Magellan Health Services Reports Fourth Quarter and Full Year 2012 Financial Results

Magellan Health Services Reports Fourth Quarter and Full Year 2012 Financial Results

AVON, Conn.--(BUSINESS WIRE)-- Magellan Health Services Inc. (NAS: MGLN) today reported financial results for the fourth quarter and full year 2012, as summarized below. For the year ended December 31, 2012, the company reported net revenue of $3,207.4 million, segment profit of $267.4 million, and net income of $151.0 million or $5.42 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.

As of December 31, 2012, the company had unrestricted cash and investments of $302.3 million.

"Magellan had a strong fourth quarter, and completed a successful 2012," said Barry M. Smith, chief executive officer. "Each of our business units contributed to our success with significant accomplishments including solid financial results, product innovation, and new business sales.

"This is an exciting time as we enter a new phase of growth. The next twenty-four to thirty-six months will be especially dynamic, as the industry consolidates and the Affordable Care Act is implemented with Medicaid expansion and the creation of state, federal and commercial exchanges. As a result of these changes, we foresee market disruption for the traditional players, allowing for significant growth opportunities for innovative, agile companies such as Magellan.

"During 2013, we will continue investing to expand our presence in the Pharmacy marketplace as well as in Medicaid. In Pharmacy, customers face a fragmented and inefficient system which compromises quality care and increases costs. Our vision is to create an entirely new approach, so that we can lower the total drug spend while improving the health of the patients we serve. We offer a suite of clinical and cost management solutions that integrate our specialty, medical pharmacy, and PBM capabilities. Our solutions offer customers a comprehensive approach to managing the quality and cost of pharmaceutical care, for any drug, at any provider site of service, under any benefit.

"We are also gaining traction on our Medicaid initiatives where we have created new models of care for special populations that integrate the pharmaceutical, physical and behavioral health management of individuals with Serious Mental Illness as well as those dually eligible for Medicaid and Medicare. Whether through our traditional businesses or through innovating and implementing new strategies for growth, Magellan is well positioned to shape the future of health care."

Outlook

"We completed a strong 2012, exceeding our segment profit guidance for the year," said Jonathan N. Rubin, chief financial officer. "We posted high quality results, reflecting key new business implementations, improved cost of care management, and a lower administrative expense ratio. We achieved these results, while making significant investments in our Medicaid and Pharmacy strategies. Combined with our financial strength, this positions us well for 2013 and beyond.

"We are reaffirming our guidance for 2013, which calls for net revenue in the range of $3.56 billion to $3.74 billion, and net income in the range of $91 million to $109 million. Additionally, we expect segment profit for 2013 to be in the range of $250 million to $270 million. Based upon the impact of share repurchase activity through February 22, 2013, but not considering any potential future share repurchases, we are adjusting our diluted weighted average shares outstanding for the year to 27.8 million, resulting in an EPS range of $3.27 to $3.92."

Earnings Results Conference Call

Management will host a conference call at 10:00 a.m. Eastern Time on Thursday, February 28, 2013. To participate in the conference call, interested parties should call 1-888-566-8408 and reference the pass code FourthQuarter Earnings Call 2012 approximately 15 minutes before the start of the call. The conference call will also be available via a live Webcast at Magellan's investor relations page at www.MagellanHealth.com.

About Magellan Health Services

Headquartered in Avon, Conn., Magellan Health Services Inc. is a leading specialty health care management organization with expertise in managing behavioral health, radiology and specialty pharmaceuticals, as well as public sector pharmacy benefits programs. Magellan delivers innovative solutions to improve quality outcomes and optimize the cost of care for those we serve. As of December 31, 2012, Magellan's customers include health plans, employers and government agencies, serving approximately 33.8 million members in our behavioral health business, 17.2 million members in our radiology benefits management segment, and 8 million members in our medical pharmacy management product. In addition, the specialty pharmaceutical segment served 41 health plans and employers, and several pharmaceutical manufacturers and state Medicaid programs. The company's Medicaid Administration segment served 24 states and the District of Columbia. For more information, visit www.MagellanHealth.com.

Cautionary Statement

This release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, as amended, which involve a number of risks and uncertainties. All statements, other than statements of historical information provided herein, may be deemed to be forward-looking statements including, without limitation, statements regarding estimates of 2013 revenue, net income, segment profit, earnings per share, strategy and growth. These statements are based on management's analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "may," "should," "could," "estimate," "intend" and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, the possible election of certain of the company's customers to manage the health care services of their members directly; changes in rates paid to and/or by the company by customers and/or providers; higher utilization of health care services by the company's risk members; delays, higher costs or inability to implement new business or other company initiatives; the impact of changes in the contracting model for Medicaid contracts; termination or non-renewal of customer contracts; the impact of new or amended laws or regulations; governmental inquiries; litigation; competition; operational issues; health care reform; and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the "Risk Factors" section included within the company's Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 28, 2012, the company's subsequent Quarterly Reports on Form 10-Q filed during 2012 and the company's Annual Report on Form 10-K for the year ended December 31, 2012, expected to be filed with the Securities and Exchange Commission and posted on the company's website later today. Readers are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this release. Segment profit information referred to herein may be considered a non-GAAP financial measure. Further information regarding this measure, including the reasons management considers this information useful to investors, are included in the company's most recent Annual Report on Form 10-K and on subsequent Form 10-Qs.