Magellan Health Services Inc. has agreed to buy First Health Services Corp. from Coventry Health Care Inc. for $110 million in cash.
Coventry Health, Bethesda, Md., acquired First Health, Downers Grove, Ill., in 2005.
Coventry Health recently decided that the First Health Medicaid operations do not fit in with the company’s long-term strategy, according to Coventry Health Chief Executive Officer Allen Wise.
Coventry Health and Magellan, Avon, Conn., hope to get the regulatory approvals they need to complete the deal by Sept. 30. Coventry Health plans to use proceeds from the deal to pay off debt and buy back stock.