Magellan Health Services Inc.
) reported net earnings of $37.0 million or $1.32 per share in
the fourth quarter of 2012, surpassing the Zacks Consensus
Estimate of $1.05. Net earnings also surpassed $29.7 million or
$1.05 per share earned in the fourth quarter of 2011.
The strong results were driven by new businesses, lower cost
of care management and improved administrative expense ratio.
Net revenues came in at $830.3 million, increasing 15.1% from
$721.5 million in the year-ago quarter. However, net revenue
lagged the Zacks Consensus Estimate of $843 million.
Segment profits surged 22.9% to $77.7 million from $63.2
million in the fourth quarter of 2011. Segment profit refers to
earnings before income taxes and excludes stock compensation
expense, depreciation and amortization, interest expense,
interest income, gain on the sale of assets and special charges
Total costs and expenses were $771.9 million in the reported
quarter, increasing from $678.2 million in the year-ago
Full Year Highlights
For 2012, Magellan reported net earnings of $151.0 million or
$5.42 per share, comfortably surpassing the Zacks Consensus
Estimate of $4.41 million. Net income also outperformed $129.6
million or $4.17 per share recorded in the year-ago quarter.
Net revenues were $3.21 billion in 2012, increasing 14.6% over
$2.80 billion in 2011. Total costs and expenses increased to $3.0
billion from $2.6 billion recorded last year. Segment profits
amounted to $267.4 million in 2012, declining 1.1% from $270.4
million in 2011.
Operating cash flow amounted to $181.3 million in 2012,
improving from $112.0 million in 2011.
Magellan increased its earnings per share (EPS) guidance for
2013 to $3.27-$3.92 from $3.22-$3.85 guided earlier on the back
of lower shares outstanding. However, the guidance does not
include any future repurchases.
Additionally, Magellan affirmed the net revenue guidance range
of $3.56-$3.74 billion for the year ahead. Further, net income
guidance was also affirmed at $91-$109 million and segment profit
at $250-$270 million.
Results at Other HMOs
Coventry Health Care Inc.
) reported fourth-quarter 2012 operating earnings per share of 88
cents, which surpassed the Zacks Consensus Estimate of 67 cents
as well as the prior-year earnings of 60 cents. Coventry reported
net income of $119.3 million compared with $85.7 million in the
Another health maintenance organization (HMO),
) reported fourth-quarter 2012 adjusted income of $1.03 per
share, beating the Zacks Consensus Estimate of 95 cents. Adjusted
income also surpassed the year-ago earnings of 99 cents per share
UnitedHealth Group Inc.
) reported fourth-quarter 2012 earnings of $1.20 per share, in
line with the Zacks Consensus Estimate. Earnings, however,
increased 2.6% on a year-over-year basis.
Magellan currently carries a Zacks Rank #4 (Sell).
COVENTRY HLTHCR (CVH): Free Stock Analysis
MAGELLAN HLTH (MGLN): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
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