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Magellan Health Services Reports Third Quarter 2010 Financial Results

^{Published on 2010-10-29 03:42:22 - Market Wire}
 

AVON, Conn.--([ BUSINESS WIRE ])--Magellan Health Services, Inc. (Nasdaq:MGLN) today reported financial results for the third quarter of 2010, as summarized below, and increased guidance for the full year. For the quarter ended September 30, 2010, the Company reported net revenue of $750.3 million, segment profit of $90.1 million, and net income of $44.8 million or $1.31 per diluted common share. Segment profit represents income from continuing operations before stock compensation expense, depreciation and amortization, interest expense, interest income, gain on sale of assets, special charges or benefits, and income taxes.

"With these year-to-date results we are on track for a robust finish for 2010."

Financial Results

aI am quite pleased with our strong third quarter which demonstrates that our value proposition and strategy of diversification is resonating in the marketplace,a said Ren© Lerer, M.D., chairman and chief executive officer. aWith these year-to-date results we are on track for a robust finish for 2010.

aOur success is based on our ability to improve quality and access to care for our millions of members, and create value for customers. Across the spectrum of our business segments a" managed behavioral health, radiology benefits management, specialty pharmaceutical management and Medicaid administration a" our customers and consumers look to us as their partner to leverage our clinical and technological expertise to help find solutions to the challenges they face. Our track record of innovation motivates current and potential customers to do business with Magellan.

aAs we look to the future, 2011 will present new challenges. Our strategy uniquely positions us with a broad range of products and solutions to help customers deal with emerging health care and fiscal issues. Magellana™s abilities and expertise, as well as our long history of dealing with the Medicaid population, will be particularly important given the significant expansion of Medicaid over the next several years.a

aWe made important strides in our operational execution in the third quarter, positioning the company for future profitable growth,a said Karen S. Rohan, Magellana™s president. aWe implemented new business, expanded our products and capabilities, and continued our focus on care management and clinical initiatives. All of our business segments are focused on generating growth and developing new products to meet the changing needs of our customers, which is especially important given the current economic environment and the changing landscape brought about by health care reform.a

Outlook

aAs a result of our solid financial results through September 30, Magellan is increasing our full year guidance,a said Jonathan N. Rubin, chief financial officer. aWe now expect full-year segment profit in the range of $285 million to $300 million and net income of $126 million to $140 million. This equates to diluted earnings per share of $3.66 to $4.07, which reflects the impact of repurchases to date this year, but excludes any impact from repurchases that may occur during the remainder of the year. We now expect full year 2010 cash flow from operations to be in the range of $270 million to $300 million.

aLooking ahead, after adjusting our current 2010 guidance ranges for approximately $22 million of favorable year-to-date out-of-period adjustments, we expect to see moderately lower segment profit in 2011. This expectation is driven by several factors including the impact of previously disclosed contract terminations, and continued margin pressure resulting from economic strains on our health plan and state clients, partially offset by expected new business growth and the continued benefit of our effective care management and other performance improvement initiatives. We will provide detailed guidance in our December call.a

Earnings Results Conference Call

Management will host a conference call at 10:00 a.m. Eastern Time on Friday, October 29, 2010. To participate in the conference call, interested parties should call 1-888-566-8408 and reference the passcode Third Quarter Earnings Call 2010 approximately 15 minutes before the start of the call. The conference will also be available via a live Webcast at Magellana™s investor relations page at [ www.MagellanHealth.com ].

About Magellan: Headquartered in Avon, Conn., Magellan Health Services, Inc., is a leading specialty health care management organization with expertise in managing behavioral health, radiology and specialty pharmaceuticals, as well as public sector pharmacy benefits programs. Magellan delivers innovative solutions to improve quality outcomes and optimize the cost of care for those we serve. Magellana™s customers include health plans, employers and government agencies, serving approximately 58 million people nationwide in our behavioral and radiology benefits lines, more than 40 health plans in our specialty pharmacy benefits segment, and 25 states and the District of Columbia in our Medicaid Administration segment. For more information, visit [ www.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 2010 net income, segment profit, earnings per share, and cash flow from operations, 2011 segment profit, and strategy. These statements are based on managementa™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 abelieves,a aanticipates,a aplans,a aexpects,a amay,a ashould,a acould,a aestimate,a aintenda 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 Companya™s customers to manage the health care 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 Companya™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 aRisk Factorsa section included within the Companya™s Annual Report on Form10-K for the year ended December31, 2009, filed with the Securities and Exchange Commission on February26, 2010, and the Companya™s Quarterly Report on Form10-Q for the quarter ended September 30, 2010, expected to be filed with the Securities and Exchange Commission and posted on the Companya™s website on Friday, October 29, 2010. 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, is included in the Companya™s most recent Annual Report on Form10-K and subsequent reports on Form10-Q filed with the SEC.