Back to top

Image: Bigstock

Magellan's (MGLN) Q3 Earnings Top Estimates, Decline Y/Y

Read MoreHide Full Article

Magellan Health, Inc.’s third-quarter 2020 adjusted earnings per share (EPS) of 8 cents compares favorably with the Zacks Consensus Estimate of a loss of 12 cents. However, the bottom line declined 80% year over year.

Shares of the company have lost 2.2% in the last three days’ trading, which might be due to year-over-year decline of the bottom line.

Nonetheless, third-quarter results reflect higher revenues owing to the Pharmacy Management segment’s improving managed care and other revenues, partially offset by elevated costs and net contract losses at the Healthcare segment.

Moreover, revenues of $1.2 billion for the quarter ended Sep 30, 2020 surpassed the Zacks Consensus Estimate by 2.4% and inched up 1% year over year. Notably, the top line beat the consensus estimate in each of the last four quarters.

Segmental profit plunged 25.2% year over year to $34.1 million.

Healthcare segment’s profit of $21.2 million was down 19.1% year over year mainly due to net contract losses and minimum medical loss ratio (MLR) thresholds in specific contracts.

Pharmacy Management segment’s profit of $31.4 million fell 11.2% year over year mainly due to start-up costs related with the Medi-Cal contract and earlier revealed contract losses. Nevertheless, the results seem to have partially benefited from impressive specialty pharmacy operations performance and favorable customer settlements.

Total costs and expenses escalated 3.1% year over year to $1.2 billion due to higher cost of goods sold, direct service costs and other operating expenses plus special charges.

Magellan Health, Inc. Price, Consensus and EPS Surprise

Magellan Health, Inc. Price, Consensus and EPS Surprise

Magellan Health, Inc. price-consensus-eps-surprise-chart | Magellan Health, Inc. Quote

Capital Position

Cash flow from operations for the first nine months ended Sep 30, 2020 was $232 million, which surged 60.6% from the year-ago comparable period.

As of Sep 30, 2020, the company's cash and cash equivalents totaled $152.1 million, up 31.4% from the level on Dec 31, 2019.

As of Sep 30, 2020, total assets of the company increased 9.3% to $3.4 billion from the figure at 2019 end.

Total stockholder's equity of $1.6 billion as of Sep 30, 2020 increased 13% from the prior-year comparable period.

2020 Guidance Reiterated

The company reiterated its earlier provided guidance for 2020, which calls for net revenues to be $4.4-$4.6 billion, adjusted net income to be $16-$28 million, segmental profit in the $145 million-$165 million bracket and adjusted EPS between 63 cents and $1.10.

Business Update

On Sep 9, the company collaborated with Livongo, which provides Magellan customers and members access to a digital self-care solution, Livongo for Behavioral Health.

On Oct 27, Magellan Health tied up with Kaden Health by making a strategic minority equity investment in it. Notably, Kaden Health has a proprietary telemedicine platform, which is likely to enable Magellan in enhancing its virtual behavioral care services.

On Oct 27, the company’s board of directors authorized an extension of its existing share repurchase program worth $400 million through November 15 of next year. The company has $186 million remaining under the buyback program as of Sep 30, 2020.

Zacks Rank

Magellan Health carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the medical sector players that have reported third-quarter results so far, UnitedHealth Group Incorporated (UNH - Free Report) , Anthem, Inc. and Centene Corporation (CNC - Free Report) beat the Zacks Consensus Estimate for earnings.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


UnitedHealth Group Incorporated (UNH) - free report >>

Centene Corporation (CNC) - free report >>

Published in