Magellan reports net revenue of $692.8 million for first quarter 2011

Magellan Health Services, Inc. (NASDAQ: MGLN) today reported financial results for the first quarter of 2011, as summarized below, and increased guidance for the full year. For the quarter ended March 31, 2011, the Company reported net revenue of $692.8 million, segment profit of $75.7 million, and net income of $34.3 million or $1.02 per diluted common share. Segment profit represents income from operations before stock compensation expense, depreciation and amortization, interest expense, interest income, gain on sale of assets, special charges or benefits, and income taxes.

Financial Results

As of March 31, 2011, the Company had unrestricted cash and investments of $356.3 million. In addition, the Company reported year-to-date share repurchases through April 27, 2011 of 3.2 million shares for a total cost of $155.8 million.

"Magellan had solid first quarter performance, which gives us a strong foundation for the rest of 2011," said René Lerer, M.D., chairman and chief executive officer. "Our success during the quarter resulted from ongoing effective care management and strong overall business performance. Magellan offers financial stability and a unique focus as a clinically driven organization. Our comprehensive suite of solutions allows us to manage the most challenging and costly areas of specialty health care. Taken together, these create an enterprise platform that improves quality and cost for our customers. During the quarter, we also made excellent progress in returning capital to shareholders by continuing to move forward with our share repurchase program. To date, we have completed approximately $237.2 million or over half of our $450 million authorization.

"We remain focused on helping our customers adapt to the changing health care environment, which challenges them with rising costs and complexity. As an impactful partner, we continuously evolve our solutions to address the high-cost, high-need, high-touch areas of specialty health care."

"Each of our business segments - behavioral health, radiology benefits, specialty pharmaceutical management and Medicaid administration - performed well during the quarter and remains focused on operational execution, customer growth and retention, and product development and innovation," said Karen S. Rohan, Magellan's president. "Overall, I am pleased with our momentum in the first quarter and the prospects for the remainder of the year."

2011 Outlook

"As a result of our updated business outlook and the share repurchases through Wednesday, we are increasing our 2011 guidance," said Jonathan N. Rubin, chief financial officer. "We now expect full-year segment profit in the range of $255 million to $275 million and net income of $105.5 million to $122.5 million. This equates to diluted earnings per share of $3.24 to $3.76, which reflects the impact of repurchases so far this year, but excludes any potential repurchases that may occur during the remainder of the year. Regarding our guidance for cash flow from operations, we expect that the increase in segment profit will be offset by working capital changes. Therefore, we are maintaining our original cash flow from operations range of $180.5 million to $211.5 million."

Source: Magellan Health Services, Inc.