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Magellan Health Unveils 2016 Outlook, Keeps 2015 View Intact

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Magellan Health, Inc . MGLN expects to deliver operating net earnings between $3.06 and $3.83 per share in 2016. The Zacks Consensus Estimate for the same is currently pegged lower at $1.38. We expect the analysts to raise their estimates following the company's projection. Operating net earnings are estimated at $75.5 million to $94.5 million. Shares gained more than 8% in yesterday's trading session, reflecting an optimistic outlook for 2016.

Accounting for one-time items, net income is projected in the range of $50 million to $70 million or $2.06 to $2.83 per share.

The company estimates revenues between $4.28 billion and $4.52 billion. The Zacks Consensus Estimate of $4.6 billion currently stands above the company's guidance. Magellan Health guided segment profit in the range of $260 million to $280 million, riding on the strength of pharmacy business, better performance at Magellan Complete Care of Florida, and growing commercial healthcare business.

Magellan Health exhausted the earlier $200 million share repurchase authorization in the third quarter and is presently executing the new $200 million program approved in October. Under the current authorization, the company had spent t $18.4 million to buy back 0.345 million shares. At Dec 31, 2016, shares outstanding are expected to be 24.7 million.

For 2016, Magellan Health projects cash flow from operations between $193 million and $224 million.

Magellan Health believes that it will remain well poised for growth on the back of solid results from its Pharmacy and Healthcare business. The expected long-term earnings growth is currently pegged at 20%.

Concurrently, Magellan Health reiterated the expectation for 2015. Adjusted net income of $73 million to $86 million or $2.82 and $3.32 per share accounts for care pressures in government healthcare contracts, and lower rates in Florida, though strong performing Pharmacy business will limit the downside. Magellan Health guided net income of $11 million to $24 million or $0.42 and $0.93 for 2015 based on 25.9 million shares outstanding. Cash flow from operations in 2015 is projected between $155 million and $175 million. The Zacks Consensus Estimate for 2015 is pegged at 69 cents, translating to a year-over-year decrease of 79.6%.

Zacks Ranks

Magellan Health presently carries a Zacks Rank #4 (Sell). Some better-ranked health, maintenance organizations worth considering are UnitedHealth Group Inc UNH , Centene Corp. CNC and Molina Healthcare, Inc. MOH . While UnitedHealth Group sports a Zacks Rank #1 (Strong Buy), Centene Corp. and Molina Healthcare carry a Zacks Rank #2 (Buy).

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MOLINA HLTHCR (MOH): Free Stock Analysis Report

UNITEDHEALTH GP (UNH): Free Stock Analysis Report

MAGELLAN HLTH (MGLN): Free Stock Analysis Report

CENTENE CORP (CNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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