Magellan Health Services Inc.
) reported third-quarter 2013 operating net income of $1.70 per
share, surpassing the Zacks Consensus Estimate significantly by
68.3%. However, the results lagged 28% year over year.
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Increase in expenses more than offset the increase in top line,
leading to a year-over-year decline.
Magellan Health's total net revenues grossed $873.6 million in
the third quarter, which missed the Zacks Consensus Estimate of
$875 million. However, the results improved 9.4% year over year.
The increased net revenues came on the back of higher revenues
derived from managed care and other as well as from dispensing.
Total cost and expenses of Magellan Health moved up 11.8% year
over year during the reported quarter. The rise primarily stemmed
from higher cost of care, cost of goods sold and direct service
cost and other operating expenses.
Magellan Health generated segment operating profit of $59.2
million during the reported quarter, which slipped 14.7% year
Revenues were up 7.9% year over year to $190.6 million.
However, operating profit of the segment reduced 22.1% from the
Revenues stood at $45.3 million increasing 9.3% year over year.
Growth in top line led to a 35.7% year-over-year surge in
operating profit to $34.8 million in the quarter.
Radiology Benefits Management:
Revenues grossed $94.1 million during the third quarter,
increasing 6.8% from the prior-year quarter.
Operating profit for the segment came in at $15.1 million during
the reported quarter. It declined 7.9% from the comparable
quarter in the previous year.
Revenues amounted to $63 million, surging 15.8% year over year.
However, operating profit of this segment slid 17.5% from the
comparable year-ago period.
On Oct 1, 2013, Magellan Health closed the acquisition of
Partners Rx in its effort to consolidate its foothold in pharmacy
marketplace. Magellan Health's strong cash balance supported it
to pay $100 million for the transaction.
Under the new Medicaid Managed Care program, the state of Florida
approved Magellan Complete Care of Florida for launching the
Medicaid specialty health care plan during the third quarter of
2013. Magellan Complete Care is allowed to provide services in
eight regions including 40 of 67 counties in Florida. The
participation is subject to final rates, customary contract
negotiations and execution of contract which is expected to take
place in 2014.
Previously, Magellan Health marked its foray into the New York
market by inking a deal with New York-based AlphaCare to make
prudent investments and own 65% of the latter's stake. This deal
is expected to allow Magellan Health to provide better health
care services at a reasonable price.
Magellan Health exited the third quarter of 2013 with cash and
cash equivalents of $281.8 million that surged 48.7% from the
Net cash provided by the operating activities of Magellan Health
was $171.3 million in the first nine months of 2013. It soared
53.4% from the comparable year-ago period numbers.
Capital expenditure by Magellan Health amounted to $42 million in
the first nine months of 2013 reducing 20.6% year over year.
Based on its expectations from recent acquisitions and extension
of its Maricopa county business, Magellan Health raised its full
year 2013 guidance for net revenues to range between $3.5 billion
and $3.7 billion. Net income is expected to hover within $118 to
$136 million. The company also expects its operating net income
to range between $4.28 and $4.93 per share considering the impact
of the share buyback activity till Oct 21.
Magellan Health presently carries a Zacks Rank #2 (Buy). Among
others in the space,
) with a Zacks Rank #2 will release its financial results for the
third quarter of 2013 on Oct 29. Other healthcare service
Health Net Inc.
) will release their quarterly financial results in the first
week of November.