News Releases
Magellan Health Services Provides 2012 Financial GuidanceAVON, Conn.--(BUSINESS WIRE)--
Magellan Health Services Inc. (NASDAQ: MGLN) today announced that, for
2012, it expects to generate net revenue in the range of $3.2 billion to
$3.4 billion, and net income in the range of $91 million to $109
million, which translates into diluted earnings per share in the range
of $3.25 to $3.89. The company also expects segment profit (which
represents income from continuing operations before stock compensation
expense, depreciation and amortization, interest expense, interest
income, gain on the sale of assets, special charges or benefits, and
income taxes) for 2012 to be in the range of $240 million to $260
million.
The company confirmed its guidance for 2011, projecting full year net
income in the range of $116.5 million to $135.5 million, segment profit
of $255 million to $275 million, and cash flow from operations of $180.5
million to $211.5 million, excluding the net shift of restricted funds
between cash and investments. Magellan increased its diluted earnings
per share guidance to a range of $3.75 to $4.36 per share based on share
repurchases through the close of business on December 12, 2011, but
excluding any potential repurchases that may occur during the remainder
of the year. Magellan reported year-to-date share repurchases through
December 12, 2011, of approximately 8.1 million shares for a total cost
of $398 million.
Additionally, the company announced a new Senior Secured Revolving
Credit Facility totaling $230 million, which replaces the current $80
million facility.
"Magellan expects to complete 2011 with solid overall results, and is
well-positioned to take advantage of marketplace opportunities in the
future," said René Lerer, M.D., chairman and chief executive officer.
"We've had important new business sales, sharpened our overall business
strategy particularly as it relates to Medicaid and pharmacy, and made
initial investments in people and capabilities that create the
foundation upon which we will build and innovate. In 2012, we will
materially increase our investments in our Medicaid and Pharmacy
initiatives. We are further expanding our Medicaid footprint to provide
comprehensive management for special populations, and leveraging our
unique expertise in medical pharmacy management and Medicaid pharmacy
capabilities to develop a comprehensive solution for the management of
total drug spend. Retaining and growing existing business by developing
new products and services, expanding into new markets and cross-selling
across our customer base also remain key priorities for the company."
"The bank financing plan that we announced today, coupled with our
existing strong cash flow, allows us additional flexibility to support
our strategy," said Jonathan N. Rubin, chief financial officer. "Current
availability of financing in the market and our ability to obtain
favorable terms made this the right time to increase our credit
facility. The company has also deployed capital to enhance shareholder
value. We completed our prior $450 million share repurchase program, and
have started repurchasing shares under the new $200 million program
authorized by our Board of Directors in October."
2012 Guidance Conference Call
Management will host a conference call at 10:00 a.m. Eastern Time on
Tuesday, December 13, 2011. To participate in the conference call,
interested parties should call 1-888-566-8408 and reference the pass
code 2012 Financial Guidance 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 www.MagellanHealth.com.
About Magellan Health Services:
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. As of September 30 2011, Magellan's customers included
health plans, employers and government agencies, serving approximately
31.2 million members in our behavioral health business, 16.3 million
members in our radiology benefits management segment, and 5.5 million
members in our medical pharmacy management product. In addition, the
specialty pharmaceutical segment served 41 health plans and several
pharmaceutical manufacturers and state Medicaid programs. The company's
Medicaid Administration segment served 25 states and the District of
Columbia. 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 2011 and 2012 net
income, segment profit, earnings per share, cash flow from operations,
2012 estimates of revenue, 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 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
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,
2010, filed with the Securities and Exchange Commission on February 25,
2011, and the company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2011, filed with the Securities and Exchange
Commission and posted on the company's website on October, 27, 2011.
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.
Magellan Health Services, Inc. and Subsidiaries
Fiscal 2012 Forecast Guidance - Income Statement
(In millions, except per share amounts)
Low
High
Net revenue
$
3,179.0
$
3,354.0
Cost and expenses:
Cost of care
2,107.0
2,227.0
Cost of goods sold
279.0
299.0
Direct service costs and other operating expenses (1)
574.0
584.0
Depreciation and amortization
66.5
62.5
Interest expense
3.5
1.5
Interest income
(3.5
)
(2.5
)
Income before income taxes
152.5
182.5
Provision for income taxes
61.5
73.5
Net income
$
91.0
$
109.0
Weighted average shares outstanding - diluted
28.0
28.0
EPS - diluted
$
3.25
$
3.89
(1) Includes stock compensation expense of $21.0 million and $16.0
million for low and high guidance, respectively.
Reconciliation of segment profit to income before income taxes:
Segment profit
$
240.0
$
260.0
Stock compensation expense
(21.0
)
(16.0
)
Depreciation and amortization
(66.5
)
(62.5
)
Interest expense
(3.5
)
(1.5
)
Interest income
3.5
2.5
Income before income taxes
$
152.5
$
182.5
Magellan Health Services, Inc. and Subsidiaries
Fiscal 2012 Forecast Guidance - Cash Flow
(In millions)
Low
High
Cash flows from operating activities
Net income
$
91.0
$
109.0
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation and amortization
66.5
62.5
Non-cash stock compensation expense
21.0
16.0
Non-cash income tax expense
5.5
9.5
Other net cash flows from changes in assets and liabilities
(20.0
)
-
Net cash provided by operating activities
164.0
197.0
Cash flows from investing activities
Capital expenditures
(71.0
)
(61.0
)
Net cash used in investing activities
(71.0
)
(61.0
)
Cash flows from financing activities
Payments on long-term debt and capital leases
(2.0
)
-
Net used in financing activities
(2.0
)
-
Net increase in cash, cash equivalents and unrestricted investments
$
91.0
$
136.0
Magellan Health Services Inc.Media Contact:David W.
Carter, 860-507-1909dwcarter@magellanhealth.comorInvestor
Contact:Renie Shapiro, 877-645-6464rshapiro@magellanhealth.com
Source: Magellan Health Services Inc.
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