Magellan reports second quarter net revenue of $698.3 million

Magellan Health Services Inc. (NASDAQ: MGLN) today reported financial results for the second quarter of 2011, as summarized below. For the quarter ended June 30, 2011, the company reported net revenue of $698.3 million, segment profit of $75.9 million, and net income of $34.2 million or $1.07 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 June 30, 2011, the company had unrestricted cash and investments of $308.3 million. In addition, under its current authorization, Magellan reported share repurchases through July 26, 2011 of 6.2 million shares for a total cost of $305.3 million.

"Magellan had a strong second quarter, completing a solid first half of the year with results meeting our expectations," said René Lerer, M.D., chairman and chief executive officer. "It's significant that contributions to these results came from across our lines of business, as well as solid care management results from our risk products. Looking ahead, our focus remains on executing our strategy and exploiting our deep experience and clinical expertise. We are particularly enthusiastic about opportunities to bring innovative solutions to new and existing customers in the areas of pharmacy and Medicaid.

"Magellan demonstrated traction during the quarter with existing customers. Our successful partnership with the state of Arizona resulted in a contract extension in Maricopa County through September 2013. And earlier this week, we announced an innovative partnership with the state of Iowa in launching an integrated health home program that focuses on individuals with serious mental illness, with the goal of driving better health outcomes. This brings the integration of medical and behavioral health management for this unique population under Magellan's oversight, and is part of our ongoing efforts focused on total care management. We are the partner of choice in the specialty health care market providing comprehensive solutions and proven results to state governments, health plans, and employers."

"I'm pleased with our operational performance during the quarter and our positioning in the marketplace for future growth," said Karen S. Rohan, Magellan's president. "We are continuing to differentiate our offerings in the market by developing new products in anticipation of customer needs and in response to the changing health care landscape. Our radiation oncology, cardiac management, and medical pharmacy products continue to generate significant market interest. In addition, there is growing demand from both commercial and public sector customers for our integrated behavioral and medical capabilities, which we are currently piloting with a number of clients through our patient-centered medical home and integrated health home programs."

"Our financial position remains strong, with solid fundamentals and good liquidity," said Jonathan N. Rubin, chief financial officer. "This enables us to continue to invest in our growth strategy, while making further progress in our share repurchase program."

2011 Outlook

The company reaffirmed its 2011 guidance ranges for full-year net income of $105.5 million to $122.5 million, segment profit of $255 million to $275 million, and cash flow from operations of $180.5 million to $211.5 million, excluding the net shift of restricted funds between cash and investments. The company updated its diluted earnings per share to a range of $3.30 to $3.83 per share based on share repurchases through the close of business on July 26, 2011, but excluding any potential repurchases that may occur during the remainder of the year.