Magellan Health Services, Inc. (Nasdaq: MGLN) today reported net revenue of $728.1 million, net income of $25.5 million or $0.73 per diluted common share, and segment profit, representing 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, of $61.4 million for the quarter ended March 31, 2010. This compares to net revenue of $619.5 million, net income of $13.6 million or $0.37 per share, and segment profit of $39.1 million for the same period last year.
“Over the past 21 months, we have purchased 8.2 million shares at an average price of $36.49, for a total cost of $300 million”
The company ended the quarter with unrestricted cash and investments of $264.3 million, which represents an increase of $0.5 million from the balance at December 31, 2009, after the impact of $59.3 million in stock repurchases in the quarter. Cash flow from operations for the quarter was $60.3 million, compared to $58.6 million for the same period last year.
Please see the attached tables detailing the company's operating results, including results by segment.
"Results for the first quarter of 2010 were strong across the organization, reflecting segment profit growth in behavioral and radiology management, inclusive of new business, and the results from our new Medicaid Administration business," said René Lerer, M.D., chairman and chief executive officer. "We continue to drive our diversification initiatives to offer a comprehensive suite of integrated specialty health management solutions, including broad expertise in the Medicaid segment."
Lerer added that with its passage in the first quarter, health care reform provides Magellan with an opportunity to make a positive impact on the quality, safety, and affordability of care for even more consumers. "With approximately 32 million Americans gaining coverage under health care reform between now and 2019, we are well-positioned to deliver value through our care management solutions to a greater number of state government, Medicaid, and commercial payors. Magellan is uniquely qualified to provide specialized expertise to care for the mental health, radiology, and pharmacy needs of this growing population."
Magellan's president, Karen S. Rohan, added, "The organization's positive results continue to be driven by the operational success of each of our individual business units, most notably our radiology benefits management and public sector behavioral health businesses. Based on the strength of our business operations, increased market interest in our comprehensive product offerings, and the potential opportunity from health care reform, we are optimistic about our prospects for 2010 and beyond."
Share Repurchase
On April 1, 2010, Magellan completed its most recent share repurchase program, resulting in the purchase of approximately 2.5 million shares for a total cost of $100 million, at an average price of $40.09.
"Over the past 21 months, we have purchased 8.2 million shares at an average price of $36.49, for a total cost of $300 million," said Jonathan N. Rubin, chief financial officer. "This demonstrates our commitment to maximizing shareholder value by returning capital through share repurchases, while continuing to advance Magellan's financial, strategic, and operating objectives to grow the business for all of our stakeholders."
Outlook
Management affirmed its earnings guidance for 2010, stating that the Company expects to generate net revenue in the range of $3.0 billion to $3.2 billion, net income in the range of $95.5 million to $115.0 million, and segment profit in the range of $235 million to $255 million. These results are expected to yield earnings per share in the range of $2.73 to $3.29 on a diluted basis.
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