Magellan Health (MGLN) Reports Q4 EPS Loss of ($0.77), Revenues Miss; Offers FY19 EPS Mid-Point Guidance Above Consensus, FY19 Revenue Mid-Point Views Below Estimates

Magellan Health (NASDAQ: MGLN) reported Q4 EPS of ($0.77), $2.18 worse than the analyst estimate of $1.41. Revenue for the quarter came in at $1.84 billion versus the consensus estimate of $1.89 billion.

• Net revenue for the year ended December 31, 2018 increased to $7.3 billion from 2017.
• Net income for the year ended December 31, 2018 decreased to $24.2 million from 2017.
• Segment profit for the year ended December 31, 2018 decreased to $228.0 million from 2017.
• Adjusted net income for the year ended December 31, 2018 decreased to $61.7 million from 2017.
• Unrestricted cash and investments were $130.4 million as of December 31, 2018. Approximately $63.3 million of the unrestricted cash and investments at December 31, 2018 is related to excess capital and undistributed earnings held at regulated entities.
• The Company is confirming its full year 2019 earnings guidance.

“Relative to our previous expectations, the fourth quarter was negatively impacted by approximately $50 million of both out-of-period and non-recurring items, primarily related to retrospective rate adjustments in New York which occurred subsequent to our guidancecall in December. We do not expect these items to have a material impact on 2019 earnings and are therefore confirming 2019 guidance,” said Jonathan N. Rubin, chief financial officer of Magellan Health.

Barry M. Smith, chairman and chief executive officer of Magellan Health, said, “While 2018 was challenging, we are only mid-way through our work to create a stronger, more sustainable foundation for the Company. For decades, Magellan was the leader in the carve-out specialty and behavioral health space. While these capabilities remain valuable and relevant today, the reality is that the market has changed to a much more integrated model. We recognized this and proactively took steps to transform our business in a significant way. We have made solid progress in shifting our revenue stream into growth markets over the last five years.”

Mr. Smith continued, “Looking to the future, we are confident that we can address our operational issues and deliver profitable growth and value creation. We are implementing a multi-year margin improvement plan to increase adjusted net income margin to over 2 percent.”

GUIDANCE:

Magellan Health sees FY2019 EPS of $3.70-$4.69, versus the consensus of $4.21. Magellan Health sees FY2019 revenue of $7.2-7.5 billion, versus the consensus of $7.25 billion.

For earnings history and earnings-related data on Magellan Health (MGLN) click here.

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