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Why Is Magellan Health (MGLN) Down 2.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Magellan Health (MGLN - Free Report) . Shares have lost about 2.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Magellan Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Magellan Health Q1 Earnings Miss Estimates

Magellan Health reported an operating loss of 40 cents per share, missing the Zacks Consensus Estimate by 27% and declining 102.5% year over year.
Revenues of $1.7 billion were down 3.6% year over year, due to reduction in Magellan Complete Care and Medicare Part D footprint and PBM healthplan contract loss. This was partly offset by growth in MCC of Virginia and new PBM employer business. Revenues came in line with the Zacks Consensus Estimate.

Segment profit of $45.6 million was down 18% year over year, due to a decline in contribution from both its segments – Healthcare and Pharmacy Management.
Total cost and expense of $1.79 increased 3% year over year due to higher cost of goods sold.

Capital Position

Cash flow from operations for the quarter ended Mar 31, 2019 was $35.4 million, down 56% year over year.

As of Mar 31, 2019, the company's cash and cash equivalents totaled $233 million, down 14% from year-end 2018 level.
Guidance

For 2019, the company affirmed its previously issued earnings per share guidance range of $3.70 and 4.69. It, however, reduced its revenue guidance to $7 billion-$7.2 billion from the previous guidance of $7.2 and 7.5 billion.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 42.62% due to these changes.

VGM Scores

Currently, Magellan Health has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Magellan Health has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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