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Magellan's (MGLN) Q4 Earnings Miss Estimates, Decline Y/Y

Magellan Health, Inc. MGLN reported fourth-quarter 2020 loss per share of 38 cents per share, wider than the Zacks Consensus Estimate of a loss of 30 cents. However, in the year-ago quarter, the company reported earnings of $1.24 per share.

Revenues of $1.18 billion surpassed the Zacks Consensus Estimate by 7.5% but declined 34.3% year over year.

Magellan Health, Inc. Price, Consensus and EPS Surprise

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

Segmental profit plunged to $11.2 million from $55.9 million in the year-ago quarter due to lower contribution from Healthcare and Pharmacy Management units.

Healthcare segment’s profit of $17.5 million was down 53.6% year over year, mainly due to lower revenues and higher direct service cost.

Pharmacy Management segment’s profit of $19.9 million fell 44.8% year over year, mainly due to higher cost of goods sold and direct service cost.

Total costs and expenses escalated 9.2% year over year to $1.2 billion due to higher cost of goods sold, direct service costs and other operating expenses plus special charges.

Capital Position

Cash flow provided by operations from continuing operations for the year ended Dec 31, 2020 was $179.5 million compared with $183.6 million in the corresponding period of 2019.

As of Dec 31, 2020, the company’s unrestricted cash and investments totaled $1,148.8 million compared with $81.1 million in the comparable period of 2019. This increase was largely due to the receipt of proceeds from the MCC Business sale to Molina.

As of Dec 31, 2020, its cash and cash equivalents totaled $1.14 billion compared with $115.8 million in the corresponding period of 2019.

As of Dec 31, 2020, the company’s total assets increased 8.7% from the 2019-end figure to $3.4 billion.

Total stockholders’ equity of $1.87 billion as of Dec 31, 2020 increased 33.8% from the prior-year comparable period.

Business Update

On Dec 22, 2020, it announced the acquisition of a majority interest in Bayless Integrated Healthcare, a leading integrated behavioral and primary care provider in Arizona.

On Dec 31, 2020, the company completed the MCC Business sale to Molina for $850 million in cash, plus closing adjustments of $158 million (subject to post-closing adjustments, if any), and the assumption by Molina of liabilities of the MCC Business.

On Jan 4, 2021, Magellan and Centene Corporation announced that they have entered into a definitive merger agreement under which Centene will acquire Magellan Health for $95 per share in cash for a total enterprise value of $2.2 billion. The transaction is expected to be completed in second-half 2021, subject to customary regulatory and shareholder approvals.

On Jan 13, 2021 the company led a Series B financing in NeuroFlow, a digital health company that combines workflow automation, consumer engagement solutions and applied AI to promote behavioral health integration in all care settings.

Zacks Rank and Other Stock Performances

Magellan Health currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UnitedHealth Group Inc. UNH, CVS Health Corp. CVS and Humana Corp. HUM are some stocks in the same space that beat their respective fourth-quarter earnings estimates by 5.4%, 4.8% and 2.1%.

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