A month has gone by since the last earnings report for Magellan Health . Shares have added about 10% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magellan Health due for a pullback? 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 Q1 Earnings Top on Lower Medical Utilization
Magellan Health, Inc.’s first-quarter 2020 earnings of $1.15 per share beat the Zacks Consensus Estimate by 69.12% as well as the year-ago bottom line of 40 cents.
Moreover, revenues of $1.79 billion for the quarter ended Mar 31, 2020 surpassed the Zacks Consensus Estimate by 1.61% and also rose 2.9% year over year. The top line trumped the consensus estimate in all the last four quarters.
Segmental profit soared 64% year over year to $74.8 million. The company gained from reduced levels of medical utilization toward the end of March due to a decline in elective services across its healthcare businesses.
Healthcare segment’s profit of $62.1 million was up 35% year over year, driven by favorable prior-period development and utilization results, particularly in the MCC Magellan Complete Care of Virginia and New York as well as in the reinstatement of the Health Insurer Fee.
Pharmacy Management segment’s profit of $20.9 million skyrocketed 152% year over year on the back of improved gross margins from the company’s PBM business as well a strong performance within its specialty drug management portfolio.
Total costs and expenses rose 5.6% year over year to $1.76 billion due to higher cost of care, direct service costs and other operating expenses plus depreciation and amortization.
Capital Position
Cash flow from operations for the quarter was $31.7 million, down 10.5% year over year.
As of Mar 31, 2020, the company's cash and cash equivalents totaled $383.9 million, up 18% from the level on Dec 31, 2019.
As of Mar 31 2020, total assets of the company increased 4.3% to $3.2 billion from the figure at 2019 end.
Total stockholder's equity inched up 2.4% sequentially to $1.43 billion as of Mar 31, 2020.
2020 Guidance
The company reaffirmed its earlier provided guidance for 2020, which calls for net revenues in the band of $7-$7.4 million, adjusted net income in the range of $83-$103 million, segmental profit between $250 million and $280 million and adjusted EPS in the $3.34-$4.14 bracket.
Business Update
On Apr 30, the company announced the sale of its Magellan Complete Care unit to Molina Healthcare Inc. for $850 million in cash. Also, the latter entered into multiple long-term agreements with Magellan Health including the purchase of new medical pharmacy and musculoskeletal management services for more than 3 million Molina members and also retained it for behavioral health, radiology and musculoskeletal management services in certain MCC markets.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -41.86% due to these changes.
VGM Scores
Currently, Magellan Health has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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
Magellan Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Image: Bigstock
Magellan Health (MGLN) Up 10% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Magellan Health . Shares have added about 10% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magellan Health due for a pullback? 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 Q1 Earnings Top on Lower Medical Utilization
Magellan Health, Inc.’s first-quarter 2020 earnings of $1.15 per share beat the Zacks Consensus Estimate by 69.12% as well as the year-ago bottom line of 40 cents.
Moreover, revenues of $1.79 billion for the quarter ended Mar 31, 2020 surpassed the Zacks Consensus Estimate by 1.61% and also rose 2.9% year over year. The top line trumped the consensus estimate in all the last four quarters.
Segmental profit soared 64% year over year to $74.8 million. The company gained from reduced levels of medical utilization toward the end of March due to a decline in elective services across its healthcare businesses.
Healthcare segment’s profit of $62.1 million was up 35% year over year, driven by favorable prior-period development and utilization results, particularly in the MCC Magellan Complete Care of Virginia and New York as well as in the reinstatement of the Health Insurer Fee.
Pharmacy Management segment’s profit of $20.9 million skyrocketed 152% year over year on the back of improved gross margins from the company’s PBM business as well a strong performance within its specialty drug management portfolio.
Total costs and expenses rose 5.6% year over year to $1.76 billion due to higher cost of care, direct service costs and other operating expenses plus depreciation and amortization.
Capital Position
Cash flow from operations for the quarter was $31.7 million, down 10.5% year over year.
As of Mar 31, 2020, the company's cash and cash equivalents totaled $383.9 million, up 18% from the level on Dec 31, 2019.
As of Mar 31 2020, total assets of the company increased 4.3% to $3.2 billion from the figure at 2019 end.
Total stockholder's equity inched up 2.4% sequentially to $1.43 billion as of Mar 31, 2020.
2020 Guidance
The company reaffirmed its earlier provided guidance for 2020, which calls for net revenues in the band of $7-$7.4 million, adjusted net income in the range of $83-$103 million, segmental profit between $250 million and $280 million and adjusted EPS in the $3.34-$4.14 bracket.
Business Update
On Apr 30, the company announced the sale of its Magellan Complete Care unit to Molina Healthcare Inc. for $850 million in cash. Also, the latter entered into multiple long-term agreements with Magellan Health including the purchase of new medical pharmacy and musculoskeletal management services for more than 3 million Molina members and also retained it for behavioral health, radiology and musculoskeletal management services in certain MCC markets.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -41.86% due to these changes.
VGM Scores
Currently, Magellan Health has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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
Magellan Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.