Magellan Health (MGLN) FY18 EPS Tops Views at Mid-Point

Magellan Health, Inc. (NASDAQ: MGLN) announced today its full year 2018 guidance parameters.

The Company expects net revenue in the range of $7.5 to $7.8 billion, representing growth of approximately 32 percent compared to the midpoint of the 2017 guidance range, which includes the Senior Whole Health acquisition that closed on October 31, 2017. Net income is expected to be in the range of $114 to $138 million, which equates to a diluted earnings per share range of $4.52 to $5.48. Adjusted net income is expected to be in the range of $143 to $163 million, which equates to an adjusted EPS range of $5.68 to $6.47.

(Street sees FY18 EPS of $5.80 on revenue of $7.13 billion)

“Magellan has successfully repositioned itself for long-term sustained growth with its two platforms – healthcare and pharmacy management,” said Barry M. Smith, chairman and chief executive officer of Magellan Health. “Through strategic execution, we have extended well beyond our behavioral health legacy business to focus on delivering solutions to employers, managed care organizations and government that address the highest cost, fastest growing areas of healthcare spend.”

Segment profit for the full year 2018 is expected to be in the range of $414 to $436 million, representing growth of approximately 30 percent compared to the midpoint of the 2017 guidance range, which included $9 million of favorable out of period items. The year-over-year growth primarily reflects the following favorable drivers:

• The impact of projected new business effective in 2018 of approximately $450 to $500 million in revenue, of which approximately half has been sold to date;
• The annualization of new business revenue sold and implemented during calendar year 2017 of approximately $450 million;
• Same store growth within existing contracts;
• The absence of Virginia start-up costs in 2018;
• The favorable year-over-year impact of our commercial healthcare initiatives;
• The favorable impact of our 2018 pricing and formulary changes in our Part D Plan;
• The full year impact of the Senior Whole Health acquisition; and
• The segment profit impact from reinstatement of Health Insurer Fees in 2018.

These favorable items are expected to be partially offset by:

• Contract terminations with year-over-year revenue impact of approximately $90 million;
• The full year impact of the rate reductions in Magellan Complete Care of Florida.

“I am pleased with our 2018 guidance for revenue and segment profit growth,” said Jonathan N. Rubin, chief financial officer of Magellan Health. “We are focused on continuing our strong execution of our strategy and operating plan.”

The Company is affirming its 2017 full year guidance as detailed in its third quarter 2017 earnings release dated November 1, 2017. Fourth quarter and full year 2017 earnings will be reported on February 27, 2018 at 6:30 a.m., with a conference call following the earnings release.

Guidance Conference Call

Management will discuss the Company’s full year 2018 guidance parameters on Friday, December 1, 2017 at 8:30 a.m. Eastern. To participate in the conference call, dial 1-800-857-1812 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 January 1, 2018. This replay may be accessed by dialing 1-866-458-4760 (domestic) or 1-203-369-1317 (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 revenues 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.

You May Also Be Interested In

• Tesla touts acceleration of new models, but Q1 results fall short of estimates
• Artisan Partners Asset Management (APAM) Misses Q1 EPS by 1c
• Avangrid (AGR) Tops Q1 EPS by 19c