US-based managed healthcare services provider Molina Healthcare is investing $200m to expand its coverage of providing behavioural and mental health services.
The company entered an agreement with The Providence Service (PRSC) to acquire outstanding ownership interests of its subsidiaries Providence Human Services (PHS) and Providence Community Services (PCS).
The deal will see Molina make the payment to PRSC upon closing of the transaction, which will be subject to customary working capital adjustments.
PHS, which provides accessible, outcome-based behavioural and mental health services, generated $346m in revenue last year and operates in 23 states and the district of Columbia.
Molina Healthcare president Mario Molina said: "We are excited to enter into this strategic transaction with The Providence Service Corporation.
"The PHS and PCS platforms, coupled with their extensive experience in Medicaid, will enable us to complement our health plan offering with behavioral and mental health and other services that focus on social determinants of health.
"Providing access to these types of quality services is imperative, as we increasingly arrange for healthcare services for patients with complex needs."
Subject to regulatory approvals and other closing conditions, the deal will be closed during the fourth quarter of this year.
Providence president James Lindstrom said: "PHS is an industry leader with a strong management team and highly dedicated workforce.
"We appreciate our workforce’s contributions to Providence, particularly under the current PHS leadership, and believe that PHS is ready for its next stage of growth with Molina, a company with a complementary mission, vision, set of values and culture."
In this transaction, Molina Healthcare’s financial advisor is UBS Investment Bank and its legal advisor is Sheppard, Mullin, Richter & Hampton, while PRSC’s financial advisor is Moelis & Company and its legal advisor is Paul Hastings.