[October 24, 2014] |
|
Magellan Health Reports Third Quarter 2014 Financial Results
SCOTTSDALE, Ariz. --(Business Wire)--
Magellan Health, Inc. (NASDAQ:MGLN) today reported financial results for
the third quarter 2014, as summarized below. For the quarter ended
September 30, 2014, the company reported net revenue of $923.2 million,
segment profit of $62.2 million and net income of $27.1 million, or
$1.00 per diluted common share.
Third Quarter Financial Results1
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|
|
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Three Months Ended
September 30, 2014
|
|
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Nine Months Ended
September 30, 2014
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(Millions, except per share results)
|
|
|
|
2014
|
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2013
|
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Increase/
|
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2014
|
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2013
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Increase/
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(Decrease)
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(Decrease)
|
|
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Revenue
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|
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$
|
923.2
|
|
$
|
873.6
|
|
5.7
|
%
|
|
|
$
|
2,777.7
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|
$
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2,538.1
|
|
9.4
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%
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|
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Segment Profit2
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62.2
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|
59.2
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5.1
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%
|
|
|
|
183.7
|
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203.5
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|
(9.7
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)%
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|
|
Net Income
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|
27.1
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|
47.2
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(42.6
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)%
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|
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|
57.8
|
|
|
106.8
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|
(45.9
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)%
|
|
|
Adjusted Net Income3
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|
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35.2
|
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|
47.2
|
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(25.4
|
)%
|
|
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73.4
|
|
|
106.8
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(31.3
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)%
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Earnings per Share
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1.00
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1.70
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(41.2
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)%
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|
|
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2.09
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|
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3.87
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(46.0
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)%
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Adjusted Earnings per Share3
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1.30
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1.70
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(23.5
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)%
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|
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2.66
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3.87
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|
(31.3
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)%
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|
-
Revenue increased due to the inclusion of Partners Rx and CDMI in the
current year quarter, new business, same store growth and rate
increases, partially offset by the loss of revenues associated with
terminated contracts.
-
Third quarter segment profit increased mainly due to stronger results
in the Commercial and Pharmacy Management segments, partially offset
by terminated contracts, as well as administrative start-up costs and
estimated operating losses for Magellan Complete Care.
-
Net income, earnings per share, adjusted net income and adjusted
earnings per share decreased mainly due to a higher effective tax rate
resulting from the non-deductibility of Health Insurer Fees, lower
reversals of tax contingencies, and increased valuation allowances in
the current year for certain deferred tax assets, offset by an
increase in segment profit. Reversals of tax contingencies affecting
the tax provision were $15.6 million in the current year quarter, and
$22.7 million in the prior year quarter.
1 Included in the tables issued with this press release are
the reconciliations from non-GAAP measures to the corresponding GAAP
measures.
2 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, as well as stock compensation expense.
3 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, as well as amortization of identified
acquisition intangibles.
As of September 30, 2014, the company had unrestricted cash and
investments of $390.8 million, which includes proceeds from the drawdown
of the $250 million term loan under the company's new credit facility.
"This has been a transitional year for Magellan," said Barry M. Smith,
chairman and chief executive officer of Magellan Health. "We stabilized
our business, made important acquisitions, and continued to advance our
growth strategies. As we approach the end of the year, we remain firmly
focused on the work necessary to achieve our aggressive long-term growth
targets as the leader in special population management.
"Our three core businesses - including Magellan Complete Care - provide
a broad range of next generation solutions to address today's healthcare
challenges and tomorrow's healthcare opportunities. I am extremely
pleased that we are anticipating solid growth next year, and are well
positioned for continued growth in the future."
Share Repurchase Program
Year-to-date through Tuesday, October 21, 2014, the company repurchased
approximately 2.8 million shares for a total cost of $161.8 million, at
average price of $57.54, and has completed approximately $277.7 million
of the current $300 million authorization. The Board of Directors has
authorized a new share repurchase program of up to $200 million over a
two year period until October 22, 2016. The shares may be purchased from
time-to-time on the open market, under 10b5-1 plans, or in privately
negotiated transactions. There are a number of factors that impact the
timing and pace of purchases, such as stock price, capital needs,
acquisitions and determination of open and closed trading windows.
Results and Outlook
"The third quarter of 2014 was a strong one for Magellan, particularly
in our Commercial, Specialty Solutions and Pharmacy Management
segments," said Jonathan N. Rubin, chief financial officer. "We resolved
the cost of care issues that we experienced on one of our risk
behavioral health contracts. The care costs recorded in the quarter for
Magellan Complete Care of Florida resulted in an estimated Medical Loss
Ratio of approximately 100 percent, which is within the range of our
expectations for the start-up phase of the program. It's important to
note, however, that these estimates are based on limited data, as we
only have leading indicators of drug costs and inpatient
pre-authorizations. We expect to have a more complete view of full
claims data in early 2015.
"Given the results to date, we are now expecting our full year 2014
guidance for net revenue in the range of $3.6 to $3.8 billion, net
income of $63 to $77 million, segment profit in the range of $243
million to $258 million, and cash flow from operations of $207 million
to $226 million. Taking into account the impact of share repurchase
activity through October 21, 2014, but not considering any potential
future share repurchases, our guidance range for fully diluted EPS is
estimated to be $2.30 to $2.81, based on a fully diluted share count of
27.4 million. We are also revising our 2014 guidance range for full-year
adjusted net income of $88.0 million to $102.0 million. We have updated
our guidance for adjusted earnings per share to a range of $3.21 to
$3.72, based on the updated fully diluted share count.
"Looking ahead, we expect to have solid segment profit growth in 2015.
We will provide detailed 2015 guidance during our December call."
Earnings Conference Call
Management will host a conference call at 10 a.m. Eastern time on
Friday, October 24, 2014. To participate in the conference call,
interested parties should call 1-800-857-1812 and reference the pass
code Third Quarter 2014 Earnings Call approximately 15 minutes
before the start of the call. The conference call will also be available
via a live webcast at Magellan's investor relations page at MagellanHealth.com.
About Magellan Health: Headquartered in Scottsdale, Ariz., Magellan
Health, Inc. is a healthcare management company that focuses on
fast-growing, complex and high-cost areas of healthcare, with an
emphasis on special population management. Magellan delivers innovative
solutions to improve quality outcomes and optimize the cost of care for
those we serve. Magellan's customers include health plans, managed care
organizations, insurance companies, employers, labor unions, various
military and government agencies, third party administrators,
consultants and brokers. For more information, visit MagellanHealth.com.
Cautionary Statement
This release contains forward-looking statements within the meaning of
the Securities Exchange Act of 1934 and the Securities Act of 1933, as
amended, which involve a number of risks and uncertainties. All
statements, other than statements of historical information provided
herein, may be deemed to be forward-looking statements including,
without limitation, statements regarding estimates of 2014 net revenue,
net income, adjusted net income, segment profit, cash flow from
operations, earnings per share, adjusted earnings per share, capital
deployment, 2015 segment profit growth and strategy. These statements
are based on management's analysis, judgment, belief and expectation
only as of the date hereof, and are subject to uncertainty and changes
in circumstances. 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. Actual results could differ materially due
to, among other things, 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 health care services by the
company's risk members; 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;
health care 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 Annual Report on Form 10-K for the year ended December 31,
2013, filed with the Securities and Exchange Commission on March 3,
2014, and the company's subsequent Quarterly Reports on Form 10-Q filed
during 2014. Readers are cautioned not to place undue reliance on these
forward-looking statements. The company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date of this release. Segment profit
information referred to herein may be considered a non-GAAP financial
measure. Further information regarding this measure, including the
reasons management considers this information useful to investors, are
included in the company's most recent Annual Report on Form 10-K and on
subsequent Form 10-Qs.
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MAGELLAN HEALTH, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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(Unaudited)
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|
|
(In thousands, except per share amounts)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
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|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
|
2013
|
|
|
|
|
2014 (1
|
)
|
|
|
2013
|
|
|
|
|
2014 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed care and other
|
|
$
|
770,113
|
|
|
|
$
|
703,020
|
|
|
$
|
2,239,422
|
|
|
|
$
|
2,214,885
|
|
|
|
PBM and dispensing
|
|
|
103,485
|
|
|
|
|
220,150
|
|
|
|
298,685
|
|
|
|
|
562,774
|
|
|
|
Total net revenue
|
|
|
873,598
|
|
|
|
|
923,170
|
|
|
|
2,538,107
|
|
|
|
|
2,777,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of care
|
|
|
564,537
|
|
|
|
|
495,180
|
|
|
|
1,627,194
|
|
|
|
|
1,582,505
|
|
|
|
Cost of goods sold
|
|
|
97,503
|
|
|
|
|
202,180
|
|
|
|
281,190
|
|
|
|
|
520,044
|
|
|
|
Direct service costs and other operating expenses (2)
|
|
|
156,834
|
|
|
|
|
176,928
|
|
|
|
440,958
|
|
|
|
|
520,684
|
|
|
|
Depreciation and amortization
|
|
|
17,654
|
|
|
|
|
23,956
|
|
|
|
50,770
|
|
|
|
|
66,665
|
|
|
|
Interest expense
|
|
|
789
|
|
|
|
|
2,879
|
|
|
|
2,191
|
|
|
|
|
5,719
|
|
|
|
Interest income
|
|
|
(291
|
)
|
|
|
|
(241
|
)
|
|
|
(1,002
|
)
|
|
|
|
(827
|
)
|
|
|
Total costs and expenses
|
|
|
837,026
|
|
|
|
|
900,882
|
|
|
|
2,401,301
|
|
|
|
|
2,694,790
|
|
|
|
Income before income taxes
|
|
|
36,572
|
|
|
|
|
22,288
|
|
|
|
136,806
|
|
|
|
|
82,869
|
|
|
|
(Benefit) provision for income taxes
|
|
|
(10,660
|
)
|
|
|
|
(3,490
|
)
|
|
|
30,036
|
|
|
|
|
28,384
|
|
|
|
Net income
|
|
|
47,232
|
|
|
|
|
25,778
|
|
|
|
106,770
|
|
|
|
|
54,485
|
|
|
|
Less: net income (loss) attributable to non-controlling interest
|
|
|
-
|
|
|
|
|
(1,355
|
)
|
|
|
-
|
|
|
|
|
(3,354
|
)
|
|
|
Net income attributable to Magellan Health, Inc.
|
|
$
|
47,232
|
|
|
|
$
|
27,133
|
|
|
$
|
106,770
|
|
|
|
$
|
57,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - Basic
|
|
|
26,990
|
|
|
|
|
26,703
|
|
|
|
26,976
|
|
|
|
|
27,070
|
|
|
|
Weighted average number of common shares outstanding - Diluted
|
|
|
27,704
|
|
|
|
|
27,242
|
|
|
|
27,563
|
|
|
|
|
27,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to Magellan Health, Inc. -
Basic
|
|
$
|
1.75
|
|
|
|
$
|
1.02
|
|
|
$
|
3.96
|
|
|
|
$
|
2.14
|
|
|
|
Net income per common share attributable to Magellan Health, Inc. -
Diluted
|
|
$
|
1.70
|
|
|
|
$
|
1.00
|
|
|
$
|
3.87
|
|
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
47,232
|
|
|
|
$
|
25,778
|
|
|
$
|
106,770
|
|
|
|
$
|
54,485
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on available-for-sale securities (3)
|
|
|
110
|
|
|
|
|
(111
|
)
|
|
|
(37
|
)
|
|
|
|
2
|
|
|
|
Comprehensive income
|
|
|
47,342
|
|
|
|
|
25,667
|
|
|
|
106,733
|
|
|
|
|
54,487
|
|
|
|
Less: comprehensive income (loss) attributable to non-controlling
interest
|
|
|
-
|
|
|
|
|
(1,355
|
)
|
|
|
-
|
|
|
|
|
(3,354
|
)
|
|
|
Comprehensive income attributable to Magellan Health, Inc.
|
|
$
|
47,342
|
|
|
|
$
|
27,022
|
|
|
$
|
106,733
|
|
|
|
$
|
57,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For a more detailed discussion of Magellan Health's results
for the quarterly period ended September 30, 2014, refer to the
Company's Quarterly
|
|
|
Report on Form 10-Q, which will be filed with the SEC on, or shortly
after, Friday, October 24, 2014, and the live broadcast or taped
replay of the
|
|
|
Company's earnings conference call on Friday, October 24, 2014,
which will be available at www.MagellanHealth.com.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes stock compensation expense of $4,524 and $11,961 for
the three months ended September 30, 2013 and 2014, respectively,
|
|
|
|
|
and $14,764 and $25,983 for the nine months ended September 30, 2013
and 2014, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Net of income tax provision (benefit) of $74 and $(74) for the
three months ended September 30, 2013 and 2014, respectively, and
|
|
|
|
|
|
$(25) and $1 for the nine months ended September 30, 2013 and 2014,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
|
|
NON-GAAP MEASURES
|
|
|
(Unaudited)
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
|
2013
|
|
|
|
2014 (1
|
)
|
|
|
2013
|
|
|
|
2014 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
|
|
$
|
47,232
|
|
|
$
|
35,192
|
|
|
$
|
106,770
|
|
|
$
|
73,448
|
|
|
|
Adjusted for acquisitions starting in 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangibles
|
|
|
-
|
|
|
|
(4,317
|
)
|
|
|
-
|
|
|
|
(9,376
|
)
|
|
|
Stock compensation relating to acquisitions
|
|
|
-
|
|
|
|
(8,885
|
)
|
|
|
-
|
|
|
|
(16,196
|
)
|
|
|
Tax impact
|
|
|
-
|
|
|
|
5,143
|
|
|
|
-
|
|
|
|
9,963
|
|
|
|
Net income attributable to Magellan Health, Inc.
|
|
$
|
47,232
|
|
|
$
|
27,133
|
|
|
$
|
106,770
|
|
|
$
|
57,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
$
|
1.70
|
|
|
$
|
1.30
|
|
|
$
|
3.87
|
|
|
$
|
2.66
|
|
|
|
Adjusted for acquisitions starting in 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangibles
|
|
|
-
|
|
|
|
(0.16
|
)
|
|
|
-
|
|
|
|
(0.34
|
)
|
|
|
Stock compensation relating to acquisitions
|
|
|
-
|
|
|
|
(0.33
|
)
|
|
|
-
|
|
|
|
(0.59
|
)
|
|
|
Tax impact
|
|
|
-
|
|
|
|
0.19
|
|
|
|
-
|
|
|
|
0.36
|
|
|
|
Net income per common share attributable to Magellan Health, Inc. -
Diluted
|
|
$
|
1.70
|
|
|
$
|
1.00
|
|
|
$
|
3.87
|
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2014 will be filed with the SEC on, or
shortly
|
|
|
after, Friday, October 24, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
(Unaudited)
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2013
|
|
|
2014 (1)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
106,770
|
|
|
$
|
54,485
|
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
50,770
|
|
|
|
66,665
|
|
|
Non-cash interest expense
|
|
|
552
|
|
|
|
3,888
|
|
|
Non-cash stock compensation expense
|
|
|
14,764
|
|
|
|
25,983
|
|
|
Non-cash income tax (benefit) expense
|
|
|
(164)
|
|
|
|
813
|
|
|
Non-cash amortization on investments
|
|
|
7,273
|
|
|
|
3,620
|
|
|
Realized loss on sale of investments
|
|
|
-
|
|
|
|
40
|
|
|
Cash flows from changes in assets and liabilities, net of
|
|
|
|
|
|
|
|
effects
|
|
|
|
|
|
|
|
from acquisitions of businesses:
|
|
|
|
|
|
|
|
Restricted cash (2)
|
|
|
17,987
|
|
|
|
71,530
|
|
|
Accounts receivable, net
|
|
|
(19,231)
|
|
|
|
(19,492)
|
|
|
Pharmaceutical inventory
|
|
|
(1,680)
|
|
|
|
8,710
|
|
|
Other assets
|
|
|
(9,781)
|
|
|
|
(22,378)
|
|
|
Accounts payable and accrued liabilities
|
|
|
6,685
|
|
|
|
(28,461)
|
|
|
Medical claims payable and other medical liabilities
|
|
|
16,144
|
|
|
|
39,940
|
|
|
Tax contingencies
|
|
|
(22,981)
|
|
|
|
(15,179)
|
|
|
Deferred credits and other long-term liabilities
|
|
|
2,221
|
|
|
|
3,940
|
|
|
Other
|
|
|
1,953
|
|
|
|
138
|
|
|
Net cash provided by operating activities
|
|
|
171,282
|
|
|
|
194,242
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(42,091)
|
|
|
|
(50,597)
|
|
|
Acquisitions and investments in businesses, net of cash acquired
|
|
|
-
|
|
|
|
(132,210)
|
|
|
Purchase of investments
|
|
|
(235,946)
|
|
|
|
(216,958)
|
|
|
Maturity of investments
|
|
|
233,723
|
|
|
|
220,191
|
|
|
Other
|
|
|
(7,900)
|
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(52,214)
|
|
|
|
(179,574)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from issuance of debt
|
|
|
-
|
|
|
|
250,000
|
|
|
Payments to acquire treasury stock
|
|
|
(49,462)
|
|
|
|
(139,316)
|
|
|
Proceeds from exercise of stock options and warrants
|
|
|
24,548
|
|
|
|
41,685
|
|
|
Payments on capital lease obligations
|
|
|
(2,310)
|
|
|
|
(2,606)
|
|
|
Other
|
|
|
484
|
|
|
|
655
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(26,740)
|
|
|
|
150,418
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
92,328
|
|
|
|
165,086
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
189,464
|
|
|
|
203,187
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
281,792
|
|
|
$
|
368,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2014 will be filed with the SEC on,
|
|
|
or shortly after, Friday, October 24, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes the net shift of restricted funds between cash and
investments that results in an operating cash flow change that
|
|
|
is directly offset by an investing cash flow change. During the nine
months ended September 30, 2013 and 2014, restricted cash
|
|
|
of $33,610 and $28,806, respectively, was shifted to restricted
investments that resulted in an operating cash flow source.
|
|
|
|
|
|
|
|
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED OPERATING RESULTS BY BUSINESS SEGMENT
|
|
|
(Unaudited)
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
|
2013
|
|
|
|
2014 (1)
|
|
|
2013
|
|
|
|
2014 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed care and other revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
- Commercial
|
|
$
|
190,655
|
|
|
$
|
144,257
|
|
$
|
578,030
|
|
|
$
|
531,173
|
|
|
- Public Sector
|
|
|
445,260
|
|
|
|
388,682
|
|
|
1,266,739
|
|
|
|
1,206,579
|
|
|
- Specialty Solutions
|
|
|
94,125
|
|
|
|
120,808
|
|
|
277,118
|
|
|
|
345,568
|
|
|
- Pharmacy Management (2)
|
|
|
57,164
|
|
|
|
49,273
|
|
|
166,092
|
|
|
|
149,620
|
|
|
- Elimination (2)
|
|
|
(17,091)
|
|
|
|
-
|
|
|
(48,557)
|
|
|
|
(18,055)
|
|
|
Total managed care and other revenue
|
|
|
770,113
|
|
|
|
703,020
|
|
|
2,239,422
|
|
|
|
2,214,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBM and dispensing revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
- Pharmacy Management (2)
|
|
|
103,485
|
|
|
|
241,226
|
|
|
298,685
|
|
|
|
590,115
|
|
|
- Elimination (2)
|
|
|
-
|
|
|
|
(21,076)
|
|
|
-
|
|
|
|
(27,341)
|
|
|
Total PBM and dispensing revenue
|
|
|
103,485
|
|
|
|
220,150
|
|
|
298,685
|
|
|
|
562,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of care
|
|
|
|
|
|
|
|
|
|
|
|
|
- Commercial
|
|
|
118,022
|
|
|
|
71,264
|
|
|
354,520
|
|
|
|
299,318
|
|
|
- Public Sector (2)
|
|
|
382,913
|
|
|
|
337,128
|
|
|
1,095,694
|
|
|
|
1,034,754
|
|
|
- Specialty Solutions
|
|
|
65,403
|
|
|
|
86,787
|
|
|
182,212
|
|
|
|
250,192
|
|
|
- Pharmacy Management
|
|
|
15,290
|
|
|
|
1
|
|
|
43,325
|
|
|
|
16,296
|
|
|
- Elimination (2)
|
|
|
(17,091)
|
|
|
|
-
|
|
|
(48,557)
|
|
|
|
(18,055)
|
|
|
Total cost of care
|
|
|
564,537
|
|
|
|
495,180
|
|
|
1,627,194
|
|
|
|
1,582,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
- Pharmacy Management (2)
|
|
|
97,503
|
|
|
|
223,251
|
|
|
281,190
|
|
|
|
547,362
|
|
|
- Elimination (2)
|
|
|
-
|
|
|
|
(21,071)
|
|
|
-
|
|
|
|
(27,318)
|
|
|
Total cost of goods sold
|
|
|
97,503
|
|
|
|
202,180
|
|
|
281,190
|
|
|
|
520,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct service costs and other operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
- Commercial
|
|
|
47,032
|
|
|
|
37,513
|
|
|
129,823
|
|
|
|
120,319
|
|
|
- Public Sector
|
|
|
27,826
|
|
|
|
45,789
|
|
|
82,403
|
|
|
|
134,138
|
|
|
- Specialty Solutions
|
|
|
13,990
|
|
|
|
17,843
|
|
|
41,224
|
|
|
|
50,881
|
|
|
- Pharmacy Management
|
|
|
32,281
|
|
|
|
45,535
|
|
|
93,216
|
|
|
|
122,691
|
|
|
- Corporate
|
|
|
35,705
|
|
|
|
30,248
|
|
|
94,292
|
|
|
|
92,655
|
|
|
Total direct service costs and other operating expenses
|
|
|
156,834
|
|
|
|
176,928
|
|
|
440,958
|
|
|
|
520,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
- Commercial
|
|
|
(124)
|
|
|
|
(164)
|
|
|
(390)
|
|
|
|
(476)
|
|
|
- Public Sector
|
|
|
(259)
|
|
|
|
(225)
|
|
|
(833)
|
|
|
|
(729)
|
|
|
- Specialty Solutions
|
|
|
(384)
|
|
|
|
(269)
|
|
|
(1,275)
|
|
|
|
(1,037)
|
|
|
- Pharmacy Management
|
|
|
(198)
|
|
|
|
(8,122)
|
|
|
(898)
|
|
|
|
(13,981)
|
|
|
- Corporate
|
|
|
(3,559)
|
|
|
|
(3,181)
|
|
|
(11,368)
|
|
|
|
(9,760)
|
|
|
Total stock compensation expense
|
|
|
(4,524)
|
|
|
|
(11,961)
|
|
|
(14,764)
|
|
|
|
(25,983)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: non-controlling interest segment profit (loss) - Public Sector
(4)
|
|
|
-
|
|
|
|
(1,323)
|
|
|
-
|
|
|
|
(3,301)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
- Commercial
|
|
|
25,725
|
|
|
|
35,644
|
|
|
94,077
|
|
|
|
112,012
|
|
|
- Public Sector
|
|
|
34,780
|
|
|
|
7,313
|
|
|
89,475
|
|
|
|
41,717
|
|
|
- Specialty Solutions
|
|
|
15,116
|
|
|
|
16,447
|
|
|
54,957
|
|
|
|
45,532
|
|
|
- Pharmacy Management
|
|
|
15,773
|
|
|
|
29,834
|
|
|
47,944
|
|
|
|
67,367
|
|
|
- Corporate and Elimination
|
|
|
(32,146)
|
|
|
|
(27,072)
|
|
|
(82,924)
|
|
|
|
(82,918)
|
|
|
Total segment profit
|
|
$
|
59,248
|
|
|
$
|
62,166
|
|
$
|
203,529
|
|
|
$
|
183,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of segment profit to income
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit
|
|
$
|
59,248
|
|
|
$
|
62,166
|
|
$
|
203,529
|
|
|
$
|
183,710
|
|
|
Stock compensation expense
|
|
|
(4,524)
|
|
|
|
(11,961)
|
|
|
(14,764)
|
|
|
|
(25,983)
|
|
|
Non-controlling interest segment profit (loss)
|
|
|
-
|
|
|
|
(1,323)
|
|
|
-
|
|
|
|
(3,301)
|
|
|
Depreciation and amortization
|
|
|
(17,654)
|
|
|
|
(23,956)
|
|
|
(50,770)
|
|
|
|
(66,665)
|
|
|
Interest expense
|
|
|
(789)
|
|
|
|
(2,879)
|
|
|
(2,191)
|
|
|
|
(5,719)
|
|
|
Interest income
|
|
|
291
|
|
|
|
241
|
|
|
1,002
|
|
|
|
827
|
|
|
Income before income taxes
|
|
$
|
36,572
|
|
|
$
|
22,288
|
|
$
|
136,806
|
|
|
$
|
82,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2014 will be filed with the SEC on, or
shortly after, Friday, October 24, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Public Sector subcontracts with Pharmacy Management to provide
pharmacy benefits management services for certain of Public Sector's
customers. In addition,
|
|
|
Pharmacy Management provides pharmacy benefits management for
Magellan's employees covered under its medical plan. As such,
revenue, cost of care, cost
|
|
|
of goods sold and direct service costs and other operating expenses
related to these arrangements are eliminated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Stock compensation expense is included in direct service costs
and other operating expenses; however, this amount is excluded from
the computation of segment
|
|
|
profit since it is managed on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) The non-controlling portion of AlphaCare's segment profit (loss)
is excluded from the computation of segment profit.
|
|
|
|
|
|
|
|
|
|
|
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