Magellan Health Services Inc. will have a new chief executive at the start of the year as current CEO René Lerer steps down to become a full-time executive chairman.
The change is part of a transition to take place over several years. Barry M. Smith, 59, will be the new CEO starting Jan. 1. Smith is a member of the company’s board.
Lerer, 57, will serve as executive chair all of next year, which means he will be a full-time employee with specific responsibilities, including building new relationships and strategic partnerships. Starting in 2014, Lerer will become a “non-executive chair,” meaning he will not be a full-time employees. He might stay on as non-executive chairman for an additional year.
“Barry Smith is a recognized health care industry leader with a track record of success and someone who has a deep understanding of Magellan having served on our board,” Lerer said. “He is the right person to lead Magellan into the next phase of our transformation. I’m looking forward to my new role as executive chairman, and working in partnership with Barry.”
Smith has been operating partner for Health Evolution Partners since 2011, investing in various health care businesses. He was founder, chair and CEO of VistaCare, chair and CEO of ValueRx, and he held senior positions in PCS Inc. and Baxter International. Smith was on Magellan’s board from 2005 through 2008. He joined again in 2011.
In 1995, Value Health Inc. of Avon announced its plans to buy Medintell Systems Corp., a Minneapolis firm that marketed information systems to help hospitals manage pharmaceutical inventories. At that time, Medintell’s CEO Kevin L. Roberg was named chief executive of ValueRx, Value Health’s subsidiary that managed pharmacy benefits. Roberg replaced Smith, who resigned as chair and CEO to pursue other opportunities.
Smith was credited with building ValueRx to a company that managed $2.2 billion in drug spending annually.
He is lead director of CenseoHealth, chair of Optimal Radiology and lead director of Halcyon Health Services.
Avon-based Magellan is a specialty health care management company that specializes in behavioral health, radiology and specialty pharmaceuticals. The company manages healthcare benefits for employers and government agencies with 33.8 million customers in behavior health, 17.3 million in radiology benefits and 8 million customers in pharmacy programs.
The company said in an announcement Tuesday that it expects to generate net revenue ranging from $3.56 billion.
on to $3.74 billion and net income ranging from $91 million to $109 million, or $3.22 to $3.85 per share.
Shares of Magellan Health Services were trading up 60 cents at $50.54 Wednesday.
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