Third-quarter fiscal 2009 results announced by Magellan Health Services

Magellan Health Services, Inc. (Nasdaq:MGLN) today reported net income of $31.0 million, or $.88 per diluted common share, and segment profit of $64.5 million for the third quarter of 2009. The Company also increased guidance for the full year to the upper half of its previously disclosed range.

The Company attributed these results to strong revenue performance across all business segments and effective cost-of-care management. It also announced today that it has signed a binding letter of agreement with WellCare Health Plans, Inc. to expand management of behavioral health care for the plan’s entire book of business, resulting in total annualized WellCare revenues in excess of $100 million.

Financial Results

For the quarter ended September 30, 2009, the Company reported net revenue of $667.6 million and net income of $31.0 million, or $.88 per diluted common share. For the prior year quarter, net revenue was $656.5 million and net income was $23.5 million or $.58 per diluted common share. Segment profit (which represents income from continuing operations before stock compensation expense, depreciation and amortization, interest expense, interest income, gain on sale of assets, special charges or benefits, and income taxes) for the current year quarter was $64.5 million, compared with $57.6 million in the prior year quarter. The Company ended the quarter with unrestricted cash and investments of $220.1 million, including the impact of stock repurchases as well as net cash used for the acquisition of First Health Services.

For the nine months ended September 30, 2009, the Company reported net revenue of $1.92 billion and net income of $62.9 million, or $1.77 per diluted common share. For the prior year period, the Company reported net revenue of $1.96 billion and net income of $62.6 million, or $1.55 per diluted common share. Segment profit for the first nine months of 2009 was $150.3 million versus $164.6 million for the prior year period.

See the attached tables detailing the Company’s operating results, including results by segment.

René Lerer, M.D., chairman and chief executive officer, said, “Our financial performance in the third quarter was strong across all of our business segments, reflecting solid progress in maintaining and growing our customer relationships as well as our success in improving cost of care. By providing appropriate oversight and strong clinical care management, we have demonstrated success in achieving quality outcomes for our customers and their members while effectively controlling costs. This safeguarding of the quality and affordability of care is the foundation of our commitment. At the same time that we’re focusing on these fundamentals, we’re looking forward and investing in product development and innovation, expanding the depth and breadth of our service offerings and identifying new ways to deliver value to our customers.”

Karen S. Rohan, president, said that the quarter’s results demonstrated the progress and success of all businesses – behavioral health, radiology (NIA), specialty pharmacy (ICORE), and Medicaid administration (First Health Services).

“Our strategic focus on customer retention and business diversification is yielding results across all of our lines of business,” Rohan said. “This includes contributions from our newest business, First Health Services, which has further diversified and expanded the breadth of our service to Medicaid customers. In addition, we learned recently that our public sector behavioral health contract in Maricopa County has been extended for a fourth full year, through August 31, 2011. We are exceptionally pleased to have received this vote of confidence in our efforts and to have the opportunity to continue strengthening and transforming this system of care.”

SOURCE Magellan Health Services, Inc.