UPDATE: Magellan Health (MGLN) Tops Q2 EPS by 2c, Revenues Beat; Provides Updated FY20 EPS/Revenue Guidance Below Consensus

Magellan Health (NASDAQ: MGLN) reported Q2 EPS of $0.84, $0.02 better than the analyst estimate of $0.82. Revenue for the quarter came in at $1.1 billion versus the consensus estimate of $1.03 billion.

Second Quarter 2020 Highlights (all percentage changes compare second quarter 2020 to second quarter 2019 for continuing operations unless otherwise noted):

• Net revenue decreased 4.7 percent to $1.1 billion.
• Net income increased 552.9 percent to $47.1 million.
• Segment profit increased 6.4 percent to $57.0 million.
• Adjusted net income increased 64.7 percent to $21.3 million.
• Unrestricted cash and investments were $161.5 million as of June 30, 2020. Approximately $29 million of the unrestricted cash and investments at June 30, 2020 is related to excess capital and undistributed earnings held at regulated entities of continuing operations. In addition, the Company had approximately $160 million of excess capital and undistributed earnings held at regulated entities of discontinued operations at June 30, 2020.
• On June 24, 2020, the Company announced the election of Christopher J. Chen, M.D., and Mural R. (Joe) Josephson to Magellan’s board of directors at the 2020 Annual Meeting of Stockholders.
• On June 16, 2020, the Company announced the appointment of Dr. Caroline Carney as the chief medical officer.
• On July 6, 2020, the Company announced the appointment of Darren Lehrich as the chief investor relations officer.

“Throughout the COVID-19 pandemic, I continue to be inspired by the dedication and resilience of our organization,” said Kenneth Fasola, chief executive officer, Magellan Health.

“As we look to the balance of 2020, our strategic priorities remain intact. We are resolute in delivering on our existing commitments, lowering our operating cost structure, strengthening our capabilities through innovation, and improving our ability to capitalize on growth opportunities. The culmination of these efforts will strengthen our competitive position and lead to stronger growth in the future,” continued Fasola.

GUIDANCE:

Magellan Health sees FY2020 EPS of $0.63-$1.10, versus the consensus of $2.88. Magellan Health sees FY2020 revenue of $4.4-4.6 billion, versus the consensus of $4.94 billion.

The Company announced its updated 2020 fiscal year guidance parameters for continuing operations. This updated guidance excludes the MCC business, which is now reflected as discontinued operations retrospective to January 1, 2020.

The Company expects net revenue in the range of $4.4 billion to $4.6 billion. Net income is expected to be in the range of $15 million to $27 million, which equates to a diluted earnings per share range of $0.59 to $1.06. Adjusted net income is expected to be in the range of $16 million to $28 million, which equates to an adjusted EPS range of $0.63 to $1.10. Segment profit for the full year 2020 is expected to be in the range of $145 million to $165 million. This updated segment profit guidance includes $25 million to $30 million of stranded overhead costs that were previously allocated to the MCC business, but are required to be reclassified to continuing operations in accordance with GAAP. Following the closing of the MCC transaction, the Company expects approximately half of the stranded overhead costs to be mitigated through planned cost reductions, while the remaining amount is expected to be largely offset in 2021 by payments under a transition services agreement with Molina.

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

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