Magellan Health is buying a small chunk of Coventry - the unit that provides prescription drug programs and other services for Medicaid members. Although the unit was identified as 'First Health', it is NOT Coventry's workers comp managed care business.

The business currently generates about $55 million in annual revenue.

Coventry will take a loss on the sale (evidently the business was carried on the healthplan company's books at a value considerably higher than the sale price) of fifty-five to sixty cents a share.

The move ties into a larger relationship between the two firms, as Magellan will also be managing Coventry's radiology and oncology claims for the next three years. The radiology contract is on at at-risk basis, meaning Magellan will guarantee to hold costs to a specific range or dollar figure.

The sale continues CEO Allen Wise's strategy of divesting under-performing and non-core businesses; expect more news like this over the next year.