the deal also includes potential contingent payments of up to $165 million depending on CDMI’s performance relative to 2015 rebate-retention targets.

George Petrovas, co-founder and executive vice president of CDMI, will join Magellan and assume a new role as president of CDMI after the acquisition, which is expected to close in the second quarter of 2014.

Colleen Flanagan Johnson, a spokeswoman for Magellan, said current CDMI President Sue Petrovas will take on a consulting role following the acquisition, and that Magellan has no present plans for any staffing changes or a relocation of CDMI’s office in Newport.