Magellan Health Services Inc. says it plans to triple its stake in a New York City long-term-care company for a total investment of $25.5 million.
Magellan, a specialty insurer based in Avon, entered an agreement to invest in AlphaCare of New York, which is a Medicaid managed long-term-care HMO and Medicare company that focuses on New York’s population that is eligible for dual eligible for Medicaid and Medicare.
After the transaction is complete, Magellan will own 65 percent of the company. Magellan holds a 7 percent equity stake in AlphaCare from a previous investment of $2 million in the holding company, AlphaCare Holdings LLC. Magellan also loaned $6 million to the holding company.
The transaction, announced Tuesday, will bring Magellan’s total investment to $25.5 million, including the $8 million it already has given the company.
“AlphaCare presents us with a great opportunity to enter the New York market and leverage our combined expertise with the AlphaCare team to create an entirely new integrated care offering to help the state provide quality health care at affordable costs,” Scott R. Markovich, president of Magellan Complete Care, said in a prepared statement.
Magellan has an option to buy the rest of AlphaCare’s stock at a price yet to be determined after the end of 2016.
AlphaCare, headquartered in Brooklyn, was established in 2012 and began enrolling members in August 2013. Its current management will remain in place, Magellan said.