MAGELLAN HEALTH INC0000019411false00000194112020-05-112020-05-11

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

May 11, 2020

MAGELLAN HEALTH, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

1-6639

58-1076937

(State or Other Jurisdiction

(Commission File

(IRS Employer

of Incorporation)

Number)

Identification No.)

4801 E. Washington Street

Phoenix, Arizona

85034

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (800) 642-1716

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value 00000194112020-05-112020-05-11

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

May 11, 2020

MAGELLAN HEALTH, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

1-6639

58-1076937

(State or Other Jurisdiction

(Commission File

(IRS Employer

of Incorporation)

Number)

Identification No.)

4801 E. Washington Street

Phoenix, Arizona

85034

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (800) 642-1716

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

MGLN

The NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

MGLN

The NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Condition

On May 11, 2020, Magellan Health, Inc. (the “Company”) reported operating results for the quarter ended March 31, 2020. Attached and incorporated herein by reference as Exhibit 99.1 is a copy of the press release dated May 11, 2020.

Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits

(a)  Financial Statements of business acquired:              Not applicable.

(b)  Pro forma financial information:                  Not applicable.

(d)  Exhibits:See Exhibit Index.

2

Exhibit Index

Exhibit Number

   

Description of Exhibit

99.1

Press release dated May 11, 2020.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MAGELLAN HEALTH, INC.

Date: May 11, 2020

By:

/s/ Jonathan N. Rubin

Name:   Jonathan N. Rubin

Title:     Chief Financial Officer

4

mgln_Ex99_1

Exhibit 99.1

 

 

Picture 0

 

NEWS RELEASE

Media Contact: Lilly Ackley, ackleyl@magellanhealth.com, (860) 507‑1923

Investor Contact: Joe Bogdan, jbogdan@magellanhealth.com, (860) 507‑1910

 

Magellan Health Reports First Quarter 2020 Financial Results

PHOENIX – May 11, 2020 – Magellan Health, Inc. (NASDAQ: MGLN) today announced financial results for the first quarter ended March 31, 2020, as summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31

 

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

Chg

 

Net revenue

    

$

1,794.3 

    

$

1,739.5 

    

3.2 

%

Net income

 

$

18.3 

 

$

0.4 

 

4134.3 

%

Segment profit [1]

 

$

74.8 

 

$

45.6 

 

64.3 

%

Adjusted net income [1]

 

$

28.6 

 

$

9.6 

 

199.3 

%

Earnings per share

 

$

0.73 

 

$

0.02 

 

3550.0 

%

Adjusted earnings per share [1]

 

$

1.15 

 

$

0.40 

 

187.5 

%


[1]Refer to the Basis of Presentation for a discussion of non-GAAP financial measures.

 

Highlights:

·

Net revenue increased 3.2 percent over the first quarter of 2019 to $1.8 billion.

·

Net income increased 4134.3 percent over the first quarter of 2019 to $18.3 million.

·

Segment profit increased 64.3 percent over the first quarter of 2019 to $74.8 million.

·

Adjusted net income increased 199.3 percent over the first quarter of 2019 to $28.6 million.

·

Unrestricted cash and investments were $281.2  million as of March 31, 2020. Approximately $123.3 million of the unrestricted cash and investments at March 31, 2020 is related to excess capital and undistributed earnings held at regulated entities.

·

The Company is maintaining its full year 2020 earnings guidance.

·

On March 18, 2020, the Company announced the offering of several services and resources in response to the spread of the novel coronavirus (COVID‑19) including the digital cognitive behavioral therapy (DCBT) app, RESTORE®, at no cost for individuals experiencing sleep difficulty and insomnia.

·

On March 20, 2020, the Company expanded telehealth services and implemented additional initiatives to help support clients during the COVID‑19 pandemic.

·

On April 10, 2020, the Company opened a free national 24‑hour crisis line for all first responders and healthcare workers who are serving on the front lines battling the coronavirus pandemic.

·

On April 30, 2020, the Company and Molina Healthcare, Inc. entered into definitive agreements to divest Magellan Complete Care.

“Magellan Health has a vital, ongoing and shared responsibility in protecting the mental and physical health of millions of people,” said Kenneth Fasola, chief executive officer of Magellan Health. “In fact, the coronavirus pandemic has made abundantly clear what we already knew – the behavioral health of individuals remains a

critical societal need, presenting challenges for health plans, employers and government payors – a challenge and opportunity Magellan is well positioned to address.”

Divestiture of Magellan Complete Care

On April 30, 2020, the Company announced that it entered into a definitive agreement with Molina Healthcare, Inc. to sell its Magellan Complete Care (MCC) business to Molina for a cash purchase price of $850 million, subject to regulatory approvals and other customary closing conditions. MCC, with revenue of over $2.7 billion in 2019, manages full-service Medicaid and Medicare health plans including Magellan Complete Care in Arizona, Florida and Virginia; Senior Whole Health in Massachusetts and New York; and TMG by Magellan in Wisconsin. The transaction is expected to be completed by the end of the first quarter of 2021.

“The sale of Magellan Complete Care tightens our focus, strengthens our balance sheet and creates a new, multi-faceted strategic relationship with Molina Healthcare, a Fortune 500 company with a strong reputation for serving states and their beneficiaries’ health care needs,” said Fasola. “This divestiture will provide Magellan with additional financial flexibility to invest in our remaining businesses and supports our vision to become the leading independent payor services company offering behavioral health,  specialty health, and pharmacy management solutions for high cost, chronic populations on a carve-out or integrated basis.”

Net Revenue

Net revenue for the first quarter ended March 31, 2020, was $1.8 billion, which represents an increase of three percent over the same period in 2019. This increase was mainly driven by growth within Magellan Complete Care.

Segment Profit

Segment profit was $74.8 million for the first quarter, compared to $45.6 million in the prior year quarter, including approximately $12 million of favorable out-of-period items, primarily related to MCC reserve development.

·

Healthcare segment profit was $62.1 million, which represents an increase of $17.1 million versus the first quarter of 2019.  This increase is driven by favorable prior period development and utilization results, particularly in MCC of Virginia and New York, as well as reinstatement of the Health Insurer Fee.

·

Pharmacy Management segment profit was $20.9 million, which was an increase of $12.6 million from the first quarter of 2019. This year-over-year increase was primarily driven by improved gross margins from our PBM business as well strong performance within our specialty drug management portfolio.

·

Corporate costs inclusive of eliminations, but excluding stock compensation expense, totaled $8.2 million, compared to $7.7 million in the prior year’s quarter.

Cash Flow & Balance Sheet

Cash flow from operations for the quarter ended March 31, 2020, was $31.7 million, as compared to $35.4 million in the first quarter of 2019.

As of March 31, 2020, the Company’s unrestricted cash and investments totaled $281.2 million, an increase of $85.8 million from the balance at December 31, 2019. Approximately $123 million of the unrestricted cash and investments at March 31, 2020 is related to excess capital and undistributed earnings held at regulated entities, including $94 million at MCC entities. Thus, the Company had over $150 million in unrestricted cash at the parent as of March 31, 2020.

“Magellan posted strong first quarter results and while COVID‑19 presents uncertainties, our business fundamentals are on track,” said Jonathan N. Rubin, chief financial officer, Magellan Health. “We’ve taken bold steps to refine our strategy, lock in value, and provide financial flexibility to the company moving forward.”

Earnings Conference Call

Management will discuss the Company’s first quarter results on a conference call scheduled for Monday,  May 11, 2020 at 8:00 a.m. Eastern. To participate in the conference call, dial 1‑888‑566‑5773

and use passcode “1st Quarter 2020 Earnings Call” approximately 10 minutes before the start of the call. The conference call will also be available live via webcast at Magellan’s investor relations page at MagellanHealth.com. A telephonic replay will be available shortly after the conclusion of the call through June 10,  2020. This replay may be accessed by dialing 1‑800‑374‑1820 (Domestic) or 1‑402‑998‑0909 (International). A replay of the webcast will also be available at the site listed above for 30 days, beginning approximately two hours after its conclusion.

Basis of Presentation

In addition to results determined under Generally Accepted Accounting Principles (GAAP), Magellan provides certain non-GAAP financial measures that management believes are useful in assessing the Company’s performance. Following is a description of these important non-GAAP measures.

Segment profit is equal to net revenue less the sum of cost of care, cost of goods sold, direct service costs and other operating expenses, and includes income from unconsolidated subsidiaries, but excludes segment profit or loss from non-controlling interests held by other parties, stock compensation expense, special charges or benefits, as well as changes in the fair value of contingent consideration recorded in relation to acquisitions.

Adjusted net income and adjusted earnings per share reflect certain adjustments made for acquisitions completed after January 1, 2013, to exclude non‑cash stock compensation expense resulting from restricted stock purchases by sellers, changes in the fair value of contingent consideration, amortization of identified acquisition intangibles, as well as impairment of identified acquisition intangibles.

Included in the tables issued with this press release are the reconciliations from GAAP measures to the corresponding non-GAAP measures.

About Magellan Health: Magellan Health, Inc., a Fortune 500 company, is a leader in managing the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits and other specialty areas of healthcare. Magellan supports innovative ways of accessing better health through technology, while remaining focused on the critical personal relationships that are necessary to achieve a healthy, vibrant life. Magellan’s customers include health plans and other managed care organizations, employers, labor unions, various military and governmental agencies and third-party administrators. For more information, visit MagellanHealth.com.

Forward-Looking Statements

This press release, and oral statements made in connection with this release, include statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, express or implied forward-looking statements relating to 2020 guidance for net revenue, income before income taxes, net income, earnings per share, segment profit, adjusted net income, and adjusted earnings per share; growth and margin opportunities and initiatives; business environment, long term opportunities and strategy; transformation, process improvement and innovation initiatives; our expectations regarding the benefits to the Company of the transaction to sell the Magellan Complete Care business (the “transaction”), the ability of the Company to obtain regulatory approvals for the transaction and to satisfy other closing conditions, the anticipated timing of the closing of the transaction, the benefits to the Company of the commercial agreements

entered into in connection with the transaction, the ability of the Company to use the proceeds of the transaction to fund future growth initiatives or otherwise create value for the Company, the ability of the Company to strategically focus on enhancing its behavioral and specialty health business, as well as the continued growth of its pharmacy business, and the ability of the Company to achieve our strategic and growth goals. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include the effectiveness of business continuity plans during the COVID‑19 pandemic, the possible election of certain of the Company’s customers to manage the healthcare services of their members directly; changes in rates paid to and/or by the Company by customers and/or providers; higher utilization of healthcare services by the Company’s members; risks and uncertainties associated with the pharmacy benefits management industry; delays, higher costs or inability to implement new business or other Company initiatives; the impact of changes in the contracting model for Medicaid contracts; termination or non-renewal of customer contracts; the impact of new or amended laws or regulations; governmental inquiries; litigation; competition; operational issues; healthcare reform; and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included within the Company’s most recent Annual Report on Form 10‑K, its Quarterly Report on Form 10‑Q for the quarter ended March 31, 2020, to be filed with the Securities and Exchange Commission later today which contains updated or supplemental risk factors on information security and cyber-security matters, and extraordinary events including the COVID‑19 pandemic, and subsequent reports on Forms 10‑Q and 8‑K. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

 

 

 

 

 

    

December 31,  2019

  

  

March 31, 2020

 

 

 

 

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

325,249 

 

 

$

383,963 

 

Accounts receivable, net

 

 

890,065 

 

 

 

923,716 

 

Short-term investments

 

 

334,489 

 

 

 

350,192 

 

Pharmaceutical inventory

 

 

44,962 

 

 

 

42,333 

 

Other current assets

 

 

78,278 

 

 

 

106,820 

 

Total Current Assets

 

 

1,673,043 

 

 

 

1,807,024 

 

Property and equipment, net

 

 

138,422 

 

 

 

143,260 

 

Long-term investments

 

 

10,668 

 

 

 

6,289 

 

Deferred income taxes

 

 

1,840 

 

 

 

698 

 

Other long-term assets

 

 

82,700 

 

 

 

96,389 

 

Goodwill

 

 

1,018,156 

 

 

 

1,018,156 

 

Other intangible assets, net

 

 

167,344 

 

 

 

153,095 

 

Total Assets

 

$

3,092,173 

 

 

$

3,224,911 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

88,415 

 

 

$

104,359 

 

Accrued liabilities

 

 

284,024 

 

 

 

320,826 

 

Medical claims payable

 

 

409,533 

 

 

 

392,141 

 

Other medical liabilities

 

 

124,684 

 

 

 

128,454 

 

Current debt, finance lease and deferred financing obligations

 

 

3,491 

 

 

 

84,402 

 

Total Current Liabilities

 

 

910,147 

 

 

 

1,030,182 

 

Long-term debt, finance lease and deferred financing obligations

 

 

679,125 

 

 

 

647,624 

 

Deferred income taxes

 

 

17,034 

 

 

 

23,235 

 

Tax contingencies

 

 

14,841 

 

 

 

16,021 

 

Deferred credits and other long-term liabilities

 

 

73,243 

 

 

 

76,246 

 

Total Liabilities

 

 

1,694,390 

 

 

 

1,793,308 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Ordinary common stock

 

 

543 

 

 

 

546 

 

Additional paid-in capital

 

 

1,386,616 

 

 

 

1,402,797 

 

Retained earnings

 

 

1,475,207 

 

 

 

1,493,044 

 

Accumulated other comprehensive income (loss)

 

 

144 

 

 

 

(57)

 

Ordinary common stock in treasury, at cost

 

 

(1,464,727)

 

 

 

(1,464,727)

 

Total Stockholders’ Equity

 

 

1,397,783 

 

 

 

1,431,603 

 

Total Liabilities and Stockholders’ Equity

 

$

3,092,173 

 

 

$

3,224,911 

 

 

 

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

  

  

2020

 

Net revenue:

 

 

 

 

 

 

 

 

Managed care and other

 

$

1,223,979 

 

 

$

1,272,936 

 

PBM

 

 

515,510 

 

 

 

521,371 

 

Total net revenue

 

 

1,739,489 

 

 

 

1,794,307 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of care

 

 

941,961 

 

 

 

951,642 

 

Cost of goods sold

 

 

489,793 

 

 

 

486,142 

 

Direct service costs and other operating expenses (1)(2)

 

 

271,924 

 

 

 

287,731 

 

Depreciation and amortization

 

 

30,708 

 

 

 

28,684 

 

Interest expense

 

 

9,107 

 

 

 

9,029 

 

Interest and other income

 

 

(4,974)

 

 

 

(3,759)

 

Total costs and expenses

 

 

1,738,519 

 

 

 

1,759,469 

 

Income before income taxes

 

 

970 

 

 

 

34,838 

 

Provision for income taxes

 

 

539 

 

 

 

16,588 

 

Net income

 

$

431 

 

 

$

18,250 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding — basic

 

 

23,946 

 

 

 

24,728 

 

Weighted average number of common shares outstanding — diluted

 

 

24,213 

 

 

 

24,869 

 

 

 

 

 

 

 

 

 

 

Net income per common share — basic

 

$

0.02 

 

 

$

0.74 

 

Net income per common share — diluted

 

$

0.02 

 

 

$

0.73 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

431 

 

 

$

18,250 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available-for-sale securities (3)

 

 

320 

 

 

 

(201)

 

Comprehensive income

 

$

751 

 

 

$

18,049 

 


(1)

Includes stock compensation expense of $9,607 and $6,057 for the three months ended March 31, 2019 and 2020, respectively.

(2)

Includes changes in fair value of contingent consideration of $144 for the three months ended March 31, 2019.

(3)

Net of income tax provision (benefit) of $100 and $(67) for the three months ended March 31, 2019 and 2020, respectively..

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

  

  

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

431 

 

 

$

18,250 

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

30,708 

 

 

 

28,684 

 

Non-cash interest expense

 

 

326 

 

 

 

585 

 

Non-cash stock compensation expense

 

 

9,607 

 

 

 

6,057 

 

Non-cash income tax (benefit) provision

 

 

(250)

 

 

 

7,802 

 

Non-cash amortization on investments

 

 

(192)

 

 

 

325 

 

Changes in assets and liabilities, net of effects from acquisitions of businesses:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(23,804)

 

 

 

(33,291)

 

Pharmaceutical inventory

 

 

(6,333)

 

 

 

2,629 

 

Other assets

 

 

(10,835)

 

 

 

(41,862)

 

Accounts payable and accrued liabilities

 

 

20,399 

 

 

 

52,746 

 

Medical claims payable and other medical liabilities

 

 

19,671 

 

 

 

(13,622)

 

Contingent consideration

 

 

(1,609)

 

 

 

 

Tax contingencies

 

 

83 

 

 

 

925 

 

Deferred credits and other long-term liabilities

 

 

(2,889)

 

 

 

3,003 

 

Other

 

 

111 

 

 

 

(505)

 

Net cash provided by operating activities

 

 

35,424 

 

 

 

31,726 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(12,642)

 

 

 

(15,719)

 

Acquisitions and investments in businesses, net of cash acquired

 

 

(320)

 

 

 

(369)

 

Purchases of investments

 

 

(172,766)

 

 

 

(164,311)

 

Proceeds from maturities and sales of investments

 

 

128,748 

 

 

 

152,394 

 

Net cash used in investing activities

 

 

(56,980)

 

 

 

(28,005)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from borrowings on revolving line of credit

 

 

 

 

 

80,000 

 

Payments to acquire treasury stock

 

 

(4,124)

 

 

 

 

Proceeds from exercise of stock options

 

 

2,045 

 

 

 

10,903 

 

Payments on debt, finance lease and deferred financing obligations

 

 

(7,323)

 

 

 

(34,774)

 

Payments on contingent consideration

 

 

(6,247)

 

 

 

 

Other

 

 

(1,702)

 

 

 

(1,136)

 

Net cash (used in) provided by financing activities

 

 

(17,351)

 

 

 

54,993 

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(38,907)

 

 

 

58,714 

 

Cash and cash equivalents at beginning of period

 

 

272,308 

 

 

 

325,249 

 

Cash and cash equivalents at end of period

 

$

233,401 

 

 

$

383,963 

 

 

 

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS BY BUSINESS SEGMENT

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

  

  

2020

 

Healthcare

 

 

 

 

 

 

 

 

Managed care and other revenue

 

$

1,164,253 

 

 

$

1,208,674 

 

Cost of care

 

 

(941,961)

 

 

 

(951,642)

 

Direct service costs and other

 

 

(179,190)

 

 

 

(196,909)

 

Stock compensation expense (1)

 

 

1,750 

 

 

 

2,021 

 

Changes in fair value of contingent consideration (1)

 

 

144 

 

 

 

 

Healthcare segment profit

 

 

44,996 

 

 

 

62,144 

 

 

 

 

 

 

 

 

 

 

Pharmacy Management

 

 

 

 

 

 

 

 

Managed care and other revenue

 

 

59,895 

 

 

 

64,435 

 

PBM revenue

 

 

556,565 

 

 

 

573,778 

 

Cost of goods sold

 

 

(530,207)

 

 

 

(537,574)

 

Direct service costs and other

 

 

(79,635)

 

 

 

(81,866)

 

Stock compensation expense (1)

 

 

1,672 

 

 

 

2,107 

 

Pharmacy Management segment profit

 

 

8,290 

 

 

 

20,880 

 

 

 

 

 

 

 

 

 

 

Corporate and Elimination (2)

 

 

 

 

 

 

 

 

Managed care and other revenue

 

 

(169)

 

 

 

(173)

 

PBM revenue

 

 

(41,055)

 

 

 

(52,407)

 

Cost of goods sold

 

 

40,414 

 

 

 

51,432 

 

Direct service costs and other

 

 

(13,099)

 

 

 

(8,956)

 

Stock compensation expense (1)

 

 

6,185 

 

 

 

1,929 

 

Corporate and Elimination

 

 

(7,724)

 

 

 

(8,175)

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Managed care and other revenue

 

 

1,223,979 

 

 

 

1,272,936 

 

PBM revenue

 

 

515,510 

 

 

 

521,371 

 

Cost of care

 

 

(941,961)

 

 

 

(951,642)

 

Cost of goods sold

 

 

(489,793)

 

 

 

(486,142)

 

Direct service costs and other

 

 

(271,924)

 

 

 

(287,731)

 

Stock compensation expense (1)

 

 

9,607 

 

 

 

6,057 

 

Changes in fair value of contingent consideration (1)

 

 

144 

 

 

 

 

Consolidated segment profit

 

$

45,562 

 

 

$

74,849 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of income before income taxes to segment profit:

 

 

 

 

 

 

 

 

Income before income taxes

 

$

970 

 

 

$

34,838 

 

Stock compensation expense

 

 

9,607 

 

 

 

6,057 

 

Changes in fair value of contingent consideration

 

 

144 

 

 

 

 

Depreciation and amortization

 

 

30,708 

 

 

 

28,684 

 

Interest expense

 

 

9,107 

 

 

 

9,029 

 

Interest and other income

 

 

(4,974)

 

 

 

(3,759)

 

Segment profit

 

$

45,562 

 

 

$

74,849 

 


(1)

Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to acquisitions and impairment of intangible assets are included in direct service costs and other operating expenses; however, these amounts are excluded from the computation of segment profit.

(2)

Healthcare subcontracts with Pharmacy Management to provide pharmacy benefits management services for certain of Healthcare’s customers. In addition, Pharmacy Management provides pharmacy benefits management for the Company’s employees covered under its medical plan. As such, revenue, cost of goods sold and direct service costs and other related to these arrangements are eliminated.

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NON-GAAP MEASURES

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

  

  

2020

 

 

 

 

 

 

 

 

 

 

Net income

 

$

431 

 

 

$

18,250 

 

Adjusted for acquisitions starting in 2013

 

 

 

 

 

 

 

 

Changes in fair value of contingent consideration

 

 

144 

 

 

 

 

Amortization of acquired intangibles

 

 

12,272 

 

 

 

14,191 

 

Tax impact

 

 

(3,282)

 

 

 

(3,816)

 

Adjusted net income

 

$

9,565 

 

 

$

28,625 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share—diluted

 

$

0.02 

 

 

$

0.73 

 

Adjusted for acquisitions starting in 2013

 

 

 

 

 

 

 

 

Changes in fair value of contingent consideration

 

 

0.01 

 

 

 

 

Amortization of acquired intangibles

 

 

0.50 

 

 

 

0.57 

 

Tax impact

 

 

(0.13)

 

 

 

(0.15)

 

Adjusted earnings per share

 

$

0.40 

 

 

$

1.15 

 

 

(MGLN-GEN)

###

v3.20.1
Document and Entity Information
May 11, 2020
Document and Entity Information [Abstract]  
Entity Central Index Key 0000019411
Document Type 8-K
Document Period End Date May 11, 2020
Entity File Number 1-6639
Entity Registrant Name MAGELLAN HEALTH INC
Entity Incorporation, State or Country Code DE
Entity Tax Identificatoin Number 58-1076937
Entity Address, Address Line One 4801 E. Washington Street
Entity Address, City or Town Phoenix
Entity Address, State or Province AZ
Entity Address, Postal Zip Code 85034
City Area Code 800
Local Phone Number 642-1716
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol MGLN
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false